creating economic value through reputation management · 2008-08-27 · branding marketing & pr...

Copyright ©2008 Reputation Institute. All rights reserved.

Creating Economic Value through Reputation Management

Dr. Charles Fombrun

Founder & CEO

Reputation Institute

“When quality is not enough, lead by reputation”Pontifica Universidad Católica de ChileAugust 20, 2008

2Copyright ©2008 Reputation Institute. All rights reserved.

Reputation Institute

RI Advice GroupRI Knowledge Center• Corporate Reputation Review• Research, Insights & Cases• Conferences & Seminars

Proprietary analytics & models • RepTrak™ - reputation measurement• EcQ® - employee alignment •WorkRep™ - employee ambassadorship• RepTrak Risk™ – reputation risk assessment• Media RepTrak™

• Office Network ………………… 7 offices, 15 associates• Member Network …………….. 75 corporate members• Knowledge Network ………… 150 academic members


Agenda

Valuing Intangible Assets – connecting the dots of reputation

1

Beyond Companies–understanding countries and their reputations

4

Professionalizing Reputation Management–creating economic value

3

How do Companies Build Reputation?–learning from winners and losers

2


1. Valuing Intangible AssetsConnecting the dots…..to the bottom line


Physical Forces: The Four Forces of Nature


Social Forces: Attraction & Repulsionor -Halos & Networks –Action at a Distance


Companies are More or Less Attractive


Business Schools Compete for Reputation


Countries also Compete for Reputation

9


Connecting the Dots

Employee Engagement

Leadership

Ethical BehaviorReputation

StakeholderSupport

Advertising

Public Relations

Philanthropy

Media Coverage

Analyst Ratings

Financial Performance

Economic ValuePrice & Quality

Service Orientation

Innovation

Market Value

Is Google a great place to work because its Is Google a great place to work because its

stock is at $483, or is its stock at $483 stock is at $483, or is its stock at $483

because it's a great place to work? because it's a great place to work?

----Business Week, January 22, 2007Business Week, January 22, 2007


Market Value Results because Reputation Generates Public Support

Corporate Reputation

Pu

bli

c S

up

po

rt

Source: Reputation Institute, 2008


-6 0 .0 0%

-4 0 .0 0%

-2 0 .0 0%

0.00 %

2 0.00 %

4 0.00 %

Jan-00

Apr-

00Jul-0

0O

ct-00

Jan-01

Apr-

01Jul-0

1O

ct-01

Jan-02

Apr-

02Jul-0

2O

ct-02

Jan-03

Apr-

03Jul-0

3O

ct-03

Jan-04

Apr-

04Jul-0

4O

ct-04

Jan-05

Apr-

05Jul-0

5O

ct-05

Jan-06

Apr-

06Jul-0

6O

ct-06

S&P 500

HIGH REPUTATION

PORTFOLIO

Reputation & Market Value are Linked Example: Data from 2000-2006

Source: Reputation Institute, 2007

CumulativeReturns

In Simplistic Terms, Reputation puts $$ in the Bank

A simple equation links reputation to market value:

% Change in Market Value = 1.3 * % Change in Reputation

So, on average:

Top 30 in Reputation

Bottom 30 in Reputation

Market/BookRatio

3.79 1.42

10% Improvemen

t in Reputation

13% Improvement in Market

Value


Company’sReputing

BrandingMarketing & PRPhilanthropy

3rd Party Opinions

Media (Traditional, Social)Topic Experts/LeadersPersonal Networks

CorporateReputationHow company is perceived

CorporateReputationHow company is perceived

PersonalExperiences

ProductsCustomer ServiceInvestmentsEmployment

Source: Reputation Institute

Future Prospects

AttractivenessRatings

Cost of Capital

SupportiveBehaviors

EmployeesInvestorsCustomersOthers Financial

Results

ProfitabilityMarket Value

FinancialResults

ProfitabilityMarket Value

How Do the Dots Connect?


2. How Do Companies Build Reputation?


Are there Key Pillars of Corporate Reputation?


Who is Most Respected?-how are they winning hearts & minds?Who is Most Respected?-how are they winning hearts & minds?

Global Pulse measures consumer perceptions of:

• 1,000 largest companies

• 60,000 consumers

• 27 countries


The World’s Most Respected CompaniesGlobal Pulse 2008


How Toyota Reputes- through Products & Citizenship

Products/Services- Cutting edge design

Citizenship- Environmental friendly

How Does Google Build Reputation?--through Products & Workplace


Reputation in the Global Airlines and Aerospace Industry-Global Pulse 2008

75.19

74.37

73.61

71.82

71.58

68.88

68.84

68.65

68.15

66.66

66.57

66.34

65.36

64.90

64.88

61.98

60.67

59.52

58.35

58.20

57.95

54.49

53.91

46.95

44.76

Deutsche Lufthansa AG (Germany)

Boeing (US)

Lan (C hile)

Qantas Airways (Australia)

Bombardier Inc. (Canada)

British Airways (UK)

BAE Systems (UK)

Lockheed Martin (US)

Airbus (France)

TAP (Portugal)

Air C hina (China)

Northrop Grumman (US)

C hina Southern Air (China)

Raytheon (US)

Air France-KLM (France)

Continental Airlines (US)

American Airlines (AMR) (US)

Delta Air Lines (US)

United Airlines (UAL) (US)

Northwest Airlines (US)

China Eastern Air (C hina)

Air Canada (Canada)

Air India Ltd. (India)

Japan Airlines Corp. (Japan)

Alitalia (Italy)

Global Mean64.20


Factor Adjusted Regression Adjusted R-squared = 0.786

n = 4,310

Which Dimension of Reputation has the Strongest Effect on Consumers in Airline/Aerospace?

18.1%

13.0%

15.0%

15.6%

14.7%

11.4%

12.1%


The Reputation Toolbox

Insights & Analysis

Systems Execution

Evaluation

Strategy


1. Establish a Shared ModelExample: Measuring a Pharmaceutical Company

Goals


Factor Adjusted Regression Adjusted R-squared = 0.774

n = 27,000

2. Consolidate ResearchIdentify the Drivers of Your Company’s Reputation

17.6%

13.6%

14.6%

14.5%

16.3%

11.8%

11.6%


29

Consumers Opinion Elites Policy Elites

Financial Analysts Physicians Employees

3. Align ActivitiesIdentify What Matters to Different People


Stakeholder Outcomes

Vision & Mission

The Platform’s

‘Big Idea’

We promise to…

People Profits Planet

Initiatives that make the company

relevant to its stakeholders

4. Align EmployeesAdopt a Common Reputation Platform

4. Align EmployeesAdopt a Common Reputation Platform

Initiatives & Actions

5. Express Yourself to build Reputation

Responsive

Sincere

Transparent

Consistent

Distinctive

Visible

Expressive

Visible – company communicates often and widely

Distinctive – the way the company communicates makes it

stand out from its competitors

Consistent – company conveys a consistent message

across its communications

Transparent – company provides an appropriate amount of

information about what it does and how it operates

Sincere – company appears genuine about what it says and

does

Responsive – company invites and welcomes feedback

about its activities about what it says and does


Cross-FunctionalIntegration

Cross-FunctionalIntegration

advertising

sponsorships

customer service

product packaging

philanthropy

CSR activities

workplace policies

governance policies

environmentalpolicies

financial reporting

corporatebranding

communicationscampaigns

media coverage

6. Integrate across FunctionsImplement the Reputation Platform


33

7. Build Monitoring SystemsFacilitates Integration


Example: Telefónica

Offer our employees the best place to work, attracting and retaining the best talent and providing the best career development opportunities

EMPLOYEES

Put customers’ needs at the heart of everything we do, so that they get the maximum satisfaction from our services and solutions

CUSTOMERS

Provide our shareholders with the best combination of growth and returns in the industry

SHAREHOLDERS

Act as an important driver of technological, economic and social development in the communities in which we operate, combining our ambition of being a global and efficient company with the aim of satisfying every local market’s requirements

SOCIETY

OUR

VISION

“We aim at enhancing people’s lives,

businesses performance and the progress of

the communities in which we operate, by

delivering innovative services based on

information and communication technologies”


Telefonica’s ExecutionSocial Investments in Education

EDUCATION

Program to includeICT use in basiceducation

Program to includeICT use in basiceducation

Program to school

working children in

LATAM

(25,000 children)

Program to school

working children in

LATAM

(25,000 children)

Investigate, debate and createknowledge onsustainable use of

ICT

Investigate, debate and createknowledge onsustainable use of

ICT

Involve employeesand retirees

Involve employeesand retirees

EXCELLENCE IN

EDUCATION

EXCELLENCE IN

EDUCATIONINCLUSIONINCLUSION

KNOWLEDGE

CENTER

KNOWLEDGE

CENTERVOLUNTEERINGVOLUNTEERING


OurCore Values

Strategic VisionWho do we want to be?

What are the values we want to defend for the future?

Organization

Culture

What do we stand for?

How do we realize our

values & ideas?

Stakeholder Images

Who are our key

stakeholders?

Which values do they

associate with us?

The Continuous Cycle of Corporate Alignment


4. Beyond Companies


38


What Drives a Country’s Reputation?

Drives Support:

• Investment• Tourism


Country ReputationHow Others see You


Country Self-ImageHow You See Yourself


Reputation and Support

42

CountryReputation

Visit

Live or work

Invest

Purchase

0.78

0.74

0.70

0.73


In Sum:Reputation Management is a 7-Step Process

1. Establish a Shared Model

2. Consolidate Research

3. Align Activities

4. Align Employees

5. Express Themselves

6. Integrate Cross-Functionally

7. Set Stakeholder Goals & Track Progress

creating economic value through reputation management · 2008-08-27 · branding marketing & pr...

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