Reputation Management Critical in Every State of Business Growth

“A reputation once broken may possibly be repaired, but the world will always keep their eyes on the spot where the crack was.”

The quote is attributed to an English bishop who lived some 600 years ago. But I’m certain it resonates today with many organizations that have lived through the various stages of business growth as defined by the “Greiner Curve” and other sources.  There are few companies, if any, who didn’t trip and perhaps fall along their path to success.  Along the way, it’s likely their reputations were blemished, at least somewhat.  Still, there are many others that failed miserably, perhaps after enjoying some success, only to once again reclaim relevance during a business renewal phase.  Apple certainly comes to mind.  And Ford too.

We like to talk about reputation as the enduring essence of an organization. When we meet with clients, we reinforce the point that reputation influences every aspect of their organization.  A healthy reputation keeps an organization whole through times of crisis.  Likewise, a healthy reputation enables a company to flourish more than the competition during times of prosperity.

In recent years, reputation has moved to the forefront as a critical success factor for companies at every growth stage.  The Internet has helped fuel this, but corporate reputation officers and firms that view communications through the reputation lens existed long before the proliferation of online reputation management tools and firms that try to expunge negative online news about a company, person or issue.

Many start-up companies, for example, are often more concerned with developing and delivering effective solutions to their customers – and getting off to a fast start – than they are with building a healthy reputation from day one.  How many new companies are you familiar with that have tripped, or imploded, because they didn’t begin with the right people, or burned through their cash, or failed to focus on core competencies, or were inhaling their own exhaust? Hundreds of such companies did just this during the dot.com bubble, and more are poised to do the same in other industries.  The alternative energy industry comes to mind.  Solyndra has gone belly up and A123 Systems recently laid off more manufacturing personnel.  Its stock price is near its 52-week low.

Recovering and rebuilding a company’s reputation can be an excruciatingly painful and costly process, especially in today’s unforgiving business environment. But newer companies who manage to stay alive during this formative period by demonstrating their viability get to “pass go” and advance their reputation into the next stage of business growth – the survival stage.

Survival stage companies may experience a period or rapid growth but have yet to enjoy true business success.  However, they have done many things right, be it increasing production to meet customer demand, recruiting the right talent and focusing (or re-focusing) their marketing. It is at this stage, as the employee base grows and increased demands are made of everyone (versus the early stage where it’s all about the founder and his/her energy level), when a company begins to reinforce its corporate culture and sharpen its focus on what it stands for.

At the success or mature stage of a company’s business lifecycle, it’s all about living the high life, right?  Well, maybe not so much.  During this period of growth, strong financial performance may be offset by unsustainable growth and a complacent company culture.  Also, success stage companies may be publicly traded, which invites more scrutiny from key stakeholders like investors and the media.  Senior management missteps, such as not providing accurate guidance for the Street or being late to market with a promising new product, will not go unpunished.  The sharks on Wall Street may forgive — but they do not forget.

These success stage companies often become trapped in the decline stage, a period when they are hit by unforeseen, outside influences that can damage their reputation.  A company in the decline stage, but still with a respected reputation, can better withstand the onslaught of newer and more nimble global competitors (and subsequent falling prices), increased operational costs, and underutilized employees.  They’ll enjoy the so-called halo effect. When a company and its reputation have been seen in a favorable light over a sustained period of time, it is difficult to cast a shadow upon it.

Again, Apple comes to mind as a great example of a company whose reputation thrived, survived, and then thrived again. Many were writing Apple off before Steve Jobs returned to the helm in 1997 to rebuild and reshape the company’s tarnished reputation. This was during Apple’s “revival” stage of business growth and today its reputation is among the strongest of any global company in any industry.

While it remains to be seen how Apple’s reputation will hold up over time, one has to like its chances given the company’s near-maniacal approach to reputation management.

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