The concept of the importance of reputation (corporate or otherwise) have been debated through the ages.

Some would dismiss it as being unsubstantial but management theorists and consultancies would have you believe that it is a strategic asset and a source of organization equity that can be leveraged to gain a competitive advantage. It supposedly (magically) creates a safety buffer that can be drawn to protect one from negative news and it could be increased by engaging with the stakeholder community.

In it’s latest announcement “Reptrack” – a Corporate Reputation Survey by the “Reputation Institute” (they are a consultancy)- their spokesmen continually sold the idea of the importance of reputation management. According to them reputation is so influential to businesses today – we live in a “reputation economy”. Many consultancies exists around the world offering “holistic” advice on how corporations could improve their reputations – including how to do so online: how to push up positive items on Google page ranks and neutralise the negative ones… .

One can easily see why the corporate types would buy into this talk – business valuations are increasingly driven by “intangibles”- intellectual property or brands rather than plant values, inventory..etc. The concept of “reputation economy”, thus, seems to make intuitive sense eg. Facebook’s IPO would see their valuation exceed that of General Motors (that is their valuation before they went hat in hand for government hand-outs). Reputation is also getting more difficult to manage with the rapid rise in usage of social media: irate customers can easily upload a youtube video lampooning the latest ad campaign or trash your latest products. Even corproate titans like British Petroleums (see: Deepwater Horizon oil spill) and Toyota/ VW (unintended accelerations/ so called “diesel-gate” scandal) are not spared and watched as their reputations crash in the blink of an eye.

A waste of time and effort?

I cite 3 main objections to the reputation management industry:

1. It seems overtly simplistic to aggregate the many components (from an enterprises’s relationship with an NGO to the quality of it’s products) to a single notion of reputation. To add to the confusion, there is the perennial argument from the Corporate Social Responsibility (CSR) types who demands that corporations should improve the world and be thanked for it and the Public Relations types whom push for the best possible spin in the media circus
2. The industry depends on an all too naive view of reputation power. Their premise is that corporations with the most positive reputations will find it the easiest to attract customers and survive a crisis.There are some glaring counter-examples where this is obviously not true: the tobacco industry still makes excellent profits despite having their reputation in the gutter for the better part of the last decade.
3. And the weakest argument to come from the reputation management industry is their primary logic: in the face of potential threats to your reputation- work even harder at managing your reputation. This can’t be further from the truth (see below).

Reputation: an incidental by-product

Extending the previous example, shortly after the oil spill – BP blew a further pile of cash in a “beyond petroleum” branding campaign at the advice of a reputation-mangement consultant. This did nothing to deflect the damage done- worse, there are now hours of (hilarious) youtube footage lampooning the campaign and numerous blog posts and comments ensuring that it will not quickly be forgotten.

So, now what?

The best strategy in managing your reputation is to think less about it. You should divert your attention to producing the best goods and services you can. Many of the most successful businesses are identified by their intense focus on core offerings – not their glitzy marketing campaigns.

Reputation should not be your direct end. Fix your objectives around improvements to your core business. Customers will naturally leave positive feedback about you and your products if you do that well.