Friday, December 30, 2005

2006




As we look foward to 2006, a few thoughts.





No more Trust Me...instead Show Me
No more CEO Celebrity...instead CEO Credibility
No more CEO First....instead Company First
No more Enron behavior...instead Ethical Behavior
No more CEO Charisma...instead CEO Character
No more Crony Governance...instead Corporate Governance
No more Outsider CEOs...instead Insider CEOs
No more Executive Privilege...instead Full Disclosure

Happy New Year! lgr

Thursday, December 29, 2005

Measurement Does Not Replace Management


I found this statement in a PriceWaterhouseCoopers journal on risk management -- measurement does not replace management. I am the first to agree that it is not the most profound but it sure rings a bell. There is always a demand to measure public relations, advertising, direct mail, etc. and not surprisingly, no one has found the holy grail.

When it comes down to it, it's all about quality management. Measurement is important and my favorite CEOs all recite that you manage what you measure. But without good leadership, all the measurement in the world can't cut it. Numbers can fail. I can't help recall the terrific quantification and forecasting by Cisco that held us all spellbound until the numbers did not do their job. Thankfully Cisco is back on its feet with the deft leadership of John Chambers.

We were recently asked about measurement, in particular marketing mix modeling (MMM). This is the new craze ever since P&G's new research found that public relations can have a significant effect on sales. Bravo to P&G for these results which help to validate public relations and other "below the line" marketing.

Key to conducting marketing mix modeling, however, is the availability of extensive, detailed data that can be fed into the model. The process requires entering large amounts of data (usually broken down by week) covering a considerable time span -- several years in many cases -- for each type of channel involved. The model also incorporates broader economic and competitive data to take external factors into account. Needless to say, not every company has reams of detailed data that can be thrown into the MMM hopper.

While the model may be able to determine public relations’ contribution to sales, increased sales may not be the prime objective of public relations such as building reputation, building equity with key communities and forging relationships with allies.

I leave you with my thought for the day: Good management trumps measurement. Maybe not profound but certain.

Tuesday, December 27, 2005

Reputation Erosion


Burson-Marsteller's global reputation research made it into today's The Wall Street Journal. My by-lined Managers Journal piece ("On Business Storm-Proofing," 27 December 2005) described some of the early warning signs of reputation failure and what leaders can do about them. We identified 15 early warning signs (only 7 were identified in the article) and remarkably, business opinion leaders around the world agreed with the rank order and magnitude of these telltale signs.

I was encouraged to see that the first early warning sign was low employee morale. Companies should regularly monitor employee satisfaction and ask employees what is on their minds. With several years of tracking data behind them (start now!), leaders can see how their actions, communications and events impact employee morale and loyalty. With a benchmark to compare against, leaders can recalibrate what is working and not working. Former president Teddy Roosevelt said: "Far and away the best prize that life offers is the chance to work hard at work worth doing." If leaders can provide meaningful work worth doing, they are doing their job.

Hopefully as the new year begins and business leaders prepare new slates, we can all watch for these troublesome warning signs and get our houses in order.

Friday, December 23, 2005

The Reputation Files

I just spent the entire morning filing articles and information from the past several months. Since we have a few days off for the holidays, I thought I would spend time getting ready for 2006. I usually try to file when the stack gets too high, meaning over 12 inches. I have about two inches left which I will try to complete shortly.

My reputation files are all at home which means that my home office is chock full of make-shift file holders and lots of piles. Here are my other reputation-piles that surround me (and haunt me) day and night:

**14 books (two feet high)that I hope to read (e.g., Tough Calls, Will Your Next Mistake Be Fatal?)
**unread but to-be-read magazines, journals and articles (8 inches high)
**maybe-will-read magazines, journals and articles (6 inches high)
**articles that I want to reread again since I liked them the first time (4 inches high)
**many file holders containing information that grew out of my first book, CEO Capital (e.g., first 100 days, CEO legacies, CEO thought leadership, reputation crises, European CEOs, Asia-Pacific CEOs, Wall Street and CEOs, CEO succession)
**many file holders containing information on emerging trends in the reputation- and CEO-space (e.g., industry reputation, private company CEOs, CEO blogs, the happiness of being number 2)

I intend to write less frequently in my blog and enjoy the holidays. That sounds to me like a fair trade-off for completing my dreaded filing on all things reputation.

Wednesday, December 21, 2005

Flag Bearing CEOs



GM's CEO Rick Wagoner was interviewed by Bill Holstein (editor of Chief Executive) magazine in The New York Times last Sunday about how the big auto giant was faring. Wagoner provided his advice for leaders who find themselves in a similar position -- righting the ship. His advice was 1) focus on the key factors that will drive the turnaround; 2) always do what is right for the business; and 3) communicate effectively.

"People are always hungrier for information when times are challenging," remarked Wagoner. He could not be more right. During difficult periods, CEOs have to be the flag bearer. Wagoner has done a yeoman's job of keeping a dialogue going with all of GM's diverse stakeholders. In fact the automotive industry on the whole -- from Ford's Bill Ford to DaimlerChrysler's Dieter Zetsche -- have all been carrying the flag these days. They have all spoken of sacrifice in light of difficult financial conditions and reputation challenges.

Reminds me of an episode I read in Nissan CEO Carlos Ghosn's book titled Shift. Ghosn arrived in Japan in 1999 to turn around the suffering global automotive manufacturer and quickly learned that the company had not been profitable since 1991. After three months, Ghosn called a press conference and laid out his revival plan which was meant to communicate the changes necessary to revive the company. Ghosn took his job of chief communicator very seriously. He wrote in his book: "As the CEO, my responsibility is to be certain that everyone who works for Nissan is clear about his role as a necessary part of the company...we must communicate with all of them [employees], we must make them part of the company's advance, we have to keep them informed of its progress, and we have to share its fruits in the most honest possible way."

Ghosn's idea of employees as the company's advance team makes sense. With CEO flag bearers and employee advance teams, the auto industry is possibly marching in the right direction.

Tuesday, December 20, 2005

Being Number Two


Safe to say these days that being number one is risky business. Wal-Mart certainly faces this problem while number two Target appears to enjoy media praise, robust earnings and customer support. A Pew Research survey that was released yesterday found that 85 percent of the general public is favorable towards Target while only 69 percent feels the same about Wal-Mart. Or to read it another way, a slim 15 percent is unfavorable towards Target versus 31 percent who express unfavorability towards mega-Wal-Mart.

We may have another target on our hands. Now that Pepsico's market value surpassed Coca-Cola's for the first time in 112 years, Pepsico might face some of the tough challenges that numero uno companies confront daily.

Darling Google (#1 in the search engine space) is doing fine just now. Over 90 percent of the general public have favorable views of the search engine firm in the just mentioned Pew study. But as a fierce reputation watcher, I expect Google to misstep along the way. AOL, Amazon, ebay and Microsoft have all had their comeuppances along the way to stardom. Some have weathered the storm better than others. I guess we will see whether Google's investment in AOL will turn out to be the midas touch or the emperor's new clothes.

Sunday, December 18, 2005

The Business of Green


As always, The Economist from December 10th has an insightful article about the greening of GE. Several fascinating points about how GE is going green.

First, CEO Immelt is announcing at the start of 2006 that all global managers will be evaluated not just on their financial performance but also on their green bottom lines. All units will have ambitious targets for reducing carbon dioxide by 2012.

Second, I found it particularly interesting how GE got started with its focus on clean technologies. GE began with its customers. Eighteen months before the new green strategy was launched, CEO Immelt invited top exec customers to two- day "dreaming sessions" to talk about what products they might need in the future and where the world might be in 2015. Immelt's thinking was that if my customers want clean energy, GE better be ready. Whereas former CEO Jack Welch began strategy with supreme execution (Six Sigma), Immelt begins with the customer.

Third, the article not surprisingly compares GE with BP's "Beyond Petroleum" environmental thought leadership. The comparison is meant as a warning to GE to not overpromise with its new Ecoimagination manifesto. The writer seems to believe that BP might be back-pedaling from its lofty talk of alternative fuels and climate control. The point being made is that change comes slowly to the energy business and GE should be careful because going green could backfire. BP CEO Lord John Browne is quoted as warning companies: "Be very careful to separate aspirations from actual promised action. Business is about doing business, it's not a surrogate for goverment or public service." GE has stirred the global business pot with its message about green technologies but it needs to keep a lid on overreaching in case GE has to pull back from its ambitious targets. However, my bet is on GE making its targets.

Persons of the Year


The choice of Bill and Melinda Gates as TIME's persons of the year along with Bono confirms our recent release that Bill Gates was chosen as the world's most admired leader in our global business survey. They even beat out Mother Nature.

Thursday, December 15, 2005

Most Admired Leader: Reputation Rebound

We issued a press release this week on the world's most admired CEOs/Chairmen from our global business influential survey. Bill Gates won the top prize. I was not surprised due to the attention paid to his philantrophic contributions in the areas of education and health.

What I found compelling was how Microsoft's founder recovered his reputation. Gates' reputation rapidly spiraled downward during the anti-trust investigation. As one onlooker said, "it was like they went through the valley of death." There was a series of well-publicized reputational issues from negative customer satisfaction to weaknesses in perceived trust, ethics and honesty. However, Gates(and new CEO Ballmer, of course) used the crisis an an opportunity to streamline management, renew its culture and reset its reputation and strategy. Over time, Gates has proven that reputations can rebound.

In case you are interested, here is the list of the 15 world's most admired CEOs and Chairmen:

2005 World’s Most Admired Chief Executives

Rank CEO/Chairman Company
1 Bill Gates/Microsoft
2 Steve Jobs/Apple
3 Warren Buffett/Berkshire Hathaway
4 Michael Dell/Dell
5 Richard Branson/Virgin Group
6 John Browne/BP
7 Carlos Ghosn/Nissan Motor & Renault
8 N. R. Narayana
Murthy/Infosys Technologies
9 Jeffrey Immelt/General Electric
10 Rupert Murdoch/News Corporation
11 John Bond/HSBC Holdings
12 John Chambers/Cisco Systems
13 Jorma Ollila/Nokia
14 Terry Leahy/Tesco
15 Lakshmi Mittal/Mittal Steel

Source: Understanding CEO Capital™, 2005, Burson-Marsteller

Wednesday, December 14, 2005

100 Days +/- Til Davos

The countdown to the World Economic Forum is upon us. Always comforting to know that our world leaders, academics, policy makers and opinion shapers are discussing our greatest collective challenges. On the WEF website, the agenda lists some of the speakers and their given topics -- China, India, European reform, world resources, terrorism, globalization. Of note, the CEO of Accenture, William Green, talks about people. "My top priority as chief executive is to ensure that our people have the right capabilities, as well as the energy and motivation to achieve extraordinary results for our clients and for us as a company." Refreshing to hear a CEO talk about his workforce as his most pressing challenge.

Tuesday, December 13, 2005

24/7 Modesty

Modesty is the new driver of executive celebrity. Everywhere you turn, someone is writing or talking about CEOs who are no-name heroes, giving away bonuses, speaking infrequently, focusing on operations and just plain shy. One after another. I do think we are going slightly overboard. You know, there is nothing wrong with CEOs speaking up. Business is not all spread sheets. There has to be some excitement, drama and pomp and circumstance....a little, that's all.

Stakeholders and shareholders want to hear what leaders are thinking about our collective futures. They want to hear how companies are driving growth, managing change and delivering service. They want to know how to infuse an organization with entrepreneurism and innovation. It is okay to agree to an interview.

I am waiting for the Most Modest CEO list in 2006.

Monday, December 12, 2005

When Messengers Are As Important As the Message


I read this quote in Harvard Management Update that rings true.

Professor Robert Mittelstaedt of University of Pennsylvania's Wharton School of Business was quoted as saying: “…you need to multiply every lost customer you do hear about by 10 more that you haven’t.” Customer problems that finally reach the CEO's office are usually so diluted and filtered that it is hard to have an accurate handle on reality. Multiplying by 10 every customer defection that gets to the CEO's office is an easy back-of-the envelope formula for leaders who want to hear before it is too late.

We all know of company examples where CEOs are the last to know of an internal or customer service problem. We also know that warning signs exist for some time before the final wake-up call. News accounts of the Enron scandal often describe whistle blower Sherron Watkins' prior attempts to inform Ken Lay of accounting shenanigans. Similarly, evidence of terrorist activity prior to 9-11 did not surface soon enough or with enough urgency.

CEOs have to want to hear the good news with the bad. Sounds easier than it is. Procter & Gamble's CEO Alan Lafley is described as living proof that the messenger is just as important as the message. Presumably Lafley hears what is really happening at P&G (where "customer is king") because he does not shoot the messenger but probably multiplies the message by 10.

Reputations can be destroyed with fleeting speed if customers defect or express dissatisfaction. If bad news reaches the corner office, you can bet that it is not the first time. Pay respect to your messengers.

Sunday, December 11, 2005

Making Sense

I keep an ongoing list of leadership and reputation quotes. Occasionally I review them to jump start my thinking. My collection of quotes contrast with what I see as today's intense and crushing focus on growth, the bottom line and quarterly earnings. All good things for sure but this monetary focus begs the question: Where does Xerox Parc guru John Seely Brown's comment fit in today's world? Brown was quoted in Fast Company as saying: "The job of leadership today is not just to make money. It’s to make meaning.”

When I first saw this quote, it resonated with me. To build lasting and enduring reputations and keep the right talent people, CEOs need to make work meaningful and purposeful. When one looks at companies such as Microsoft who is trying to eradicate disease or Intel who is recognizing science achievement, you know that meaning is being made.

Reputations cannot be built on financial performance alone. Our reputation research consistently finds financial performance as "necessary but not sufficient." Other attributes are equally if not more important today -- credibility, honesty, transparent communications, good places to work, motivation and inspiration. I guess that is where meaning comes in....leaders who can be straightforward about the organization's true purpose, treat and rewards employees well, motivate and inspire us to reach new heights. I wish we heard more about meaning and less about money from our leaders. When they do speak about meaning, we hear them loud and clear.

Thursday, December 08, 2005

Women@Work

I read this absolutely wonderful speech from Time Inc chairman and CEO Ann Moore that was featured in Wharton's Knowledge Works. Ann was the keynote speaker at the 7th Annual Wharton Women in Business Conference. She provided nine business insights (nine not 10, the rounder number) that to think about when you are a CEO and woman these days. Here they are:
  1. Never turn down the chance to vote. (Voting is a privilege)
  2. The only difficult assignment in business is finding good people and putting them in the right job.
  3. You will never have more control over your professional life than you do when you start out.
  4. Forget the clock. Get a compass instead.
  5. Power accrues to those who produce results. Profits matter.
  6. Power isn't everything. Power means incredible sacrifices and constant trade-off between work, spouse and family.
  7. Recognize that there are fundamental differences between men and women.
  8. All behavior emanates from the top and reverberates down the organization to the lowest level.
  9. Making money is easy. Making a difference is hard.

I can't decide which insight I like best. They all resonant with responsibility. Number 4 and number 9 are fairly profound. Regarding number 4, Ann says to forget about managing your time to the minute and worry about the direction your life and career are taking. Always have a North star to guide you. Time passes so quickly that you lose sight of where you want to end up.

The CEO's last insight speaks to doing something with one's life that helps others whether it is mentoring, volunteering, taking care of your aging parents, helping someone in need. When we look back over our lives, what will we see as having made a difference. I have never forgot a statement from Levis' Robert Haas who said that when he died, he did not want his tombstone to say that here lies a man who shipped XXX millions of jeans. As we know, Levis Strauss & Company was one of the original corporate social responsibility givers.

Good thoughts on work and life as the year closes and a new one opens.

Wednesday, December 07, 2005

The Ticking Clock


Two interesting CEO pieces today in The New York Times (December 7, 2005). One has to do with hedge fund manager and chief Ed Lampert of Sears and a plea for him to speak up and out. An analyst is quoted as saying, "We would like it if management talked more." Clearly a strong message is being sent. A similar remark with the same innuendo appeared in The Wall Street Journal about Lampert's written notes (read as inaudible) report on earnings. All the work that I have done on CEO reputation and CEO communications points to the need for CEOs to be accessible and communicative. Our new research among global business influentials found that company reputations are driven by quality of products AND quality of external communications. Transparency is the name of the game. My sense is that the Street will be all over Lampert as the months progress. They do not like surprises and do not like silence. Hence The New York Times title, "For Sears Shareholders, Silence Stirs Anxiety."

As for Mr. Pressler, CEO of the Gap, an equally unflattering article in The New York Times. The formula for these articles is always the same -- executives departing, poor sales, no turnaround yet and lingering doubt from analysts. Another CEO on the media's watch list.

Previous research we have done indicates that new CEOs have about 18 to 22 months to prove themselves. By the close of the second year, the board and shareholders are restless and the clock starts ticking. A warning to all.

Tuesday, December 06, 2005

The Ranking Season

Today starts the ranking season. The Wall Street Journal (December 6, 2005) issued its Harris Interactive survey of corporate reputations. Soon to follow in late February is the Fortune Most Admired Companies Survey. Ron Alsop, the writer, made an interesting point about it taking Google seven years to build a great reputation. Revered Jim Collins, author of Good to Great and management guru, has said that it takes seven years for a company to go from good to great, not from zero to great. As Collins reminds us in Built to Last, "good" is not so easy to get to at all. Google has definitely set a record but as we see time and time again, reputations rise and fall like the temperature.

Today is also the day that I get inquiries about the "WSJ" survey. Companies do not understand that the WSJ survey is among consumers whereas the Fortune survey is among the corporate elite and financial analysts. If you recall, a few years back, Ben and Jerry's Ice Cream was among the most admired in the WSJ survey -- an obvious hint that CEOs were not voting! The other hint that the WSJ survey of reputation is among consumers is that the top 10 are all consumer-based companies. J&J, Coca-Cola, Google and UPS are all companies that average consumers touch nearly every day. In the Fortune survey, we find that some of the top votes go to companies such as Berkshire Hathaway and Procter & Gamble which consumers might not immediately recognize despite knowing their products (Geico and Tide, respectively).

Alas, the Harris survey results are discouraging. Alsop points out that consumers are down on corporate America -- 71 percent rated American businesses' reputation as not good. This is despite the outpouring of support for recent hurricanes, tsunamis and earthquakes. Sounds like we all have our work cut out for us if we want to build back that trust.

Keep the faith that we can turn this around.

Sunday, December 04, 2005

FAMA, My Girl


At a conference on the market value of reputation held in Zurich this fall, I caught my first glance of her. A presentation by Fritz Gutbrodt of SwissRe about Fama left me wanting more. This asbstract goddess of reputation was enthralling. As Fritz pointed out, if you look closely, you will see Fama's many tongues a-wagging and her countless eyes upon you. Fama was the original generator of word-of-mouth. She sprinkled rumors and news about people from the heavens onto unsuspecting villages and towns below. With her trumpet in hand (bellowing out compositions of good and bad deeds) and inked quill on her side (all the better to write with), Fama is our poeta laureata. Of course, her words could build up someone's good name instantly or shatter their reputation forever. Her job was to take what she heard and spread it like wildfire. For us reputation watchers, Fama was doing her job way before we arrived. What a conversation we could have today!

Saturday, December 03, 2005

Public Backlash Against Wal-Mart

Zogby International just released a national poll among Americans about their opinions and attitudes towards Wal-Mart. The findings are not pretty. The American public has an increasingly poor view of Wal-Mart. The poll found nearly four in 10 Americans holding an unfavorable opinion of Wal-Mart and more than five in 10 Americans believing Wal-Mart’s image is worse than it was one year ago. The poll reports that 56 percent of American adults agreed with the statement, "Wal-Mart was bad for America. It may provide low prices, but these prices come with a high moral and economic cost." In contrast, only 39 percent of American adults agreed with the opposing statement, "I believe Wal-Mart is good for America. It provides low prices and saves consumers money every day."

The Wal-Mart woes are a 21st century example of the high cost of reputation damage. This mighty retailer is losing the public relations war . Its foes, to name a few --
walmartwatch.com, wakeupwalmart.com -- are having a powerful effect on public opinion. It seems that there isn't a day that passes without a knock against the giant discounter.

Two summers ago I worked on an amazingly satisfying project about how companies rebuild reputation. The analysis consumed us for months. The day before we presented the findings, I was catching up on the Financial Times and came across a sentence that struck me. As I am often asked about how to manage reputation, the sentence summed up my thoughts with some minor tweaking. For me, it sums it all up.

Everything in reputation management is very simple,
but nothing in reputation management is very easy.

Friday, December 02, 2005

Norway's Burnished Reputation

Norway's ears must be burning.

First, the World Bank and International Finance Corporation found that of 155 countries, Norway was the best country in Europe for business. It takes a mere two weeks (13 days) to establish a company in Norway compared to nearly half a year (198 days) in Laos. (
http://worldbank.org)

Second, the WSJ reported yesterday on its front page (December 1,
www.wsj.com) that the Norwegian government Petroleum Fund choose a philosopher, Henrik Syse, to be their in-house ethicist. What does a country need with such a high brow thinker? Well, finding the right mix between wealth and responsibility. Norway, as most of us know, is the world's third largest oil exporter and its coffers are teaming over from escalating oil prices. The Fund wants to insure that Norway matches profit with purpose. The Journal author Andrew Higgins writes that "this nation of just 4.6 million has long used its reputation for moral rectitude to wield influence around the globe out of proportion to its size."

Norway's recognition as the home of the Nobel Peace Prize further enhances the country's perception as the land of social justice, human rights and peace. Now Norway can add on selling points such as business-friendly and moral diviner. It is nice to know that some countries actually ponder how to behave for present and future generations.

Country reputation can be easily spoiled. Althought it has had its own hiccups along the way, Norway is one country that has been steady as she goes.

Thursday, December 01, 2005

Tug of War

I was reading an article yesterday about a CEO who is under siege to improve the bottom line, please investors and rally employees. The article said that the CEO who is quiet and modest needed to be more visible. On one hand, this makes sense. If your company is in the spotlight, the CEO must speak up on behalf of the organization. The CEO is the human and public face of the organization. Yet...we continuously find that CEOs are criticized for speaking too much or too little. Finding the right balance is the holy grail. The first focus for CEOs must be internally communicating the strategy, direction and next steps to revive the company's fortunes and reputation. Without employee buy-in and clarity, CEOs cannot stem the tide of external criticism and sniping.

I often advise CEOs and their communications officers to break their recovery plan into "five easy pieces." In other words, reduce the "go forward" strategy to 90-day cycles. This is easier to manage and measure progress than your typical three-year manifesto for the future.

Either way you cut it, CEO visibility has to be about select exposure and not overexposure. Plain and simple.