Thursday, March 30, 2006

Blogging in Europe

A UPS survey surveyed nearly 1500 business leaders from Europe's top 15,000 companies by revenue and found that 37% were not aware of blogs. An even larger 42% had heard of them but had not read them. Only 11% of top European execs read blogs and as expected only 2% write them. By country, here is how it shakes out:

Not aware of blogs
Germany -- 57%
Netherlands -- 56%
Belgium -- 48%
Spain -- 37%
Italy -- 32%
UK -- 31%
France -- 16%

Germany and the Netherlands were the least knowledgeable about blogs.

Although blogging has spread like wildfire in the US among business executives and businesses are rapidly monitoring the Internet to see what bloggers are saying about them, European business people have not caught the blogging fever. Maybe that is a good thing. Sometimes we have to stop ourselves in the U.S. from thinking that the entire world is staying up at night blogging or rssing or podcasting.

There is hope. The UPS Europe Business Monitor does hint that change is on the horizon. In 1999, 11% of business executives used online sources (including blogs)as their primary source of information on business issues. In 2005, online usage shot to 25%. Now that's progress.

Monday, March 27, 2006

Falling Asleep at the Wheel

Crises start as ripples and eventually turn to tidal waves. It is the "near misses" that accumulate and nearly kill a company's reputation. Another good way of describing the incremental missteps that can do harm comes from a German shareholder talking about the quality problems at Mercedes: “You don’t break a car company over night. You really need to fall asleep at the wheel.” The statement appeared in the Financial Times (4 March 2005) article by James Mackintosh and Richard Milne, “The Ultimate Way of How Someone is Judged Is Not only By the Bottom Line."

Thought it was worth sharing.

Sunday, March 26, 2006

CEO Calendar Vertigo

Just finished reading a Financial Times interview with Merck's CEO Dick Clark. It is worth repeating below because this is not the first time I have heard a CEO talk about underestimating the demands on his or her schedule. Wal-Mart's CEO Lee Scott had similar thoughts:“The biggest mistake I made was not controlling my schedule. I was not prepared for the demands of my time -- internally and externally…I have to make sure I am in the stores and that I understand what is going on with the business.” My real sense is that CEOs get vertigo looking at their calendars.

"FT: Can you describe how your day has changed since you’ve become CEO?

DC: That’s a great question. The variety of activities you do in any one given day are just incredible. They go from very strategic, to interface with investors, to meeting with employees. You have much more visibility inside and outside the company, so the variety is just incredible in the different types of experiences you have.

And the thing that’s probably the most difficult for me right now is to balance the demands on my schedule. Not internally as much as the demands that are being asked of me externally. I made a commitment when I took this position that I was going to spend a tremendous amount of my time, a majority of my time, internally running the company, getting the strategy in place, making sure we’re doing it right – before I decided to have this external exposure.

Whether they are different associations and boards or government officials, I underestimated ten-fold the external demand that is placed on a CEO

FT: By how much?

DC: 10-times, 10-fold. I had no idea the impact it would have. And there tough decisions, where the President of the United States, of the UN secretary general or this particular congressman or senator; you’ve got to attend these two board meetings and the council of competitiveness, and on and on and on. Which are important decision for the company as well, to represent the company and you help whoever’s asking you to provide input.

But at the same time you have to balance that. Your mission in life is to your stockholders, your employees and your patients. And getting that right is something I’m still working on."

Saturday, March 25, 2006

CEO Blogging

I listened to an interesting session this week. The teleconference call was set up by WOMMA (Word of Mouth Marketing Association) and had several interesting speakers talking about blogging -- Richard Edelman, President & CEO, Edelman Public Relations; Laurie Mayers, Senior Vice President, Deputy Managing Director, Hass MS&L;and Michael Wiley, Director, New Media, General Motors.

Richard Edelman identified several rules of the road that he abides by when writing his blog (e.g., make it ethical, yield control of the message, make sure it's not spin, engage your critics). Richard says that he checks Technorati to see if anyone is commenting on his blog and writes them a comment if his words have been misunderstood or taken out of context. I thought that was a smart idea. Will try it myself.

Hearing about General Motors' Fast Lane blog was also illuminating. Laurie Mayers works on the Fast Lane blog and noted that it received 8,000 comments in its first year. She mentioned that GM's return on investment with Fast Lane is many more times greater than what you would get if you had to pay for conducting focus groups to obtain the views of 8,000 car enthusiasts.

Michael Wiley made good points too. I was particulary interested in his comment that Fast Lane had become a feeder to various news media and that it was often picked up verbatim. Nice way to get the GM message out and speak directly to the public while bypassing a critical press.

All of the speakers agreed that the hardest part of CEO blogging was content creation. Tell me about it. For me, the pressure to come up with new and interesting content is hard enough. For CEOs, it has to be nearly excruciating. Yet, it is being done and clearly the ROI is bountiful.

Wednesday, March 22, 2006

Managing Your Reputation Online

When companies undergo a crisis, they often forget that visitors go to their websites to check out or confirm what they may have heard. Unfortunately, many companies overlook how important their web sites are in managing their reputations during bad times. This topic was on my mind today as we presented our recent findings to a client on crisis-stricken companies online.

Some background. A few days after 9-11, we (Idil Cakim and I) examined Fortune 500 and most admired company websites to learn how their sites fared. We learned that companies quickly turned their business sites into information hubs to communicate to employees, customers, and families about the tragedy. Most companies were quick to provide a message to the public, update information on how to volunteer or donate funds, identify locations for giving blood, list counseling services or tell people where to go to donate products. In addition to monitoring web sites, we also surveyed the public and learned that they would have also wanted more updated news reports, being notified about the status of operations (what happened to my package?), emergency hotlines, email addresses for crisis updates and a message from top management. Many missed opportunities although we all learned alot about online communications during these unthinkable times.

9-11 got us seriously thinking about how companies manage their reputations online when they are in the spotlight or making headlines. Did companies take the lessons from 9-11 and apply them going forward? It is always surprising to us how little information companies make available during times of trouble. Undoubtedly, legal considerations get in the way and prevent companies from communicating fully with the public. Yet some companies manage to do a stellar job of managing their reputations online in bad times and good times. These companies provide special contact numbers (on the home page no less!), issue press releases or statements that answer questions on what might be troubling the company, feature a letter from the CEO (in a variety of languages!)and point visitors to other sites (such as government sites or non-profit sites) for further information. Some companies provide glossaries of terms, FAQs and positive and negative news accounts.

Just pick any simmering issue or crisis tomorrow, go to the company's web site and see what they are saying or not. If you have to dig beyond two page views, forget it.

Sunday, March 19, 2006

Thumbs Up for Citigroup

One of the markers of reputation recovery is making signs of progress visible. Of course if you have the choice, the best way is to get someone else to broadcast it for you. That's what happened yesterday to Citigroup. In Clint Riley's Wall Street Journal article, "Citigroup Gets Higher Grades for Its Corporate Governance," the writer underscores the positive progress being made by CEO Chuck Prince's journey to become "the most respected global financial-services company." Riley gathers votes of confidence from several corporate governance rating experts who give Citigroup a clean bill of health. One of the experts even called the financial services giant, "the new Citigroup."

+++Howard Sherman, COO, Governance Metrics International
+++Ric Marshall, chief analyst, Corporate Library
+++Robert A.G. Monks, founder, Institutional Shareholder Services and now Lens Governance Advisors

Prince's plan to overhaul the company after its Japanese trading scandal and European bond-trading misstep is bearing fruit. His "five point" plan includes intensive employee training ("Our Shared Responsibilities"), good corporate governance practices, better communications and board independence. The video on the company's long history that is part of the training appears on the web site and goes a long way towards educating Citigroupers as to their shared history and obligation to the revered franchise.

Although early positive endorsements can be reversed with the slightest misstep, these thumbs up for Citigroup go a long way in building momentum and energizing its 300,000 employees. The key is not to forget that recovery is a marathon, not a sprint. Repuation recovery is never finished.

Friday, March 17, 2006

Cures for the Company Blues

Terrifically fun week. We launched our little 5X5 book, Cures for the Company Blues: 15 Early Warning Signs of a Company's Failing Reputation.

published the pocket guide and launched it mid-week.

How did this book come to life? We were brainstorming last December about how to release the findings from our recent reputation survey. Just the thought of another press release was too much for me to bear. Alas, a light bulb went on in my head and I knew that a mini-book was our solution. Years ago when I was at Fortune, I had a similar brainstorm and published Fortune Cookies: Wit and Wisdom from Fortune. This little book included quotes from Fortune edit that were instructive and resonated with readers (like me) -- e.g., Innovate or Evaporate! was my favorite.

Cures for the Company Blues identifies the 15 early warning signs of organizational failure, describes the symptoms that leaders need to pay attention to and provides several sure-fast remedies. The basic idea is that CEOs can address the problems that destroy their corporate reputations by keeping a watchful eye out for what is happening inside their walls and right under their noses.

Wednesday, March 15, 2006

C-Suite Reputation Rises

Hill & Knowlton just released their latest wave of research on reputation. Their global research among financial analysts found that perceptions of the C-suite are more important in investment decision-making than business unit heads, chairmen or board members. Of course, the CEO still remains critical to driving investment dollars but the top team is now increasing in importance. Burson-Marsteller's research has found similar results.

A great example of showcasing your company's senior team comes from Cisco. Take a look at how Cisco provides information to investors and other stakeholders about their leadership team. Not only can we read these top managers' bios but we can browse through their speeches, presentations, perspectives, videos, etc. The top team is smartly on display and practically in your living room. You can choose whether you want closed captions or translations. Cisco makes it easy to witness the talent of their top team and vote in favor of the company. Worth studying.

Tuesday, March 14, 2006

Getting the Point Across

Business Week's article on the changes at Boeing contained a particularly chilling tale. At its first retreat with senior management, new CEO James McNerney (from 3M) introduced General Counsel Douglas G. Bain who criticized the company for its "culture of silence." For those of you who have not been following the Boeing saga, the ethics charges against the leading aerospace company have been quite numerous over the past several years (stolen proprietary Lockheed Martin documents, recruiting a Pentagon officer who had committed the Air Force to buy Boeing tankers at an inflated price, removal of CEO Harry Stonecipher for having an affair with a subordinate). Business Week writes that to get everyone's attention, General Counsel Bain rattled off the federal prison numbers of two jailed former employees. "These are not Zip Codes," railed Bain. Loud and clear.

Ironically, this week I found myself teaching graduate students about corporate reputation and the case study was Boeing board's decision to oust the amorous CEO. Most students understood that CEO Stonecipher had to be ousted because of poor judgement and unethical behavior in having an affair with another Boeing employee and sending racy email messages. Yet, one student remarked that affairs happen all the time in corporate America and this incident was not reason enough to oust the CEO. Another suggested that Boeing's board should have told Stonecipher to quit seeing this woman or else lose his job. It took some convincing from the class's professor to persuade these students that integrity is a company's most valued asset in the reputation wars and without it, reputation is worthless.

When I was writing my book, I had investigated the Boeing web site to examine how it managed its reputation. I recall finding an online ethics test that employees and site visitors could take to rate themselves. Not sure that the test is still there but I can assure you that Bain's remarks had a greater impact on the organization than any electronic quiz on moral values ever could.

Sunday, March 12, 2006

CEO Communications On Tap

When asked how much time he spends communicating, Dell's Kevin Rollins says, "Can you go above 100 percent?" If you think about it, most CEOs would probably say the same. The job which used to be overseeing operations and holding court from the corner office is now a pure communications play. CEOs are expected to communicate with just about every conceivable stakeholder, From one to many, CEOs are judged on their ability to communicate well and effectively. I would be rich for every dollar I could make listening to officers tell me that their CEO does not communicate clearly, crisply, strategically or at all. I think we are going to have to extend the day to above 24 hours to get all those messages distributed and heard. Should also add that CEOs are now worrying about writing blogs to communicate even deeper within the organization. Who has the time? I applaud the effort but wonder if CEOs need another responsibility on their plates. Time will tell.

Monday, March 06, 2006

Reputation in Istanbul

Reputation has reached Istanbul in a big way. The conference that I spoke at on Mobilization of Capital & Corporate Reputation was held yesterday in Istanbul and well-attended. It was sponsored by the Swedish Trade Council, Embassy of Sweden and Capital magazine. TeliaSonera, a Swedish-Finnish telecom company, was the main sponsor. Capital has been covering reputational issues for some time now and Sweden strongly supports Turkey's journey to joining the EU.

Many Turkish companies are eager to learn the steps needed to build global reputations to succeed today in this new century. Since the vast majority of Turkish companies are family-owned companies, the challenges are different and sometimes difficult as they give up stakes in their businesses in return for financial capital. A major thread in the conference presentations was understanding how to apply good corporate governance in order to attract foreign investment and build credible companies. As well, there was a focus on business ethics which we all know has to underscore good governance and well-led companies.

A discussion on business' responsibility to provide a profit vs. social good surfaced. Since many Turkish companies are family-owned, good corporate citizenship is apparently built into the social fabric of Turkey and has a long history among the largest Turkish family-owned businesses such as the Koc and Sarbanci families. The Financial Times had an interesting sidebar(February 22, 2006) by Vincent Boland on the social deeds carried out by a Turkish carpet company, Merinos. Merinos is the world's third largest carpet producer and one of Turkey's first 500 industrial companies. Boland (who writes often on the Turkish economy and business and is always interesting and well-informed) describes how this family-owned carpet business sent 25% of its 3000 employees on vacation last year to a five-star resort in the Mediterranean. As if that was not impressive enough, the Erdemoğlu family who owns the company built apartments for its factory workers to replace the poorly constructed homes that existed. As Borland quotes the leader Erdemoglu, "We all come from similar conditions and we want to help our people." A worthy and noble thought.

Turkey is definitely an interesting country to watch as it builds its reputation on a world stage. A good case study and best practice for the future.

Saturday, March 04, 2006

Reputation Everywhere

I am off to Istanbul to speak about Reputation in the Capital Markets at a conference sponsored by Capital magazine and the Swedish Trade Council. After much reading about how companies in Istanbul are trying to attract investors, prepare for joining the EU and become a truly global player, I understand why building strong reputations matter so much. Individual countries are not all the same as I keep learning. In Turkey, many of the largest companies (and many of the smallest too) are family-owned. This represents a very different challenge than countries where the companies are mostly held by their shareholders and large institutional investors. However, Istanbul sounds like a very vibrant business climate that is open to business partnerships and reform as its economy has vastly improved from early 2000.

Turkey's reputation has improved. Its accession to the EU in October 2005 -- and a 10 year process ahead of it -- has dramatically signalled to other countries and companies that Turkey is serious about joining the EU way of conduct and freedoms.

The greatest issues facing Turkish companies seem to be corporate governance which I will emphasize in my speech. After reading about the turbulent relationship between Motorola and its relationship with the Turkish Uzan family over its cell phone partnership, I realize that corporate governance needs improvement and better oversight.

More to come on reputation in Turkey.

Thursday, March 02, 2006

Corporate Reputation Drivers

"REPUTATION is a hot topic in executive suites, largely because the overall
reputation of business is so poor. Two weeks ago, the Business Council, a
group that includes chief executives of many of the largest companies in
the U.S., devoted a day to the topic at its retreat in Boca Raton, Fla.
Some executives expressed surprise that the negative effects of corporate
scandals have lingered for so long. Others felt victimized by a hostile
press. But all seemed to agree that reputation has become increasingly
important to their businesses." So wrote Alan Murray in yesterday's Wall Street Journal , "How Microsoft Rebooted Its Reputation." Our new CEO Mark Penn was mentioned in the article and also spoke at the Business Council that Murray refers to.

Reputation is indeed more important and not just because confidence in business is low. It is important because the intangible factors of business (talent, brand strength, patents, knowledge, technology, leadership, etc.) are rapidly replacing the tangible factors (real estate, machinery, inventory, etc.). Why does everyone forget that one of the reasons reputation is increasingly important is attracting and retaining the best talent?

Our latest research among global business influentials asked what drives company reputation. Below are the top five drivers. I am always fascinated by how these drivers change with the times.

Has high quality products and services (1)
Communicates effectively externally (2)
Has high quality management (3)
Focuses on serving customers (4)
Is honest with stakeholders (5)

Not entirely surprising to me, effective external communications rises to the number two slot. Transparency, honesty and accessibility are required for companies to build and maintain good reputations today. Communicating with the expanding universe of many stakeholders -- from bloggers to NGOs to alumni to regulators to online journalists to engineers to MBAs to academics to labor unions to hedge fund managers to institutional investors to boards (to name just a few)-- is not for the faint of heart.