Business is cultivating intangible assets, which – on average – seem to be growing at a higher rate in the corporate domain than tangible assets. Reputation is one such value add.
Intangible assets, or goodwill, are increasing their contribution on the balance sheets of a-players in the corporate world. Whilst it remains significantly important to focus on sweating the tangible assets of a business, the need to grow and leverage intangible assets is increasing at a far greater pace.
If one considers the value of businesses which frequent the lists of ‘most admired companies ‘and ‘most loved brands’ including Apple, Google, Coca-Cola, Microsoft, McDonald’s, Starbucks, Walt Disney, BMW and the likes, an increasing portion of their value stems from intangibles.
Reputation encompasses many of the elements that can contribute to goodwill. Reputation is defined as by www.businessdirectory.com:
The collective assessments of a corporation’s past actions and the ability of the company to deliver improving business results to multiple stockholders over time.
There are a number of key benefits that an organisation gains when it has a formidable reputation, each of which contributes to the overall puzzle of organisational value:
1. Reputation opens doors to opportunity
Your personal assistant knocks on your door to let you know that someone from Aston Martin is on the phone. Would you take the call? Would you take a call from someone at Google, Apple, or perhaps In2Great Consulting. Conversely, would you take a call from a former executive of Enron? Your approach would likely be entirely different if you indeed agreed to connect.
It is evident that a company with a strong reputation has an edge over those which are yet to establish themselves, or perhaps who have erred in the past. Being able to access key people in senior positions enables the discovery of opportunities. Given that these opportunities are well evaluated and implemented, they will translate into revenues for the parties. People are far more willing to conduct business with individuals and organisations they trust. Having a good reputation suggests that trustworthiness is part of the package.
2. People want to work for you
I imagine the organisations mentioned above, and others such as Facebook, Disney, Ferrari, and the top fashion houses of the world enjoy their pick of the very best candidates in their industry. And, I would suggest that staff retention would be higher in these organisations, thanks to the fact that employees are proud of the organisation they work for. Most of us know people who work for organisations they are not proud of, and when asked for this detail, mumble their way through the conversation.
3. Suppliers want to supply to you; customers want to buy from you
This point is intertwined with point 3 above. Similar to staff, suppliers will be proud to announce that they are a partner of a high-reputation organisation, and customers will be glad to share the news that they purchase from you. Organisations with good reputations will have a greater pick of suppliers, and over time, will likely develop a strong base of customers. As a result of meeting their promises and continuing to build their reputation, these organisations receive positive word of mouth, which further places them as on top of the pile.
4. Reputation enables expansion and product extensions
We exist in a global village today, and thanks to the prevalence of the Internet, people in Asia, for example, have excellent knowledge about American companies and their products. Demand is created in these environments before the organisation opens their offices in these locations. The chances of success of product extensions launched into existing locations equally increases, due to the affinity that is awarded to the organisation.
5. Reputation can save a brand at a point of crisis
There are many well-known brands which have suffered negative publicity over recent years. Think Toyota and VW, BP, and Nike, to name but a few. Each of these brands has suffered a tremendous hit to their reputation in past years and has seen dramatic impacts to their organisation’s value as a result. A brand’s reputation can pull them through a crisis, but is obviously not the only aspect which will determine how it emerges from the experience. Consider for example how poorly BP handled its crisis and the consequences of this poor management.
So, how do you create a reputation?
Intentionally is the answer. Organisations must stand for something and that something must become ingrained into the culture of the company. What values does your organisation stand by? How are these values demonstrated in the actions your organisation undertakes? How do you treat the various stakeholders you deal with? What ethical standards do you hold your staff, and in particular senior management to? What action does your organisation take when these values and ethics are transgressed?
The answer to all of these questions, and many more, collectively put the piece of the reputation puzzle together. Good reputations are not enjoyed accidentally. They are created through a consistent application of organisational values and ethics and made evident to various stakeholders through the approach the organisation takes in its dealings.
Need help establishing and embedding your corporate reputation, and considering how reputation can be included in your strategic planning? In2Great Consulting can help.
Contact us here, or mail us at info@in2GreatConsulting.com.