Companies Should Avoid Political Advertising, Despite New Rules

I gave an interview to a reporter in Minneapolis yesterday about an advertising campaign in Minnesota by Target, Medtronic, and other companies that supported Republican-backed proposals. The U.S. Supreme Court gave its approval in the past year to company political advocacy. Critics have contended that this gives corporations too much influence over politics; supporters argue that companies enjoy free speech, as do individuals and should not be barred from exercising their rights to express their opinions. The Court agreed with the latter argument.

Just because someone is allowed by law to do something does not mean that they need to do it. Minnesota has had a long history of company involvement in the community. For many years, the Twin Cities companies pledged to contribute 5% of revenues to local community initiatives. Many communities around the country have had company involvement in the local community, including building of opera houses, public art displays, etc. Communities and companies have been intertwined for generations. Some applaud this, some are concerned. While many people may separate contributions to local causes from political advertising, they are very closely aligned in that they are aimed at integrating the company into the community. When it benefits the larger community (e.g., art, social needs, etc.), most people applaud it. When it is aimed at influencing the outcome of political debate in favor of the company, it becomes more problematic to the company's reputation.

Companies, in my opinion, should avoid politically-based advertising. There is a general distrust of corporations currently and too transparent an involvement in trying to influence the political dialog is not in the long-term best interests of the company. Companies deal with a multitude of stakeholders, all of whom have expectations of the company--that is what forms reputation. The relationship with stakeholders is a delicate one that requires balance. By getting too aggressive in a political debate, companies can throw this delicate balance off. While they may be within their rights, according to the Court, they should think long and hard before exercising that right.

Target in one company that has decided to get involved actively in advertising on behalf of Republican causes. Its CEO is a major supporter and donor to the Republican party. However, the corporation speaks for its stakeholders, including its employees, who likely are not so clearly in support of one party's view over another. It jeopardizes its relationships by these political actions.

Companies have incredible access to power and incredible influence. A major company can call on any member of Congress it wants. It represents a significant constituency for the member of Congress. Companies have more access and more power than the average person. This power should be used judiciously. It should avoid outright political advertising.

Is Reputation About Delivering on Expectations, or Just the Expectations?

I recently heard a presentation by Charles Fombrun, perhaps the most widely published academic in reputation management. He defined brand as the promise that sets expectations and reputation as the delivery on expectations.

I have the utmost respect for Fombrun, but I disagree with him. I believe that reputation is related to expectations, not to the delivery on expectations. Brands do indeed create expectations. Reputation, then, is related to the branding effort--does the promise meet the desired expectations of stakeholders? If it does, our reputation will rise; if not, it will lag. Expectations can come from the company's efforts, from touch points at which the stakeholder meets the company, from one's peers, or from 3rd party influentials, such as the media or others.

Expectations run on a continuum. One can have negative expectations of a company. What would it mean if we delivered on those expectations, as Fombrun argues? Would we build reputation? Of course not, we would simply reinforce the negative perceptions of value. For example, it could be argued that for many stakeholders the BP oil leak in the Gulf reinforced their negative expectations of the oil industry. BP, then, delivered on those expectations.

On the other hand, let's take the current situation of J&J's crises related to Tylenol for children in which there were quality problems in the plant. J&J had one of the best reputations in the world. Most people had high expectations of the company. Their actions were below expectations. In this case, J&J would suffer some reputation damage, although the high expectations prior to the crises would likely buffer it compared to a company with lower reputation (lower expectations of its value).

If a company with a bad reputation attempts to invest in social responsibility efforts to improve its reputation in order to meet stakeholder expectations, according to Fombrun, we would expect that the company's reputation would improve. However, research has found that the opposite can in fact occur. Companies with poor reputations that attempt to build their reputations too quickly run into stakeholder disbelief. The expectations of stakeholders is that the company is a bad actor. If it tries to do something that it thinks would deliver on the value stakeholders would like to see, it risks further alienating stakeholders. Its actions are questioned--stakeholders assume that the company must be trying to buy a good reputation.

Companies with poor reputations need to build an organizational culture that allows them to act reputably and do so for some time before trying to engage in a program to convince stakeholders that it is reputable. In other words, reset expectations.

So, reputation is the expectations of value perceived by stakeholders. We manage reputation against those expectations, we do not deliver on them.

Can BP Find More Ways to Ruin the Reputation of the Entire Oil Industry?

There is enough finger pointing going on following the Gulf Oil disaster to make everyone cringe. President Obama has finally had it; the public has had it. BP, which at first minimized the situation, has been pointing fingers at the company that operated the platform and at Halliburton, a company whose reputation can not possibly get much worse. No one is taking responsibility, likely because the lawyers have told them not to in an attempt to minimize the legal ramifications.

The problem is that BP is not following the standards of "Crisis 101". They continue to make promises they cannot keep, to talk as if this is not one of the greatest environmental disasters the world has seen, and to shirk responsibility. The CEO even said that BP would take responsibility for "all things that are proven to have been caused by BP". In other words, "read the fine print". The platform--someone else's problem; the pipe--someone else's problem. So, what exactly is BP taking responsibility for?

When a company outsources to others, it still owns the responsibility for the end product. It cannot shirk that. It's partners are its responsibility--perhaps not legally, put certainly in the court of public opinion.

BP is damaging not only itself but also the entire oil industry. The industry has been unbelievably silent during this crisis. When they have spoken it is to suggest that drilling still is needed. They have not seemed to take this disaster to heart and to understand the emotions. They are reinforcing the worst perceptions of the industry.

BP once wanted to be a shining star. Its star has not only dimmed but has gone out and perhaps turned the shine out of the entire sector.

Do Ethical Ranking Translate to Sales?

Do companies that are ranked high on ethics get more sales as a result. The answer is yes, but it is a bit more complicated that that. Studies have shown that companies that are ranked highly on reputation do better financially than companies with poor reputations. Ethics and reputation are quite different. Ethics means acting on a "higher order". Reputation means exceeding stakeholder expectations and being distinguished from ones peers and competitors. Reputation can be measure; ethics are much harder to measure and often depend on the perspective of the person doing the assessment.

For example, I have seen a number of so-called ethics rankings that will not include pharmaceutical companies because they engage in animal testing. This is an ideological perspective on ethics. The FDA and other health organizations globally require that drugs be tested on animals and they often specify the animal. It is far better, in my opinion, to test a drug on an animal than on a human before releasing. But, that is not the opinion of PETA and other such organizations. They have a different perspective on what is an what is not ethical.

To me, corporate ethics is the perspective that guides an organization to respect and balance the needs and interests of its multiple stakeholders. It is a facet of reputation, not the same.

Business ethics do translate into more sales, but in an indirect way. People often say that they want to do business with more ethical companies, but it usually means "all things being equal", which they rarely are. Actual behavior is much more difficult to track. Will someone actually not do business with a company that they judge to be unethical? Many people believe that the oil companies are unethical, but they continue to fill their cars with gas. There is no alternative. Some people may hate their local cable companies and think that they are unethical, but they continue to watch TV--once again, there is little choice. When choice becomes greater, we look for reasons to buy and not to buy.

While we know that reputation can translate into greater sales, lowered cost of capital, etc., ethics is a bit more difficult to track. Heinz was the first company to take a position of "dolphin free tuna", requiring that fisherman catching tuna for its Starkist brand not kill dolphins in the process. They were applauded, but there was no increase in tuna sales. Unilver's Dove brand soap created the "Campaign for Inner Beauty" to help talk to young girls whose body image was being shaped by standards of Hollywood and Madison Avenue. They were applauded but the campaign did not increase sales of Dove. The campaigns, however, spoke volumes about the philosophy of business of these brands and increased their value longer-term in the eyes of many.

Sales may be the wrong measure of what companies are looking for. The real measure is perceived value, and that will translate into higher prices, not necessarily more sales. Sales tracks volume; perceived value can move based upon an appeal to a niche market that, if it is a "bell-weather", could increase the overall value of the product or organization. We will see the results in better recruiting, greater support from outside interest groups, retention of top talent, etc.

There is a great and compelling reason for companies to act ethically and to build their reputations. Asking if this will result in direct contribution to sales is a short-term question to a longer-term process. The key, though, is to be ethical, not to brag about it. Once again, we find that if one lives their brand, they will build their reputation.

Why Universities Need Brand and Reputation Management

A friend of mine is heading to Italy to meet with a group of European communications heads. The topic is why universities need branding. Since I work in a university and actually have done brand and reputation management for a university in Canada, I thought it was an interesting question.

Academia has always thought that it was above commercial enterprise. However, as costs for an education have increased and as universities compete for the best talent in faculty and students, the brand or reputation of the university has become more important. This has become fairly common-place in the U.S., but she was heading to Italy, so I thought that the experience in Canada might be closer to the issues in Europe.

Canadian universities always considered themselves to be on a fairly equal basis. There are no public universities in Canada--it is not allowed by government. The Minister of Education has responsibility for universities, as well as public primary and secondary schools, and Catholic schools (this was an arrangement with Quebec). There is relative consistency in the cost of a university education across the country--relatively inexpensive by US standards. A Canadian university education costs about $4500 for tuition per year compared to about $15,000-20,000 for a state university in the US. While we have had wide variations in the quality of colleges and universities in the US, Canadian education is consistent in its quality, although there are some places more equal than others in terms of quality and students, faculty and parents know it.

Every year, McLean's magazine in Canada runs a ranking of the best universities. Educators pretended not to notice. Then, Canadian business schools started showing up in the list of best business schools outside the US. As the Canadian schools moved up the ranking, the percentage and quality of applicants from outside of Canada started to grow. There was a recognition that reputation of the school made a difference in the quantity and quality of applications. In fact, I talked to a few Chinese students who said that they could not get government grants to study abroad at a university that dropped below the top 100 mark in the FT ranking of best business schools.

What typically occurs when there is a tight status-quo competitive environment in a sector began to happen. First one school then another started to advertise and create branding campaigns. Money started to flow to the schools considered the best from private donors. Soon, most of the schools started to differentiate.

Universities are big business. The cost is high and the prestige or lack of it makes the degree and important benefit or liability to the holder. Schools that drop in rankings often find it harder and more expensive to attract top faculty.

Symphonies, museums and other institutions that always considered themselves above the pedestrian commercial interests are now branding and building reputation campaigns. It is more difficult in a university to deliver the experience commensurate with the promise since it all depends on the department, college, etc. University experience is personal and individual and no administrator can engage faculty member in "living the brand". However, it is every bit as important to a university as it is to any other organization in a competitive environment.

CEOs Should Study President Obama

President Obama went into the proverbial "lions den", attending the gathering of the Republican Congressional Caucus in Baltimore last week.

The Democrats have a majority in the House and now 59 votes in the Senate. Obama is having problems with the Republicans, who have decided that it is good policy to simply attempt to block everything the Democrats propose--dividing the country along political and philosophical lines. Many on the left have been urging the President to forget about reaching out to the Republicans and use his mandate to push things through (remember when President Bush won his second term by a fairly slim margin and talked about all the "political capital" he had acquired and would use?). Vice President Cheney had noted that elections have consequences and that Bush had a mandate to move things forward. Funny how a larger margin of victory last year somehow did not give Obama a mandate, according to these same Republicans.

Anyway, what CEOs can learn is what Obama did by visiting the Republicans. Obama knew that he had to reset his own reputation and that of his party. He reached out to the GOP, talked to them, debated them, scolded them, and listened to them. He played the role of leader listening to his opponents. We have not seen this much previously, nor do we see it much in the corporate world. When confronted with ribald critics, companies tend to push back hard, to attempt to marginalize the opponent or vilify them.

Obama could have done the same thing, but it wasn't working, just as that tactic does not work in the corporate world. Instead, he met with his critics and showed them what dialogue looks like. By taping the proceedings, he also showed the country what leadership and true bipartisanship can look like.

There will be many who will attempt to spin this to their advantage. I'm sure that Limbaugh and Hannity will talk about the PR spin Obama is attempting or that he is trying to make us like England and its "question period" (a clear attempt to make us a European socialist society, they likely will argue). The left is likely spinning it their way demonstrating that Obama is in the right and the Republicans are always in the wrong. Some on the left will likely criticize Obama for not moving to the left rather than to the middle. However, most people know that the truth usually lies somewhere in between. The Republicans (at least the non-ideologues) have some good ideas, just as the non-ideologue Democrats do. The country is better off when we govern from the middle. At least that's my opinion.

CEOs and corporations can learn from this as well. They are not always right and their critics wrong. Meeting critics, talking with them (not at them, but with them), and listening to them can work wonders. One will learn quickly who can and cannot be talked with in a civil way and who is so ideologically driven that they have no room for compromise. But, by meeting with critics, you in effect nullify one of their primary strengths, which is their ability to characterize you.

Watch the tapes of the meeting between Obama and the Republicans. It could be used as a training manual for CEOs. The Republicans are now saying that they are sorry they allowed the meeting to be taped. They wished now they could continue to characterize the President, but now he has shown himself as a man of compromise, not the radical they have tried to show him as. He has made it more difficult for them to resist dialogue. Some on the far right and far left will not bend, but lets hope that there are enough clear-thinkers in the GOP and on the Democratic side to begin to talk. The country needs such dialog dearly, and it will show the way for others who are dealing with critics.

Toyota Recall a Correct Decision

Toyota's decision to stop the sale of all cars affected or potentially affected by the acceleration problem should be applauded. It is an unprecedented move by an automobile manufacturer. In making this decision, Toyota took a short-term financial hit to save its reputation long-term. The decision reminds me of the decision by J&J in 1982 to recall all Tylenol from the market after 7 people died from cyanide-laced Tylenol in the Chicago area.

Toyota has built its reputation on quality and reliability of its cars. Those attributes have been put into question. Toyota's perceived leadership on quality and reliability will be tainted for many and the troubles will be a competitive lift to other car manufacturers. However, what Toyota told the public by its action is that they put safety and reliability over revenues and profits. Their recall may open them to even more litigation since it likely will be interpreted by the courts as being an admission of guilt. However, trust is built by trustworthy behaviors, not by words, and they have demonstrated by their action that they can be trusted.

All of these downsides were obviously weighed by the management team in Tokyo before making this decision. A recall of all affected cars was the first step and that is what most other car companies would have done, but most would have stopped there. Toyota, however, went further, pulling all affected cars from the market and also stopping the rentals of these cars from rental car agencies. By taking this action, Toyota also preempted regulatory withdraw of its cars. Within days they would likely have been forced to pull their cars, which would have been much worse of the company. They chose to get in-front of the crisis.

In the competitive world of auto sales and especially in our tough economic times, Toyota is pulling themselves out of consideration for many car buyers, loosing sales for a long period of time since auto buyers typically do not return for years. That is why anyone who believes in brand management or reputation management should applaud Toyota's action. They took the tough but right decision.

I have been asked whether I believe that they will regain market share after this is behind them. I believe that they have the potential to do that. It will take time because of the car buying cycle--it's years, not days or months like Tylenol. But, consumers now know for sure that Toyota is concerned with the quality of its cars and the safety of its consumers. We know that when those cars come back on the market, they will be engineered to the highest standards. Remember that Southwest Airlines was found to have cracks in its planes that were overlooked by negligent maintenance. It pulled its planes and when it began flying again, the public lined up again. Loyalty rebounded.

I suspect that loyal Toyota customers, those who have been their customers for years, will return. Those who bought a Toyota for the first time might find themselves looking elsewhere. They are what are called "passive loyalists", easily swayed by other offers.

I wish Toyota well. I do not own one of their cars, but I admire them for recognizing the importance of reputation in their long-term corporate health.

University Branding Becomes a Major Topic

Universities have really gotten into branding in a major way. New firms are forming that focus exclusively on the academic market. Articles are being written in various marketing and academic management journals about the importance of branding.

Why is college/university branding moving into high gear? The cost of an education in the US has become extremely expensive. At the university I teach at, which is a private institution, undergraduate students pay about $47,000 per year when all expenses are included. The MBA costs anywhere from $50,000-85,000 at our university, depending on the program selected (on-line versus full-time or executive MBA). At the same time, there are more students attending colleges and universities. So, the perceived value of the degree takes on greater importance. Companies want to know the value of potential employees have, parents begin to be concerned about where their son or daughter will receive an education that is valued in the market, and universities are concerned with their ability to attract the best and brightest students available. All of this adds up to a major reason for branding. University rankings become extremely important. They put the value of the university into context--allowing it to be assessed against others in the market.


I believe that universities should be talking about their reputations rather than their brands. Brand is focused primarily on consumers. Universities do not have consumers or customers, but rather a host of stakeholders, including, parents, alumni, corporate donors, government (for grants and ,in the case of public institutions, funding, and others). The term reputation is more acceptable to faculty. Everyone wants a good reputation for their schools; not everyone wants the university to think of itself as a brand.

It is difficult to have a university live its brand or reputation. A friend of mine once called a university a "group of anarchists sharing a common parking lot". Faculty do not like to be managed. They see themselves as independent contractors, each vying for their own position and fame. University tenure encourages this. A faculty member who plays as part of the team and serves his/her department and college well but does not publish is less valuable than the faculty member who does little in concert with others but who is a publishing "machine". So, it is difficult, if not impossible for a university to live its brand.

Far too often, universities fall into the trap of thinking that their slogan is their brand. The slogan of my business school is "Learn Here. Lead Anywhere". This is not our brand. Our brand is about attributes, namely co-op education, technology and applied research. Put those together and offer them to students and one has an environment that allows people to learn at Drexel and lead anywhere afterward. Just like in a company, the key is to link the slogan back to attributes that are real to the university.

Live Your Brand; Grow Your Reputation

It seems amazing to me that so many people continue to talk about reputation as if it were something that we could build through communications alone. Reputation is primarily built through behavior, not through communications. We've heard the term "walk the talk". Companies that behave properly build their reputations more effectively than those who talk about it and do little to act appropriately.

Brand is the attributes, associations and symbols that we create that we want to be known for. Reputation is the "vote" by stakeholders that we are distinguished (differentiated in strategy terms) from our peers. How do we get from what we want to be to reputation? It is through our employees--they are the ones who connect the brand to stakeholders.

When we develop a positioning--the words that give our brand life; that explain why we should be favored over another offerings--we need to get employees engaged so that they are both willing and able to live the brand in their daily activities. One good way to do this is to develop an Employee Mantra, a simple, clear message that employees understand is their role in the positioning. It is tough to use the positioning by itself because it is focused on external stakeholders, and we ask way too much when we ask employees to understand how to translate the positioning. But, a good Mantra can do that. Like the concept of mantra in meditation, it is designed to provide focus when the "mind" wanders. So, when many people are telling employees different things, they can come back to their mantra to know what to do.

There is a famous story about someone who visited NASA and saw a janitor sweeping the floor. "What is your job"? the visitor asked. One would expect the answer to be that the person was a janitor. The answer, however was: "I keep this place clean so that we can put a man on the moon".

Consider how we could get all employees to translate their jobs to a final accomplishment that builds value for the organization. "What do I do that adds value?" is a great question for everyone in the organization. When we can find that connection and make it emotional, we have the real ability to engage employees in behaviors that will live the brand and grow reputation.

Totes>Isotoner Sets High Standards for Customer Service

It is not often these days that one is totally shocked by a display of high customer service. I purchased a Totes (they use totes, lower case) umbrella last spring. It is guaranteed for life. At some point recently, one of the spokes of the umbrella broke. I followed the instructions I found on line to not take it back to a store, but rather to send it back to the company with $5.00 for return postage. A new or repaired item would then be sent.

Much to my amazement, I received a letter yesterday from one Helen Baur, Consumer Affairs, totes>isotoner. The letter indicated that "under your circumstances, we would certainly not expect you to pay this fee, having had the umbrella for such a short period of time". My $5.00 was enclosed.

Now, I should note that I did not have a receipt for the original purchase, so Totes was simply assuming from the model of my umbrella that I had purchased it recently.

I teach in a business school and we are always talking about customer service, or lack of it, and the return on investment that it brings or looses. totes>isotoner has gone beyond what I would have expected. I am absolutely impressed with their high consumer standards. They deserve my praise and my customer loyalty. I thought I would pass this on to others in hopes that my story will both inspire other companies to adopt similar standards, and for others in the market for umbrellas, gloves and other items by totes>isotoner, to consider totes>isotoner.

Break Down the Silos Inside Companies

Companies continued to be siloed, depite the fact that this is counterproductive. Silos may be good ways to move information within an organization, but the infighting between silos in most companies gets in the way of real competitive advantage. Marketing, PR, advertising, sales, customer relations, etc. all remain in silos. Companies cannot afford this anymore, not only in terms of the costs of maintaining the silos and their inefficiencies, but also because it is ineffective in dealing with influencing customers and other stakeholders.

Silos create their own messages, their own organization, etc. They cost the company in many ways. Companies have customers, employees, investors, etc. Those are the important stakeholders for companies. Many companies, however, spend an enormous amount of time managing all the internal squabbles and turf wars rather than focusing on building value.

Look at the traditional value chain in text books. We have inbound logistics, outbound logistics, we have support functions, marketing, sales, etc. All of these are shown in vertical bands. Each is to work on their own activities and contribute to the value of the company. It has the right concept, but has been wrongly implemented in practice.

Some business strategists have been talking about "unbundling" the value chain. This is a means to turn the vertical silos into more horiziontal activities so that organizations inside the company work together toward common objectives. Marketing does not have domain over customers; the entire organization does. Finance is not responsibile for money; the entire organization should be financially oriented. We need stewards (experts) as the guides for each of these areas, but ownership should be done away with.

What if a company were to say the following? We have a number of stakeholders who create value for our company: employees, customers, investors, and others. We want a plan of how we can enhance customer value, investor value, employee value, etc. We do not want 3-4 plans from different functions, but rather one plan that is integrated and consistent. We will incentivize those who work collaboratively and penalize those who continue to want to hold onto their "sacred islands".

If CEOs demanded such an approach, the company would likely see people reaching out and working with others they have little or no incentive to work with currently. I tried a change like this within my piece of the pie at Nortel. Instead of having a VP of Advertising, the person became the VP of Customer Relations. It changed the nature of the activities from advertising to all of the things that were needed to enhance customer relations. It can work. What's stopping companies? What do other think about this?

Who Owns Reputation Management?

I was at a meeting in NY today sponsored by Echo Research. Because the meeting was primarily for communicators, it focused on issues related to reputation from the communications perspective. The argument was that communications should "own" reputation management within companies because it is the most suited discipline to do so. The rationale is that given social media, relationship management--a supposed PR expertise--is critical; and that communications looks at more stakeholders than any function other than the CEO.

I agree with the perspective that public relations is better suited to relationship management than is marketing and that it is a function with concern for many constituents. Still, I have problems with the concept of ownership of something as important to an organization as reputation. The equivalent would be to say that the CFO owns finances. He/she is the primary steward, but everyone in the organization owns responsibility for financial management.

Communications should be the catylst for reputation management, if they have the skill set to do so. However, this skill set needs to be more than a constant urging for social responsibility and "doing things right".

The leaders of reputation management will be those who first-and-foremost understand that the primary interest of a CEO is to build value for the organization. Reputation management does that, but I am not at all sure most communicators or most marketers understand what is meant by that. Communications often sees value as "doing good". Somehow these good things are supposed to translate into behavioral intent. Sometimes they do and sometimes they don't. Marketers suffer from wanting everything to have transactional monetary value--relationships take too long.

A blending of the two is what is needed. Reputation management leaders need to help the organization focus on those things that distinguish the organization in the eyes of key stakeholders to build value. When they do that they will be given the "keys to the kingdom" by the CEO.

Often the communications teams are focused on stakeholders other than those who make money for the company. One often hears "that might be good for customers and investors, but what will regulators or NGOs say?" These are good questions, but reputation is most imporatant with stakeholders who matter, not with those who don't.
Every organization has three key stakeholders who contribute to the company's financial success: employees, customers and investors. Other stakeholders can help or impede success and must be managed appropriately. So reputation management is really about making the company distinguised for the key stakeholders and good enough so that the organization is supported or not impeded in its objectives and activities.

It's time that marketing, communications, investor affairs and HR got together and understood that they are in this together and that common goals need to be worked on. Others need to be brought into the mix, but until the organization can work consistently toward common objectives and behaviors with its key stakeholders, reputation management will not work. CEOs shouldn't care who the catylst is for this. It just needs to happen and the leader is the person who "gets it".

An On-Line Bonanza for Bad Managers

I had an interview today with a reporter who is covering a story about a company that sells the ability to bury bad on-line comments by pushing them down the Google search. In other words, a reverse search-engine-optimization concept.

It is not surprising that someone came up with the idea to sell companies on the idea to get rid of the bad reviews. It's like the Mafia getting rid of the body.

There are so many problems with this that I am not sure where to start. First, brands and reputation are not being build on Google searches like they were 5-years ago. This has now moved to social media--conversations on the Internet. Blogs and micro-blogs (Twitter) are where the action is. Second, this plays right into bad management. If someone is saying something negative about your company, a smart manager should want to know why, whether it might have some truth, and then take action to correct it. This is the opposite. "I don't like what people are saying and I want you should make them go away"

Challenges for the Newly Merged Pharma Companies

The consolidation in the pharmaceutical industry continues. It is interesting that last year at this time I was teaching a Pharmaceutical Marketing MBA class and said that consolidation was predictable. Most of the students, all mid-level at pharma companies in various disciplines outside of marketing, pushed back that this would not happen. I think it was more of a wish on their part rather than good market observation.

Anyway, the consolidation has been going on and will continue. We likely are moving to what the Boston Consulting Group called the "Market of Three". That is, as an industry matures, consolidation occurs until there are three major broad players, with a group of niche players.

There are huge opportunities awaiting these newly formed companies to enhanced their perceived value with stakeholders. When a company says they will be the "new ..., they are in fact framing expectations for stakeholders that something will be different. That is, there will be new attributes, associations and experiences that were there previously. From a brand and reputation perspective, this is a double-edged sword. On the one-hand, these companies can get out of the starting gate with new positioning, brand and reputation initiatives designed to prove that they are in-fact new. Or, they can simply hope that new means that they will be accretive at some point in their financial performance, which I would argue is insufficient to prove their newness.

I would hope that these companies are looking at how they created value before, individually, and how they will be creating value going forward; that they reidentify for themselves and for others their strategic group with which they compete; that they engage in organizational change efforts to bring the new cultures into alignment (60-70% of mergers fail due to culture clashes); and that they look for ways to enhance their reputation with there key stakeholders.

It will be interesting to see how many of these companies do anything more than simply try to tell people that they are new.