Can Corporate Brand Management Be the Way to Real Values?

The new document from the Arthur Page Society entitled "The Authentic Enterprise" is a remarkably good piece that is designed to spark a dialogue about the changes going on tha impact corporations and the changing roles and responsibilities of the Chief Communications Officer. A key focus on the document is on values and the role of the CCO in helping to lead the company toward an identification of its core values.

I responded recently to a blog on the Arthur Page Society's website (www.awpagesociety.com), in which Roger Bolton, formerly the CCO at Aetna talked about his role as the leader in the definition of the "Aetna Way". I suggested that I believed that companies with solid values were those who respond well in times of crisis versus those who only gave their values lip-service.

It is only in about the last 20 years that companies have given so much concern to crafting "values statements". Such statements were spurred on by consulting firms, but many organizations adopted them mainly as ways to "speak to their values" and gave little real focus to how they might actually "live the values".

Bill Nielsen, former head of communications (CCO) at Johnson & Johnson gave a speech last year in which he quoted President Lincoln who said that reputation was like the shadow of a tree. The tree was the reality, the shadow was like reputation. Bill noted that company's need to "fertilize the tree rather than the shadow". Well said, but what does this really mean and how do companies do it?

Rather than spending so much time on the words of value statements, companies should instead focus on what business they're in, what they stand for, vis-a-vis their stakeholders, and how they see their responsibilities to these stakeholders. The famous J&J Credo, a true statement of values, was written when J&J was getting ready to go public. General Johnson wanted investors to know what kind of company they would be investing in. In essence, J&J was putting forth its brand promise and assuring that there were no surprises between the promise and the experience by investors.

This is an important concept for companies to adopt. Rather than trying to mimic the J&J credo, they neek to be true to themselves, i.e., "authentic". The organization needs to define its core values, its attributes, and how it will behave and will not behave, including what businesses it will and will not enter. This is not a job for the writing of values statements, but rather the real job of corporate brand management, a process that focuses on all of these aspects. The new "second wave" of brand management, as Prof. Majken Schultz of Copenhagen Business School calls it, is not narrowly focused as brand management might have been in the past. It is integrated with and is used for the kinds of organizational change management needed to close the gap between organizational intent and behavior that is needed to become authentic with stakeholders.

A Good Corporate Reputation Starts with a Good Corporate Brand

Most communications professionals do not recognize that building a good reputation is directly linked to the relevance their corporate brand has with key stakeholders. Too often, public relations and communications professionals try distance themselves from the term brand, arguing that it is related to marketing and advertising and narrowly focused on products and customers. This is not and should not be the case.

Brand management should be focused on identifying the values and attributes of the organization that resonate with key stakeholders. Reputation management, which communications professionals often refer to as "being known for doing good", suggests correctly that reputation is a derivative of actions by the organization that are relevant with key stakeholders. In other words, reputation is a vote by stakeholders that the brand attributes are important and relevant to the stakeholder.

If reputation management is not linked to brand management, one risks trying to build reputation through corporate responsibility programs, which although important are tactics, not strategies. The only way external communications programs can work is if they are supported by the actions of the company, and that means that the company must have the values, be able to deliver consistently on its desired attributes, and be able to build relationships with its stakeholders.

On the other side of the wrong perceptions of brand and reputation management are those advertising and brand professionals who think that brand is related to logo, design changes or slogans alone. Those are simply symbols that should help illuminate and help build associations for the brand. But, we should always recognize that when we talk about building a brand or changing a brand, we are talking about identifying attributes and linking actions with communications. Both the PR and design perspectives often minimize the importance of linking the concepts of brand and reputation.

Crisis Management is Not the Only Things We Can Learn from J&J's Handling of the Tylenol Crisis

Johnson & Johnson's handling of the Tylenol incident in 1982 is the stuff of legends. As the reader might recall, a "madman" laced Tylenol capsules with cyanide, killing 7 people in the Chicago area in October of that year. J&J has rightly one high praise for how quickly it acted, pulling all Tylenol from all stores in the U.S. within 4-days. Its handling of the crisis helped the company not only rebuild Tylenol's market share within 6-months when many people thought the product was dead, but it also secured people's trust in J&J as a company.

Clearly, J&J did everything right from a crisis communications perspective. They addressed the problem head-on, they were open and honest with the media and frantic customers, and they cared more about their ongoing relationship with customers than they did about the possibility of law suits and the short-term bottom line.

Juxtapose this against what happened in 2007 when Mattel toys that were made in China were found to have high quantities of lead. Mattel missed filing the required 24-hour report with the Consumer Products Safety Commission (CPSC), suffered a fine of over $1 million from the CPSC, and still took more than 6-weeks after that to file its full report. When Mattel's CEO finally went public, he placed the blame on the Chinese for poor manufacturing quality. He later had to go to China and publicly apologize to Chinese officials for his statements.

People who study crisis communications use J&J as the gold standard and offer up Mattel as another example of a company that missed the boat on properly handling its crisis. I'd like to offer a different take on what should be learned.

J&J acted the way it did because it lived by its Credo, a document that acts as a values and brand statement for the company. The then CEO of J&J, James Burke, met with his top executives twice a day as soon as the crisis hit. He used the Credo to question everyone as to what should be done. The Credo's first paragraph states that the company's first order of business is to maintain the trust of the doctors, nurses, mothers and fathers who use its products. Burke and his team recognized that if they did not live up to the Credo, it was of no value. It was the most severe test of the document and it helped the company do the right thing. It acted like a "constitution", guiding the organization when straight thinking might have been difficult. I can imagine how difficult it was to come to grips with the decision since it meant millions in lost inventory, sales and potentially opening the company to law suits, since the withdraw might be interpreted as an admission of guilt.

Like J&J, Mattel has a values and responsibility statement that is prominently displayed on its website. It speaks to its commitment to making products of the highest quality and safety specifications. However, when tested, Mattel demonstrated that its statement of values were merely words, not true guiding principles for the company to live by. By trying to shift blame to the Chinese, who clearly did make the products unsafely, they failed to recognize that one can outsource manufacturing, but one cannot outsource reputation. Mattel owned those Chinese manufacturing plants in an intangible way, even though they may not have appeared on the balance sheet.

I am coming to believe more and more that companies with good reputations have them because they have a set of underlying values that guide their behavior. These values do not allow them to attempt to spin their way out of problems. They deal with them honestly and openly; they get through them and reinforce the trust that customers placed in them before. In fact, that trust is enhanced because they have proved their trustworthiness with their actions. That's the real message of the Tylenol incident that other companies should really pay attention to.

The Reputation Difficulties for Consumer Products Companies

Unilever, one of the largest consumer products companies in the world, is under attack. A group calling itself Citizens for Commercial Free Children (CCFC), began a campaign in October 2007 claiming that Unilever was hypocrical because it was running Dove and Axe campaigns at the same time. Both are products of Unilever. Dove launched a program called "Onslaught" which urged parents of girls to talk to their children before the fashion and cosmetics industry does.

Dove decided to do something when research discovered that most women had a poor body image and tended to compare themselves poorly against the beauty images held up as desirable by the media. Dove ads show a normal looking woman before and then after make-up that would be applied to a model. The results are remarkable. There also are ads showing women of different sizes and ages, noting that beauty is not limited by body shape or age.

The Axe ads are totally different. In the ads, young men spray themselves with Axe, a body deodorant, and are immediately set upon by beautiful women who cannot constrain themselves after smelling Axe. The web-stie ads are really "over the top", with a group of women called Bom Chicka Wah Wah, that sing about raising ones labido and dropping inhibitions.

The CCFC feels that Unilever is hypocrical because it tries to raise the level of womens' feelings about themselves with Dove, and then sterotypes women in the Axe commercials. Unilver has responded that it has many products, all of which are targeted at different audiences, and the Axe commercials are meant to be a spoof and not to be taken seriously. The CCFC was not satisfied with the response.

This situation highlights a real problem with companies like Unilever that follow a "house of brands" approach to branding. Each product division has responsibility for its own marketing and communications. The name Unilever is never used on any product, and only appears on packages to the extent legally required.

Companies that are organized like Unilever (e.g., Procter & Gamble), face a real dilemma. They can put in place corporate reviews and restrictions on their divisions, or they can allow each division to conduct its own marketing and communications campaign. However, as this case has shown, it is easier than ever for a group to bring the corporation into the fray and demand that there be corporate-wide rather than product-line standards.

I did a case study on this situation with the students in my Corporate Brand and Reputation Management class. They were really torn about what Unilever might be able to do to rectify the situation. They recognized and appreciated the CCFC's complaints, but also thought that Unilever's position was justified. There was a sense among the students that Axe might have gone a bit too far in its web-site ads and that toning these down would help.

Reputation is a difficult thing for companies to manage and still balance the needs to drive sales. It is all the more difficult for consumer products companies that give responsibility for all marketing and communications to their product line management with few limitations. Johnson & Johnson, which is primarily a consumer products company, although it is known as a pharmaceutical company, puts parameters of responsibility on its business units through its "Credo". Perhaps companies like Unilever should begin to instill a sense of shared values throughout all of its business lines, as does J&J. It would still give the product lines freedom. However, as the old saying goes, freedom without some restrictions is chaos.

What Audi Doesn't Understand and Acura Does

One of the core components of brand and corporate reputation is customer service, yet many companies fail to fully provide the level of service to match their high-priced brands. In the auto industry, the issue has often been the distribution relationship between the manufacturer and the dealer which leaves the dealer in charge of the brand in relation to the customer.

My wife leased a 2007 Audi A4 two years ago and almost immediately began having problems with the navigation system. She took the car back to the dealer 5 times and each time they said they had fixed the system, but it still did not work properly. Finally, I wrote to the president of Audi US, who forwarded my letter of complaint to a regional service manager to handle the problem. To say that the regional service manager was a low-level complaint department with no ability or authority to properly deal with the problem would be a bit of an understatement. Having lived much of my adult life in the corporate world, I could tell from my numerous telephone coversations with him that he was unable to solve our problem, even if he were willing to do so. But, because he had so little knowledge of customer relationship management, any appeal to his sense of marketing, brand and reputation management failed to make even a dent.

He suggested that we bring the car into yet another dealer for checking the system. I commented that after 5 tries we were more than a bit frustrated with that route and that the company should replace the system. He refused to do that and said he had no authority to make such an offer. He suggested that we could order a new software package and download it ourselves. We found this offer unsatisfactory. After several very frustrating telephone conversations and letters back and forth, we decided that our best course of action would be to wait out the 2-year lease and get rid of the car.

When my wife finally returned the car to another dealer, she asked if her experience was typical. The gentleman at the dealership said: "I shouldn't be bad-mouthing my company, but this is the way Audi treats customers". He gave us a few other examples in which Audi would not stand behind its product and service was short-changed.

Now, let's juxtipose this against my own personal experience with Acura. I own an MDX, which I bought in 2005. A few months ago, I started to have some problems with my navigation system. I took it in for service. I got a call from the dealer who said that my system was acting up for them as well and that they thought that I should get a new software package installed. The normal cost would be $285, but they had gotten Acura to agree to pick up the cost. Situation solved. Customer happy. Loyalty to the dealer and Acura secured.

After my wife turned in her Audi, she bought a new car. Guess what she bought? She got an 2008 Acura TL from the dealer who had been so good to me.

The morale of this story is so simple that it is amazing to me that every company does not fully understand it. When dealing with high-priced, high-quality brands, one must understand that customer service is an integral part of the total brand experience. Selling a car is not like selling Coke. A can of Coke costs a dollar or two and has a usage life of a few minutes. Cars are expensive and have usage lives of years. The management of the brand cannot, like a Coke, stop at consumption. In fact, even Coke realizes how to enliven the brand experience to create return customers. Audi's customer service and brand management were so poor that they can only serve as illustrations in this blog, to my clients and with my student of what not to do.

A few decades ago, Audi had a problem with its breaking system. At that time, its response was to blame U.S. drivers for not knowing how to drive high-performance European cars. The real fault, it was found, was an engineering problem. I guess the people running Audi still have not learned a sufficient lesson in how to handle customer service and what good brand and reputation management really mean.

Crisis Planning is Not Reputation Management

Whenever communications people talk about reputation management, the talk immediately turns to the subject of crisis management and how important it is to prepare the organization for a crisis.

Crisis managaement is to reputation management as fire fighting is to fire prevention. Crisis management is important and plans should be in place, but it is handling of an already existing problem. Reputation management should be a strategic process that gets everyone in management aligned on how to balance the needs and interests of all stakeholders so that reputation is enhanced and risk is minimized.

A good way to manage reputation in a complex organization is via the use of a Reputation Council. The Council brings together all of those in the organization responsible for "stakeholder relations". The membership would include communications, human resources, marketing, sales, government relations, investor affairs, and any other function that has responsibility for an important stakeholder of the company.

The Council would have as its objective the integration of the company's reputation efforts with regard to employees, customers, investors, media, government agencies, and all other stakeholders. The Council would all work from the same strategic guidelines and would share research, both that already on-hand, as well as that which is needed. It is amazing how often I have found that research done by one organization is not shared with other organizations.

Through such a Council, reputation can be managed as a holistic, strategic company-wide process. Crisis management would then take its rightful place as a tactic within the overall plan.

Some Basic Principles of Reputation

I have been attending a number of meetings at which a variety of people talk about reputation. It is interesting how liberally and non-specifically the term is used. It seems that many people suggest that simply doing good public relations or having good corporate advertising will create a good reputation.

The following are some basic principles which should provide guidance for those involved in corporate brand and reputation management that, I hope, will make the discussions increasingly more specific:

1.Brands and reputation are judged within a competitive set and each organization must differentiate from other offerings;

2.An organization needs to behave in trustworthy ways to earn trust and build reputation—communications alone will not do it;

3. Stakeholders decisions are made on specific, immediate needs, and these can change over time;

4.Not all stakeholders are equally important. You must have a way to prioritize stakeholder value and potential risk;

5.Stakeholders are increasingly defining brand(s) and reputation on-line;

6.The objective of brand and reputation management is to deliver measurable returns to your organization.

I will be posting more specific suggestions that elaborate on these principles in future blogs.