The Reputation Game
The focus of business has almost always been to maximise profits. Apart from a few socially-minded firms — such as confectioner Cadbury’s, whose founders created the Bournville model village — business people’s sole aim was to increase profits and maximise return to owners and shareholders.
James Wallman, Future Gazers report
But now, in an era of ethical consumerism, transparency, and heightened concerned about the environment, business is moving from single-minded concern for profits, to a broader interest in three more Ps: people, planet and purpose.
It is now key for a business to have a purpose beyond simply making money, as communications specialists Michael Hayman and Nick Giles explored in their book Mission. You can see this in the rise of the B Corps certification, Richard Branson’s B Team and Marks & Spencer’s Plan A. It’s clear in the success of purpose-led businesses like Patagonia and TOMS shoes1
Besides the evolution of the purpose of business, something else has changed. There was a time when a business could get away with saying that it had a meaningful purpose but stick to business as usual behind the facade. That time is over. The rise of digitisation, the internet, social media, citizen journalism means a transparent world where it is increasingly difficult to conduct “green washing” and similar campaigns. Witness the recent collapse of PR company Bell Pottinger: the 32-year-old communications company filed for bankruptcy after it was caught stirring up racial tensions on South Africa.
In a more connected, transparent world, it’s ever harder to pretend to be something you’re not. In the future, then, it will be essential for businesses to manage their reputations. There are two aspects to reputation, of course: what you’re able to do and how you do what you do.
The success of many of the world’s most thriving modern businesses — from retailers like Amazon and Expedia to platforms like Airbnb, Notonthehighstreet, and Treatwell — rests on ratings that make it easy for potential new customers to evaluate someone’s likelihood of delivering the goods or services they say they provide.
“The connectivity of today’s world makes reputation even more important,” says Rupert Younger, Director of the Oxford University Centre for Corporate Reputation at Oxford Saïd Business School, and co-author of new book The Reputation Game. “Business is much more transparent than it has ever been, and with that comes heightened expectation around the character of businesses. This is here to stay, and will grow exponentially.”
Critically, your reputation — your ability to deliver, and the manner and ethics of your delivery — isn’t what you say it is, it’s what the internet and others say it is. So, it’s no use simply thinking you’re projecting an image.
“You can’t cultivate your reputation,” says David Waller, ex-Financial Times journalist and co-author, with Younger, of The Reputation Game. “You have to be and do the right thing in the right way.”
Having a purpose will be equally important for all businesses. Some believe smaller businesses are likely to focus on more local missions. “It’s about place,” says the British Chamber of Commerce director general Adam Marshall.
But just as micro-multinationals can reach their target customers anywhere on the globe, so we think that the meaning of “local” and “place” are evolving. Our ever flatter and more connected world will enable firms to transcend the boundaries of geography and find missions that connect with their “local” customers wherever they are.
In the future, there will be no place for cowboy operators who promise lots and deliver little. They’ll be too easily caught out and put out of business. There’ll only be room for firms who take their reputation seriously.
According to Yell Business, one of the largest providers of digital marketing solutions for SMBs in the UK:
“The importance of online reputation for small businesses – and managing it effectively – is a key factor to reaching and retaining customers in the modern world. The Reviews feature on Yell.com and other online platforms such as Facebook and Google My Business means that word of mouth has now well and truly moved online, and is a permanent and public record of an individual’s experience with a business, and should be managed effectively and in a timely and appropriate way.”
This development will be very positive for small firms — especially those that follow the transparent route that turns good actions into a reliable reputation.