The Thunderbird Most Admired Companies survey revealed that most of the things companies do to improve reputation are mere ‘entries’ in a giant log called the reputation database. As new entries occur, old ones are forgotten, and because the audience is wired into so many data streams, the RAM is insufficient. Information overload is the main reason companies find it difficult to change perception after an incident like United’s Dr. Dao eviction or Facebook’s Russia hacking.
“Incompetent crisis strategies cause companies to fall into a corporate version of Newton’s Law, which says once a company gets in trouble it tends to stay in trouble.” (click to tweet)
But is there a magic elixir that can improve a damaged corporate reputation? In the course of our fieldwork, we discovered the primary reasons people admire companies (80%) are the qualities of integrity and vision. To properly restore admiration, these must be restored as well.
- The widest ‘scandal effect’ was a 60% variance between Google and Facebook after its Cambridge Analytica dustup, followed by an unimpressive performance by Mark Zuckerberg in the Senate hearing; secondly, United’s scandal effect resulted in a 64% variance between it and Southwest ) after Dr. Dao’s disturbing eviction.
- After Uber suffered from turmoil in the C suite, its score is 44% compared to Lyft with 78%.
- BMW scored 81% compared to Volkswagen at 36% after the company’s emission cheating failure.
- Another challenge with reputation failures is the “Nixon Effect” (see box below). It refers to the long term damage to reputation that occurs when incompetent crisis management becomes the crisis.
Admired v. Un-admired
THE NIXON EFFECT
As with the 37th president, the consequences of a small-time burglary at the Watergate Hotel complex continue to overshadow his great accomplishments: