From Values to Value: The Only Sustainable Business Model and the Foundation of Lasting Reputations

Recently I have been reading a lot about reputation. I was not surprised to learn that reputational risk is one of the top issues on the minds of most boards and their CEOs, according to almost every survey about their concerns. There are also a lot of consultants and advisers in the business of helping them mitigate or manage those risks, or in dealing with a crisis when one strikes — as they seem to all too frequently. There are also plenty of books on the subject. On the flip side, there are also plenty of books about the value of reputation management. They focus on the economic benefits associated with customer loyalty, the value of the brand, and the impact on share price.

Unfortunately, the more I read the more I can’t help thinking that most reputation management advice is akin to medicine that only focuses on treating the illness rather than prevention. And it seems even less interested in how to establish what I will call reputational health and maintain reputational well-being. You won’t be surprised to learn that I think the emphasis is wrong. This situation is, I suggest, the result of management’s obsession with performance optimisation: Total Quality Management (TQM), Just-In-Time (JIT), Business Process Reengineering (BPR) and Lean Manufacturing, for example. Such obsessions seem to come with the risks that we might associate with over-enthusiastic body builders on the one hand or illnesses such as bulimia or anorexia on the other. The artificially induced and the unbalanced approach cause problems sooner or later. I recently referred to Beyond Performance by Scott Keller and Colin Price of McKinsey. In the opening paragraph of the foreword to the book the authors note that “what matters is not just an organisation’s competitive advantage at a point in time, but its evolutionary advantage over time. Trouble is, most of us know a lot more about how an organisation can execute in the short-run than we do about how to build one that has the health and vitality to thrive over the long-term”. Let me put to you that the answer is staring us in the face. If we look at all companies which last, they all have strong reputations that are rooted in strong values focused on developing healthy and balanced organisations. They don’t focus on trying to achieve quick short-term results by cutting corners which would damage their health; they focus on achieving a level of performance that is sustainable.

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