The past decade has been a costly one for the reputation of business. Across many industries the perception has developed that a gulf exists between the actions of management and the interests of customers, investors, regulators, and the public at large. It is truly shocking to see that, as a result of cumulative perceived (and in many cases real) breaches of trust, the reputations of once esteemed industries now vie with such traditional negative benchmarks as used car sales. The consequences of this unfortunate shift are very real. Companies now face a much tougher and more expensive regulatory environment. More subtle, but equally costly, companies also face a series of implicit new constraints on their operating activities, in which they avoid taking actions that could inflame negative opinion against them. Companies and trade associations have begun reacting to these challenges with moves designed to remove particular irritants in their external relations. “Transparency” has become a popular term, as companies increase disclosure of their relationships with various influencers in order to allay suspicion and demonstrate that they have nothing to hide.
Transparency is an important factor — but it doesn’t solve the problem. Sometimes it can even exacerbate the problem as the public learns more about industry practices that have the potential for abuse. The fundamental challenge is to shift strongly held perceptions when the public discourse is dominated by sound bites and simplistic mental maps that distort the underlying reality. The starting point is to approach company and industry reputations as critical strategic assets, identify current and emerging threats to these assets, and define robust strategies to restore their value. To have impact, the strategies must be clear, unambiguous, and supported by sustained, visible action. In some cases, they may require companies to redesign key elements of their existing business model. These are times when companies must make tough decisions to change their policies and practices in ways that may hurt short term results — for example, by giving up certain marketing techniques that are effective in promoting adoption of new products — in order to reframe the debate and regain the initiative in shaping the public’s perceptions.