Why do many otherwise smart CEOs mismanage the reputation asset of their company? Available to Purchase

This paper, examines why CEOs often misunderstand and therefore mismanage the reputations of their companies. The paper describes the way corporate reputations are built, maintained and enhanced and suggests that a good reputation needs several elements: (1) that it be part of the corporate strategy, not just a public relations or advertising slogan; and (2) that it be built from differentiating, sustaining activities of the company. The author couples his own experience with the literature on corporate strategy, noting that reputation is part of the corporate positioning process, which has long been considered the core element in strategy. Fortune magazine’s “Most admired companies” and research conducted by the author are used to highlight the variables of corporate reputation and how perceptions of reputation differ internationally. Using these variables, companies can maintain consistency in their reputation globally, while at the same time allowing regions and countries to customise to meet local needs. The paper argues that companies often fail to achieve their desired reputations because of two primary factors: (1) the failure to identify a clear core competency, relying instead on claims of superiority that have little value to the intended audience; and/or (2) “active inertia”, or continuing to do the same things that made the company successful, despite the fact that these things are no longer relevant to the current situation. Examples of companies that have done a good job at building their corporate reputation and examples of some who have had problems are provided, along with a check list of “warning signs” that a company’s reputation is in trouble, along with some suggested actions.