It’s always surprising to see founders willfully ignore good practices when it comes to reputation, whether it’s Fab CEO Jason Goldberg going Jerry Maguire on his employees or Mike Jeffries of Abercrombie and Fitch telling the outside world that fat and/or unattractive people aren’t welcome to wear his company’s clothes.
In the case of Goldberg and Jeffries it would seem that the founders are so convinced of their company’s mission that they believe they need to go on a crusade against the world.
More often, though, founders are focused on short-term wins and conveniently forget about other people’s interests. Like Marc Pincus of Zynga, who admitted in 2011 that he did every horrible thing in the book to see immediate revenues:
“I mean, we gave our users poker chips if they downloaded this zwinky toolbar, which was like, I don’t know–I downloaded it once and couldn’t get rid of it.”
A reputation isn’t just nice to have: A solid reputation is essential to your company’s survival in the long term. Here are seven things all leaders need to understand about reputation, based on science:
1. A GOOD REPUTATION HAS A MEASURABLE IMPACT ON YOUR BOTTOM LINE
2. YOUR COMPETITORS WILL STRUGGLE TO SEE HOW YOU GOT THAT SOLID REPUTATION
3. ONLY A TINY PART OF YOUR REPUTATION IS CAUSED BY HOW MUCH PROFIT YOU MAKE
4. HAVING A GOOD REPUTATION DOESN’T MEAN THAT YOU HAVE TO BE A NICE GUY
5. GOOD REPUTATION MAKES FOR LOYAL CUSTOMERS AND MOTIVATED EMPLOYEES
6. A GOOD REPUTATION BOOSTS YOUR PROFITS FOR YEARS TO COME
7. A GOOD REPUTATION ISN’T ALWAYS A GOOD THING
Let’s take a look at the first two amazing insights that FastCompany presents…
1. A GOOD REPUTATION HAS A MEASURABLE IMPACT ON YOUR BOTTOM LINE
Researchers have shown that companies with good corporate reputations enjoy a competitive advantage and higher returns, making a good reputation a valuable and rare asset.As researchers Peter W. Roberts and Grahame R. Dowling found when they compared the reputation of companies and their long-term financial performance more than a decade ago, “Firms with better corporate reputations are better able to sustain superior financial performance outcomes over time.”
It doesn’t stop there. A good reputation, they found, also helps poor performing firms in their efforts to return to profitability.
That means it’s solid business sense to sacrifice short-term profits for a healthier long-term reputation, as some firms have correctly understood.
Experts reckon that while U.S.-based drugstore CVS may lose close to $2 billion a year in sales after it decided to stop selling tobacco products, the brand will more than make up for its losses by cementing its reputation as a health-conscious company.
Now consider this…..
2. YOUR COMPETITORS WILL STRUGGLE TO SEE HOW YOU GOT THAT SOLID REPUTATION
Part of the reason why firms with a better reputation perform better is because it’s hard to copy a good reputation.For your competitors it’s hard to see how all your decisions and processes interact to improve your reputation. Roberts and Dowling call this “causal ambiguity.”
“Because reputations are complex, and the main drivers of reputation creation are embedded inside the firm, they are likely to be associated with a high degree of causal ambiguity, which reduces the extent to which competitors may imitate them,” they wrote.
Now consider this….
You can read the full article at….
https://www.fastcompany.com/3030278/7-scientific-reasons-your-reputation-will-make-or-break-your-company
