The development of brand as a concept
The concept of brand has evolved at an accelerated pace since the 1950s. First seen simply as a mark of identification, the proliferation of brands led to the idea that organisations had a corporate identity that set it apart. Over the next few decades it became accepted that an organisation's brand signalled its identity. And that a brand had value beyond distinguishing one company from another. By the 1980s, the idea of brand as a multi-channel experience had taken hold, although still mostly among owners of consumer brands.
Online branding became popular as the 90s progressed. Global B2B companies started to embrace the idea that brand could convey relevance to business customers. It was accepted that business people made purchasing decisions based on emotion, just as consumers did. If business customers liked and trusted a brand, they would also choose it over competitors (albeit via a longer and more complex buying process). Managing your brand proactively became common in B2B, too.
The role of reputation
As brand gained recognition as a strategic asset, interest in corporate reputation grew. Could it have a similar strategic value that was yet 'undiscovered'?
In the early 2000s, a large number of research papers on reputation were published in academic journals. Although the findings were still inconclusive, evidence emerged that reputation made its own unique contribution to business success, quite apart from the contribution of brand equity.
As the decade progressed, researchers began to distinguish between brand and reputation, which were previously seen as interchangeable. Brand was recognised as operating primarily in the customer dimension. Its aim is to build relationships through customer experiences that differentiate the company and ensure its relevance to customers.
Reputation, on the other hand, spans all aspects of a company's performance. Its aim is to raise the credibility and recognition of the company among all its stakeholder groups. As a measure of past performance and a signal of future behaviour, reputation influences whether or not stakeholders (including customers and employees) trust the company to deliver expected value, based on credibility, fairness, and ethical conduct.
As brands became more successful and higher-profile, recognition of the need to protect them from damage grew. A number of well-publicised disasters, culminating with BP's Deepwater Horizon crisis in 2010, underscored a more central role for reactive reputation management. The idea of proactively building reputation before disaster struck, as a buffer against subsequent damage, started to evolve.
Between 2010 and 2016, a growing body of literature showed that reputation strength had a significant impact on customer and financial outcomes. And that when managed proactively, reputation strength, and financial results, increased (Yasin, 2017). This effect went beyond the known positive contribution of 'goodwill'.
A new way of thinking
Some larger businesses had begun to take note. A European survey of senior communication professionals by The Brunswick Group found a growing acceptance of reputation as an untapped source of value and opportunity. They observed that many businesses appeared to be missing the advantages brought by this new proactive way of thinking about reputation.
A new way of thinking about the importance of reputation required a deeper understanding of what reputation is, why it needs to be 'built' proactively and how to do so -- beyond just engaging more fully or frequently with stakeholders.
Without such an understanding, the obvious question from company leaders is: "Why should I invest in it?"
So what is reputation?
As the concept of corporate reputation was studied throughout the 90s, it was said to be based on perceptions or judgements about an organisation formed over time. This was the basis of 'stakeholder theory', one prominent academic theory of reputation.
A popular distinction between reputation and brand became 'brand is what a company says about itself, while reputation is what other people say about it. "
While a useful distinction, it propogated the idea that reputation was not something companies could really influence. It suggested that only brand could be approached proactively, and that reputation would form 'automatically' as a result.
Given the asymmetrical and time-lagged nature of reputation, this is understandable. Reputation takes time to establish and yield results, and that's assuming the work is done effectively. The effect of this lag, we believe, was that few organisations attempted to measure their reputation, and little credit was given to its influence.
Between 2005 and 2010, some commentators formed the opinion that 'reputation management' whether reactive or proactive, must be little more than "spin". This was based on the conclusion that reputation was a function of PR; that it was designed to 'control' stakeholder perceptions; and therefore, was manipulative. This might have been how some people went about it, but it's far from an effective approach. Effective reputation building is all about credibility.
The view of reputation management at that time lacked several key pillars of conceptual understanding. These only fell into place through research conducted between 2010 and 2020. They are:
1) An understanding of the many 'dimensions' of reputation and our ability to prioritise and influence them individually
2) The factors that influence how stakeholders form perceptions
3) That the an organisation rarely perceives value the same way as its stakeholders do.
A deeper understanding led to the belief that reputation shouldn't be left to 'build itself'. When it is, two things happen:
1) It takes longer for the desired reputation to coalesce in the minds of potential clients, and
2) much of the value the organisation brings to each of its stakeholder groups is not recognised or correctly interpreted by them. In other words, organisations are leaking value because it is invisible.
Only from 2020 onwards has there been broad consensus, based on several large global studies, that even the strongest of reputations must be proactively leveraged so that the company's value becomes visible and credible. Without doing so, the social and financial benefits identified by 20 years of research were slow and difficult to realise.
Our experience over the last fifteen years has confirmed that when organisations invest in proactively building their reputations, they achieve greater financial returns and attract higher quality customers and employees in a shorter period of time.
However, the majority of businesses do not believe they can afford to invest in their reputation. This leads to a significant source of sustainable business value remaining untapped. In our experience, this is particularly true for small to medium sized B2B companies. At this point in time, they do not see themselves as having the need (as consumer brands do) or the resources (as large organisations do) to manage their reputation proactively.
However, research and experience makes it clear that investing in reputation has a multiplier effect. It makes your investments in brand and marketing far more effective, and far lower-risk, and it does a lot of heavy lifting for your sales and business development team once established.
It's more effective because you are using all of your resources toward establishing one clear reputation you can 'own' in your market. And lower risk because reputation strategy demands credibility. You shouldn't build externally until your ducks are nicely in a row internally.
At Reputation Sherpa, we exist to make building and leveraging reputation achievable and accessible for small and medium enterprises. We aim to accelerate business leaders' understanding and use of reputation as a strategic tool for sustainable business value and growth. We've developed frameworks and processes to guide leaders on this rewarding journey.
