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2/242011 Reputation Institute

Editor-in-Chief

Dr. Charles Fombrun

Chairman

Editor at Large

Kasper Ulf NielsenExecutive Partner

Managing Editor

Seth KerkerManaging Director

Contributors

John Patterson

Senior Advisor

Joan Walker

Executive Vice President,

Allstate Insurance Company

Sally SusmanExecutive Vice President Policy,

External Affairs & Communications

Pfizer

Jesse Deutsch

Analyst

Advisory Board

Dr. Cees van Riel

Vice Chairman

Nicolas Georges Trad

Executive Partner

Anthony Johndrow

Managing Partner, United States

Dr. Leonard Ponzi

Managing Partner,

Research & Analytics

Dr. Matthew Pan

Managing Director, China

Dr. Ana Luisa Almeida

Managing Director, Brazil

William Pullen

Managing Director, Chile

Henrik Strier

Managing Director, Denmark

Dr. Dominik Heil

Managing Director, South Africa

Fernando Prado

Managing Director, Spain

Spencer Fox

Managing Director,

United Kingdom

Volume 3 Issue 2 Summer 2011

Reputation Institute Knowledge Center

Reputation Intelligence is published by Reputation Institutes Knowledge

Center. The Knowledge Centers mission is to bring together a global

network of practitioners and academics to leverage extensive research,

sophisticated analysis, and rigorous methodologies that strengthenrelationships with key stakeholders and add tangible value through

management, growth, and protection of corporate reputation.

The Knowledge Center addresses the proliferating demands by practitioners

for answers to questions about how reputations affect competitive

positioning, how to examine and value corporate reputations, and how

to build, maintain, and defend those reputations.

For more information on becoming a member of Reputation Institute,

please visit the Knowledge Center at www.reputationinstitute.com.

About Reputation Institute

Reputation Institute is the worlds leading reputation consulting firm.

As a pioneer in the field of brand and reputation management,

Reputation Institute helps companies unlock the power of reputation.

With a presence in 30 countries, Reputation Institute is dedicated to

advancing knowledge about reputation and shares best practices and

current research through client engagement, memberships, seminars,

conferences, and publications such as Corporate Reputation Review

and Reputation Intelligence.

ReputationIntelligence


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Dear Colleagues,Welcome back to Reputation Intelligence, Reputation Institutes quarterly thought leadership publication. This issues theme is

largely powered by the content and conversations that resulted from three days that 350 leaders of the reputation economy

spent together at RIs annual conference in New Orleans in May 2011: Reputation as a Leading Driver of Business Value.

The 15 years of RIs existence have seen a sea change in how companies approach both the historic art and emerging scienc

of reputation management. Most of the largest companies in the world have been exposed to the concept and importance

of corporate reputation by now, but it still takes an act of God, industry risk, or self-inflicted crisis for most companies to get

religion and take a systematic approach to understanding what stakeholders expect from them.

The reputation management journey breaks down into five phases:

Phase I: Exploration and discovery (50-60 percent of Forbes Global 2000 marketplace)Phase II: Reputation metrics linked to core business metrics (e.g. Net Promoter Score, Brand Equity, Employee

Engagement, Loyalty)20-25 percent of market

Phase III: Reputation seen as having specific, measurable business impact and built in to business planningprocess10-15 percent of market

Phase IV: Company leaders are responsible for specific reputation goals5-10 percent of marketPhase V: Reputation fully integrated into enterprise strategy and operationsthe elusive Holy Grail where no

organization anywhere in the world truly is today

With a nod to RIs academic roots and thriving network of educators and students around the world, think of Phases I and II as

undergraduate coursework (Reputation Management 101 and 201), Phases III and IV as graduate study (Reputation MBA), and

Phase V as post-doctoral work where only a handful of companies are in the early stages of writing their reputation theses.

This issue ofReputation Intelligence chronicles the journey from Phases II through IV for companies like: Allstate in the wak

of Hurricane Katrina; Pfizer and the pharmaceutical industrys ongoing reputational challenge; BBVA Compass and Itau afte

the global financial crisis; and Vestas in the aftermath of COP15 climate change disappointment and $100 oil. Each article an

sidebar also plays off the three key takeaways from the New Orleans conference:

Employees are emerging as the most important stakeholder group in the reputaton economyStakeholders know more about you than ever before. What do you know about their expectatons of you,

and what are you doing about it?

The best Chief Reputaton Officers are CEOsIn closing, let me invite you to share your thoughts about these issues with our growing reputation community through our

online discussion group on LinkedIn. If you are not yet a member of our group, please visit http://www.reputationinstitute.com

and navigate to the Community tab for quick and direct access. You can also e-mail us any comments you have at

[email protected] . Thanks for your support for RI onsite in New Orleans and every day through our

client and membership networkit means the world to us.

Best regards,

Anthony Johndrow

Managing Partner, RI North America

Issue Editor, Reputation Intelligence



I.LESSONS LEARNED FROM NOLA: IN THE REPUTATIONECONOMY, ITS THE ENTERPRISE THAT MATTERS MOST

Horrific images of the crippled Fukushima Daiichi nuclear reactor in

Japan. The shuttering of News of The World, the largest English language

circulation newspaper in the world, in London. Hackers stealing personal

and financial information from millions of PlayStation 3 consumers in

North America and Europe. These recent events are perhaps the most

obvious signal that we no longer live in a world where brand promises and

product-centric marketing alone can weather the storms of the reputation

economy. In each case, Tokyo Electric Power, News Corporation, and Sony

respectively failed to convince internal and external stakeholders they

could be trusted at the enterprise level when faced with governance and

leadership crises. At the end of the day, perhaps a 1980s rock song says itbest: youve got to stand for something/or youre gonna fall for anything.1

In this brave new world, marketersstewards of the customer experience and a

tight link to sales in most organizationsare up against it to a greater extent than

communicators, who have traditionally been the default corporate storytellers and

crisis responders, though with much smaller armies and investments than their

marketing brethren.

On one hand, there is the new normal that digital media, 9/11, and the financial crisis

have brought to marketersincreasing the degree of difficulty of a Chief Marketing

Officers day job to levels unseen in the pre-Y2K world. Think democratization of

choice, the near-commoditization of many product/service categories, todaysinterconnected universe where we can access friend and neighbor opinion without

leaving our homes, the rise of green, an alarming lack of faith in big companies

and institutions, a precipitous decline of trust in advertising messages, etc. Its

pretty complicated for the 99 percent of todays underpaid, overworked marketing

professionals who dont have a World Cup or Olympics silver bullet ad in their budget.

Marketers Coming to Grips with Product versus Enterprise

Lets see if we can simplify things a bit for these beleaguered souls. Our marketplace

behavior is really only governed by two factors: our perceptions of the products or

services in question and our perceptions of the enterprise behind them. Marketers

have spent their careers (and virtually all of their ad budgets since World War II)

trying to influence the former, but evidence is mounting that the latter is not only

virgin territory, but also may actually be more influential than anyone thought.

In our annual study of the reputation of the largest 150 U.S. companies with the

general public that Forbes published in spring 2011, Reputation Institute isolated

these two influences using the RepTrakTM model. Perceptions of products/services

and innovation belonged to product influence and perceptions of workplace

(financial performance, citizenship, governance, and leadership) covered the

enterprise category. RIs statisticians factored these variables (to ensure five versus

4 2011 Reputation Institute

1 Stand for Something, John Cougar Mellencamp. Scarecrow. Columbia Records, 1984


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two didnt give enterprise an undue advantage) so the unique influence of each

of these two variables on two kinds of supportive behavior could be isolated:

Purchase Considerationgetting commercialonly 39 percent of thedecision is based on product perceptions, while 61 percent is based on

perceptions of the company behind that product.

Advocacy/Recommendation securing advocacy in an interconnectedworldonly 42 percent of this critical behavior can be explained by product

perceptions, while 58 percent is explained by what they think of the

enterprisewhat they think the company stands for beyond the features

and benefits of its products.

This isnt only true at the macro level. In the pharmaceutical industry, a key

stakeholder group is the physicians who prescribe products to patients. In thishighly innovative and regulated industry across multiple client-specific deep-dive

research projects worldwide, ample evidence exists that enterprise perceptions

drive physician behavior much more than their perceptions of the products.

Another industry example of this phenomenon at work is financial services. While

BBVA Compass in the U.S. and Ita in Brazil are deploying different tactics to reach

skeptical stakeholders, both companies are competing on their internal cultures

and community-driven orientation. Product-centric marketing collateral is not the

key to banks regaining public trust, a fact not lost on either banks top management.

The key to post-financial crisis value creation for banks? Competing on values,

which comes down to making governance, leadership, citizenship, workplace, and

financial performance relevant to audiences who expect more than free checkingaccounts and the toaster oven promotions of the last century to stay loyal in the

reputation economy.

In terms of visual, top-of-mind marketplace examples to drive this point home,

take P&Gs decision last year to launch the P&G corporate brand through its

Vancouver Winter Olympics sponsorship advertising and point-of-sale campaigns.

The overwhelming positive reaction from multiple stakeholders (moms to opinion

elites) to the unleashing of this enterprise-wide narrative helped P&G dial it up

again around the Special Olympics in the fall of 2010. If the ultimate product brand

marketers are looking at using their enterprise story commercially, shouldnt you

consider investing in your corporate brand too?

Building Reputation Equity at a Time of ScarcityThe following organizations discussed how they are taking this new reality to heart

and shifting the conversation at RIs annual conference in New Orleans in May 2011:

Nancy Lintner, SVP Strategic Communications, PepsiCo gave an updateon year two of the Pepsi Refresh project, which provides grassroots funding

for up to 60 ideas each month that cluster around four categories (arts and

music, education, communities, and monthly Pepsi Challenge) at four grant

sizes (ranging from $5,000 to $50,000) following a simple four-step process

(idea generation, idea submission, idea promotion/voting, and idea funding)

Many of the early lead

of the Internet-fueled

innovation economy

of the mid-1990s and

the scandal-driven

governance revolution

of the early 2000s wer

not always the last on

standing in their peer

group as the global

financial crisis change

the rules of business

forever. So, it is premat

to declare victory or

anoint the winners of

the nascent reputationeconomy. Nonetheless

it is encouraging to se

so many organization

building reputational

endurance through

multistakeholder platfo

that are built to last.


6/242011 Reputation Institute6

through social media. Under the stewardship of CEO Indra Nooyi, Pepsi Refresh goes beyond branding to

put some skin in the game when it comes to renewing American communities and simultaneously buildingreputation capital.

Ray Jordan, Corporate Vice President Public Affairs and Corporate Communications, Johnson& Johnson discussed the implementation of reputation management best practices throughout the

organization. However, it is J&Js more recent decision to sign up as a global sponsor of the 2014 FIFA World

Cup in Rio de Janeiro, Brazil, that perhaps speaks to the worlds most respected health care product and

pharmaceutical manufacturers desire to export its strong reputation in emerging markets by promoting its

corporate brand as a whole, which is greater than the sum of its hundreds of product brand parts.

Helen Clark from ChevronTexacos Corporate Marketing group chronicled how ChevronTexacosWe Agree branding campaign has given the oil giant white space in the aftermath of the BP Deepwater

Horizon spill in the Gulf of Mexico around societal issues once taboo to the energy industry. With bold

call-to-action statements like Oil companies should put their profits to good use, Oil companies should

support small business, Fighting AIDS should be corporate policy, and Its time oil companies get behind

the development of renewable energy, its easy to see why stakeholders are responding positively to candid

dialogue, rather than status quo rationale, from one of the super majors.

Christa Carone, Xeroxs Chief Marketing Officer detailed how Xeroxs Ready for Real Business campaignhelped transform the legendary document management company in the wake of its largest acquisition

ever (Affiliated Computer Systems) in 2010. Through its commitments to innovation, citizenship, and the

environment, Xerox is walking the walk and talking the talk with stakeholders who are now taking another

look at the iconic company.

Blair Christie, Ciscos Chief Marketing and Communications Officer explained how Ciscos founder andCEO John Chambers drives the companys reputation agenda and pushes internal and external stakeholdersalike to think differently about long-term value creation. By focusing on employee, environmental, and

social investments, Cisco is able to make the Human Network campaign more tangible to more people

than pure product or service-centric programming ever would. Refuting the Milton Friedman axiom that the

only purpose of business is to make a profit, Cisco believes in doing good for business and society, and its

Transforming Education initiatives as well as its innovative partnerships with NGOs like One Economy, Digital

Opportunity Trust, and Inveneo are the proof in the pudding.

Reputation Management is a Decathlon, not a Marathon or a Sprint!

At the end of the day, it is not about dropping your product or service focus entirelybut those leaders of the

reputation economy who are leading by example have found a way to deepen those connections with their

customers by letting them know whos behind the curtain. You have to give them faith that your company is and

will continue to behave in ways that make them feel okay about continuing to do business with you.

Many of the early leaders of the Internet-fueled innovation economy of the mid-1990s and the scandal-driven

governance revolution of the early 2000s were not always the last ones standing in their peer group as the

global financial crisis changed the rules of business forever. So, it is premature to declare victory or anoint the

winners of the nascent reputation economy. Nonetheless, it is encouraging to see so many organizations building

reputational endurance through multistakeholder platforms that are built to last.

Succeeding in the reputation economy is more like training and competing in the 10 events that make up

the Olympic decathlon, than a marathonor a sprint! Think of the seven dimensions of corporate reputation

(products and services, financial performance, innovation, citizenship, leadership, governance, and workplace)


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The 2011 Global RepTrak 100 Results

Dr. Peter Drucker famously said, What gets measured gets managed. No truer (and more important) has this been

than now. We live in a Reputation Economya market in which corporate reputations are, more than ever, linked

to stakeholder behavior. Trust, esteem, good feeling, and admiration for a company are now primary drivers of

supportive and ultimately purchasing behavior.

Reputation Institutes Global RepTrak studya cross-stakeholder survey conducted in 15 markets globallyis the

largest corporate reputation study worldwide. Through rigorously tested quantitative and qualitative methods, thestudy measures the trust, esteem, good feeling, and admiration relevant stakeholders have for companies around

the world.2 On an industry level, the best performers were Consumer Products (74.83), Electronics (73.15), and

Computers (70.28), all significantly above the 64.2 industry average. The worst performers were the usual suspects:

Tobacco (50.10), Utilities (59.04), and Telecommunications (59.77), all of which face deep-seated negative stigmas.

The best-of-the-best on a company level were those that managed to export their reputations both home and

abroadcaptured in a specialized study called the RepTrak 100. Google came out on top (79.99), followed by

Apple (79.77), The Walt Disney Company (79.51), BMW (79.42), LEGO (79.26), Sony (79.05)3, Daimler (79.03), Canon

(78.07), Intel (77.56), and Volkswagen (77.33). Google drew strength from strong positive perceptions about their

workplace (77.82), governance (74.23), and citizenship (74.42), while Apples scores were driven primarily by

innovation (83.91), performance (82.25), and leadership (80.56).

That the top two performing companies were driven by perceptions of their enterprises rather than their

products/services signals a shift in the Reputation Economy. To build and maintain robust reputations both

home and abroad, companies must respond to the changing tides of reputation measurement with strategic

management. To neglect the data is a risk not to be taken lightly.

the way decathletes have trained for the 100 meters, long jump, shot put, high jump, 400 meters, 110 meter

hurdles, discus throw, pole vault, javelin throw, and 1500 meters since the ancient Greeks. You cannot get on thepodium by being world-class at just the four running events or three jumping events or three throwing events any

more than you can build a strong reputation by spending most of your companys time, talent, and treasure telling

the world a lot about your products and too little about whats behind them.

2 Companies are rated on a scale of 100 and are adjusted across markets for bias. Scores above 80 are considered excellent/top

tier, from 70-79 strong/robust, from 60-69 average/moderate, from 40-59 weak/vulnerable, and below 40 poor/bottom tier.

Year to year, changes in score of +/- .5 are considered significant and cause for attention.3The first wave of survey data indicated that Sony, rather than Google, took first place. However, concerns about the companys

post-tsunami supply chain and negative attention surrounding its security practices after the recent PlayStation Network

hacker breach hurt its score in the second wave of collection. Cumulatively, the company dropped to 6th placea significant

drop but still very strong placement. This was a testament to the brands resilience in difficult times.


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How BBVA Compass Competes on Reputation in the Banking Industry

BBVA Compass ranks among the top 20 largest U.S. commercial banks based on deposit market share, operating716 branches in Alabama, Arizona, California, Colorado, Florida, New Mexico, and Texas. From a consumer awareness

standpoint, it is probably best known as the U.S. subsidiary of Grupo BBVA, one of the largest global financial services

groups and a leader throughout the Spanish speaking world, or because of its 2010 sponsorship of the National

Basketball Association as the official bank of the NBA.

However, from a differentiation standpoint, the global financial crisis of 2008-09 certainly made banks rethink the

bigger is better axiom, and sports sponsorships were hardly a game changer for AIG (English Premiere League

soccer), RBS (long-time association with golfing legend Jack Nicklaus) or UBS (Formula One auto racing) during

their respective fall from graces, reputationally speaking. How is BBVA Compass bucking the trend and improving

its reputation score with the U.S. general public over the last two years? By promoting what they stand for (their

enterprise story) instead of just what they sell (the product marketing view of the world).

One way they have accomplished this is through the formation of the BBVA Compass Corporate Responsibility and

Reputation (CRR) department, which reflects the comprehensive way the BBVA Group views its relationships with

the communities in which it has a presence. This holistic approach involves many aspects, including charitable giving,

volunteerism, environmental management, diversity and inclusion, and other areas that promote the well-being of

people where they live, work, and play. All of this activity is reported annually in both the BBVA Group and the BBVA

Compass Corporate Responsibility Reports, but this is more than report writingit is a Program Management Office

(PMO) approach that industrializes reputation management in everything BBVA does in the U.S.

Six offices exist within CRReach with specific goals and lines of delivery:

Community Giving

Employee Involvement

Financial Education Diversity and Inclusion

Environmental and Natural Resource

Responsible Practices

Take one example from the Responsible Practices CRR office, which monitors compliance with BBVA Group policies

and protocols, including those governing transparency, ethics, and responsible products and reports out on these

behaviors as an organization to promote transparency. BBVA says that its product development teams ensure that

our reputation as a good corporate citizen is considered in all that we do. This includes the First Time Home Buyer

Mortgage, which requires applicants to complete a module of the FDIC Money Smart curriculum, BBVA Compass

financial education program, in order to qualify for the loan.

CRRs offices serve to focus BBVA Compass efforts in the U.S. where they can make the most impact in order to excelas a corporate citizen and fulfill the Groups mission of working for a better future for people ... for all people.

One global program that also resonates locally in the U.S. is the BBVA Foundation Frontiers of Knowledge Awards,

which seek to recognize and encourage world-class research and artistic creation, prizing contributions of lasting

impact for their originality, theoretical significance, and ability to push back the frontiers of the known world.

These international awards span eight categories: Basic Sciences; Biomedicine; Ecology and Conservation Biology;

Information and Communication Technologies; Economics; Finance and Management; Contemporary Music; and

Climate Change and Development Cooperation.

It is for these reasons that BBVA Compass is standing out in the crowded and competitive U.S. banking marketplace

in the reputation economy of the 2010s.

2011 Reputation Institute8


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For many years, like coun

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responsible and honest w

However, Katrina showed

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II.REPUTATION: FROM FIRE-FIGHTING TO FIRE-PROOFING

By Joan Walker, Executive Vice President, Corporate Relations

Allstate Insurance Company

Joan H. Walker is executive vice president, Corporate Relations, for Allstate

Insurance Company and a member of the Allstate senior leadership team.

She is responsible for external and internal communications for The

Allstate Corporation and its subsidiaries.

Prior to joining Allstate in November 2005, Walker was executive vice

president of Marketing and Communications for Qwest Communications

International. She was responsible for all external and internal

communications and corporate marketing. Her marketing responsibilitiesincluded advertising, brand management, market research, database

management, web marketing, and sales communications.

I would say this is probably the worst catastrophe or set of catastrophes certainly

that Im aware of in the history of the country. Michael Chertoff, Homeland Security

Secretary, September 3, 2005.

On Monday, August 29, 2005, at 6:10 a.m., one of the strongest hurricanes in history

slammed into the Louisiana coastline. Over the next 48 hours, Katrina pushed

water 12 miles inland in Mississippi. Her peak winds of 150 mph tossed cars, boats,

and houses aside like plastic toys. In New Orleans, the overloaded levees broke in

more than 50 places, flooding 80 percent of the city and neighboring parishes, and

causing the horrific scenes we saw on our television screens for weeks to come.

In five short days, Katrina killed 1,836 people in seven states and caused more than

$80 billion in damages. Hurricane Katrina was a devastating event for the people

of the Caribbean and southern United States.

It was also a very difficult event for us and our industry. Our business is to help

people prepare for the unexpected. Insurance agents choose their careers because

they love interacting with people and helping them. They are people-people, and

deeply committed to the communities in which they live. But the devastation

caused by Katrina was so enormous and so profound that they wished they could

do more. Standard homeowner policies typically cover wind damage but not floods.

Flood insurance is a separate type of insurance policy that is underwritten by the

federal government.

Much of the damage caused by Katrina was due to flooding. Imagine the pain of

having your home destroyed with all your belongings, of having your photos and

memories washed away, and then being told that your homeowners insurance does

not cover it. Imagine if it is your best friends home and you are the agent delivering

the message. The devastation caused by Katrina went far beyond dollars and cents.

On the business front, not only was Katrina the costliest natural disaster in U.S.

history, but also it generated unprecedented levels of unfavorable press and



unwarranted litigation. The insurance industry became a target of the media,

some politicians, and consumer advocacy groups. Responding to that challengemade us step back and think about Allstates reputation in a new light.

For many years, like countless other companies, Allstate focused on strategically

managing our reputation through traditional issues management, corporate

citizenship, and thought leadership programs. We thought about reputation as

something that would take care of itself as long as we took care of our business

in a responsible and honest way. However, Katrina showed us that our reputation

could be adversely affected by events completely beyond our control. It led us

to ask ourselves if a more strategic, focused and proactive approach to building

reputation leadership could make our company stronger.

Our Reputation Journey: Step One

Our reputation journey began in the fall of 2005. We started by asking three

strategic questions:

Is it possible to manage reputation proactively?What is the value of reputation to the business, and is the investment justified

in terms of dollars and effort?

How can a reputation strategy be operationalized so that it complementsand builds on other strategic efforts, such as branding, culture, and employee

engagement?

We then undertook a rigorous and structured program of research and analysis

to answer those questions. In a few months, we had completed the initialfact-finding phase.

The analysis proved it is indeed possible to manage the value of reputation

proactively; that the value created by a strong reputation is significant and

many times the investment required; and that a reputation strategy can not

only work in concert with other programs, but also it can magnify the impact of

those programs. The team was excited and encouraged by the results. But like

all large companies, Allstate has many good ideas competing for resources. To

be successful in putting in place an effective reputation leadership program,

we had to make the case not just to the senior leadership team, but to a broad

constituency of employees and agency owners across the company.

As we were completing the research, a milestone in our journey occurred.Tom Wilson became our new CEO. Tom was more than receptive to the idea

of reputation leadership. Intuitively he understood that reputation is important

to all businesses, but it is particularly important to a business like ours where

trust is so integral to the value proposition. After all, the product we sell is a

promise. Tom made two vital contributions to our reputation effort during

those critical early days.

llstate Ambassadors are a diverse

roup of 6,500 employees from around

he company who actively serve as

hampions for the Good Hands brand.

his successful grassroots movement

was launched nearly two years ago as

way to engage employees in Allstates

eputation efforts.

he Ambassador movement has

rown organically and enabled

llstate to tap into some of its most

ngaged, informed, and passionate

mployees to help build Allstates

eputation. For Ambassadors, the

movement is an opportunity to

emonstrate leadership skills,

etwork, and help reinvent Allstate.

he role of Allstate Ambassadors

ncludes the following:

REFER colleagues, family, and friends

to Allstate and help grow Allstates

business.

ADVOCATE for Allstate with customers

and other stakeholders.

VOLUNTEER in community events

to support Allstate and local agency

owner initiatives.

IMPROVE processes to enhance

Allstates reputation, drive innovation,

and support growth.

RECRUIT new Ambassadors to engage

employees in improving Allstates

reputation.


11/24

First, he made sure reputation leadership received a thorough hearing across the senior leadership team. Having

the opportunity to make the case and making the most of that opportunity was key. By proving the role reputation

plays in the purchase cycle at both the top of the sales funnel by driving consideration and the bottom of the

funnel in retaining and cross-selling customers, we made the business case for reputation leadership. We were then

able to build broad internal support for the strategy and justify the investment by quantifying the upside.

But another effort led by Tom made an even greater contribution to the reputation effort. As one of his firstinitiatives as CEO, Tom engaged the senior leadership team in developing Our Shared Visiona roadmap for making

the essence of our brand come to life through our employees and agency owners. Our Shared Vision provided

both a touchstone for the reputation strategy in terms of defining what we wanted our reputation to be, as well as

providing the overall context for where reputation fits within the corporate purpose and operating principles.

Once we built support among the senior leadership team, we laid out a program focused on protecting our

reputation with customers and consumers. (We define consumers as those people who should be our customers,

but arent yet.) Our notion was that every Allstater from the CEO to the front-line employee to the agency owner

should have the knowledge and tools to make better decisions on behalf of our customers and consumers. And, we

wanted to instill clear accountability for keeping and improving our corporate reputation. To help accomplish this,

we developed Conscious Choice a decision-making model that helps employees at every level of the company

evaluate both the intended and unintended consequences of our decisions and actions.

We then created metrics to measure the satisfaction of our customers and tied the results to our 401K contribution.

It is an incentive model that rewards every employee and holds them accountable for our reputation with

customers and consumers.

With the initial program a success, we knew we had the commitment of our employees and agency owners tobroaden the way we viewed reputation and become more ambitious with the outcomes we wanted to achieve.

Our Reputation Journey: Step Two

We needed to do more than just protect our existing reputation; we wanted to build a stronger reputation. This

required addressing a broader set of stakeholders and thinking of reputation leadership not as a program, but

rather as an organizational capability that we could deploy to create a competitive advantage in the marketplace.

We started with governance, establishing the Reputation Leadership Council (RLC) to govern and oversee our

reputation strategy. The RLC is a team of our most senior executives focused on embedding a reputation focus

It takes many good deeds to build a good reputation, and only

one bad one to lose it.Benjamin Franklin

Repetition makes reputation and reputation makes customers.

Elizabeth Arden


12/242011 Reputation Institute2 2011 Reputation Institute

and accountability across the enterprise. Next, we incorporated reputation risk into our enterprise risk management

functionwhich reports quarterly to our Board of Directors. We now consider our reputation risk alongside financial

and legal risks.

We then partnered with Reputation Institute to design a more systematic research approach to understand our

position with all of our stakeholders and what drives reputation for each group. This research helped us develop

a proprietary reputation metric. Our Allstate Reputation Scorecard provides a more consistent approach for every

employee to understand and apply stakeholder expectations and perceptions to their work. The Scorecard informs

our messaging and communications, our business strategy development and our day-to-day decision making. Mostimportantly, the Scorecard allows us to assign individual accountability for each stakeholder group. Members of

the senior leadership team have each accepted personal responsibility for meeting reputation goals with a specific

stakeholder audience.

We broadened the program in terms of stakeholders, but we also broadened the program in terms of employee

involvement, engaging employees from around the company to take personal accountability for Allstates reputation

through a grass-roots employee movement. Today, more than 6,500 Allstate Ambassadors actively serve as champions

for the Good Hands brand and these champions grow in number and impact by the day.

Finally, to help ensure that reputation leadership is a capability and not just a program, we created a Reputation

Leadership function, which resides in Corporate Relations. This team of strategic business advisors provides

stakeholder research, best practices, and ideas to build our reputation to the enterprise.We have now built a solid foundation that is making a positive impact on how we run our business.

For example, our research says that personal experience is a significant driver of our reputation with consumers.

Last year, we created the Good HandsSM Roadside Assistance program. The program provides assistance in the case of

an accident, flat tire, or other problem on the road and is open to anyone. It provides the opportunity to experience

Allstate even if you are not a customer.

Creating a reputation leadership capability

is, like all enterprise-wide efforts, a challenge,

but our experience is that succeeding

creates real value for the enterprise; both

in short-term returns and in longer term

strategic capability-building.


13/24

Different Views on the Reputation Journey

Skillful pilots gain their reputation from storms and tempests.

Epictetus

Changes in institutional

reputation in business

education can make

the difference between

employers choosing your

students or somebody

elses. Or alumni writing

an endowment check,

or finding an excuse to

skip donating this year.Or faculty choosing one

school versus another. It

is serious business, and

one that Tulane has taken

seriously since Hurricane

Katrina changed many

peoples perceptions about

New Orleans forever.

Angelo DiNisi,Tulane University

Reputation management

is not about a catchy

slogan or waging a

political campaign

treating stakeholders

as voters. Rather, Novo

Nordisk approaches

corporate reputation

as a set of stakeholder

behaviors that canbe quantified that add

up to business results.

The only way we can

change diabetes is to

invest our reputation

capital wisely.

Nick Adams,Novo Nordisk

Competing on culture is

one of the few ways to truly

differentiate yourself from

the pack. Corporate culture

is the connective tissue

between the brand image

and values you project

to the market and the

legacy you leave behind

to future generations. Likereputation, culture cant

be bought or soldit must

be built and earned, one

relationship at a time.

Bill Margaritis,FedEx

We manage our reputation

in a similar fashion to our

market capitalization: from

the top, we communicate

our strategic vision,

our execution against

those goals, and update

stakeholders on our

progress on a regular basis.

Our founder and CEO is abig believer in the power of

corporate reputation, and

invests in the programs

and initiatives to build and

protect Ciscos reputation

as a result.

Blair Christie,Cisco Systems

Another example is around community involvement. The research says that awareness of Allstates involvement in

the community has a significant influence on our positive reputation. Many of our employees and agency owners

are already active in their communitiesserving on nonprofit boards, acting as advocates for our public policy

work, and serving in industry and trade organizations. We also offer incentives for employees and agency owners

to volunteer for causes that matter to them. In order to expand these good works and capitalize on the goodwill

they generate, Allstate has now increased community grant funding for Allstate agency owners to personally use

with nonprofit organizations in the communities where they live and work. (Continued)


14/242011 Reputation Institute4 2011 Reputation Institute

That is particularly true in our business, where the frequency and severity of bad weather has increased in recent

years. Following particularly high levels of tornadoes across the United States and Canada, Allstate and itsdedicated employees were there helping to restore the lives of our customers.

Recently, though, we did make a significant change in how we handle catastrophic weather. A key driver of our

reputation with investors is transparency. So this year, for the first time, we issued a news release announcing

our estimated catastrophe losses for the month. We went further by communicating that in the future, we would

report monthly estimates for catastrophe losses expected to exceed $150 million.

These are things we might have done differently if not for our commitment to reputation leadership. Reputation

now permeates our thinking, our strategies, and our day-to-day activities.

Our Reputation Journey: Step Three

What comes next? Weve made a great deal of progressweve moved from fire-fighting to fire-proofing.

Still, we believe our greatest opportunities are ahead of us.

Where might those opportunities lie? One of Allstates core competencies is our ability to accumulate, manage,

and mine large data sets. As our reputation data set grows, we are working on building reputation tools that will

help us predict more precisely the impact of our strategy and actions and more definitively draw the line of sight

between business results and reputation. In the future, we may even be able to mine the data to identify new

business opportunities, e.g., new product ideas, or new strategies, e.g., new markets or businesses.

Thats only one of many ideas we are working on today that will be part of our reputation story tomorrow. Of course,

we realize we will never reach the end of our journey. There is always a chance to be better, and we have set a high

standard for ourselves:

We continually ask ourselves what we might have done better or differently. The answer is we would not have

done a great deal differently, but we constantly strive to do things better. For others who find themselves in a

similar place to where we were five years ago, let me offer some lessons learned from our experience.

Lesson 1: Align your reputation goals with your business strategy. In our case, reputation fits seamlessly with both

Our Shared Vision and our business model. It is not a bolt-on effort.

Lesson 2: Research, research, research. Dont just say it; prove it with facts and numbers.

Lesson 3:Engage and spread accountabilities across the entire organization. Do not let reputation management

become the job of just a few people. Make certain your most senior executive is carrying the torch and your

leadership team is aligned.

Creating a reputation leadership capability is, like all enterprise-wide efforts, a challenge, but our experience is

that succeeding creates real value for the enterprise; both in short-term returns and in longer term strategic

capability-building.

Dont bother to be just better than your contemporaries or

predecessors. Try to be better than yourself.

William Faulkner


15/248

III.WINNING THE REPUTATION CHALLENGE

By Sally Susman, Executive Vice President, Policy, External Affairs &

Communications, Pfizer Inc.

Sally Susman is Executive Vice President, Policy, External Affairs &

Communications for Pfizer Inc., the worlds largest biopharmaceutical

company whose diversified health care and consumer products are

sold around the world. She is a member of Pfizers Executive Leadership

Team, chairs Pfizers Political Action Committee, and is Vice Chair of

The Pfizer Foundation, which promotes access to quality health care,

nurtures innovation, and supports the community involvement of

Pfizers 100,000 employees.

Susman directs Pfizers global communications efforts, its interactions

with external and internal audiences, and its public affairs activities,

including relations with the governments of all nations in which the

company has operations or markets products. She also heads the firms

corporate responsibility group and plays a key role in shaping the

companys policy initiatives.

In a September 1962 speech at Rice University in Houston, President John F.

Kennedy challenged his country to accept the challenge of putting a man on the

moon before the end of the 1960sthis at a time when the Soviets were the clearleaders in manned spaceflight:

We choose to go to the moon. We choose to go to the moon in this decade and

do the other things, not because they are easy, but because they are hard, because

that goal will serve to organize and measure the best of our energies and skills,

because that challenge is one that we are willing to accept, one we are unwilling

to postpone, and one which we intend to win, and the others, too.

Pfizer and the pharmaceutical industry arent trying to put a man on the moon, but

the challenge to improve our reputation is almost as great as NASAs challenge

was in 1962. However, my company and our President and Chief Executive

Officer Ian Read see that challenge as one that we are willing to accept, one we

are unwilling to postpone, and one which we intend to winnot just for Pfizer,but for people everywhere who need medicine to stay healthy and alive. Think

about it this way: My company makes life-saving medicine and yet most people

dont like us. Working to improve Pfizers reputation is the hardest thing Ive ever

done and represents the professional challenge of a lifetime.

At Pfizer, measuremen

everything. When it come

science and medicine, we

to be a data-driven comp

We also apply that same r

to reputation managem

Weve done a great deal

research around the worl

what drives reputation a

how we can manage and

our reputation as a tool

meet our business goal



Perception versus Reality: Connecting the Dots at Pfizer

Each of Pfizers four business imperatives for 2011 includes a reputation component:

Fix the companys innovative core. Generate medicines that profoundlyimpact health.

Make the right capital allocation decisions that will maximize value for Pfizerand create enhanced shareholder return.

Be respected by society.Be a great place to work where we all give our best every day.

One of the reasons that building a better reputation is so difficult for pharmaceutical

companies is that the public does not understand all that we do as a company. When

asked which group makes the greatest contribution to developing important newmedicines, U.S. consumers are much more likely to say universities or the National

Institutes of Health than pharmaceutical companies (43 percent versus 30 percent).

Yet in reality, pharmaceutical companies develop the vast majority of new medicines.

Another perception gap is that Pfizer is just another drug company. There is very

low awareness of the vast array of programs, public health efforts, and other things

Pfizer does to improve health more broadly. Perhaps the hardest perception to shake

with the general public is about governance and transparency. Only 29 percent

of the public say Pfizer is transparentvery few people are aware of our efforts

to publicly disclose the details regarding our interactions with physicians and the

medical community. Few people are aware that we publicly post the results of every

clinical trial, good or bad.

Here are a few other things people dont know about us:

Pfizer has more scientific researchers on staff than the faculty at Harvard, Yale,Johns Hopkins, and Stanford combined;

Over the next 25 years, pharmaceuticals will prevent nine million cases of heartdisease and save more than five million lives;

On average, it takes $1 billion to develop a new medicine;Only one in 10,000 compounds is ever approved by the U.S. Food & Drug

Administration; and

It takes an average of 12-15 years from discovery of a promising molecule toFDA approval of a medicine.

This is tough work.

Despite these challenging headlines, theres genuine excitement at Pfizer about our

four business imperatives. The emphasis on respect and trust right now is critical

because of the increasing pressures on the health care system. Respect for medicine

is critical to Pfizer because we need to obtain and maintain patent protection for

6

For Pfizer and thepharmaceutical industry

overall, actions must

peak louder than

words. Managing our

eputation is about doing

he right thing in the first

place. Its about doing

business responsibly

and with accountability

and about conducting

ourselves with the highest

degree of integrity. Our

corporate voiceand our

ndividual onesmust

be above reproach, and

must exemplify good

udgment and integrity

o that we have the moral

authority to advocate for

what is right.


17/24



navigate the daily challenges and crises. But what we really need to do differently and better is manage our

reputation over the long-term, in a more holistic and sustainable way. In other words, we are moving beyondtreating the symptoms to curing the disease.

Our research shows common themes and some clear gaps that we need to address to improve our reputation.

Pfizer devotes more resources than any other entity in the world to research, develop, and provide medicines to

people who need them. Our medicines help people feel better and our vaccines prevent them from getting sick in

the first place. But few people connect those dots. Thats why one of our challenges and one of our goals is to open

a conversation about the value of innovative, new medicines to society and to public health.

But there is good news. Our research also shows just as clearly that the more people hear about Pfizer and learn

about our programs and what we do, the more supportive they are. Simply put, the better people know us, the

better they like us. Thats why we are recasting our approach. We are:

Activating 100,000 employees around the world as Pfizers ambassadors. Our own employees are our bestadvocates.

Engaging more and more smartly with the mediaboth traditional and social. Weve stepped out ofthe proverbial bunker and invited journalists to visit our locations to meet our scientists, doctors, and

executives. We are also using digital and social media, once taboo for pharmaceuticals because of strong

regulatory oversight.

Conducting a top-to-bottom review of Pfizers clinical trials process to ensure we have the highest standardsof quality and compliance in clinical development.

Continuing our historic focus on safety and quality.Winning the Reputational Challenge of the 2010s for Pfizer and PharmaFor Pfizer and the pharmaceutical industry overall, actions must speak louder than words. Managing our reputation

is about doing the right thing in the first place. Its about doing business responsibly and with accountability and

about conducting ourselves with the highest degree of integrity. Our corporate voiceand our individual ones

must be above reproach, and must exemplify good judgment and integrity so that we have the moral authority

to advocate for what is right.

As the governance dimension of reputation is now the #2 driver of reputation with the U.S. general public (and it

is a top-three driver in almost every country Pfizer operates in), what Pfizer stands for has become as important as

what we make and sell. It is Pfizers hope that our focus on wellness and health and innovative products will make

a difference to peoples lives, and that they will support us. Stakeholders will decide if they believe companies

like Pfizer are part of the problem or the solution. The reputation challenge is quite simple: Should governments

legislate health care outcomes and use the pharmaceutical industry as a means to that end? Or can Pfizer continueto innovate and explore the outer reaches of human knowledge in order to save and extend lives by co-creating

those solutions with the concerns of civil society and regulators in mind?

When the pharmaceutical industrys license to operate is moral, not financial, and Pfizers purpose is properly

understood and respected by all of our stakeholders, we will have moved beyond treating the symptoms and will

have found the reputational cure.

8 2011 Reputation Institute


19/24

What if a Corporation Created an NGO and Gave it Back toCivil Society?

At the 2011 World Economic Forum annual meeting in Davos, WindMade, the first global consumer label for

companies using wind energy, was launched. Pioneered by Vestas Wind Systems, the WindMade initiative was

founded with cooperation between the Global Wind Energy Council, World Wildlife Federation, Vestas, LEGO,

the UN Global Compact, PricewaterhouseCoopers, and Bloomberg.

In the first half of 2011, a legal entity of the non-profit organization was established in Brussels and an Executive

Director (Henrik Kuffner) was recruited with extensive experience developing and operating consumer labels.

In addition, a WindMade Technical Committee was formed to oversee the development of the standard, and a

membership recruitment strategy was also launched to begin to engage global brands in helping finalize thestandard and pioneer the label.

Whats interesting about this developing story is the pioneering role of Vestas, the worlds largest wind turbine

manufacturer, in the creation of WindMade. Plenty of non-governmental organizations (NGOs) have been

launched since the early 20th century around the world, with the support of some aspect of civil society first.

The role of corporations as agents of social changeto do more than checkbook diplomacy when it comes to

partnering or co-creating with NGOsis a completely new phenomenon in the reputation economy of the 2010s.

Facing fierce competition from Chinese upstarts and well-heeled global conglomerates in GE and Siemens, Vestas

changed the rules of the game and flipped the script on the traditional corporate playbook with the launch of

WindMade. Vestas saw competing on behalf of the entire global wind energy industry (currently providing less

than five percent of global energy consumption) to advocate for company and product-specific information about

how green a product actually is as a way for its business and industrial customers to race to the top along thesame lines that Walmarts Sustainable Value Networks (SVN) helped transform global supply chain purchasing

behavior in the 2000s. Actually, Walmart (along with fellow corporate behemoths IKEA, Nissan, and Microsoft) is a

member of the WindMade Sounding Board, which exists to guarantee qualified feedback on the standard and help

iron out key issues before going public with the standard in September 2011.

The idea of Walmart and Vestas fighting together for social justice and consumer choice would have been the

realm of a COP15 fantasy just two short years ago, but thanks to the WindMade coalition of the willing, this is one

NGO whose mission is to push civil society to catch up with its corporate parents.

Welcome to the reputation economy, WindMade!



IV.REPUTATION AND STRATEGIC RENEWAL

History tells us that so-called timeless corporate strategies are as much fable

as farce. Companies rise and fall based on their ability to adapt to fickle andendlessly mutable markets. With a shifting landscape, corporate strategy

must shift in tow. But this landscape can be vast; it is shaped by many forces

cultural, social, political, and economicsome more predictable than others.

When the market calls for a fresh strategic focus, some companies miss their

chance to evolve gracefully. But evolve they must if they want to succeed.

Heeding the necessity for strategic renewal is perhaps only more difficult than actually

driving a strategy shiftespecially if the shift is radical. Long-lived brands stand just

as much for corporate values, goals, and strategies as their associated products and

services. If a companys business focus is to change, then inevitably the brand must

change with it. But redefining a well-established brand is no easy task. Years orsometimes decades of stakeholder perceptions must be altered or even erased if brand

renewal is to be taken seriously. And for this to happen, stakeholders must trust the

company behind the brand to make the right strategic decisions, radical or otherwise.

One of the key takeaways from Reputation Institutes 2011 annual conference was that

reputation is a powerful asset in times of great change. It builds brands and gives them

the credibility to rebuild from the ground up.

Xeroxs Comeback Story

Consider Xerox, for example. Its iconic printers and photocopiers were fuel for success

for nearly a century. About 11 years ago, however, the company found itself stagnating in

the face of strong competitors. They hoped to reinvigorate their products and corporate

structurebut the change came too quickly. Their business rapidly unraveledrevenue

and profits declined and debt mounted. After just a few months, Xerox found themselves

on the brink of bankruptcy. Key employees started to leave. Customers and industry

experts found the company to be increasingly distant and insensitive to suggestions.

To make matters worse, the SEC discovered alleged widespread accounting irregularities

at the company and a group of angry employees filed a class-action discrimination

lawsuit. Facing public disapproval and the possibility of extinction, Xerox needed a bold

and ambitious turnaround plan.

The companys leadership recognized the need for radical strategic renewal. But how

could it be done without upsetting the stakeholders? Prior attempts proved unsuccessful

and nearly catastrophic. They took a step back to evaluate their strengths and asked,

What was core to Xerox, and what went wrong? The core, it seems, was their strong

reputation. Xeroxs Chief Marketing Officer, Christa Carone, addressed RIs annual

conference and said, We were known for our firm corporate values, we were known for

our innovation, and we were known for creating a great workplace for our employees.

Xerox had won the Malcolm Baldrige [National Quality] award not once, but twice, and

we were known for a culture that was inclusive and really valued hard work and high

performance. We knew that [our reputation] was in the bank to help see us through

really challenging times. Stakeholders clearly trusted the brand. Their products had a

dedicated consumer base who wanted Xerox to succeed even during its turbulent times.

Carone continued, While we were being kicked by the press every day and we were

sworn at by our investors at pretty much every hour, we realized we really had two aces

in the hole. I know that this sounds so Pollyannaish, but for us it became part of our story,


21/24

and the wisdom is really in the simplicity of it. First was an incredibly loyal customer

base that we knew wanted Xerox to survive. The second was an incredibly dedicatedworkforce, who we knew would do anything to help save the company.

It is this more than anything, Xerox claims, which allowed the company to move

forward with what might have appeared to be major strategic risks. They began by

firing their accounting firm and appointing a new CEOsymbolic of a fresh start.

In order to reconnect with consumers, they engaged directly with industry analysts,

experts, customers, and employees, asking for honest feedback on both products and

company practices. Perhaps boldest of all, they dipped their toes in the document

services business, a significant shift in the companys corporate strategy. To mark

the transition, Ursula Burns, the first African-American woman to lead a Fortune-500

company, took the reigns as CEO.

In 2009, Xerox was a $15 billion business, with 75 percent of its revenue coming from

its mature, products-focused operations. The company is now a $23 billion business,

with 50 percent of its revenue coming from services. Xerox is no longer the Xerox of 10

years ago. In fact, the company officially discourages the branded verbiage with which

it was canonized in popular culture; to Xerox is a relic of the past.

Well on its way to growth, Xeroxs reputation remains strong. In Reputation Institutes

2011 RepTrak Study, the company scored 74.31among the most robust reputations

in the United States. Stakeholders have remained loyaldespite nearly a decade of

financial and strategic difficulties and a drastic shift in its supply chain and strategic focus.

Loyalty, trust, and goodwill. These are corporate fundamentals too commonly lost in

the bottom-line obsession. Even the most financially able companies are prone tocrisesand market prescience, it seems, is a rare gift. Traditional crisis management

can only do so much. Reputationthe willingness to give a company the benefit of

the doubtcan keep business going in spite of market missteps.

Kodaks Return to Prominence

Kodak is another great example. Its reputation was a powerful anchor when the

130-year-old company nearly became completely irrelevant in a once Kodak-

dominated market. For much of the companys history, film, its sole product, was a

gold mine. Gross margins were close to 70 percent. With Kodak as the undisputed

global king of the film space, the company was enormously prosperous. But film

sales began to plummet going into the year 2000 without much warning. The digital

cameratechnology that Kodak itself had invented in 1975 but stored away in fear

of losing its profits from filmbegan to pick up speed in the marketplace.

Competitors quickly outpaced their once formidable rivalcausing Kodak to admit

defeat on what was for nearly a century its own space. Gerard Meuchner, Director

of Communications & Public Affairs and Kodaks Vice President, commented during

his conference presentation, If you make your money on one product for so long, it

becomes like a narcotic. He continued with, we allowed others into the digital camera

business when we could have completely owned it for ourselves. When you sell one

product for so long you really lose your perspective on the tidal wave of change thats

coming at you because you cant imagine leaving all that behind. The companys

extensive digital photography patent portfolio, he admitted, is the only reason they

were able to remain afloat financially.

Loyalty, trust, and

goodwill. These are

corporate fundament

too commonly lost in

bottom-line obsession

Even the most financia

able companies are pr

to crisesand market

prescience, it seems, is

rare gift. Traditional c

management can on

do so much. Reputatio

the willingness to give

a company the benefi

of the doubtcan kee

business going in spite

market missteps.



It was clear to both Kodak and its consumers that catch-up in the digital film space was not a viable future. Strategic

decisions needed to be made to shift the companys focus. But, like Xerox, Kodak was more than brandit was an

institution. More than a decade of representing a single, high-quality product made the brand practically synonymous

with film. The challenge was to maintain stakeholders trust to support a sweeping strategic renewal initiative.

They began by modifying their time-honored logoKodak encompassed within a film-shaped box. In 2006, they

unveiled a new logo. It was almost identical but for one essential detail: it was liberated from the yellow film box whichcharacterized the brand for decades of its long history. The change coincided with the appointment of Kodaks new

CEOAntonio M. Perezjust three years earlier. Perez was an icon for the companys new vision. He came from HP,

where he spearheaded their lucrative inkjet business. If Kodak was to survive, they would take what they knew best,

and apply it to a harshly inflated premium ink market.

Kodaks Meuchner admits that the company is far from a full recovery. He insists that its growing pains, however, have

been assuaged by the enormous trust and goodwill toward the Kodak brand. Kodaks reputation, measured at 76.85 in

2011, is indeed strong. And with a strong reputation comes strong supportive behavior. Stakeholders are still willing to

give Kodak the benefit of the doubtwhich will no doubt be instrumental in its recovery.

Kodak and Xerox are excellent examples of why strong reputations are powerful assets in the struggle for strategic

renewal. Some companies, however, must handle the challenges of renewal while under fire from its stakeholders.

McDonalds Responds to Changing Times

McDonalds, arguably the worlds most pervasive brand, is such a company. Though they were almost universally vilified

in the 1990s, they leveraged the power of strategic renewal to respond to critics and strengthen stakeholder relations.Uninformed change is always a risk. It might be best, then, to take some advice from McDonalds, who transformed

themselves with great success.

For years the company focused on quantity rather than quality. In the late 1990s, their resources had spread thin; their

stock plummeted and their food was demonized. While people loved the foods taste, most didnt feel good about eating

it. Some didnt believe it was real or that it could fit into a nutritious diet. Customers also complained about poor service,

despite claims that employees were the heart and soul of the organization. Employees werent happy and neither were

customers. Their reputation was at serious riskand it was significantly affecting their revenues.

McDonalds identified what they saw as the major hurdle to restoring their reputation: there was a distinct gap between

what they stood for and what they were known for. This was not just an issue of poor marketing or branding. They had

lost touch with their stakeholders and, as McDonalds Neil Golden, Senior Vice President and Chief Marketing Officer

remarked at the conference, were fighting irrelevance.

Executives set out plans to reinvigorate the companys core values. Their reputation hinged on how well these values

were maintained. Most important, they wanted stakeholders to be able count on them to always do the right thing;

they wished to be known as a company with good judgmenta company that sticks to its morals and operates with

its stakeholders best interests at heart. Second, they aimed to promote not only great products, but also the companys

great character. These were not easy tasks.

McDonalds approached the challenge with great care. They began by establishing a number of stakeholder engagement

programs that still exist to this day. First came the Moms Table. They gathered moms from various demographics in an

effort to discover what both parents and their kids found most important in food. Then came McJob, a nationwide hiring

2011 Reputation Institute

Kodaks reputation, measured at 76.85 in 2011, is indeed strong.

And with a strong reputation comes strong supportive behavior.

Stakeholders are still willing to give Kodak the benefit of the

doubtwhich will no doubt be instrumental in its recovery.


23/24

The Civilian Side of Reputation: What Happened to Rochester, NY?

Some say that a city s corporate institutions help shape its character. Nowhere is this truer than Rochester, NY

a 19th century boomtown turned 20th century manufacturing haven. For many years it has been home to some

of the titans of U.S. manufacturing: Kodak, Bausch + Lomb, and Xerox to name only some. As such, it is a corporate

city through and through. In 2000, manufacturing was in various capacities responsible for nearly half of Rochesters

economy. Its largest corporations were fundamental to both its lifestyle and image; the monolithic Xerox tower

still sets the aesthetic tone of the city as an icon of its skyline (even though Xerox officially relocated its corporateheadquarters from Rochester, NY in 1969!).

Over the past 10 years, however, Rochester has struggled to maintain its economic esteemand with it, its reputation

as an attractive center of commerce. The woes of its corporate mainstays played the largest part in this. Kodak

suffering from declining film salesshed 70 percent of its local employees from 2000 to 2010; Xerox followed suit

as it reduced local positions by 50 percent; over the same period Bausch + Lomb, a multi-billion dollar healthcare

company, eliminated over one-third of its local positions. This constituted over 22,000 lost jobs in the city from

these three companies alone.1

Throughout the last decade, Kodak and Xerox have struggled to maintain their reputations vis--vis their investors,

customers, and even their own employees. But both companies seem to have found a relatively sturdy foothold; and

now theyre rearing their heads in what looks to be a return to form. Reputation Institutes Global RepTrak Pulse found

that Kodak and Xerox now have robust reputation platformsscoring 76.85 and 74.31 respectively. This newfoundstrength is in part driven by Rochesters political champions, who realize that corporate reputation is not just corporate.

It impacts more than business results, but local economies and residents. For example, the local government touts

Xeroxs efforts to reduce the citys printing costs, allowing an extra $2 million for community service funding. Even

further, Kodaks CEO served as superintendent for Rochester Citys Schools for a day. He also works closely with

senators in Washington to help create local jobs, support small businesses, and develop city infrastructure.

Cities like Rochester have a unique responsibility. They must maintain the reputations of their local businesses, for

the strength of the citys reputationtheir ability to attract people to live and to visitis only as strong as their

corporate foundation.

1 Source: http://www.policy-wonk.org/kent-gardner/nys-must-rework-relationship-with-unions/

Other Rochester-based companies that reduced local positions include: Seneca Foods Corp. (57 percent), IEC Electronics Corp.

(52 percent), Gleason Corp. (40 percent), Garlock Sealing Technologies LLC (33 percent), Pactiv Inc. (30 percent), andHickey-Freeman Co. Inc. (21 percent).

day intended to connect employee experiences to the companys reputation. McDonalds wanted its applicants to

see the good of McJob and the good of McDonalds, both directly supporting the U.S.s economic recovery.

These programs, among others, helped McDonalds reinvigorate its business strategy with newfound confidence.

They focused on better service, better employee treatment, better accessibility (expanded operations and hours),

renovating stores, re-doing the menus, and, more generally, better fitting consumers needs. In 2002, the company

launched more than 50 products, many of which were intended as healthier alternatives to its core products. In the

same year, they also launched the Dollar Menu, which provided less expensive options tailor made for recession

budgets. The company even transformed its ad campaignsfocusing not on products but on hope, friendship,wistful nostalgia, and the excitement of eating with others. The advertisements express what the company stands

for, not just what it serves.

McDonalds is now enjoying one of the longest consecutive periods of growth in its historyand this growth is not

just financial. McDonalds took an informed risk to refocus its strategy. This is a decision which paid off in spades. Its

reputation is stronger than ever.

There are a number of valuable lessons to be learned from our 2011 conference in New Orleans; the most surprising,

and ultimately the most important is that reputation is the number-one driver of corporate value. But reputation

equity is a resource companies would do well not to neglect. From strategic renewal to crisis management, a strong

reputation is a powerful tool. It might even be the difference between extinction and a bright new beginning.


24/24

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