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Harris Interactive came out recently with its annual Reputation Quotient Survey and there are some interesting developments.
The top spot in 2010 went to Berkshire Hathaway but not so this year after the Sokol fiasco, which we’ve previously written about here in Return on Reputation. Now Berkshire Hathaway is down to No. 4 – not bad, all things considered, but still a precipitous drop from a previous, largely untarnished image. Who dropped off the top 10 list entirely? Coke and Microsoft…replaced by Disney and Apple. Google moved up two spots to rank No. 1.
What does all this mean for companies who care about their reputation? That it’s a fickle thing and as Warren Buffett famously said, takes an instant to evaporate. Not only that, but everyone has a say these days in what kind of company you are. Google came in first for its financial performance and workplace environment…proof positive that all stakeholders weigh in when it comes to reputation.
Investors and employees clearly gave Google a boost on the ladder in today’s 24/7 interconnected world, and that matters. Every company spends a lot of time thinking about how they communicate with Wall Street – conference calls, press releases, one-on-ones with big institutional investors. But probably not as much time focusing on the way they talk to employees and how they empower their employees to talk about the company, too. Smart companies have “ambassador” employees blogging and participating on Facebook, Twitter, etc., after implementing forward-looking social media policies that lay out the ground rules. Google it and you’ll see.
The Oracle of Omaha Redux
May 2, 2011
What a difference a month makes. Last month Warren Buffett was praising David Sokol, his erstwhile successor who made a hasty departure amid the scent of an insider trading scandal, as a great guy whose purchase of Lubrizol shares prior to the Oracle of Omaha buying the Company “were not in any way unlawful.” At this weekend’s Berkshire Hathaway annual meeting, normally a lovefest for 40,000 Buffett shareholders and devotees, the Oracle used words like “inexplicable”, “inexcusable” and “very damning evidence” to describe Sokol and what now looks like share purchases that will end with a perp walk.
Buffett is legendary for his investment acumen and vigilance regarding his and his firm’s reputation. After a month in the media spotlight regarding the Sokol/Lubrizol affair where questions swirled about what the Oracle knew and when he knew it, whether he was just getting too old and was off his game, or whether he was just a hypocrite when it came to Sokol, Buffett came clean and admitted that he “obviously made a big mistake.” Time will tell whether Buffett’s reputation took a hit. He has built up considerable good will over the years and the Sokol fiasco as well as the big hit to Berkshire Hathaway profits in the first quarter as a result of insurance losses will likely not do lasting damage to the man or his company’s reputation.
The Sokol/Lubrizol affair is just the latest example of the response to a crisis situation creating seemingly more problems for a company and its executives than the crisis itself (think Toyota, BP, Goldman Sachs and Johnson & Johnson). Crisis communications 101 teaches that you take control of the message quickly, be transparent, only release information on what you know and never speculate. From the start, Berkshire Hathaway dropped the ball, whether due to Buffett’s loyalty to a key member of his team or just not knowing the facts. The media jumped all over the issue and for a month reveled in discussing the seamy details and timeline of events, repeating Buffett’s reputation mantra and highlighting the ode to Sokol in the company’s press release.
Now, a few weeks late, Buffett has held forth on the issue and provided a mea culpa. Charlie Munger, Buffett’s right hand man summed it all up nicely at the annual meeting in typical Berkshire Hathaway understatement when he admitted that it “wasn’t the most clever press release in the world.” It also wasn’t the most clever way to respond to a crisis and that should be the lesson for the normally very clever Oracle and the rest of us.
No Longer the Oracle?
April 8, 2011
Warren Buffet is famously known for saying, “lose money for the firm and I will be understanding; lose a shred of reputation for the firm and I will be ruthless.” The quote and the speaker are often seen as benchmarks for those of us in the reputation management business. However, the Oracle of Omaha is now embroiled in perhaps the biggest reputational crisis of his career after the surprise resignation of heir apparent David Sokol. The story has pivoted into a fulsome discussion of Buffett’s image and how much he knew or wanted to know about Sokol’s purchase of Lubrizol shares and subsequent recommendation of the company to his boss prior to Berkshire Hathaway’s purchase.
Buffett’s press release/letter on the subject, starts by expressing shock at Sokol’s departure and praises his extraordinary contribution to Berkshire Hathaway. He ‘secondly’ discusses the Lubrizol situation and concludes that nothing unlawful occurred. Unfortunately, regulators, who have already started investigating, may not see it that way and the incident has unleashed a relative savaging of Buffett by a normally fawning analysts and media. Yesterday’s column by David Weidner in the Wall Street Journal goes so far to as to chronicle a decade-long decline in Buffett’s mastery of his reputation.
The Sokol fiasco and media frenzy of the last ten days is guaranteeing that the Berkshire Hathaway annual meeting later this month will not be the usual lovefest in Omaha. The folksy Q&A format will no doubt be a lot more tension filled. Buffett has said that he will simply refer any questions on the Sokol and Lubrizol matters to the press release/letter issued on March 30. But that just won’t cut it. Buffett has already damaged his reputation by not addressing the very real concerns on the issue and any stonewalling at the annual meeting will only do further damage. He needs to meet this crisis head on and draw on his strength as a plain-speaking Nebraskan to tell shareholders what he knew when he knew it and show some ruthlessness regarding his and Berkshire Hathaway’s reputation. Buffett has already wasted precious time but the goodwill he has engendered over the years gives him a chance to rebound. He needs to be his usual candid self and provide the answers his audience wants. A better mea culpa, if his lawyers let him, also wouldn’t hurt.
As he prepares for the annual meeting, Buffett can refer to the recent DealBook post by the New York Times’ Andrew Ross Sorkin, one of the media regulars at the gathering, for a great list of questions to prepare for.