Category Archives: General Corporate

May 1, 2014 | cwinters | Tagged , , ,

When it comes to corporate reputation, trust begins at home

It’s always fun, and OK, even a bit vindicating, when you find actual data to support something you’ve always believed. Like the notion that reputation and trust begin at home, with your organization’s employees. If you haven’t seen this little tidbit here on this blog, perhaps a study featured in HBR will convince you.

You may have seen the headline that a quarter of employees don’t trust their employers. But what is more interesting than the headline, is the deeper dive into why and what that means. MWW friends, colleagues and clients may recognize a few of these tidbits:

  • Communication is key to trust….but what you do is more important than what you say
  • Two-way dialogue is more important that top-down communication
  • Telling people how and why is more important than the “what” or factual information

And for those among us who are challenged with managing multiple generations in the workplace (spoiler alert: we are going to talk about Millennials here) – workplace stress is defined very differently by the generations. And what your parents described as “knowing your place” Millennials describe as a major source of workplace stress: lack of participation in decision-making.

HBR is full of great information – too much for most of us to fit into our reading list. But this one is worth the read.

April 30, 2014 | cwinters | Tagged ,

Buffet Backtrack on CEO Pay: Reputation Buster, or Just Buffet Being Buffet?

The Oracle of Omaha has spoken, or in this case, not spoken. After boldly pronouncing large shareholders as the last line of defense on CEO pay just a few years ago, Buffet declined to vote against the Coca-Cola compensation packages he termed excessive. In fact, he declined to vote at all.

Is abstaining a cop out, or sending a signal, as Buffet suggests? And will his apparent lapse in backbone damage his reputation as the tough-talking, common sense billionaire who makes headlines any time he issues a pronouncement?

Buffet has built a reputation as being a contrarian voice, with results that consistently outperform the market. And that is his secret sauce: performance. So long as he continues to perform, any perceived “flip flops” in position will likely be chalked up to eccentric billionaire behavior. But should that performance wane…then we may see Buffet’s reputation decline like an OTC stock.

April 29, 2014 | cwinters | Tagged ,

Can you monetize your reputation? Ask Vernon Davis

Reputations are often described as “priceless” – particularly among those who’ve earned a stellar one. But the latest Fantex IPO of Vernon Davis suggests that reputation can be quantified, and even monetized.

If you haven’t been following, Vernon Davis is the world’s first publicly traded NFL player – offering fans an opportunity to “buy in” to his future earnings – which are presumably one part athletic performance (and contract payments) + one part endorsements (presumably the biggest upside is here). For sure, securing top dollar endorsement deals is about performance and exposure – and a trip to the Super Bowl sure wouldn’t hurt. But nothing kills endorsements quicker than a reputational problem. Ask Oscar Pistorius.

Arguments are raging about whether or not “buying in” to an athlete is a clever new investment opportunity, or a scheme to bilk fans of their hard earned money. As to the question of whether his personal reputation will impact the value of that investment – the answer is pretty clear.

This notion takes the practice of personal reputation management – whether for CEOs, athletes, musicians or elected officials to a whole new level. And goodwill banks will be more literally – banks, measured in dollars and cents, giving the notion of Return on Reputation a whole new meaning. And at least for today, Vernon’s stock is up.

April 7, 2014 | cwinters | Tagged ,

Reputation Bracketology: JCPenney v. JPMorgan Chase

And it all comes down to this: the final game of the tournament. The winner takes home the trophy, and the loser just takes the bus. In this matchup, we have two strong teams squaring off after two bruising rounds of competition. Here’s where things currently stand:

JCPenney

JCPenney came into the tournament as a serious underdog. They’ve been down before – way down – and rebuilding a championship-worthy team for a second time simply seemed like too much of a long shot. Just don’t tell head coach CEO Mike Ullman. He took on Toyota in the first round and General Motors in the second, handily beating both as the two automakers continued to struggle to overcome their own demons.

Coach Ullman has reignited the “Retailers” and their fans with a consistent emphasis on the fundamentals and a light touch of modernization – all while maintaining the iconic retail tradition that Americans love to love. By returning to discount pricing and coupons, loyal fans are returning, and with a fresh focus on online sale, particularly home sales, new customers are starting to take notice, as well.

When it comes to March Madness, a true Cinderella story is born when the underdog defies expectations and captures the hearts and minds of tournament fans everywhere. JCPenney has been serving the American public for over 100 years, and its brand loyalty puts them in good stead now when they need it the most. It remains to be seen if the “Retailers” will have a fairy tale ending, but if they can keep their heads in the game and avoid any additional setbacks, this will be a very close game indeed.

JPMorgan Chase

After easily defeating Carnival Cruise Lines in Round 1, JPMorgan squared off in Round 2 against a tougher opponent in Target. Target came out swinging with a solid game plan built on customer responsiveness and free credit reporting, but the “Bankers” held their own with strong performances centered on transparency and accountability. A few missteps led to a tighter contest than many had predicted, but head coach CEO Jamie Dimon rallied his team and they pulled out the win.

In the championship game, the “Bankers” will need more than just a strong track record. Coach Dimon has once again showed his willingness to make bold moves that strengthen his team, including the recent shakeup to the office responsible for the London Whale trading scandal by combining the Chief Information Office with the bank’s treasury department. This should lead to greater visibility and transparency across the units with responsibility for JPMorgan’s own finances and prevent another high-stakes failure.

Despite making all the right moves to get his team back on track, things are still far from over for the embattled “Bankers.” We still don’t know the full repercussions of the judge’s ruling in favor of shareholders who lost value in the London Whale scandal. As it continues to play out, it prevents JPMorgan from closing the book on this chapter of its history and truly focusing all the company’s efforts on the championship game at hand. A team distracted by outside events is quite unpredictable in these high pressure circumstances.

Winner: The winner of 2014 Reputation Bracketology is… JCPenney. In a hard fought contest that came down to who has moved farther away from their troubled past, the “Retailers” proved they truly are a Cinderella story. Despite the lead changing hands several times, Coach Ullman and his team proved they may be down, but they’re never out.

April 5, 2014 | cwinters | Tagged ,

Reputation Bracketology: JCPenney v. General Motors

JCPenney:

In the first round, JCPenney proved that returning head coach CEO Mike Ullman was onto something when the “Retailers” defeated Toyota to advance to the Final Four. When Ullman returned to the helm of the iconic American brand, he had his work cut out for him. The previous coaching staff had essentially run the program into the ground with new strategies that were poorly suited for its loyal fans.

By bringing the focus back to fundamentals, JCPenney is reviving the winning strategy that made it an American success story from the start. It all centers on building confidence in players, fans and stakeholders, through a steady commitment to customer service, cultivating talent and online retail. While it’s too early to tell whether loyal “Retailers” fans will renew their season tickets, a 25 percent jump in share price immediately following the release of the quarterly earnings report in late February indicates that something in Coach Ullman’s playbook is working.

If JCPenney and Coach Ullman can continue to shift the focus away from the disastrous decisions of the past and stay centered on the opportunity for change, growth and innovation, the “Retailers” could easily take home the trophy.

General Motors:

GM easily pulled off the first round victory on the strength of head coach CEO Marry Barra’s strategy of transparency around the mistakes made by the previous coaching staff and the institution of a new culture of accountability.

Unfortunately for the “Motors”, things have gone from bad to worse. After announcing the recall of another 1.3 million vehicles, Coach Barra made two appearances on Capitol Hill this week to testify about documents that show previous coaching staff were aware of faulty ignition switches, but deliberately chose not to fix them citing that “none of the solutions represents an acceptable business case.” Continuing her winning strategy, Barra apologized for the failure and announced two new additions to the roster – former U.S. attorney Tony Valukas, who will lead an internal investigation and disaster compensation specialist Kenneth Feinberg, who will evaluate options for payments to the families of accident victims. Both of these moves indicate that the “Motors” came to play, and Barra will not shy away from the increasing pressure of her new role.

While GM has been very effective thus far in rising to the occasion and making all the right moves, any team would be hard pressed to overcome the continuous drip of negative information. The hits just keep on coming, and it is unclear if we’ve heard the last of it. Will the momentum and goodwill built up to this point be enough for Coach Barra and the “Motors” to overcome the mess they’ve inherited, or will the consistently negative coverage break the spirit of this iconic team?

Winner: In this clash of the iconic brand titans, we give the edge to JCPenney. The veteran coach using proven methods to emerge from crisis and bring back his team’s glory days is just too much for the smart rookie coach still dealing with a continuously unraveling legacy she inherited. We see a promising future for head coach CEO Mary Barra, but there’s light at the end of JCPenney’s tunnel and in the madness of March, having the worst behind you is always a winner.

Up Next: Our championship matchup between JPMorgan Chase and JCPenney

Here is our updated bracket:

April 4, 2014 | pwalotsky | Tagged , ,

Throwing in the Towel: How to Build Reputation in a No-Win Scenario

Last week, while most fans of college athletics were glued to their television screens as the March Madness Tournament pressed into the Sweet Sixteen, a much more dramatic event with long-term impacts for college athletics occurred in Chicago.

On March 26, a National Labor Relations Board regional office recognized Northwestern University football players as university employees capable of forming a union – not student-athletes who are exempt from organizing rights. This ruling sent chills down the spine of athletic directors and NCAA officials across the nation, and may be looked upon years from now as a seminal moment in amateur sports, comparable to Curtis Flood’s suit against the MLB’s reserve clause in 1969 which set the foundation for free agency in professional sports.

While a formal ruling that would allow college athletes to form a national union and collectively bargain for all college athletes is likely years off due to extensive appeals and litigation, between this instance, the ongoing O’Bannon case against the NCAA that is scheduled to see the inside of a courtroom this summer, and the recent anti-trust suit against the NCAA by star sports lawyer Jeffrey Kessler, the fundamental business model in college athletics is headed towards dramatic change over the next decade barring a dramatic collapse in momentum of the student-athlete rights movement.

On its face, the requests of these Northwestern college athletes who were recognized by the NLRB are exceedingly reasonable. These include: no loss of scholarship as a result of injury, healthcare coverage for injuries in practice and games, independent experts on sidelines to assess concussions, forming an educational trust to help former players graduate once their eligibility has expired, and “due process” for students who are removed from scholarship by coaches. Notably, the only talk around compensation is a nominal per-game stipend to cover reasonable expenses – something that most major conferences and even the NCAA’s President already support.

Furthermore, aside from this assault by litigation on all fronts, in the court of public opinion, we’ve reached a tipping point. Just this past week, major institutional media figures ranging from legendary sports writer Frank DeFord to New York Times business columnist Joe Nocera have celebrated the NLRB ruling and unionization for athletes. A year earlier saw a blistering cover story in the Atlantic Monthly that accused the NCAA of being a “colonial” institution and a PBS Frontline investigative report that exposed the double-standards and hypocrisy of the March Madness tournament with impoverish athletes enriching outlandishly paid coaches and administrators. Even President Obama has remarked that he’d like to see the NCAA do more to protect the health of athletes.

While the NCAA and universities are still aggressively trying to make their case – as the President of the University of Delaware attempted to on The New York Times op-ed page on Wednesday – the die has been cast. The remaining holdouts against NCAA reform are sentimentalists and those whose paychecks are tied to the current business model. The latest round of opposition – the idea that a union for college athletes is impossible to administer and impractical – has been dismissed by prominent labor law experts in academia like Peter Frampton of UC-Berkley. If there were strong and credible arguments left, one would think they would have been articulated by now.

While it may not happen today or tomorrow, change is coming, and from the NCAA and university perspective, none of the options are good ones. So, what to do when confronted with this type of no-win scenario?

In many cases – and this instance is no exception – opportunity in a no-win situation may be found through building reputation and good will in the long-term. Presently, the question that the NCAA and major universities are asking themselves is just how much negative press and litigation they are willing to endure to maintain the status quo. Do they proactively change and earn some good will, or do they hang on as long as they can until they’re forced to change by regulators or legislation?

Since the core of the NCAA’s business model is at stake, it’s likely they will fight aggressively to the very end to preserve revenue streams and keep their business model in place. After all, organizations that no longer exist have no further reputation to lose.

But major universities themselves will exist long after a decision is made. At a certain point, they will need to choose: do they proactively offer concessions to athletes? Or will they continue to pursue the status quo despite the writing on the wall?

The obvious, but painful decision is for universities to announce their support for making concessions proactively, and to make these pronouncements soon. While athletic departments will resist change aggressively, ripping the band-aid now prevents the long, slow drip of criticism and litigation. Furthermore, they have a seat at the table in making the rules, rather than leaving it to regulators or legislators.

Finally, I would be remiss not to mention the first-mover’s advantage. It does not apply in this instance because first-mover schools that act on their own could be punished by the NCAA and excluded from their sanctioned events. However, when an entire industry is faced with a no-win scenario and the path forward is apparent, being the first to break from the pack can have substantial reputational benefits. If you ever find yourself in a situation that’s seemingly without hope, consider your long-term reputation as a way to find opportunity and a light at the end of the tunnel. And if you have the chance, act before your competitors to earn the greatest amount of reputational benefit.

April 4, 2014 | cwinters | Tagged ,

Reputation Bracketology: Target v. JPMorgan Chase

Target:

Despite a slow start, Target put in a strong showing in the early round, easily defeating SeaWorld with slow, but generally well received outreach from the CEO, a front office shake-up and a new effort to appeal to “season ticket holders” with free credit monitoring. However, Target’s offense was dealt a serious blow with the recent revelation that warnings about suspicious activity on its network went unheeded in the weeks prior to news about its major data breach during the hectic holiday rush.

Newly acquired starting forward, CFO John Mulligan, recently made his third start before a Congressional panel, fielding questions about a Senate report that found Target missed multiple opportunities to prevent the theft of millions of customers’ credit card numbers and personal information. With this information only recently coming to light, it’s too early to know if the damage will be enough to erase the benefits of being an early favorite.

As opponents continue to seek ways to leverage this new perceived weakness, it remains to be seen if the “Bullseyes” can adjust their playbook this far into the season. Additionally, with ongoing litigation over the theft yet to fully ramp up, it’ll take more than a last second shot from half-court to win against a strong opponent like JPMorgan Chase. This could turn out to be a matchup for the ages.

JPMorgan Chase:

JPMorgan Chase benefited from a weak first round opponent, so we have yet to really see what this team is capable of. Matched against a stronger opponent in Target, we expect the “Bankers” will rise to the challenge and continue to build off their new team motto of transparency and accountability.

2013 was a rough year for JPMorgan Chase and head coach CEO Jamie Dimon. Starting with the release of an internal report stating that Dimon bore ultimate responsibility for the company’s losses from the London Whale debacle, and ending with the company paying roughly $20 billion over the course of the year to resolve various government inquiries, the off-season was a much needed time of reflection and rebuilding.

As the team returned for the 2014 season, there was a renewed focus on moving forward that saw the Bankers overcoming last season’s missteps after being considered by many top analysts to be on the bubble. While some issues continue to linger on the sidelines, such as Dimon’s surprising 74 percent raise and the unexpected exit of Assistant Coach Michael Cavanaugh, the team seems to have weathered the storm and come out stronger on the other end – with some analysts even projecting significant growth in 2014. As a footnote, it remains to be seen how much of an impact this week’s ruling by a U.S. District Court judge that shareholders can continue to pursue claims related to the London Whale case will have on the team should they advance to later rounds.

Despite these lingering questions, it’s hard to count out a team that peaks in early March, but for JPMorgan Chase, the real question is – will it be enough to overcome its first legitimate challenger or will the ghost of seasons past continue to haunt the Bankers’ tournament dreams?

Winner: The potential depth of Target’s slump will be too much of an obstacle for the Bullseyes to overcome, and this matchup goes to JPMorgan Chase. The Bankers’ perfectly timed climb out of crisis is why they call it madness, folks.

Up Next: JCPenney vs. General Motors

April 3, 2014 | cwinters | Tagged ,

Reputation Bracketology: General Motors vs. Bank of America

General Motors: A few months ago, GM seemed to be leading the charmed life. The “new GM” had put the bailout behind the company, and exuberance for its new CEO Mary Barra abounded. And then came the recall. Some experts say that Toyota’s settlement is a precursor for what may come for GM, which could change its game. But for right now, GM gets high marks for an effective, transparent response. Prior to the recall, Barra highlighted reducing bureaucracy as one of her priorities, and a culture of accountability will serve the company well during times of trouble. As a new CEO, she has the ability to be the person who solved the problem, without necessarily carrying the baggage of creating the problem.

Bank of America: Thomas Jefferson had a bank account at Bank of America. They are, after all, Bank of America. Just a few short years ago Bank of America was touting its “higher standards,” was growing rapidly and seemed certain of an entrenched position among America’s leading companies. Until the company wasn’t.

Today, it seems the company has a lot of work to do if it wants to be seen as more than just a profit monger. Clearly, tone deaf is a trait that is pervasive in financials services, as evidenced by Bank of America’s decision to increase ATM fees in the midst of a reputational firestorm. This is one case where use of the CEO seems ill-advised, as he seems to make things worse, not better. Bank of America has the lowest customer satisfaction of its peers, and although profitable, its financial performance is showing signs of vulnerability and volatility.

Winner: GM, because it is rising to the occasion far better than Bank of America. Of course, should the investigation reveal that corporate bureaucracy or greed caused a “hush up” – the outcome may be very different in future rounds.

Up Next: The first match up of the Reputation Bracketology Final Four: Target vs. JPMorgan Chase.

Here’s our updated bracket:

 

target data

April 3, 2014 | dlauer | Tagged

Why The Right Brushstroke Can Make All The Difference In Target’s Recovery

John F. Kennedy once likened the duality of a crisis to the two brushstrokes used to form the Chinese word: “One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger–but recognize the opportunity.”

Target has continually been in the hot seat since announcing one of the most impactful consumer data breaches on record. Closing on the 100 day mark, reverberations from Main Street to Wall Street are still being felt, punctuated by record low customer traffic numbers and a drastic drop in the stock. Given that the company chose to ignore a “suspicious activity” system warning after hackers infiltrated, its reputation – arguably its most coveted corporate asset – is suffering.

With the worst behind it, the good news for Target is all signs point to its commitment to recovery. The company’s leadership has taken many critical steps that are enabling them to begin restoring trust in the brand. To date, it has accelerated its $100 million plan to roll out chip-based credit card technology and built more secure walls between its network and added more “two-factor” authentication protocols. It has made the move to clean house and take names (including its now former Chief Information Officer and Chief Compliance Officer). Taken together, this sends a strong signal: Target admits a major fracture in its IT has been ripped wide open and a Band-Aid won’t hold it together.

For Target, this is a very good thing, considering the next breach is not a question of if, but when. We live in a mobile world today. More than half of Americans purchased electronics, books, or clothing online last year alone, leaving consumer goods companies and their customers more vulnerable to hacking threats than ever before – to the tune of $88 million. The cost to the retail industry alone is $2.7 million. The bottom line: we’ve got a growing problem on our hands. Secreting consumer data is an issue that’s not going away, and someone needs to step up and own it.

Target’s Fork in the Road

The question is: could Target be that owner? It’s difficult for any company to see the forest when they’re busy dodging the falling branches, but it’s time for Target to seriously consider what the company wants the end game to look like. Sure, Target could clean up its mess, move forward and hope its brand equity and customer loyalty will endure over time. Or, Target could do what true category leaders do. Capitalize on the opportunity inherent in this seminal moment. Go beyond the Band-Aid. Become an advocate for security best practices within the retail sector and beyond. Put simply, Target can pick up that other brush and start painting.

Taking Action

If Target does decide to own the issue, there are several steps to consider in order for the company to begin building a platform around security while reassuring customers it is taking the right actions on their behalf.

1. Make a Customer Pact

Target needs to sharpen its focus even more right now on customer satisfaction. They’re not just another stakeholder in this mess, they are THE STAKEHOLDER. Thanks to the loyalty and goodwill built over the years, most customers are rooting for the company to come out on top, but they want to see the promises in action, not hear about them. One way to bring the spark back is to put Target’s commitment in writing. Imagine the first retailer to develop and publish a Consumer Security Constitution: a manifesto letting customers know where the company stands on the issue of security and what they can expect in return.

It worked for JetBlue. The airline’s Customer Bill of Rights, written in 2007, provides passengers with a clear understanding of how JetBlue responds to delays by setting expectations such as to what JetBlue will and will not tolerate such as “JetBlue will not permit the aircraft to remain on the tarmac for more than three hours” unless there’s a major safety or operation reason and “Customers who experience an Onboard Ground Delay on Departure after scheduled departure time for 3-3:59 hours are entitled to a $50 Credit good for future travel on JetBlue.” It took the Department of Transportation more than two years to catch up to JetBlue’s lead … resulting in a formal rule that allowed fines to be levied in many cases if passengers were stranded for more than three hours. Now that’s industry leadership in action.

2. Convene The Party: Strength in Numbers

Target should align itself with the decision makers and powerful industry forces supporting change. The quickest way to multiply its reach would be through a strategic partnership with the National Retail Federation and major security federation, such as Cyber Secure America Coalition to attack the issues at hand.

Better yet, Target could get ahead of the dialogue by convening a security task force with retail’s major players in support of industry-wide adoption of the highest vigilance for consumer security. These efforts will not reinforce Target’s security commitment, but will help push forward industry-wide adoption of its Security Constitution. Taking a page out of Facebook’s playbook, consider the online company’s backing of immigration reform – it has successfully brought together other major business leaders to create FWD.us, helping to advance the conversation around reform.

3. Turn The CIO Search Into A Best-Practice for the Retail Sector

The search for a new CIO presents another opportunity for Target to lead. All industries are grappling with the changing role of the CIO and its growing importance to any enterprise. Ask any CFO who survived the Kozlowski and Schwartz eras and they’ll tell you that the CIO role has now been propelled to the reputational front line – not always an easy place to operate. This is a chance to shine a light on what businesses are going to need from this department as technology’s role continues to expand. Stressing the importance of leading innovation with an equal vigilance about security is surely to gain mainstream traction and attention.

Target’s breach made its security practices everyone’s business, and now it’s up to management to keep them informed. The public will want to know who the candidates are, their track record on security and their philosophies on solutions. Target should send regular updates through the media and other influencers about the standards it will be holding candidates against. By bringing the CIO agenda and timeline public, people will feel invested in the effort and encouraged by the positive changes to come.

Any of these action items are not for the faint of heart. Companies don’t become an advocate of security best practices or anything else, overnight. And they don’t earn the title just because they claim it. Being an authority will require Target to commit fully to the cause, which includes its time, resources and even cultural investment. Buy-in and support from the top is critical to demonstrating this isn’t just a “side gig” for the company but rather a platform completely integrated into its DNA – from employees’ vernacular, to systems and operations.

As a brand fan, it’s hard not to pull for the company that democratized fashion chic. Hopefully it decides on the right brush to paint its future, because ultimately, there’s a great opportunity for us all to benefit.

April 2, 2014 | cwinters | Tagged ,

Reputation Bracketology: JCPenney vs. Toyota

JCPenney: I’ve said it before, and I will say it again. It’s hard not to root for JCPenney. They are another company we’ve been watching for years here at ROR. Mike Ullman is a veteran of retail turnarounds, and he’s fixed JCPenney once before. He is bringing back the proven game day strategies of private label brands and promotions to drive customer traffic. Reliable moves like closing unprofitable stores, and doubling down on key categories like home goods should serve JC Penney well. Ullman also knows how to establish benchmarks and communicate progress in a turnaround – he’s outlined a plan that stakeholders can understand and support –and he is delivering against that plan.

Toyota: If JPMorgan Chase is peaking at the right time, Toyota is doing the opposite. We’ve been following Toyota’s woes here on ROR for a few years now, and despite some valiant efforts to focus on safety, such as the launch of its new Collaborative Safety Project, Toyota is announcing recalls almost as frequently as retailers report same store sales. The recent Lexus recall, combined with the $1.2 billion dollar settlement makes the company an underdog in this tournament.

Winner: JCPenney. Because great coaches win big games.

Up Next: General Motors vs. Bank of America