Abstract and Keywords
Every company can tell many stories about itself and some like Enron did. The various Enron stories focused on its corporate character and Kenneth Lay, the celebrity CEO who ran the company. They helped to create a very powerful reputation for the company that duped people into being a customer, or investing their money or their labour in the company. The various Enron stories illustrate many of the key aspects of how corporate storytelling can create an image for the company and transform this into a reputation of distinction, or not as the case may be.
Every company could tell many stories about itself, and some like Enron did. The various Enron stories focused on its corporate character and Kenneth Lay, the principal character who ran the company. As noted in chapter 2, they helped to create a very powerful reputation for the company. So powerful in fact that many people were duped by these stories into being a customer, or investing their money or their labor in the company. The various Enron stories illustrate many of the key aspects of a corporate story and the impact that it can have on creating an image for the company and transforming this into a reputation of distinction, or not as the case may be.
To elaborate the role of corporate storytelling for reputation formation I’ll start by telling a short tale of the thirty-year life of the Australian Graduate School of Management—the AGSM. I will tell this tale as most people would, namely as a descriptive chronology. To turn it into a more engaging corporate story requires some development, which I will describe after I recount this version of the story. To turn it into a good reputation story requires more focus.
I joined the AGSM in its second year as a PhD student and stayed until the end when I was an associate dean. This is my story of an organization that I grew up with and later helped run. For most of its life it was rated by the Financial Times as offering the best MBA degrees in Australia. As you will see, it was an interesting and sometimes challenging place to work. And we were a group of people who were not universally liked by some of our other Australian colleagues.
(p.92) The Australian Graduate School of Management Story
As a brand name the AGSM still exists. Some people even think that it is still a proper business school. For the first thirty years of its life it was an autonomous graduate business school. But in 2006 it was gelded. Over the next few years most of its faculty left, and its programs were submerged into those of a much bigger faculty. In essence, the AGSM became a Post-it note brand name.
It all stated well enough. After a report about the poor quality of graduate business education in Australia, the federal government committed to funding a national graduate school of management. Thus the AGSM was established in 1976 as a separate postgraduate school in the University of New South Wales.
The first dean was a well-respected Australian academic. He sourced his founding faculty from overseas. They were an eclectic group of 12 young and aged scholars who were dedicated to building a center of excellence. Initial funding was $2.33 million from the federal government. The first programs were for full-time MBA, PhD students and fee-paying executives. They proved difficult to fill and the first class of MBAs totaled just 31 students who were willing to bet the next part of their careers on a new venture. Initially the AGSM looked more like a small medical school than a traditional university faculty. It quickly developed a tangible esprit de corps. The size, structure, and source of funding of the new school signaled that the AGSM was very different to the then and now large university faculties of economics and commerce. Over its first decade the AGSM quickly gained a reputation as a small, privileged clique of high achievers.
The Middle Years
During the next twenty years the AGSM prospered. It grew to become about a $40 million operation that could survive at this scale but could not grow without making some fundamental changes to its programs and institutional arrangements. This problem, and our independent relationship with our parent university, ultimately came back to kill us.
During this period the AGSM became more like a professional practice than a university department. The school developed a strong (p.93) internal culture among the student body and the faculty. We were much more collegiate in our decision making than a traditional faculty. We were also housed in our own self-contained building, which had a great library, reliable computing facilities, accountants, good restaurant, executive accommodation, and a well-stocked wine cellar. We attracted some important donations that were quarantined from the university. We paid salary supplementation based on a formal performance appraisal system. We had three ex-management consultants as deans. And we did not pay any “tax” or “dividend” back to the university. For many years “we ate what we killed.”
The school also developed some defining character traits that set it apart from most other Australian university faculties. For example, all faculty were expected to participate in decision making, and each person’s opinion was appreciated; the MBA programs were priced at what the market would bear rather than being pegged to other university courses; student teaching evaluations were put in the library for all to see; some faculty were allowed to specialize as teachers or researchers; people were paid well above the standard salary scale for excellent performance; teaching executives and executive MBA students often required travel away from the university and working on nights and weekends; a large proportion of the faculty were professors as opposed to the few professors in most faculties; consulting was done through one’s private account or through an AGSM company rather than through the university’s consulting company; we were happy to be ranked annually by the Financial Times against our global rivals; a board of directors participated in the governance of the school, and sometimes the directors were called on to pressure our parent university to modify its claims on AGSM resources.
During this period the AGSM attracted and developed some outstanding students, teachers, and researchers. A few of the faculty were headstrong and at times a bit difficult to manage. They would act like sole traders in a market rather than members of a college. One source of tension was the business model of the school—teaching made the money but research was held internally in high esteem. At one point, a faculty revolt resulted in one of the deans being terminated. Some people found the AGSM environment uncomfortable and left. Some spent the greater part of their working life there.
(p.94) The End
In 2006 the university appointed one of our previous deans as vice chancellor. His primary mandate was to put the university on a more secure financial footing. To do this, which he ultimately did, required some tough decisions. To signal to the university community that such decisions were forthcoming, he then proceeded to “shoot his own dog”! Immediately after his appointment he called a joint meeting of the AGSM (about 40 faculty) and the university’s Faculty of Commerce and Economics (about 240 faculty). Here he announced that the two entities would merge under the leadership of the dean of the faculty. The die was cast. A short, unsuccessful attempt was made to reverse the situation, or at least wrest control of the leadership. All attempts failed.
A number of reasons motivated this decision, none of which were satisfactory to most of the members of the AGSM. Hence, within a couple of years approximately a third of the faculty left, a third was happy to join a much less demanding environment, and a third decided to stay until their generous superannuation became due.1
The AGSM brand name settled down to be a Post-it note that is attached to a small number of postgraduate degrees and executive courses. The brand name has a couple of dedicated administrative staff but no separate group of faculty. Without these it cannot be regarded as a real business school.
This corporate story has some notable omissions. All would need to be addressed before it would “work” to consolidate the AGSM’s old reputation or create a new one.
One is that my rendition of the AGSM story deliberately lacked the development of a dominant organizational character trait that would appeal to your business-related values or expectations. By emphasizing a deep inner desire to do something (aka mission) and some signature behaviors, I could have positioned us as a pioneer—we were established to re-energize Australian management education and became the first school to implement many modern management practices. I could have (p.95) positioned us as a rebel or a challenger—we would routinely challenge many university orthodoxies. For example, most of the faculty did not join the academic union, and most were prepared to drive through the occasional picket line on a day of strike action to come to work. Another position could have been that of excellence—our research productivity and teaching excellence routinely outperformed that of our commerce and economics colleagues at the University of New South Wales and in other Australian university business schools. The positioning of an organization is what shapes its reputation position by showing that we were best at something or best for somebody.
My narrative also lacked a face. I gave some hints that individual academics could have been used to humanize the organization. And the dean who became vice chancellor and gelded the school to which he devoted nine years of his working life could have been made into a pivotal personality. Powerful corporate stories generally have some strong people as principal actors. These help other people identify with the organization.
A third omission is that there are no disasters, obstacles, turning points, or competitors. Many corporate stories chronicle how the organization overcomes some type of adversary. This is often a point of proof of a strong character or some special competence. For the AGSM the major issue was funding. Despite the best efforts of our various deans, we only every raised a very small endowment. Our program fees were our principal source of revenue. So our “profit story” was that we were an “eat what you kill” operation. At a small size, operational funding was not a serious concern, but we did not have enough in reserve to fund significant growth.
A fourth omission is that there is no moral to the story. Two could have been easily developed. One along the lines of it was a mistake to geld a viable, strongly branded, internationally reputed institution. The reputation story here is that often the reputations of a university’s professional schools (business, engineering, law, medicine, etc.) boost that of the parent university. Now the AGSM story becomes one of poor brand management and poor strategic decision making. An alternative story line is that of growth and/or re-invention. Here the AGSM was merged into a larger institution that could serve the needs of a broader Australian business community. This is a good outcome, and if the integrity of the AGSM (p.96) brand had been retained, it would have allowed the school’s reputation to spread to a wider community. What is interesting is that for the first few years after its demise, when people talked about the old AGSM, both of these storylines competed for supremacy.
The final omission was that there was little direct discussion of the value we created for our various stakeholders. Many students went on to successful careers. Many of the faculty built successful careers. The reputation of our parent university was enhanced by our success. And our executive programs helped some companies to become more successful in their endeavors.
The choice of facts to highlight, organizational character, outstanding people, turning points, and value created, all offer ample scope to write a variety of stories about the old AGSM. The storyline chosen may seek to create a desired reputation based on character, competence, citizenship, and sometimes profitability. These are “who we are” stories. Alternatively, the storyline may focus on the people who really matter and what the company does best for these stakeholders. These are “best for somebody and/or best at something” stories.2 To be believable, the new AGSM story will have to be true enough to fit with the memories of the people who knew the organization when it existed. When these memories fade, the story can be rewritten by its current owners.
To recap, there are some key aspects to good corporate reputation stories:
• Stories are personal—the facts, defining moments, key people, and situations faced are all introduced and framed by the storyteller.
• Language matters—if the corporate story is to help build and maintain a good reputation, then it must use the language of reputation in its telling.
• History matters—what has happened in the past conditions how new information about the organization is presented by the storyteller and interpreted by his or her audience.
• Key people and the defining characteristics and experiences of the organization highlight its overall character.
• A strong story will contain similar elements and convey a similar reputation position when told by different people.
(p.97) • You don’t need to spell out every detail of the story. The well-organized absence of information will draw people into a story. In this way they become co-producers of the story. They are then likely to believe it more.
• The primary audience for a corporate story is employees. If they don’t believe it, then nobody will. And outside the company employees are its primary storytellers.
With hindsight one of our biggest mistakes with our AGSM story was that many more people knew our name than knew any of our stories. We had some interesting stories to tell that fitted with the worldview of a modern business school, and that many people in the local business community and business academics in Europe and America shared—but we didn’t tell them. We lived our story as students, administrators, and faculty, and we allowed our deans to periodically change our corporate identity symbols instead of all of us telling and retelling our story. As marketing consultants say, “just because people know your name doesn’t mean they know who you are.”
There is one facet in the AGSM story that bedevils many very profitable companies. It is how to tell the corporate profit story in such a way that it is not seen as greed by members of the general public. In chapter 3 this problem was called the bottom-line backlash effect. A common strategy to avoid such an effect is to try to deflect attention from super profits by telling a corporate citizenship story. Most big companies implement this by writing some type of social or environmental report and posting it on the corporate website. Some of these win awards and the praise of NGOs. However, apart from some curious academics and journalists, I wonder who else reads these reports. For example, let me ask you the reader, how many vision statements, codes of conduct, ethics statements, and sustainability reports have you read of the companies that you regularly deal with? In fact, have you even read your own company’s current statements?
Another strategy is to use corporate advertising to focus the attention of stakeholders and members of the general public on something other than profits. For example, the “Designed by Apple in California” advertisement is 1 minute and 30 seconds long. It echoes the message in William Isaacson’s biography of the late Steve Jobs that product (p.98) development at Apple is conducted by “engineers and artists, craftsmen, and inventors” and it is a long process—“for every yes there are a thousand nos.” It also notes the product development strategy of the company—“We spend a lot of time on a few great things.”
Interestingly, one of the best places to find a rendition of a company story is in Wikipedia. For example, there is much more informative detail about the European electronics company Philips here than on its corporate website! Also these entries seldom focus on the profit side of a company.
So here is the dilemma. A well-established company has far too much history to tell and far too many aspirations to convey, but it still needs to tell a story about itself. So how could it fashion such as story? My suggestion is that it takes a leaf out of the leadership book of the Royal Navy.3 This highly respected institution uses two types of story. One is of the long-wave variety and chronicles the formal memory of the navy. On entering a naval institution, one can generally find a book that notes past naval activities on that date. The role of these episodes is to show what individuals did in situations large and small and thereby inspire others to tackle the challenges of the day. The other type of story is short-wave in nature. Here navy personnel are encouraged to tell stories called “dits” about what is happening on a day-to-day basis. These serve to assimilate knowledge and insights and to reinforce the Navy’s collective consciousness. The aim is to get both types of story to focus on reputation-enhancing issues.
In a corporate reputation context the long-wave story focuses on the values, purpose, character, competence, and past deeds of the company. These factors can be illustrated by linking them to defining moments, critical challenges overcome, and key employees. In essence this is the story about how the company achieved the reputation that it currently enjoys or endures. A version of this type of story can usually be found on the corporate website. In contrast, the various short-wave stories need to focus on the value the company is creating for its different groups of stakeholders. These stories encourage employees to talk to each other, and if they can focus on stakeholder value creation, then they are speaking about how the company is creating a better corporate reputation. These stories are generally shared “around the water cooler” and at other (p.99) informal gatherings. For many years FedEx told a number of these stories about its heroic attempts to deliver its parcels.
To further make my case for the efficacy of corporate storytelling, let me proceed by selling the power of corporate stories.
The Power of Stories
Parents and grandparents know the power of a good story. So do movie-makers and the writers of fiction, documentaries, television dramas, biblical texts, the armed services, and so the list goes on. Comedy and jokes often involve a short story with an unexpected ending. Anecdotes are mini-stories. So are most news reports. Thus, at an intuitive level, we all know the power of a good story.
On the scientific side the case for developing a corporate story is supported by two sources of evidence. One is Howard Gardner’s scientific work in the field of cognitive psychology.4 His research supports the efficacy of using stories to convey ethical and moral principles and to change people’s minds. Here the story of a company gives people a reason to believe something about it that aligns with their values and expectations. Anita Roddick, the late founder of the Body Shop, was a master storyteller about her company and what it stood for. Likewise is Richard Branson and his various Virgin stories. Stories also provide the context in which new information about the company will be evaluated. The second type of evidence comes from the work of Stephen Denning and Annette Simmons on inspiration, influence and persuasion through the art of business storytelling. Their work provides much of the compelling anecdotal evidence about why stories are a powerful communication tactic to activate emotions and to engender trust and confidence in leaders and their companies.5
Howard Gardner regards stories as one of the four “contents of the mind.”6 They have a powerful influence on what we learn because of their pervasiveness and intuitive appeal. Also, because they often speak about values and morality, which sits at the heart of the reputation of individuals and companies, they are a natural medium to convey a company’s character, good deeds, and aspirations. In a corporate context they are more believable, more memorable, and they generate more enthusiasm than the various sanitized statements of mission, vision, (p.100) ethics, and codes of conduct that companies routinely produce and that often remain invisible inside the organization. Hence, while these statements of intent are useful as inputs into a corporate story, they are no substitute for it.
The task facing a corporate communicator is to craft a corporate story in the language of corporate reputation with content appropriate to foster a desirable reputation position. To illustrate how this task may be achieved, I’ll outline what I suggest should be the raw material for such a story.
Who We Are Style Reputation Stories
One type of long-wave reputation story is based on the identity of the company. It is a “who we are and what we do” type of story. The content of this type of story is scattered throughout many a company’s website. This information is often organized as a chronicle. The timeline is usually some version of what we did yesterday, our record today, and what we will do tomorrow. The past history of a company is relevant when it guides the values of the present, shapes the current identity of the organization, and/or helps sustain the faithful and bring in new recruits. Information about today acts as a bridge between yesterday and tomorrow. Information about tomorrow is meant to be inspirational. Balance across these three time periods is a key aspect of this type of corporate story. When there is a heavy emphasis on yesterday, it may suggest that the company is past its prime. A too heavy emphasis on the current situation may resemble a report card. And a too heavy emphasis on the future may sound too prophetic.
To illustrate this challenge, consider the task faced by Carly Fiorina when she became the CEO of Hewlett Packard in 1999. As an Economist reporter noted, HP had become a hardware has-been, unable to keep up with the Internet age.7 What Fiorina was confronted with was that HP had a proud history as a founding member of Silicon Valley that was supported by a very strong culture called the “HP Way” that she thought was now stifling innovation. Her options were to create a new corporate story based on a new future or one that acknowledged the past. The first option would be perceived as either ignoring or challenging HP’s history, and it probably would have created resentment among longstanding employees. (p.101) The risk with the second option was that the past could easily distract people’s attention from engaging a new future.
Fiorina chose the second option, but she cleverly reframed the past as a prelude to the future. HP was to again function according to the old “rules of the garage” that William Hewlett and David Packard had used to drive innovation in the company’s early years. However, current ‘star’ employees were used in the company’s communications to suggest that this generation of employees were the spiritual descendants of the founders. Not only did this approach show respect for the past, it empowered all of HP’s employees to take key roles in the future. The corporate slogan at the time was “invent,” which was a reminder of the past and a plea to employees to keep their focus on innovation. It was also designed to position HP as “best at innovation.” The problem here was that many of the company’s innovations were not successful in the marketplace. Thus one of Fiorina’s key tasks was to get more of HP’s products into homes and offices. As noted when discussing Philips, having a reputation for being innovative is only worthwhile if customers think that this provides something valuable to them.
Another source of content for “who we are” reputation stories comes from the measures of corporate reputation reviewed in chapter 8. These measures typically ask people to rate a company on a number of factors, such as the quality of its products and services, the engagement of employees, corporate profitability, leadership, and community responsibility. Sometimes the list can be 20 or more such factors. When companies take these measures seriously, there is tendency to manage to the measure. That is, they focus on the factors that they can control that produce the highest reputation score. It is just like managing to one’s key performance indicators. In these situations it makes sense to craft the company story to speak directly about these factors. However, the problem with this approach to storytelling is that while each factor is important, it is difficult to wrap them all around a central theme or timeline.
Figure 6.1 identifies the feedstock for the “who we are” style of corporate story. Here various aspects of the company’s mission, character, competence, moral purpose, and modes of behavior form the basis of the reputation story. If the corporate story resonates with the values, expectations, and self-interest of key stakeholders, they are likely to believe it. (p.102)
Looking across the corporate landscape suggests that some companies decide to anchor their story around a mission that appeals to our values and emotions. Eleven archetypal types of company are:
• Altruistic companies—exist primarily to serve their stakeholders. Most charities, not-for-profit organizations, government departments, schools, hospitals and churches are designed for this purpose. In the corporate world where a profit imperative exists, altruism gets translated into “doing well by doing good.” This comes in a variety of guises such as a giving people a great deal. For example, the low-cost airlines have this purpose. Disney was founded to make people happy. The new benefit corporations appeal to this emotion.
• Excellent companies—exist primarily to be the best at whatever they set out to do. For example, when BMW proudly advertised its cars as “the ultimate driving machine” and they were better than their competitors, the company was pursuing excellence. Excellence is often the aspiration of the big professional service firms, especially the big law firms. To signal and re-affirm excellence, companies must often charge a price premium and/or figure prominently in the league tables that rate industry competitors.
(p.103) • Discovery companies—exist primarily to be creative and build something new. They often have massive research institutes. Many of the old chemical companies and many of the new biotechnology companies have this character. As noted earlier, 3M and its stream of new products is another example of such a company.
• Hero companies—some exist to overcome a major problem. Many pharmaceutical companies are trying to find a cure for major diseases. Others companies exist to lead or challenge an often bigger incumbent on behalf of a specific group of customers. South West Airlines started out as a challenger-hero when it first entered the Texas market and challenged the two incumbent airlines. Richard Branson’s various Virgin companies enter markets to challenge big, lazy incumbents, and if they are successful, they emerge as heroes.
• Pioneer companies—exist to explore or create new markets. Amazon, Google, and YouTube are examples of this. Sometimes they create a profound new experience for people. Sometimes they simply make an existing task so much easier or better. Sometimes they redefine an existing market such as Cirque du Soleil with circus-style entertainment.
• Lifestyle companies—exist to provide people with a better or unique lifestyle. Apple has done this via its many iProducts. Facebook has done it with its social networking. Cruise lines such as Carnival, Disney, Holland America, Norwegian, Princess, and Royal Caribbean have done this with their ocean cruising. Harley-Davidson has designed itself to appeal to some unique lifestyle groups such as motorcycle gangs and affluent weekend riders.
• Everyday life companies—exist to facilitate our daily lives. Big retailers like and IKEA, Walmart, and Tesco have a mission to make everyday living easy and/or less tedious, and sometimes even enjoyable. For example, Walmart’s slogan of “save money, live better” now reflects this purpose. Tesco’s core purpose is “we make what matters better.” IKEA’s mission is to make low-priced products that help people live a better life at home. Starbucks retail outlets that are positioned as a “third place” that is neither home nor work fosters this position.
• Infrastructure companies—exist to provide the backbone infrastructure of the nation. These are the companies that help build or run the airlines, railways, telecommunications networks, electricity grids, (p.104) road systems, distribution systems, financial systems, and the like. The big challenge for these companies comes after they are privatized. Now their profit motive is set off against the lingering expectation that they will still deliver on their broad-based community service obligation.
• Watchdog companies—exist to monitor the activities of other organizations on behalf of a particular group of people. For example, audit firms play this role for shareholders. Some media firms still do this for the community. Before the global financial crisis the ratings agencies used to be trusted to provide an independent evaluation of the creditworthiness of companies and countries. Greenpeace is still actively engaged in monitoring corporate environmental behavior.
• Protection companies—offer services that protect the assets, health, or lifestyle of people. These companies trade on the fact that many people perceive that there is risk associated with many of the things that they do. Insurance companies have become profitable serving this need. Some pharmaceutical companies adopt this stance. Police and fire fighters also play this role.
• Public service organizations—are agencies that administer government policy. The most liked tend to dole out welfare, and the most disliked tend to collect revenue. For organizations like these that can’t change their missions, style matters a lot. People sense indifference, pomposity, and arrogance, and they also sense the opposite.
When a moral purpose draws on the philosophical ideas that shape a society, then anchoring a corporate reputation to such a moral purpose automatically gains the company a certain amount of respect for trying to do what is right and what is worthwhile.8 An interesting example of a company that does this, but does not fit easily into the categories listed above, is the Tata Sons conglomerate of India. The company has more than 100 operating companies whose products and services touch the lives of many people in India on a daily basis. Charitable trusts own 66 percent of Tata Son’s shares. Thus the role of the business is to generate profits for its charitable trusts to distribute. And as one divisional head noted, “Return on capital is not at the center of our business. Our purpose is nation-building, employment and acquiring technical skills.”9 The (p.105) company’s corporate slogan is “Leadership with trust” explained on the corporate website as “to improve the quality of life of the communities it serves globally, through long-term stakeholder value creation.” Interestingly, one of the key items on the agenda of the Tata Group Executive Council is to “preserve and enhance the reputation of the Tata name.” A Tata brand custodian and chief ethics officer is a member of this council.10
The risk of grounding a corporate reputation in a moral purpose is that the message can get lost in the implementation. For example, to achieve their aims, Tata Sons must deal closely with numerous parts of the Indian government and civil service, and such relationships will always generate accusations of corruption and crony capitalism. Also it is easy for hero and watchdog companies to be regarded as villains. This was the fate of Monsanto when it heroically tried to develop genetically modified foods. Greenpeace has often been criticized for the way that it goes about trying to hold companies to account for their actions. However, when corporate morality resonates with the values of a stakeholder, the company is establishing deep roots for its reputation.
Whether reputation stories are grounded in corporate attributes or anchored to a moral purpose, a critical component will be the signature modes of behavior of the company. These express the mission, character, morals, and competence of the company. Modes of behavior demonstrate how the company creates value for itself and its customers; deals fairly with employees, customers, and business partners; and fulfills its expressed obligations to other stakeholders. As noted earlier, it is during times of crisis that modes corporate behavior are starkly contrasted with corporate rhetoric. For example, when Qantas grounded its fleet of aircraft and stranded its passengers around the world in 2011, it deliberately violated two conditions in the Customer Charter outlined on its website—its commitment to getting its passengers to their destination on time and to notifying them about delays of which it is aware.
Because the mission of some companies leads to behavior that doesn’t enhance the long-term interests of society, they spin a counter story about their morality. For example, to handle the growing public concern about the use of the carbon fuels, many of the big oil companies are spinning stories about their active concern for the environment on their corporate websites and through their corporate advertising campaigns. Typically (p.106) these stories state the company’s concern for the environment and then present their initiatives to dampen the harmful effects of their products. For example, Chevron has branded itself as a “human energy” company (the current corporate slogan). They invite people to share their views and ideas with the company (see chevron.com/weagree). In this way people are being invited into a part of the corporate story. The problem with this type of “we are aware of the problem and are trying to fix it” story is that many people consider that companies that are responsible for creating an ongoing problem can’t also be a part of the solution. They are working against their own self-interest. The big processed food companies encounter this problem. Their advertising campaigns say “consume more” while the PR campaigns say “consume less” or “consume responsibly.” Far more money is spent on advertising than public relations.
As noted earlier, corporate advertising, identity symbols, and slogans like “human energy” are branding devices. They are designed to both signal and signify a company’s overall mission or morality—to both employees and external stakeholders. These devices were used extensively by Carly Fiorina to communicate to HP’s employees, customers, and investors that the company was reinventing itself to be a major player in the information technology market space. An early series of advertisements showed a picture of the garage where William Hewlett and David Packard started their company. Other advertisements featured “star” employees as purveyors of the company’s mission. The corporate slogan was stated simply as “invent.” And at this time a part of the company website was devoted to using these devices to help tell HP’s story.
Best at and/or Best for Style Reputation Stories
The other major type of reputation story is grounded in the narrative of being seen to be best at something and thus being best for somebody. While many of the “who we are” stories hint at being best at something, they seldom take the next step and state who they are best for. They don’t tell people why being best at something like innovation is beneficial to them, for example, because it generates new products that solve their problems. From the stakeholder value perspective introduced in chapter 5, these stories don’t describe the set of resulting experiences from engaging with the company. And herein lies the major shortcoming of many (p.107) “who we are” stories—because they don’t speak directly to anybody, they tend to speak to nobody. Scanning the Wikipedia entries and the corporate websites of Philips and HP suggests that it is much easier to talk about what these companies try to be best at rather than who they are best for.
In the previous chapter I mentioned the 3M company as one of the world’s best corporate innovators. It is a good example of a leading company that is now trying to tell people why its considerable expertise in innovation is useful to them. This company probably has the best record of commercial innovation among modern corporations. It has a wonderful history and tradition of innovation.11 It has given us everything from the Post-it note to a range of life saving medical products. For many years these Post-it notes were used to express the company’s competence in innovation to its customers. This novel product captured the imagination of people in all walks of life.
The front page of 3M’s current US corporate website introduces a link to a section about how the company’s innovation capability benefits a wide range of different people.12 The section titled “3M Story” describes many of the company’s life changing products. The shortcoming here is that the product is positioned as the hero in these stories rather than the person who uses the product. Seldom are the end-user benefits that are delivered by these products illustrated on the website.
I would suggest that most people who buy or use or benefit from most of 3M’s products do not know that they are from 3M. Hence the corporate capability showcased in the 3M Story section on the website does little to broadcast to the ultimate beneficiaries of its products the company’s innovative reputation. And as I noted in the previous section, nor does its corporate branding—“Science. Applied to Life.” So what would I advise 3M to do? Here I would steal an idea from Intel. Many years ago when Intel (the chip maker) and Microsoft (the operating system) were key parts of most of the personal computers that people used, Intel ran an advertising campaign with the slogan “Intel inside.” They were training people to insist that their new PC had the latest Intel chip inside. Then, and only then, would they chose a brand that had this chip inside. From all accounts, this was a clever and very successful campaign. Maybe 3M could enhance its long-standing “innovation” slogan with a reminder to consumers to make sure that this is a product “powered by 3M (p.108) innovation” or with “3M inside.” It would then be easy for corporate advertising to showcase 3M employees designing better (more innovative) products that delivered benefits to customers. Now employees become heroes, and customers have a reason to seek out 3M products. This type of corporate branding would help strengthen the company’s desired reputation as “best at innovation.”
At the AGSM we had a similar problem to 3M. We were more product focused than customer focused. In order to redress this imbalance, we needed to tell our prospective students why they should consider doing their MBA with us rather than a competitor. We selected three pieces of information to include in our recruiting story. One was the average salary increase a student could expect. This information was also a key factor in the Financial Times ranking of MBA programs. It speaks about the financial benefit and the payback time of doing an AGSM MBA. The other two pieces of information were where students were most likely to be employed after graduation, and some testimonials from successful alumni. This information speaks about the resulting experience of doing an AGSM MBA.
The main story line in a “best at therefore best for” reputation story focuses on stakeholders first and the company second. Focusing the corporate narrative on products and services is a halfway compromise. Sometimes stakeholders get the message, but often they don’t. The reason for this is that most people like to hear about how they might benefit rather than how good your products are.
Three Roles for Reputation Stories
To be commercially valuable, a reputation story needs to help attain and retain the stakeholders who matter to the company’s success. As noted earlier, these people are the company’s target customers, and the employees and business partners who create value for these customers. For 3M the core employees are the scientists and engineers who can innovate to produce beneficial new products and services. Target customers are the people who are prepared to pay 3M’s premium for these simply better products. Business partners are the firms that will help 3M apply its innovative capability and market its new products. The role of management is to arrange funding for and facilitate these (p.109) activities. In essence 3M’s reputation story is about how the company explores to create new products and then exploits what it creates to be commercially profitable. The exploration and new product development attract employees, business partners, and customers while the commercial viability of these new products retains these groups and satisfies the company’s shareholders.
The basic template to understand stakeholder value creation was laid out in chapter 5. These stakeholder value templates can be used to help craft a reputation story. The elements to emphasize are the cores of the onions of each group. For Riedel the pride employees have in making the best wine glasses produces a range of products that enhances the wine-drinking experience of discerning consumers. This makes it easy for business partners like wine merchants and sommeliers to promote Riedel glassware and profit from their efforts. All this is captured in the core of the Riedel onion, namely, “The wine glass company.” If Riedel can establish a reputation as the wine glass company, everybody else has to find a different reputation position. Told well, this story can help attract the best available employees, customers, and business partners. And practiced well, it will retain these people as loyal and engaged partners. If the company strategy is a good one, then Riedel will survive and prosper.
Another role for a reputation story is to help reestablish the company’s past reputation. This is sometimes called a “springboard” story.13 It is often told by a new CEO appointed to restore a company’s past glory. The HP story mentioned earlier was an example of this. The job of these stories is to inform and motivate employees to embrace a program of change and key stakeholders to accept it. Because a new future is uncertain, these stories are often told without a great deal of embellishment to encourage the listener to participate in inventing his or her version of it. The stories about two of IBM’s previous CEOs, Louis Gerstner and Samual Palmisano, are illustrative of this genre.
• Original story—In its formative years IBM had an interesting story to tell about its spiritual leaders Thomas J. Watson, Sr. and Jr., its origins selling business machines, a radical innovation in the system 360, and market leadership as reflected in its nickname Big Blue. This story combined aspects of discovery and heroism.
(p.110) • Story lost—In the 1990s IBM failed to re-invent itself and nearly became a collection of Baby Blues. In 1993 Fortune magazine called IBM a collection of dinosaurs.
• Story re-crafted—Under Louis Gerstner’s leadership, the company re-invented itself and became the global leader in e-business consulting and technology. This story was one of a leader-hero.
• Story changing—Under CEO Sam Palmisano, IBM began to reconfigure itself from the e-business company to a provider of “on demand business,” which was its then corporate slogan.
• Story stalled—Under the next CEO Virginia Rometty, IBM sought once again to become an innovation company. This was expressed as “continuous transformation,” which was explained on the company website as helping IBM transform itself and its clients transform themselves. This slogan was illustrated using the company’s “Smarter Planet” initiative, which showcased its principle achievements. I suggest that IBM’s story stalled because many IT-based companies were pursuing similar initiatives. Also, after reading the website and an interview with the CFO Mark Loughridge, I still cannot figure out how the company could become the leader in its field and which stakeholders would respond to their overtures.14
Some company stories are told around the character and exploits of the founder. Richard Branson is a master of this. His numerous books and blogs about the Virgin group of companies with himself and sometimes his employees as key characters have made him a modern-day hero and Virgin a challenger brand for many customers. His philanthropy and personal exploits are used to embellish these reputations. The power of these stories is that they are much more personal than most other types of corporate story. Also it is harder to attack a likable rogue like Branson, or obsessive nerd like Steve Jobs, or respected elder statesman like Bill Hewlett than a faceless company. The two big problems with this twinning approach of founder and company is the potential damage done by a personal indiscretion of the founder and what happens when he or she dies. This is one of the problems facing Apple in the post Steve Jobs era.
Howard Gardner provides two reasons why stories fail. One is that they are full of hyperbolic narrative, something used by many CEOs when they are sprucing the growth prospects of their company. A second reason (p.111) is that many stories underestimate the resistance of the various counter-stories that circulate about a company. This has been a major problem for Monsanto’s story. As an enthusiast for genetically modified foods, Robert Shapiro used this discovery to trumpet how Monsanto could help alleviate worldwide famine and malnutrition. However, the good reputation potential of this story was countered by the stories of many disparate groups about the dangers of “experimenting with nature.”
Any corporate reputation story has a big job to do. It must speak to different stakeholders in a way that resonates across their diversity. And it must do so in a credible and engaging manner. Hence help is often needed. For example, to help Jack Welch talk GE into becoming one of the world’s greatest companies and to convince outsiders that it was, he used the services of speechwriter.15 Warren Buffett also uses an editor to help write his annual letters to Berkshire Hathaway shareholders.16 Moreover presidents and prime ministers use speechwriters. So here lies a source of expertise that is readily available to most companies.
The brief to a speechwriter will dictate whether the company decides to tailor its story to each group of stakeholders or use one story for all. My suggestion is to create a story that has attributes of both these options. Four parts of a corporate story should remain the same, namely mission, moral purpose, character, and competence. These are the things that underpin the trustworthiness of a company. They also guide employee behavior and provide the moral authority for making tough decisions. The part of a corporate story that should be changed to facilitate communication with a particular audience is the core of their stakeholder value proposition. This will customize the expression of the company’s mission, morals, character, and competence in order to help people like it and resolve any doubts about its expected performance.
The Qantas dispute noted earlier provides a perverse illustration of this principle. In this case the senior managers of the airline chose a set of actions that contradicted the story they had fostered for the last twenty years. Over this period Qantas was positioned, and accepted among many people in the community as an iconic Australian company. Its corporate branding portrayed this through its slogan the “Spirit of (p.112) Australia” and its symbol the flying kangaroo. Its story and its branding aligned with the Australian values about what was appropriate behavior toward its employees and customers. To many people it was unthinkable that the airline would unexpectedly and deliberately strand its customers in foreign countries in order to win a dispute with its employees. Had the company warned travelers about this action prior to canceling all their flights, this behavior would have signaled their concern and respect for their passengers. It would have reaffirmed the good character of the airline with this important group of stakeholders. It would also have signaled to the Australian employees that paying customers were equally important. And as noted earlier, it would have honored the pledge in its customer charter.
The Medium and the Message
In November 2005 the giant US retailer Walmart found itself at the wrong end of a story titled “Walmart: The High Cost of Low Price.”17 What worried the corporate affairs people was that this unflattering documentary movie might become a cult hit like Michael Moore’s 1989 unsympathetic portrait of General Motors—in Roger & Me. To counter and hopefully disarm the story, Walmart released its own movie “Why Walmart Works & Why That Makes Some People Crazy.” In effect their idea was to fight “movie with movie,” a tactic that illustrates the power of the medium used to convey the message. And one that echoes Marshall McLuhan’s enduring observation that “the medium is the message.” Advocates of the power of social media make a similar claim.
Now, if the medium becomes a key part of the message, then selecting an appropriate medium to communicate a company’s reputation story is a crucial part of its success. The traditional approach has been to use a mix of different media for internal and external stakeholders. For internal stakeholders the often unrelated statements of mission, vision, and values talk about the character, aspirations and morals of the company. Internal newsletters and the company’s various annual reports then chronicle behaviors that signify these attributes. However, seldom do these newscasts contain explicit cross references from organizational outcomes back to these guiding statements. And seldom are they prefaced by a précis of the desired corporate story. In effect the corporate story is split up across (p.113) different media, and more often than not, it fails to be integrated by anybody other than the CEO in his or her occasional addresses to new employees and shareholders. Such fragmentation dilutes the effectiveness of the official corporate story.
Likewise, for external stakeholders, a holistic corporate story often goes untold. They may glimpse parts of it in the annual report, a corporate advertisement, a media article, a corporate video, an Internet blog, or on the company website. And if the company is big, there might be an entry in Wikipedia. Often when a company changes its corporate identity symbols, the public relations department will tell a story about how this new expression of identity expresses the soul of the company. However, for most companies there is seldom a continuing effort to explain the character and competence of the company and how this helps deliver an engaging set of stakeholder experiences. As noted at the beginning of this chapter, this was one of our failures at the AGSM. Unlike our distant ancestors, we did not sit around the campfire and tell and retell our story so that it became a powerful folktale. However, on the few occasions when we did sit in our dining room next to the wine cellar with our students these became emotional events. Over time our building became a sacred site for these special functions.
The crucial issue for most big companies is how to cost-effectively tell their story to the stakeholders who really matter. And to do this in a way that helps each group understand their role and contribution to the company’s success. While face-to-face communication is generally considered to be the most effective medium, it is not cost effective for most large companies. Nowadays corporate websites have a crucial role to play in corporate storytelling. They can be easily updated to reflect current events and to address critical commentary. They can be beautifully illustrated with images and interviews. However, the big problem with most company websites is that parts of the corporate story are scattered all over the place. For example, when I wrote the first draft of this chapter, the HP story was told in the About Us, Newsroom, Investor Relations, Global Citizenship, and Former CEOs sections. And none of these sections referred to any other section. It was a complete mess. When I did the latest revision, the US website had changed and these parts of the story had disappeared.
(p.114) Illustrating and Reinforcing the Story
Many years ago I was told a story about the appointment of a new managing partner of one of the world’s premier consulting firms. The first thing he did was to review all the current engagements of the firm. This uncovered one engagement that he did not think lived up to the reputation of the firm. He went to the client and got permission for his firm to redo the assignment at no cost to the client. I call this a “signature act.” It demonstrated what the firm stood for, and it signaled the importance of a good reputation. Every company needs some of these signature acts to help it tell the right story of the company.
Whether or not they realize it, most companies have many such signature acts. The AGSM had two that I was routinely involved in. One was our faculty meetings. They were conducted in a robust way where rank counted for little relative to the power of one’s evidence and persuasion. The other was that we taught some classes on weekends. And if they involved teaching executives or executive MBAs, the course director lived in with the course participants, sometimes for a period of up to four weeks. A colleague and I got into trouble with the participants on one executive course when we started it on Mother’s Day (a Sunday). Both these signature acts signaled to outsiders, especially other parts of our parent university, that we were different from a traditional Australian university faculty.
As the example of the Royal Navy suggests, stories involving signature acts need to be shared. One that became legendary among MBA students was the Goldman Sachs recruiting process. It was an endurance test that involved 10, 20, 30, or more interviews with 10 or 20 members of the firm. Another set of signature acts involving MBA education became a best-selling book titled Snapshots from Hell.18 It was about the first-year experience at the Stanford Business School. Signature acts vividly demonstrate the culture of the company. In this way they help to set the expectations of people who deal with it.
Evaluating the Reputation Story
For a reputation story to help establish and enhance the company’s reputation, it must get traction inside and outside the company. Media analysis is a common way that companies use to assess how well their (p.115) story is being repeated to outsiders. The leverage points in the traditional and newer Internet media are the journalists and opinion leader bloggers. Interestingly, few companies periodically measure the reputations of these people to help them understand why they get the media coverage they do.19
While having the corporate story accurately reflected in the media is important, what is more important is for employees to accept it. On a personal level it is important to gauge if the corporate story makes them feel inspired about creating something better, or like the company more, and sometimes tell the story to other people. A less reverent measure of acceptance is to ask them where they consider the story falls along the 4B-spectrum of being seen as “bullshit,” “blather,” “boasting,” or “better company.” If the story does not resonate inside the company, it will not be portrayed by employees in their encounters with outsiders. And if outsiders do not accept the story, they will ignore it, or worse still, begin to actively counterargue with it. Qualitative research among employees and important stakeholder groups can be used to track acceptance. Monitoring the Internet is also important. This research should seek to detect if opinion leaders are starting counterarguments or rumors, and if gossip is spreading.
Finally, the most powerful corporate stories become legends. Now that Steve Jobs has passed away, the story of Apple under his reign is taking on a mythical nature. A good example of this is the movie Steve Jobs. Such mythmaking makes it harder for the characters in the new Apple story to live up to the legacy of the past. Another example of this phenomenon is the story of the All Blacks rugby union team in New Zealand. This team has such a rich and strong heritage that every player caries the responsibility of meeting the expectations of the entire country when they run out onto the playing field. As a final reminder to the team members of their responsibilities to the legend of the All Blacks, the team performs a Haka (a traditional Maori challenge) on the field facing their opponents at the beginning of each match. Ceremonies like this add a sprinkle of fairy dust to the occasion, and just as importantly to the story of the team. (p.116)
(1.) I was one of the people who waited for my defined benefit superannuation. As the last associate dean for research, one of the roles I gave myself in the new merged faculty was to protect the AGSM academics who decided to stay. Even though I was a bit pigheaded about this, graciously on my retirement a couple of years later, the university made me an emeritus professor.
(2.) There was an interesting conflict between being best at research and best at teaching in the AGSM and many other business schools. While best at teaching was something that was clearly valued by most stakeholders, being best at research had a more limited application. For example, students often didn’t care about the research agenda of a faculty member and the faculty member’s research seldom had a big impact on what they taught. Nor was research the principal driver of the school’s Financial Times ranking. Paradoxically where research played its largest role was to drive the reputations of the faculty members, which in turn made them more marketable and more likely to be poached by another business school.
(3.) A. St. George, Royal Navy Way of Leadership (London: Preface Publishing, 2012).
(4.) H. Gardner, Changing Minds (Boston: Harvard Business School Press, 2004).
(p.239) (5.) S. Denning, The Springboard: How Storytelling Ignites Action in Knowledge-Era Organizations (Boston: Butterworth Heinemann, 2000); Squirrel Inc.: A Fable of Leadership through Storytelling (San Francisco: Jossey-Bass, 2004); The Leader’s Guide to Storytelling (San Francisco: Jossey-Bass, 2005). A. Simmons, The Story Factor (New York: Basic Books, 2006).
(6.) The others are concepts, theories, and skills.
(7.) Rebuilding the garage, The Economist (July 15, 2000), 59–61.
(8.) N. Mourkogiannis, The realist’s guide to moral purpose, Strategy + Business (Winter, 2005), 42–53.
(9.) A new boss for Tata: From pupil to master, The Economist (December 1, 2012), 65–66.
(11.) Someone in 3M chronicled the company’s track record in a wonderful book—A Century of Innovation: The 3M Story (3M Company, 2002). I found this book only by accident.
(13.) S. Denning, The Leader’s Guide to Storytelling (San Francisco: Jossey-Bass, 2005).
(14.) J. Crown, Adding it up at IBM, Chicago Booth Magazine (Spring 2013), 20–24. See also R. Waters, Rometty’s IBM overhaul becomes more urgent, Financial Times (October 24, 2014).
(15.) B. Lane, Jacked Up: The Inside Story of How Jack Welch Talked GE into Becoming the World’s Greatest Company (New York: McGraw-Hill, 2008).
(17.) M. Barbaro, A new weapon for Wal-Mart: A war room, New York Times (November 1, 2005). J. Birchall and H. Yeager, Big-box politics: Wal-Mart takes the fight to its critics, Financial Times (August 17, 2006), 9.
(18.) P. Robinson, Snapshots from Hell: The Making of an MBA (New York: Warner Books, 1994).
(19.) G. R. Dowling, Journalists’ evaluation of corporate reputations, Corporate Reputation Review 7, 2 (2004), 196–205.