Tales of the unexpected

To avoid being blindsided be the ‘unknown unknowns’, anticipatory issue management helps organisations prepare for the worst.

Many executives assume that a good reputation simply follows from having good business practices. According to this view a high level of business integrity is believed to be sufficient for maintaining a stellar reputation, while reputational threats can be delegated to public affairs, legal or outside advisors. This approach has two unfortunate consequences. First, managers do not view themselves as responsible for protecting the company’s reputation. Designing a supply chain, for instance, is exclusively driven by cost and reliability concerns but does not incorporate the potential negative reputational impact of appalling supplier labour conditions for a major brand, as many major retailers experienced after the 2013 collapse of the Rana Plaza garment factory in Bangladesh. Second, in most companies communicators do not participate in major business decisions, but are brought in when the decision has already been made, often tasked with containing the fall-out of an ill-conceived business decision.

At the root of the problem is a misconception of the source of reputational challenges. Most reputational crises do not happen because of some external event or misfortune; rather they are the direct consequence of company actions or inaction. Decisions are made without consideration for their reputational impact. Decision-makers fail to act as the stewards of the company’s reputation.

Daniel Diermeier

Daniel Diermeier is the Dean of the Harris School of Public Policy Studies and Emmett Dedmon Professor of Public Administration at the University of Chicago. He is a fellow of the American Academy of Arts and Sciences, the Guggenheim Foundation, and the Canadian Institute of Advanced Research (CIFAR). This article is based on the author’s book Reputation Rules: Strategies for Building Your Company’s Most Valuable Asset (2011).