Reputation deconstructed

By Martin Vogel

Googleplex, Mountain View, California

Amazon tops the Reputation Institute’s 2011 survey of the most reputable American companies. Google leads the global survey.

In relation to the US study, the RI found that the excellent companies were:

  • 2.5 times more likely to have the CEO set the strategy for their enterprise positioning
  • 1.5 times more likely to include reputation metrics as part of their senior management “dashboard”
  • 15 times more likely to manage corporate reputation across company functions
  • 1.7 times more likely to use an outside partner to assist with corporate reputation management

There’s some interesting detail on how reputation affects consumers’ buying decisions. The RI found that people take into account their whole impression of a company, not just their view of its products or services, when deciding whether to buy:

Reputation Institute’s analysis of the seven dimensions of corporate reputation shows that perceptions of the enterprise (Workplace, Governance, Citizenship, Financial Performance and Leadership) trump product perceptions (Products & Services plus Innovation) when it comes to driving behaviors. The five enterprise dimensions drive 61% of purchase consideration and 58% of recommendation/advocacy behavior with consumers. This provides further proof of what Reputation Institute calls the “reputation economy” – a place where people increasingly choose among competing products and services based on their impressions of how the companies behind them behave.

Apparently, Amazon’s success marks the first time an online company has come top of the US survey. Forbes provides a useful summary of the foundations of its reputation:

Amazon earned its No. 1 rank by providing value to users, staying ahead of the curve in technology and innovation and responding quickly and ethically to scandals. The Seattle-based company flourishes on transparency and trust. It offers customers a dependable online shopping experience with trustworthy third-party vendors. Users trust and value its product recommendation system, which suggests products based on one’s purchasing history.

The online retailer also capitalized on the success of its Kindle e-reader last year as e-book sales soared. That, combined with developments in cloud computing, an Android app store and digital movie streaming helped Amazon do especially well in the products and services and innovation dimensions.

Consumers also got a glimpse of the company’s values in November when it responded to thousands of outraged users by quickly removing a pedophilia book from its digital shelves.

While Amazon’s lead seems intuitively correct, Google’s position at the top of the global poll is more puzzling. The analysis seems to be that Google has won trust for the way it responded to revelations that elicited criticism of its business practices. Forbes again:

When the Mountain View, Calif., company pulled out of China to avoid showing censored search results to users there in late March, Google sent a message to the rest of the world that its values would be placed ahead of its profits. The decision resonated strongly in Central and Northern Europe, Central and South America and in North America, where consumers rated the company within the top five most-reputable businesses.

When privacy issues arise around its business, Google usually responds quickly: Recently the search giant said it would keep its Street View cars from picking up wireless networking data after Google revealed that these vehicles had collected content of users’ Internet communications on open Wi-Fi networks.

My take is that these kind of incidents are more damaging than the RI’s survey is picking up. Google was widely criticised when it went into China and it pulled out only when it found that the profitability was not sufficient to justify the reputational flak, which extended to the compromising of its security when the Gmail accounts of Chinese dissidents were hacked. (See this analysis at the time by John Naughton.)

In the recent ruling on Google Books, Judge Denny Chin was highly critical of the way Google had gone about digitising books without the permission of copyright owners:

The ASA [Google’s proposed agreement with publishers] would grant Google control over the digital commercialization of millions of books, including orphan books and other unclaimed works. And it would do so even though Google engaged in wholesale, blatant copying, without first obtaining copyright permissions. While its competitors went through the “painstaking” and “costly” process of obtaining permissions before scanning copyrighted books, “Google by comparison took a shortcut by copying anything and everything regardless of copyright status.” As one objector put it: “Google pursued its copyright project in calculated disregard of authors’ rights. Its business plan was: ‘So, sue me.'”

Similarly, the US Federal Trade Commission found recently that Google violated its own privacy policy in the launch of Google Buzz and it identified other shortcomings in Google’s practices:

The FTC said “deceptive tactics” were used to populate the network with personal data gained from use of Gmail, and that when users were given the change to opt-out of Buzz, they were still enrolled in some of its features. For those that did decide to opt-in, the FTC says the implications of that were not made clear. “Google also offered a ‘Turn off Buzz’ option that did not fully remove the user from the social network,” it said.

The remedies put in place in both these cases will go some way to assuring consumers and other stakeholders about the ethics and trustworthiness of Google’s business practices in future. With respect to Google books, it is likely that Google and publishers will agree a system whereby authors and copyright owners will opt-in to the digitisation of their work rather than having to opt out of it. And the outcome of the Google Buzz case is that the company will be subject to an annual privacy audit for 20 years.

However, the impression is created of a company that pushes the ethical boundaries until it is successfully held to account. Google makes fantastic products which offer innovation and ease of use at apparently negligible prices. These products are the foundation of Google’s positive reputation. But Google’s enterprise-wide story contains narratives which are problematic. In other words, it presents the inverse of the RI’s model for excellence and this can’t be encouraging for Google’s reputation in the long term.

Image courtesy Marcin Wichary.