It is often stated that the moment of truth emerges from crisis. Do we keep our promises?
This goes for people as well as for companies. But crisis and recession also offer the opportunity to demonstrate that the values and central ideas behind the corporate brand do hold up. History has plenty of examples of how companies that stayed honest to their central values enhanced their reputation during a crisis. The Tylenol crisis and the way it was handled by Johnson and Johnson for example is legendary in that respect. When a company such as AIG is on the verge of self-destruction, the reason is not first and foremost the massive financial losses or economic mistakes. The reason is rather that the giant bonus payments on top of massive public support revealed values in use that are completely detached from the company’s claims about responsibility and decency. More so, the management of the company ceased to understand that the company has become a beaming symbol of the greed and lack of responsibility that in part generated the financial crisis.
In my opinion, the AIG story demonstrates that a lot of classic assumptions of brand management are in need of an over-haul. First, a brand cannot be protected or defended by legal means alone. Even though top management had a contractual obligation to pay the executive bonuses, the reputational implications were devastating and showed disrespect for the public. I will argue it is the responsibility for top management to consider and account for reputation risk involved and act accordingly. Secondly, it is not possible to hide, suppress or outsource a brand in times of trouble. On the contrary, the weeks that passed by before the bonuses were revealed made things even worse and increased the reputation damage.
Although the financial recession has generated massive losses in market value, the deterioration of trust and strained relationships with employees and customers will ultimately be more damaging long term.
The recession highlights the need for a new mindset for brand management…and for sure that will create new winners and losers. Maybe public companies and organizations will get their big chance to build a stronger reputation and attract even better employees? Other companies will truly have the opportunity to stand out as more responsible than their peers within the same industry…not all bankers are crooks and the responsible ones may ultimately reap the benefits long term.
Maybe even professors will re-establish the long gone esteem of their profession?
Do you agree we need a new mindset for brand management? And if so, what should it be?
Who will be the winners and losers of the recession and why?
