Managing risk and brand reputation
In its usual level-headed style The Economist analyzes the basic issues involved in managing risk and brand reputation, especially for global corporations. They address the subject as part of a special report on Corporate Social Responsibility (CSR).
This special report will look in detail at how companies are implementing CSR. It will conclude that, done badly, it is often just a figleaf and can be positively harmful. Done well, though, it is not some separate activity that companies do on the side, a corner of corporate life reserved for virtue: it is just good business.
Three layers of CSR
The Economist identifies three layers of CSR as it’s currently practiced in large corporations:
- Philanthropy — beginning with “checks for charities”
- Risk management — to ensure that screwups (or disasters) don’t occur
- Strategic opportunities — to use CSR for competitive advantage
Where do brands come in? In level three, of course. Brands and CSR are a perfect strategic fit.
Beyond an antiquated notion of brands
I totally agree with the Economist’s integrated approach to CSR, where it shrugs off superficial feelgood communications and focuses on CSR operations embedded in the business. However, The Economist seems to have an antiquated notion of brands, as if we’re still living in the 1950’s, when brands were static “assets” to be kept polished and squeaky clean lest any “bad press” diminish their value. This defensive and reactive concept of brands prevents the special report from addressing proactive brand strategies that may dramatically raise the bar for both social responsibility and profits.
Brands and social responsibility
“Brands and social responsibility” is an important subject that deserves its own in-depth report. CSR requires new attention to the supply chain, and to the brand chain. It also requires new brand models, and new brand approaches. That’s more than I can manage in this post, so I’ll end with some general comments.
- A brand is company potential X customer potential. When brands are understood in this context, the arena of “social responsibility” becomes a strategic brand opportunity, rather than a nagging and/or awkward problem.
- Brands managed as “assets” are dead ends. The purpose of brands is to create customers. This is in itself a socially responsible act.
- When brands are reduced to perceptions (”how the company is perceived”) they become little more than PR exercises, with a dash of design. This completely ignores a brand’s game-changing potential to create customer value.
- The brand mission is to grow the customers that will grow the business. In general, the more socially responsible the brand, the more opportunities it creates for customer growth.
- A brand platform is a social platform. The more socially responsible the brand, the more power it can generate through (and from) its customers.
- “Asset brands” sit on the shelf, or hide in the vault. They’re eventually bypassed by proactive, socially responsible brands that can run (and grow) with customers.
- The best way to be “socially responsible” is to embrace those strategies that advance customers, rather than merely aim to empty their wallets.
- In general, a brand cannot do any more for its customers than it does for its employees. Social responsibility begins at home.
- Brands stripped of social responsibility are low-performing brands. At the very least, they will be leaving money on the table.
- The best way for a brand to manage its reputation is to lead customers to higher levels of value. Brands that don’t lead get stuck in the muck.
