The Leader's Role in Managing Reputation with Laurence Duarte

Alexis:

Hey Laurence, what is your role and how would you describe it to someone you just met?

Laurence:

I like to define myself as a business fixer. Most of the time my clients call me because they don't know what to do, and so my job is to help them protect their company and grow. Sometimes we need fresh eyes and that's why I am here. So yes, I think this is how I like to define myself: as a business fixer and also a protector. I like to protect business. That's why for the last six years I developed an expertise in criminal risk and how to protect the most important assets of a company. The most important assets of any company are property — people, I should have started by people, of course it's people first — then properties, proprietary information, and of course reputation. I think that's why we are here today: to talk about reputation.

Alexis:

So tell me more about that. Why is corporate reputation really important?

Laurence:

Because it's what defines the willingness of your consumers, but also your investors and your employees, to work with you, to buy from you. It's how they perceive you, and so that's why it's so important. Reputation is their willingness to work with you.

Alexis:

Tell me a little bit more about what reputation is, and what difference you make between brand and reputation?

Laurence:

Most of the time the issue comes from this: we think we own reputation, and actually we don't. We own brand. Brand is us. It's like you, Alexis — you are Alexis, and what people think about you is your reputation. It's a perception, and that's why we don't own reputation. That's why it's sometimes very difficult for people, and why they don't really want to talk about reputation. They wait to meet reputation in a bad situation, and suddenly it's like, oh my goodness, I have a reputation — but most of the time it's a little bit too late, because it's very difficult to grasp and to control, and we know how much we love to control things, especially in the business field.

Fortunately, there are ways to understand, to monitor, and in a way — I would say not control, but at least to protect from reputational risks — because reputation has so much impact in a company. The first thing that most of the time we think about is reputation equity: when you have a crisis it acts as a goodwill buffer, so you recover far more quickly. But it's not only about that. As I said, it will help you attract better employees, achieve premium prices, retain higher customer loyalty, get a better market value, and — a really huge advantage — it will help with the credibility of your communication. When you have a good reputation, it's like you are welcome everywhere, and that really matters a lot.

Alexis:

Let's take examples. I would like to pick two and tell you how I felt about those companies and their reputation. When Facebook — we heard about what they did to help manipulate elections (that's my understanding of it) — I closed my Facebook account and said, okay, I don't want to have anything to do with that company anymore. I'm not saying it's rational. That's what I felt, that's what I did. With Spotify, more recently, there was all the discussion around what they were doing and not doing, and I realized I was in a conversation with friends and I was advocating for Spotify. I was thinking, that's really interesting — what is going on there? Is that the reputation equity you're talking about?

Laurence:

Yes, thank you for sharing these two examples. They show how mature, I would say how conscious a consumer you are — and you are not the only one. More and more, you have a change in the culture and the society because of hyper-transparency: now we know everything very quickly, and if a company is not able to make a clear choice, we will make the choice. With Facebook, you decided: no, I don't want to put some money in — even if it's free, we know they use our data so it's not free — and you decided to close.

For Spotify it's another example, and it's a tricky one because reputation works at several levels. It's like being in love. If you're just in love for two days, it will be easy to drop. But if you have been in love for a long time it will of course be more difficult to drop. I have the same issue with Spotify. I was thinking I should stop because I don't like what they do, but I am so used to Spotify that I don't know what to do — is it easy to switch to another company? That's where we stand as consumers, with our consciousness and our activism, and that's exactly what the company needs to monitor. That's why it's important to understand your risk exposure: you have to understand what is going on in the society, the expectations of your consumers and how they change over time, as well as the outrages. Most of the time we think it's not our concern — like #MeToo, Black Lives Matter, the climate youth movement — you can't say you didn't see them coming. So for Spotify, they knew that at some point it would come, and if they have very harmful, violent content for many people, they have to do something about it. If they don't, suddenly it's our responsibility, and I'm not sure we really like to take that responsibility, because we buy a service and we don't want more disruption from this service about our ethical behavior.

Alexis:

So companies and individuals can work on that to look at their reputational risk. What are the determinants of reputational risk?

Laurence:

First, the main thing is that you need to check what we call the reputational gap. I like to define it as: if your true character exceeds your reputation — too much love or too much hate, high expectations or low expectations. At some point, the two polarities have to match. You need to be sure that what people are expecting from you is what you can offer. If it's not the case — and sometimes we may see, oh, they really love us so much, this is good — it might actually not be good, because if it's not the reality at some point they will feel betrayed. And if a consumer feels betrayed, especially the most supportive one, there is no comeback from that. The backlash is far more violent for that type of consumer. So that's the first thing: the reputational gap.

Then there is another thing to check: criminal attacks, because that's how your reputation can be harmed as well. Cyber attacks, counterfeiting, a toxic environment — all of these create bad conditions and reputational risks. Then, as we already talked about, it's also important to check the change in the beliefs of your consumers and what they want from you. Before, we just wanted a product that works well. Now we want a product that is guilt-free — it has to work well and it has to feel right. That's exactly what happened with Facebook and Spotify. You don't want to use or to buy products that can harm the planet or harm other people. And of course, it's also important to see what stakeholders think about you — not just consumers but also the media, social media, governments, regulators, NGOs. They can be very good signs, even if most of the time we think NGOs bother us. Actually, they don't, because they will show you where you have to work in order to build up and protect your reputation.

Alexis:

It's really interesting that you look at all the stakeholders. Do you include in that analysis of reputational risk the employees themselves of the company?

Laurence:

Oh yes, employees are very, very, very important. It's like tons of little weak signals — it always starts with small signals, and the question is whether you are able to catch them before it's too late or not. Employees are very important. Of course, we have an issue we call a reputation company bias: if you're in a company that is very aggressive, very competitive and doesn't allow failures, they will hide a lot of things. So it's always 'everything is okay, I am working for the best of the best.' The problem is that, most of the time, that's not the case — we always have some issue here and there, and the fact that we can't see it means you protect a toxic environment, you protect failures, you protect mistakes and management missteps. At some point, it becomes too loud. And as we know, a company is not a black box, it's a glass box. Everyone can see inside the company — but it's too late. That's why it's important to create a healthy culture in a company, because as I said, employees are the first reputation shield when you have a crisis. They will be the first to protect the company. So it's better to have a healthy culture, because it will help you at so many levels.

Alexis:

I'm really interested in looking at that gap between reputation and reality. From an employee's standpoint — I remember working with companies as a consultant where there were really inspiring statements on the walls about transparency and great values, but when you looked at the people, they were all in a way scared, managed under high pressure and a lot of fear. Completely disconnected from what was written on the walls. Are those the kinds of gaps you mean?

Laurence:

Yes. It's about how you build trust — and trust is also another major reputational shield. But trust you don't buy. Trust you have to prove. So you don't have to have a gap between what you say and what you do. It depends on the true character of people. Of course it starts with people: a company is nothing without its people. So it's unfortunate, what I call posture-slashing — you have all this bright content, all this beautiful communication, and suddenly you have a crisis and you can really see that it was just a posture, there is nothing. It was empty words, and we can't have that now in our society. People won't accept just empty words. You will be called out. As a consultant you've seen that, because you can see a discrepancy between what was written on the wall and the reality of leadership and management. It's very unfortunate because it creates a lot of damage in terms of leadership, and this is not good.

Alexis:

So it's not only what you say, of course what you do, but it's also what people expect from you.

Laurence:

Exactly. That's why you have to be sure of what your consumers, your stakeholders, and what is going on in society — because it changes. Sometimes people say: oh, I am doing all the right things, so it's enough. It's not enough. You also have to create an environment that enables you to see what is going on, in order to adapt. That's why most of the time people think about reputation risk and management as a cost — it can also be a very good competitive advantage, because you know what is going on, you have a lot of data, a lot of intelligence, and if you are able to understand and seize the issue before your competitor and add that into your strategy, you will protect but also grow your business in a far more sustainable way. So it's strategy seeking as well as situational awareness — both need to be implemented.

Alexis:

You mentioned it just before, and also in your latest report, you talk about reputation shields in companies. Can you elaborate a little bit on that?

Laurence:

Yes. I found that we need to implement some anticipatory issue management. This is very important: you have to identify, evaluate, and monitor the risk, and then you also need reputation shields. There are two that are the same for everybody. People — your culture — will work as a very good reputational shield when you have some crisis. Studying all the criminal risk, I noticed it always comes from people, so if you have a good culture, your employees will protect you, will protect your business. Then trust: you need to build trust, you need transparency. You need at every step of your company people who say, okay I say that, I do that, and I prove it — you can verify that I did it. This is very important.

Sustainability is also a very important reputational shield. And in my latest report, because it was the beauty industry, I also said that the fact that you communicate a definition of beauty that is non-competitive, non-hierarchical, non-violent is a very good reputational shield, because that's what women consumers want and need — and they will call you out if you don't do that.

Alexis:

That means all your relationships with all your stakeholders, including of course your employees — that's the shield you can build, and that will protect you in case of crisis. It's not only the convenience of having a job or using a service. It's really building that shield over time.

Laurence:

Yes. And what is most important for people who listen to this podcast: they need to see, as leaders, that everyone has a responsibility for the reputation of their company. Most of the time what I have seen is, we think reputation belongs to Communication or to Legal Affairs, but actually it's not the case. Everyone has a say and a responsibility. Even the people in charge of the supply chain — when you build a global supply chain, you will have to choose some countries, and some countries might be better in terms of accountability but a big risk in terms of reputation. So I really think everyone has to be aware and understand their role in reputation building.

Alexis:

And so you work with CEOs and leadership teams to help them manage that reputation shield.

Laurence:

Yes. The first thing is to understand what reputation is, then to implement a framework to monitor reputation and see the risks, understand the risks and mitigate them — and of course to prepare for crises, because in a big company crises will happen — and to build the reputation shield. So it's a lot of awareness that I'm developing with CEOs and leadership teams around this issue. What people tend to forget is that 90% of the market is made of intangible assets that are brands, and so you can imagine the damage of a crisis or a scandal: the disruption, the loss of market value when you are hit by a scandal and suddenly suffer from a bad reputation.

Alexis:

Speaking of leadership, you've worked with a lot of leaders. Among those you admire, what's the one trait that stands out to you, and how is it important in the way you see leadership?

Laurence:

I would say self-awareness. I really think it's the base — the base of the base. You can't be a good leader if you don't know what is happening inside you, because what is happening inside you will drive your decisions, and you will have good or bad ones. I have seen so many times CEOs at big companies — and I always think that in success you have the seed of failure. So if you are vulnerable to seeing and continuing to ask why, why, and avoiding as much as you can the blame and self-pity when bad things happen, then you need to be self-aware. You need to ask questions from the inside: what is happening inside? What are my drivers? How do I feel about this and that? To be able to take a step back and see what is at play. Then we take far better decisions, and we realize that our actions always have consequences. It's strategy seeking in a way, and it's very important. Self-awareness is a source — and when you have this source, you will have authenticity, integrity, honesty, courage, and so on.

Alexis:

Beautiful. Tell us one action you've taken in the past to develop yourself as a leader, and what did you learn from it?

Laurence:

I think self-awareness — it's always important to see what's going on. So my action has been to work around that: to learn, to read books about what is happening inside, to understand more about emotions and where they come from — for example shame, guilt, and fear. And I also found the embodiment movement very interesting. Suddenly you realize that you have a body, and the body has information for you. Most of the time we cut from the body, and I think it's interesting to say, oh, I am feeling fear at the moment — why? It helps to balance and helps to be more conscious as a leader. It creates a level of consciousness, and I think when we raise the level of consciousness we take better action, we are more free, and so happier.

Alexis:

Really interesting, and a lot of food for thought. I assume people will think about that pain in their back or in their neck in a different way now. Thank you very much for having joined me on the podcast today, Laurence.

Laurence:

Thank you very much, Alexis.