"The Potential Marketing Opportunity of Big Data." "Large-Scale Customer Data Breaches." Stories like these have factored prominently in the business headlines thus far in 2014, placing companies’ knowledge management strategies at the heart of their reputation strategies. Starting this month, I will look at how these strange bedfellows can help drive differentiation, integration and growth opportunities for organizations who invest in both.
Knowledge management came of age inside Corporate America in the golden age of innovation—the 1990s. As enterprise resource planning (ERP) packages, the Internet and other improvements in information management became widely adopted in the run-up to Y2K, leading companies used their newly developed knowledge management muscles to drive competitive advantage. Offense was the name of the game, and brand building was the new normal.
Fast forward to the 2000s—the risk decade. Outsourcing (especially offshoring) forced companies to adapt their people, process and technology strategies related to knowledge management to a world transformed by accounting fraud and financial crisis. Corporate governance went from an arcane academic topic to a chief expectation across a wide range of stakeholders, including the general public. For most organizations, defense became the new offense from the boardroom to the chatroom.
Out of the aftermath of the 2008-09 financial crisis, a reputation economy was born: a place where consumers care about the company behind the products and services it sells. The winners in this new world order have been able to position themselves in the sweet spot between capitalism (“inside-out”) and humanism (“outside-in”). But there have been far more cautionary tales than success stories because reputation management (defined as an organization’s ability to engage, manage and measure a company’s entire stakeholder ecosystem from the workplace to the marketplace) has lagged behind knowledge management in its sophistication, adoption and relevance to frontline employees in most large global organizations.
So far, the 2010s have been dominated by globalization, commoditization and social media, which have empowered “influencers” at the expense of traditional siloed customer and employee communication strategies by large organizations. Thus, it is now more important than ever for a company to align its knowledge management tools to drive better corporate storytelling across all channels: paid, earned, owned, shared and social.
The business case for reputation management can be quantified every step of the way. We know from social science that humans form perceptions about organizations through three primary influence channels: direct experience with an organization; what an organization says about itself, its products or services; and third-party opinions (think word-of-mouth, traditional and social media). Based on individuals’ exposure to these touchpoints, advanced analytics can now measure key stakeholders’ emotional connection to companies (the degree of trust, admiration, esteem and good feeling), as well as the rational factors that drive an organization’s reputation.
Across thousands of companies in dozens of industries and countries around the world, research indicates that seven rational dimensions explain an organization’s reputation: Products & Services, Innovation, Workplace, Governance, Citizenship, Leadership and Performance. Armed with this insight, companies can also measure and forecast the amount of supportive behavior an individual is willing to engage in—or withhold from—an organization (such as: purchasing, recommending, saying something positive, investing in or giving the benefit of the doubt in a crisis). Most importantly, these reputation metrics and supportive behavior indicators can be linked to business results through predictive analytics.
Knowledge management is fundamental to keeping perceptions of the organization balanced across the three influence channels (direct, what company says/does and third party). Too many organizations over-index the customer experience as the primary driver of value. Rather than considering engagement strategies for the broader stakeholder ecosystem, they use the company’s communication channels for mostly one-tune commercial messaging. This, in turn, mobilizes influencer groups that wish the company ill to pump up the volume on any perceived shortcomings in third-party conversations and question its mission, vision and values whenever they come in conflict with customer satisfaction rankings. Still others sit on the sidelines of most third-party conversations about their industry or local communities because of a belief that “if we can’t control it any longer, it must not be worth doing.” This free rider problem presents a long-term reputation challenge to the organization if they are constantly bombarded by more aggressive competitors, new entrants from other industries or activists. Who wants to be defined by their adversaries?
It doesn’t have to be this way. Reconcile board-level interest in reputation management with the knowledge management strategy and governance already in place for an organization. Arm first responders with accurate, high-impact messages that speak to multiple stakeholders’ expectations of the company behind its products and services. This is the reputation imperative of the 2010s.