The reputation landscape is littered with examples of crises that appear to come out of nowhere and yet, on closer examination, could have been predicted if the necessary analytical process had been in place prior to the eruption. From the discovery that a telecommunications company’s revenues were fictitious, that a famous fashion designer harbored paranoid anti-Semitic delusions or that a legendary football coach was ignoring a sexual abuser on his staff, crises of every conceivable kind generate telltale indicators, often far in advance, that all is not well. If there were effective processes for detecting these warning signals, then much reputational damage could be averted entirely or, at the very least, significantly mitigated.
Former Secretary of Defense Donald Rumsfeld (Rumsfeld, 2002) provided the seed of an idea in 2002 when he adapted a phrase used previously at NASA to discuss Saddam Hussein’s weapons of mass destruction – “the known unknowns”. It provides the framework for developing a methodology for identifying potential reputation threats before they become full-blown crises. In fact, with the right insights, it should be possible to identify and predict potential crises before they occur, even to the extent of changing behaviors preemptively to prevent the crisis occurring in the first place. To do this, it is necessary to conduct a far-reaching audit of an organization’s vulnerabilities and to establish an issues identification process. The critical challenge is to develop an approach that helps us to sort through the seemingly endless list of potential crises to focus on the ones that are both most likely for a given organization and potentially most damaging.
After many years of analyzing the etiology of crises, we have developed one operating principle and an issues identification system known as “Issues Mapping” to do just this.
Our operating principle for identifying potential reputation vulnerabilities in advance is a simple one: look first at those things that an organization is most proud of, and there you will find lurking the greatest threat. One might also call this the Penn State Principle (Toobin, 2012), after the case in which a much beloved and legendary football coach appears to have ignored suspicions that a member of his staff was guilty of child abuse and no one at the university was very anxious to hear about a potential dark side to its stellar football program.
The theory works as follows: those achievements that are most tied to the and self-esteem of an organization are particularly impervious to question or doubt. In one company, it might be length of days without an injury in the workplace; in another, it might be its leadership in technology; and in another, its commitment to diversity. What happens when a particular aspect of an organization is celebrated is that it becomes peculiarly difficult to raise questions about that aspect.
Internal voices censor themselves not to be instrumental in tarnishing the shining jewel. When these voices are raised, the organization finds it extraordinarily difficult to take up the allegations. Too often the whistleblower is ostracized and demonized. Up and down the organization, no one has the desire to be the one to point out that the emperor has no clothes. This failure is doubly dangerous because crises involving an organization’s most precious accomplishments are the ones that do the most damage to its reputation. A thorough audit and review will often turn up issues which will, if appropriate, generate potential policy or culture changes that can avert the crisis before it happens.
Attempting to identify potential reputation threats in any large organization can seem to be very daunting indeed. On any given day, large multi-national organization with hundreds of thousands of employees is engaged in millions, even billions, of individual transactions with customers, business partners, investors and other stakeholders. Trying to get a handle on these reputation threats would seem, on first examination, to be analogous to boiling the ocean, in the terms of a current business cliché.
Our system of issues mapping reduces the potential magnitude of this challenge by focusing not on the entire organization at a particular moment in time, but on four identifiable forces of change and the tension between those forces and the operations of the organization.
The four forces
The four forces that we use are changes in demographics, technology, culture and economics. By mapping the operations of any organization against changes in one or all of these four forces, we can expose latent vulnerabilities to the light of day and take pre-emptive action either to change company policies or prepare points of view that can be used in communications on the issue when it reaches maturity.
In many ways the most powerful of the four forces, demographic change underlies much of the evolution of civil societies around the world. There are many aspects of demographics that could come into play, but we focus on gender balance, the relative sizes of different age cohorts and racial and changes to the racial and ethnic mix in the society under review. In the USA and Western Europe, for example, the largest generational cohort, the tail end of the Baby Boomers is heading into retirement, and the much smaller Generation X cohort is ascending to the leadership of both public and private institutions (Colby and Ortman, 2014).
More than 50 years of immigration from former colonies has also transformed European culture in ways that would be astonishing to former generations. In China (Wee, 2015) and India (Trivedi and Timmons, 2013), gender balance has been significantly undermined by the widening availability of fetal gender testing in cultures with a preference for male children. In Egypt and other parts of the Middle East (Youthpolicy.org, 2010), the largest population cohort is still in its teens and twenties.
Why are these demographic shifts important? They are important because economies, cultures and expectations are largely shaped by the life stages of the dominant age cohorts in a population, and these, in turn, collectively determine social values and points of tension and cohesion. Organizational reputation relies at the highest level on alignment with dominant social values; so if we can create accurate “maps” of demographic change, then we can predict where potential tensions might arise. A few examples will illustrate the process.
Southwest Airlines, now a leading US carrier, was once (1970s) an upstart regional airline that made its name with a unique brand of culture: flight attendants in hot pants and white go-go boots who entertained and flirted with customers in an atmosphere fuelled by generous servings of alcohol (Kirby, 2015). It was a winning formula for fun in the air based on a specific set of demographic factors. The passengers were largely young, male, white, Anglo-Saxon and Southern, sharing deep cultural roots that dictated what was funny, edgy and appropriate without much worry that a line would be crossed and a passenger offended. In the ethnically and demographically diverse travel environment of today, this formula would be catastrophic for any travel brand, and of course, Southwest has transformed its culture to meet the changes without losing some of its informal friendliness.
This is excerpted from the full article. Click on the link to the journal below.
“Sacred cows and the known unknowns” appeared in The Journal of Business Strategy, Vol. 36 Issue: 6, pp.54 – 58, and is reprinted with permission from Emerald Publishing Group Ltd.