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MISSION:INTANGIBLE, the blog of the Intangible Asset Finance Society, offers critical comments on intangible asset, corporate reputation, and finance; supplemented by quantitative reputation metrics. Intangible assets include business processes, patents, trademarks; reputations for ethics and integrity; quality, safety, sustainability, security, and resilience; and comprise 70% of the average company's value. MISSION:INTANGIBLE is a registered trademark of the Intangible Asset Finance Society.

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Executives Become the Personification of Stakeholder Dissatisfaction

C. HUYGENS - Wednesday, July 26, 2017
"Whenever there’s a corporate misstep, stakeholders, from activist investors to customers to politicians, are giving public voice to their anger through social media, doing damage not only to corporate brands, but to individuals in corporate leadership positions.…The executives who are vilified during a crisis become the personification of stakeholder dissatisfaction. When they are targeted, the personal losses can be devastating."

Read more in the CEO World.

Email Reputation Risk: Summer 2017 Edition

C. HUYGENS - Wednesday, July 19, 2017
Reputational risk is the risk of a verdict of culpability with prejudice and damages for emotional harm in the court of public opinion. The purpose of a reputation risk management strategy is to foster reputational resilience and a verdict of exculpation due to mitigating factors, according to Nir Kossovsky of Steel City Re.

“The entire notion of reputational risk is essentially a battle for the mind of the stakeholder. When a bad thing happens — as they always do — will the stakeholder say, ‘Yeah, that’s a bad thing, but it’s such a good company. It’s unfortunate, but they’re good people and they’ll recover.’  Or will they say ‘Yep, that’s what we expected. That’s a bad company and that’s one more thing we expected to come out of them.’”

Reputation risk management products such as insurances that behave like warranties help foster reputational resilience.

Read more in the Business Insurance.

Activists Seek to Exploit Misplaced Expectations

C. HUYGENS - Thursday, May 18, 2017
A tsunami of emotionally charged disappointed stakeholders expected: #reputation #risk looks like this.

In a letter to investors earlier this month, explaining why they were opening to new capital, Mr Singer said he believes “that there has never been a larger (and more undeserved) spirit of financial market complacency in our experience”.

Read more from the Financial Times:

The Wall Street Fear Gauge, Stuck NearAero

C. HUYGENS - Friday, May 12, 2017
Emotionally charged disappointed activist investors existential threat to CEOs as #reputation #risk roars through the boardroom and into the corner office. Culpability insurance is in limited supply and demand is growing.

…the trend is good, and the fundamentals are improving. All else being equal, this should support stock prices. But neither fact should distract from the reality that those prices are very high already — or the fact that high valuations do not need good fundamental reasons to revert towards to more normal levels. The stock market is not spookily quiet. It is spookily expensive.

Read more in the Financial Times.

Silicon Valley Reputation At Risk Over Trust

C. HUYGENS - Monday, May 08, 2017
Talk about emotionally-charged disappointment: “From terrorist content, sexism claims and trolls to mind-reading privacy invasion, unpaid tax and robots taking jobs, the charge sheet is growing rapidly. Technology executives risk attracting an opprobrium that is traditionally reserved for bankers.”

From terrorist content, sexism claims and trolls to mind-reading privacy invasion, unpaid tax and robots taking jobs, the charge sheet is growing rapidly. Technology executives risk attracting an opprobrium that is traditionally reserved for bankers. Stories have emerged of tech billionaires building bunkers in New Zealand to hedge against a revolt by the 99 per cent.

Until recently, the technology sector has been more trusted than any other. In the latest Edelman annual survey, 76 per cent of people trust technology companies, compared with about 60 per cent for most industries and 54 per cent for finance.

That trust underpins Silicon Valley’s economic miracle almost as much as the technology. The halo of pioneering innovation for the advancement of humankind — embodied by Apple’s “think different” slogan and Google’s “don’t be evil” motto (now abandoned) — makes consumers feel good.

Read more in the Financial Times.

What Does Happiness Have to Do With Reputation?

C. HUYGENS - Thursday, August 07, 2014
OK, class. Together, please: Reputation comes from expectations, and value comes from stakeholder behaviors. Now the long form: Corporate reputation is the sum of stakeholder expectations of corporate performance, which leads stakeholders to behave in financially-relevant ways, such as how creditors set borrowing rates, suppliers set terms, customers respond to prices, how effectively employees work, and how severely regulators impose penalties. To better understand how expectations lead to behavior, it is helpful to know that according to researchers, our emotional states are tied to our expectations.

This may not come as a shocker, but "disappointment squelches happiness." Look no farther than the violent reaction to BP four years ago to understand what over promising and under delivering can look like in the extreme. But this other observation may not be as intuitive: "expectations affect happiness long before the reward." In casino parlance, people "act on the come." And what helps establish expectations? That's right. Reputation.

There's more for those in the communications field. It appears that expectations are reset moment to moment based on immediate experiences; happiness follows. This observation suggests that annual surveys of stakeholder sentiment are as useful in day to day management of reputation as are balance sheets in day to day management of cash flows. As one colleague quipped, "How do your account reconciliations fall behind by twelve months? One day at a time."  

(Updated on 8 Aug from the original posting .)

Read more from NPR.

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