”We can't be perfect but we can try to be. As I've said in these memos for more than 25 years: "We can afford to lose money — even a lot of money. But we can't afford to lose reputation — even a shred of reputation." We must continue to measure every act against not only what is legal but also what we would be happy to have written about on the front page of a national newspaper in an article written by an unfriendly but intelligent reporter.”
Those were the famous words of Warren Buffet in one of his biennal letters to Berkshire Hathaway Managers in 2014. I like this so much, so it inspired me to write about it. Why? Because Warren Buffet is a rich, famous and successful man? No. Because he is a wise man that has been around for a long time. Because he has power to influence. And because he shows great leadership. And simply because he so well expresses a fact that I passionately believe in.
I would like to encourage listed and non-listed companies at equal measures to consider the point he makes about going beyond the legal requirements in handling the company’s communication.
In a digitalised world where news travels almost faster than light, it certainly is not enough to communicate what is legally correct. Our stakeholders are overwhelmed by too much information for any human brain to take in and process. There is no way that we can expect any individual to use all that information in a way and at a time that would beneficial to us. We must assume that people have not seen or heard about us. But take into account those who have and those who know almost more about us than we know ourselves. And increasingly we need to remember that fake, misleading or misinformed news is no fiction, so before someone else runs away with our story, we need take charge of it and manage it.
To do that our business needs to have a clear mission and an actionable and living strategy that takes the company towards that mission. We need to define who we need to have onboard to get to that mission, ie. our key stakeholders.
We need to help these key stakeholders to digest information by providing information that is relevant to his/her situation, provide it at a time when it is needed and paced with the right level of detail – and listen to him or her to continuously adapt our communication to make sure what we say is what he/she hears, while still keeping a steady focus on our mission.
To help our stakeholders remember us we need to give them logical context (mission and strategy) and a steady feed of relevant information that shows what the strategy means in reality.
Needless to say, we need to do the right things (solid leadership and strategy implementation), but history has proven that hardly any business or leader gets it right all the time. Sometimes we even get ourselves into a crisis. And that is where our reputation really is tested. Because if we have managed to build a trustworthy and believable reputation among our key stakeholders, we stand a better chance of getting out of the crisis faster, at lower cost and less pain to our owners, investors, financiers, employees, customers and other key stakeholders.
Communication alone does not do the reputation trick. Reputation management certainly cannot be outsourced to the IR and communication department while the rest of the company does its own thing. Successful communication assumes that leaders take relevant action, and in particular action that we have said we would take. With relevant action in combination with relevant communication we build trust.
Reputation and trust are about the most valuable assets any business can hold in its balance sheet. This is true especially for businesses that are set to grow and that need funding, good co-investors or the right investment targets to build that growth. I suppose that is just about every business that needs to deliver value to its owners, offer an interesting workplace to its employees or competitive products or services to its customers.