Tuesday, July 3, 2007

Image is Everything: A Riff on Value and Your Company

Two seemingly unrelated news articles crossed my radar screen this morning. The first, from Businessweek, discusses how a company's public perception can affect the value of a company's stock, while the second, from Forbes, talks about how a restaurant critic's reputation might be destroyed if the public sees his face.

The lesson from the Businessweek article is that the more positive a company's perception is among private investors the stronger their stock price becomes. An example is that Johnson & Johnson trades at a higher price/earnings ratio than Pfizer, in large part because the former has a better reputation than the latter. Reputation is certainly not as tangible as revenue, profits, cash, and the like, but without a doubt, customers will ultimately gravitate towards a company they like better, all things being equal.

And what we get from the Forbes article is that the Philadelphia Inquirer's restaurant critic--who has a long-lasting reputation of giving honest, objective advice, but without anybody knowing who he is (which would taint the service and food he receives while dining out)--is in jeopardy of having his identity revealed due to a pending lawsuit. Video testimony has been recorded and if released to the public, it is argued that restauranteurs will know who he is and treat him differently to get a better review. The lesson here being that Craig LeBan, the critic in question, has a higher value of NOT being known than if he were a local celebrity, so he highly covets his privacy in order to continue to do his job well.

Essentially these are two opposite takes on the same issue: Identity absolutely affects your reputation, and, ultimately, how people value your products or services. Keep this nugget in mind with everything your company does, including:
  • Advertising-- do you present yourself as a company looking to make the world a little bit better or as a company trying to get "shock attention" ads looking for a quick buck?
  • Customer service-- do the people at your company answer the phone in a friendly manner, or is it more of an inconvenience when somebody calls?
  • Community recognition-- does your company actively help the local community or do you lurk in the shadows, not caring about how your business affects your neighbors?
  • Public relations-- do you actively try to prevent problems and maximize your company's reputation, or do you try to "spin" a negative aspect/event into a positive one after the harm's done?

Face the facts folks-- your company's "face" affects the bottom line...

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