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Using Social Media to Create a New Type of Social Business: Design for Reputation and Risk Management

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How do you manage risk in the social world? The primary elements in managing risk associated with your reputation are first in knowing you have an issue, and then in addressing it in a speedy and transparent fashion with the right people. This chapter outlines best practices to protect your online reputation and manage the risk associated with the blogosphere.
This chapter is from the book
  • “Your online reputation is your Social Business Currency. Manage it well.”

    Sandy Carter

  • “What happens in Vegas might stay in Vegas, but odds are there’s footage.”


Reputation and Risk Management

As I began my research into reputation and risk management, I found many organizations that experienced some sort of crisis in the blogosphere while trying to protect their online reputation. For example, United Airlines had to deal with a crisis with David Carroll’s Taylor guitar, which was broken during a flight he took. Because he felt he had not been treated well, he wrote a song about what United had done, and posted it to YouTube (www.youtube.com/watch?v=5YGc4zOqozo). At press time, there were more than 10 million viewings. Taylor Guitars also produced a YouTube video with 500,000 viewings offering support to David, and offering tips to those traveling with Taylor guitars. By the time United did come back and offer to reimburse David, he asked for United to give the money to charity. United Airlines stock plummeted 10%, costing shareholders $180 million dollars, for a $1,200 claim on a guitar! And United isn’t the only company faced with these challenges. Consider a few others:

  • Dell’s support was attacked online with a lead blogger calling it “Dell Hell.” Dell handled the situation well, and in fact, listened and created a great solution called IdeaStorm.
  • AT&T’s poor service for iPhones caused the FCC to step in on a plan from one disgruntled tweeter to shut down AT&T’s network.
  • Energizer’s Night Race 2011, held in Sepang International Circuit, Malaysia, was not well organized. Although the race was only sponsored by Energizer, when negative comments on Facebook appeared, Energizer’s brand took a hit by not responding quickly and apologetically, and an alternate site, Boycott Energizer Night Race, took a very aggressive stance against Energizer.
  • Honda promoted its Facebook page, seeking input on its new Accord Crosstour design. Most people were critical of the design, although on Facebook a fan seemed to like it, writing “Interesting design, I would get this car in a heartbeat.” It was later found out that the “fan” was the product planner for the Crosstour. Even though Honda issued an apology, the media did write about the story and of Honda’s lack of transparency.

I strongly believe that every Social Business needs to expect the best, but plan for the worst. Planning for your reputation online is a relatively new concept. People have been focused on reputation management offline for a while, but only recently has this focus included the online world. In fact, I discussed this concept with many Fortune 100 HR directors, and they are now hiring many more reputation managers versus risk managers into their companies! A risk manager focuses on what to do when something goes wrong. A reputation manager focuses on protecting the brand, product, or company in a proactive stance.

What is reputation management? It is ensuring that a company knows what is being said about it, building it up through positive actions and having a way to address the negative comments online, and sooner rather than later. Reputation is what others believe to be true about your company, product, or brand. Reputation management is being able to appropriately shape that reputation by

  • Listening to know what others think about you
  • Countering negative opinions
  • Building positive opinions through actions

Much has been said regarding the proliferation of social comments. With so many social tools and such wide scope and content, it is available to everyone and is extremely impactive. What is even worse is that the Internet does not have the same authoritative standards as do traditional media. For example, a newspaper and news channel will often check their facts and do some investigative study before going public. In the blogosphere, you can’t count on that level of investigation, and thus it can be difficult to understand whether information is valid or just one person’s biased opinion.

But what’s different from the media explosion of television and radio some 50 years ago is both the sheer volume, speed, and influence. About 770 million people have visited a social networking site, according to comScore. (comScore is an Internet marketing research company providing marketing data and services to many of the Internet’s largest businesses. comScore tracks all Internet data on its surveyed computers in order to study online behavior.) According to Forrester Research, four out of five online U.S. adults use social media in some capacity (source: “Benchmarking Social Marketing Plans For 2011,” by Sean Corcoran with Emily Riley, Angie Polanco, October 14, 2010). Furthermore, according to the GlobalWebIndex, over 70% of those in the U.K. leverage social media. It is this power of influence and massive distribution that make social such a potent force in influencing consumer perceptions. In fact, 78% of consumers trust their peer’s recommendations—whether good or bad.

It is this volume of content, distribution, and influence that is reshaping how Social Businesses manage their reputation and manage risk that might occur in their relationship to brands, products, services, and issues of the day.

I recently read the “Elements of Reputation” by Arlo Brady. Based on his research, reputation is built from the following:

  1. Knowledge and skills: A company is only as good as its employees, who are the major determinant of current and future success.
  2. Emotional connections: Consumers attach emotions to services and products; without this emotional connection many companies would be alike.
  3. Leadership, vision, and desire: Stakeholders attach a high value to companies that are perceived to be led by a group of people who have vision and desire.
  4. Quality: This concerns product or service quality, that is, whether a company is seen to be meeting customers’ requirements, not just once but consistently.
  5. Financial credibility: This is the traditional means by which a company’s performance is judged. To build credibility, the company should have a strong historical and contemporary record for generating better-than-average returns for shareholders.
  6. 6. Role of the company in the society and community: People care that you care about bigger things than just profit—that you value helping people.
  7. Environmental credibility: Given the green movement, companies that focus on the environment tend to have better reputations as citizens value the planet. A Smarter Planet by IBM demonstrated our focus on the planet as much as profit.

These seven items provide a guide for what to watch carefully. Reputation must be managed closely in order to decrease the potential for elements that downgrade the reputation. In fact, if you think about Chapter 5, “(Social) Network Your Business Processes,” many of these seven reputation earners are inherent as you socially enable your internal processes. For example, facilitating sharing of talent and subject matter expertise by socially enabling your HR process can impact your knowledge and skills.

Any of the aforementioned seven elements could come under attack at any time, however. In fact, the number one question that I get asked from the C suite is about the “risk” of being so public online. The risk exists even if your company is not proactive online, because clients, influencers, and competitors can write about your company at any time. That is why, despite these risks, IBM’s Chief Marketing Officer, Jon Iwata, said the rewards outweigh the risks:

  • “We discovered that the risks of not encouraging employees to engage in social media and the risks of not providing them with the tools and education they need greatly outweigh the risks [of trained participation]. Our assessment has provided even more evidence that encouraging employees to engage in social media is critical to our future success as a business.”

How do you manage risk in the social world? The primary elements in managing risk associated with your reputation are first in knowing you have an issue, and then in addressing it in a speedy and transparent fashion with the right people. This chapter outlines best practices to protect your online reputation and manage the risk associated with the blogosphere.

The rewards of becoming a Social Business far outweigh the risk, however, but not without careful planning and management. In fact, to me, the bigger risk is that your company will create an online presence and no one will come! As with any relationship, it takes work to make it strong. The sections that follow explore how to plan for recovery, while outlining the great rewards that come with a Social Business.

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