Restoring Corporate Trust and Reputation May be a Blue Ocean Strategy Challenge.
Seth Godin’s daily blog post for Sept 4th, 2019 in its entirety:
AI can now easily (8 seconds) change the identity of someone in a film or video.
Multiple services can now scan a few hours of someone’s voice and then fake any sentence in that person’s voice.
Open publishing on platforms like the Kindle means that there’s no gatekeeper to verify the source of what you read. Perhaps there’s already a fake Kindle book by “Malcolm Godin” and “Seth Gladwell”. I wonder if it’s any good or if someone simply wanted to fool a search engine?
Don’t buy anything from anyone who calls you on the phone. Careful with your prescriptions. Don’t believe a video or a photo and especially a review. Luxury goods probably aren’t. That fish might not even be what it says it is.
But we need reputation. The people who are sowing the seeds of distrust almost certainly don’t have your best interests in mind–we’ve all been hacked. Which means that a reshuffling is imminent, one that restores confidence so we can be sure we’re seeing what we think we’re seeing. But it’s not going to happen tomorrow, so now, more than ever, it seems like we have to assume we’re being conned.
Sad but true.
What happens after the commotion will be a retrenchment, a way to restore trust and connection because we have trouble thriving without it.”
So how does one tie together the concepts of the end of reputation and a plausible Blue Ocean Strategy solution for increasing trust?
First, a couple of assumptions need to be spelled out and conceptualized.
First Assumption: When Seth Godin shares resources that provide evidence that the end of “reputation” is at hand, due to technology’s misuse and often-times, nefarious use, we see that distrust is the by-product.
From Clearlogic.ca, “Luis M B Cabral, Professor of Economics at New York University, theorized in “The Economics of Trust and Reputation” that trust and reputation play an important role in the success of a company.
According to Cabral, trust is established between an organization and its stakeholders through regular interactions that produce consistent results. Cabral suggests there is a positive relationship between trust and the price customers are willing to pay for a product or service — the higher the trust, the more customers are willing to pay. In addition, the more consistent transactions that take place between a seller and a buyer, the harder it is to break any trust previously built between them (whether good or bad).
Cabral’s theory also explains how “investing in reputation” can pay off for a company. He suggests there is a negative relationship between reputation and the amount of money the company must invest in improving their reputation. As reputation increases, company leaders can invest incrementally less into building their reputation without hurting the progress they’ve made.”
Second Assumption: Blue Ocean Strategy and Blue Ocean Shift have at their core, the need to identify, build a relationship with, and provide value to the noncustomer while reducing the costs of delivering the added value necessary to bring the noncustomer into the fold.
We can see that if an individual or company has a great reputation, the investment to maintain that reputation goes down while simultaneously, the customer’s willingness to pay for the company’s product or services goes up.
How do we then manage to cultivate reputation in an age of fake products, review websites that aren’t fair or legit, social media posts that aren’t real or in context, and other unfair hits to our reputations? There are also times when companies and individuals simply make dumb choices and suffer massive hits to trust, social capital, and reputation.
Below is a simple yet profound Reputation/Trust As-Is Strategy Canvas. It showcases some differences between a company or individual with high levels of trust as opposed to a company or individual with low levels of trust and reputation.
When a leader looks at the key factors of competition found in this strategy canvas, it’s clear that one’s ability to get the highest price for a product or service is enhanced when high levels of trust occur. What is required? Factors include great support for customers. Support is where tremendous increases to the value prop may be added. What can you do support wise, to please your customers? Be looking at support as a factor, prior to the sale, during the sale, and after the sale. Consistency is simple. Just do what you do, to the best of your ability, day in and day out. If you say thank you to a customer when they leave, then do it every day. If you write informative articles that help your customers and audience, then do it consistently. When someone visits your site and sees the last post was from 2015, it diminishes trust in your company. How happy are your employees? When they are happy, they enhance the trust customers have in your service or brand. When an employee throws an employer under the bus because of poor treatment or neglect or worse from the employer, damage to the company’s reputation is assured. How reliable is your product or service? While it seems obvious when a product or service is poorly designed and poorly delivered, it sullies the reputation and permanent damage ensues. An finally, companies and individuals with reputations in decline find it far harder and more expensive to maintain the status quo. They are always having to buy or spend their way out of crisis mode. Take an example from VW. The emissions cheating onboard computer scandal is a great example of the extremely high toll exacted when reputation and trust were thrown out the window in exchange for temporarily higher margins.
So what’s at stake? You or your company’s move to Blue Ocean or uncontested market space and the resulting high profit margins the come along with those customers.
How does one measure the possible gains in high levels of trust and reputation? It’s easier than one may imagine. First, take a look at what’s at stake. Let’s use the Three Tiers of Noncustomers tool from Blue Ocean Strategy’s Online Studio.
When your trust and reputation levels are high, your soon-to-be noncustomers decide to stay. Knowing why they are “soon-to-be” noncustomers is vitally important. How do you obtain the intel on who is leaving and who is staying? There are numerous tactics but the best ones surround talking to your customers. It’s that important. Good ole fashioned communication done face to face or over the phone is the best way to build reputation and trust. Email won’t cut it. Social may be a slight bit better than in person but only if you utilize the messaging systems inside platforms. For example, if I can’t make it to Australian to visit a Blue Ocean Strategy mentor and colleague, LinkedIn may have to do. Authentic reading of posts, sharing of work, and curating articles to others is a great way to build trust and reputation.
The tier two noncustomer is where some significant business growth potential exists. These customers are aware of you and your company. They simply prefer where they are currently being served. A few things may be at stake here but let’s stay with our trust and reputation theme. Your best pathway to building trust and reputation with these noncustomers is to reinforce the trust and reputation you have with current customers who know them. The folks at Ninja Metrics have proven it this way. Your current customer’s lifetime value plus their social value equals their true total value. The pathway to your tier two noncustomer is via your current customers and some tweaks to your value proposition.
Ninja Metrics builds tools that track and provide the ability to enhance the value proposition for gaming companies and other software firms. Their extensive research details the social whales in your industry are not the biggest spenders. They do, however, have the most influence.
With this understanding, you can now lead your practice and company into the third tier of noncustomers. The unexplored. You don’t currently know this audience. They have no knowledge of your reputation or whether or not they can trust you. How do you reach them? There is a process. Some technologies exist to help. Ninja Metrics is just one example.
Your first step is to perhaps look across industries, product offerings, and buyer groups and analyze what industry is lacking in trust and reputation. A great example is the automotive industry. Disruptors at GM decided 30 years ago to build a car “community” and deliver its product around “no-negotiating” pricing. It was Saturn and had a decent run. Today’s disruptions are taking the traditional dealership completely out of the equation. Carvana’s listing on Google says it in a nutshell.
What can you and your company do to serve tier-three noncustomers that you’ve not even explored so as to exploit the lack of trust and declining reputation of competitors?
For help around these issues and strategies, reach out to me via DM. I’d be glad to have a complimentary initial consult.