The Reputation Game

The Art of Changing How People See You

David Waller, Rupert Younger

• Publisher: Oneworld Publications
• Year: 2017
• eBook ISBN: 9781786070722
• Topic: Personal Development
• Subtopic: Business General

Your reputation affects everything, the opportunities that come your way in business and in life – learn the rules to life’s most important game…

‘A must-read.’ Biz Stone, Co-founder of Twitter

It’s a game you’re already playing, whether you like it or not. You can choose to ignore it and remain at the mercy of what others say about you, or you can take the time to learn how it works. For those who do the potential benefits are unlimited.

Through pioneering research and interviews with a host of major figures ranging from Jay-Z and LinkedIn co-founder Reid Hoffman to Bernie Madoff and Man Booker prize-winning Hilary Mantel, The Reputation Game reveals the key mechanisms that make and remake our reputations, providing the essential guide to the most important game in business and in life.

Part I

REPUTATION STRATEGIES

A good reputation is more valuable than money.

Publilius Syrus, Latin writer and scholar, 85–43 bc

1

The rules of the game

There are three ‘dice’ in the reputation game: behaviours, networks and narratives.

The first is your behaviour. Your actions send signals about what others can expect from you. In business, always paying your suppliers within thirty days sends a positive reputational signal. As an individual, you should always do what you say you are going to do. If you start turning up to meetings late, people will adjust their expectations accordingly: they will tell other people you are always late, they will ‘aim off’ when they have a meeting with you and turn up late themselves, or, if they set special store by punctuality, they might invite someone else along instead.

It would be wonderfully simple if there was a straightforward connection between your behaviour and your reputation. Yet this is not the case: philosophers from at least the time of Plato have pondered the paradox that you can enjoy a great reputation, and yet behave really badly. Many chief executive officers (CEOs) complain that their companies do not enjoy the reputations they deserve – typically with investors – while others enjoy reputations they haven’t ‘earned’. There has been much hand wringing about our new ‘post-fact’ or ‘post-truth’ world, but in terms of reputation it has always been perception that matters. Reputation doesn’t exist independently of the way people form their judgements. In short, your reputation is not what you really are, but what others perceive you to be.

That is partly because reputation travels through networks. Your choice of which networks to invest time in, coupled with how you engage, make a huge difference. We all know intuitively that the company we keep, in person or online, tells the world a great deal about who we are. If you are not part of the right networks, it makes it harder for your actions to be appreciated and your reputation to take the shape it deserves. During the Deepwater Horizon crisis of 2010, BP found itself adrift in the US – a British company lacking connections in the White House, as we will see. Or you can be an unpublished author whose self-published masterpiece is ignored by reviewers, a talented actor who cannot get a casting, or a painter who cannot get a show put on: in the creative industries a gifted individual needs to be taken on by an agent who will introduce him or her into networks of publishers, producers or galleries.

So reputations begin with our actions, and travel through our networks. The third element is the message that is being transmitted. In today’s world, we are all our own publicists – whether on Facebook, Instagram or Twitter, or professionally through annual reports, blogs and websites. How we use narratives is critical to the way we influence our reputations.

Goldman Sachs, on the face of it, has a real reputation conundrum. As one of the largest and most successful investment banks in the world, it is loved, hated, feared and admired in equal measure by different people all over the world. So what is its reputation? It would seem impossible to state with any certainty. Matt Taibbi, a staff writer at Rolling Stone magazine, famously wrote a piece on Goldman Sachs in which he described the bank as ‘a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells of money’.[mr¹ The piece went on to accuse the bank of ‘manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere’. Harsh criticism, reflecting US public opinion in the aftermath of the 2008 financial crash. And yet, despite this, Goldman retained its prime position as a recruiter of finance MBAs and the investment bank of choice for mergers and acquisitions.

How can it be possible for Goldman Sachs to be simultaneously so reviled and revered? The answer lies in the simple proposition that we all have multiple reputations, each of them for something with someone. Goldman’s commercial success is built on hiring the best people, rewarding them generously, and looking after clients’ financial interests more effectively than the competition. The bank will only become concerned about any other criticism if that begins to affect the judgement of politicians and regulators, which might have implications for its business.

A modern, multinational corporation has multiple constituencies: it sells to its customers, it buys from its suppliers, it seeks to influence the regulators that govern its markets; it pays dividends to its shareholders and conveys a story about its future earnings potential to analysts and journalists; it engages with pressure groups who pursue a specific agenda, such as mitigating climate change; it also provides a living (and hopefully also the opportunity for self-fulfilment) to its employees. These multiple reputations can mean the difference between success and failure. For example, a long-standing reputation for quality, reliability and trustworthiness with customers will help you maintain high margins and withstand temporary shocks such as a product recall or even a serious accident. A reputation for reliability and predictability with investors should earn you a higher stock-market value and reduce the cost of raising capital when you need it.

Rolls-Royce, the engineering group, has a near fail-safe reputation for producing aircraft engines of the extraordinary reliability and quality: its Trent family of engines are designed to fly for up to forty thousand hours between each shop visit and have only suffered one ‘uncontained failure’. This was on 4 November 2010, when one of the engines on Qantas Flight 32 exploded shortly after take-off from Singapore’s Changi Airport. The crew managed to land the damaged plane and there were no casualties, yet it was a close-run thing. The accident was later found to be due to a defective component.

Although Rolls-Royce’s share price fell after the incident, it is fair to say that airlines, passengers and investors gave the company the benefit of the doubt. This was perceived to be an exceptional event and Rolls-Royce’s reputation for engineering reliability prevailed. The company subsequently issued multiple profits warnings in 2014–15, culminating in a record loss of £4.6 billion for 2016, and it has been investigated for bribery and corruption in Indonesia, China, India, Brazil, Nigeria and the UK. The company has suffered reputational knocks as a result, but surely nothing like as severe as if there had been another mechanical failure.

Being known as a great employer that provides rewarding career opportunities will help recruit the brightest and best graduates, leading to lower recruitment costs and greater productivity down the line. Sometimes, however, the contradictions between your different reputations can cancel themselves out. For many years, Tesco enjoyed a reputation with its shareholders for financial and strategic invincibility. Long headquartered in a dowdy office in the suburbs north of London, Tesco seemed to be able to grow profits and market share faster than its competitors. Under the stewardship of former CEO Terry Leahy, the company sought to export its model to other parts of the world, with huge launches in Asia and continental Europe. Even as it expanded, others loathed the company, arguing that its relentless expansion was draining the life out of town centres and putting small shopkeepers out of business. Following the departure of Sir Terry in 2011, the company suffered a series of disasters, from horsemeat being found in its food products, to an accounting scandal and forced withdrawal from the US market. Its profits collapsed, it lost market share in its core home market, and it had to replace new CEO Philip Clarke with no-nonsense outsider Dave Lewis. Having lost its reputation for unrelenting competence, the company found itself with few friends among those who had formed a poor judgement of its character, rather than its competence as a retailer..

We will explore the interplay between competence and character reputations, but note that a good character reputation does not guarantee to commercial success: Cadbury and Rowntree were both proud, progressive companies with fabulous reputations in the communities where they operated, but ended up losing their independence. A reputation for benevolence will not immunize you against commercial threats.

Countries too have multiple different reputations. When President Obama failed to intervene in the Syrian conflict, President Putin of Russia seems to have concluded that Obama would not respond in any serious manner to a military intervention in Ukraine.

‘With the Kremlin, the Obama administration gained a reputation for weakness and indecision,’ reflects Fred Kempe, president of the Atlantic Council, a leading US think-tank. ‘Obama could only have addressed that reputational issue by changing his behaviour, as Kennedy did in 1962 during the Cuban missile crisis.’

Such perceptions often don’t grow out of adopting the wrong policy, but rather from a lack of consistency. The Berlin and Cuban crises, as Kempe has written in his 2011 book Berlin 1961, show how a reputation for weakness or indecision can be provocative to a rival, whether or not it is based on fact. The missile crisis was in part a result of a perception of American weakness following the US acquiescence to the building of the Berlin Wall a year earlier.

In summary, we all have multiple reputations. Our actions are formulated as a story and travel through networks. We cannot necessarily control our reputation – after all, reputation is what other people are saying about us – but we can learn how to use these three elements to our advantage. Let’s look in more detail at the three dimensions of reputation, starting with the origins of human behaviour in the deep past.

2

Behaviours

The behavioural biology of reputation

Reputation is bound up with the most elemental animal and human needs: to survive in a hostile environment, to get enough food to eat and to find a mate. Humans are social animals, banding together to fend off predators and hunt large prey. Do you co-operate with others, and if so, who can you trust?

Chimpanzees, our nearest relatives in evolutionary terms, have complex social systems, based on relationships between individuals that have many endearing parallels with the way we humans behave, as any visitor to the zoo can testify. Researchers believe that chimps and other social animals pursue two basic reputation strategies. The first is social learning: they watch other animals’ behaviours, making a choice of where to feed or build a nest, for example, and will follow suit without testing the environment directly for themselves. As science writer John Whitfield observes, this ‘has obvious similarities with the way humans choose what to buy, where to vacation’, and so on. The second strategy is eavesdropping: adjusting your own behaviour based on watching – or being watched by – others. Whitfield cites the example of the cleaner wrasse, a small coral-reef fish, which ‘decides whether to cooperate with its clients by removing parasites and dead tissue or to cheat them by biting mucus and scales (which are more nutritious) partly on the basis of whether potential clients are watching’.¹

Costa Rican vampire bats leave their cave every night to look for a meal of blood. On average, one-third of younger bats come back without anything to eat, and they are bailed out by well-fed older bats who are happy to regurgitate some of their surplus blood. How the well-fed bats decide to share the surplus depends on patterns of past behaviour; whether, in short, the hungry bat has fed them in the past, and there is a favour to be repaid.

Reputation is not just concerned with our beliefs or actions. Our observed behaviour affects status, trust and reciprocity. As humans, we have developed sophisticated mechanisms to respond to danger or opportunity. We learnt long ago that how others see us affects our future. Cave dwellers knew it when they drew paintings of the hunt on their walls. This is thought to be a signalling mechanism – either that they were expert hunters or that there was abundant food in the area.

Behavioural signals

The Godfather movie of 1972 glamorized the life of the mob and contained the immortal scene of the Mafia affiliate waking up to find a horse’s head next to him in bed: behavioural signalling like no other. The Italian Mafia in the US had various rules and customs that had to be obeyed by all Mafiosi. The rituals associated with membership ranged from drawing blood from a pinprick on the finger to swearing an oath over a gun or a picture of the Virgin Mary. Once sworn in, Mafiosi lived by omertà, the code of silence that meant you should never speak about the Mafia to the authorities. It was cosa nostra, our thing, and no one else’s business. If you broke omertà, you might end up in landfill in New Jersey or mixed into the concrete foundations of a construction site. The behavioural signals were crystal clear, and the Mafia gained a reputation for consistency by punishing breaches of those rules in unarguable terms.

Take the example of Abe Reles, a hitman for the Mafia from the 1920s to the time of his death in 1941. He was a member of what the media dubbed ‘Murder, Inc.’, the enforcement arm of the National Crime Syndicate that comprised the five main Mafia families in New York. He was a cold-blooded psychopath, nicknamed ‘Kid Twist’ because of his ability to strangle his victims with his bare hands, but his speciality was to drive an ice pick through a victim’s ear and into their brain. On one occasion he killed a parking attendant in broad daylight for not delivering his car quickly enough, and he took pleasure in burying alive one of his enemies. He was an effective enforcer, and his presence alone sent a strong message to those around him. Reles became feared and even admired (for killing, by other criminals). The Mafia families connected to him gained valuable reputation currency by association.

In 1941, Reles earned himself a new nickname, ‘The Canary’, when he ‘sang’ to the authorities. After being arrested on charges of racketeering and murder, Reles squealed, providing details of some eighty-five murders. Various malefactors were identified, including the infamous Harry ‘Happy’ M...

Table of contents

• Cover
• More Praise for The Reputation Game
• Title Page
• Dedication
• Note on the authors
• Contents
• Introduction
• Part I
• 1 The rules of the game
• 2 Behaviours
• 3 Networks
• 4 Narratives
• Part II
• 5 Managing crisis
• 6 Advanced techniques
• 7 Legacy
• 8 Conclusion
• Notes
• Acknowledgements
• Appendix: Suggested Further Reading
• Index
• Imprint Page