Monday, September 17, 2012

Reputation is the Secret to Company Value

Apple Inc. has become the most valuable company in the world. Its stock price indicates the company is worth over $640B-- bigger than Microsoft, Google, Amazon and Facebook combined. Some analysts suggest it could go much higher. The company's total assets are about $120B. The difference between its assets and its market value comes down to its "reputation" among the public that it will continue to deliver value. Is reputation worth that much? What does Apple Inc. do to build its reputation that your company can learn to do better?


What is Reputation?

The investment community believes in Apple’s management capability and the organization’s strength to produce desired results. Here is a telling quote from an article from the Associated Press’ Peter Svensson just prior to the iPhone 5 launch:

Apple's stock has hit new highs recently because of optimism around what is believed to be the impending launch of the iPhone 5, and possibly a smaller, cheaper iPad.

Key words – “optimism”, “believed to be”, “possibly” - suggest that the company is trusted to deliver on its promises of future growth and profits, not just today’s success. That trust is the company’s reputation.

Building Reputation

Organizations cannot really control their reputation directly. It comes as a result of the actions taken over time. Apple continues to deliver state-of-the art innovation that keeps it one step ahead of its competition. This is a must in their market, and there is no room for hiccups. Other lessons all companies can learn are:

  1. Delivering on promises on-time and not missing deadlines.
  2. Keeping excitement alive - Build anticipation and excitement with communication to the press, and stakeholders and customers
  3. Executing with excellence - Paying attention to executional details of each element of the marketing mix
  4. Living the brand – All employees and retail associates are highly knowledgeable and are brand ambassadors.
  5. Product and thought leadership - not getting stuck in me-too product and price wars.
  6. Being authentic – behavior consistent with company values and the expectations of the stakeholder.

Managing reputation has become of significant interest in the last decade. Crises such as the BP Oil spill and financial meltdown of financial services companies show how fragile reputation can be. Apple Inc. demonstrates many of the rules to building a good reputation over time.

Do you believe that reputation has value in your organization?

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