The Reputation Recipe: Social Responsibility, Innovation, and Leadership

The Reputation Recipe: Social Responsibility, Innovation, and Leadership

While many elements contribute to an organization’s reputation — there are three that can make or break one, and in turn, an organization itself: corporate social responsibility, innovation, and the values, vision, and strength of leadership.

First, organizations that genuinely and continuously employ corporate social responsibility (CSR) initiatives enhance their reputation and value. Companies justify their CSR initiatives with the promise that they will “improve a company’s image, strengthen its brand, enliven morale, and even raise the value of its stock” (Zhou, 2006). It’s no secret that people like to feel good about themselves, as well as the products and services they use and the brands and causes they support. Philanthropy both encourages purchases and increases long-term brand loyalty. Therefore, establishing socially responsible initiatives is essential to achieving and maintaining a positive reputation. Supporting good causes, reducing carbon footprints, employing diversity, equity, and inclusion policies, and encouraging community and virtual volunteering are all ways organizations can demonstrate their dedication to being socially responsible.

Of course, actions speak louder than words. Social responsibility initiatives must be genuine and continuous. A positive reputation requires follow-through as a consistent personality — one where the organization does what it says it would do on an ongoing basis. When an organization recognizes its responsibility to the environment and the world around it and actively integrates these environmental and social concerns into its business strategies and operations, it establishes a reputation for itself, distinct from its competitors. And, today more than ever, consumers expect organizations to be socially responsible by speaking about and acting on pressing social issues — especially Millenials and members of Generation Z.

According to a 2012 study by the Reputation Institute, now RepTrak, 42 percent of an organization’s reputation is based on consumer perceptions of its CSR efforts, which many organizations already leverage — and more should (Smith, 2012). At its core, CSR helps to establish a greater level of trust between organizations and consumers. For example, Patagonia is known as a leader in corporate social responsibility. In 1985, Patagonia announced its “1% for the Planet” pledge, promising to donate 1% of all sales to the “preservation and restoration of the natural environment” (Patagonia, n.d.). Since then, Patagonia has donated more than $140 million in cash and in-kind donations. Likewise, during the COVID-19 pandemic, Disney donated $27 million worth of food and personal protective equipment (PPE) from its closed parks and production sets (Digital Marketing Insitute, 2021). In 2017, Starbucks pledged to hire 25,000 United States military veterans and spouses by 2025. After reaching this goal six years early, the coffee conglomerate pledged to continue hiring 5,000 more veterans and spouses each year (Stankiewicz, 2019). Like other brands looking to be more sustainable and socially responsible, LEGO Group announced in September 2020 that it would be investing $400 million over the next three years to first and foremost phase out its single-use plastic bags and shift to fully sustainable packaging by 2025 (Lego, 2020).

Second, the companies with all the buzz around them are continuously innovating — introducing new products, services, methodologies, and ideas never seen before. The more innovative, the more talked about, and the more talked about the better an organization performs financially. Innovative companies can please their stakeholders by actively listening to what they want and acting on those wants before competitors even know they exist. They are thought leaders in the marketplace of ideas and are constantly capitalizing on new market opportunities. As a result, they have robust prospects for future growth and offer high-quality products and services that outperform their competitors (Javed, 2020).

As the fourth-biggest company globally, Alphabet, the parent company of Google, has a well-established reputation as a highly innovative company and a great place to work. In 2007, Google introduced a new policy — Innovation Time Out (ITO), which encourages employees to spend 80 percent of their time at work on core projects, and 20 percent on exploring innovative side projects relevant to their interests (Murphy, 2020).

SpaceX is a company that earned a positive reputation by doing something never done before. If consumers were asked ten years ago whether everyday civilians would soon be traveling to space aboard a commercial spaceship, they would have thought the concept was crazy. However, like all innovative companies, SpaceX set forth on a mission to make the impossible possible while differentiating itself from conventional and underfunded organizations like NASA. Similar to the concept of an untrained individual going to space, the idea of getting into a stranger’s car to go to the airport, a friend’s place, or dinner ten years ago would have seemed both ridiculous and foolish. Yet, Uber has seamlessly made the concept an everyday norm.

Finally, leadership significantly influences an organization’s reputation by the values, visions, and strengths leaders bring to the table. Stakeholders must feel confident in the leader of an organization's ability to motivate and empower its workforce to develop and offer the best, highest quality products and services. An organization's leadership assumes the role of the company spokesperson and is essentially the brand's face. Therefore, leaders with their own positive reputations will positively influence the reputation of the organization they lead — and vice versa, because just as leadership can improve an organization's reputation, it also can ruin it. And, because an organization's values should guide its vision and be the driving force behind how it does business, it is essential that its leadership shares and demonstrates the same values.

Good leadership goes far beyond one's personal business goals and aspirations, as demonstrated by leaders like Mark Cuban and Warren Buffet. Most leaders adopt either an authoritarian, democratic, or laissez-faire leadership style, but the best leaders draw on positive qualities from each (Carlin, 2019). Mark Cuban, best-selling author, owner of the Dallas Mavericks, and star of ABC's "Shark Tank," has several strengths that make him a good leader and reflect positively on his many business endeavors. On "Shark Tank," a self-made entrepreneur himself, Cuban helps eager and aspiring potential entrepreneurs grasp opportunities they otherwise may never have. His leadership style inspires and motivates others to take worthwhile risks they believe in. Like Cuban, Warren Buffet, a master of reputation management himself, once said, "It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently" (O'Donnell, 2018).

Although many factors contribute to establishing and maintaining a positive reputation, social responsibility, continuous innovation, and strong leadership are fundamental ingredients to perfecting the recipe.

References

1% for the planet. Patagonia. (n.d.). Retrieved September 22, 2021, from https://www.patagonia.com/one-percent-for-the-planet.html.

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Digital Marketing Institute. (2021, September 1). 16 brands doing Corporate Social Responsibility successfully. Digital Marketing Institute. Retrieved September 22, 2021, from https://digitalmarketinginstitute.com/blog/corporate-16-brands-doing-corporate-social-responsibility-successfully.

The Lego Group. (2020, September 18). Lego Group to invest up to US$400 million over three years to accelerate sustainability efforts. About us - LEGO.com US. Retrieved September 22, 2021, from https://www.lego.com/en-us/aboutus/news/2020/september/sustainability/.

Murphy, B. (2020, November 1). Google says it still swears by the 20 percent rule to find big ideas, and you should totally copy it. Inc.com. Retrieved September 22, 2021, from https://www.inc.com/bill-murphy-jr/google-says-it-still-uses-20-percent-rule-you-should-totally-copy-it.html.

Muzhar, J., Hafiz, Y., Asrar-ul-Haq M., Ali, M., & Kirmani, S. (2020). Responsible leadership and triple-bottom-line performance—do corporate reputation and innovation mediate this relationship? Leadership & Organization Development Journal, 41(4), 501–517. https://doi-org.proxy.library.nyu.edu/10.1108/LODJ-07-2019-0329

O'Donnell, J. T. (2018, August 28). In 1 simple sentence, Warren Buffet explains the power of personal branding. Inc.com. Retrieved September 22, 2021, from https://www.inc.com/jt-odonnell/in-1-simple-sentence-warren-buffet-explains-power-of-personal-branding.html.

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Stankiewicz, K. (2019, November 8). Starbucks CEO: We've met goal of hiring 25,000 vets and spouses, now plan to hire 5,000 annually. CNBC. Retrieved September 22, 2021, from https://www.cnbc.com/2019/11/08/starbucks-ceo-kevin-johnson-we-plan-to-hire-5000-veterans-annually.html#:~:text=After%20meeting%20its%20goal%20to,CNBC's%20Jim%20Cramer%20on%20Friday.

Zhou, V. (2006). Porter Business Case for CSR. Harvard Business Review. Retrieved September 22, 2021, from https://www.academia.edu/17741283/Porter_Business_Case_for_CSR