Monday, March 21, 2011

Reputation Management as Change Management

You may remember my post "Reputation is Built on Behavior" in which I argued that communications has very little to do with reputation, but the way an organization behaves does.

I just read an article on the MIT Sloan Management Review website in which Michael S. Hopkins interviews Marvin Odum, president of Shell Oil Co. The interview is to me very exciting, because it appears to be an excellent explanation of how an organization needs to manage itself to manage relationships with stakeholders (and I would say its reputation).

Among his points:
  • The technical side of a proposal is only "half of the equation. The other half is about communities and stakeholders."
  • He calls this a shift from organizations saying "Trust me. I'm going to do it the right way" to stakeholders demanding "'Show me and involve me. Make me part of this. I’m going to be part of these decisions going forward.'”
  • He further notes that this "... changes everything. It changes the way we think as a company. It raises our performance. And it changes the timeline of these projects."
  • Not anticipating "nontechnical" risks and opportunities adds time and, consequently, money to projects. Thus, anticipating them is good for the bottom line.

He goes on to say:

"If we can get our people thinking sufficiently from that point of view, not just working with stakeholders and listening to what they say but actually anticipating their needs, anticipating these 'nontechnical' risks and opportunities — and if we can get more people skilled in that way — then the more successful we’ll be, the shorter these project timelines will be, the more trust in Shell there will be."

Mr. Odum is talking about changing how people in the organization think about issues and how to manage them. This is change management. One of the concerns I shared about British Petroleum (BP) in the wake of the Gulf disaster (in the blog I mentioned above) was that aside from hand wringing and replacing the CEO, there were no signs that BP was doing anything to change a culture that has led to an absolutely dismal environmental record.

Mr. Odum also believes this approach leads to better performance:

"As you get better companywide at exploring, understanding and addressing those nontechnical risks, it drives innovation. Because mitigating those risks often drives you right back into the technology loop — back into asking how can you solve novel problems in novel ways, and how can you do it at affordable costs?"

Another point in the article I find to be genuinely thrilling, is Mr. Odum says Shell does scenario planning:

"We’ll look a half a century into the future, and we ask ourselves, 'Where is the world going to go?' We’re not looking to define a definitive answer; we’re looking to define the spread of options that the world has, that governments have, how priorities will change and how things will be implemented. And then we’re looking to understand how we would perform in each of those possible worlds. Then we bring it all the way back to today to see now what we need to do to drive toward being successful in that spread of potential outcomes."

That's what I call a solid approach to environmental management and a firm foundation for reputation management.

And getting more directly at the role communications plays in reputation management, Mr. Odum says:

"... the first thing that comes to my mind in that respect is the word “transparency.” The only way to approach the situation that we’re in is for a company like Shell to be a complete open book in terms of what we do, how we do it. And we have to be able to stand up to the criticism as well as reap the benefits that we get from being that transparent."

One key role communications can play in all of this is monitoring issues and anticipating the nontechnical risks and opportunities Mr. Odum cites by having a thorough understanding of stakeholder wants, needs and expectations.

While I've drawn some fairly long quotes from the article, there is in it much more of great value. I highly recommend you read it. That address again is:


David Alexander said...

Hi Forest,

Thanks for sharing this interesting article and your thoughts. Coincidently, as I was reading it (March 21, 2011—6:20 PM PDT) I was also listening to a story on NPR talking about how TEPCO (Tokyo Electric Power Company) has mishandled communication with its communities/world. In this instance, what sounded like a formerly loyal employee was very critical about the lack of transparency and willingness to share information about the Fukushima nuclear power plant situation it currently struggles with. In this case the reputation damage extends to the actions and exports of an entire country. It seemed to be perfect example of Odum's points.

Forrest W. Anderson said...

Thanks David. Great observation!

It all make sense when viewed through the right lens.

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