Values and the Power of Reputation

Companies live and die by their reputations. Regardless of size and resources, brands build their reputation through interactions with their stakeholders congruent to their mission, values and promises. For both internal and external stakeholders, a company’s reputation significantly contributes toward growing heart-share, mind-share and competitive advantage. Embracing sustainability and responsible business practices provides brands with a meaningful platform for growing reputation and preparing for the future.

An effective way of promoting alignment between brand reputation and core business practices involves embracing timeless, mutually shared values. Not only do shared values help establish what is important to an organization and its people, but they better communicate why a company is in business and how business activities contribute to fulfilling their “why.” Furthermore, a system of widely communicated values can serve as a filter informing the types of products a company is willing to produce, the services they are willing to perform and the type of customers they are wanting to target. Ideally, values also help drive the best fitting employees to a company, helping to ensure that each employee acts to strengthen reputation, not jeopardize it.

Conversely, a brand built solely on functional attributes may have difficulty breaking from their functional reputation, exposing the company to the risks of changing market forces. Companies may be more willing to produce products that harm the general health of society or the planet so long as they fulfill the needs of a purely functional value proposition. Current and potential employees may also find it difficult to understand how their efforts contribute to a bigger picture.

An easy metaphor for the importance of values is to compare two houses. Both houses are identical in appearance, however one was framed using strong, load-bearing beams which represent strong values. The other house was framed using only thin planks used to hold up the walls and roof. While from the outside, these houses may look the same, only the house built with strong beams will withstand the stresses of changing weather conditions and provide comfort and protection for its inhabitants long-term.  Without a sturdy structure, there is little chance the other house will last, and most likely it will need to be rebuilt sooner at tremendous cost and inconvenience.

For a real-world example, a fast food chain with a reputation built around the functional benefits of cost and convenience alone may find it difficult to remain relevant given today’s growing societal concern for health and wellbeing. This is a real struggle facing brands from the fast food boom who find themselves struggling against the pressures of revenue decline and store traffic decreases. While fast food generally appeals to people looking to save money or have a quick meal, new competitors embracing sustainable values as key to their reputation have become viable substitutes that also speak to consumer emotional drivers. This is evidenced by the rise in health-focused fast-casual restaurants, grocery stores with healthy dining options, diverse food trucks using locally-sourced ingredients, and home meal kit services. Moreover, technology may supplant the drive through window via meal delivery services, making alignment to consumer values and emotional desires ever more important.

Finally, large companies are looking to infuse their brands with new vigor from companies who have built their brands and reputations around their values. Healthier, responsibly sourced, and innovative options, regardless of business model, are making a major impact in the way corporate values and sustainability are highlighted as part of the brand and business expansion strategy. Sustainability and values-focused brands continue to be a popular target of larger companies looking to enhance their portfolio with more sustainable offerings. Good examples are the recent acquisitions of Whole Foods Market by Amazon, Justin’s Nut Butter by Hormel, Blue Buffalo Pet Products by General Mills, RXBar by Kellogg’s and WhiteWave by Danone (Note: Danone North America has recently become the world’s largest B-Corporation.) Companies are eager to capture the opportunity to expand their competitive moats while better resonating with consumers who are concerned with the “why” as well as the “what”. They continue to grow by meeting the demand for “better” options, and in the case of Amazon, are leveraging the technological revolution to further integrate these offerings more seamlessly into our daily lives. At Domoto, we are quick to suggest that all brands lay a strong foundation anchored by strong corporate values that empower employees and guide the value proposition of the business. The rewards of this approach can be great, and the future will demand this of companies if they desire to remain relevant, build a reputation based on trust, and succeed in ever more competitive markets.

Thank you for reading our Domoto Digest blog post! We hope you found this information valuable. If you would like to discuss how Domoto can help you further enhance your brand, please contact us and we’ll get back to you in a timely manner.


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