Authenticity Yields Authentic Reputation

Authenticity allows us to like what we like and dismiss what we don’t, without value judgments. It can generate enormous brand loyalty. It has enriched social media influencers. For some, it’s the single most influential factor in determining stakeholder support. Authenticity is that secret sauce that conveys the consistent image that people rely upon. When combined with the real qualities that people attribute to businesses, they create the very powerful force of an authentic reputation.

To illustrate these concepts, we’ve created a story about authentic reputation and its importance to business success. When we finish we will offer five keys to protecting authenticity. We will use two fictional companies and their leaders. Both companies had great brands and their success was envied by many. They each cultivated authentic reputations that ensured strong stakeholder support. The companies, Real Products and Unlimited Energy, were at the threshold of global success.

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The Calculating Model

Real Products was a closely held company that had methodically built itself from a cleaning contractor to a major conglomerate. The CEO of Real Products was cold and calculating. He brilliantly used data analytics to his advantage. While fully capable of winning in direct competition, he often discretely maneuvered to co-opt the competition.

He used elaborate structures to win over stakeholders. While customers, employees, and communities might not get the best deal from Real Products, it was much better than if they crossed him. He wanted to effectively control his business lines globally. Of course, he cared about money, but power and control were stronger drivers. He had an authentic reputation for winning through careful analysis and calculation. Investors and other stakeholders supported him, so they would not lose to Real Products.

The Bold Model

Unlimited Energy had been the most popular brand in the world with operations in every country. For generations, it was the biggest, best and most widely admired corporation, but over time it faltered. Activist investors gained control and brought in new management.

For this job, Unlimited Energy chose a bold, brash and supremely confident CEO. He had radically transformed several other companies. While a couple of those companies had to be broken up and sold, all his ventures enriched his investors. This new CEO promised to restore Unlimited Energy to global dominance and make all investors wealthy in the process.

Predictably, Unlimited Energy’s reputation morphed into one closer to the supreme self-confidence of their CEO. Investors flocked to Unlimited Energy’s can do, take no prisoners attitude. Unlimited Energy gained the authentic reputation as the company that would always come out on top. It wasn’t enough just to win; Unlimited Energy must dominate.

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The Strategy

Real Products and Unlimited Energy were the most effective competitors in the markets that were open to them. They were first or second in every market. When one of them wasn’t in a market, the other was usually twice as big as the next competitor.

The CEO of Unlimited Energy realized that together they could easily pick off the more profitable parts of their smaller competitors. He decided they should talk rather than fight head-to-head and squeeze each other’s margins. A preliminary discussion between the two CEOs was set while they were both at Davos.

To simplify the story let’s assume they weren’t covered by the Sherman Antitrust Act or other regulations. The activist investors were all crowing about how Unlimited Energy would dominate even these preliminary talks.

The Collaboration

When they met, the Real Products CEO was true to his nature. He had analyzed every aspect of the possibilities and developed a comprehensive plan for absorbing 60% of their competitors. The remaining 40% was consolidated under several allied businesses, to soften opposition.

The plan doubled the business volumes for Real Products and Unlimited Energy. In addition, they agreed not to compete on price. The cumulative effect would triple earnings in two years.  The plan far exceeded the Unlimited Energy CEO’s wildest expectations and he immediately agreed.

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Since they were already at a global forum, they announced the agreement that afternoon. The additional publicity would reward the activist investors and improve the companies’ ability to raise capital for the acquisitions.

At the announcement, the Unlimited Energy CEO tried to cement the deal by praising his colleague. He told participants he was humbled by the brilliant strategy and grateful that the Real Products CEO wanted to work with Unlimited Energy. “Our stockholders will never again have to worry about their investments,” he said. “Real Products has ensured extraordinary returns.”

The Unlimited Energy investors who prided themselves on dominating the market were furious when they saw their CEO defer to his biggest competitor. Then they figured out that the remaining 40% would be owned by companies under Real Products’ control. Instead of an equal deal, their CEO had been hoodwinked into ceding control of 60% of the market to their competitor. They dumped their Unlimited Energy stock and the darling of Wall Street became a paper tiger without any authenticity.

Importance of Authenticity

The lesson is simple. Authenticity must be part of your nature. You need to be honest, open and consistent about this. If you try to deceive, it will be discovered.

In our story, the Unlimited Energy CEO presented himself as a businessman who was very confident in his own ability to control situations. So long as people’s experiences supported that image, it represented an authentic reputation. The challenge came when there was a disconnect. When people saw a deferential demeanor in the announcement it undermined their confidence in his ability to control.

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Authenticity is particularly important in crisis situations. In crisis communications, audiences can be hypersensitive and critical. If they find any inconsistencies in your behavior, they may dwell on them until they become insurmountable problems.

Five Ways to Protect Authentic Reputation

How do you avoid the inconsistencies that undermine your authentic reputation? If you can remain true to five principles of behavior you should be able to maintain your authentic reputation. They are:

  1. Honesty – You and your business should be honest about your true nature from the start. If your reputation still fits your character today, continued honesty should ring true.
  2. Integrity – Don’t pretend to be something you’re not. Likewise, stand up for your beliefs. If you find that your organization is changing, then address it as it occurs. Don’t wait for a crisis to advise stakeholders.
  3. Transparency – This doesn’t mean releasing proprietary or confidential information, but there should be a reason to keep information confidential. For other things that can impact stakeholders, transparency should be the norm.
  4. Values – The company’s values should be meaningful and influence behaviors. Use values to guide your behaviors and your authentic reputation will naturally be closer to your real priorities.
  5. Compassion – While it’s not a requirement for authenticity, compassion affects others’ perceptions. If you demonstrate compassion for others, they will be much more likely to show the same for you. If you want to get the benefit of the doubt, you need to give it.

Authenticity strengthens your company’s reputation. Remain true to your values and nurture consistent behaviors, even when it’s inconvenient. This will yield an authentic reputation that will serve you well when you need it most.

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