Repositioning Corporate Nigeria: Lessons in Corporate Reputation Management - 101210

Repositioning Corporate Nigeria:

Lessons in Corporate Reputation Management
December 10, 2010; 1205 hrs, Nigerian Institute of International Affairs, Lagos, Nigeria

Introduction

It was with great delight and pleasure that I accepted the invitation to say a few words
at this public presentation of Demola Akinbola’s book, Built To Endure: How Purpose-
Driven Organisations Use Reputational Capital to Achieve Strong Brand Equity.
I find the subject of the book not only relevant and topical, but of great interest in the
light of its multi-dimensional implications for management, marketing, organizational
values and the achievement of larger corporate objectives. I’ll like to start by
congratulating the author on his achievement.

Akinbola brings to his treatment of the subject, passion, knowledge and the kind of
insights that every corporate player should find useful and instructive. Reputational
capital touches the epicentre of businesses; it is at the very core of the making of capital
and the management of enterprise, for without reputation in a market that is driven by
competition and technology, the affected business is bound to lose its winning edge and
equity.

Donald Sull in his book “Why Good Companies Go Bad and How Great Managers Remake
Them” makes the intriguing point that businesses like individuals also suffer hubris; they
can rise and fall, and no corporate hubris can be worse than a company placing itself at
risk due to its own inertia and failure to reinvent.1 The investment in reputational capital
is the clearest antidote against such inertia; the centrality of reputation capital means
that companies have to constantly evaluate and innovate, in order to remain
consistently successful.

For drawing our attention to some of these issues, Demola Akinbola’s book is worth
reading. This however is not a commentary on his book. My task is to share with this
audience a few thoughts on how corporate Nigeria can reposition itself by learning a few
lessons in corporate reputation management. I intend to do this as briefly as possible by
highlighting a number of case studies as the basis for more extended analysis.

Beyond Dogma
The classic traditional idea had been that companies build reputation and identity by
producing good quality products and services which are then pushed in the market and
well-positioned through aggressive marketing and publicity. There can be no doubt that
organizations need to create identities through strong brands and such market
reputation that can promote organizational goals. Strong brands grant companies a
competitive advantage. That advantage comes from the particular company being able
to differentiate its goods and services, projecting them as the best and the first in the
market, and aligning customer values to the values of the product.

Ten years ago, I presented a position paper to ACAMB – The Association of Corporate
Affairs Managers of Banks in Nigeria - titled – “Moving from image management to
reputation management” at its Akodo Retreat, I surmised that the Corporate Affairs

1
Sull, Donal N. Why Good Companies Go bad and How Great Managers Remake
Them. United States: Harvard Business School Publishing Corporation, 2005.

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 Repositioning Corporate Nigeria: Lessons in Corporate Reputation Management - 101210

Management function and the manager as we knew it would not be relevant in 10 years
time.

Why? Because the rate of change from the outside was far higher than the rate of
internal change needed to respond to the changing dynamics in the market place.

In effect, a change in the redefinition of expectations, engagement imperatives,

performance measures and platforms meant that methods, skills and competencies
required to deliver a sound reputation management service within corporate Nigeria had
been altered.

As a base measurement of this hypothesis, it is a fact that no less that 90% of those
present at that session are no longer engaged in the jobs they had then or enjoy the
dizzying heights at which they operated then.

In subsequent commentaries and engagements, particularly pre-2006 banking

consolidation exercise; the question was asked - "Is corporate Nigeria prepared for
the inevitable crisis to come?"

Increasingly in the 21st century and the future, businesses must learn to be adaptive and
customer-centric. Reputation management has become all-important because the scope
of competition has expanded and it continues to do so. Companies that fail to respond to
the trend can only be left behind. However, the traditional conception that publicity and
communication promote reputation is increasingly becoming inadequate; reputation
management is a function of far more complex processes requiring greater dynamism on
the part of businesses.

Even for established, highly reputable organisations, the threat to reputation could come
from the most unlikely source, and when “it hits the fan” 2, as Michael Bland expresses it,
only those businesses that are prepared will be in a position to turn “crisis into
opportunity.”

Examples of Corporate Reputation failure

Today, one of the most important lessons learnt from the series of developments that
has happened is just how few companies are prepared for a crisis. Second must be
the almost lethargic manner in which our firms are embracing the shift towards the
combined imperative of alternative platforms and technology.

The story of the US ENRON Corporation is perhaps a classic example of a how a

seemingly successful business can lose its reputation overnight and become a by-word
for corporate failure. In October 2001, it took only a whistle-blower within to drag the
reputation of this foremost US energy company in the mud, through sordid revelations
that resulted in bankruptcy, resignations and suicide, and the dissolution of Arthur
Andersen, one of the world’s leading accounting firms at the time. ENRON and Arthur
Andersen which had both been good corporate brands suddenly got mired in accounting
fraud, carefully orchestrated over the years by managers who had acquired bad habits
which soon got both they and their organizations into trouble.

2
Bland, Michael. When It Hits the Fan: turning crisis into opportunity. England:
Centre Publishing, 2004.

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 Repositioning Corporate Nigeria: Lessons in Corporate Reputation Management - 101210

The ENRON scandal resulted in investigations by the authorities, and the enactment of
the Sarbanes-Oxley Act by the US Congress which seeks to protect shareholders from
being defrauded by smart-alec corporate figures. Before then, ENRON had been praised
for its excellent financial records and Arthur Andersen as a global accounting and
auditing brand.

In 2010, it was the turn of Toyota. Observed accelerator and brake master defects in a
number of popular Toyota brands resulted in a reputation crisis for one of the world’s
leading automobile companies. The Toyota leadership had been accused of submitting to
a dangerous “echo effect”, the failed assumption by managers that because a
brand is strong, it is almost untouchable by a reputation crisis, thus talking
themselves into the adoption of poor strategies which merely complicate a
situation that could have been managed differently. The Toyota Corporation did
not respond on time, and thus allowed the crisis to fester, but it soon woke up from its
lethargy to embark on massive vehicle recalls, and worldwide reassurance of its
customers. Toyota had to eat the humble pie, even if it took it six months to do so. It
was a classic case of customers’ expectations driving corporate choices and values.

There was also in 2010, the BP Oil Spill or the Gulf of Mexico Oil Spill, which lasted for
three months and was adjudged “the largest accidental marine oil spill in the history of
the petroleum industry.” BP almost had its reputation in tatters, even if the original
accident was partly due to lapses by its contractor-agents including industry aristocrats:
Transocean and Halliburton. It found itself admitting responsibility and co-operating with
the US authorities to clear the mess that had resulted from its operations. The BP brand
was threatened; it faced the clear danger of being rebranded as a threat to marine
ecological life, and as a company for which profit was more important than the health of
the environment.

The company’s struggle to avoid such label underscores the importance of reputation
management, albeit the verdict on the Deep Water Horizon Oil Spill was that the
accident was avoidable and that BP was guilty of failing to manage the lapses in its
operations. In its own report on the accident, however BP tried to demonstrate further
good faith by admitting that there were indeed errors of human judgement, engineering
design and operational implementation.”

Closer home in Nigeria, the bribe-for-contract cases involving Halliburton, Siemens,

and Wilbros and Nigerian government officials has dealt much blow to the reputation of
multinational companies doing business in developing countries where there are weak
accountability frameworks in the public system. Officials of the multinational companies
have been indicted in their home countries, and whereas the Nigerian authorities are
mismanaging the process of bringing all the collaborators to book, the damage to
corporate reputation is well advertised. By the same token, Shell’s travails in the Niger
Delta and its running battles with the communities and the militants in the area have
resulted in such reputation deficit which casts the oil exploration company in the mould
of the main villain in the Niger Delta.3

Reforms in the banking sector by the current leadership of the Central Bank of Nigeria
has also raised issues of reputation with brands that were hitherto considered strong

3
See Okonta, Ike and Oronto Douglas, Where Vultures Feast: Shell, Human Rights
and Oil in the Niger Delta. San Fransisco: Sierra Club Books, 2001, also see Okonta, Ike.
When Citizens Revolt: Nigerian Elites, Big Oil and the Ogoni Struggle for Self-
Determination, Port Harcourt: Ofirima Publishing House Ltd., 2008.

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within the Nigerian banking industry revealing such corporate governance crisis and
individual failures that have led to more concerted regulatory control.

So, why aren't more companies prepared?

Although crisis events are unpredictable, they are not unexpected. During the next five
years, according to Oxford-Metrica, 83 percent of companies will face a crisis that will
negatively impact their share price by 20 to 30 percent.

We in Nigeria are already expecting not a few, yet the reality is that our level of
organisational response continues to be elementary in the least and farcical at best.

Michael Novak has advanced the convincing argument that business is not only about
capital, but that it is a moral calling and where businesses and businesses leaders fail
the moral test, the business is ultimately injured. He drives home his point about
reputation and moral wrong as seen in the banking industry crisis in Nigeria when he
writes inter alia that

“It is possible for people in business to do moral wrong, even though such wrongdoing
sooner or later injures both the business in question and the moral reputation of the
profession as a whole. Immoral acts do occur in business. But to behave immorally is
neither necessary to nor conducive to business success. One may get away with
immoral behaviour for a while, but sooner or later it is highly likely to catch up with the
perpetrator and the firm…Virtually everyone would be embarrassed to have splashed
across the front pages of major newspapers every wrong they ever did. Accordingly,
more than one business leader has announced to his workforce: Anything you would be
ashamed to see in the newspapers, just don’t do.”4

Need we add any other comment on the lessons of the scandals in the Nigerian banking
industry?

Reputation can be easily lost – and in Corporate Nigeria’s case - reputation is indeed
threatened – but it’s highly unlikely the firms involved will collapse completely.

Indeed, this may be one of the biggest lessons for firms in Nigeria as we study how we
emerge from this crisis.

The reality is that these new market mantra provides for Corporate Nigeria to reposition
itself for recovery about as well as it could be – owing, in large measure, to the
reputation for products, services and corporate responsibility it has developed in the
past.

What Are the Issues?

I have offered the foregoing descriptions in order to provide real-life illustrations of the
extent to which a reputation crisis impact negatively on company image and identity and
business equity and in the foregoing can be found both the worst and best examples of
crisis management. But there are a number of issues that today’s manager must take to
heart as he or she reflects on the value of reputation in business.

4
Novak, Michael. Business as a Calling: Work and the Examined Life. New York:
The Free Press, 1996, p. 9.

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 Repositioning Corporate Nigeria: Lessons in Corporate Reputation Management - 101210

First, in today’s business terrain, the benchmark for reputation is much higher than it
has previously been. The publics and the stakeholders have become more sophisticated.
This sophistication is in part a function of the electronic and information age. The
average consumer has more access to a wider range of choices which are brought to his
or her doorstep through the television and e-channels. Businesses sill adopting
traditional, old methods may find that their methods have since ossified, and that many
of their publics would be excluded.

Reputation is a major asset, but in a more sophisticated market, it is a very volatile

asset which may evaporate, even on account of sheer serendipity. It is therefore now
the responsibility of business managers to adopt such internal mechanisms that can
track changes in the business environment, anticipate accidents and build the human
resource bank for dealing with emergencies.

Second, a corollary realization is how businesses have become generally competitive. In

the age of globalization and neo-liberal capitalism, the old monopolies of old have
crashed creating a much wider market and greater consumer choice. People have
alternatives in terms of what to do or not to do: today’s consumer is less at the mercy of
any service provider than he or she had ever been at any other time in history. That
consumer is much harder to please, or impress, because his horizon has since
expanded, his knowledge of quality and processes have changed.

Third, a new regime of regulatory mechanism is abroad, and the dimensions are both
local and international. Anyone dealing with reputation management would have to be
mindful of regulators who are becoming more important. The transition from military
dictatorship in Nigerian to civilian rule in the last decade has resulted not just in
transformations in the business arena but also a stronger emphasis on regulatory
frameworks particularly with the shift from government monopolies to trade
liberalization and privatization. Nothing damages a company’s reputation more than the
wilful breach of regulations and having to be sanctioned for same.

Fourth, the manner in which corporate leaders have betrayed trust in the last four
years, confirmed at a global level in the CEO irresponsibility that accounted in part for
the lingering global financial meltdown, and the crash of markets, has resulted in such
backlash in terms of new expectations about standards of corporate conduct.

The public now expects a higher level of transparency in company operations,

shareholders have become more vigilant, and there is a greater distrust of auditors and
published company accounts. By 2002, the New York Stock Exchange was already in the
aftermath of the ENRON scandal, calling for a new corporate governance proposal. The
same situation has occurred in less than a decade in other markets.

Fifth, there have since emerged more active influencers of reputation than hitherto
existed. Social and non-governmental organizations now have an increasingly critical
role to play. Where they exist, such movements as the GreenPeace Movement and
gender rights groups as well as consumer rights associations insist on higher standards
of corporate operation. Much of the trouble that Shell has had to manage in the Niger
Delta has come mainly not from the Nigerian authorities, but from militant civil rights
and community groups in the area hose activities have had far more impact on Shell’s
image and operations in the Niger Delta in more than a decade.

Sixth, today’s managers have to contend with the rise of online media and social
networking sites which have since graduated into very strong advocacy units with a

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capacity to influence public opinion quickly and effectively and with maximum
devastating impact. In the absence of a strong regulatory framework for cyber crime,
this new development has also been open to much abuse as it can be deployed easily for
de-marketing purposes by unseen rivals seeking an advantage in the market. In
managing a recent crisis, the makers of Indomie noodles had protested that their
product was the target of a malicious de-marketing assault on its reputation.

But the lesson lies in being pro-active, and in developing the internal capacity for
reputation challenges in cyberspace. British Airways in an incident involving a Nigerian
passenger who was banned for life from flying the airline due to alleged unruly
behaviour aboard a BA flight from London, found itself having to manage an untidy
assault on its reputation by the online Nigerian community which took up the
passengers’ fight and called for a boycott of BA by all Nigerians.

Seventh, the reputation of businesses now also depends greatly on the quality of their
internal processes and their management of human resource assets. The scope of what
the company is responsible for has expanded. Organisations under a new international
dispensation are expected not merely to make profit but to be good corporate citizens,
and to be socially responsible. The idea of the corporate entity as a community member
is a reinvention of the classical conception of capitalism and a realignment of capital with
the democratic imperative and the achievement of a good society.

A company with impressive balance sheets but whose workers are treated worse than
slaves, and whose commitments to safety and environment issues are nearly nil
invariably ends up with a reputation crisis among its many publics with the
disenchantment among the workforce posing perhaps the biggest threat to
organizational culture.

Of Nigeria and Other Matters

Whereas there may be a theoretical awareness of the foregoing issues in corporate
Nigeria, the level of their observance and fidelity to international best practices remains
comparatively low. The root of this can be traced among other things to the cynicism
that drives corporate Nigeria’s culture. There is almost an unwritten but pervasive
assumption in many Nigerian organizations that Nigeria as one public official once put it
is “a country where anything goes.” This is a comment on the vigilance of the security
and regulatory agencies hose duty it is to enforce breaches of established rules and
regulations and to ensure a corresponding cost in terms of loss of face and reputation
for the offender. Many organizations for example exploit the weak, labour laws in the
country to exploit their workforce, who trapped in a contracted job market, are
constrained to give up their rights and not seek appropriate redress.

Contrary to extant labour laws, many Nigerian organizations expressly forbid the
formation of labour unions by their staff. Such infraction ought to have strong
implications for reputation but that can only happen if the regulatory agencies are
strengthened, and they wake up to their statutory responsibilities. Many Nigerian
providers of goods and services deserve heavy penalties for the sub-standard goods and
services that they provide, but the reality is that many of these guilty businesses parade
ISO certification duly awarded by the Nigerian authorities.

Massive distortions within the Nigerian economy and disturbing patterns of policy flip
flops has produced massive de-industrialization and low capacity utilization such that the
scope of competition in many sectors of the Nigerian economy is severely limited, the
consumers’ choice is also invariably limited. Many businesses explain away their failures

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 Repositioning Corporate Nigeria: Lessons in Corporate Reputation Management - 101210

on the grounds that Nigeria is a difficult place to do business, on account of massive

leakages, corruption in official corridors, and lack of infrastructure: what would
constitute a reputation challenge in other countries is easily excused away on the
grounds of the inchoateness of the Nigerian industrial environment.

Corruption is of course a major issue. A BBC Global survey has indicated that corruption
is the most talked about issue in Nigeria for it circumscribes both corporate and
governmental life, and in many ways is taken for granted.5 Not enough effort is being
made to tackle the scourge of corruption, particularly corporate Nigeria corruption given
its implications for sovereign reputation. Nigeria instructively is one of the poorest
countries in the world for doing business.

Many organizations lack the capacity to handle reputation issues. They are non-challant
or they act too late or rely too heavily on the services of PR agencies that in reality can
only be as effective as the quality of their briefs, and the attentiveness of internal
corporate managers.

The misconception that corporate reputation can be managed through publicity,

propaganda and corrupt relationship management processes is indicative of a gross
knowledge deficit in this area of engagement in corporate Nigeria. The extant order
must yield way to new processes and a renewed commitment to adopt a knowledge and
competence driven strategy to reputation management and brand identity promotion.

Last words
I have taken so much of your time already and since there are other businesses to be
taken care of today, I will like to bring this to a close by drawing attention to a number
of additional issues:

One, the responsibility for reputation management rests with everyone in an

organization, from the office assistant who delivers mails to the CEO

Two, companies must take greater responsibilities for the effect of their operations on
the environment as this could have implications for their reputation

Three, the ethics and values of organizations are more becoming more closely linked to
societal expectations. Organizations are increasingly seen as producers of moral effects;
hence the arguments about the moral dimension of business.6

Four, a company’s operations as ell as reputation is dictated by strategy and unless

processes are informed by strategy, inefficiency and failures result.

Five, investments in customer loyalty can help build reputation.

5
See Ijioma, Ezra (with agency report) “Corruption, Nigeria’s most talked about
problem – BBC poll,” Punch newspaper, December 9, 2010, p. 2

6
For a fuller discussion of this subject, see, Etzioni, Amitai. The Moral Dimension:
Toward a New Economics. New York: The Free Press, 1990. Cf. Novak, Michael, 1996, op.
cit.

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Six, the World Wide Web is increasingly being used to build reputation and also to
destroy it. Every company must learn the game and seek to own it for its benefits.

Seven, business to business companies can only ignore reputation matters at their own
peril.

Most importantly, it is clear that if we build corporate Nigeria’s brand – an equitable

brand that has gone regional if not fully international yet; we stand a chance of building
brand Nigeria on a sustainable basis and in doing so challenge those values, cultures
and precedents that have held us down as a people.

With this thinking, it is now clear that what and how corporate Nigeria’s reputation is
being built and sustained is no longer a matter for one department or function in an
organisation but a direct Board of Directors and CEO responsibility.

Building enduring brands and reputational capital demands much more than engaging in
perception management or image laundering – the new market demands an experiential
engagement; one that has an in-built marketing leverage sown into it.

In the next 5 – 10 years, only companies that are able to create a personal/public
experience for its users and consuming public will survive.

The good thing about this new market I see is that it will reward those who embrace the
responsibility and deploy people and platforms to create this service proposition.

This experiential reputation management approach saves cost as it delivers a

reputation that immediately creates new customer and market segments – it is
integrating Investors relations, media relations, trade and brand communications,
government and community relations, protocol & hospitality and CEO/Corporate
communications into a front desk team, not a back office function.

If building enduring institutions is what corporate Nigeria seeks, then this new
reputation management imperative is what it needs.

I thank you all for listening.

Olufemi AWOYEMI, FCA

Founder/CEO Proshare Nigeria Limited

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