Ipsos Corporate Reputation

Global Vs Local

Local relevance is climbing the corporate agenda for global businesses and reputation management has a vital role to play in getting the global versus local balance right.

Globalisation and the growth of the digital economy make it increasingly important for businesses to understand cultural norms, customer expectations and regulatory views across every market.
Conversely, as the media, political pressure groups, and investors have become global, local incidents can now quickly escalate into global reputation crises.
Reputation Council members are clear that the balance between local market needs and global strategy requires experimentation and analysis, as well as evidence-based trust.

In 1983 Theodore Levitt published his classic treatise ‘The Globalisation of Markets’ in Harvard Business Review. His central contention was that advances in communications and technology were leading to a more homogenous world, indeed, a world where uniformity in consumer tastes would increase and global brands would flourish by delivering the same proposition and experience – regardless of location.

Reality seemed to support Levitt’s contention as companies such as McDonalds, Levi’s, Toyota and Panasonic exported standardised products (and marketing campaigns) around the world. The concept of the ‘global consumer’ was in the ascendancy and businesses aligned their organisational structures accordingly. Decision-making became centralised with the focus on global business units rather than individual countries.

Perhaps not surprisingly, the same principles permeated global reputation management: The idea that an organisation and what it stands for should be consistently expressed regardless of the location and cultural context. Ideas such as vision, purpose and core values were seen as essential truths that underpinned the corporate reason for being. They needed little in the way of adaptation to local needs or sensitivities and were at their best when unadulterated.

This doctrine held true for a number of years but became increasingly questioned with the emergence of fast-growing economies such as China and India, which spawned increasingly powerful local competitors. Consumers no longer needed to default to global brands as local companies were producing products and services that were catching up in quality and brand appeal. It became apparent that local relevance was climbing the corporate agenda for global businesses and that reputation management had a vital role to play in getting the global versus local balance right.

It’s in this context that we decided to ask our Reputation Council members from around the world to share their thinking with us in this area. Our findings fell under a number of clear themes: authenticity; measurement; autonomy; and digital and social media.

Authenticity

In an environment of increased scrutiny of global corporates in domestic markets, corporate communicators report the growing importance of translating global strategy into authentic localised outputs.

To do this effectively, corporate communicators must have a deep and evidence-based understanding of both the role of localism in driving reputation in the domestic market and local stakeholders’ expectations of the corporate entity, and then be empowered to turn broad global strategies into effective domestic communication plans, backed up by meaningful practical demonstrations of the entity’s commitment to the local market.

In addressing this challenge, many Council members referred to one of the bedrocks of good reputation management: authenticity. It emerged that if an organisation has done the groundwork in developing and embedding a strong corporate brand strategy internally, it will be well positioned to apply a specific market or stakeholder lens to this strategy to develop and tailor external communications that are authentic. That is, they’re true to the master strategy and relevant to specific markets or stakeholder groups, and will not put the business in a position where it is communicating in one market or with one stakeholder group in a way that compromises it with another.

"The stakeholders in each market whose views make up your reputation are shaped by their cultural, historical, political and market differences. There is a culture in every country that is different, no matter what global strategy you’re trying to deploy."
"Stakeholders don’t expect you to be a global brand, they expect you to be a local brand. When they interact with us, they interact in the local context."
"We have to operate with sufficient consistency so that we bring the same value set and value proposition wherever we operate around the world. We have to do this whilst also knowing that different audiences care about different things and therefore expect different things from you. We must appreciate this balance, else we risk not being authentic."
of Council members working in multinational companies analyse perceptions of their sector or business across different countries.
Measurement

As barriers to global business continue to diminish and the world becomes smaller, many businesses find themselves in new markets and new regions, managing different cultural norms, customer expectations and regulations. It’s normal in these situations to wonder why a company’s reputation varies by market, much as a reputation may vary by stakeholder audience. The majority of Council members we spoke with recognise this complex environment and understand that it’s nearly impossible to have a consistent, unified reputation across markets.

"It’s impossible. A general theme could come through, but it’s different at the local level. You can create a general belief about an organisation, but not a unified reputation across markets."

Within this context, most global communicators and marketers aim to develop a consistent global positioning strategy and framework that has the flexibility to be tailored to local markets, and also strive to demonstrate a long-term commitment to the local markets where they operate.

"It’s critical to understand reputation by market and have an umbrella narrative globally but understand that different markets, different cohorts and different subgroups are going to require pushes and pulls that are nuanced in the messaging. That will always be the case. Unless you have that diversified approach, you’re likely to fail at a global approach. The more global we get, the more local we get."

Additionally, this localisation of messaging and communications within the broader global context requires strong teams and partners on the ground.

"You need respect for regional and country communicators. They know the local market better than anyone else. Companies should be listening from the bottom up, not the top down."

Nearly all the Council members interviewed indicate that they evaluate their company’s reputation globally to provide the insight necessary to tailor their strategies and understand how to prioritise messaging and communications to local markets and various stakeholders. In many instances, this reputation measurement informs everything these companies do – programme prioritisation, partnerships, key messaging, stakeholder prioritisation, resource allocation, etc.

"It helps you to invest where it’s needed, but also get ahead of pushback. Research is a guiding tool for resource allocation and to measure the success of programmes."

Reputation measurement plays a critical role in the long-term strategy for local markets, and in the words of one of our Council members:

"You can’t improve what you don’t measure."
Autonomy

Our research suggests that tailoring corporate communication to local markets has become more important in recent years. Council respondents point out that it is vital to find a balance between local market needs and corporate-level strategy. The alignment builds on continuous exchange and relationships of trust.

The paradox is that the media, political pressure groups and investors have become global, but it is precisely this global perspective that has made local reputation problems more urgent. Today, a local reputation issue has the potential to grow into a global reputation crisis. On the flipside, communication tools on hand today have also made it easier to tailor global strategies to local particularities.

Mixing global and local communication strategies brings different points of view to the table. The way businesses talk to clients or organise a campaign and the images they use to build a corporate brand differ greatly between Saudi Arabia, China and Sweden. What matters depends on local cultural values, including religion. It is this broader context that needs to be considered when building communication strategies. Blending local and global communication can be a source of refreshing innovation.

Council members agree that the balance between global communication objectives and local needs has got to be right. Companies experimented with a spectrum ranging from totally autonomous local to totally centralised global communication strategies. There is no one-size-fits-all solution.

Whilst global narratives set the broad framework of a strategy, alignment with local needs is important. Both ought to be interlocked. Continuous exchange with local communication experts is necessary to achieve this. Local communicators should have a degree of autonomy, because they are the ones with robust knowledge of their local communication landscape. This autonomy presupposes trust in the vernacular expertise of communication teams on the ground.

"There are also questions of internal governance: What is the relationship between the holding company and its local market branches? How much autonomy do you grant local communicators? How far can this be, or should this be, controlled centrally?"
"On the corporate level, we must understand that it is very well possible for a local reputation issue to grow into an existential global reputation crisis. A system must be in place that allows communicators to allocate resources and to react with precision on the ground."
Digital and social media

For global businesses, digital and social media have dramatically increased public scrutiny of local operations. What may once have been considered local incidents can now quickly escalate into global reputation crises. At the same time, connecting with local consumers and stakeholders increasingly requires tailored engagement at a local level.

The challenge for global businesses is therefore a simple, if paradoxical, one: to build a reputation that is globally consistent and at the same time locally relevant.

"The growth in digital media in the last 20 years does mean that being able to segregate reputation by geography is not really tenable."

In last year’s Reputation Council report, we discussed how equity flows between corporate and product brands, offering both opportunities and threats to corporate communicators. The same principle applies to reputational equity flow between regions. And this flow has been accelerated by the growth of digital media, which has collapsed the barriers to information flowing between regions. In this environment, inconsistency of positioning or behaviour between regions becomes a threat to global businesses.

Reputation Council members stress the importance, therefore, of establishing a principle or framework that anchors corporate behaviour and messaging globally. This is the role of the corporate brand. As described in Ipsos’s white paper, ‘Brand Purpose: What’s the point of you?’, part of the purpose of brand positioning is to act as the “guardrails for communication.”

Final thoughts

It’s clear that the world has indeed changed since Theodore Levitt mused on the role of the global brand over 35 years ago. Global marketing and communications are no longer homogenous; we now live in a world where brands and reputations are seen through the prism of local market needs and expectations.

Council members clearly recognise this change and are working with CEOs and other members of the senior leadership team to implement communication and business strategies that achieve the right balance between globally consistent and locally relevant messaging.

However, given the rise of connected and savvy stakeholders, it is imperative that such strategies are built on the pillars of:

  • Authenticity – behaviour is aligned to communications
  • Autonomy – power is devolved wherever possible
  • Digital and social media – understanding their role in breaking down barriers
  • Measurement – objective assessment of progress

Methodology: 154 interviews conducted with Reputation Council members between 25th June and 12th November 2018.

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The Reputation Council Report 2018: Full Report

Welcome to the latest briefing from the Ipsos Reputation Council.

This – our thirteenth sitting – has been the biggest and most international yet, involving 154 senior communicators from 20 countries.

As Paul Polman, CEO of Unilever, once said: “reputation has a habit of arriving on foot and departing on horseback”. In the past year, a welter of high-profile reputation scandals affecting businesses, their leaders and even whole industry sectors has, once again, focused our minds on the risks and rewards of this powerful but potentially volatile asset.

Some of these scandals have posed a genuine threat to companies’ continued survival or licence to operate. Others have fizzled out. In this edition, we examine how Reputation Council members distinguish between issues which might blow up into a genuine reputation crisis, and others that are just day-to-day turbulence. What indicators or early warning systems can communicators draw on, to help them build resilience?

The technology sector has been wrestling with some unprecedented reputation issues recently. Concerns around privacy, data leaks, advertising practices, AI and automation have come together to create the phenomenon of ‘techlash’. We talk to Council members about the implications for their own businesses and the lessons that communicators can learn from the way in which the technology sector is responding to techlash.

We’re also beginning to see greater scrutiny of the role that CEOs should play in external communications, against a backdrop of issues such as pay ratio reporting, gender inequality, shrinking CEO tenures and the ‘celebrity leader’. In this edition, we explore Council members’ playbook for CEO-led communications, and look at how the CCO can ensure that these communications build, rather than destroy, reputation value.

The opportunities and challenges that come with communicating in a global context is a theme we’ve examined in past editions. In this sitting, we ask Council members how they strike the right balance between global and local messaging and narratives, and how they keep a finger on the pulse of their reputation (or reputations) around the world.

Lastly, we’ve introduced some new, ‘quickfire’ sections, in which we analyse Council members’ views on a number of contentious, topical talking points, such as the death of CSR, the distraction posed by social media, the need to pick a side in a polarising society, and whether consumers will overlook poor corporate behaviour if the price is right

I hope you enjoy this edition of the Reputation Council report. Please do get in touch if you’d like to find out more about any of the issues covered or discuss how they might affect your own business.

Milorad Ajder
Global Service Line Leader
Corporate Reputation
milorad.ajder@ipsos.com

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Global Perspectives on Sector Reputations

Which industries are facing the greatest reputation challenges at the moment?

NORTH AMERICA

Media: 44%

Tech: 44%

Pharma: 31%

Despite lingering reputational issues still plaguing the financial services sector, the recent assault on media and tech means that these two industries are seen to be facing the greatest reputational challenges in North America. Each of these industries is named by 44% of Council members.

Beyond these two industries, pharmaceuticals now holds the third position in terms of reputational challenges at 31%. Cost and value continue to drive the conversation, and with the US government putting more of a spotlight on drug costs, these reputational challenges are likely to continue.

"[Media has] got a constant drumbeat of ‘fake news’, how do you overcome that?"
"These are self-inflicted wounds [in the tech industry] – companies are not thinking through the implications of their actions on their customers."
LATIN AMERICA

Construction: 50%

Energy: 41%

Mining: 34%

In Latin America, construction rises to the top as the industry facing the greatest reputational challenges this year (50%). A number of corruption charges have embroiled not only specific companies throughout the region but also politicians and civil servants.

Energy (41%) and mining (34%) round out the top three most challenged industries, predominantly due to environmental concerns and a perception that they bring limited benefits to the local markets.

"There is a public perception that mining pollutes, does not produce profits for the country, and is a group of companies that do not add local value but add value to those who extract the material and take it away."
EUROPE

Finance: 44%

Energy: 43%

Finance remains one of the industries facing the greatest reputational challenge in Europe (mentioned by 44% of Council members). In the words of one Council member, “this crisis has not been solved yet, given that the image reconstruction process appears to be very slow.”

Additional challenges for the financial services sector include cyber security concerns and emerging FinTech players challenging the traditional financial companies.

Energy also continues to face reputational challenges, cited by 43% of Council members in Europe. Issues continue to focus on environmental concerns, climate change, sustainability and consumer costs.

"When energy companies don’t immediately pass on price savings from a barrel of oil to a consumer or to a client, then the negative repercussions are there immediately."
ASIA PACIFIC

Finance: 88%

Energy: 71%

Media: 71%

Consistent with last year, the financial services industry continues to suffer reputational challenges in APAC, though mentions are higher this year at 88% (up from 73% in the last wave). Council members continue to cite the lingering effects of the financial crisis.

The energy sector is also mentioned more frequently than last year (71%), and while affordability and sustainability are still key reasons, government policy is now referenced far more frequently by Council members.

This year, media is also mentioned by 65% of Council members in APAC, with many attributing this to a changing media landscape as well as the resounding cry of ‘fake news’.

"The energy policy is a mess. Can’t separate from political environment."
"The Trump phenomenon and the constant hammering of ‘fake news’."

In full: how Reputation Council members around the world perceived each sector's reputation

Methodology: 154 interviews conducted with Reputation Council members between 25th June and 12th November 2018. Base: All Reputation Council members – Global (145), North America (16), Europe (80), Latin America (32), APAC (17).

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