Coffee shops, energy companies and the Chinese Communist Party

Dr Joel Rogers de WaalAcademic Director, YouGov
November 15, 2012, 12:00 PM GMT+0

What do coffee shops, energy companies and the Chinese Communist Party have in common?

From Starbucks to Centrica and the BBC, there are plenty of headlines this week to amplify the signature theme of modern business news, namely that the developed world is seeing an historic backlash against corporate greed. We are also apparently going through a ‘Great Empowerment’ in popular terms to match the scale of the ‘Great Recession’.

Well sort of.

It hardly takes a sage to notice that an anti-rich backlash has gone global. But this is about more than the standard fare of anti-business sentiment that comes with cyclical recession.

In September this year, YouGov gathered a range of experts from government, business and media for the annual YouGov conference at Cambridge University to discuss the theme of ‘Reputation in the Age of Protest’, and how nations, corporations and political parties variously manage the modern challenges of reputation.

As the conference helped to explore, a core proposal of Western-age globalisation has been challenged in the last half decade – i.e. the social value-model of trickle-down economics, and the notion that everyone benefits from enriching the top.

This doesn’t mean there’s broad appetite for the sort of radical change advocated by some on the American and European Left. As YouGov cross-country polling has shown in Germany, Britain, Sweden and the United States, there’s little support for questioning the market economy in principle, with no real difference in opinion-trends between countries associated with guided ‘European’ capitalism or the Anglo-Saxon free-market approach.

What is obvious, however, is a newly strengthened tendency to see prospering companies and socio-economic progress as zero-sum. According to another recent YouGov report, for example, large numbers of British retail customers still believe, some five years after onset of the sub-prime crisis, that self-interest and the common good remain fundamentally decoupled in the UK banking sector.

From CSR to SV

Moving past the latest corporate scandals and FTSE reputational nose-dives, many companies remain trapped in outmoded approaches to value-creation that essentially treat the process as a natural by-product of normal business, plus a dose of arm’s-length philanthropy via annual budgets for corporate social responsibility (CSR).

As some of this year’s YouGov conference speakers emphasised, such as former Northern Rock boss Gary Hoffman and the Royal Mail’s Chief Executive Moya Greene, large businesses in particular will have to work considerably harder from here on to protect their reputations in ways that extend beyond the old “social responsibility” mind-set. It almost goes without saying that customers and stakeholders have more power than ever to scrutinise, to protest, and to join standing armies of freelance watchdogs ready for battle. Networked technology and its social effects have created a new kind of ‘bubble reputation’, which assumes the volatile, behavioural characteristics of financial markets. Digital leverage among close-knit groups magnifies the epidemic power of a message or idea, as Tipping Point author Malcolm Gladwell has explored in his thesis on the “laws of the few”. Confidence can be amplified into speculative bubbles or collapse in hours and minutes with a run on reputation.

A significant outcome from these developments is a shift among the more innovative business-thinkers towards ‘shared-value’ models that do more to connect profit with progress at a strategic level, and less to place each in short-term trade-off with the other.

According to the management-consultant firm Booz & Company, to be a successful global brand today means being a ‘global attractor’, which in turn means incorporating at least three dimensions into a common platform: first, appealing to aspirational values; second, being a trend-setter of new ideas and standards; and third, staking out positions as a responsible global citizen, where social issues and the company’s business intersect organically.

Letting go to keep control – from business to communism

In turn, the notion of shared value is also being broadened by consumer empowerment. Few chief executives suggest running a business entirely through open-sourcing and crowd-surfing. But an increasing number of companies accept the idea that relinquishing ‘some’ control of the communications process to public dialogue is now central to managing trust and reputation among customers, employees, investors and other stakeholders.

This includes a more open, hands-up approach to criticism. A trenchant example can be seen with McDonalds, having taken steps as bold as listing calorie-counts on menus and uploading footage of slaughterhouses on open company blogs.

Accordingly, many successful brands are shifting away from being assets owned by corporations towards being socially constructed, collectively owned and shared identities. As the media company Raconteur has explained, effective brand strategies no longer rest on the old way of command and top-down centralised control, and consumers no longer want force-fed advertising. Brand-owning companies are not like armies, says Vicky Bullen, Chief Executive of the branding agency Coley Porter Bell: you can’t just order people to be consistent; you have to make them want to be consistent.

It’s a small irony, therefore, that the reputational challenge facing big business is not entirely dissimilar from the challenge faced by the Chinese Communist Party and other market-authoritarian governments.

There’s a difference in China between online activism for the cause of better service from government authorities and barefaced dissent against the Chinese Communist Party’s right to one-party rule. A majority of Chinese online activism is careful not to cross this line. For those who do, China has an Internet police force with a staggering size of over 50,000, further bolstered by countless bloggers working secretly for the government, who activate when it’s time to debunk potentially harmful stories

The government in Beijing consciously tolerates a limited measure of online empowerment as part of a semi-official bamboo strategy – bending to social winds rather than standing straight and breaking like Soviet Communism. In fact, from Pacific Asia and Russia to the Gulf states and Latin America, governments are learning to tolerate a certain measure of online dissent in the form of demands for better services and efficiency. This is different from challenging the underlying theory of state, however, and functions in many cases to reiterate the ultimate legitimacy of government rather than undermine it. Digital media in this context offers a useful kind of ‘pseudo-democratic steam-valve’.

The common rule here seems to be: letting go and giving stakeholders a louder say in how things are run is now – paradoxically – a core component of staying in control for many large organisations, whether capitalist or communist, or a fashionably modern mixture of both.

See the results from the YouGov cross-country poll

See the YouGov Reputation Research report: The reputation of banking

See more information about the Annual YouGov-Cambridge Conference 2012