Master Public Opinion to Unlock Secrets of Corporate Success with Reputation Analytics by Daniel Diermeier

Public Opinion for Companies. In today’s digital age, a company’s reputation can be made or broken in the span of a tweet. Reputation Analytics: Public Opinion for Companies dives deep into the complexities of public perception, offering a groundbreaking framework for understanding and managing corporate reputation. With insightful strategies rooted in game theory and psychology, this book is a must-read for anyone looking to elevate their organization’s standing in the public eye.

Don’t let your company’s reputation leave you in the dust. Keep reading to discover how Reputation Analytics can become your playbook for winning public favor and driving business success.

Genres

Business, Management, Public Relations, Corporate Strategy, Social Media, Crisis Management, Branding, Psychology, Game Theory, Communication Studies

Reputation Analytics: Public Opinion for Companies presents a scientific approach to understanding corporate reputation. Daniel Diermeier, a leading scholar in the field, introduces a rigorous analytical framework that combines game theory, psychology, and text analytics.

The book addresses how public opinion shapes an organization’s success or failure and provides a methodology with practical applications for both scholars and practitioners. It covers topics such as the principles of public opinion, the role of values in shaping attitudes, the impact of media and social networks, and the rise of strategic activism.

Review

Diermeier’s Reputation Analytics is an essential guide for anyone involved in managing a company’s public image. The book’s multidisciplinary approach offers a fresh perspective on reputation management, making it a valuable resource for executives, PR professionals, and academics alike.

Its in-depth analysis and actionable insights make it a standout work, providing readers with the tools to navigate the complex landscape of public opinion effectively. The book is not only informative but also engaging, making it a compelling read for those interested in the dynamics of corporate reputation.

Recommendation

If you think your good business practices or integrity will protect you from a corporate reputation crisis, think again, says Vanderbilt University chancellor and political scientist Daniel Diermeier. Small actions – even inaction – can cascade into a massive crisis, potentially harming your business for years to come. Diermeier explains how to proactively manage your corporate reputation with a scientific approach that draws heavily on statistical modeling, human psychology and political strategy. Learn from others’ crisis management mistakes while taking steps to protect your company’s future.

Take-Aways

• Managing your corporate reputation requires thinking like a political strategist.
• People form specific and general impressions of your brand in six primary ways.
• Companies face reputational crises when they trigger “moral outrage.”
• It’s difficult to fight perceptions that your brand is causing harm. Consider taking accountability.
• Companies must understand and become comfortable handling activist campaigns.
• Leverage a deep understanding of media and social network influence.
• Harness emerging technologies to manage corporate reputation proactively.
• Avoid common mistakes and develop a risk management mindset.

Summary

Managing your corporate reputation requires thinking like a political strategist.

Managing your corporate reputation is akin to how politicians and their teams manage public opinion. However, companies must consider many more “constituencies,” or “publics,” than political campaigners. Your corporate reputation hinges on the perceptions of customers, potential customers, employees, investors, business partners, suppliers, and external groups such as regulators and the media. Don’t assume that sound business practices will protect you from a reputational crisis. Every company needs to make reputation management an integral part of its strategic operations.

“A company’s reputation is essentially public. Successful reputation management therefore requires the ability to assume external actors’ perspectives and viewpoints.”

Public perceptions aren’t always rooted in direct experiences. One customer’s bad review can trigger several potential customers to form negative opinions about your company. Your corporate reputation isn’t always homogenous either: It may differ across constituencies, products and markets. For example, McDonald’s reputation may be drastically different in China than it is in France. Managing your corporate reputation will, thus, require you to consider the ways differing social, cultural and political factors can shape opinions of your brand and your market positioning.

People form specific and general impressions of your brand in six primary ways.

Understanding how people form opinions about a brand can help you better manage your business’s reputation:

• “Repetition” – The more people see or otherwise encounter a brand, the more likely they will remember it.
• “Recency” – If an encounter with a brand happened recently, people will remember those encounters more clearly.
• “Attention” – People only give brands their full attention for short periods, often when encountering problems with their products or services. Impressions made during these brief periods are usually profound and long-lasting.
• “Affect” – People’s initial impressions of brands tend to snowball over time because most individuals readily accept new information that aligns with their existing beliefs and are more skeptical of new information that doesn’t.
• “Consonance” – When your messaging aligns with people’s beliefs, they’re more likely to embrace and recall it.
• “Online processing” – While recent encounters with a brand offer people specific reasons to see a brand in a positive or negative light, their underlying feelings are based on an “aggregate” of impressions formed over time. An early “attention” period usually determines whether these aggregate impressions are positive or negative.

Companies face reputational crises when they trigger “moral outrage.”

Reputation crises occur when people respond emotionally to what they see as a brand’s break with ethical norms or values they hold dear. People then express their “moral outrage” via consumer boycotts or protests. Moral judgment hinges on three main principles: the duty to avoid causing others harm; upholding fairness, justice and rights; and respecting moral conventions and values. The latter principle is particularly applicable when dealing with individuals or groups who prioritize communal loyalty, hierarchy and “the sacred.” Different publics have different value orientations: Some tend to focus more on individual morality, while others – like political conservatives – focus more on collective morality.

“The do-no-harm principle implies that companies are viewed as having a general duty to avoid harm.”

People employ two modes of thinking when making moral judgments: “System 1” thinking is “experiential”; “System 2” thinking is “analytic.” System 1 judgments stem from preexisting associations: An event engages your emotions, and your mind immediately recalls past events that made you feel similarly or that otherwise connect with the current event. These memories may include images, stories and metaphors that prompt you to think positively or negatively about the current event. System 2 judgments are logic-based: To the best of your ability, you’re consciously determining what is true or relevant. While System 1 judgments occur almost instantaneously, System 2 judgments take more time and notably more effort. People tend to rely more on System 1 processes when forming perceptions about companies. Few take time to research a company enough to make a well-informed judgement.

It’s difficult to fight perceptions that your brand is causing harm. Consider taking accountability.

Consider “folk economics” – the public’s sense of how commerce works – before your brand takes action. For example, the public tends to view airline ticket price increases as more profitable than they really are for airlines, dismissing factors such as rising costs. The way the public views your industry, or how people “frame” the products or services you provide, affects your corporate reputation. For example, the public used to perceive smoking as a matter of personal choice. However, nowadays, most people see smoking as a public health risk and, thus, view tobacco companies as morally suspect.

“Lack of crisis management expertise will cause outrage and diminished reputation for unprepared organizations.”

Companies hoping to restore trust and rebuild credibility when they’ve triggered public moral outrage should only fight against accusations if they can make clear, easy-to-understand arguments. Unless you want to lose credibility, avoid making excuses. Instead, your company’s leadership should apologize and promise to do better in the future. Leaders should demonstrate personal and public commitment to handling crises and show authentic empathy toward anyone harmed by the company’s actions.

Companies must understand and become comfortable handling activist campaigns.

Modern companies are more likely to face activist campaigns that damage reputations. People today expect organizations to act ethically, and the media has become more critical of corporate behavior. The intricacies of global supply chains and the fact that more companies now have trust-based business models also play a role in the rise in “activist-driven risk.” Social activism in response to how a company handles issues like safety or compensation is not only more common nowadays but also less localized in nature – thanks in part to social media. Fear of the harm activists can do to companies’ reputations often prompts brands to adopt corporate social responsibility (CSR) practices. But CSR activities will not prevent your company from activists’ attacks.

“Activist campaigns are typically designed to put pressure on companies over specific business practices – often through the threat of inflicting reputational damage on companies.”

Activist campaigns tend to be strategic and proactive: They’re designed to prompt organizations and industries to change business practices. If activists repeatedly target your company, even though you embrace CSR practices, it’s unlikely that anything short of radically changing your business model will make you a less attractive target. For example, People for the Ethical Treatment of Animals (PETA) is unlikely ever to stop attacking McDonald’s. Statistical modeling should take such factors into account; otherwise, companies might misinterpret data related to activist campaigns and CSR – concluding, for instance, that CSR puts a firm more at risk of being targeted rather than understanding that some sorts of companies will always be more at risk regardless of whether they engage in CSR.

Leverage a deep understanding of media and social network influence.

Negative media coverage can undoubtedly trigger a reputational crisis. Take Toyota: In 2009, media coverage of a horrific car crash that occurred when a Toyota-made vehicle’s accelerator became stuck sent the company’s stock prices plummeting 21%. Had the media compared Toyota’s overall safety record with those of its competitors, perhaps the public reaction would have been a bit more balanced. As it was, however, the way the media covered the incident meant that even after Toyota obtained proof that its vehicles were free of systemic defects, public perception of the brand remained poor.

“Perceptions and attitudes are influenced by peers, third-party experts, and the media, both traditional and user-generated. In this environment, building and maintaining a successful reputation in the marketplace requires a deep understanding of such channels of influence.”

People often accuse the media of bias. However, some research suggests that media outlets match their audience’s “ideological positioning” rather than intentionally push a biased agenda. Still, media can and does play an outsized role in determining the issues to which people pay attention. And, once the media brings attention to a particular issue – a problem with contaminated toothpaste manufactured in China, for example – it tends to inspire related content: stories about the general issue of problematic manufacturing practices. Thus, when one company in a particular industry or product area comes under media scrutiny, the potential for reputational damage increases for all businesses in that sector and those in closely related sectors. For instance, the toothpaste issue might also affect food manufacturers, drug companies or any organization that manufactures goods in China.

Social media also wields influence over public opinion. A linear regression model could help identify what triggers a rise in a particular variable, such as desired consumer attitudes or behaviors on social media, if you’re working with a continuous dependent variable, such as an approval scale. Alternately, if you’re attempting to test a binary outcome – like whether someone will or will not purchase something – a discrete choice model exploring two mutually exclusive possibilities would serve your purposes. Bear in mind that it is difficult to distinguish the effects of peer influence from other forms of influence, such as mass media.

Harness emerging technologies to manage corporate reputation proactively.

Corporate reputation research and analysis rely heavily on opinion surveys, but relying exclusively on such surveys can be problematic. Datasets tend to be limited in scope and are often proprietary. Many survey practices also reflect outdated perspectives of how the public forms opinions about corporations. That said, there are situations where it makes sense to measure opinion with surveys, such as instances of workplace misconduct and racial prejudice. Researchers have developed new ways to ensure anonymity with randomized response designs, ensuring subjects feel more comfortable answering honestly. But when it comes to gauging the effect of corporate actions on a company’s reputation, organizations need to explore alternative ways of collecting and analyzing consumer data.

“What is needed is not another corporate function, but to develop a reputation management capability.”

You could conduct sentiment analysis – analyzing text or text snippets taken from online reviews for negative or positive views of your company, a product or a specific issue. Machine learning algorithms can assist in sentiment analysis in many ways, including classification – meaning, categorization – of opinions as positive or negative. You can train algorithms to classify “domain-specific adjectives” – words whose meaning depends upon their context, like “tasty” in the context of a restaurant review – before measuring sentiment.

You can also use text-analytic scores to measure your publics’ ideological stances and values. Supervised learning models (such as SVM) can help you classify audiences on an ideological spectrum, drawing on information like party affiliation and analyzing speech patterns and word choices that may indicate ideological leanings. For example, an SVM analysis revealed that Democrats prefer to pair the words “estate” and “tax,” while Republicans are more likely to pair the words “death” and “tax.”

Avoid common mistakes and develop a risk management mindset.

When you’re under public scrutiny, people will consider your company’s current actions – How well is your CEO answering questions? Are you doing anything to resolve the issue? – and your past actions. Decisions that may have once seemed reasonable may suddenly appear wrong when facing a hostile audience. Avoid this situation by shifting your mindset from reactive crisis management to proactive risk management.

“Most reputational crises do not happen because of some external event or misfortune; rather, they are the direct consequence of company actions or inaction.”

Build a reputation management system into your corporate strategy, and appoint a tactical team to oversee it. Your tactical team should provide regular updates to leadership, identifying and mitigating possible risks. For risks you cannot avoid, employ preparation strategies. This might include collaboratively engaging with advocacy groups to find allies. Invest time in assessing which issues are interesting and important enough to your publics that you risk reputational damage if, at some future time, media or activists link your company – or a company like yours – to those concerns. Identify and evaluate all emerging issues, monitoring them as their framing changes over time to gauge how to – or if you should – respond. By developing a proactive reputation management capability today, you increase your likelihood of preventing crises before they happen.

About the Author

Political scientist Daniel Diermeier is the chancellor of Vanderbilt University and the author of Reputation Rules.