Every organisation understands the importance of a good reputation. Even though it isn’t something you can buy off the shelf or sell on when you decide you want a change, reputation is fundamental to operation and growth.
Reputation is what economists refer to as an intangible asset. Unlike machinery, offices, vehicles or stock, the assets of today’s most successful companies are increasingly made up of things we can’t see or touch. Things like knowledge, R&D, software, brand, design and reputation.
In the major developed economies of the world investment in intangible assets is now greater than investment in traditional tangible assets. This quiet revolution in the way business is being done has significant consequences for the future of our world, according to Jonathan Haskel and Stian Westlake In their new book Capitalism without Capital.
It is my observation that the PR and communications industry has a tendency to tie itself in knots when it comes to justifying spending on its services. In an effort to step up to the task of measuring ‘return on investment’, practitioners are busy ‘getting to grips with the numbers’, setting measureable objectives to support their creative campaigns and seeking out the data that will prove their worth at the client’s quarterly budget meeting.
Well that is all well and good for short term budget planning but I am wondering if, in the rush towards granularity and measurement, we are not missing opportunities to have a wider conversation about what investment in reputation really is and what it means for today’s organisations.
The term investment implies an anticipated future gain; a larger market share, the ability to command higher prices, increased customer loyalty or the securing of an important contract. Therefore, a true investment in reputation is likely to be ambitious, designed to help achieve key organisational goals not just to maintain the status quo.
Like any investment in intangible assets it also carries a degree of risk. Outcomes are not certain and if the campaign flops, the organisation has no way of recovering the cost. Brands are constantly challenged by the fluid expectations of their stakeholders and must continue to protect and maintain the valuable asset that is their reputation.
So I think perhaps it is time for PR and communications to be a little a braver in its conversations and about budget and ROI and more open about the potential risk and reward we can create for clients. Let's catch the wave created by this fundamental shift towards investment in the intangible by learning the language of economists and joining in the conversation at a higher level.
Instead of just focussing on data to show incremental improvement, I believe the time is right to lift our eyes to the higher prize of a seat at the strategy table and really prove our worth as experts in the building and management of that most valuable of assets, reputation.
Jonathan Haskel and Stian Westlake 2018 Capitalism Without Capital Princeton University Press