AM for CXOs – Reputation

2018-08-08

Aya Bentur  

FutureCraft 4D Adidas and Carbon 3D Printed Sneakers

Benjamin Franklin said, “It takes many good deeds to build a good reputation, and only one bad one to lose it.” A company’s reputation is undeniably important and fragile, especially today. It seems that even though there is a wide awareness of the topic, companies rarely have a department or person whose role is calculating reputational risks, safeguarding reputation and everything that entails. The responsibility usually falls under the jurisdiction of the CEO. Today we start a new series – #AM4CXO, looking at top management (CXO) concerns and consider how Additive Manufacturing (AM) fits in alleviating or exacerbating these general concerns. Each post will tackle a different C-suite issue, such as IP protection, spare part consistency, customer satisfaction, new business models and revenue sources, branding and more. The first post in the series will focus on reputation – the catchall concern that top management cares about in a way it gathers and captures everything the company does and stands for. How can AM affect that?

The Culmination of Everything

Deloitte describes reputation as “the culmination of everything your company does—from product quality to employee behavior and everything in between”. Reputation is a form of perception. Perception has a subjective connotation, yet in this case, perspective is based on the collective impressions of employees, customers, media, NGOs, regulators – a wide set of stakeholders, basing their impressions on everything the company does and says from product to behavior. An example of a leading company building and maintaining a great reputation is LEGO, ranked 2nd by the Reputation Institute. In the video below LEGO CEO Niels B. Christiansen says “What we do is not just about being on top of a reputation list, for me and all my colleagues at LEGO this is really driving the mission forward of inspiring and developing the builders of tomorrow” he sees their reputation as a testament to their actions, “…it shows that a lot of stakeholders around the world recognize that we are doing the right thing”. The company actually turned their reputation around during the early 2000’s beginning with a statement from LEGO’s executive vice-president for markets and products, Mads Nipper: “With our arrogance, we thought being LEGO allowed us to do anything”, followed by turning back the focus to their key audience – children and basing the design process on consumer insights.

The Age of Information

According to an article published in 2007 in the Harvard Business Review “in an economy where 70% to 80% of market value comes from hard-to-assess intangible assets such as brand equity, intellectual capital, and goodwill, organizations are especially vulnerable to anything that damages their reputations”. This was over 10 years ago, and the power of intangible information and communication has only grown since, together with the distrust in traditional advertising. Key stakeholders today are not just consumers, employees, shareholders, and regulators but also indirect stakeholders: NGOs, media, and social media have a significant influence on a company’s reputation. The Media Tenor Institute for media analysis describes the “awareness threshold” needed for a company to maintain a good reputation. It’s a balance between positive, negative and neutral stories appearing in the media. Basically, enough positive stories can help mitigate the negative ones. It’s important for a company to remain above the “awareness threshold”, having a positive reputation but remaining under the threshold will make it difficult for a company to stay undamaged when facing a crisis.

Actions over Reactions

It’s not fortune telling, reputational risks can be anticipated, and if anticipated they should be dealt with in advance. Actions are stronger than words, and it is those true actions distinguished from PR spins that build a strong and resilient reputation. Anticipating begins with research, and the Reputation Institute outlines how reputation can be quantified. The institute lists 7 areas to evaluate in regards to reputation: products and services, innovation, workplace, governance, citizenship, leadership, and performance (infographic below). It’s not enough to look within, it is equally important to evaluate against competitors and industry standards, McKinsey recommends creating an objective benchmark: “Quantitative measurements promote effective comparisons and help companies avoid ignoring potential issues or performance gaps”. Examining what might be reputational issues objectively will lead to better-informed actions.

Reputation Institute

There is a general distrust in traditional advertising and now with the ease in which news (and fake news) are generated actions and not counter actions are what counts. “Consumers, our research indicates, feel that companies rely too much on lobbying and PR unsupported by action. They also fault companies for not sharing enough information about critical business issues—for manufacturers, say, the content of their products, their manufacturing processes, and their treatment of production employees” concludes the research conducted by McKinsey. Cultivating a strong reputation can help companies avoid future damages, a damaged reputation has a direct effect on customer loyalty, employee morale and of course finances. According to a study conducted by Deloitte “Truly effective crisis management goes beyond being reactive and simply protecting existing value. It also enables resilience and powers future performance, thereby enabling an organization to emerge stronger”. Building a reputation that has a long-term value includes looking ahead, paying attention to stakeholders and taking responsibility, AM applies to all three.

Building a Reputation – #1 – Look Ahead

Looking ahead enables growing the company along with its reputation. A strong reputation today means being innovative, up to date in advancements, in changes that can fuel the needs and wants of stakeholders. Executives such as José Cocovi, Mold Line Manager at Michelin understand that the manufacturing industry is changing, it needs to enable faster, better products, be agile and innovative, and AM provides just that. Looking ahead means acting now when recognizing a future trend or path, waiting can be harmful to a company and its reputation. At Michelin over 1 million sipes are already additively manufactured on a yearly basis, this is an example of bringing forward thinking to the present (below).

Michelin Additively Manufactured Mold Inserts for Tire

Building a Reputation – #2 – Pay Attention

A company and its reputation can only gain from paying close attention to stakeholders, understanding their product preferences as well as their attitudes and beliefs. Stakeholders want to know that they are heard, their opinions and needs taken into account. The ability to react in real-time to the customers’ needs and wants is a big part of additive manufacturing. AM has the potential to minimize the gap between the company and the consumer, one example is car companies such as Daimler additively manufacturing spare parts for discontinued trucks. “The particular added value of 3D printing technology is that it considerably increases speed and flexibility, especially when producing spare and special parts. This gives us completely new possibilities for offering our customers spare parts rapidly and at attractive prices” says Andreas Deuschle, Head of Marketing & Operations in Customer Services & Parts at Mercedes-Benz Trucks (3d printed metal parts below). Another example is the additively manufactured Futurecraft 4D sneakers by Adidas which includes midsoles customized to the wearer (up top).  Customized products and parts produced with AM according to demand send a clear message to the consumers – we operate with you in mind.

Mercedes Benz Metal 3D printed Parts

Building a Reputation – #3 – Responsibility

Responsibility is a big part of a good reputation, a CXO taking responsibility for a crisis that occurred generally generates good public opinion, and a company acting with environmental responsibility, for example, is even more appealing. Environmentally conscious manufacturing, reducing the ecological footprint, minimizing waste and materials are all benefits of additive manufacturing. The additively manufactured fuel nozzle by GE not only uses less material, in a method that reduces waste significantly, it also improves the engine’s efficiency and reduces fuel consumption. Another example of a responsible AM action is keeping virtual inventory – benefiting the environment, the customer and the company’s bottom line.

The list of World’s Most Reputable Companies 2018 according to the Reputation Institute includes Adidas (#7), BMW (#9), and Michelin (#11). We believe that these companies achieved such status in part due to their constant innovation, awareness to public demand, along with the implementation of AM in their production lines. They show dedication and responsibility to their stakeholders, to issues such as the environment and to the future of the company (and all three are featured in our Leaders in AM post).

Follow our #AM4CXO series, if you have a top management issue you would like us to include just write us in the comments below. For more insights and information follow us on LinkedIn or subscribe to our newsletter for weekly updates.

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One thought on “AM for CXOs – Reputation

  1. Which means that AM enables to 3D print the desired part/product, and then check ahead of time if it fits with your industry needs. If yes, just then publish the company will take this route, detailing the productional and financial pros and cons.

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