TL;DR: reputation affects capitalization. To make it higher, the reputation can and should be managed.
Any economic agent operating on the open market has its own capitalization. This can be evaluated in a number of different ways: through the stock market, through the size and stability of the wages received, or through the number of daily incoming calls.
In addition to these purely economic metrics, capitalization also depends on the public view of the agent’s behavior.
Many times we heard news stories about companies being caught behaving inappropriately, and the markets didn’t like it. Which had a direct impact on their stock price.
Because the value of companies today is not only formed by the consumer benefits of the products or services offered in the market. But also by the overall impact and contribution of companies’ activities to the prosperity of the entire community.
In contrast to the evaluation of public companies, which at any given time is quantified to the nearest cent, the evaluation of the reputation of non-public organizations and individuals is always abstract, subjective and depends on the individual experience of interaction with the object under study.
But with a simple mental exercise, we can draw the key metrics that make up the overall reputational picture:
- expertise in some area and its depth;
- business and social style of behavior;
- crisis or abnormal situations behavioral style;
- personal contribution to the public good.
The beauty is each of these parameters can be decomposed, digitized, measured, and subsequently manipulated in the desired direction - that is, managed.
That’s what we at WSS do every day.
It is only important to remember two things:
- Reputation is a derivative of publicity. It is impossible to manage a reputation of zero.
- The formed expectations of observers should match the behavior of the agent in the future.
A specific topic of conversation is financial reputation. Which we will talk about in a future episode.