The Power of Business Reputation

An article in the July 9 & 16, 2007 issue of BusinessWeek (“What Price Reputation?”) examines the growing trend among businesses to try to manage their company reputation. Traditionally analysts and executives have viewed a company’s value as the combined value of its tangible and intangible assets. Tangible assets — such as factories, machinery and cash reserves — are easy to quantify, while intangible assets are much more difficult to place a value on.

Several of the “Reputation Managers” quoted in the BusinessWeek article assert that once you remove all of the tangible assets, the majority (if not all) of the remaining portion of the company value results from reputation. This probably sounds very familiar to practitioners of Brand Management, since Brand Management staked out and attempted to quantify the same intangible asset value a number of years ago.

Brand Managers might argue that reputation is just one of several components necessary for a successful brand, and ultimately in the case of public companies a strong stock price. From my perspective, may of the components of a brand that could not be easily measured when Brand Management first arose now are measured on a regular basis. As a result, those quantifiable brand components now qualify as tangible assets, with reputation accounting for a significant chunk of what is still intangible.

What do you think? Can a company’s reputation exist independent of its brand? Is the Reputation Management movement overreaching with its claims?