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How Reputation Works

How reputation works:  The information that shapes it and the people who perceive it

A person or company’s reputation is based on information (of some kind or another). And every reputation is perceived by people (of some kind or another). Put information and perception together, and you’re left with a potpourri of differences, reactions, interactions, and misunderstandings in the grand arena of how reputation works.

There are several principles including demographic, psychological, and technologicalthat undergird all that variation among reputational perception. This article explains, broadly, how reputation works.

Specifically, we’re answering four broad questions throughout this article:

  1. Who are the people forming these ideas of a given person or company’s reputation?
  2. How do their ideas or perception of a reputation arise?
  3. What are the specific technological features that shape reputational information?
  4. Why are we so limited when making judgments regarding reputation?

This article will arm you with the information that you need for two very important business skills: 1) managing you or your company’s reputation and 2) understanding how your own beliefs and practices function in regard to reputation.

Who are the people forming ideas of a reputation?

Here’s the situation. You’re the CMO of a Fortune 2000. The name of your company, for sake of cliche, is Widget Inc. Today, Widget Inc, consisting of ten thousand employees and a billion dollars in revenue, is in serious trouble because your product failed, your stock value dropped, and your c-suite made some serious mistakes.

Basically, your reputation sucks.

Revenue is hurtling downward like a satellite reentering the earth’s atmosphere. A ghastly swath of middle management is flocking to recruiters and blanketing Monster.com with their resumes. Six VPs have resigned. Bloomberg is whispering about an entire industry meltdown. Service providers are abrogating contracts. Customers are exiting in droves. Reviews are blowing up with criticism and vitriol.

Basically, everything hit the fan. And you’re trying to clean it up. What should be on your mind as you fetch your metaphorical broom and dustpan?

Reputation is in the eye of the beholders

I create this cataclysmic backdrop to assert a significant point: There are a lot of different types of people who are forming ideas about who your company is, what you stand for, how corrupt you are, how sterling your character is, what kind of impact you’re having in the world, and whatever other ideas they hold.

Your business does not have a single reputation. It has as many reputations are there are people who are perceiving your company. And that’s where things get tricky. We often discuss “reputation” as if it’s monolithic —indivisible, coherent, unambiguous, good or evil, positive or negative.

Certainly you understand, however, that reputation isn’t quite so cut-and-dried. Mrs. Jones has a different idea of Widget Inc. company than Mrs. Smith, who has a different idea of Widget Inc. than Ms. Fitzpatrick.

Reputation is in the eye of the beholder. So, who are those beholders?

The perceivers of reputations

Allow me to state this point in clinical terms:

  • Fact: Every different person holds a different reputational idea. In other words, Mrs. Jones and Mr. Smith think about your company in two different ways.
  • Fact: For every person who holds a reputational idea, that idea is based on three things: 1) the information that they intake, 2) the specific perspective they have, 3) the cognitive biases they hold

Let’s go back to Widget Inc. where the situation is bleak and you are standing with broom and dustpan in hand.

Who are the people perceiving your reputation?

Mrs. Jones is a major investor whose investment company owns 12% of the company. She thinks that the business will make a comeback. Her company is buying up more Widget Inc. stock at record low prices. She rejects industry scuttlebut and makes informed decisions based on her personal history as a successful investor, situations she has seen before, and the fact that her great grandfather founded the company.

Mr. Smith is the Senior Manager of Internal Policy, a job more boring than it sounds, and he feels like the handwriting is on the wall regarding his tenure at Widget Inc. Smith’s five years at Widget have been dry and static, and he doesn’t like New Jersey traffic. Mr. Smith gets all of his information from friends on Facebook Messenger. That is, he has been carrying on rumor-fueled conversations with six coworkers about the company’s situation. He’s embarrassed to admit to his bowling league friends that he works for Widget, and his $92k annual salary seems egregiously low for someone in his capacity. At least, so he believes, based on arguments he has recently had with his wife. Mr. Smith has sent resumes to five different companies.

Ms. Fitzpatrick was a customer of Widget Inc. Was a customer, that is, until she Googled “Widget inc scandal” and her eyes blurred over with business jargon news headlines that obviously reflected poorly upon Widget Inc. Fitzpatrick cancelled her contract last Tuesday, ate the early termination fee, and flounced off to a different service provider. Au revoir, customer Fitzpatrick.

Three people. Three reputations. Three life situations. Three choices.

That’s what is staring you in the face as your loose hold on the broomstick turns into a white-knuckled grip of fear. It’s impossible for you to identify every conceivable reputational iteration, let alone respond. But it is important for you to acknowledge that there are different groups of people who are forming reputations of your company.

Here are a few of them:

  • Existing customers
  • Former customers
  • Future customers
  • Former employees and current pension holders
  • Employees about to retire
  • Employees who just entered the company
  • Prospective employees
  • Senior management or executives of the company
  • Suppliers and providers of the company
  • Major investors
  • Small time investors
  • Day traders
  • Journalists
  • Bloggers
  • Reviewers

Everyone is forming their reputation of the company based on their particular situation. Plus those people are selecting information that they think will best inform their situation. Beyond that, their cocktail of cognitive biases is handling that information in different ways.

As you contemplate these truths, mouth agape and dustpan dangling from hand, your next question is how are these people forming their ideas of Widget Inc.’s reputation?

How do people form their ideas of a reputation?

Asking this question is sort of like asking “how do people think?” As you may assume, the answer is “how much time do you have?” It’s complicated. For simplicity’s sake, there are three salient formative principles in reputational formulation.

People seek out information that is relevant to their particular interest.

Generally speaking, people will find the information source that is best suited to what they’re trying to figure out.

An investor, for example, is interested in the stock information around Widget Inc. They are combing records on Morningstar.com, Bloomberg.com, and digesting the Financial Times in order to get expert info on this important issue.

Does this investor care that the married family man CEO of Widget Inc. was photographed entering a chauffeured Mercedes Cabriolet with a scantily clad high-dollar escort in front of St. Regis Hotel in New York City at 8:30am? Sure he is, but this information is not as cogent to him as the numbers ticking on Morningstar. Reputation formed.

What about the freshly-minted MBA grad looking for his first job? He’s had his eye on Widget Inc. for a while. His browser history is all Glassdoor.com URLs mostly having to do with salaries, interviews, and company reviews. Reputation formed.

And the average customer of Widget Inc, whose $59.99 per month payment is automatically withdrawn from her Visa card? She saw someone share a link on Facebook, recognized that company name, realized she was a customer, and started Googling stuff. Reputation formed.

The investor, the MBA, and customer all have a particular interest, so they will actively seek information that gives them the best information.

People seek out information they want to see.

Our own biases, discussed later on in this article, play a huge role in the formulation of reputation. Due to the nature of cognitive biases, we often aren’t even aware that we’re selectively accepting or rejecting information, but we do it all the time.

Widget’s customer may see two news articles on Google news, side-by-side. One article is “Widget Inc. Saves 10,000 Kittens from Death, and Donates 1bn to UNICEF.” The other article is “Widget’s CEO Caught With Pants Down.” Which one do you click on? Which one is the most formative as your reputational idea of Widget takes shape?

This seeking takes its most obvious form through online searches. We search on Google, and Google begins to learn our search habits and preferences, thus serving up information that it thinks we will like. Facebook, too, learns what news articles we are most eager to click on or what are friends are sharing, and algorithmically adjusts our newsfeeds accordingly.

Your initial preferences and interaction with a search engine or social platform sets off a cascade of machine-learning responses that give you information that you want to see...or that the search engine things you want to see.

People rely on the opinions of others.

Finally, let’s not neglect one of the most significant issues of all —other people’s opinions. There is simply too much content in the world for any single person to digest even a fraction of it. Why bother anyway? Everyone has an opinion, and we’re wired to trust people. Plus, we’re mentally lazy. No need to read boring reviews if you can just ask Fred what he thinks.

Evolutionary biology has trained us to rely on the previous mental or physical work performed by those around us. Without this powerful instinct, humans would have succumbed to the onward march of evolution a long time ago. Thus, when Fred tells you “Man, Widget Inc sucks!” then you will accept his briefly worded opinion, and seek out Widget Inc.’s competitor.

Today, the most influential “opinion” comes from a source that knows you better than almost anyone else —a brilliant and all-encompassing entity, that knows your secrets, guards your resources, empathizes with your needs, and serves up your answers in a split second all day, every day.

It’s name is Google.

Google is not a person, of course, but a machine-learning, algorithmically-driven search engine. It decides what you see, and serves up the best information in the best possible way. You may not think of Google’s search result as “opinion,” but because of the way it reacts, iterates, and serves up information, it’s most instructive to think of it as just that.

So, as the most powerful shaper of reputation, just how does the search engine, primarily Google, do it?

How does universal search affect reputation?

It’s not an overstatement to say that Google search results are the primary method by which reputation is formulated. What we need to figure out next is how this happens.

What is universal search?

Universal search refers to the fact that Google search results display different types of information. Since 2007, the search engine decided that the best search results are more than just websites. Not only do you have a list of top websites, but you also have other features such as news results and knowledge panels that may change based on who is searching, where they are searching from, recent events related to the query, and pretty much anything else.

Universal search, then, is a set of comprehensive search results on any given topic. A search for “Barack Obama,” for example reveals more than just Wikipedia and BarackObama.com. You get instead a variety of news articles, images, facts, a Twitter account, and questions that people also ask.Barack-Obama

This, then, is part of the formulation of Barack Obama’s reputation, at least from my perspective on Tuesday at 4:56pm. Your results, to be specific your search results, may vary.

What does all of this mean for reputation management and the formulation of reputation? It means, to state it simply, that you’ve got your hands full. Not only must you be monitoring your brand’s website, but you must also bother your mind and nerves with video results, Twitter mentions, news listings, image carousels, local packs, knowledge panel, AdWords ads, sitelinks, and the other myriad features that Google SERPs display.

Your brand’s reputation is shaped by multiple media types, from the content of microblogs to that published by major news sites. All of this content from various forms serves to make your reputation more authentic, but also more unwieldy.

There’s personalized search results, too.

Another way that Google opinion affects the formation of a reputation is through personalized search results. What are personalized search results? Personalized search results are those that aren’t dependant on traditional ranking factors, but are instead affected by personal factors.

Search experts estimate that more than half of all search results are personalized. Personalization of search results happens in response to the following factors:

  • Location - Google pinpoints your DNS and delivers search results accordingly. A search for “best tacos” in Santa Fe, New Mexico is going to dish up vastly different results than a search for “best tacos” in St. Louis, MIssouri.
  • Search or browsing history - What you’ve searched in the past, clicked on in the past, and preferred in the past affects what Google displays in the present. As
  • Google+ profile features - Google+ is a social media site. Whether or not you’re active on Google+ as a social media site doesn’t matter. Google has that information, and will use that information to serve relevant ads or search results.
  • Type of device being used - If you’re using an Android phone, Google TV, or Google Home, Google knows it and will adjust your search results accordingly.
  • Your Gmail information - It’s allegedly helpful, but Google will draw on your Gmail account to furnish information such as your upcoming flights, hotel stays, or other information.

Keep in mind that personalized search results don’t simply happen when you’re logged into your Google account. Personalization is also shaped by DNS (where your internet host is) location and device type, which Google knows even if you’re browsing in incognito (private) mode or or logged out.

Search engine results respond dynamically to the type of query that you’ve put in. It affects the images you see, the information you intake, the top-ranked listings, whether or not there’s a knowledge pack or shopping carousel or a news article.

How do individual cognitive biases affect reputation?

Finally, we come to one of the fuzziest areas of reputation formation —the individual mind of the person who is forming that reputation.

As most people realize, the human mind is not a streamlined, flawless, purely rational machine, operating with computer-like precision as it processes all incoming information. I.e, “Where did I put my keys?!”

When it comes to reputational information, such a realization is crucial. Why? Because no matter how careful you act, how expertly you manage your reputation, or how obvious the quality of your reputation may seem, there are those who will completely misunderstand.

This article is not the place for an exhaustive list of cognitive biases, but it’s important to point out at least one of these biases.

What is a cognitive bias?

“A cognitive bias is a mistake in reasoning, evaluating, remembering, or other cognitive process, often occurring as a result of holding onto one's preferences and beliefs regardless of contrary information.” (Definition from Chegg.com)

Just because cognitive biases are “mistakes” doesn’t mean they are all bad. Cognitive biases have been crucial to the survival of our species, and many cognitive biases allow for rapid response mental shortcuts (heuristics) to confusion, non-rational, or perplexing situations.

That being said, cognitive biases can really screw us up when responding to reputational information.

What cognitive biases affect reputational information?

All cognitive biases affect reputational information. Cognitive biases are part of how we think. They “shape our world,” in the words of Peter Diamandis. Thus, nothing in the realm of our awareness is immune from their impact.

As mentioned above, this is not the place for an exhaustive list of cognitive biases. There are a lot of them.Cognitive Bias Codex

Image from Wikimedia Commons.

You may be familiar with such biases as “bandwagon effect,” acting in a certain way just because a lot of other people are. It’s possible that you’ve also heard of the “hindsight bias,” in which we think, after an event has transpired, “Yeah, I knew it all along.” (No. No you didn’t.) Stereotyping is a widespread and socially destructive bias that distorts or generalizes our views of people.

Biases affect our world. And, more to the point of this article, dramatically affect the way reputational information is perceived.

What is one of the most important cognitive biases to be aware of?

From the dozens of cognitive bias, there is one bias to be aware of as it pertains to reputational information: confirmation bias.

As we’ve written before, “Confirmation bias is our tendency to find, favor, and remember information that already confirms our existing beliefs. In turn, it causes us to pay considerably less attention to that information that does not support what we already think that we know.” Here is a synopsis of confirmation bias according to psychologist Shahram Heshmat:

Confirmation bias occurs from the direct influence of desire on beliefs. When people would like a certain idea/concept to be true, they end up believing it to be true. They are motivated by wishful thinking. This error leads the individual to stop gathering information when the evidence gathered so far confirms the views (prejudices) one would like to be true.

Let’s say that Joe, a denizen of the delightful city of Bismarck North Dakota believes that Monsanto is an evil corporation, bent on the destruction of all that is good in the world. Joe’s belief about Monsanto’s reputation is simple: profoundly reprobate.

One day, Joe is browsing the Internet and comes across an article that feeds directly into his belief about Monstanto’s perniciousness.Top-Evil-Corporations

That’s all that Joe needs. A richocheitng glance at a headline below does nothing to sway Joe’s belief regarding the depths of Monsanto’s degeneracy.Monsanto

Even if Joe had seen headlines reporting that Monsanto was saving the monarch butterfly from extincion, replenishing the Southeastern watershed, preventing the spread of malaria in the African content, eradicating the common cold, and winning the Nobel peace prize, it would do nothing to sway his belief: Monsanto is Satan.

One of the reasons why confirmation bias is such an integral component of reputation management is because one’s biases are reflected and further entrenched by the AI-driven algorithms of Facebook and Google’s personalization.

If you convey a liberal bias, your Facebook feed will surface liberally-biased news stories. If you skew conservative, Facebook delivers conservative-slanted stories.Liberal-vs-Conservative

Facebook has you figured out. At least it thinks it does. You told them about your politics. You chose friends that share non-neutral political stories. You “like” some of these stories. Maybe you share some yourself. Perhaps you even started a political flame war and defriended a few onerous human beings who were positioned on the opposite side of the political aisle.

Facebook wants to make you happy. They’re not going to deliver up a story that’s going to tick you off and make you scurry away.

The same could be said for Google or other AI-driven platforms. The very sources that we trust for information are, in fact, digital echo chambers, replete with the reverberations of our own biases.

We are partial to our own beliefs. We become uncomfortable in the face of contrasting truth. Close mindedness is our reflex. Change is hard.

What’s even more inflammatory is that our biases are emotional issues. It’s hard to be passive about issues that we believe are morally charged such as religion, sexuality, the environment, money, or politics.

We may never be able to be bias-free, but we can become more aware of this flaw in our rationality, and attempt to pontificate less and question more.

Conclusion

How does reputation work? It’s not simple. People intake information, and that information is fed to them by powerful algorithms whose goal is not to challenge thinking, but instead to improve engagement. Cognitive biases creep in, adulterating the mental processes that we need to accurately interpret reputational information.

This doesn’t make reputation management useless. In fact, it highlights the importance of reputation management.

Reputations always need management, and understanding how people interact with reputational information is the keystone to undertaking that management.