The Reputation Economy

I was at a conference recently where one of the presenters threw out some blogging statistics (unfortunately I don't have the source in my notes). 17% of companies currently are blogging. 35% expect to be blogging by the end of 2007 and 48% have no plans. Almost half of the companies out there have no plans to implement a simple (and almost free) means by which to start meaningful conversations with their customers.

A year ago many companies and executives still didn't even know what a blog was. Now it is unlikely that there is a CEO that doesn't know what one is, however the problem they are trying to figure out now is how to enter into this game without screwing up... and by the way screwing up means different things depending on who you are talking to - Peers, shareholders, investors, customers, industry experts, and other bloggers. Unfortunately it seems that most are just planning to ignore it.

What companies need to understand is that we are now truly in the reputation economy. Of course having a good reputation has always been important, but in the past companies had some means of controlling reputation perception through PR and advertising. Additionally, the mechanisms by which reputation spread was somewhat limited. You may have a good or bad reputation in your town, but move out from there and its like starting over (which could be either a positive or negative depending on the company).

Its similar to the ebola virus. It has always been around, but if it hit a small village it might wipe out the town the it could only spread that far since there were little to no connections outside of the town. Then towns became closer together, and faster means of transportation got developed, and the virus now pops up in many different places and everyone gets in a panic about the new virus...Social software tools are the rapid transportation mechanisms that are allowing reputation virus's spread quickly, pop up in new areas and surprising consumers... and can no longer be contained.

And its not just blogs that determine your reputation now - A plethora of social tools are now going mainstream. Wiki's and social networks from the behemoth mainstream players to the growing population of niche social networks, are the places where your corporate reputation will be determined - not your PR engine.

What makes this entire situation more interesting is that not only are tools available for the market to define your reputation, but whatever they define will be recorded for eternity in search indexes.

So for the nearly 50 percent of companies that have no plans to blog (and presumable no plans to use any other social tools), ignoring the change is not going to solve the problem. The solution is to learn, participate, communicate, and learn some more. Above all be humble.