Readers: today we’re excited to feature an exclusive op-ed by Gerard F. Corbett, chair and CEO of the Public Relations Society of America (PRSA). Corbett, who is accredited in Public Relations (APR) and is a member of the PRSA College of Fellows, has been a member of PRSA for more than 35 years. He also serves as CEO of Redphlag LLC–a strategic public relations, marketing management and executive coaching consulting firm that he founded–and chief marketing officer of Producers Forum, Inc., a real estate Web startup.
In case you’ve just returned from six months manning the International Space Station or conducting research in the Amazon River basin, the USADA released a report on Oct. 10, which cited witness testimony, financial records and laboratory results to support its accusation that Armstrong had participated in a complex, systematic doping program and used other illegal methods to gain competitive advantages in the international sport of competitive cycling.
The seven-time Tour de France winner has faced doping allegations throughout his career, but he’s managed to dodge those accusations by pointing out that he’d been tested for banned substances hundreds of times in the past, without ever producing a positive result. Of course, it didn’t hurt that a two-year U.S. Government investigation that examined Armstrong’s role in possible doping-related crimes was closed earlier this year, with no charges brought.
Perhaps by virtue of his adamant denials, cancer-surviving story and charitable work with the Livestrong Foundation, Armstrong always found a way to push aside the accusations and preserve his credibility (and sponsorship dollars). Then, metaphorically speaking, the wheels came off.
In August, news of the USADA’s report began to surface. Armstrong went on the offensive, announcing “enough is enough.” He no longer was interested in fighting the anti-doping agency’s “unconstitutional witch hunt,” which he called “one-sided” and “unfair.” But so great was the evidence in the USADA report that Armstrong’s protestations to the contrary began to ring hollow. On Monday, the International Cycling Union (UCI) said it had ratified the USADA’s sanctions, stripped Armstrong of his seven Tour de France titles and banned him from the sport for life.
The coverage in traditional and new media has been unrelenting. There have been blog posts that applauded Armstrong for ending his fight against the charges to focus on other things, and others that concluded his unwillingness to fight was surely evidence of his guilt; op-eds that implored him to admit he was lying and apologize — as basic crisis management tenets would suggest — and others urging him to remain silent; and articles that suggested he step down from his position as chair of the Livestrong Foundation, while others debated whether the two were inextricably linked.
Frankly, I wondered what I could add to the discussion that hasn’t been said before. And then yesterday I ran across this Bloomberg article, which estimates that Armstrong “may lose as much as $200 million in future earning potential, more than the wealth he accumulated in a championship cycling career now gutted by revelations of doping.”
It’s the Reputation, Stupid!
Reputation was once considered too difficult to measure with any precision, let alone to prove cause and effect. It’s been some time in coming, but companies and individuals have awakened to the reality that there is a real, monetary value associated with their reputations.
For example, The Reputation Institute has calculated, based on a 14-year review of the companies in Fortune’s “Most Admired Companies” Survey, that a 5 percent gain in reputation equates to a 3 percent increase in market value.
Also, a BusinessWeek article a few years back echoed the Arthur Page adage that “reputation is 10 percent what you say, and 90 percent what you do,” saying that more and more companies are finding that “the way in which the outside world expects a company to behave and perform can be its most important asset.” The magazine goes on to estimate that a company’s reputation for being able to deliver growth, attract top talent, and avoid ethical mishaps can account for much of the 30 to 70 percent gap between the book value of most companies and their market capitalizations.
With a net worth already estimated by Forbes at $125 million, Armstrong’s present and future as an endorser and motivational speaker were bright. That is, until the USADA report shredded his credibility and reputation (together, the Armstrong “brand”), at which point he lost nearly all of his current sponsors, including Nike, Trek bicycles, Oakley sunglasses, Giro helmets and Michelob Ultra beer, and severely damaged his opportunity to represent new ones.
Do we need any clearer evidence that there is true monetary value associated with reputation?
All the public relations in the world can’t create a lasting public image, as Armstrong’s fall from grace shows. A brand’s reputation must be grounded in reality, built over years and protected judiciously. And public relations cannot change a reputation unless the underlying problems are corrected first.
Admitting his guilt, taking ownership of his lies, issuing a sincere apology and establishing a path forward would be a good start for Armstrong. But unfortunately, he’s now faced with an uphill battle that’s much steeper and less forgiving than any of the mountain climbs he once routinely conquered as a Tour de France competitor. And therein lies the lesson.
-Gerard F. Corbett