Reputation Damage stories –

It has been a busy week for Reputation damage stories, but they are not all the same. Let’s take just three of them: Ryanair, Goldman Sachs and Apple.

Ryanair boss Michael O’Leary apologised to his rival Stelios Haji-Ioannou for damaging his personal reputation in an advertisement which had depicted Stelios as Pinocchio, ie a liar. The £50,000 fine doesn’t dent the Ryanair profits and both budget airlines benefit from the publicity. This was more about a libelous claim and any value attached to Stelios’s personal reputation did not require proof. The aim was to highlight the fact that of Easy-Jet had stopped publishing its punctuality figures to cover up poor performance.  It transpired that the decision on publication was not taken by Stelios so he couldn’t be called a liar, although he was depicted as personification of the airline.

Goldman Sachs were fined a record $550 million dollars by the SEC for being economical with the truth in selling Abacus investments to both investors expecting growth in property values and a hedge fund gambling on a fall in their value. Investors were only given half the picture. Strangely enough the value of Goldman shares rose after announcement of the fine, so the reputation of Goldman Sachs was not adversely effected.  The market was happy the investigation achieved closure and as Goldman Sachs did not admit or deny the allegations, to an investment banker that is alright then.

Apple has had continuing problems with the iPhone 4—‘a product that occasionally fails to communicate thanks to a funky wraparound antenna design and a corporate marketing department that has failed to communicate clearly what's wrong with the thing’ according to Erica Ogg of CNET in the US. According to her ‘Apple has handled the antenna issue is a textbook example of what not to do in these situations’. The reputation of the brand remains high among devoted and loyal users but you do wonder just how much experimentation in product technology users will tolerate if the product doesn’t deliver on its primary function.

What is the common theme? Reputation damage doesn’t always equate to a reduction in value. Ryanair has not suffered reputation damage for paying a small fine, but its advertising agency might look more carefully at the full cost of being provocative. Goldman Sachs reputation among investors has risen because it has reached a deal with the SEC and ‘regrets lack of full disclosure’. Apple tells its loyal client base to hold the product a different way and that the problem is with them not the product. Having paid a fashion premium for the product they of course comply. The reputation of Apple as a design icon is undamaged; I’m not sure about its reputation as a mobile phone.