About five years ago, I had an early glimpse into America’s changing corporate landscape in, of all places, Japan. While researching our book, The Athena Doctrine, I met Ryo Nakagawa. His startup, Share0, helps self-employed entrepreneurs and consultants find office space in companies with empty suites. For generations, the Japanese embraced the “salaryman” model of work, which called for workers to devote themselves to a corporation that would, in turn, provide long-term employment. But Ryo believed the future belongs not to big organizations but to individuals with skills who come together for collaboration.
Born into the Lost Decades of low growth with fewer secure positions available in big corporations, a vast cohort of young Japanese must now reconsider the salaryman ideal and invent other ways to establish themselves.
Fast forward, and a similar dynamic is underway in the U.S. In our annual Reputation Quotient Study of corporate reputation, many large companies declined in esteem and trust. But what really caught our attention was the trendline: Fifteen years ago, the largest companies were the most respected, but today, many with the best public reputations are smaller, regional players and those with intimate customer service and values that resonate within their consumer communities.
Curious, we then assessed which companies had excellent leadership and a similar trend emerged. Even among larger companies, organizations with relatable and humanistic leadership, who speak out for employees and issues they believe in, often lifted the perceptions of their firms. Berkshire Hathaway, for instance, ranked No. 24 overall in the RQ study, but the firm jumps to No. 1 in our RQ leadership ranking, while Apple moves from No. 29 to No. 9.
This shift in trust signals a change in consumer culture and values. Thanks to social media-fueled transparency, the public has more insight into the business practices and values of leading companies. In fact, in a 2015 Gallup Poll, 67% of U.S. adults reported having a great deal of confidence in small businesses, far exceeding the 21% who were similarly confident in big businesses.
It seems that a behemoth scale today is no guarantee of having consumers’ trust. Instead, there is an emerging belief that a bigger business doesn’t always equate to a better business. Even CEOs like Google’s Sundar Pichai have stated as much: “As a big company, you are constantly trying to foolproof yourself against being big, because you see the advantage of being small, nimble and entrepreneurial,” he told The Guardian. “You always think there is someone in the Valley, working on something in a garage — something that will be better.”
Acting small, therefore, is not only a crucial ingredient in building a solid reputation today, it also helps a company stay competitive and versatile. For big companies seeing their reputations drop, there are lessons to learn from other companies that have managed to maintain good reputations despite their size. These companies are perceptually shrinking themselves in three key ways to earn consumers’ respect and maximize their bottom-line:
They get personal with customers.
Allowing customers to access and shape a company’s product or service creates personal experiences, which deepens their emotional bond with the brand and cultivates brand loyalty. People feel empowered from being involved in the design process.
NikeID lets customers custom-tailor shoes, accessories, bags and backpacks. The same goes for Levi’s Tailor Shop, where you can repair and personalize your denim with the help of expert tailors. And Lexus partnered with 23andMe for “Genetic Select,” which uses patented DNA sequencing to pair drivers with a vehicle tailored to their genetic makeup. For example, a customer genetically prone to more freckles might be offered custom window tinting. Following Lady Gaga’s axiom “Born This Way,” there are now custom headphone earbuds to DNA-directed workouts and diets. Here, trust means being personal, accountable and intimate.
They foster communities and values.
Large companies are also “getting small” by being radically transparent about their values and building communities around their beliefs and culture. Chick-fil-A and Patagonia, despite their different ideologies, both topped our Reputation Quotient Top 10 this year (Chick-fil-A at No. 4 and Patagonia at No. 9).
One lives its Christian values by closing the entire chain on Sundays. The other opens its patents on all-natural wetsuits to protect the environment. Yet each company weaponizes their values to attract kindred spirits and respect from the public for walking their talk. Lyft partners with startup Cubigo to provide reliable transportation for seniors, while in Nike’s Community Stores, 80% of its employees must live within a five-mile radius. Here, breaking down a big faceless firm into people, gestures and ideals is the goal.
They act ‘small’ in how they work.
To legislate smallness, many companies are modeling after startups with rapid product cycles, more agile customer feedback and offering more flexibility for employees to recommend changes to ideas as they develop from concept to finished product. This allows entrepreneurial workers to cut through the bureaucracy and find new revenue streams and other opportunities for the company.
For instance, Intuit runs a “follow-me-home” strategy where employees conduct nearly 10,000 hours of annual visits to customers’ homes to watch them use Intuit’s products to fully understand the actual user experience. According to CEO Brad Smith, “You’ve got to look somebody in the eye and feel the emotion.” In addition, Intuit creates “discovery teams” that generate new ideas and streamline internal communications so that big decisions and findings radiate outward to the entire company quickly. Meanwhile, at Adobe, people working on a startup project as part of the company’s Kickbox initiative are simply required to find just one executive to continue funding their ideas rather than persuading an entire committee.
In these examples, we see that large firms are rebuilding trust by maximizing their people and ideas over their size and scale. To grow big, think small.
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CEO of The Harris Poll (Harris Insights & Analytics), a public opinion, corporate & brand reputation firm. NYT bestselling author.