MISSION INTANGIBLE

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MISSION:INTANGIBLE, the blog of the Intangible Asset Finance Society, offers critical comments on intangible asset, corporate reputation, and finance; supplemented by quantitative reputation metrics. Intangible assets include business processes, patents, trademarks; reputations for ethics and integrity; quality, safety, sustainability, security, and resilience; and comprise 70% of the average company's value. MISSION:INTANGIBLE is a registered trademark of the Intangible Asset Finance Society.

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Komen: Guarded prognosis

C. HUYGENS - Wednesday, April 04, 2012
On 30 March, Susan G. Komen for the Cure founder Nancy Brinker sent a letter on Friday to members of Congress, apologizing for the organization’s “mistakes” during the recent controversy over Planned Parenthood grants — and asking representatives to support funding for an early breast cancer detection program. The letter appears to have been in lieu of the organization’s annual “Lobby Day” in Washington, D.C., held last year on 14 April. At the annual lobbying day, activists push for government programs, not for Komen programs. These government programs focus on cancer research and early detection and treatment for underserved women.

A week earlier, the Washington Post reported ongoing turmoil with several executives at headquarters and affiliates departing, questions arising about fundraising ability, and structural changes underway to give affiliates more influence. On 27 March, Harris Interactive reported Komen’s 2012 brand equity score. “Susan G. Komen has consistently rated as either the first or second most equitable non-profit organization in its category. This year, SGK fell 54 spots to 56th place out of 79 non-profit brands surveyed. …Komen’s current brand equity score of 55.1 represents a 21% drop in brand equity over the prior year ─ a historic drop in the study's 23-year history, surpassed only by Fannie Mae in 2009.”

The reputation crisis continues at SGK. There is a road to reputation restoration, but Komen has yet to take the third step and most important step – establishing processes that will prevent a repeat of that which triggered the prior crisis. Unlike Penn State, another not-for-profit institution to be rocked by a reputational crisis recently that has taken mitigation steps, there is no evidence that SGK has figured out what that means.

SGK positioned itself as a non-partisan religiously agnostic organization focused on women's health issues related to cancer. It has acknowledged that it erred in cutting off Planned Parenthood and alienating a constituency that interpreted the action as a partisan expression. In doing so, it alienated a second constituency that viewed the reversal as a partisan expression.

Here is what it can do to restore its reputation.

1. Komen needs to apologize for making sweeping operational decisions that might be interpreted as partisan.
2. Komen needs to review its decision making processes and ensure that going forward they are appreciated for being (authentically) non-partisan
3. Komen needs to make it clear to its broad constitiuency that it will share knowledge gained in #1 and #2 to help other organizations with non-partisan missions walk the fine line and avoid a similar crisis.

Penn State University: Not so happy valley

C. HUYGENS - Saturday, November 12, 2011
The Financial Times (November 11, Bullock) focused on it right away: "'Higher education is first and foremost a business that is driven by reputation,' said John Nelson, head of higher education research at Moody’s. 'Student demand, the attraction of faculty and the ability to draw donations are all based on reputation.' Moody’s said it will evaluate 'the potential scope of the reputational and financial risk' arising from the allegations, including potential lawsuits and settlements, weaker student demand or philanthropic support, changes in the university’s relationship with the state and significant management or governance changes."

The Washington Post's (November 12, AP Wire) headline was blunt: "Moody’s warns Penn State’s bond rating could be downgraded because of sex abuse scandal."

Reputation is an epiphenomenon. It is a product of how an entity executes one or more of six core functions: ethics, quality, innovation, safety, sustainability, and security. Three of these have been called into question by the Penn State University sexual abuse scandal. The Pennsylvania attorney-general has filed criminal charges involving child sexual abuse against Jerry Sandusky, a former assistant football coach, as well as perjury and failure to report charges against two senior university officials, including the chief financial officer.

In our current culture, the path to reputation restoration includes rolling heads. Swift retribution is demanded, and and innocent blood may be part of the cost to save the many. The reign of terror had its merits, but it was not necessarily the best path towards a just and democratic system. We can only hope that the lessons taken from this latest reputational crisis are that better preventative processes are preferable to the guillotine.

Meanwhile, in Happy Valley Pennsylvania, a normalcy is already returning.

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