The author’s column by Natalia Mezhenska, the CEO of OTP Capital
“Whoever you go with, you’ll get it”, – I remember this saying from my childhood. Nowadays, it has become relevant again, as I see multiple ups and downs in the financial market while working in the field of investment. I am convinced in its eternal relevancy. The bigger the player is, the more relevant it should be taken.
A good name is better than an expensive suit (c)
In recent years, the company’s business reputation (so-called “goodwill”) has not only become greatly dependent on the attitude of partners and customers but also on how society sees the means that helped it to achieve strategic goals, how the obligations are fulfilled, and what principles are in use. Building goodwill begins with the name introducing the company to the world. The name itself is the stamp that determines the fate of the company at all stages of the life cycle.
One of the most popular areas of business reputation management is investment relations. The easiest way to understand the importance and role of goodwill in the investment sector is to consider the place of it and the name of the company at each stage of the life cycle.
Among the dozens of life cycle models, let’s take as an example the key stages from the matrix of Ichak Adizes.
Origin
When starting, awareness is the main task in reputation management when business is most vulnerable. If the name of your company is unknown in the market than you start from scratch. If you start under an umbrella of the brand, the shadow of it will forever fall on your company.
Here is a simple example. When the decision to start an open OTP Pension fund 12 years ago was made, it was much easier to get the first clients simply because of its name. OTP was the acronym that eastern Europeans had known for over 60 years on its good side. Therefore, the imprint of the parent Hungarian OTP Group has been put on the pension fund, which is now the market leader among open private pension funds in terms of its assets.
From childhood to prosperity
The next four stages – childhood, high activity, youth and prosperity – will be combined into single story. These are the stages of challenges and stresses, but at the same time of drive and energy. These are the stages of growth. Of maximum effort. Of aggressive marketing, development, investment in development.
In the best scenario, your name is being passed on by word of mouth. For the goodwill starting point, this period is of maximum strength. Every step is for being ahead. Each campaign and activity is for strengthening the record. However, your product is the focus. It continues to improve and gain height during this period, as the best way to establish the association of quality is to produce quality products and services.
Stability: to be or not to be?
It is difficult to talk about stability when “black swans” are no longer a single phenomenon. However, considering this concept from the standpoint of the company’s life cycle, it should be said that most still get to this stage. This is the moment when you have gained speed and you think you are well afloat.
It is stability, the moment when you feel that you can slow down a bit, is the beginning of the “aging” of the company. You no longer work for the name, but the name works for you.
“We are already known” is a popular excuse of such companies. Still, that is the biggest risk and every mistake at the stage of stability will cost as much as bankruptcy at the stage of youth.
The hype on the Privat group was one such unfortunate example for the investment sector. For a long time, this group was considered one of the most powerful in the financial market. However, at a time when market positions seemed to be as strong as possible and leadership in the banking sector was beyond doubt, it was the numerous goodwill risks and the tainted name that played a nasty joke. As a result, the Privat’s reputation was discredited at one point over the years.
Though Privatbank started taking over its positions after the nationalization, as it has become a “new” bank having a new image in the eyes of the clients, all the participants in the reputable Privat Group are still facing consequences from a loss of goodwill. As the non-government pension “PrivatFund”, existing on the market for 15 years and having 51,000 clients to serve, with the capital of a quarter of a billion. Thus, from the middle of 2016, unaffected by the nationalization of the “mother” bank, the “PrivatFund” formally belonged to ex-owners, though continued with state-owned Privatbank.
Such symbiosis allowed PrivatFund to gradually restore its goodwill and PrivatBank did it either. However, the recent announcement in May 2021 by the Board of the non-governmental PrivatFund on terminating cooperation with the state-owned PrivatBank caused great concern to dozens of thousands of clients. Such concern have ground, though, as it have turned out that “PrivatFund” is so much PrivatJ.
Decline and death
The last stages of an aging company (aristocracy, early and late bureaucracy) end with the final one – the “death” of a business and a brand. Without timely measures, this stage is an absolutely logical and expected end of the organization’s life. Should at this moment or earlier it “went ashore” and ruined her goodwill, its ending be not only logical but also resonant and loud.
Let me return to what I started from: “whoever you go with, you’ll get it”.
Both the future of our company and the fate of our clients are defined by our partners, the third-party support, and the name we do our business under.
What is in your name and how it is standing? These are the questions to be asked first ourselves.
