I gave a speech earlier this week on the impact of corporate reputation on business performance.
This is a subject that’s close to our hearts at Sky.
Like many other businesses, we recognise that in an era of unrivalled choice, global communications and digital media, the opportunities to engage customers directly - and the risks of failing to meet their heightened expectations – are greater than ever before. That’s particularly true for consumer-facing companies like Sky whose success depends on building valuable, long-term relationships with customers.
Importantly, it’s not just customers who expect more nowadays. A much wider group of stakeholders are also looking at business through a different lens. Employees, investors, suppliers, regulators, and wider communities, they all want to know that companies are acting responsibly and contributing positively to society.
As the window through which all of these things are viewed, the importance of reputation has never been clearer.
I’m certainly not going to claim that we’ve got everything right at Sky.
As with other businesses, Sky could be accused in the past of having had too narrow a focus on short-term performance. When we arrived on the scene back in 1989, no-one in the UK had ever tried to build a TV business on a subscription model. In fact, so confident were the established broadcasters that pay TV wouldn’t work, one of them even took out a full page ad in the FT just to say so!
In those early days, things often didn’t look good. At one point, the business was losing over £14 million a week. However, we got our heads down and got on with the job, rapidly growing our subscriber base and turning those losses into healthy profits.
The unintended consequence of this ruthless focus on commercial success was that our relationship with customers became very transactional, with little emotional engagement. In its determination to succeed, Sky was often called the Millwall of the TV industry, revelling in the old refrain of “no one likes us, we don’t care”.
In many ways, this approach made us what we are today, so we’re not about to disown it. But it’s equally clear that it’s no longer enough just to focus on short-term performance. And as custodians of the company for future generations, it’s up to us to ensure we build a business that will succeed for decades to come.
We’re doing so in three ways.
First, we know that we’re judged on our actions, so we make sure that everyone at Sky understands the importance of doing the right thing.
Second, we want our customers and wider stakeholders to see what kind of a company we are, which means getting better at telling our story. That was why we commissioned a report from independent consultants Oxford Economics that measures and explains the scale of our economic impact.
Finally, the communications challenge for a high-profile business like isn’t getting noticed; it’s getting noticed for the things we want to get noticed for. As a result, we’ve picked a few big points of reappraisal that we believe will encourage people to think differently about us. For example, our partnership with British Cycling has now helped get a million more people cycling regularly.
Much of this involves taking a long-term perspective on how reputation creates value for our business. But that doesn’t mean that we’ve lost sight of the short-term. In fact, it’s quite the opposite. You can only plan for the future if you achieve short-term success, which for us means giving our customers great TV and home communications. At the same time, an increasingly important part of achieving that short-term success is getting people to think positively about our brand.
So thinking about our reputation is helping us to perform better today and making our business stronger for the future.
And it’s by doing both that we create the greatest value of all.
You can read my full speech here.