In her ill-judged attack on global capitalism, Naomi Klein decried the phenomenon of the corporate logo. One of the sillinesses of this is that logos and brands are essentially bound up with the reputation of a firm. A firm that has a strong brand, a strong reputation for honesty, quality and high service may have taken years, decades even, to aquire it. It can take only days to lose such a reputation through stupidity or dishonesty. That is why reputation is a protection for the consumer. Statists who imagine that we need all manner of regulations to protect consumers against shysters routinely forget this point. A firm that wants to make a whacking great profit is unlikely to deliberately harm or even kill, its customers. Self-interest dictates that a firm that wants to make money over the long term will work like hell to ensure its reputation is deserved. (It may be debateable whether limited liability either enhances or weakens this process, but I have not the time to explore that here).
I got thinking along these lines following the recent mess that has unfolded at Reuters, thanks entirely to sharp-eyed bloggers spotting something funny about photographs. Reuters is one of the oldest, if not the oldest, news service in the world. It both provides information directly to clients such as traders via its screens, offering real-time news alerts, and also wholesale news, providing text and photographs to newspapers and broadcasters. The company – founded by central European aristocrat Baron Julius Reuter – has employed some of the bravest and sharpest journalists in the business, not to mention folk who went on to forge careers in television like Sandy Gall or even thriller writers like Frederick Forsyth and Ian Fleming.
So what has happened over the photo scandal has the whiff of tragedy as well as farce. Its reputation has been badly damaged by the photo scandal. My sources at the firm realise that the situation cannot be shrugged off and it appears this will not happen. Good. The organisation deserves credit for immediately axing the jerk who doctored photographs to make a situation look more exciting and therefore marketable than it was. The whole back-catalogue of this person’s work has been taken down. Reuter’s head of editorial, David Schlesinger – no stranger to speaking his mind about matters – is certainly like to crack the whip, although I am not yet aware that senior managers’ heads may roll because of what has happened. (Stay tuned).
It is a shame in some ways since the company has been recovering financially over the past couple of years. Reuters’ profitability was hammered after the end of the dotcom boom in 2000. Bloated and complacent after the boom years in foreign exchange and equity markets during the 80s and 90s, Reuters’ lost ground to firms like Bloomberg. Bloomberg’s snazzy news and bond-dealing boxes and add-on features enticed away thousands of clients. And yet under new CEO Tom Glocer, the company started to fight back, halting the exodus of clients, simplifying its product range. It left its old HQ in Fleet Street and moved to a gleaming new office in Canary Wharf.
To fight back from this, senior management must show no mercy if there are further signs of this sort of nonsense. If they do not take a hard line, one can be sure business rivals like Bloomberg or the Wall Street Journal will be ready to pounce.