Can digital innovation help repair a company’s reputation?

Once a company has been tarnished by scandal, it can be difficult to win back customer trust. For some, digital innovation could make a difference

Facebook’s shift to the ‘metaverse’ under new company name Meta has been the subject of much criticism. However, company-wide transformations hold significant potential, particularly those that embrace the power of digital innovation. 

Mark Zuckerberg’s announcement of a universal virtual reality ecosystem was derided by many in the media and beyond. Olivia Solon, NBC News tech investigations editor, tweeted: “I don’t get how the pivot to the metaverse will solve any of Facebook’s problems.” 

She was far from alone. Danny Groner, director of growth PR at investment fund Forecast Labs, said the company was “trying to reinvent themselves as something else … as a way to distance themselves from damage they’ve done”. That damage includes Facebook’s handling of user data, the accusations of whisteblower Frances Haugen, and concerns over the spread of content related to violence, terrorism, hate crime and fake news. 

But no matter what happens with Facebook and Meta in the long run, experts say we shouldn’t dismiss the power of transformation. Graham Staplehurst is thought leadership director for Kantar BrandZ, which produces an annual analysis and ranking of the world’s most valuable brands. He argues that “creating a fresh set of brand associations through a new chapter might be an essential step for the business”.

Digital dividends

So how can companies make the most of their transformation? Digital innovation is key. 

Take BP for example. It was the most valuable energy brand in the world in 2009, according to Kantar BrandZ rankings. But it slid to sixth in the energy category following the Deepwater Horizon oil spill in the Gulf of Mexico in 2010, the largest marine oil spill in history. 

The disaster “shook the company to its core”, then CEO Robert Dudley said in 2018. By that time the company had recognised the need to “modernise through technology” to become “future fit”, as outlined in its 2017 strategy

By 2019, BP had partnered with Microsoft to accelerate its modernisation and overcome its challenge of reducing carbon emissions while meeting increasing global energy demands. This involved a “full-scale reinvention of the way it approaches technology”, according to the company, including becoming cloud first, leaning on AI and machine learning and incubating its own startups. 

Creating a fresh set of brand associations through a new chapter might be an essential step

These initiatives are said to have created billions in savings and new revenue streams. In parallel, BP’s brand valuation has nearly doubled since 2009 to $10.4bn (£7.7bn), according to BrandZ, and it was the seventh most valuable brand in the UK in 2021.

“Its transformation as an energy business has clearly been effective,” says Kantar’s Staplehurst.

BP executives spoke at length about the positive impact of digital innovation at the recent Women of Silicon Roundabout (WOSR) conference in London, discussing the company’s advances in robotics, cloud computing, customer-centric design, smart cities and digital upskilling of its workforce.

“BP is transitioning from an international oil company to an integrated energy company. Through this transition, we’re putting a lot more effort, energy and investment into the renewable space and how we can create profitable businesses on that side from wind, solar, and other types of renewables, but making sure they’re digital in a very natural way,” explained Mariza Fotiou, BP’s vice president of digital product ownership and design.

Embracing change

However, there are cultural challenges when it comes to innovating within a 112-year-old corporation.

“In a company like BP, you have a lot to lose if something goes wrong,” said Lilybeth Go, BP’s vice-president for data and analytic platforms, also speaking at the WOSR conference. “But we need to accept that change is constant, so when we get into new business and new markets, we have to think, ‘how can we go fast’?” said Go.

Both Go and Fotiou described the shift as a journey that takes time.

“We need to be patient with this change,” said Fotiou. “We need to bring people into the journey with us to understand that we can move away from having all the answers … to a space where failing is accepted, where we work together across multidiscipline teams to think about how we can create the future together.”

We need to accept that change is constant … we have to think, ‘how can we go fast?’

Similarly, Volkswagen was positioned at number six in the ranking of the world’s most valuable car brands in the BrandZ analysis. That was until 2016, when the US Department of Justice sued the car manufacturer for effectively rigging its diesel vehicles with software designed to cheat emissions tests. The company settled in court for $14.7bn and embarked on a $10bn buyback programme to compensate affected customers. 

Volkswagen dropped out of the BrandZ rankings altogether for two years but has since recovered to become the world’s ninth most valuable car brand. It’s worth more in 2021 than it was in the first rankings in 2006. 

It’s perhaps no coincidence that Volkswagen also went big on its digital transformation strategy.  In 2019, the manufacturer committed to invest £3.4bn and create 2,000 new jobs. Ralf Brandstätter, who was then the company’s chief operating officer, said at the time: “We are laying the sustainable foundation for making the company fit for the digital era. We are accumulating new digital expertise and making all areas of our organisation faster, leaner and more competitive.”

Wider pressures

That’s not to say such companies pursued digital innovation primarily to boost their brands, or that it’s a silver bullet. Repairing the damage wrought by a scandal or operating problem is possible, but isn’t always achieved, notes Staplehurst. 

“Although this is likely to be helped by digital transformation, in our view such transformations are happening anyway due to industry-level pressures, so it would be hard to definitively separate the effects relating specifically to reputation recovery,” he says.

So can Facebook’s metamorphosis into Meta follow in the footsteps of BP and Volkswagen? Like BP, perhaps time will be on its side, notes Jonathan Hassall, senior behavioural analyst for insights consultancy Canvas8.

“It could be that Meta is hoping the dust will have settled on this rebrand by the time their metaverse products go to market, effectively getting out in front of the issues around trust and data privacy that come with being in Facebook’s orbit.”