Tuesday, November 01, 2005

The Immortal Part, Sir, of Myself

Reputation is the last refuge of scoundrels when trying to explain business behavior. But how else to explain this puff-piece in the Times?
Inside a stuffy, windowless room here, veterans of the 2004 Bush and Kerry presidential campaigns sit, stand and pace around six plastic folding tables. Open containers of pistachio nuts and tropical trail mix compete for space with laptops and BlackBerries. CNN flickers on a television in the corner.

The phone rings, and a 20-something woman answers. "Turn on Fox," she yells, running up to the TV with a notepad. "This could be important."

A scene from a campaign war room? Well, sort of. It is a war room inside the headquarters of Wal-Mart, the giant discount retailer that hopes to sell a new, improved image to reluctant consumers.

What's going on here is that Wal-Mart wants to get a reputation for taking its image seriously. Look, we have a war room! We've hired an expensive ad agency! We're bucking our corporate past! This desire is distinct from wanting to get a reputation for taking care of workers which would imply actually changing policies. But no:Wal-Mart has every intention of continuing the policies for which it has a bad reputation. What Wal-Mart thinks matters is elite opinion which will be formed not from experience in Wal-Mart or from knowing Wal-Mart workers, but from articles like this: if a company takes its reputation seriously surely it wouldn't continue offensive policies. War room implies cares about reputation implies will change policies (because bad policies would impact reputation, right?). By modus ponens, we have that the mere presence of a war room ought to assuage concerns -- or that has to Wal-Mart's logic here. Even if it has only a slight chance of working, it is certainly cheaper than changing employment practices.

A media campaign is a very noisy signal of actual plans. Hopefully this is either the first step in something broader, or else it fails to work.


Blogger henry said...

Reputation is the last refuge of scoundrels when trying to explain business behavior.

Don't you think that's a little strong?

2:32 PM  
Blogger Isaac said...

Even if its the last refuge, doesn't mean it doesn't have use. Just that ceteris paribus people would prefer to be able to explain behavior without having to talk about reputation. That you invoke reputation as a last resort. I think that that is accurate.

3:21 PM  
Blogger henry said...

Hmmm...it seems to me that reputation is a first-order explanation for a lot of business practices. Like why most businesses don't manufacture poor products. It's intimately linked with credibility and all that. A central banker has to establish a reputation for fighting inflation, there's nothing "last refuge" about that. But perhaps your definition of reputation is more narrow than mine...

7:55 AM  

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