Whether you are a first-time entrepreneur or a veteran company executive, the one aspect of growing a business and raising capital, or selling a product rarely discussed at seminars is the building of your organization’s credibility. It doesn’t get much attention when you issue your quarterly report because it is not always easy to measure that quality directly in dollars and cents. Busy CEOs and company executives charged with concentrating on bottom line finances and product advancement don’t always see the connection.
What does credibility or reputation mean and how does it add value to your business? Having credibility all comes down to getting the benefit of the doubt (BOD) especially when things go wrong. BOD can be an important weapon for a company in the contest for investor, media and public opinion. Without earning BOD investors can become inpatient, the ability to raise capital becomes harder, analysts and the media can downgrade you or write you off. This is especially important for biotechs where payoff is usually long term, and may take more than a decade and millions in fundraising before even getting close to a drug approval.
Most management teams would agree, I believe, that credibility is important, but then look to their public relations/investor relations person or PR firm and say building reputation is their job. But credibility does not relate solely to public relations efforts to generate awareness or headlines. The Chief Executive Officer of Credibility— the person chiefly responsible for credibility—is the CEO. The CEO is the person investors and the media and Wall Street can give the BOD nod. I would suggest that the CEO should take the initiative in this process. The CEO and officers should manage their company’s reputation just like any other corporate asset and keep it high on the company’s agenda.
Big Pharma companies rely mostly on tangible assets and accomplishments in their efforts to build their reputation. For most biotechs, paydays and tangible assets can be a long way off. The economy can go sour. Cash can run thin, research may hit glitches, production can run into problems, or someone else may come up with a better mousetrap. That’s why building reputation while building your company is so important. Once lost, trust can be challenging to rebuild.
You cannot build or measure trust by just publicity or marketing schemes or press conferences. Confidence in a company isn’t always generated by road shows or media tours. A sense of integrity is an elusive quality as much a consequence of how you do things as what you do.
CEOs tend to focus on the tangibles: factual evidence, fundraising, product validation, cost of research, sales. So it is not easy to find the time or even the relevance to attend to intangibles like perception, trust, and confidence. Many CEOs may start their corporate life with valuable assets. An idea: the goodwill of investors who believe you are on to something. But such impressions can be fleeting at the first sign of trouble.
CEOs might want to give thought to the following: Have you codified your company vision, made it easily understandable; do you report company progress with candor; do you speak to local groups about what your company is doing and why; do you write op-eds on industry issues; does your PR/IR team have building trust as part of their pitch/plan for you? Do you have outside experts on your research or technology that investors, analysts and media respect? Do you “give-back” to the community?
Building credibility at your company helps the industry. From the biotech industry’s historical perspective, it has had an up and down relationship with Wall Street with company predictions not always panning out. The GMO issue is still with us, and it wasn’t that long ago there was an effort by one city councilor in Massachusetts to ban genetic research within the city limits.
About 15 years ago, I asked a much respected investor relations expert to give a speech to a group of biotech IR/PR professionals making many of these points. He concluded his remarks by saying, “Trust is an elusive quality—as visceral as it can be intellectual. It’s the glue that cements investor to entrepreneur, shareholders to a company. It is built slowly and there are little litmus test along the way—candor, openness, sharing bad news as well as good, and the need for CEOs to be concerned over perceptions.”
I am not saying you can’t build a profitable business without credibility being part of the company’s agenda. But if and when you have that first stumble—and there are always will be—you may find yourself being glad that your audiences are willing to give you that BOD nod.
Dan Eramian has more than 25 years of experience in government and biotechnology communications. He has been spokesman and communications director for three federal agencies including the Attorney General of the United States and Department of Justice.
Reprinted from Xconomy, March 23, 2013, http://www.xconomy.com/seattle/2013/03/26/build-credibility-as-you-build-your-business/.