It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.
—Warren Buffett
Every business depends on its reputation—the social capital it has earned by doing the right thing for its people and their customers and community. Reputation is a reflection of a company’s values and how consistently its people adhere to them. A good reputation can carry you far, even in the worst of times. However, it’s not easy to build a good reputation; it takes constant and genuine attention to the details, executing the basics well, and consistently delighting customers.
At Umpqua, our four core values are absolute integrity, extraordinary service, innovative delivery, and a strong sense of community as we expand our footprint throughout the nation. Adhering to these core values creates a system of automatic deposits of social capital into our reputation bank. When we fail to live our values, a portion of the social capital we’ve been accumulating disintegrates and is lost. And as anyone who has lost the trust of a customer knows, social capital that has been lost can be extremely difficult to recover.
While I have long known that an organization’s reputation is an extremely powerful force, this truth was made particularly clear to me when, in the middle of the recent financial crisis, we were faced with an unexpected challenge.
In 2011 Occupy Wall Street became a presence in many large American cities. The organization came into being on September 17 in Zuccotti Park in Manhattan’s Financial District, and quickly spread to more than one hundred cities across the country. The reasons for the emergence of the movement can be traced to a variety of grievances, including the widening income gap between rich and poor in the United States, President Obama’s perceived failure to hold the financial industry accountable for the 2008 economic crisis that people believed it had in many ways created, and a belief that politics had been taken over by moneyed interests.1
The Occupy group in Portland, Oregon, held its first protest march on October 6, 2011. As part of its activities, Occupy Portland planned a day when the group’s supporters would occupy Portland banks. I believe that many of the people who belonged to the Occupy Portland organization were decent people who had good motives. But a faction of anarchists had infiltrated the group and was pushing a more radical agenda.
The Occupy Portland website provided information about upcoming protests, marches, and other Occupy events, and we kept an eye on it to monitor the planned action against Portland banks. As the day drew closer, the affected banks were announced there, and I wasn’t surprised to see Wells Fargo, Bank of America, and other large, nationwide banks on the list. We really weren’t worried that we would become a target because, compared to those giants, we are a small bank that has deep roots in our communities. We definitely weren’t Wall Street.
My bubble was soon burst.
One day someone dropped by my office and said, “Hey, Ray, I just wanted to let you know we were monitoring the Occupy Portland web page and Umpqua’s name showed up on it. They’re going to march on Umpqua.”
“What are you talking about?” I asked. “Are you sure?”
The associate showed me the Occupy Portland web page, and sure enough, the plan was to march on Umpqua Bank. I knew this wouldn’t be good for the bank, our associates, or our customers.
A few days later, I asked Eve Callahan, who runs our corporate communications and public relations division, to do me a favor. I said, “I want you to contact Occupy Portland—I want to talk with them.”
Eve looked at me as if I’d lost my mind.
“There’s a risk in talking with them, Ray.”
“I know, Eve,” I replied. “But I want to talk with them. Please get ahold of the organization’s leadership and set it up. I want to clear the air.”
So the leaders of Occupy Portland agreed to meet with us the day before they were set to march on Portland’s banks. Everyone—believe me, everyone—advised me not to do this. But I was convinced that if I made our case, I might be able to avert this train wreck.
Two polite, articulate young women met us at the Umpqua office at the appointed hour. I thanked them for meeting with me, and then I said, “We’re not recording this meeting. This is an opportunity for you to ask me questions and perhaps for me to explain to you what’s going on here at Umpqua—what kind of bank we are, what kind of people we are, and what we do for the Portland community.”
And they did have questions.
“You received TARP money,” began one of the women, “and you never paid it back. Why not?”
“We paid that back two years ago,” I explained.
“Oh. You did?” the woman asked.
“Yes we did,” I confirmed.
“Oh, okay—I didn’t realize that. Here’s another question for you. The chairman of your board runs a forest products company. We don’t like that.”
“You’re right,” I said, “but what has that got to do with me?”
“Well,” the Occupy Portland leader continued, “he’s on your board.”
“I understand that,” I replied, “but help me understand exactly what the problem is. Have you ever met our chairman? He’s a great guy. You should introduce yourself to him. I think you’d really like him.”
“Well . . .”
I continued. “Now, in what ways do you think I influence his business?”
“What do you mean?” asked the woman.
“I’m not on his board, I’m not his CEO,” I explained. “I don’t influence his business. I can’t tell him what he should or shouldn’t be doing.”
“Yes, I know that,” replied the Occupy Portland leader, “but he’s still on your board.”
“Okay,” I continued, “but let me ask you this: When are you planning to march on the Boys & Girls Club of Oregon? When are you planning to march on the Relief Nursery, which helps underprivileged kids in danger of domestic abuse?”
“What are you talking about?” demanded the Occupy women in unison.
“He’s on their boards too,” I said. “When are you going to march on those organizations because a member of their boards—a man who’s helping people who have some very serious challenges in their lives—runs a company you don’t like?”
The Occupy Portland leaders hadn’t thought about that.
After a few more rounds of questions and answers, we wrapped up our conversation and thanked one another for the opportunity to present our respective views in a civil and productive way. And three days later, when Occupy Portland marched on the big banks—the Bank of Americas and the Wells Fargos and all the rest—they didn’t march on Umpqua Bank. Now I don’t know if that had anything to do with our conversation, but I do know this much: being open and willing to have open communications, a willingness to talk, and a reputation for transparency helped us immensely.
But it didn’t end there.
The fact that we were actually willing to meet with the Occupy Portland folks when the larger banks weren’t improved our already strong reputation within the community. It made a very large deposit into our social capital bank, one that still earns us interest today.
When you’ve earned a reputation for being transparent and doing the right thing, the public will give you the benefit of the doubt. And this can make a huge difference in uncertain times.
In my quest to keep Umpqua a step or two (or three) ahead of our competitors, I study all kinds of companies in a variety of industries—from Starbucks to Disney, and from the Ritz-Carlton to Nordstrom. One thing I’ve found is that these high-performing companies have several things in common no matter what they sell or what they do.
Perhaps first and foremost among the traits that these companies share is they have extremely high standards and absolutely will not compromise on their high standards.
If you’ve been to Disneyland or Walt Disney World, you know that the freshly popped popcorn sold throughout the parks is one of their best-selling products. Some people, believe it or not, consider eating Disney’s theme park popcorn one of the highlights of their visit. But while many of the parks’ guests are enjoying this treat, I dare you to find a stray kernel on the ground. Chances are you won’t, at least not for long, because they’re picked up immediately by a massive crew of human street sweepers who swarm the parks from opening to closing. The discipline of the company and its people to maintain their standards is incredible.
But I suppose I shouldn’t be surprised. Walt Disney’s famous vision for this new kind of amusement park that became Disneyland in 1955 was developed years earlier when he was on a trip to a Los Angeles–area amusement park and observed a dilapidated carousel covered in cracked and chipped paint with horses that were broken and frozen in place. These seven words: “No chipped paint. All the horses jump,” became Disney’s vision for his amusement park of the future. In other words, everything within the theme park would be maintained in pristine condition, and it would work the way it was supposed to.
Each night when the maintenance staff takes control of the park after closing—and before turning the park back over to the ride operators and shopkeepers the next morning—they’ve got to make sure there’s no chipped paint and that things are put back together the way they should.
There are plenty of companies that do incredibly good things—wonderful things, in fact. You’ll find these companies in every industry, and in every business market—not just your own. Study them. Learn from their successes. Understand how they recover from mistakes. Explore their core values and cultures.
When I give talks to other bankers, I tell them that if they’re looking to get ahead and if they’re looking for a wild and crazy idea that might make a difference in these tough times, then take the time to study high-performing companies in a nonbanking industry. Study Disney, Nordstrom, Starbucks, and Apple. Pick a company you admire that’s beating the pants off its competition and likes to talk about it. You can bet that their leaders are proud of their success and will be happy to tell you what they’re doing since you don’t compete with them. So go ask. Then take whatever ideas you learn from them back to your company.
I don’t care if you sell insurance or cheeseburgers or widgets or whatever else. The lessons you’ll learn from these top-shelf companies are applicable to any industry. Take those lessons back to your office and apply heat to them, bend them, sand and paint them, and then morph them into something that you can use. While you’re working on that, keep in mind that your competition doesn’t think that way.
If you’re in the insurance business, you’ve got a management or marketing consultant telling you exactly the same thing he’s told fifty other insurance companies before yours. As a result, there’s no way to differentiate yourself from the pack. By looking outside your industry for ideas, you’ll realize that there are as many ways to succeed in business as there are successful businesses, and each has valuable lessons from which we can learn and gain in our own operations.
Every year since 2007, Forbes magazine has put Umpqua Bank on its annual list of the Top 100 companies to work for in the United States. For eight years in a row, we’ve been named the most admired financial services organization in Oregon.
People ask me, “Why do you care about these honors? What do they add to your bottom line?” On the surface they might not appear to add anything directly to our bottom line, but they add to the reputation of Umpqua within our industry and the communities in which we operate. They boost the morale of our people, and that positive energy is reflected back to our clients and our customers. They attract the kind of people we want working for us—people who want to give the best of what they have to give to our customers and to one another.
In tough times, if you have good people capable of doing great work, good leadership capable of communicating effectively, and a strong, well-respected reputation, you’re going to make it. You’ve got everything you need to thrive in even the most uncertain of times.
Note
1. Max Chafkin, “Revolution Number 99,” Vanity Fair (February 2012), http://www.vanityfair.com/politics/2012/02/occupy-wall-street-201202.