Steady as she goes

In turbulent times it’s not changing strategies – but staying the course – that builds a strong corporate reputation, according to this year’s “World’s Most Admired Companies,” in the March 16 Fortune.

What quality wins respect for firms like Apple, Berkshire Hathaway, Toyota, Google, Johnson & Johnson, Procter & Gamble, FedEx, Southwest Airlines, GE and Microsoft – this year’s Top 10?

The consulting firm Hay Group, which helps Fortune survey 4,000-plus analysts, executives and directors to pick the most admired large companies in 64 industries, points to consistency in strategy:

Most important is a strong, stable strategy, which confers important benefits in unstable times. Companies that change strategies must usually change organizational structures as well, and making that change in a recession is a heavy burden just when corporations can bear it least. It forces employees to focus inward rather than outward and becomes a giant sink of time and energy.

Of course, fixing a broken business model isn’t optional if your old one is doomed. But we must recognize that changing direction is disruptive – and reputation is one of the casualties – Fortune says.

Hay Group found that, in general, less admired companies change structures far more often than the Most Admired, the main reason being a strategy switch. An extreme example is the Detroit automakers, which are turning themselves inside out as they seek strategies for survival at a moment when they should be focused on serving buyers.

The moral of the story: While “change” is popular, even more important is the ability to design and execute a strategy that endures.

As investor relations practitioners, we should emphasize the stability and durability of our companies’ strategies – and explain how those strategies will get us through the tough times.

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