He was richest man on the planet. Richer than Bill Gates and Warren Buffet put together. Richer than many of the today's global entrepreneurs put together. But he died 100 years ago. His life was full of many inspirational stories and events. One of his life accounts which he himself shared with a reporter:
Andrew Carnegie, the man with the world’s largest steel empire, rose from no money, no opportunity, and no connections — to the richest man alive?
Carnegie and J.P. Morgan were once partners in a business. One day Morgan wanted to buy out Carnegie’s stake, so Morgan asked how much he wanted for it.
Carnegie said his shares were worth $50,000, plus he wanted an extra $10,000 on top — so a total of $60,000. Morgan agreed to the terms. But the next morning, Carnegie got a call.
“Mr. Carnegie, you were mistaken,” Morgan said. “You sold out for $10,000 less than the statement showed to your credit.” Morgan had calculated that Carnegie’s stake was actually worth $60,000, and with the additional $10,000, that made $70,000. So Morgan sent Carnegie a check for the full $70,000.
Carnegie responded by telling Morgan to keep the extra $10,000. Morgan replied, “No thank you. I cannot do that.”
When reflecting on this story, Carnegie wrote, “A great business is built on lines of the strictest integrity.” He learned from Morgan that it is better to lose money in the short-term if that means maintaining your reputation for the long-term.
Think hard about this: Is your business doing everything it can to ensure that reputation comes before profits?
Generally organizations put the importance of a good reputation on back burner and focus more on attending day-to-day emergencies.
Reputation is everything. How can you forget events in the life of USA President – Bill Clinton, or for that matter world golf champion, Tiger Woods. Bad reputation shattered their careers.
Benefits of a good corporate reputation can be found in:
Customer preference in doing business with you when other companies’ products and services are available at a similar cost and quality;
Your ability to charge a premium for products and services;
Stakeholder support for your organization in times of controversy;
Employee stick more in such organizations.
Although reputation is an intangible concept, research universally shows that a good reputation demonstrably increases corporate worth and provides sustained competitive advantage. A business can achieve its objectives more easily if it has a good reputation among its stakeholders, especially key stakeholders such as its largest customers, opinion leaders in the business community, suppliers and current and potential employees.
Firms with strong positive reputations attract better people. They are perceived as providing more value, which often allows them to charge a premium. Their customers are more loyal and buy broader ranges of products and services. Moreover, in an economy where 70% to 80% of market value comes from hard-to-assess intangible assets such as brand equity, intellectual capital, and goodwill, organizations are especially vulnerable to anything that damages their reputations.
And with demonstration of such integrity, your bank of goodwill keeps growing. But remember, it takes sustained efforts over the years to increase goodwill deposits, but one single act can wipe off the entire balance overnight.
Learn more about Andrew Carnegie - click here.