The Relationship between Brand and Reputation

I used to intern at Merrill Lynch for the first two summers of my college life. Now, before the recession, Merrill Lynch was an immense investment banking firm on par with peers like Goldman Sachs and Morgan Stanley. But Merrill Lynch, in its competition with them, overextended into mortgage backed securities and other such dangerous derivatives. And since it had done so, it was hit hard by the financial crisis of 2007-08. The same crisis that forced Bear Stearns and Lehman Brothers out of business was the one to bring the esteemed and storied Merrill Lynch down to its knees. In the end, in the middle of September of 2008, Merrill Lynch was forced to stomach and accept a takeover offer of $50 billion from lender Bank of America. Bank of America was on the hunt for good deals during the meltdown and bought Countrywide Financial first. When it heard of Merrill Lynch's troubles, the deal was almost too good to pass up. What Bank of America was looking for was the hefty fees and profits provided by Merrill Lynch's brokerage house - in essence Merrill Lynch became nothing more than Bank of America's "wealth management" arm. After the buyout was completed, Bank of America pared or wound down Merrill Lynch's more riskier ventures, the same ventures that defined it as a market leader for generations (like Merrill Lynch Europe or certain aspects of Merrill Lynch investment banking) and directed ML to concentrate its efforts on expanding the domestic brokerage firm. Because of the steady cash and profits provided by Merrill Lynch Wealth Management, it has largely boosted Bank of America's bottom line while BofA has had to deal with losses stemming from subprime mortgages and legal issues.

That is just the back story. There were consequences of Merrill Lynch's overreaching of course, some of them being Merrill Lynch brokers, a lot of the high powered and influential ones, deciding that Merrill Lynch was another glob in a corporate behemoth. Before the merger, brokers had immense power within the firm, indeed, the firm's management catered to them. Now that BofA's corporate management came and sent out financial targets and goals all over the place, essentially telling the brokers what to do, these same brokers wanted nothing more to do with the firm. The financial advisers left in the wake of the merger for other wealth management firms such as Morgan Stanley and UBS (who answered to no higher power). The same can be said of the clients, but to a lesser degree - reports of overall client dissatisfaction quickly grew after the merger and the company had to work around the clock to assauge their clients that nothing would change. But of course, changes did happen.

Before the crisis, Merrill Lynch had a huge brand name and important reputation. These days, rivals and peers look at it as if it has been relegated to the minor leagues once it became acquired. To some degree, I have read that some brokers still with the firm feel that way. They want to compete with the likes of Goldman Sachs, but feel Bank of America stifles them, according to news reports. As a result, and unintended consequence, many people feel less inclined to work for Merrill Lynch, and the brightest minds insist on working at GS or hedge funds.

This just shows how brand name and reputation are intertwined. I spoke about Merrill Lynch but Apple is another prime example of how this works. In several reports and studies, Apple has repeatedly come out on top as the single most valuable corporate brand in the world (I think the value of the brand name itself approached $50 billion). Apple has staked its reputation in the power of its brand and its ability to attract and draw consumers in like moths to a flame. Year after year, it has done it again and again, beating sales estimates of its iPhones and iPads, and in turn, of its Macbooks as well. Without its brand name, Apple couldn't price its products as high as it does. Thus, we can see that the relationship between brand name and reputation is deeply intertwined. Corporations have no choice but to see that their brand and reputation are pristine and valued as highly as possible. That's why they go to great lengths to settle legal issues and court cases before it gets out of hand and public opinion turns negative.

Personal Reputations

I think everyone leaves their personal impact on family, friends, and the workplace. Those are exactly the three places where individuals have the most influence on other people. For almost everyone, their reputations with their families develop as they grow up - with the result being most families know their children extremely well. The same can't exactly be said of friends, i.e. people accumulate friends over time and sometimes, friends aren't always the same (the circle of friends changes). But even so, there are always the few friends that the individual will have known for a long while so there's reputation building between him and them. The same goes for the workplace, an individual builds up reputation and rapport between himself and his colleagues. A reputation is very dependent on how long a person stays or is fixed at a location. This is because that's the best way for people to get to know that individual. But a positive reputation is different - that depends on the individual's personality. So a reputation is one thing - a positive or negative one is something different.

For me, I think I have a strong reputation with my friends. I hang out with a lot of the same people I met during the first month of my freshman year so we have all known each other a long time. Through three and a half years of college, through everything, we still talk and meet up quite often. So not only do my friends know me very well, but I also know them very well. I like to think I have maintained a good and positive reputation amongst my friends. To that end, I can influence behavior if I chose to but I generally opt to form a consensus. The biggest and best example of this is during weekends when we decide to meet up and go to dinner. From past experience, I know it always takes a long time to find a place where we all would like to eat. Therefore, if I were to just say, "Guys, let's just go eat here" and I was adamant about it then we would all go. But I would rather have everyone have enjoy where they are eating rather than one person just choosing to go ahead and making a choice himself. At minimum, that also puts my reputation on the line if everyone didn't enjoy the food or something happened at the restaurant.

I don't consciously think about keeping my reputation intact or enhancing it exactly. I mean that just depends on how good of a friend you are and that's what I try to focus on. If one of my friends needs my help, I try to do my best to help them. Actually, a lot of my friends do come to me for advice, but  I always wonder why. It may not necessarily be because I give good advice, but because I've known my friends for a while and they know me. So to answer the question, I guess I would just try to be a good person and a good friend, stay faithful to my character as a dependable individual. The restaurant example was one instance where I could have, if I wished, cashed in my reputation for an immediate gain. It would save time, but it's not who I am. That result also extends to other areas of my life - I wouldn't stake my reputation or cash it in for immediate gain. Although that might be a little different with my parents, i.e. sometimes I played the reputation card. But now that I've grown, I don't do that with anyone.

Tri-lateral Principal-Agent Model

I think one situation where this arises for a lot of people is their parents, or family. For me, growing

up, my parents were usually on the same page as everything. They would almost always agree on a

variety of going ons in my life, including academics and extracurriculars. But one instance where

they didn't agree was a choice between playing the violin or playing soccer. When I was a kid, I

picked up both, starting the violin and continuing for several years, and likewise with soccer. As I

grew older, it quickly became apparent that I could not hope to do both. Academics were the priority

and the workload grew considerably heavier in high school when I took many AP classes. At first we

decided on a compromise: we decided that I would play both until to the point where the time

consumption of both grew unbearable. At that point, I would decide which extracurricular to keep. In

reality, I suppose the decision all came down to me. Choosing one over the other would certainly

disappoint one of my parents but of course it was up to me and which one I thought I was better at.

It was a hard decision but in the end, I chose soccer over violin. This was just one tame example of

differences in views and one agent stuck in between two different parties.

But like I said earlier, a lot of these differences can arise for people with parents or parents and other

family members. One common example is who a guy or girl will marry - one parent might approve,

the other might disapprove. Or some family members will approve and most won't approve. A lot of

times, the agent will fail someone (i.e. the old adage, you can't make everyone happy), but a few

times it is possible for the agent to satisfy both parties. At least these examples are relatively mild in

comparison to when agents have to make a choice between family and country or love and country.