How companies survive crises through capability and character

What makes some organisations resilient in crises while others struggle to recover? Successful companies understand that their reputation is built on what they do and how they do it.

Boeing, BP, Goldman Sachs and VW are all examples of successful organisations that have endured significant crises over the past decade.

According to Rupert Younger, founder and academic director of the Oxford Centre for Corporate Reputation, the key to their survival lies in the dual nature of reputation. Speaking at a webinar organised by the CIPR Crisis Communications Network, Younger explained that reputation is shaped by two key factors: capability and character.

"Capability is the perception of what an organisation or individual can do - their technical competence, ability to deliver products or services effectively and resource allocation. It is about being good at what you do," said Younger.

"Character, on the other hand, is about how an organisation presents itself. It relates to values, culture, behaviour, transparency and ethical conduct. In essence, it's about how you do what you do."

In a conversation with Rod Cartwright and Chris Tucker, Younger challenged Warren Buffett's famous quote, "It takes 20 years to build a reputation and five minutes to ruin it," arguing that this applies more to character than to capability.

His research suggests that capability-based reputations are more resilient than commonly thought, whereas character issues often lead to the most severe and immediate reputational damage.

An organisation's ability to withstand a crisis depends on how different stakeholder groups assess these two aspects of reputation.

Customers who focus primarily on product and service quality tend to be more forgiving of character flaws, provided capability remains strong. This explains why companies such as Ryanair and Wetherspoons maintain marketshare despite outspoken leadership.

However, other stakeholders, including investors, employees, regulators and suppliers, are often less forgiving. They demand competence, consistency, transparency and ethical behaviour, extending their concerns beyond short-term performance to long-term sustainability and governance.

Recent high-profile cases highlight this distinction. Alison Rose's departure from NatWest over Nigel Farage's bank account and Bernard Looney's exit from BP due to personal conduct issues demonstrate how character-related failings can end careers, even when technical leadership remains intact.

For management, the dual nature of reputation presents a significant challenge. Technical competence and operational excellence alone provide only partial protection against reputational risk.

Leaders must recognise that their character - demonstrated through daily decisions, communications and responses to ethical challenges - requires constant attention and commitment to high standards.

The key takeaway for management is that while capability can drive operational success and growth, character is essential for long-term sustainability.

In an era of increased transparency and stakeholder activism, sustainable leadership success requires excellence in both capability and character. Navigating this dynamic is crucial for modern management.

Younger is the co-author with David Waller of The Reputation Game: The Art of Changing How People See You.