You Don't Own Your Company's Reputation
Reputation is different from brand.
A company's "brand" represents what it thinks of itself, and what it wants its customers to think, and is willing to spend a considerable amount of money to make them think - in the future.
A company's "reputation" represents what people actually do think - right now. It is more powerful than brand, in that if a company presents a brand that is not in line with its reputation, the brand will lose that battle.
Another case study: Dell computer build a solid reputation for itself as a computer manufacturer that produced high-quality desktops and notebooks. To reduce costs, Dell outsourced its technical support to India - and at first, this seemed to have no effect on its sales.
However, the ran afoul of a single customer, Jeff Jarvis, who also happened to be a poplar blogger - just an ordinary guy, who had a bad experience.
This single post was the beginning of an avalanche: it attracted the attention of others who had bad experiences with Dell, who chimed in - first in his comments, then via their own blogs, then in other forums. Over the course of 12 weeks Jarvis made a total of 12 posts, each of which received "thousands" of comments (which suggests hundreds of thousands of readers).
By the time Dell became aware of the problem it had swelled out of control. Rather than reacting to it, Dell ignored the problem, and went so far as to take the user support forum on its own site offline and remove contact information from its site (except for ordering information, of course) to shut off the flow of complaints.
Complaints poured in to other sources, such as the BBB and online ratings sites, and eventually caught the attention of the mass media, who spread it even further. Google searches for "dell customer service problems" far surpassed searches for "dell computers."
Dell's response came a year later - after its sales, stock price, and customer satisfaction rations all took a severe hit. The company made a "radical change" in its transparency, completely reversing its stance from shutting out its customers to including them directly. It has taken several major initiatives, and a huge investment of resources.
You Don't Control Your Reputation
The internet has empowered customers, and the authors aver that they "are no longer content to listen to carefully crafted press statements ... tolerate poor service ... or blindly accept what they're told on their television and radio."
Companies collectively spend billions on advertising and PR to craft the perspectives of their customers and potential customers. This is not altogether wasted, as a company has little chance of making a positive impression if people don't recognize its brand at all. It is also the only medium through which the company can communicate its intent.
However, brand is at the mercy of reputation, which can undermine the image a company has spent many resources to develop. Once people start talking, your marketing becomes background noise - people trust one another more than they ever will trust you.
EN: the author goes to the extreme of suggesting that traditional media is, or will soon become, obsolete. I don't entirely agree with that, and he doesn't present any supporting evidence, so I'll skip the propaganda.
There is a note about the importance of internal marketing - the suggestion that your employees have more credibility that your marketing department when they speak to others about your company.
Conversations among employees that once happened in anonymous places: a bar, coffee shop, or the employee break room, are now being conducted online, in full view of the public.
While it may not be an employee's intention to leak internal information, work is a part of their lives: if they get chewed out by their boss, if they are frustrated in their jobs, or if they're excided about a project, they will talk about it. And the whole world - including your customers and your competition - is in earshot.
Ironically, most companies have HR policies that strictly forbid employees from speaking to the media, which could be interpreted to mean the Internet as well. And so, the only employees who share the "inside scoop" with the public tend to be former employees - whose opinion of the company tends to be less than ideal.
Finding the Haystack
The author spends a bit more time talking about the nature of the various social media online. My guess is this is for the reader who has somehow managed to live without encountering them. I'm skipping it.
Growing Your Business the Radically Transparent Way
Many of the previous practices that business use to monitor and control the information that the public sees about the company have been made obsolete, or at least diminished greatly in their effectiveness, by the online channel, and requires new skills and practices to leverage the new medium. It also requires a radically different philosophy about communication and information sharing.
What's more, you don't have a choice - a company who keeps itself closed to communication, and ignores the online medium, will suffer much more greatly than an open one when an incident leads people - even one person - to start talking about them in places they cannot control.