Public Relations

Emailgate: PR lesson of the day

EmailMy email were subpoenaed after I retired. It wasn't a big deal because all those messages were on an AT&T server, and a paralegal simply searched for key words relevant to the subpoena.

I pitty the poor lawyer who had to read them all, especially since I suspect every senior officer in the company had received the same subpoena.  It must have amounted to terabytes of data and reams of paper or, more likely, hundreds of CDs.

In the end, exactly one of my emails drew the interest of opposing counsel, and I had to spend some time in deposition explaining it, including the early hour at which it was written which seemed to arouse their suspicion (or maybe it was sheer incredulity).

So I can sympathize with Hillary Clinton. No one likes having their email published for the world to see. Much less explain any of it. 

But surely she anticipated this eventuality, especially given the Benghazi investigations, which incredibly persist to this day and will probably drag on through the first term of her presidency should she run and win.

Which brings us to the first PR lesson for today: hope for the best but plan for the worse.

Back in 2008, when she was asked what email handle she wanted, she should not have asked herself, "What would look best to my friends?" but "How will my enemies react to this?"

"" probably looked clever back then, but you'd think someone who lived through Whitewater, Monica Lewinsky, and mysteriously appearing law firm billing records would realize many of the family's enemies (and even some friends) suspected her and her husband of occasionally hiding things.

The corrolary lesson: Find someone you trust to look at what you're doing as skeptically as your worse enemy. The sharp focus that made you successful can also narrow your peripheral vision.  




De-meaning ISIS

IsisiPublic relations is all about creating meaning. If not done well, everything that follows is wasted. The same might be said of modern warfare.  

No less an authority than al-Qaeda's Ayman al-Zawahiri made that clear. “We are in a battle," he said, "and more than half of this battle is taking place in the battlefield of the media.” So far, in that battle against ISIS, the West seems to be losing.

One key problem is that ISIS's narrative seems to be confirmed on the ground in Syria and Iraq -- Sunni Muslims are being persecuted for their religion. As Simon Cottee points out in an Atlantic essay, nothing we do or say will matter much until that changes.  In the meantime, the best the West can do is play messaging whack-a-mole, responding to every Tweet and blog post ISIS fanboys put on the web.

But that's only part of the problem. ISIS, like al-Qaeda, the Taliban, Boko Haram, and al-Shabaab, is a bigoted and midieval religious ideology. And as Turkish political analyst Ceylan Ozbudak points out in Al Arabiya, "Counter-ideological work means a battle of ideas, not weapons." Since ISIS's ideas are a perversion of Islam, they must be addressed by the Islamic community itself. 

While calling  members of ISIS "radical Islamists" seems to reflect this understanding, it risks backfiring by unintentionally encouraging Islamophobia. As both presidents Bush and Obama have stressed, we are not at war with Islam. The problem we face is not the imposition of Sharia law by growing Muslim populations. It is the spread of a midieval and corrupt version of Islam. 

Better to call members of ISIS what they are -- "violent extremists" -- and to help the majority of Muslim leaders reclaim their great religion.  

To be sure, ISIS's extremist narrative must be challenged wherever it appears, whether websites, social media, university campuses, mosques, or prisons. But those who do the challenging must be credible religious leaders and scholars, backed up by the Muslim faithful. Some Muslim leaders have already spoken up against ISIS in revulsion to its execution of its Jordanian prisoner. But they need to do more to counter ISIS's corrupt religious ideology. 

That task will prove even more difficult -- and probably take longer -- than any effort to regain territory now claimed by the so-called "Islamic caliphate." Islam has no central authority that can "excommunicate" members of ISIS. The Quran, like the Bible, has many contradictory passages ripe for cherry-picking by ISIS.  The history of Islam, like the history of Christianity, is rife with precedents of horrifying brutality in the name of religion. 

Non-Muslims can't tell Muslims how to practice their religion. But we can support -- and perhaps even encourage -- that debate within their own ranks. And we can help Muslim leaders and civil society address the social problems that make ISIS seem like a realistic alternative to some of their youth.

Those actions will be the most meaningful messages we can send.



Department of what to do with lemons

LemondaeRudy Giuliani may have hijacked Scott Walker's fundraiser with his reflections on President Obama's love life (at least as it applies to the country and its occupants), but the governor's staff has found a way to use it as a springboard for what really matters to them. Here's an email they sent to potential supporters:

"Governor Scott Walker ... refuses to be distracted by the small, petty, and pale ideas that the 'gotcha' headline writers for the Liberal Media want to talk about. ... Now is the time to stand up against the publicity hounds and the journalistic pack, and help Governor Walker fight back with a 'Friends of Scott Walker' contribution ... Your support will show the clueless and mindless journalistic herd that you know what matters most and that it is not the pointless minutiae that they are pushing.”

They may be making fund-raising lemonade out of lemons, but they also have a valid point. From the Sunday talk shows to the evening news campaign coverage and the left- and right-wing blather on MSNBC and Fox, political reporting seems fixated on what historian Daniel Boorstin called pseudo-events.  

Boorstin coined the term to describe events like photo-ops that exist only to generate publicity. Candidates created such events to further their own purposes without the distraction and risk of discussing actual issues. TV journalists went along because it played to their bias for pictures and the illusion of drama.

Now it seems all the media have so thoroughly embraced the concept they are creating their own pseudo-events, posing questions designed to create headlines rather than understanding, fanning controversy when it fails to ignite, and focusing on the embarrassing more than on the enlightening. Online and off, click-bait rules. 

The ethical question for media and PR people alike: do this pseudo-communication respect the electorate's right to make rational choices? Or does it lead to pseudo-candidates and, worse, decisions based on pseudo-qualifications? Are we condemned to live in a social and political hyperreality?


Steampunk PR

Steampunk computerIf public relations were numbered like new software releases, we'd probably be in double-digits now, with lots of numbers to the right of the decimal.

But if its mechanics have changed, the practice itself is still decidedly Victorian. 

When I retired 12 years ago, Twitter, Facebook, and YouTube had not yet emerged from the fevered brows of their 20-something founders.

Back then, blogs were the shiny new thing and companies like mine were still trying to figure out how to use them. Shoveling content online was the usual standard. But it turned out consumers had shovels too. User-generated content became a threat for those who ignored it, an opportunity for those who joined the converation. 

These days, according to PR Week, a PR organization might be responsible for: "corporate communications and reputation, media relations, marquee event support, brand publishing, corporate social media engagement and content syndication, corporate sponsored and promoted content, branded media content partnerships, data insights, and analysis." 

Here's what I find instructive about this job description:

"Reputation" is still at the top of the list.  But too few brands realize reputation depends on more than "communications."

"Media relations" follows closely. It's traditionally been the one function no other organization tried to claim for itself, but lobbying and marketing have lately set up their own shadow operations. Smart companies guard its independence and report it to a level that has easy access to the CEO.

"Marquee event support" is a fancy way of saying "publicity" or worse, "party planning." PR may have outgrown those tasks, but it has not outlived them. Done intelligently, they're useful functions but they shouldn't define the practice. In too many places, they do.

The last listed functions -- "data insights and analysis" -- are arguably foundational. PR counsel must be based on more than political correctness and risk avoidance. It requires deep stakeholder understanding. The good news: every company is awash in stakeholder data. The bad news: PR people aren't very good swimmers, let alone pearl divers. The most valuable stakeholder data is numerical; many PR people wear innumeracy like a badge. 

All the other functions -- "brand publishing, corporate social media engagement and content syndication, corporate sponsored and promoted content, branded media content partnerships" -- are variations on a theme that began with the aforementioned blogs. And they have the same self-reverential pitfall. 

As long as "content" or "engagement" is useful to consumers, they will consider it a welcome service. But when the brand itself is primary beneficiary, it's as intrusive as someone taking selfies in the middle of an intimate conversation. And even less welcome. Worse, when it's a promotional message disguised as editorial content, it's akin to fraud, a form of lying tantamount to theft.

PR's shiny new tools may have changed more in the last 12 years than in the last 120, but the principle of respecting and serving stakeholders endures.


You know you're in trouble when...

Post cover williams

You kind of apologize that you "mis-remembered" what happened, sending thousands to their dictionaries.

The New York Post's cover shows you with a Pinnochio nose and capitalizes on your name's alliteration with "lyin'."

The New York Times puts its Day Two story about your problems on its front page, above the fold, with nearly a full-page after the jump.  Then it produces a video detailing exactly how your "story has changed."

Rumors force your predecessor in the job to issue a statement that he has not called for you to be fired.

A PR trade publication starts an online survey asking if your apology worked. (The answer is two-to one that it didn't.) Uninvited PR advice is sure to follow.  See below.

Your employer leaks word that it has started "an investigation," practically guaranteeing there will be Day Three and Four stories.

At this point, all you need to do to tighten the lid on your coffin is hire some high-priced PR counsel. Sadly, the best advice you'll get is the hardest to follow because it doesn't guarantee a soft landing and it may even be too late -- tell the truth, apologize, and give something back to demonstrate your contrition.  

You can try something like: "I exaggerated what happened to make it sound more exciting and myself more brave. I'm sorry. I'm making a sizable donation to Wounded Warrior Family Support. It serves the men and women who really faced the kinds of dangers I lied about.  It won't change or excuse what I did, but it's the least I can do to express my profound regret."


Oppo research

OppoWriting a book on PR ethics means I've been posting far less regularly and spending lots more time reading the trade press in search of illustrations of ethical dilemmas in the practice of public relations.

Today, I ran across two, which prompts this posting.  

Edelman is accused of using opposition research in promoting the interests of its TransCanada client, the company behind the controversial Keystone XL pipeline.

It seems TransCanada not only faces opposition from American environmentalists who don't want the pipeline going south from Alberta through the U.S. to refineries in Louisiana, but also from Canadians who don't want the pipeline heading east to refineries in Eastern Canada.

Based on documents released by Greenpeace, Edelman proposed to conduct "detailed background research on key opposition groups," a step the New York Times characterized as part of an effort "to spread any unflattering findings about the opposition."  The plan documents also propose enlisting third party allies to "put pressure" on the pipeline's opponents "when TransCanada can't." 

On the other hand, one of the Edelman documents suggested, “To make an informed decision on this project, Canadians need to have a true picture of the motivations not only of the project proponents, but of its opponents as well.”  

Meanwhile, BuzzFeed reported that an Uber executive suggested digging up dirt on journalists, "specifically to spread details of the personal life of a female journalist" who had recently accused the company of “sexism and misogyny.” The executive who made the suggesttion later explained he thought he was speaking "off the record" at an industry dinner. He said he "regretted [the remarks] and that they didn’t reflect his or the company’s views."

In my three decade career, I can only remember one time when a senior executive asked me to gather information we could use to discredit a reporter who has become a thorn in our side.  I told him it was a stupid idea and that was it. I should have also told him it was unethical.

Some background research on journalists is perfectly ethical. There's nothing wrong with collecting and analyzing what reporters have previously written to better understand their point of view of your company and the industry. At minimum, that could enable you to anticipate their interests and questions.

There's also nothing wrong with tracking public details about a reporter's private life or information he or she is willing to share, such as a spouse's name, children, alma mater,  hobbies, etc. Such information can help build a stronger personal relationship with the reporter. But digging for embarrassing or unseemly information is clearly unethical on just about any ground I can think of.

It's a violation of the reporter's privacy. It's clearly dishonest. Why else would the Uber executive blow off an objection on the grounds that “Nobody would know it was us”? But perhaps most importantly, it muddies the waters of public discussion and deprives people of information about the company by casting irrelevant aspersions on the reporter whose bringing it to them. It's not responsible advocacy by any measure.

The key word here is "irrelevant" and that could be the safe harbor for Edelman. If its background research is intended to reveal relevant information about the pipeline's opponents, such as conflicts of interest or extreme positions they have taken in the past on similar projects, it could be ethical.

But if the agency's oppo research team is seeking irrelevant information it can spread around to -- as one document says, “Add layers of difficulty for our opponents, distracting them from their mission and causing them to redirect their resources,” they should join the Uber executive mentioned above in the ethical penalty box.



New rules of persuasion

Social mediaMore than a new majority in Congress emerged from the recent election. Some new rules of persuasion were revealed as well.

Elections have long been fertile ground for scholars trying to figure out the shape of public opinion and the forces that change it.  

The presidential campaign of 1960, for example, gave us the concept of  pseudo-events like debates and photo ops,  which inevitably led to the development of pseudo-qualifications on which dozens of candidates have run ever since (and on which several have actually won). 

Indeed, the practice of public relations has arguably lifted more lessons from politics than the other way around. Sometimes the wrong lessons (the use of war rooms and truth squads, negative campaigning, etc.). But also useful lessons (micro-targetting, staying on message, etc.).

Ever since Obama's 2008 campaign, social media has been the dominant platform of campaigning, just as television had been since the 1960s. It was not only the key to the Obama campaign's fund-raising, it also proved to be critical in his ground game of turning out the vote, giving communities of common interest targeted information, and engaging people who had previously expressed little interest in politics. 

Social media had been around long before Obama's campaign, of course. But his team was the first to realize social media are not new screens, ripe for advertising messages, so much as on-going conversations with their own rules of engagement.

So it will be interesting to see how long its takes for PR practitioners to internalize the insights emerging from the latest bi-annual exercise in electioneering.

Ben Smith's latest BuzzFeed column hits on a particularly intriguing insight:

"Persuasion works differently when it relies on sharing. ... And the social conversation favors things that generations of politicians have been trained to avoid: spontaneity, surprise, authenticity, humor, raw edge, the occasional human stumble. (Joe Biden!)... 

"A few modern politicians appear to have a real feel for the raw emotion and, sometimes, (apparent) spontaneity that people will want to share. Elizabeth Warren's blunt and casual economic 2011 tirade and Ted Cruz's theatrical confrontations (and even his own low-production-value cell phone videos) are the beginnings of that viral populism for which the social web has opened a real space."

How long will it take for major brands to figure out what this means for them?


A tale of two layoffs

Facing a Layoff When You Have Bipolar DisorderMicrosoft announces "massive" layoffs and the media essentially yawns.

In 1996, AT&T announced layoffs of the same relative size -- about 14% for Microsoft and 13% for AT&T. But AT&T and its CEO at the time were pilloried as "corporate killers."  

The circumstances appear very similar:

  • Both companies were eliminating jobs as part of organizational restructuring -- Microsoft because it was absorbing the acquisition of Nokia; AT&T because it was splitting itself into three companies.
  • Both companies were financially healthy when they announced the layoffs -- Microsoft even more so with profits of $22.5 billion versus AT&T's $5.5 billion (excluding restructuring charges).
  • Both companies made their announcements in a time of economic uncertainty -- Microsoft even more so. The unemployment rate in January 1996 was 5.8% versus the current 6.1%.

Here are the differences:

  • AT&T's number was bigger -- 40,000 versus 18,000. In fact, AT&T's CFO at the time sent the PR department off to see if it would be the biggest number of jobs ever eliminated in hopes it would really impress Wall Street. He was bummed out when we told him IBM, GM, and Sears had all beaten us to the record. Still, the media likes big numbers.
  • AT&T's announcement was vague on which jobs would be eliminated. In fact, the majority were in the manufacturing business being spun off and even those jobs were in divisions to be sold. Microsoft has been forthright in explaining most of the jobs eliminated will be in its Nokia division. And it promised that division heads would be able to explain the impact within their organizations almost immediately. AT&T's division heads didn't have that information for weeks.
  • But the biggest difference grew out of AT&T's focus on Wall Street rather than Main Street. The company set out to produce the biggest restructuring charge possible. At the highest levels, executives saw it as a singular opportunity to launch all three companies with clean balance sheets and the lowest possible costs. At lower levels, managers saw it as an opportunity to create reserves that could be reversed later to produce reportable income. That's not financially kosher, and the SEC tries to police it, but it happens every time a company takes a restructuring charge. 

Ironically, these differences were magnified by a decision few of us realized would be so significant at the time.

Just before the original restructuring announcement was made in September 1995, the company's CFO met with a group of analysts who covered the company to give them a heads up under non-disclosure. They asked him when the companies to be spun off would actually leave the nest and he told them it would take at least a year -- meaning most of 1996 -- just to unravel the financials and sort out assets like patent licenses and shared real estate.

"Why so long?" was their reaction. "If you could get it done before the end of the 1995," they said, "you could put all the restructuring charges in the last year of the integrated company, when no one really cares." That made sense to the company's CFO, so at lunch, just before the announcement of the restructuring, he said, "We're going announce that all this happen by the end of the year. Pass the pickles."  

As a result, AT&T announced the job eliminations and associated restructuring charges on one of the slowest news days of the year -- the first business day of 1996. In addition to guarnteeing headlines in every major newspaper, it also made the construction of the restructuring charges pretty sloppy. At announcement, we had one number -- 40,000 jobs, which was quicly translated into "40,000 layoffs." We couldn't break it down much further.

Worse, all of those jobs were characterized as "AT&T" jobs because the manufacturing division didn't have a name yet. We were calling it EquipCo internally. If the announcement had been made just six months later, it would have been issued by two companies, AT&T (18,000 jobs) and Lucent Technologies (23,000 jobs).

Announcing on the first business day of January also put it in the middle of the presidential primaries in New Hampshire. Pat Buchanan who was lagging in the race saw it as the perfect opportunity to stir up the electorate, railing against greedy CEOs. And when Buchanan unexpectedly won in New Hampshire, the media connected the dots. From then on, AT&T was on the defensive. 

AT&T had focused entirely on impressing Wall Street and lost Main Street. The final irony: Main Street became so sour on AT&T even Wall Street lost confidence in the company. And its long slide to disintegration began. 

Three of the biggest things we learned in this whole fiasco:

  • Events outside a company can shape -- even distort -- how a company's actions are perceived. Who could have predicted Pat Buchanan of all people would play such a big role in AT&T's travails?
  • Once the media have a stake in a story, its premise can't be dislodged. No matter what you do. "Downsizing" and "corporate greed" became memes in 1996 and AT&T became their trope. 
  • A crisis doesn't end until there's blood in the water. AT&T's annus horibilis didn't end until the company's CEO was forced out. (The new CEO had a honeymoon of about a year before his anni horribiles began, but that's another story better told here.)

Forward this blog to your friends at Microsoft.






Bad for business

Rip journalismThe CareerCast web site lists "newspaper reporter" as the second worst career to pursue in its 2014 report. That's just ahead of lumberjack, which ranked 200.

Ironically, there's a connection between the two. Newspapers are closing left and right, meaning the industry needs fewer reporters -- and newsprint, which is produced from the wood pulp in the trees lumberjacks fell. All in all, the Bureau of Labor Statistics estimates a 9% drop in logging positions by 2022, and a 13% decline in reporters.

At the other end of the scale, among the fastest growing jobs, is public relations. Some estimate it's will grow 12% over the next decade. In other words, PR will grow by about as much as journalism declines. 

The disparity in this ratio concerns me, even though I spent virtually my entire career in PR (not counting the summer I wrote feature articles for the Suburban Press and Recorder in Natick, Mass.).

Here's why:

  • When I worked for AT&T, the best coverage we got was from the smartest reporters for the best newspapers. We didn't always like it, but it was intelligent, logical, and fair. When we had news, they helped spread it. And when those reporters compared us to the competition, we usually came out on top. No one could snow them. From what I hear, the average reporter covering business these days is much younger, much less experienced, and stretched thinner than the elastic in Chris Christie's underwear.
  • Trust in the media has never been lower. But it can get to even scarier depths if what passes as news on the Internet gains much more traction. Part of the problem is that online no one knows you live in your mother's basement and get most of your scoops from the signals your aluminum foil hat picks up.
  • Some people think brand journalism can fill the gap. Talking directly to your customers is certainly important. But just as we need a healthy journalistic community to keep our politicians honest, the business community will be better off if its policies and practices are occasionally reviewed by intelligent reporters with no axe to grind. 
  • Finally, it's true that all these new PR people won't be in media relations. PR covers a wide range of activities -- e.g., employee communications, community relations, speechwriting, philanthropy, etc. And it's also true that any PR person who makes it harder for a journalist to do his job doesn't really understand PR. But that's exactly what a lot of journalists are complaining about. I don't think it will get better when there are fewer reporters and more PR people.



PR Ethics

Times 7-16-24Ethics and PR sound like an oxymoron. But the headline and first three paragraphs of this front page story in the New York Times say all you need to know about the subject.

Documents Show G.M. Kept Silent on Fatal Crashes

The car crash that killed Gene Erickson caught the attention of federal regulators. Why did the Saturn Ion he was traveling in, along a rural Texas road, suddenly swerve into a tree? Why did the air bags fail? General Motors told federal authorities that it could not provide answers.

But only a month earlier, a G.M. engineer had concluded in an internal evaluation that the Ion had most likely lost power, disabling its air bags, according to a subsequent internal investigation commissioned by G.M.

Now, G.M.'s response, as well as its replies to queries in other crashes obtained by The New York Times from the National Highway Traffic Safety Administration, casts doubt on how forthright the automaker was with regulators over a defective ignition switch that G.M. has linked to at least 13 deaths over the last decade.

"G.M.'s response" almost certainly came from someone in its regulatory department. A similar response could just as easily have come from someone in the PR department. 

What was the response the Times found so wanting?

The company repeatedly found a way not to answer the simple question from regulators of what led to a crash. In at least three cases of fatal crashes, including the accident that killed Mr. Erickson, G.M. said that it had not assessed the cause. In another fatal crash, G.M. said that attorney-client privilege may have prevented it from answering. And in other cases, the automaker was more blunt, writing, “G.M. opts not to respond.”

As I've said before, I was never asked to lie when I did PR for AT&T. But learning the truth was not always easy. In any large organization, elements of the truth are closely held by multiple organizations, each with its own agenda. That's probably what happened at GM.

But PR people have an ethical obligation to ferret out the truth. Not because they are holier-than-thou, wannabe journalists. But because they are the company's representative in meeting its obligation to serve the public interest.

Ethical training for PR people has to start from that premise.


Gay marriage and public opinion

Gay-wedding-topper-ideaqsThe majority of Americans support gay marriage, which is now legal for about half the U.S. population. 

That's a remarkable change in public opinion in a relatively short period and it's fair to ask how it happened.

In a recent column, Gordon Crovitz -- former publisher of the Wall Street Journal -- credited a Supreme Court decision striking down California's Proposition 8, a 2008 initiative that banned same-sex marriage in the state. 

Crovitz is one of the savviest observers of the digital scene. He probably did more than anyone to guide that venerable paper through the swirling tides of the Information Age.

But even he can misread the bobbing and weaving of public opinion.

"Public opinion changed because litigation showed how same-sex marriage could strengthen the institution, not undermine it," he wrote. 

The suit -- litigated by the unlikely team of Ted Olsen and David Boies, formerly opposing counsel in Bush v. Gore -- was undoubtedly an important step towards legitimizing gay marriage. But that's not where the case was won in the court of public opinion.

It was won on a smaller, more personal stage -- television.

When programs as popular as "Bones," "The Good Wife," "Grey's Anatomy," "Downton Abbey," "Nashville," and "Scandal"  make people's sexual orientation -- and marriage -- a normal part of life, ordinary people begin to think differently about it.

That's the real lesson in swaying public opinion -- make your position look normal to the large number of people who are not engaged in the fight on either side. That way, you're pushing through an open door.

Of course, it helps if -- as in the case of gay marriage -- it is normal.


You don’t have to be loved, but you’d better be liked

ChristieOne of the paradoxes of corporate -- or political -- life is that people expect their leaders to be tough but likable. Toughness can be commanding and inspiring, especially if it springs from competency. But even then, if it edges into meanness, likability goes out the window and followers fall by the wayside.     

The line between “tough” and “mean” is hair thin. 

Many CEOs have crossed it to their great regret, even if their boards never caught on. It’s simply very difficult to manage by fear and greed. At some point, people aren’t willing to pay the price.

Chris Christie has never had a problem being commanding. But he’s often come just to the edge of meanness, sometimes over-hanging it by more than a bit. He usually got away with it because he seemed so likable. In all his bluntness, he said what many of his constituents were thinking, down to the same profane words.

Then the Bridgegate Scandal suggested the governor has an even darker, previously unseen, side.

The jury is still out on his personal involvement in the scandal.  If he is proven in any way responsible, his formidable goose is cooked.

Meanwhile, as his recent “Tonight Show” performance demonstrates, the governor is giving a master class on likability.  The basic rules:

  • Laugh at yourself, not at your problem.
  • And allow yourself to be vulnerable.

The Softer Side of Goldman Sachs

SoftOne of the most tough-minded firms on Wall Street seems to be taking a cue from ancient Chinese philosophy and modern geo-political strategy.

Goldman Sachs is exercising its "soft power." 

The basic idea may have originated with the ancient Chinese poet and philosopher Lao Tzu, but Harvard University’s Joseph Nye popularized the concept of  “soft power” way back in 1990. 

His timing was apt. The Soviet Union had recently collapsed, some people were declaring “the end of history,” and it looked like the U.S. would single-handedly command the world stage for the coming decades.

Nye’s premise was that the U.S. defeated Communism largely through the exercise of “hard power,” i.e., the threat of over-whelming military and economic force. But getting the rest of the world to follow our lead from that point on, he said, would require the exercise of “soft power,” i.e., the power of attraction.

It was a controversial idea to some. Practitioners of realpolitik, who believe the only power that works in the real world is the kind that can be dropped on cities, considered it naive. But even Machiavelli – the original political realist – noted that, while it’s better to be feared than loved, the ultimate danger is to be hated.

Now there are signs that the likes of Goldman Sachs has discovered the advantages of developing and exercising soft power. 

"We have influence,” CEO Lloyd Blankfein told television interviewer Charlie Rose, “but it's the softest of the soft power, the softest of the soft influence. What we do is we put out ideas. We defend our ideas, we are provocative, we show initiative. But at the end of the day, we don't have the power to execute."

Maybe not. But if the ideas a company floats are compelling enough, it can play an important role in shaping the environment within which it operates. In the world of public relations, this is called “thought leadership.” 

Blankfein’s chat with Charlie Rose, for example, came in the context of the firm’s “North American Energy Summit” which brought corporate CEOs, public officials, and industry experts together to debate how the region can achieve its energy potential while meeting environmental concerns. 

Among the attendees? A host of public officials who once would have thought twice about being seen in the firm’s Wall Street headquarters, including vice president Joe Biden, Treasury Secretary Jacob Lew, Environmental Protection Agency administrator Gina McCarthy, and Energy Secretary Ernest Moniz, as well as several U.S. governors, government officials from Canada and Mexico, and the CEOs of a number of energy companies.  

There’s an obvious business benefit to being perceived as the intermediary between such powerful players. But it also gives the firm an attractive “pull” with longer-term benefits. Expect Blankfein and other top Goldman executives to be increasingly outspoken on the topic of environmentally responsible energy development as a spur to job growth. The topic is at the center any Venn diagram of stakeholders' concerns, the firm’s competencies, and its long-term business interests.

That’s where the seeds of soft power are.


The voice of the paparazzi


The paparzzi used to focus their lenses on the likes of Brad and Angelina for the vicarious thrill of the masses. But now they and their keyboatd wielding colleagues play a critical role in corporate governance and marketing.

Way back in 1970, economist Albert Hirschman suggested consumers and investors have only two choices when they believe a company is doing them wrong: they can "exit" (end the relationship) or they can "voice" (complain until the company changes).

As a practical matter, exit doesn't accomplish much any more. Organized product boycotts are rare. And when Hirschman wrote his paper, the turnover of an average managed mutual fund was 17% a year; by 2000, it was 91%, meaning funds sold nearly all of their holdings every year. Many funds, in fact, have turnover ratios of more than 100%, holding the typical company share for less than a year.

That leaves voice. Again, when Hirschman wrote his paper, voice belonged to a privileged few. One consumer's voice tended to get lost in the  clamor of the marketplace. Even if consumers or investors ganged up on a company, their voices could be drowned out by a barrage of advertising and misdirection.

Today, everyone is a publisher. Blogs and tweets have outsized influence. According to one survey, 90% of consumers say their purchasing decisions are influenced by online reviews.

And media of all sorts amplify the voice of governance experts who used to toil in obscurity. Just this week, the media reported Walmart's board was criticized by an institutional investor group for being too chummy with management. Last week, the media reported Chipotle's sharowners overwhelmingly voted against an executive compensation plan they considered overly generous.

None of these expressions of "voice" is binding. But when the mainstream media report them, they take on added urgency. Corporate America is not governed by the media, but it is highly influenced by it. When I attended AT&T board meetings, I was far more likely to hear "how will the Journal react to this," than "what will the SEC say."

And then this story on the front page of today's New York Times puts a human face on GM's ignition switch problems, turning the emotional level of the discussion way up. 

Law and finance professor Louis Lowenstein termed all this "the voice of the paparazzi," way back in 1999 before the Internet changed everything. Ironically, his son, Roger Lowenstein, is one of the most highly respected of those voices.

"The new voice in town is the raucous, incessant beat of the analysts and the media, and boards and CEOs now pay heed," he wrote. "With good numbers on which to base detailed, credible reports and stories, those oh so rude paparazzi have an impact that puts ministries of finance and cronyism to shame."

That new voice now has more power than Prof. Lowenstein could ever have imagined.


The week in corporate malfeasance

Corp.001This has been a busy week in corporate malfeasance.

Credit Suisse pleaded guilty to criminal charges of aiding and abetting tax evasion in the U.S. and was slapped with a $2.6 billion fine.

General Motors announced its 30th recall bringing the total number of vehicles hauled back into dealerships to 15.5 million, a new record and the kind no company likes to register. 

Chipolte Grill suffered an ignominious vote of no confidence on executive compensation. Nearly three-quarters of shareowners voted nay, the largest percentage ever. 

Which company turns out to be the biggest loser depends on your point of reference, as well as on the actions each company takes from here on out.

If you're an investor who is only interested in the company stock price, you might consider Credit Suisse's travails much ado about nothing. Helping clients avoid taxes -- even when it amounts to tax evasion -- is not the kind of thing that makes customers hesitant to do business with a firm. It might have if Credit Suisse turned in the tax-evading clients, but the firm dummied up about that. And despite its guilty plea, the company retained its license to operate in the U.S., including as a Federal Reserve counterparty. Even that humungous fine looks like the cost of doing business. The company -- and investors -- essentially shrugged the whole thing off. 

General Motors isn't shrugging, but investors seem to be reserving judgment on the long-term customer impact of the recalls. They think if the company's new management can position these recalls as an effort to correct the mistakes of the past, GM may slide through. Americans love second chances. But that means the break with the Old GM has to be dramatic -- there has to be blood in the water. And customers will be looking for evidence that the company is dealing fairly with the families affected, no matter what the bankruptcy court says it's legal obligations are.  

Investors in Chipolte Grill, on the other hand, aren't going to let the issue of executive compensation go away. The shareowner vote is non-binding, but it's hard to see how the company's board can ignore it completely, despite the stock's stellar performance (which ironically contributed to the outsized pay packages to which executive comp is closely tied). In fact, the company has already signaled it got the message. Its board will probably make some changes along the lines of putting more restrictions on equity grants.

But there's an isssue lying in the weeds that could prove fatal -- inequality and declining economic mobility.  

Chipolte CEO compensation is 775 times the company's average worker. That's better than the 1,200 to 1 average in the fast-food industry as a whole. But it's substantially higher than the 200 to 1 average across all industry segments. 

CEO-to-worker salary ratios may have little to do with inequality or economic mobility. But they're fuel for the fire. And no company wants to get too close to that conflagration, much less tied to a post at its center. But that's exactly where Chipolte's core customers -- well educated, socially conscious foodies -- might be persuaded to put it. Chipolte has to get as creative on this issue as on the recipe for its sustainable, GMO-free organic burritos.

Of the three companies, unless some damaging new information surfaces, I'd worry most about Chiplote.



A model of resilience

19-jill-abramson-wake-forest.w1058.h704Lessons from the saga of Jill Abramson's dismissal from the New York Times.

1. Perceived hypocrisy magnifies apparent misbehavior. Accusations that the New York Times was guilty of gender bias were particularly explosive given its status as the in-house paper of the liberal establishment. Rather than earning it the benefit of the doubt, the paper's liberal creds made it look even worse. Somewhat the same thing happened to AT&T during the infamous monkey cartoon scandal in the 1990s. 

2. High profile misbehavior -- real or imagined -- is particularly dangerous if it fits within a pre-existing narrative. Accusations that Abramson was not paid the same as her male predecessors for doing the same work illustrated the very real problem of gender bias in pay. Similarly, accusations that she was a tough manager caused many to ask if the same would have been said about a male executive editor. Gender bias is a real issue. Abramson's dismissal, justified or not, was the match that lit the bonfire.

3. The specific crowds out the generic. You'd think Abramson's dismissal would prompt a deep exploration of the gender bias that supposedly prompted it. But there has been little discussion of the societal causes of unequal compensation. And many have asked why women can't be as high-handed as men, rather than asking why high-handedness is acceptable in anyone of any gender.

4. Finally, in all of this, the better communicator has been Jill Abramson. She has said little about her dismissal publicly. Even her commencement address at Wake Forest University was a model of indirection. She put the focus where it belonged -- on the students and their parents -- but found a way to make her experience relevant to them. 

“I’m talking to anyone who’s been dumped, not gotten the job you really wanted, or received those horrible rejection letters from grad school,” she said. “You know the sting of losing or not getting something you really want. When that happens, show what you are made of.”  She not only encouraged them to show resilience, she modeled it.


Abramson in the ring

Newyorkpost-051614Jill Abramson reportedly will get into the ring to fight her firing through a commencement speech at Wake Forest University on Monday, May 19.Meanwhile, the New York Post is having a lot of fun poking its crosstown tabloid rival, including with an Instagram photo posted by Abramson's daughter.

And the brouhaha about her firing continued on the Sunday talk shows with all the wrong questions. There were two big issues: compensation and management style.

On compensation, Abramson's salary has been used as a symbol of the very real issue that the average woman makes significantly less than her male colleague doing the same work. But whether Abramson was one of those women is questionable.

When she started as editor, she made less than her predecessor. But he had been executive editor for eight years. When I was executive vice president of public relations at AT&T, I made significantly less than my predecessor (a woman) for more than two years. According to the data I've seen, Abramson caught up in far less time than I did.

The other big issue has to do with Abramson's "pushiness." I haven't heard anyone at the Times call her "pushy." The publisher did accuse her of “arbitrary decision-making, a failure to consult and bring colleagues with her, inadequate communication and the public mistreatment of colleagues.”

On the Sunday talk shows I heard today, this was reduced to a questions: why can't a woman be as high-handed and abusive as a man?  Wrong question.

I never worked for a paper remotely like the New York Times. But I have surervised creative people and the biggest lesson I learned along the way (belatedly to be sure) is that they do react well to high-handedness.

On the contrary, they like to be included in decisions that affect them. They prefer a collaborative environment to a culture of command and control. And they expect to be respected as professionals with equal dignity if not rank.

Apparently, the Times terminated Abramson for failing -- after some prodding -- to measure up to that standard. Because she didn't, she apparently lost the support of the people reporting to her. Under those circumstances, her boss was well within his rights to remove her. 



The PR of managing the plank they walk

FiredJill Abramson has been relieved of her responsibilities as executive editor of the New York Times after less than three years on the job.

I don't know Ms. Abramson. Still, I've been an admirer, and I thought many of the changes she brought to the New York Times were inspired.

If I were still working with Times' journalists on a daily basis, I might have been aware of rumored newsroom tensions. But as it was, I was surprised as anyone. I was especially surprised by the relative transparency with which her departure was announced. 

I say "relative transparency" because I'm comparing it to the usual practice in corporate America.

When I ran PR for AT&T, I handled the departures of a number of senior executives. In all but one case, they were removed for cause, either incompetence, insubordination, or the failure to produce the results they promised.There were also a couple of cases of misconduct. 

But in every case, we said they left "to pursue other opportunities," "to spend more time with their families," or "because they accomplished what they set out to do." 

I couldn't understand why we weren't more candid about the reasons behind the executive's departure. The lawyers explained they were afraid the company would be sued for disparagement. Other executives said it would embarrass the company to admit it had promoted someone so (pick one) incompetent, insubordinate, or venal. And, I suspect, the people who actually did the firing just wanted to turn the page.

But I always considered it a missed opportunity. If people draw lessons from the people you promote, won't they draw even more powerful lessons from the people you fire? I saw it as a way to manifest the "Common Code" set of values that hung in every company conference room.

The Times publisher, Arthur Sulzberger, Jr., seems to have come to the same conclusion. And since his family owns the company, he can actually act on it. Ms. Abramson is a great journalist, but removing her was necessary to "improve management of the newsroom," he said.

By the standards of corporate America, that's as transparent as it gets. 


Preview of coming attractions

America's morphing age pyramid

The image above is our future. It portrays the U.S. population in five-year age increments over the coming decades.

We go from a lumpy pyramid with lots of young people at the base and a few old codgers at the peak (as in 1950) to more of a rectangle with pretty even age distributions, except for a really large group of octogenarians-plus at the top (as in 2060).

I won't be around to see it, but what happens between now and then has implications for marketing, public relations, and politics that are worth considering.

  • Daniel Moynihan attributed the turmoil of the 1960s to the large cohort of adolescents and 20 year-olds produced by the Baby Boom in that period. How will the huge cohort of Boomers entering their 50s over the next few years change our culture and politics?
  • By 2060, there will be almost as many people over 85 as younger than 5. Will that create greater division or less? Our experience so far is that young and old don't purchase, vote, or think alike. Will that continue? 
  • At the same time the population turns gray, it's also becoming multi-colored. By 2042, we will be a minority-majority population. That's already true in four states and in our 18 larhest metro areas. Do our communications reflect that yet?  

 For more questions (and a few answers), I recommend the Pew Research Center's latest report, Next America.



Media relations ethics New York Times' Public Editor doesn't have an explicit mandate to comment on ethics, except in the broadest sense.

But sometimes she does so by implication. And often the ethics in question are not those of the papers' reporters, but of the PR people they deal with.

Take today's column which questions the ethics of a source setting the ground rules under which it will give reporters access to news.

The particular news in question was not exactly earth-shaking or even market-moving: it concerned the federal Food and Drug Administration’s new guidelines for e-cigarettes. But the F.D.A. would only give reporters an advance outline of the new rules if they agreed not talk about them with industry or public health groups until they were released a day later.

It's not hard to understand the various parties' motivations here. The reporters wanted a day to prepare their initial news story so they could put it on their paper's web site as soon as the FDA issued their news release.

The FDA didn't want the initial news stories to include any potential criticism from those industry or public health groups.

Thus, the ground rules under which it gave some reporters early access to the guidelines. Reporters were happy; the FDA was happy. The only people not well served by this deal were the public they were both supposedly serving.

I won't speak to the ethics of journalists accepting such ground rules. People like the Times' Public Editor are in a far better position to do that. But I think PR people should re-consider the ethics of this practice.

It's one thing to hold a background briefing or to issue a news release on embargo. I did that often enough myself in my days at AT&T when the news was complicated and required careful study.

But it's another matter entirely to try to manipulate the very process by which a journalist covers and reports the news. The only possible justification for that is that a PR person's duty to a client surpasses any duty to the public.

The ethics codes of the various PR professional associations dance around this issue. It's time to measure our policies and practices against a clearer standard. Any PR person's first duty is to the public if only because that's our clients' first duty as well.

Any ground rule that ignores that fact slips from PR into propaganda.



Ethics in your pocket

Ethics appPity the beleagued engineers at GM back in 2005.

The company was circling the toilet having just recorded what was then the largest financial loss in its history. And its engineers were trying to figure out what to do about an apparently faulty ignition.

They made what professional ethicists would term a teleological or consequentialist decision, i.e., one that produced more good than bad. They decided the cost of recalling thousands of cars to replace a faulty ignition would be more expensive than simply replacing them under warranty when they failed. 

Actually, if they had been good consequentialists, they would have included the effect on customers in their analysis. But in a competitive business obsessed with costs that's not always easy.

Now there's an app for that.

The Markkula Center for Applied Ethics has developed an iPad app "for thinking through tough choices." It leads users through a balanced framework of ethical reasoning, identifying all the parties potentially affected and considering five concerns: utility (more good, more bad), rights (more rights, fewer rights), justice, common good, and virtue.  

It's like having Aristotle, Kant, and Mill on your cellphone's speedial.


Crossing the line

Donot crossCreating content at the intersection of a brand's competencies and readers' interests is a good thing. But when taken too far, it can cross a line.

Chevron, for example, has operated a refinery in Richmond, California, since 1902. When the local newspaper went out of business, the company launced an online news site, promising to provide residents with "important information about what's going on in the community."

On the surface, that looks like good corporate citizenship. But the ethical conflicts should have been obvious.

For example, one wonders how Chevron's Richmond Standard would have covered a 2012 fire at its local refinery. That accident cost the company $2 million in fines and restitutions. 

To be sure, Chevron's role in producing the site is clearly noted. And the paper's typical coverage is pretty non-controversial, focusing on community projects like local tree maintencance or BART's new train design

But the site will inevitably face conflicts in covering its owner or any issues that touch it.  For example, in article under the headline "Chevron Speaks," the company rebutted an allegedly "misleading" article in an alternative weekly that was critical of Chevron's planned refinery modernization project. A posting under another section called "Community Speaks" is by a local union official who praised the modernization project and Chevron itself.

I'm sure Chevron is a fine company. Its motives may be pure. But it really crossed the line here. It could have filled the gap in local news coverage in other ways that wouldn't represent such an obvious conflict.



Burson on PR Ethics

BursonMy current long-term project is a book on public relations ethics. (Yes, I know it's an oxymoron in some minds, but still...)

I'm not sure how this will turn out or even if it ever will. But in the course of my research, I ran across something Harold Burson said in an interview with the Page Center at Penn State University.

It deals with the issue of PR practitioners' ethical responsibilities towards their clients and I'm reprinting it here, with slight edits because it's based on a video that isn't always clear:

"I believe that every institution, every person is entitled to have public relations representation. I do not believe that I am compelled in any way or manner to be the one who provides that counsel representation.

"On the other hand I think that [in regards to] unpopular causes which are legitimate [and with] which I may not agree, I do not think it’s unethical for me to represent that client as long as I can do so in a way that my client is not compromised by ... disagreement.

"I think  ... that I am engaged to motivate individuals or groups to take a position or take an action that my client seeks to have taken. I think I should however as a public relations professional make the judgment on whether I represent such a client by asking myself the question, 'is what this client wants to do in the public interest?'

"And I think that is a factor that is very important [and] sometimes overlooked. The fact is I believe that no action can be sustained or successful if, in the long run, it is not in the public interest." 

While existing codes of conduct published by the various professional associations dance around the issue, Burson puts the public interest at the center of ethical decisions in the practice of PR. 

I could devote this entire blog to Harold Burson and never run out of material. Maybe I should.



The ethics of advertising drugs

DtcaIn the world of communications ethics, most discussions focus on lying in its multifarious forms -- spinning, obfuscating, deflecting, etc. 

But totally truthful communications can also raise ethical questions.

For example, here's an issue I've been pondering lately: do the risks of advertising prescription drugs directly to consumers outweigh the benefits?

On the one hand, direct to consumer advertising helps educate patients and makes them more likely to take the drugs a doctor prescribes.  But since pharmaceutical companies advertise only their newest and most expensive drugs, it contributes to the rising cost of drugs.

Furthermore, many physicians complain that patients pressure them to prescribe advertised drugs even though they don't understand the potential risks. In fact, physicians are far more skeptical about direct to consumer advertising than patients.

And there are other questions:

  • To what extent has direct to consumer advertising promoted an attitude that good health is the product of drug consumption rather than healthy habits?
  • Has direct to consumer advertising made the consumption of presecription drugs seem "normal," rather than an extraordinary intervention to cure an abnormal condition? 
  • Are recent increases in direct to consumer drug advertising, prescription drug abuse, and heroin usage simply coincidental or correlated?

DTC-Advertising-ENIndustry spending on direct-to-consumer advertising rose tenfold in the last five years. Prescriptions written for opioid painkillers such as Vicodin and OxyContin rose more than 500 percent in the same period. There's no question that a lot of those drugs are eventually used for non-medical reasons. As a result, more than 100 Americans die of a drug overdose every day, more than twice the number ten years ago. 

And as prescription drugs become more expensive, harder to get, or simply less effective, they have become a new pathway to heroin addiction. According to the National Institutes of Health, one in 15 people who take non-medical prescription pain relievers will try heroin within 10 years. 

Drug overdoses and heroin addiction in suburban New Jersey have increased so dramtically the state issued a stark warning last year:

"We now live in a state where abuse of prescription pills serves increasingly as a primary route to the unlawful world of heroin, an intersection of the legitimate and the illicit that constitutes a crisis whose devastating consequences are plain for all to see."

Pharmaceutical companies -- many of which make their headquarters in New Jersey -- need to get ahead of this developing crisis. Part of their agenda should include studying the societal effects of direct to consumer advertising. We know that when characters smoke in movies and on TV the rate of smoking among teens increases. Might the same thing be happening here?

Big Pharma may be on the slippery slope Big Tobacco plowed a few decades ago.