Force For Good Communications

Three steps to get bad news out and move on

(Last night I took part in an executive roundtable discussion at the Publicity Club of Chicago. The brief case study I shared provides a good lesson learned that I believe is quite apt for these difficult economic times, and so I'll hit the main points here.)

Following two and a half years of being delinquent in its financials, which didn't win too many points with the SEC and led to a delisting by the NYSE, Navistar scheduled a meeting with more than 200 analysts and media in New York in October 2007. We would disclose a massive restatement of prior financials and take the first steps toward becoming a current filer,

In the wake of Sarbanes Oxley and numerous changes to accounting standards, Navistar was by no means alone in having to restate prior financials. But we had gone an unusually long period without reporting after discovering mistakes that had caused the company to scrap its year-end 2005 analyst meeting. And we were more than a little concerned about the reaction we would get to a restatement that, including tax changes, amounted to a negative $2.1 billion against prior earnings. But we were confident in the company's overall health and in our business strategy for the future.

So we followed a three-part communication strategy:

1. Fully disclose the problem. Our news release, and the analyst meeting itself, began with a clear and forthright explanation of the restatement as well as an assessment of an under-resourced accounting function and numerous material weaknesses in the company's financial reporting processes.
2. Commit to fixing the problem. Our CFO detailed steps being put in place to remediate problems, beef up accounting resources and instill rrigorous financial reporting discipline throughout the company. We would steadily work to catch up in our financial filings until we were current, and we would resolve to stay current and accurate.
3. Stress the soundness of the business and its strategy to capitalize on opportunities ahead. More than half of the release and the presentation focused on future opportunities for profitable growth and how we had exactly the right strategies in place to make the most of those opportunities. We demonstrated that the company's management had not allowed the epic restatement work to distract it from the task of running the business. The company was on track to meet or surpass its growth and profit objectives, and bullish on its future.

By thoroughly and clearly communicating the first two steps, we were able to largely remove them from further discussion. The majority of analysts' questions were on our current and future business, not on our past accounting sins.

The meeting started about an hour before the market opened. When the OTC opened (Navistar was still banished to the "pink sheets" but has since returned to the NYSE), our stock was down just a fraction and we knew we were going to weather the storm. The media was fair to us as well, with much of its focus on the product announcement we made sure to include in our news release.

This formula works well for companies needing to share bad news that doesn't truly change an underlying strong story. An it applies as well for communicating to employees and other stakeholders in this brutal economy: get the bad news out, commit to discipline throughout the business but then spend the majority of time talking about the reasons you know you have the right strategy and your bullish on your long-term prospects.

As I've said in recent posts, confident hopefulness is motivating. Especially when everyone else seems to be incapable of doing anything except wringing their hands.

- Jon Harmon 

Visionary leaders help others see past the gloom and doom

Last night as I watched President Obama’s speech, I kept thinking about how the global economic meltdown has become the defining issue of the day, shaping the way we talk about everything. And it made me wonder how effectively companies are communicating to their employees and to other essential audiences: customers and potential customers, shareholders and analysts, suppliers and policy makers.

Whether a person voted for him or not, one has to be moved by Obama’s hope-filled vision. Americans, indeed, are “not a nation of quitters.” And they respond well when a leader stirs their best and brightest instincts, rather than their fears. I believe that employees and external stakeholders alike will respond to corporate leaders who can sincerely articulate a confident vision of success – diligent effort during the downturn aimed at true distinction in the better days ahead.    

Too many business leaders seemed focused only on slashing costs to survive the crisis. But burning the furniture to heat the house is self-defeating. So is focusing all attention on cost-cutting. Productivity from your shell-shocked, demotivated employees will sink your enterprise further.

Leaders who can articulate a winning approach for both slopes of the business cycle will stand out when others seem only capable of wringing their hands.

And expert communications professionals can help these visionary leaders hit the mark with all audiences and stakeholder groups.

Strategic communications can help drive market leadership through crisp and consistent messaging. We start by asking:  Are our messages on the mark?  Are external product communications consistently aimed at driving sales performance, fully integrated into our marketing mix model? Are we quantifying that contribution and holding ourselves accountable for it? Do our internal communications successfully engage our employees, providing them a sense of confident urgency to seize the opportunity at hand?

I believe these questions are quite pertinent in today’s extremely challenging environment with companies slashing budgets and demanding strong, tangible results from their staff functions.

- Jon Harmon

How to undo an unwelcome 'brand'; Illinois as 'most corrupt state'

On Chicago's WLS talk radio this morning, Rep. Mark Kirk (R-IL) urged Illinois' new junior Senator, Roland Burris, to resign following Burris' admissions that he had tried to raise money for disgraced Gov. Rod Blagojevich, which followed his admission Sunday that he had been asked by the former Governor's brother to raise money but he had refused, which followed his testimony under oath to the Senate Ethics committee early this year that he had not had any contact with G-Rod or his representatives in connection with the Senate seat vacated by Barack Obama.

It now appears that Burris (above)  tried to raise money for the disgraced Governor at the same time he was making it known that he wanted to be appointed to the vacant Senate seat. The fact that he failed to find any willing donors isn't much of a response to those questioning his ethics; it just means that he may be a dishonest politician who is also an inept fundraiser. 

Burris' ever-worsening admissions "just reinforce Illinois' brand as the most corrupt state in the country," Kirk said. "We need to restore Illinois' reputation."

Who can disagree? It seems that we have reached and passed the tipping point in public opinion. "Chicago-style politics" used to be an almost endearing term for the sharp elbows one needed as a politician in the"City of Broad Shoulders." Now politics in Illinoisis has sunk to the level of being a too-long-running national joke." Such as this bit:

"Rod Blagojevich was in the middle of his second term as governor of the state of Illinois. They impeached him and tossed him out as governor, and he is banned from participating in Illinois politics for the rest of his life. Fortunately you can participate in Illinois politics long after you're dead." – David Letterman.

The resignation of Burris, followed by a special general election to fill the Senate seat would be good first steps toward restoring the state's reputation. (But even that won't come easy. Democrats will want new Governor Pat Quinn to appoint someone to fill the vacancy, not wanting to risk losing the Senate seat to a Republican challenger.)

But then the long process of real reform must begin. Rules need to change; more importantly, behavior needs to change. Bring the back-room deals out in the open to see if they pass the sniff test. Contracts and agreements shouldn't stink of rotten behavior. Consistent transparency will help the state, over a long period of time, lose its unwanted brand in favor of all the positive things the state should rightly be known for.

- Jon Harmon  

Communicating change poorly: The continuing saga of the switch to digital TV

When trying to motivate people to take an action, we can stress the benefits of change or the dire consequences of failing to act. While the best approach often is to include both positive and negative messages, putting the stronger focus on the benefits of acting will ensure that most people will embrace the change willingly, even enthusiastically.  

Unfortunately, the U.S. Federal government is not following this simple recipe for change communications. The "once coming-soon, now delayed, but wait it's still changing today in many places"switch to digital TV broadcasts has focused almost entirely on the bad things that will happen if consumers don't go out and get their converter boxes. Namely that their old rabbit-eared TVs will no longer work.

To those of us who have long ago embraced digital everything, the dire messages of the end of analog TV signals is a yawner. We've heard for months, years really, about the February 2009 switch. I'm not sure how you could have missed it if you watched any television lately. The PSAs and local news shorts have been everywhere. If you don't watch much TV (in which case this change isn't going to cause you much inconvenience, is it?), you may have seen the posters in your supermarket or post office.

Concerned that word of the end of TV as we have known it had not reached every last living American, the Obama Administration agreed to forestall the switch to June. It was a good opportunity to both blast the Bush Administration for another instance of ineptitude as well as demonstrate the new regime's empathy for the infirm, elderly and otherwise less-than-digital America.

But Team Hope is repeating the Bush Administration's basic mistake in communicating only the negative.

So as a public service, Force for Good presents The Case for Change (to digital TV):

• Wouldn't you enjoy a much sharper picture and a lot more channels? Your TV is capable of receiving a lot more channels and displaying them a lot more clearly than you probably think it can. This is especially the case if you live in a rural area and rely on the sometimes weak signal of a small- to medium-sized city's TV stations.
  .
• It doesn't cost you anything. The converter box costs about $50 and your tax dollars have already paid for the voucher coupons to cover the cost of converting two TVs. If you haven't yet received your vouchers, you can buy the converter box, keep your receipt and get reimbursed later.
  .
• It's easy. The converter boxes can be found at your nearest electronics or hardware store. Or Wal-Mart. (I know you have one of those near you.) And there are only two cables to hook up -- one to your antenae and one to the back of your TV.
  .
• You don't have to wait. All TV stations are already broadcasting in digital. Hook up your converter box today, enjoy the clearer signal and expanded choice of stations. There's no reason to wait for the new deadline from the nanny state, I mean Federal Government. (My parents live in rural southern Indiana and have enjoyed their digitally converted TV's much improved quality and quantity of channels for several months now.) 
  .
• Oh, and if you don't get the converter box, eventually, some day, your old TV is going to go all fuzzy on you.

- Jon Harmon

How to attract readers to your blog (circa 2009)

Today the Force for Good blog passes a milestone of sorts -- with 25,000 visitors since I started it back in December 2006. That's an average of a little more than 31 visits every day according to the Typepad tracker.

Not exactly numbers that threaten the New York Times' bloggers or those writing for the Huffington Post. But not bad, either for a site with very specific content -- current thinking in "aspirational public relations." Those who visit this site come here because you are interested in PR. I hope you continue to find it worthwhile.

With this milestone in mind I'm going to update one of this site's most popular posts -- How to attract readers to your blog from April 2007.

The advice from that post still applies:

1)  Content -- offer something unique: new insights, a fresh take on a current issue, etc.

2)  Voice -- find your creative voice. It's a blog, not a white paper.

3)  Optimize to be found -- use SEO techniques smartly and ethically, linking to related content, using interesting headlines, providing feeds, grouping posts by categories, etc. to help interested readers find your posts -- not to trick them into your blog only to be disappointed by what they find.

Now some additional insights for today:

• Provide a mixture of  the fresh and current with plenty of long-lasting "evergreen" posts. Posting frequently with new thoughts provide a reason for readers to subscribe to a feed or at least visit often. But most of your readers will find your posts when they Google a phrase that is close to what you wrote about. Evergreens don't get stale or out of date and continue to draw visitors months (or even years) after they were posted. Like "How to Attract More Readers to Your Blog." People keep coming back to that one. 
  .
• Typepad's control panel enables you to skim through a day's visitors and see what they typed to find your blog. You can see what's connecting and what's not. Adjust your content accordingly.
   
• Include photos or videos when relevant or humorous (I didn't include any visuals with this post, but generally I do.) Include a photo credit, particularly if you have ads on your site or other means by which you are generating revenue. There are no paid ads on Force for Good, so I'm not a stickler for crediting sources for photos.

- Jon Harmon

Mr. Peanut goes to Washington ... and takes the Fifth

Regular readers of Force for Good will know that this blog often discusses ways to defend a company's reputation against unfounded attack. The "unfounded" part is key. If the attacks are justified, you're on your own.

I'm going to go out on a limb here and assume, before all the facts are in, that the Peanut Corporation of America is indeed run by scumbags who don't care a bit about public safety. That they didn't care if consumers of a myriad of products with peanut ingredients ate salmonella-infected food as long as the company didn't have to eat profits. And that they deserve all the condemnation that is coming there way.

If you missed coverage of the House hearings yesterday, the president of PCA and the plant manager of the Blakely, Ga., facility (where, it seems, the rats and roaches were dying of salmonella) responded to Congressional subpoenas and showed up in D.C. but, citing Fifth Amendment privilege to avoid self-incrimination, declined to answer any questions from the seething Congressmen.

It was pretty entertaining to watch them squirm, especially when Rep. Greg Walden (D-OR) held up a big jar of contaminated peanut products -- wrapped in crime scene tape -- and asked if either would mind reaching in and finding something to eat -- just as they had been willng to let their end customers do. Not surprisingly, they both declined.

Meantime, lawmakers heard stories about victims who unknowingly ate those contaminated products. Here's a snippet from the NBC affiliate in Spokane, Wash.:

Clifford Tousignant survived the Korean war.

Shirley Almer beat cancer -- twice.

They both died from eating peanut butter.

"Our family feels cheated. My mom should be here today," said Almer's son, Jeffrey.

Since the PCA execs wouldn't talk we can only go to the company's website for its perspective. Here's the last relevant release, from February 4:

LYNCHBURG, Va. (February 4, 2009) -- Peanut Corporation of America continues to be deeply concerned about those who have been affected by salmonella contamination in the past weeks.

The product recalls issued by our company continue to expeditiously remove all potentially harmful products from the marketplace, in the best interest of the public health and safety.

There has been a great deal of confusing and misleading information in the media. We want the public to know that there were regular visits and inspections of the Blakely facility by federal and state regulators in 2008. Independent audit and food safety firms also conducted customary unannounced inspections of the Blakely facility in 2008. One gave the plant an overall "superior" rating, and the other rated the plant as "Meet or Exceeds audit expectations (Acceptable-Excellent)" ratings. Unfortunately, due to the nature of the ongoing investigations, we will not be able to comment further about the facts related to this matter at this time.

PCA is second to nobody in its desire to know all the facts, and our team is working day and night to recall affected products and to complete its investigation.

                                                     *   *   *  

Sorry to say, boys, but it doesn't look good. In fact, I have to say, you are the front runner for 2009 PR Disaster of the Year.

We'll keep following this story until your lawyers deem it appropriate to tell your side of the story. Can't wait to hear it. Just don't try leaving the country in the meantime.

- Jon Harmon

Does anyone still read a printed newspaper?

 

Whether you get your news on a printed page or over the Internet, it's hard to miss all the hand-wringing over the future of newspapers.

A TIME magazine cover story"How to Save Your Newspaper" by Walter Isaacson is drawn from lectures he is giving, beginning at the University of California - Riverside this week.

And there's plenty more on the topic at the Poynter institute and the Columbia Journalism Review.

After some initial reluctance back in the day, most newspapers today provide a wealth of timely reporting and other substantive content on-line -- free of charge. It's an attractive way to consume the news. Why wait for the next day's paper when you can get news on any subject on-line now? And why pay for a subscription when you can read most columnists, editorials, etc. for free on-line? And why restrict yourself to your local newspaper when you can get news from any locale on-line?

If you have a wireless router in your home, you can take in the morning news out on your porch or deck on your laptop and get caught up quickly on whatever you want to read while you sip your morning coffee or afternoon lemon-aide.

But world-class reporting and writing is by no means free. So where is the business case for on-line news as subscriptions for printed papers dwindle and ad revenues dry up?

Up until the Sept. 15 default of Lehman Brothers kicked off a severe recession, news organizations could recover a decent amount of revenue in on-line advertising. The Internet model was to provide content for free, build a huge audience and sell ad space in crawlers and pop-ups. But that seems so 1999 today. The bubble has burst.

The question is will people pay something (anything!) to subscribe to online services of top news organizations -- like the New York Times, Washington Post and maybe your local newspaper? It's worked for the Wall Street Journal and a few others, mostly financial sites like Barron's and Motley Fool, who have successfully protected a unique space well enough to charge for it. But will enough news consumers opt to pay for quality reporting to keep the premier news organizations afloat -- or will they die off and leave us with only Yahoo! news and MSN? And if we're only left with news aggregators, what news will they aggregate? Are you ready to turn over the Fourth Estate to bloggers, aka citizen journalists? I'm all for cit j's to supplement the news, but I still want an aggressive, knowledgable and experienced media pool doing most of the heavy lifting.

The key will be for each news provider to demonstrate unique value that consumers will be willing to pay, at least a nominal amount, to read.

But won't we lose something vital if there no longer is a printed newspaper we can touch and feel?

- Jon Harmon