Force For Good Communications

Goldman won't regain public trust with Wall of Secrecy

What do companies need to do and say to win back pubic trust?

Jordan Kimmel of Trust Across America posed that question to me this week on his radio program on Voice America. Here's the link to listen to the interview.

Jordan asked me about winning back trust after a crisis and about my experience in the Ford-Firestone mess that is the basis for my book, FEEDING FRENZY. And we talked about the turmoil inside Goldman Sachs after former executive Greg Smith took quite a public parting shot in the form of an op-ed in the New York Times. (Smith's piece has since led to a global torrent of negative press and opinion against Goldman and its brand of "pirate capitalism.")

Goldman CEO Lloyd Blankfein

I pointed out that the heart of Smith's accusations against Goldman's corporate culture is the violation of customer trust, of putting profit ahead of customer interest. But even worse, I noted, is a bigger cloud hanging over Goldman, the violation of public trust. It's now clear that Goldman played a key role in the financial crisis that precipitated the global Great Recession, especially in regard to the clever packaging of derivatives built around shaky subprime mortgage disguised as AAA-rated investments.

The American public is incredibly forgiving when the leaders of an organization express remorse and a sincere commitment to change behavior for the better. But contriteness is not the message coming out of Goldman.

Furthermore, in today's world, transparency is an essential element of corporate social responsibility. Goldman's corporate culture is built on impenetrable secrecy. And there's little reason to expect the curtain to be lifted any time soon.

It's only March, but put Goldman Sachs down as an early contender for Force for Good's 2012 PR Disaster of the Year.

- Jon Harmon

High-integrity communication can be a Force for Good; FFG joins Trust Across America

Happy and proud to announce that the Force for Good blog has been invited to join a growing chorus of voices advocating for trust-worthy corporate behavior and, subsequently, increased public trust in worthy corporations. Here's the link.

Trust Across America is a fantastic collaboration dedicated to such principles as corporate integrity, transparency and sustainability. So Force for Good is a natural addition, as it was founded in 2006 on THIS: Transparency, Honesty, Integrity and Social Responsibility.

Think of Trust Across America as a sort of inverse adjunct to the Occupy Wall Street movement (without the drum-beating and vagrancy). If all companies lived up to these ideals, and their trust-worthy behavior was effectively communicated to the public at large, a whole lot of Occupy activists could go home happy (and, presumably, more productive).

Hope to have more to say about Trust Across America in the coming weeks and months.

- Jon Harmon

When should you ignore the lawyers and apologize?

When is an apology helpful? When might an apology prove damaging?

A PR pro who is aiming to repair damage to trust and reputation will likely give you different answers to these questions than a lawyer aiming to limit liability. In many, if not most cases, reputation trumps liability. It’s better to sincerely apologize and attempt to move forward in restoring trust in your organization than to stubbornly remain silent. Losing in the court of public opinion can prove more damaging than losing in a court of law. And refusing to apologize may even prove harmful in the courtroom, perhaps leading an unsympathetic judge or jury to pile on punitive damages to what they see as an unrepentant offender.

Keeping this in mind, I offer the following two-question test to help you decide when an apology is in order, courtesy of Eric Zorn in today’s Chicago Tribune. (Zorn brings up the subject because of criticism Republican presidential candidates have directed at President Obama following his apology to the people of Afghanistan for the inadvertent burning of some copies of the Koran. Regardless of your own political views, Zorn’s simple test is helpful to the corporate communicator deciding whether to push back against the lawyers and recommend a public apology be extended.)

1. Did you (or those who represent you or answer to you) do or say something that caused discomfort, or worse, to others?
2. Would you undo this act if you could?

A “yes” to both of these questions indicates an apology is almost surely in order. Note that the harmful act need not have been deliberate; and if it was indeed unintentional, you clearly should mention that fact in your apology.

Note also that your social responsibility, if not your legal accountability, often extends beyond your own company and its employees—your dealers and even your suppliers may be considered part of your extended organization in the eyes of the public. A socially responsible company holds its dealers and suppliers to the same ethical standards it follows itself.

Finally, Zorn reminds his readers not to offer one of those mealy-mouthed non-apologies that includes caveats like “… if anyone was offended” or is written in a non-accountable passive voice: “mistakes were made.”

And finally I offer these Force for Good posts from the past on the still-pertinent issue of the apology:
When is an emotional apology just too much?

When is an apology a better response than trying to argue the merits of your behavior?

How long do you have to be sorry?

-Jon Harmon

Is brand what we want it to be, or what others say it is?

I posted my thoughts on the meaning of "reputation" and "brand" on the Corporate Communications and Reputation group at LinkedIn, which sparked an interesting flow of ideas and perspective:

Nick Taylor • Reputation is made up of three dimensions, and is, essentially, the “intellectual capital” of an organisation (i.e., not the book value). The first dimension is identity – what we present ourselves as. This is typically what a brand is about (logos, values, positioning). The second dimension is image, which is almost the reverse, the opposite. It is what stakeholders see and feel from their perspective. The third dimension is personality. This is the reality of the brand seen through actions, not words, and is a real contributor to brand perception and overall reputation. So brand is an element of intellectual capital.

Jerry Thompson • Brand is the promise of value defined and offered to an organization's stakeholders. Reputation is awareness and understanding – by those stakeholders – of how well that promise is being kept, based on actions taken by the organization each and every day.

Martin Liptrot • I agree with Jerry. The brand is the promise; reputation is how well you are perceived to be living up to it. The other key difference is about ownership – while brand is tightly governed and controlled from the centre out, in the corporate voice, consistent iconography, etc. – reputation is subjective and truly in the eye of the beholder. It is possible to have a great reputation with consumers and analysts but a rotten one with community and employees, for example. That is the bit that senior executives sometimes struggle with; it isn’t a linear relationship.

Jon Harmon • Interesting comments, gentlemen.

But I'm not sure I would still assert that brand is what we say it is. More and more, brand is what those "out there" say it is; reputation, of course, always has been determined by "the others."

Today, a myriad of conversations, in social media as well as in "real life," determine the texture and shape of brand. (I'm thinking more of product brand or corporate brand than one's personal "brand," but the principle is the same.) When the branding put out by a company does not square with the branding determined by the social conversation, the dissonance can render the company's efforts ineffectual and wasted or, worse, counter-productive. And when the failed branding becomes the butt of jokes or scorned as intentionally deceptive, the company's reputation takes a hit as well.

Reputation comes before brand. But what does that mean?

Okay, so we all agree that "reputation is a winning company's greatest asset," right? That makes it pretty darn important.

But what exactly do we mean by reputation? And how does it differ from brand?

These are crucial questions – the two words are central to the professions of communications and marketing, yet there seems to be widespread disagreement on what reputation and brand really mean.

I generally love Wikipedia but this isn’t helpful:

Reputation, as distinct from image, is the process and the effect of transmission of a target image. To be more precise, we call reputation transmission a communication of an evaluation without the specification of the evaluator, if not for a group attribution, and only in the default sense.

Got that?

This is how I would begin:

Reputation is the audience filter that comes before consideration – of purchase, investment, recommendation, or employment. A positive reputation opens the door to consideration; a negative reputation can slam it shut.

Brand is all about identity and connotation, but it has no power to drive action without reputational “permission.”

Advertising pioneer David Ogilvy (who would’ve turned 100 a few months ago), made this simple and brilliant distinction:

“Brand is the promise that an organization makes. Reputation is whether it lives up to that promise”. (Thanks to Mike Hatcliffe’s blog for that.)

Other useful definitions:

“Reputation is (corporate) culture seen from the outside.” – Alan Towers, TowersGroup Inc

Reputation is “how much a community trusts you.” – Stackoverflow

If there is any doubt of reputation’s primacy before brand, consider this pithy command to the marketer by Richard Branson, founder of Virgin Airways and someone who knows a bit about branding:

“Build brands not around products but around reputation.”

And finally, on the notion of “building your own personal brand” as distinct from your reputation:

You build reputation by silently doing, proving and acting on everything you said you were going to do while building your brand. If your brand is … that you know what the hell you’re talking about, your reputation is the proof that you do. – Lisa Barone, Outspoken Media

How to put strategic communications into practice to set your business on a winning trajectory

Seventh in my series on strategic communications.

My central point has been that truly strategic communications can be more than just proactive ... and more than just closely wired to the corporate strategy. Truly strategic communications can be an ongoing input into the corporate strategy and indispensable to its execution. Corporate strategy aiming to be transformational needs the communication strategy to be a dynamic driver, helping to propel the business to a higher plane.

That's good in theory. But just how does that work in practice?

Here are two critical connection points between communication strategy and corporate strategy -- where communications can drive results so fundamentally that the Corporate Strategy function would be remiss in not actively courting Communications "to the table" as it establishes objectives and strategic plans:

Internal transformation--Becoming an innovation leader. Unless your company is already fully functioning as a living, breathing mecca of innovation, fully engaged in a learning cycle delivering continual transformation for sustainable competitive advantage, it probably needs a steady dose of active culture change. Senior management, informed by forward-thinking Human Resources (no, that doesn't have to be an oxymoron) and Communications leaders, pushes the organization out of its comfort zone for truly creative innovation. HR must revamp evaluation and compensation processes to reward smart risk-taking, breakthrough thinking and creativity while fostering cooperation and teamwork (we aren't looking for me-first all-stars, but individuals whose passion, energy and creativity helps makes everyone better). And Communications actively promotes candid, sharp, timely and specific communication throughout the organization. Everyone knows senior management's vision and strategic priorities, and knows that their ideas are actively sought and valued. Together, HR and Communications aim not just for effective internal communication, but active and productive internal engagement.

Reputation management--Beyond protecting the brand. Top-performing companies know the value of a strong brand (and not just consumer companies; a vibrant brand drives sales success in a B-to-B environment as well). But reputation management is on an even higher plane of importance than brand management. Companies not considered trustworthy drop off customers' consideration lists, preempting an opportunity for the brand to gain traction as a sales motivator. Active reputation management makes brand enhancement possible. Marketing and Communications should work actively to help drive reputation and brand valuation upward. But that's more than just a matter of communicating well to the marketplace (media relations, social media participation, marketing and advertising). The company's actions must match its words just as its products must measure up to its marketing claims. Communications leaders provide an active voice in strategic and operational meetings as the company's reputational conscience. (The Chief Communications Officer may be more appropriately renamed the Chief Reputation Officer, as I have suggested here since 2006.) Yes, the company's reputation is every leader's responsibility, but the senior Communications leader is its unceasing advocate. (Just as financial accountability and stewardship is every leader's responsibility but the CFO keeps it his/her singular focus).

These two strategic priorities--developing and maintaining a high-performance culture, and protecting and enhancing corporate reputation among all key stakeholders--are critical to your company's long-term success, are they not? Can you really achieve excellence without them? So ... is strategic communications an active and valued input in your corporate strategy?

- Jon Harmon

Author, expert Walter Kiechel weighs in: communications key to success of corporate strategy

A notable voice weighs in on my continuing series on strategic communications. 

I've been in correspondence with Walter Kiechel, author of the very insightful The Lords of Strategy, which details the birth and development to the present day of the concept of corporate strategy. (See my blog posts: here, here, here and here).

Here's his take on the major points I've raised on this blog (that communications can and should be "strategic," and that a direct link between the communications plan and the business plan is essential but only the beginning--communications strategy should be an input into the corporate strategy, not merely a conduit for executing the srategy):

Jon, I enjoyed reading the blog posts, and think you make a number of good points: communications should be used as a strategic weapon, companies ought to have the communications function at the table where these decisions are made, and yes, particularly if I had had another 50 pages or so available to me, I probably should have written more about the place of communications in the history of strategy (besides the fairly limited coverage of BCG's marketing with Perspectives, and the business book business as it had evolved by the late '80s).

If there had been more consciousness of communications, up and down within the organization, and maybe with outside constituencies as well, fewer strategies would have proven impossible to execute, I suspect.

Anyway, keep up the good work.

All the best,
Walter

Corporate strategy advanced ... but left communications behind

Fifth in a series on strategic communications.

At each stage in the evolution of corporate strategy as a discipline over the past two to three decades--from an emphasis on "positioning" to "process" and now to "people"--its dependence on equally strategic communication has become more essential.

But strategic communications as a discipline has not kept pace. And neither have the bright minds driving the strategy trains inside corporations or the leading consulting firms grasped the rapidly escalating need for communication strategy to mature as an essential input into corporate strategy.

Let's take a look at the evolution of strategy from the eyes of a corporate communicator:

• Positioning--As the "father of competitive strategy," Harvard's Michael Porter defined strategy as positioning. "Operational effectiveness" shouldn't be confused with strategy, he said. "Competing to be the best" equates to "running the same race faster." Strategic positioning is "creating a unique and sustainable competitive advantage," that is, "choosing to run a different race." Years ago, Hewlett-Packard pioneered a strategy aimed at market dominance of small printers for personal computers--HP would follow the classic Experience Curve model of a market leader driving down its prices to drive share and volume gains, in turn lowering its costs even further. In fact, HP would sell its printers at a loss in anticipation of building a highly profitable business selling expensive ink cartridges to its printer customers. HP's strategy wasn't to maximize its share of "printer units sold" but its "share of pages printed." HP's competitors have been forced to follow this strategy, resulting in both a price war for printers and sticker shock for customers needing replacement ink cartridges (leading to this less-than-forthright explanation from HP). This market dynamic creates an opportunity for a daring competitor to seek a counter positioning strategy: Kodak in 2007 began to sell its printers for a premium with the promise of low-cost replacement ink cartridges. Aimed especially at the "big burners" (customers printing lots of pages), the strategy has been only partially successful. Clearly the strategy works only to the degree it is communicated effectively--customers are willingly to pay a premium for a printer only if they are attracted to the appeal of lower ink costs. Advertising, point-of-purchase displays and successful PR (including participation in social media) should all be aimed at communicating the benefit of low cost ink, and, importantly,tapping into the anger of customers outraged by high ink costs. A smart, fully integrated, emotional communications blitz strategically aimed at outraged customers would be much more successful than the staid campaign Kodak has pursued. It's a mistake to attempt marketplace positioning without a strategy actively positioning within the sphere of customer awareness. Communications should not have been merely a conduit of Kodak's positioning strategy, it should have been one of its pillars.
• Process--Total Quality Excellence, Re-engineering, ISO and black belt certification and the like are systematic efforts to wring out further improvements in productivity and product quality.
  Relentlessly reducing costs and shortening cycle times are critical to survival in competitive industries, and what industry today isn't competitive? But process improvement isn't enough--except for market leaders selling commodities solely on price who can exploit scale advantages over their competitors. Eliminating waste and shaving costs are important, but they amount to what Porter called "running the same race faster," and Walter Kiechel calls "Greater Taylorism." Not very inspiring as strategy or battle cry, and therefore unlikely to prove transformative.
• People--Today more than ever, competitive advantage is fleeting. Globalization and the ever-quickening pace of technological advancement (e.g., Moore's Law) allow competitors to leap-frog complacent market leaders. Contemporary corporate strategy focuses on capabilities and competencies, rather than current product advantage. Strategy aims to unleash the creative power of the team. And the team may be defined broadly to include customers, as in the case of open-sourced technology development, such as apps for mobile devices. (The greater availability of free apps for Android will be a critical competitive advantage vs. Apple's I-phone.) In this paradigm, information is power not when it is protected, but when it is shared broadly. Cloud-computing can make formerly proprietary resources available to anyone in the world, and facilitate the rapid generation of ideas into concepts, concepts into products, products into social fads, and, perhaps, fads into adaptive (and therefore lasting) cultural icons. Sharing information and encouraging individual expression are foreign concepts for most corporate managers--and, therefore, true culture change will become an ever-more important element of strategy. Corporations traditionally have been designed to enforce norms of behavior and productivity through top-down authority. Actively urging people to push beyond the expected requires a shock to the system. "Innovative," "creative" and "entrepreneurial" aren't just buzz words; they describe the essence of people-centered enterprises built to continually produce competitive advantage.

Next: Enough with the concepts already! How can strategic communications deliver results NOW?

- Jon Harmon

 

The compelling corporate strategy of aiming higher

Fourth in a series on communications strategy.

That most democratic of encyclopedias, Wikipedia, defines strategic communication as "communication aligned with the company's overall strategy, to enhance its strategic positioning."

Most corporate communicators, I would imagine, would take little issue with this straight-forward definition. But I believe it falls short in two critically important ways:

First, it asserts that communication becomes "strategic" by being aligned with corporate strategy. Certainly, this alignment is fundamental, as I've stated in the previous posts in this series. But communication should also be strategic itself, and it should be an important input into the formulation of the corporate strategy. Corporate strategists should not develop the game plan in a vacuum, then hand a copy of their meeting minutes to the head of PR with the command: "Go forth and align your communication plans to this!"  (More in my next post about the importance of reputation management being actively present "at the table" helping to develop and execute corporate strategy.)

Second, global competitive forces have pushed corporate strategy to out-grow its old-school definition linked to "strategic positioning." Strategy not only is about developing a long-term game plan to successfully position the company in terms of cost, customer and competition--it also provides the dynamic piloting of an adaptive, learning organization. It's less about paddling a boat across a calm lake than about guiding a crew of rafters down a white-water river with not-always-predictable currents.

The need for strategy to be dynamic is readily apparent when the rules of engagement change in visible ways (a new competitor arrives on the scene; a new regulatory environment creates constraints and opportunities; a disruptive invention alters the basic assumptions of the industry).  Equally obvious is the observation that few strategies are executed exactly as envisioned, and communications plans may need to be altered along the way. You make course corrections to a message strategy to reflect the new realities while staying true to the corporation's enduring values (easier said than done).  

But there is a deeper reason for dynamic strategy beyond adaptive course correction. Adaptive learning keeps the strategy relevant as the game changes, but what Peter Senge called "generative learning" provides meaning to the enterprise essential to the full engagement of its people. The corporation does not execute its strategy with faceless automatons but with thinking, reasoning and feeling individuals with varying degrees of commitment and engagement. The organization is at its best when its people are fully involved, taking ownership in the meaning of their work, knowing that "someone at the top" is listening to their observations and thoughtfully considering their ideas.

When you ask people about what it is like being part of a great team, what is most striking is the meaningfulness of the experience. People talk about being part of something larger than themselves, of being connected, of being generative. It becomes quite clear that, for many, their experiences as part of truly great teams stand out as singular periods of life lived to the fullest.  (Senge, The Fifth Discipline: The Art and Practice of The Learning Organization, 13)   

For Senge (named a ‘Strategist of the Century’ by the Journal of Business Strategy), the learning organization excels because it encourages its people in their individual quest for deeper understanding, aligned with the values and objectives of the enterprise. (Therefore, I would add, strategic communications aim to foster the active engagement of employees and other stakeholders in the dynamic development and implementation of ideas critical to the success of the enterprise.) Senge identifies in individuals a thirst for ever-higher levels of excellence in their work, something he called "personal mastery." Mastery isn't the achievement of perfection in the tasks that make up our work but the continual striving itself:

People with a high level of personal mastery live in a continual learning mode. They never ‘arrive’. ...It is a process. It is a lifelong discipline. People with a high level of personal mastery are acutely aware of their ignorance, their incompetence, their growth areas. And they are deeply self-confident. Paradoxical? Only for those who do not see the ‘journey is the reward’. (Ibid: 142)

A long-term corporate strategy could deliberately seek to create a culture of innovation and deep personal commitment to a higher mission. It would identify clear markers of success along the way to provide direction and the means of accountability, but its focus would be on a compelling vision. 

When there is a genuine vision (as opposed to the all-to-familiar ‘vision statement’), people excel and learn, not because they are told to, but because they want to. But many leaders have personal visions that never get translated into shared visions that galvanize an organization… What has been lacking is a discipline for translating vision into shared vision - not a ‘cookbook’ but a set of principles and guiding practices....The practice of shared vision involves the skills of unearthing shared ‘pictures of the future’ that foster genuine commitment and enrolment rather than compliance.. (Ibid: 9)

Corporate communications, strategically aimed at fostering this "genuine commitment" through generative learning, plays a pivotal role in developing this culture of excellence. And that in turn, provides deeper meaning and satisfaction to the role of communicator. And that sure beats writing predictably boring copy for the employee magazine or the Annual Report!

- Jon Harmon 

Brands that don't ring true become roadkill

Third in a series on communications strategy.

The first major strategic insight at the Boston Consulting Group, which pioneered the concept of business strategy in the 1960s, was the "experience curve," writes Walter Kiechel in The Lords of Strategy. A company with dominant share in an industry will have the lowest costs, and, therefore, can lower its prices to gain further share, driving its costs even lower, allowing it to protect its dominant position versus competitors who remain at a perpetual cost disadvantage.

This most basic insight propelled BCG into consulting superstardom and its clients to greater marketshare and profitability. Like a law of nature, the experience curve was seen as constant and inviolable. But a closer look reveals it to hold water only for commodities competing solely on price. It fails to account for non-price distinctions customers make on many, if not most, purchases. "Brand" is the essence beyond commodity that allows favored products to sell for substantial premiums over generics (for example, bottled water where brand and packaging are the most notable distinctions between competitors). "Corporate reputation" is the halo of trust and respectability engendered by upstanding companies, or the millstone of disrepute and suspicion hanging over products offered by companies tainted by poor reputation.  Without a passing corporate reputation, brands exist outside many customers' consideration set; that is, brands cease to exist for these customers.

"Brand" and "reputation" cause substantial market distortion for the strategist expecting share to be determined solely by price.  But they are fundamental to the choices customers make every day and, therefore, they are tangible and real. For the sellers of most products and services, cultivating brand value and protecting/enhancing reputation are as important as any aspect of business and require as much forethought and deliberate execution as any element of strategy.   

Let's look again at the three basic elements of strategic positioning: cost, customer and competition.

Cost: Selling purely on price is seldom a winning strategy. Desirable characteristics of a product (or service), especially those that are truly unique, add value that enables the product to be sold at a premium, or to dominate the market. Desirability is the measure of the strength of a brand, and communication (advertising, other forms of marketing communications, media coverage, social media "buzz", etc.) helps the brand resonate with the customer.

Customer: "Markets are conversations," (meaning that conversations among customers and potential customers shape, even define, brands) was the opening thought of The Cluetrain Manifesto, way back in Web 1.0 at the turn of the century. It's even more true today. Brand management is less about crafting a clever identity and shouting it from the highest hill at whomever will hear it, than it is engaging in authentic conversations with real people.

Competition: You aren't alone in wanting to engage in market conversations. Your competitors are working overtime. Fortunately for you, most of them are still shouting at the market, they're just using Twitter and YouTube to do their shouting. If you can help the market of people "out there" discover your product, and if you invite them inside your brand--and they like what they find there--you will be well ahead of your competition. Companies whose brands aren't seen as authentic will end up as reputational roadkill.

Next post: The learning organization and dynamic strategy.

- Jon Harmon