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-- Jon Harmon

Transparency at work: Zuckerberg opens up; Facebook rebounds (a bit)

Back on June 1, I argued here that Facebook's CEO Mark Zuckerberg needed to lead an effort toward greater transparency in conducting the newly public business of the social network behemoth. Two weeks after its epically hyped IPO, Facebook had plunged 28% from its opening price of $38 to reach a new low of $27.50.

I had no pretensions of Zuckerberg noticing my advice, let alone heeding it, even though there were plenty of other voices calling for more business transparency from Facebook. And indeed, the famously maverick young founder of the company continued to keep a fairly low profile. Facebook continued to be vague in detailing its plans to monetize its enormous base of "friends" and failed to provide guidance on future revenue projections. When he did speak, Zuckerberg reminded us that Facebook's mission was never to simply make money but to "give people the power to share and make the world more open and connected."

Having a well-articulated, noble and inspiring mission is critical for encouraging an active and participative employee culture geared to execute corporate strategies. Shareholders can likewise be inspired by the vision. But they also want some guidance to help them figure out if their invested dollars are wisely held in the company, or should be put somewhere else.

(And BTW, employees also want to be reassured that the business has a sustainable trajectory of profitable growth. In short, every stakeholder wants to invest in, work for, do business with...winning companies. "Winning" encompasses all aspects of reputation including social responsibility as well
as, yes, profitable growth.)

Throughout the summer, Facebook stock continued its downward trend, dropping below $18, less than half of its initial price four months earlier. That will get your attention, no matter how maverick you are.

Finally, this week at a tech conference in San Francisco, Zuckerberg let it be know that the company's profit performance was indeed important to management. As John Shinal wrote for MarketWatch:

Now that Zuckerberg has seen the damage that the stock drop has done to the image of his company — not to mention to the morale of employees with restricted stock grants — he’s on board with the whole profit thing.

Today, Facebook closed at $22 -- up a cool 25% from its low 10 days ago. There's still a long ways to go before Day One investors recoup their investment. But it's a good start.

So, yes, transparency is critical for all stakeholders, including (especially) employees. And that includes detailing efforts being made to ensure sustainable, profitable growth.

- 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

Secret for brand success in social media: Take a walk in shoes of customers, critics

Complete this thought:

Corporate communicators seeking to use social media to connect with customers and other constituents should concentrate on ...

If you ask Peter Hirshberg, CEO of The Re:imagine Group, he'd say "empathy."

Brands are shaped by conversations "out there" and the brand messages a company puts out must be in sync with those conversations or they will have no traction in the market. You probably know that already.

But there's something even more basic to success in social media engagement, Hirshberg says. Our ability to shape conversations depends on our ability to truly empathize with the people inside those conversations.

Hirshberg provided the keynote address last night at the Plank Center for Leadership in Public Relations' second annual Celebration of Leaders in Chicago. Hirshberg's credentials are most impressive: a nine-year run at Apple, followed by Chairman/CEO roles at Elemental Software, Interpacket Networks, Gloss.com and Technorati (the world's leading aggregator of user-generated content).

Social media provides the on-going narrative to learning empathy, he says. That means more than just listening and responding to what we might see as factual errors. It means putting ourselves in our customers' -- or our critics -- shoes and seeing the world from their point of view before responding.

A not surprising viewpoint if you consider another aspect of Hirshberg's impressive resume. He is a Henry Crown Fellow of the Aspen Institute -- the Henry Crown Fellowship seeks "to develop the next generation of community-spririted leaders by honing their skills in value-centered leadership."

- Jon Harmon

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

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

 

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

Communication strategy should not be an oxymoron

First in a series.

As a communications consultant, I'm struck by how often senior executives are disappointed in their public relations functions' ability to meet even low expectations. Corporate leaders are frustrated that their communication teams are slow to react, do not take initiative, and produce less-that-desired results in terms of positive media coverage or marketing support. Internal communications deliver messages from on high, as instructed, but are not moving the needle, in any measurable way, toward educating employees on the corporate mission and strategy. And no wonder: PR is disconnected from corporate strategy and operates without much regard to supporting the objectives in the business plan.

The problem may be that corporate leaders are aiming far too low in deliverables expected from their communication function. Certainly, PR should be proactive, anticipating opportunities and executing quickly and sharply. And communications, internal and external, should closely coordinate with the business to focus on vital issues and areas of anticipated growth. The stakeholders to whom the communications team aims to reach should reflect the present and the future, not the past.

(If your PR capabilities do not measure up to the expectations outlined in the previous paragraph, congratulations. Your business can realize significant, tangible benefits quickly -- you just need to invest in a wholesale up-grading of communications. Start by examining its budget. Companies that view communications as overhead (as opposed to a vital contributor to the business) get what they pay for. And I bet you cut that meager investment further during the Great Recession, right?)

A winning company expects and demands competent, proactive communications from a PR team tirelessly working to tell the company's stories internally and externally, in sync with business strategies.

But that should just be the beginning. When a business leader says, "I want my communications team to be more strategic," he (she) generally wants the PR folks to plan ahead better, to take advantage of known coming events and maybe even to check in with corporate strategy once in a while to begin working on the promotion of products coming in the near future (or to put less emphasis on products soon to be phased out).   

All well and good, but none of that begins to rise to the level of being "more strategic." A communications function that is truly strategic works actively to protect and enhance corporate reputation, and to advance employee engagement. ("Employee engagement" is a higher calling than "employee communication" -- employees not only knowledgable about the company's strategy but actively involved in its execution, continually providing feedback as well as creative ideas for fully realizing the strategy.)

It begins with knowing the difference between having a strategy and having a well-developed calendar. Communication strategy is connected to (and is, in fact, a vital input to) corporate strategy, not just a proactive means to convey the company's strategy to various audiences.

"Communication strategy" as such is a foreign concept at most companies, including large and well-respected ones. It represents a new frontier to be developed and exploited, just as total quality management (remember that?) helped companies that had been paying lip service to quality.

I will further develop the concept of "communication strategy" in coming days and weeks.

- Jon Harmon

Inspired by pork's new slogan?

The National Pork Board is dumping its venerable slogan, "Pork: The Other White Meat."

After nearly 25 years, maybe it was time to move on from the widely recognized tagline. It certainly has served the pork industry well, reminding consumers concerned about excessive red meat in their diets to consider pork as at least an occasional alternative. So the smart marketing folks at the NPB naturally chose an equally memorable tagline that builds on the success of "The Other White Meat," right? Maybe a new, clever dig at red meat while highlighting something great about, you know, pork?

Uh, not so much. With great fanfare the pork folks rolled out, "Pork: Be inspired." An utterly uninspired theme line that tells you absolutely nothing about what's great about pork.

 

The new slogan has been roundly lampooned, for example here and here.

But seriously, some real thought and focus group research allegedly went into this choice. Here's the thinking behind the new line: "We want to increase pork sales by 10 percent by 2014. To do that, we needed to make a stronger connection, a more emotional connection to our product," says Ceci Snyder, the pork board's VP of marketing.

Now I don't claim to know pork like Ceci knows pork, but I do know a few things about branding. Just wanting to increase sales by 10 percent won't make it happen, and trying to connect with an abstract virtue like inspiration doesn't make the product (or the campaign) emotionally appealing. Or, for that matter, inspiring.

Just like I would never name a cheap economy car the "Aspire" to try to make customers find it aspirational. Oh wait, we did that at Ford, back in the mid '90s. (I don't think anybody at Ford is still taking "credit" for that one, so I won't worry about offending anyone.)

 
Anyway, the point is take a genuine product attribute, or a feeling in some way connected to the use of the product, to make a strong, perhaps aspirational, emotional connotation--that immediately conjures a positive mental image of the product.

But you should avoid being overly general. For example: "Your company name here: We're Innovative!" 

- Jon Harmon