High-Tech PR Blog >> Beyond the Hype

Brand building: Candidates vs. Corporations

Regular readers of this blog may remember that we participated in a fun competition over the summer put on by PR Week.  In the "best PR blog" contest, we made to the final eight out of 32.  One of the great things to come out of it, however, was an opportunity to get to know a lot of great PR bloggers, some of whom I had not been aware of.  One of them, Ed Moed of Peppercom in New York, suggested to this group to form a community by blogging on common topics on a regular basis.  We eagerly agreed to participate.

The first, very timely topic is on how the presidential candidates' approach to brand building compares to how companies approach it.  I'm a little late to the thread, as Ed explored the Obama brand and the resources behind it, his colleague Sam Ford looked the "Real America" branding pushed by the GOP, Todd Defren wrote about Obama's brand builder David Plouffe, and Frank X. Shaw asserted that political brands are "brittle."  Great posts, all!

I'd like to tackle the topic a little more literally by looking in particular at one fundamental: competitive positioning.  A critical aspect of this is "depositioning", or the process of differentiating oneself from a competitor and poking holes in a competitor's positioning.  While both entities practice it, the way in which each go about it is different is fundamentally different.  The difference lies in the degree of negativity is used. 

In presidential campaigns over the past 20 years, the trend has been to go more negative in terms of depositioning opponents.  Both parties' candidates are guilty of it, and it has marked both the primary and general election seasons in the current campaign.  Perhaps it is the easiest way to deposition the competitors, particularly in a nation that has been so polarized.  But, it always runs the risk of alienating key "buyers" (voters).  It worked well in 2004 as the Swift Boat campaign turned that race around.

It doesn't work, however, when the problems facing buyers are so enormous that they want to hear solutions.  Polls have suggested that among the buyers that are hardest to sell -- the independents -- going negative has hurt more than it's helped candidates.  It still remains to be seen, based upon the outcome of today's voting, if that turns out to be true, but to me the evidence is very strong that this way of building a political brand is not going to work this time around.

Relating this to the world of corporate branding, negatively attacking a competitor is never a smart tact to take.  As it's our job to advise companies on messaging and positioning, we always start with understanding their customers, what their problems are and how companies can solve them.  Of course, emphasizing unique strengths of a company and its offering and directly comparing how those strengths stack up to competitors is important.  But, a predominance of negative statements disparaging a competitors' approach does a company a disservice in terms of creating a positive and sustainable brand image in the minds of buyers.

I wonder that if negative attacks end up being a detriment in this election, if we'll see the tide turn and campaigns approach competitive positioning the way most companies do.  I, for one, hope that is the case.  What do you think?  Have the negative attacks made it harder for you to know the positions of each candidate?  Can you offer examples where this has worked for companies?

NBA Finals Provide Stage for Image and Reputation Loss and Rehabilitation

Today in Boston we celebrate the Boston Celtics 17th NBA Championship by honoring the team with a parade through the city.  In a city that is now used to winning, this championship victory brought a little extra sweetness because it happened at home; was over its most hated foe, the Lakers; and it capped off a remarkable year in which the franchise completed a 180 degree turnaround from worst season ever to one of the greatest in its storied history.

Great sporting events like the NBA finals provide a rich environment for a multitude of story lines.  As a PR professional I found several concerning image and reputation management to be almost as intriguing as the games themselves.  First there was the clear effort to not only crown Kobe Bryant as the king of the NBA and on par with Michael Jordan, but also as team leader, all around good guy and family man.  It was Kobe this and Kobe that.  We saw Kobe at home with his family, and even hugging and kissing his children and wife at halftime!  Clearly he is one of the best individual talents in the game today, but I think that the NBA and its network partners went a bit overboard with its campaign, especially given his reputation leading into the series. See this interesting blog post by Red Sox pitcher, Curt Schilling, reporting on what he saw and heard while sitting next to the Lakers bench during one of the playoff games.   

Another interesting development was the breaking story that NBA referees influenced the outcome of the Lakers' Game 6 Western Conference finals win over the Sacramento Kings in 2002. In that game, the referees called fouls that gave the Lakers a staggering 27 fourth-quarter free throws.  This accusation was leveled by Tim Donaghy, a former NBA referee now awaiting sentencing in a gambling scandal, so some may question the source.  Nonetheless, it was and is a big story and a perception problem for the NBA.  Strangely, NBA commissioner, David Stern, who built a reputation as the man who turned around the league's image when he took it over in the early 80's has been criticized in his handling of this matter for his passive response to these charges. Sure, the response strategy was to focus on the games and minimize the claims by calling them a desperate move by a convicted felon to help obtain a lighter sentence.  Still, when the integrity of game is called into question at such a fundamental level, a stronger response is warranted. 

And finally there is redemption and vindication.  Nobody can be feeling any better these days than several Celtics. Take Paul Pierce for example. He stuck it out through the tough times in Boston and even survived a near death experience.  He has achieved his dream, and in doing so, has pushed himself into the rarefied air of super stardom and Celtic hero.  For Kevin Garnett there is the satisfaction of putting to rest all those who questioned whether he could win the big one.  He certainly is on the top of the world now.  And finally, congratulations to GM Danny Ainge, who was often ripped on local sports talk radio for his handling of the team.  His ability to come back after losing out on the lottery to concoct the trades that brought us Ray Allen and Kevin Garnett was something that even Red Auerbach himself would have been impressed with.   

CEO Communications in a "Say on Pay" Era

And you thought annual shareholder meetings were tense in the past!  With the moves of some major brands like Aflac, Blockbuster and Verizon to allow shareholders a nonbinding vote on the appropriateness of the executives' compensation packages, future annual meetings should be a field day for reporters looking for drama and controversy. The Columbus Ledger-Enquirer reports:

Aflac Inc.'s board of directors released Monday to shareholders its proxy filing with the U.S. Securities and Exchange Commission, which provides details on compensation packages for its top five executives.

This year's proxy also invites shareholders to cast a say-on-pay advisory vote, the results of which will be revealed at the company's May 5 annual shareholders meeting.

Of course Aflac made it clear that a nonbinding vote means its board is not required to change executive compensation based on the vote, even if it shows shareholder displeasure with the Chairman and CEO's package of more than $14.83M.  But Aflac's move demonstrates transparency and a willingness to listen to shareholders' concerns and consider them when making these decisions.  And it seems to signal a confidence that the packages the company is proposing are appropriate and are tied to the value these executives are creating for shareholders.

Verizon was the second U.S. company to adopt this approach, after Aflac.  Blockbuster announced this past Tuesday that its board has authorized this type of advisory vote on compensation starting in 2009.  The recent BusinessWeek article chronicling this issue pinpointed the issue precisely with this quote: 

"The real question shareholders have raised is whether we are overpaying, in effect, for failure," says Stephen Davis, program director at the Millstein Center for Corporate Governance and Performance at Yale School of Management, and editorial director of Global Proxy Watch.

It goes beyond corporate governance and is part of the personalization movement in which shareholders -- and consumers in general -- feel they should have as much say in the workings of the companies whose stocks they own or products they buy as the executives and directors who manage them.  You see it in blog posts and in comments about articles covering companies and their executives. 

As this "say on pay" movement grows, it definitely raises the communication challenges of the corner office.  In the past, a heated annual meeting typically revolved around a vocal activist shareholder who may or may not draw interest in the media.  When the same individuals with the same rants appears year after year, even the most muckraking journalist has to temper his or her enthusiasm for giving them air time or space for their grievances.  But when the entire block of shareholders have the opportunity to review executive compensation -- which formerly was something grumbled about but never addressed directly -- any journalist or blogger who attends the meeting will have a bonanza of sources for articles.  This will particularly be true if the board chooses to ignore the shareholder's "say on pay" vote.

The CEO and Chairman's communication charter, therefore, is to accept this as the new reality and adjust accordingly.  The brave ones like Aflac, which are taking it on already, will score big points with shareholders and with the marketplace in general.  The ones who are agreeing to participate need to make sure their executives are ready for the scrutiny and open to discussing the value they are bringing and will be bringing to the company.  If they aren't already doing extensive preparation sessions for their annual meetings, complete with mock Q&A sessions from the floor, they need to start this practice before their next annual meeting.  If this is done correctly, the toughest and, in some cases, rudest questions they will field, will be in the mock session.  Nothing on the actual day will catch them by surprise.

If the CEO doesn't already have some external visibility or tends to shy away from interviews, now is the time for him or her to get the training and support they need to be more visible.  They will need to tell their story publicly and stand by it.  It is best for them to have the shareholders and the public understand in advance what they bring to the table and why what seems like a large compensation package is appropriate because of the knowledge, connections and vision they offer to steer the company to greater growth and profitability.

The CEOs and Chairmen who embrace this approach and look their shareholders in the eye, with confidence and openness, will come out of this the best.  The ones who fight the trend and continue to consider themselves beyond question regarding compensation or any other decisions will make the best copy for enterprising journalists. 

Roger Protests too much, the press declares

Roger, Roger, Roger.  Why didn't you take the sage advice I'm sure your agent and PR people have been giving you and just zip it?  Sometimes the best counsel us PR types can offer our clients is to protect them from themselves.  Example? Stopping the indignant CEO from wanting to respond to a "he said/he said" kind of issue that emerged in the press.  If we let them vent publicly, the press eats it up and the story lives yet another day.  And who knows what other great juicy tidbits they may drop along the way that will fan the flames even further.

I'll admit my bias right up front.  I'm a Red Sox fan and Roger is not loved by Red Sox Nation.  So I must admit I enjoyed reading the headlines this morning, such as this one in the San Jose Mercury News. "Clemens, Unlike Bonds, Steps Forward and Trips over his Ego."  Classic.  As a PR person, I also really related to the MSNBC column about Roger's failed attempt at damage control.

If Roger Clemens’ aim was damage control in his truculent and self-pitying appearance before a Congressional subcommittee on Wednesday, he failed badly. And for all the pious asides to due process and innocent-until-proven-guilty, it’s impossible to see a way that he can bluster his way out of the fix he’s in.

It's a case study in crisis communications.  First of all, you have to determine the facts and I'm not sure Roger truly has revealed -- and proved -- the facts of the matter to anyone, including himself.  Then you determine what is the right course of action to deal with the situation.  If there is blame on your side, you determine the best way -- and best person -- to stand up and admit it. Explain it and describe how you are making amends or dealing with it so you can move on.  And then you try your best to put the story to bed by not dribbling out any other comments for follow-on stories.  If you are being falsely accused, the onus is on you to prove that fact so your communications pros can help you take your case to the appropriate people -- again, with the appropriate spokesperson -- to quickly and decisively end the speculation and clear the record.

Roger Clemens is (or at least was) a great pitcher.  A good spokesperson he is not.  Nor is he a cool head in a crisis.  The MSNBC columnist comments that he seems to think that his primary view of this situation is that he is Roger Clemens and therefore should not be treated this way.  Tell it to the judge, Roger.  It will not help you in the court of public opinion.

Good Job Announcing Bad News

Kudos to John Thain, CEO of Merrill Lynch.  After joining the firm in December, he had the fun task of announcing his first public quarter with Merrill, which Reuters characterized as the worst in the company's history, in which he "reported about $16 billion in mortgage-related write-downs and adjustments." 

Not what you would call a red letter day for any CEO.  But from a communications standpoint, Thain probably could not have handled it better.  He was very straightforward in describing the reasons for the huge write-down and the steps the company is taking to reduce this risk in the future. 

A good example is the rapid-fire on-the-trading-floor interview he subjected himself to with CNBC's Maria Bartiromo right after his conference call.  He used this opportunity to allude to an announcement, made later in the day, of a second risk management officer.  He also made it clear that both risk management execs will report directly to him.  He stayed very cool even in the face of Bartiromo's scrutiny.  She opened her interview with: "will this be enough [of a write-down.]?" After Thain gave her his brief opening comments, she interrupted, "but John, the big question is, is this enough?"  He didn't duck the question and gave her the facts and figures and candor that forced her to move on.

Clearly Thain is benefiting from his reputation as former CEO of NYSE Euronext.  But I believe he's also scoring points by going right at this crisis and being as disclosive and accessible as possible. The messages regarding the excellent results of other segments of the business, as well as Thain's belief in growth in overseas markets, came through loud and clear in the coverage.

He couldn't control the risks taken by the former executives at Merrill, but Thain certainly is controlling not only how he is handling the cleanup, but also how he is reporting it externally as he works to get the company back on track.  It was not the kind of news I enjoy reading about -- we all want a healthy economy -- but the way Merrill and Thain handled it was certainly impressive.

IR Person, Protect Yourself

I If you are holding a pen or pencil or poised at a keyboard while reading this blog post, please cease and desist for your own good.  That definitely seemed to be a primary message to the Boston NIRI (National Investor Relations Institute) chapter from Donald Stern, former U.S. Attorney and currently partner at Bingham McCutchen and executive fellow at Bentley College.

Stern's topic was business ethics and since he was talking with a group of corporate communications and/or IR professionals, his focus was on how this group potentially could be affected if the executives of their respective firms were charged with any ethical transgressions or straying from strict Reg FD regulations. 

"You have to think that whatever you write down is discoverable," Stern said.  His law colleague added, "as a general rule, I advise that you don't take notes, but don't follow this rule woodenly." Stern told the crowd that "email is just the thing the goverment will go for.  I believe that is where the gold mine of information is."  Interestingly, there is a piece in Law.com from late October that talks about an Oracle issue related to discovery.

In recently unsealed documents, a federal insider trading and shareholder fraud suit alleges that hundreds of e-mails and financial records, and even audio interviews with Oracle Corp. CEO Larry Ellison, vanished or were improperly withheld from plaintiffs.

Lawyers for Oracle have strenuously denied the accusations, contained in thousands of pages of documents unsealed at the request of The National Law Journal.

Now, a showdown over the plaintiffs' request for default judgment as a sanction for alleged document destruction, as well as motions on both sides for summary judgment, looms in a Nov. 16 hearing in U.S. District Court in San Francisco.

Stern said that it's probably a good practice to make sure IR people are included in Directors and Officers (D&O) insurance policies that companies take out to protect their executives against legal liabilities.  This not only protects the company, but also can provide for the individual IR counselor to have separate legal representation in case he or she feels the need to veer from the corporate strategy to handle the government investigation.  Despite the advice regarding no note-taking, I saw a lot of pens moving around me recording this advice.

In the Q&A session, one of the IR people asked how to handle rumor-mongering on the Internet, particularly if the rumors are true.  How does an IR person protect him or herself from being fingered as a source?  Stern recommended keeping a record of who you talk to and what they ask to make sure you have proof that nothing was deliberately leaked.

So it's all about the type of notes.  Think of it as mindful note-taking.  Or a new version of the old joke about the tree falling in the empty forest.  If a company did something wrong, but no one recorded anything about the wrong-doing anywhere, did it really happen?

Don't Be Stupid

This past summer, I was strolling through the Whole Foods' headquarters store in Austin, Texas and found myself in an aisle with a curly-haired, middle-aged man wearing a tie-dye t-shirt, khaki shorts and Tevas - the regular character that you'd find in the local grocery store that I end up visiting at least four times a week (I'm a big fan, I'll admit). I did a double take and realized he was John Mackey, the CEO of Whole Foods.  I wouldn't have recognized him, except it was during the time that his anonymous online postings about his competitor, Wild Oats, broke out into the news.

At the time, Lois Paul commented on how they handled the situation from a PR standpoint.

On. Nov. 2, Whole Foods amended its policy and now has banned company leaders (anonymously or under their name) from making posts on any non-company blog, chat room, message board, etc. without approval from the company. If there is a violation, it is grounds for dismissal. Apparently, companies are just starting to come to terms on how to approach this issue, yet I'm sure this will trigger a wave of new corporate policies.

Computerworld's article yesterday afternoon on the topic explored some of the other existing corporate policies to date, and I must admit I liked Microsoft's policy named "Don't Be Stupid". It's really a difficult call to make because company leaders are out talking to people about their company non-stop, so why aren't they able to talk about the company online, where there is a growing number of relevant discussions?

The larger point is, when an executive is talking to people - whether online or in-person - about their company, they simply need to retain their integrity and not misrepresent themselves or the company with inaccurate facts (I probably sound quite naive making this statement, but I promise I'm as cynical as the next person). Companies go to great lengths to find and hire the right executives to be real leaders, so if you hire them, then tell them they aren't trusted to go online, it seems the company is sending mixed signals.

Who knows, but I can see both sides and it's a tough call to make. I won't be surprised if federal mandates are put in place at some point.

Lessons in Reputation Management

Well, the the self proclaimed "Hub of the Universe" is living up to its reputation, at least from a sports perspective. The Boston Red Sox are the World Series champions again; the New England Patriots are laying waste to the NFL; the Boston College Eagles football team is #2 in the country and vying for a national championship; the Boston Celtics are relevant again with their new big three -- Garnett, Ray Allen and Paul Pierce; and even the Bruins are winning. It's an embarrassment of riches for sure.

But this week there are a couple of developments involving two of those teams that highlight the importance of reputation on public perception and the management of that asset.  For the Red Sox it's now about the transition from lovable losers to the dominant franchise in baseball. Some are even accusing the Sox of becoming what they always loathed -- The (New) Yankees! A team with a bottomless pocketbook that can buy what it can't develop. A team with a fanatical fan base that is moving from endearingly faithful to annoyingly omnipresent. I myself don't buy into this, but it does point out the interesting reputational dynamic the franchise now is facing. What defined the Red Sox in the last millennium is no longer true. In this century they are now the top dog, and expanding their reach into international markets. Red Sox ownership has proven itself to be a shrewd group. They've turned a franchise and a ball park with a regional, cultish following into Red Sox Nation, which has gone global. So far they've executed beautifully.  They've leveraged the best of the past and carved out a new future. They've understood the power of the Red Sox brand and extended it in ways never thought possible. Their reputational challenge now is, can you be a lovable winner? I think so.

Sidenote: In a related story, I can't help but point out a high profile example of exceptionally poor reputation management. Alex Rodriquez's announcement that he was rejecting the Yankees contract offer and opting for free agency on the night the Red Sox won the World Series might be one of the biggest reputation management gaffes ever. To me, his agent, Scott Boras bears even more responsibility for this misstep, as his job is to protect his client's reputation in addition to getting him the best deal possible. The fallout has been universally negative and forced Boras to issue an apology.  Certainly damage has been done, and it will be interesting to see how much that reputational damage will impact negotiations with new suitors. 

Finally, let's look at the New England Patriots. At 8-0 and averaging more than 40 points per game, the Patriots are annihilating every team in their path. Some in the media are criticizing the Pats, claiming that they are intentionally running up the score and that it's gone beyond just winning and appears to be about total domination, and maybe even humiliation. Of course, as a Pats fan I am enjoying every minute of it, especially following the accusations related to spygate and insinuations that maybe the Pats' three superbowl wins are now tainted somehow. Has this somehow contributed to a "chip on the shoulder" attitude the team has taken on this year? One of my favorite sports columnists, Bill Simmons, of ESPN, thinks so, saying the Patriots have taken on an "Eff You" approach to the season. What's been interesting is how the Patriots have responded to this.  Coach Bill Belichick, the players and the entire organization have found a way to answer these charges, but not directly. They talk about competing for 60 minutes, it's the job of the offense to score and not kneel down, etc. Clearly they know they are being judged, but are not responding to the emotional elements behind these criticisms. Like the Red Sox they've seen their reputation move from losers to winners. But the Patriots, in advance of the Red Sox, are firmly established in a new reputational territory -- the dominant team hated by all others.  And they seem to be pretty comfortable in that place. Maybe John Henry, owner of the Red Sox, should be calling Bob Kraft of the Patriots to share reputation management strategies.

A Rush to Judgment is Never Good

A couple of weeks ago, Lois blogged on Mattel CEO Bob Eckert's handling of a tenuous situation. At the time, he was lauded for being up front with customers and media, and I agree that he benefited from his willingness to deal with the issue head on and be available to the media. Now that the situation has unfolded further, it merits going back and looking at the "rush to judgment" that is now haunting Mattel.

A crisis, by definition, is a stage in a sequence of events at which the trend of all future events, especially for better or for worse, is determined. And crisis communications is about reacting swiftly and appropriately given the facts available. Did Mattel attempt to react so swiftly that it didn't gather all of the facts before pointing a finger at China? Or did it just attempt to spin the situation? We'll never know the answer, but I'm going to presume the former.

During a crisis, it's very easy to move too fast because the media and the public are clamoring for an explanation. However, the most important thing you should do is stop. Take a breath and make sure you have all of the facts. This is so critical because miscommunicating during a crisis can significantly damage credibility, as Mattel now is experiencing.

We do a lot of work with telecommunications companies and had to respond to a crisis a while back when a widespread network outage was impacting business in North America. It was well known that our client's equipment was in the network, so we received many requests for comment as to whether our products were the source of the failure. We didn't have all of the information we needed at the time to respond appropriately so we said we were working closely with the service provider and would provide additional information when available. The service provider took the same approach, acknowledging the outage, noting it was working quickly to resolve it and would provide details as soon as it could.

At first, there was some evidence pointing to our client's equipment as the reason for the outage, but after more investigation it was determined the outage was caused by something else. We were fortunate that the service provider was not quick to point the finger at our client in order to deflect the incessant media calls. This eliminated a further crisis, which would have unecessarily impacted future customer decisions and shareholder value for our client, and required the service provider to retract its comments and apologize.

The Mattel situation is clearly much more serious in its impact, but it still points to the fact that it is important to gather as many facts as possible before communicating the details of an event (and in particular, before directing blame to another party). Mattel now must deal with strained relations with a country that is critical to its business, and even more importantly, with a public and a shareholder base that has lost confidence in the company's word.

The Haves and Have Not Dilemma of Executive Comp

Congressman Barney Frank (D-MA), chairman of the House Financial Services Committee, talked with the Boston Chapter of the National Investor Relations Institute last Friday about IR issues that included "say on pay," Sarbanes-Oxley, shareholder rights and private equity and hedge funds.  His comments about executive compensation caught my attention as we PR types always worry when the list of highest paid CEOs is coming out.  Frank said that "CEO salary issues have become macroeconomically significant."  He cited Home Depot, which announced on the one hand that failed CEO Bob Nardelli walked away with $210 million in a severance package and later talked about applying $350 million for store improvements.  If Nardelli had been awarded the still-princely sum of $35 million, Home Depot could have applied 50% more to the store improvements effort.  Reading back through the coverage of Nardelli's departure, it was clear that this amount had been negotiated into his contract when he was lured to the CEO position.  But as Frank pointed out, people are becoming angrier about executive compensation in general and, especially, these big severance packages, particularly when the CEO in question hasn't been deemed a success.  He said there is "more inequity than we have had in a very long time," adding, "a couple more horror stories and the Senate will get involved."

Legislation was passed earlier this year (H.R. 1257, the Shareholder Vote on Executive Compensation Act) to allow shareholders of public companies to vote on a company's executive compensation plans.  It doesn't set limits on pay, but gives shareholders an advisory vote on the company's executive pay practices starting in 2009.   It remains to be seen whether public company CEOs and boards pay attention to the shareholder sentiment and make adjustments accordingly.

I did think that Frank's comments related to the growing anger about inequities among the general public and not just the shareholders was interesting.  Although I certainly would not want government control over executive compensation, more rhyme and reason to packages certainly would make life easier for the poor communications professional who is left to answer the questions about why the company is shelling out that much money for a CEO who provided so little (or no) return.