Richard Edelman

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March 11, 2010

Addressing the Corporate Gender Gap

The public relations industry is fortunate to have women as a large percentage of the work force, many of whom are in leadership or ownership positions at their firms. Other industries, specifically financial services, fare poorly in retaining senior women who become top executives. The World Economic Forum has just released a disturbing study of women in business across 134 countries that should provoke companies to concentrate on overcoming the patriarchal/masculine corporate culture and providing equal opportunities and pay. Here are some of the key findings:

1) Though women now represent over half of the work force in the US and nearly half in other Western countries, only 23% of Indian corporate employees and 24% of Japanese are women.

2) The women “tend to be concentrated in entry or middle level positions; the more senior the position, the lower the percentage of women. The highest percentage of female CEOs is in the Nordic countries. The US data shows 52% of total employees are women, 40% are entry level, 26% are mid level and 14% are board level in this sample.

3) Only one third of respondent companies have a specified target or other affirmative policy on employment of women. The US and UK based companies have universally applied such targets, while none of the Brazilian or Mexican firms have done so.

4) Salary disparity between men and women starts early in the career. According to a recent study of Harvard MBA students, its female graduates get lower pay, start at a lower level and have less career satisfaction from inception of professional life. Seventy two percent of respondent companies do not track salary differences between men and women.

5) The biggest barriers to women in management are masculine cultures and lack of role models, followed closely by the lack of opportunity for critical work experience and responsibility. Most companies do not track access to stretch assignments for women.

6) What seems to be working well is flexible working arrangements, parental leave and re-entry opportunities. These are no longer factors blocking female advancement.

Saadia Zahidi, who managed the study for WEF, concluded her remarks on Monday by saying, “Women don’t want to opt out. They want to advance. Business has to do better. We can do so only if companies begin to benchmark against best practices.” It seems that business has been content to do the “easy stuff,” but not to confront the macho culture or precedents favoring men. As the father of three young women whom I am counting on to carry the family business into Generation III and the husband of a professional woman who opted out after 17 successful years in banking, I can commit to our firm providing the very best opportunities and being judged on our performance relative to peers.

Posted by Edelman at 12:26 PM | Comments (0) | TrackBack (0) |

March 7, 2010

WSJ Green Eco-nomics; What a Difference a Year Makes

I am returning from the Wall Street Journal's annual environmental conference in Santa Barbara. The tone of the event changed profoundly this year. The heretofore simple orthodoxy that companies can “do well by doing good” with regards to environmental performance is evolving, if not experiencing complete metamorphosis. Emerging is a more ecumenical approach to environmentalism that threads across a variety of challenges, tools & solutions and even ideologies to create a (even) more complex tapestry of environmental activism and innovation.

THE CURRENT SITUATION

Established industries are vigorously defending their license to operate, with newer technology companies admitting financing shortfalls and higher than projected costs. The substantial discoveries of low-priced natural gas in the US altered the financial calculus for renewables while economic pressures have given new momentum to coal and nuclear industries. The regulatory forces have shifted, with governments failing to reach consensus on carbon targets in Copenhagen and relatively low likelihood of Waxman-Markey passing the US Senate. The academic basis for carbon cap legislation is in question, with controversy surrounding the transparency on the scientific methods coupled with disagreement on magnitude and effects of climate change. The ball has been passed back to the private sector to make progress in spite of these developments.

In a business requiring long-term investments and large upfront capital commitments, this level of uncertainty means that companies will likely pursue incremental change and will hedge their bets by participating in range of ventures.

MOVING FORWARD

There are certain fundamentals to watch:

1)    Energy Consumption--Projected to rise by two times by 2050, as the world’s population grows from 6.5 to 9 billion and we begin to serve the 1.5 billion people who have no electricity and 2.5 billion without sanitation. The US uses five times as much electricity per capita as China and 25 times as much per capita as India.

2)    Natural Gas Reserves--There is between 4-8,000 trillion cubic feet of natural gas in the US, according to Boone Pickens, the equivalent of 700 billion barrels of oil, or five times the oil reserves of Saudi Arabia. He and Ford Motor representative suggested that it would be possible to convert the entire truck fleet of the US to natural gas, cutting oil imports by a third.

3)    Capital Cost--Renewables are not on track to produce electricity as cheaply as coal, which presently accounts for 50% of US power generation (85% in China, 65% in India). But Amory Lovins of the Rocky Mountain Institute noted that new wind projects are half as costly as new coal and 1/3 as costly as new nuclear facilities.

MORE COMPLEXITY IN BOTH CONDITIONS AND COALITIONS

Within this context, the actions and alliances being pursued, continue to innovate and sometimes appear, “stranger then fiction”.

1)    Renewables--The Wind industry is crying out for transmission lines that connect power generation locales to population centers. The smallest and the largest wind projects are attracting financing but there is a "donut hole" of mid-sized projects not being funded. Wind entrepreneurs are hoping for legislation that requires utilities to purchase its output first, over fossil fuels. About 8 gigawatts of wind power was added in the US in 2009; only 400 megawatts of solar was built. To put that in perspective, the goal is to have 2,000 gigawatts of renewables on line by 2050 (my math is 50 gigawatts a year, not 8.4 created in 2009). A few utilities are now pursuing "hybridization," combining solar with natural gas. FPL's CEO said that the solar plant at scale can only make 75 megawatts of power (11,000 homes served) versus a natural gas plant that can produce 3,800 megawatts. Solar is used to heat up synthetic oil that then is used to produce steam to drive an existing turbine.

2)    Clean Coal and Clean Nuclear--Mike Morris, CEO of AEP, a US utility that gets 88% of its power from coal, believes in the promise of clean coal. His company is spending $660 million on a facility that will pump carbon dioxide two miles into the porous rock formation where it will remain. Lou Hay, CEO of FPL, a US utility that gets only 4% of its power from coal, said that the cheapest electricity in the US comes from nuclear. He noted that many of the current nuclear plants are 30-40 years old and will need updating or replacing. In terms of the public debate, we are also provided a clear example of the emerging complexity, with different, highly credible environmental NGOs like Sierra Club and Environmental Defense Fund taking fundamentally opposite philosophical views on the environmental merits of clean coal in the energy mix.

3)    Rise of Electric Cars--Peter Voser of Shell said that there will be a doubling of the number of cars from 1 to 2 billion by 2050 but predicted that 40% of those would be electric vehicles. If every car in the US were a hybrid we would get a 20% reduction in carbon output.

4)    Decentralized Energy Production--Given the weakness of the distribution grid, there could be a market niche for products such as the Bloom Box Fuel Cell. This product, as large as a standard car, has zero emissions. It burns agricultural methane at 800 degrees to create electricity.

THE CONSUMER FROM TARGET AUDIENCE TO PARTNER?

Alan Murray of the WSJ and I ran a panel discussion on green marketing. Key conclusions were necessity of giving consumers information to make right decisions, potential for partnership with NGOS to boost business credibility and importance of selling more than green attributes, such as health, lifestyle and performance. The Disney team spoke about tying purchase behavior to specific philanthropic acts, which worked brilliantly in their Give a Day, Give a Disney Day promotion. Our group was quite pointed in criticizing the very notion of green marketing where people pay a premium, suggesting that behavior change would stem from authentic endorsement by peers and parity priced products. A Yale study indicates a person only spends 30 seconds to research the green provenance of a product, said Professor Dan Esty.

Marketers are still sifting through often-contradictory insights into consumer sentiment around “green”, where high aspirations are expressed, but true behavior change is often quickly de-railed by inconvenience and price premium. But all could agree that “green marketing” as a stand-alone conceit is becoming as anachronistic as “total-quality-management”. Instead green attributes are finding their place in the basic consideration funnel, needing to make their case to the consumer alongside quality, price, etc. Resulting purchase decisions will vary and depend on specific brands, markets and industries.

Those of us in public relations can play a vital role in the transition to a more complex greener society on both a rational and emotional basis. It starts with establishing the evidence for change. We can help the scientists communicate with more credibility by acknowledging uncertainty where data sets are insufficient. As Professor Esty said eloquently last night, "The culture of scientific consensus is not helpful. We need to have a broad range of opinions." We can inform people’s behaviors and purchases by providing transparency on the environmental impact of manufacturers’ and retailers’ supply chain, best done in partnership with civil society, because NGOs provide an independent and credible authority. We should also inform the emotional elements of people’s purchase decisions, by facilitating peer-to-peer discussion, creating hang tags that reinforce confidence in environmentally sustainable purchases, such as the FSC tag on lumber, and emphasizing safety plus comparable efficacy.

Posted by Edelman at 3:34 PM | Comments (0) | TrackBack (0) |

February 25, 2010

Capitalism 4.0

As noted in my recent blog post from Davos, there was a surprising consensus among CEOs that business must prove its positive contribution to society, not merely its returns for shareholders. Indra Nooyi, CEO of Pepsico (disclosure: a client) describes this as Performance with Purpose, a sustainable business model that recognizes the reality of a stakeholder society. Having attended the Committee Encouraging Corporate Philanthropy’s Annual CEO Conference and the Newsweek Magazine Green Breakfast this week, I can confirm the evolution of corporate strategy, it is no longer an “either/or question” to maintain license to operate while seizing opportunities to operate more efficiently. In fact, at last month’s WEF meeting in Davos, a working group of 14 CEOs of large companies from a variety of industries signed off on a report that was developed over the last 12 months, Re-Designing Business Value: A Roadmap for Sustainable Consumption. Here are important findings from the two events:

1) Role of the CEO on social issues—At the CECP conference, a poll of CEOs indicated that 62% wanted to take a leadership role in addressing these issues and 0% said they were worried if they focused too much on these issues, they would be out of a job. The most activist companies have a board director designated as the “go to” on social issues.

2) Social impact versus Business benefit—CEOs polled at the CECP meeting divided almost evenly (55% versus 45%) on whether social impact (long term positive impact on communities) or business benefits (tangible and intangible contribution to morale, reputation, recruitment) was more valuable to the company.

3) Philanthropy goes global—Alcoa CEO Klaus Kleinfeld said that he is pushing the Alcoa Foundation to do more in Brazil, China and other markets with Alcoa facilities. In Brazil, the donations are aimed at improving the quality of teachers and to instruct on management of public school systems. Contributions go beyond money; General Mills CEO Ken Powell said that his company gives away food processing technology to small enterprises in Africa.

4) Reporting—The Natural Resources Defense Council’s Peter Lehner said that 2/3 of American companies are now reporting their carbon footprint. HP’s Tony Prophet said that HP has made public its list of suppliers, as well its expectations of suppliers on employee health and environment.

5) Relationship with NGOs—There is general acceptance of the desirability of partnership with NGOs on important issues. Prophet of HP said that he uses meetings with NGOs as opportunities to learn and listen. According to the NRDC’s Lehner, the NGO movement has evolved its strategy from litigation as a first step to litigation as a last resort, preferring to shape legislation that incentivizes behavior change or to consult with companies on supply chain modification. Even Greenpeace has changed, working alongside Kimberly Clark to end the clear-cutting of forests.

6) Ambivalence about role of Government—There was a strong sense at the CECP session that the proper role of Government is referee, not investor or director. Melody Barnes, director of domestic policy for President Obama, noted that “the best ideas do not come from Washington DC. We need companies to be risk takers, to tell us what is working in new partnership models that address issues such as shortage of teachers in math and science.” In fact, both Travelers and UBS are investing in local schools, enabling smaller class sizes and reinstituting the music classes.

These developments are an acknowledgement of Capitalism 4.0 (concept posed by Anatole Kaletsky, journalist from Times of London, who has a book coming next fall on the subject - Capitalism 1.0 was Adam Smith 1776-1929; Capitalism 2.0 was government involvement in business in wake of Great Depression 1930-1975; Capitalism 3.0 was Thatcher/Reagan deregulation 1976-2008; Capitalism 4.0 is the present period of business in society 2008-forward) the next phase for private enterprise. The new expectation of business is as a social actor, doing well while doing good. There is a continuum for business executives, from sole reliance on philanthropy to a more complex change of business process to incorporate sustainability into operations. I would appreciate knowing where your companies are placed on it.

Posted by Edelman at 4:28 PM | Comments (5) | TrackBack (0) |

February 18, 2010

True/Slant-- Hybrid of the Future?

When Walt Mossberg, Wall Street Journal, reviewed True/Slant--an online news organization started nine months ago by Lew Dvorkin, former AOL editor-in-chief—he said:

“It is clear what you are getting—editorial or advertorial—a blend of journalism and social networking.”

In December, True/Slant surpassed one million unique visitors in the month and features 300 credible contributors including Miles O’Brien, formerly of CNN, and Matt Taibbi of Rolling Stone.

Dvorkin’s mission is to “remain committed to the values and standards of traditional news journalism that have served the public interest so well for so long,” while giving marketers an opportunity” to be part of the news discussion.” I spoke with Dvorkin yesterday; here are highlights of our conversation.

1) Readers are interested in individual voices they trust, not in institutional brands. They also want a chance to participate in the dialogue, moderated by the True/Slant contributors. The reporters are expected to engage with those posting comments.

2) Readers prefer a point of view, not a “he said, she said” approach. “They want context and perspective….transparent and passionate voices…news reported by journalists they recognize.”

3) Journalists self-publish under their own names “in a curated network environment, to build audiences around their expertise.” The contributors must have subject-specific knowledge in industry verticals, such as Business; Science and Technology; Health; Entertainment. “We are aggregators of talent, not copy editors. Each journalist is responsible for what he/she produces and how he/she markets the content.” Dvorkin calls them Entrepreneurial Journalists. Most receive incentive-based compensation structured around the growth of their audience. Some share in the site's revenue and others have equity in True/Slant. The contributors also choose stories from around the Web that are featured through “headline grabs.”

4) The content is organized by journalist and by topic “to enable the audience to efficiently find interesting news culled by contributors they respect.” RSS feeds push material out while T/S Suggests, a new function soon to be launched, matches reader interests with contributors and content.

5) Marketers can “offer their unfiltered view of the world” through the T/S Ad Slant, “a new kind of real-time advertorial.” The paid content is clearly labeled and “dynamically and contextually integrated throughout the site." Marketers can also place ads on their T/S Ad Slant page, or anywhere on the site. Dvorkin said, "A company like Merck can talk about drug discovery, explain research and patents, engage with our healthcare contributors and the audience, build a community and curate the conversation with comment management tools.” BIO, the biotechnology association, is a charter advertiser.

6) Dvorkin modestly posits, “We have decided to build the New Newsroom for the digital age. On True/Slant, our T/S contributors, their audiences, marketers and featured content partners can all publish content and discuss with one another in a public and credible environment.”

The opportunity for us in PR is to work in both the free and paid sides of True/Slant. The advertorial can be the company’s view on a set of issues, updated in real time. The reader community’s participation is enhanced with links and cross-references to bloggers or journalists in mainstream media. And we can help reporters with their stories, particularly news not getting space elsewhere. This is a venture worth supporting.

Posted by Edelman at 9:15 AM | Comments (3) | TrackBack (0) |

February 9, 2010

Communicating Science

The controversy surrounding the release of a paper denying significant global warming just prior to the Copenhagen climate round in December is indicative of the extent to which science is politicized in public discourse. According to The New York Times, “...in a 1999 e-mail exchange about charts showing climate patterns over the last two millenniums, Phil Jones, a longtime climate researcher at the East Anglia Climate Research Unit, said he had used a “trick” employed by another scientist, Michael Mann, to “hide the decline” in temperatures.’”

The current attempt to undermine the credibility of the UN IGPC and its head, Rajendra Pachauri, the Noble Prize winner, is a real set back to those seeking scientific consensus on the reality of climate change. Climate deniers are trying to undermine the entire body of the IGPC work by finding needle-in-haystack mistakes among the reams of data that were assembled, reviewed and validated. Scientists in the Climate debate must evolve from merely playing “Paul Revere,” raising awareness and refuting mis-information. They have to adopt a more disciplined approach regardless of the implications for the battle lines of the debate.

I spoke this morning with Howard Schneider, dean of the journalism school at Stony Brook University in Long Island, about their innovative program to improve scientists’ ability to communicate on matters of public interest. The Center for Communicating Science was conceived by actor Alan Alda, formerly of MASH and host of Scientific American Frontiers on PBS, and former Stony Brook President Shirley Kenney, in cooperation with Cold Spring Harbor and Brookhaven Labs.

Alda told Schneider that in the course of his 13 year run as host of the PBS show, “he met superb scientists with great stories about their research. But they were just not equipped to tell those stories.” Schneider, a former Newsday journalist and editor, continued, “so many critical public policy issues, from climate change to stem cell research, depend on scientific acuity. But scientists also have the obligation to communicate their findings effectively.” Many journalists are also not equipped to tell scientific stories, according to Schneider. “We will offer graduate programs in journalism specializing in science writing. These will be open to PR people.”

Alda has employed teaching methods from the theater to improve scientists’ delivery of accurate and compelling information. In addition to Alda, instructors at the Center will include Andrew Revkin, former NY Times climate reporter, Carolyn Porco, director of the NASA Saturn project, and Jack Marburger, former national science advisor to the Bush Administration.

Those of us in PR must be careful to work with the scientists not simply to bestow credibility but also to explain the findings in a factual, not biased, manner. It is the role of those who can stand behind data to provide a hypothesis on what it means, and for those in the policy realm to debate the government actions. To conflate the two roles is a recipe for disaster. We can also ensure there is transparency behind research funding, and relationships between clients, scientists and third party organizations.

Posted by Edelman at 4:23 PM | Comments (9) | TrackBack (0) |