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April 5, 2007

The New Mantra: Lead, Tell, Show

I was having a drink last night with Matthew Bishop, US editor of The Economist, whose book on corporate philanthropy is due out next spring. We were discussing the rise in confidence in business and concomitant decline in trust in government seen in the Edelman Trust Barometer. Bishop noted, “Business is the most accountable institution, far more accountable than government. Its every move is monitored, by financial analysts, regulators, NGOs and customers.” We agreed that business is now a “political institution” answerable to stakeholders, held responsible for finding solutions for major issues, from environment to proper working conditions in factories.

These new expectations of companies are aligned with the economic might of the private sector and its ability to act in an entrepreneurial manner. The revenue of the top 50 companies are commensurate with the GNP of the 50 top economies. So for companies to maintain the ability to say, "trust us", they must respond to stakeholder demands to, "show us."

The actions of smart companies can be summarized in three words: LEAD; TELL; SHOW.

  • LEAD— For a company to derive a sustained advantage in the reputation marketplace, it must operate in the “smart zone”, beyond minimum regulatory standards and above the minimum public expectation of behavior (this phrase coined by Tony Long of World Wildlife Fund). In every competitive market, there is first mover advantage. Note the GE ecoimagination campaign (disclosure: a client), the first to state boldly that green can equal green. A comparable example is the decision by Scotts Miracle-Gro (disclosure: a client) to give its employees a year to stop smoking or face termination, in an effort to curb soaring health care costs.

  • TELL—Go out and make your case. If possible, partner with a credible third party such as an NGO expert or academic. TXU, formerly an environmental villain, was recently lauded for its decision to drop eight of eleven planned new coal-burning facilities while adding two new ones with carbon sequestration, a plan developed with Environmental Defense and NRDC.

  • SHOW —It is expected that business will keep score, to assure its publics of its genuine commitment to solving problems. The GAP’s CSR report of two years ago set a standard for honesty on its labor issues in third party manufacturing. If someone wants to track infractions of environmental or labor policies within Chiquita’s supply chain, they can do so at www.chiquita.com, because Chiquita (disclosure: a client) recognizes that if it doesn't provide credible information about its own conduct, people will just go to - and believe - other sources for information.

    • In this context, it is ironic to see increasing criticism of business for making certain decisions because “it is good PR.” Of course, corporations seek better reputation, in the same way they want higher stock prices, more sales and the top employees. It is the job of PR people to listen to non-traditional stakeholders (NGOs, community leaders) and to bring ideas forward that can improve the reality while buttressing the image of a corporation. Effective communication can provide a blend of credibility and transparency as potent as financial data corroborated by accounting firms. PR should also offer the same level of strategic guidance on non-traditional stakeholders as management consulting firms for traditional audiences. Once upon a time, our job specification in PR was limited to TELL; now we are at the table, suggesting ways to LEAD. We then are charged with SHOW(ing) progress. This is a virtuous circle for business in the 21st century, premised on innovation, conversation and accountability, not on the perverse stereotypes of spin, control, deflect and defend.

    P.S. Given the season, I wanted to relate an Edelman family story. There comes a moment during the Passover seder that the youngest in the family is asked to open the door for Elijah, the prophet. A place is laid at the table for Elijah, symbolizing the warm welcome for strangers at the dinner. In 1925, my father Dan, age 5, was asked to do the honors. He walked to the door, opened it and was confronted by a 6 foot five inch man about to knock. As legend has it, my father exclaimed, “It’s Elijah,” and promptly passed out cold on the floor. It was the doorman for the building, affectionately known as “Sweet Man,” for his profuse applications of cologne, seeking to drop a package off for my grandmother. In any case, each of my children has been given appropriate warning lest a latter day “Sweet Man” comes knocking. Happy holidays to all.

    Posted by Edelman at April 5, 2007 11:35 AM | Bookmark and Share

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    Comments

    I have no bone to pick with Matthew Bishop, but his observation about corporate accountability cries out for a bit of context. Yes, corporations are getting more accountable. More accountable than some governments. But I get leery when corporate representatives begin to mistake their CSR programs for quasi-governmental programs. Corporations are accountable to a wide range of stakeholders for their ability to make money. Period. Their bottom line is not the public good. Ordinary people cannot elect representatives to business, not can they choose leaders or follow independent media that scrutinize policies. Their jobs or pension savings may go up in a puff of smoke to satisfy quarterly results-hungry or greedy executives. Corporate empires already transcend national boundaries and are often unaccountable to legislation designed to protect local environments or economies. I have nothing against large corporations (disclosure: clients!) but when I hear them whine or brag about their accountability (no reference to Bishop here), I think, let's not take ourselves for government, guys! No one has given us that right.

    Posted by: Elizabeth Hirst at April 6, 2007 6:38 PM

    You wrote, Bishop noted, “Business is the most accountable institution, far more accountable than government."

    Is he stating that business simply has higher standards of accountability or that we as a practical matter truly hold business more accountable? And if it's the latter (or arguably both), one would expect that the relevance to self-interest or the unbroken line between financial performance and our personal pocket books is among the chief reasons. Seems to me that if we could create such an unbroken line to citizen self-interest in the political world, then we could and would hold our politicians more accountable. Of course we would have to have politicians as willing to accept the blame as they are willing to take the credit.

    Posted by: Leo Bottary at April 9, 2007 2:24 PM

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