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May 4, 2007
Wow, We Spotted This Trend First
Geoff Colvin’s excellent article in the May 14 issue of Fortune Magazine titled "Business Is Back" contends that after a five and a half year period in the wilderness, “business is back in America’s good graces.” Colvin quotes liberally from the Edelman Trust Barometer, which has been tracking attitudes towards institutions for the past seven years.
In the report, we noted that business was the most trusted institution in eight of the 18 countries surveyed (equal to non-governmental organizations) and was more trusted than government in every country except China. We found that the rise in trust in business was attributable to three factors:
1) Business is stepping up to important global challenges, not as a matter of philanthropy but because of the market opportunity. Food companies are revising their product mix toward “good for you products” because they can make better margins and beat off the store brands. GE (an Edelman client) has launched ecomagination because “green is green,” allowing price premiums on fuel-sipping locomotives or efficient turbines.
2) Government has proven unable to make change while prosperity is being attributed to private enterprise. Whether the inept response to Hurricane Katrina in the US or the disappointment with the chief executive in countries from Korea to the United Kingdom, the public sector has lost credibility. We found it particularly interesting that in the developing world, business consistently rated well above government.
3) CEOs are again willing to speak about important issues. Though the “rock star” model is out of vogue, leaders such as Howard Schultz, chairman of Starbucks (an Edelman client) are taking the lead on health care reform, the environment and free trade. As Neville Isdell, CEO of Coca Cola Company said at Davos, “It is time for us to put our heads above the parapet again.” Trust in analysts, accountants and other business professionals is on the rise as well.
How do we keep business on this comeback trail? Public relations will play a critical role in the process. How do PR professionals help business remain trusted? We listen and understand the impact of policies on all stakeholders. We need to keep our clients focused on the stakeholder, not the shareholder model, for example partnering with NGOs (note the recent TXU deal with private equity firm KKR endorsed by Environmental Defense and NRDC). A new level of transparency is expected from companies, asking for input from enthusiastic consumers and informing communities about the rationale for a new power plant before going to government for approval. Respect for employees is the “new green” unearthed by the Edelman Trust Barometer, with continued communication on performance and purpose a necessity.
We should not allow ideologues to stigmatize these new corporate initiatives as “just PR” because we are, in fact, changing the face of business so that it can succeed in the 21st century. We are helping to provide the license to operate by letting business again be trusted to do what is right. I disagree with the UK’s Daily Telegraph article this morning by Jeff Randall who says “You cannot PR your way to a sustainable reputation. Those who think they can are confusing form and substance; they are doomed to fail.” The best PR is about substance, communicated well to all shareholders.
P.S. In this context, I am profoundly saddened by the resignation of BP’s chief executive, Lord Browne, earlier this week. He helped to show the way for other CEOs in seeking to reconcile the needs of business and society, while making BP again a feared competitor in the global energy market. I hope that he continues to find ways to contribute to the dialogue.
Posted by Edelman at May 4, 2007 12:50 PM |
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Comments
Nicely placed story, usually with PR agencies they are the worst people at doing their own PR.
Posted by: Ged Carroll at May 4, 2007 3:03 PM
Quite an interesting entry. I must say I am a bit uncomfortable with the first half of the entry while the second half strikes me (situated here in Singapore) as right on target. In the USA 53% of the responses indicated trust in business while in Russia the number was below 40%. While I love the improvement, and businesses should get credit for all their hard work, I am not sure that 1 in 2 people trusting business is something we should be too proud of. 47% of the people out there hold some sort of a negative opinion. In my mind, this is the number I would want to focus on.
So the second half where you ask how we can continue to make progress...this strikes me as right on target.
I love the work you folks are doing and the research you are uncovering. Keep up the great work, and keep up the great work in Asia. We need all the research and case studies we can get!
Posted by: Michael Netzley at May 9, 2007 9:29 PM