Richard Edelman's blogEdelman FacebookEdelman YouTubeEdelman flickREdelman LinkedIn

« January 2010 | Main | March 2010 »

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 | Bookmark and Share

Comments

Richard,

I can’t wait until Capitalism 4.0 is released. This quote from Public Affairs Books Web site: “The self-destruction of Capitalism 3.0 leaves the field open for the next phase of capitalism's evolution.” This quote begs the question, what were the root causes of Capitalism 3.0 (Thatcher/Reagan deregulation 1976-2008) self-destructiveness, will they be addressed and how?

Over the period, 1976-2006, U. S. House Campaign Expenditures have increased 1,152 % (http://www.cfinst.org/data/pdf/VitalStats_t2.pdf ). If HUGE increase, in any way, contributed to the self-destructiveness of Capitalism 3.0, which stakeholder(s) of our capitalist democracy will step-up to the plate to reverse and remedy this possible root cause?

Posted by: Hugh Campbell at February 26, 2010 6:00 PM


I visited the CECP website but most of the info seems reserved for members. i wonder where you stand as far as transparency and accountability in philanthropy are concerned. There is a trend to push for more transparency and accountability but when looking at a few main philanthrocapitalists one can see they communicate very little about what is achieved (or not) with the money they generously give away. There is this sort of assumption that if you give it away it will be wisely spent. From my own (admittedly) limited experience in one very specific program where I found a lot of waste and incompetence and -understandably- a huge lack of transparency and accountability to avoid having to expose the problems I think there is a very serious need for philanthrocapitalists (and corporations giving away money) to follow trhough about how the funds are used (or misused). part of my experience is on
http://blogsofbainbridge.typepad.com/africa
It concerns the tobacco control grants funded by the Bloomberg and Gates Foundation with the touchy issue of who is ever going to dare say anything even slightly negative about people generously giving away hundreds of millions of dollars.
We are asked to believe all is well but what if all is not well?
How can they get what they call "honest feedback" and do they really want to hear it?

Posted by: Philippe at February 27, 2010 1:56 PM


It's slightly inaccurate to note that 'even Greenpeace has changed' in relation to relationships with NGO's, as this is not a recent change in strategy and approach.

As an independent NGO that does not take donations from corporations, that gives us latitude to either work with a company to solve an issue, or expose the company depending upon the issue at hand and how serious the company is in resolving it.

So for the past few years we have had productive and positive relationships with companies such as McDonalds (who helped secure a moratorium on conversion of the Brazilian Amazon to soya bean plantations) and Coca-Cola (who are eliminating climate destroying F-gas refrigerants from their fridges). And we have also had more trying relationships with companies such as Proctor & Gamble (who use large amounts of Indonesian Palm Oil, which is wiping out areas of rainforest and fueling massive greenhosue gas emissions) and Samsung (who use a variety of toxic chemicals in their products and don't have a timeline for phasing them out).
Dialogue with companies to secure solutions is highly valued. The alternative (everything from ranking guides to exposing scandals to more direct action) helps bring issues of global significance out into the open.

Either approach is valuable in tackling the great environmental problems of our generation, though the approach of dialogue is often a smoother way forward for companies.

Posted by: Gavin Edwards at March 2, 2010 11:07 PM


Hi Richard, interesting commentary from your attendance at CEO Conference. Discussion on role of government as referee rather than director is very much explored in Inger Jensen's very good paper from 2001 on "Public Relations and emerging functions of the public sphere" which addresses issues of organisational legitimacy and identity. I would very much recommend.
http://newmediaimpressions.blogspot.com/

Posted by: Mark Phillimore at March 4, 2010 4:56 AM


A most curious example of CSR I've encountered is Raytheon, a large defense contractor, which has sponsored a multi-million dollar campaign to get middle-school aged kids more interested in math:

http://www.mathmovesu.com/

Long term goal being to increase the pool of candidates available in the type of positions Raytheon needs to fill. This campaign was created for Raytheon by Arc Worldwide, a marketing agency (and my employer prior to Edelman).

Posted by: Jeremy Van Ek at March 4, 2010 7:09 PM


Post a comment




Remember Me?

(you may use HTML tags for style)

| TrackBack


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 | Bookmark and Share

Comments

Thanks not only for your perspective on True/Slant, but for bringing it to my attention. I am now enjoying its' voice.

Posted by: Bruce Garfield at February 19, 2010 2:01 AM


Thank you for this. As a student of international relations, a successful corporate executive, and a fan of the insights provided by the Trust Barometer, I hope to engage you in a conversation regarding next generation PR. After the seismic shift ushered in by the global financial crisis, and the current intellectual one that followed in its aftermath, I believe the PR industry is well positioned to equip a new generation of leaders (political, corporate, not-for-profit, civic) with the necessary understandings of this new and complex era for continued success. A colleague and I have written a manuscript which outlines this new world. I believe Edelman would have a unique market position to benefit from this insight and continue to lead in the future in the manner that it has done so in the past. I would be delighted to share and/or discuss with you or any one at your firm, this tremendous opportunity. Thank you in advance.

Posted by: vox at February 21, 2010 11:01 AM


Here is more of a message to you, rather than a comment to this particular blog post.

Many congrats on Edelman's recent selection by AdWeek Magazine as PR agency of the year. For a future blog post, I'm very interested in your thoughts about this comment from the article about you:

"...whose entrepreneurial spirit and hands-off management style are applauded by his staffers. While he holds people accountable for success, he encourages risk."

That's quite a balance you have been able to find -- hands off management, encouraging risk and establishing accountability.

Any thoughts or tips would be great.

Posted by: Marc Hausman at February 22, 2010 6:40 PM


In my own personal opinion, True/Slant is the best of both worlds: a blend of communication with the public and responsible journalism. We live in a society today that is based on interactive media. Everyone has an opinion on everything, and each individual is not afraid to publicly display these opinions, both positive or negative, on the Internet by means of social media and blogging. However, True/Slant gives us, as public relations professionals, a chance to give our opinions to the interested public and maybe even get a fresh point of view, or see something we overlooked, and make adjustments accordingly and increase out successes. I think the quote by Dvorkin about the mission of True/Slant is evidence enough that this is a credible endeavor in which each public relations professional should be involved. We will finally have an outlet to describe what an organization is doing, or what they are all about, in depth and get almost instant responses. This will be extremely helpful for other professions as well, especially marketers. Not only does it benefit organizations and businesses, however, it will be a wise opportunity for educated individuals to see the opinions of their favorite journalists firsthand. I think that you are right, that we should work in both the free and paid sides of True/Slant, and you make a very valid point that we can help reporters get publicity and attention for stories that may still be of public interest but not getting space elsewhere. True/Slant is a great opportunity and blend of social media and journalism and would be a great outlet for many organizations in this digital age we live in today.

Posted by: Stephanie Romano at March 15, 2010 2:25 PM


Post a comment




Remember Me?

(you may use HTML tags for style)

| TrackBack


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 | Bookmark and Share

Comments

Must say I find myself agreeing with you. Your idea to stake your agency on authenticity and the character content of this post. Strange that Coppenhagen did not get the support it deserved in digital space. I love Hopenhagen, the branding of the message. It was lost on the public though. Haiti stole the thunder on Twitter, on Facebook and new media haunts.

I felt many were gutless with Hopenhagen, the science did not come through. How is it the public is receptive to Movember and Haiti and not the very thing that their children will thank them for in years to come, not there prostate problem. I feel this post needs greater exposure.

Posted by: Dara Bell at February 9, 2010 7:37 PM


Many of the so-called objective articles I see on climate change reflect a definite point of view.

When I teach journalism at a local university, I tell my students unless they are producing an editorial, their writing should take the Joe Friday “just the facts, ma’am,” approach and not expose their opinions and biases.

The wall of objectivity – which also protects the journalist – has long ago disappeared. This is particularly true in political stories where the advocacy approach has resulted in a loss of credibility.

I believe the most valuable information is in the last graph of this piece. It warns PR pros to be careful not to simply bestow credibility on scientists but to explain things in a factual, non biased manner.

A final note: I would give zero credibility to scientists who have altered data to promote their point of view. In doing so they have betrayed their professional integrity and done damage to the causes they espouse. Reporters and PR pros who excuse or defend such fraud will damage their own reputations.

Posted by: David Skocik at February 10, 2010 11:56 AM


Richard:
Your point about explaining "science" in a concise, factual manner is precisely what is needed and I am delighted that you pointed it out. If science is presented to the public-at-large in a way that gets understood and processed, it will build advocacy and speed acceptance and then change. If this happens, governments will be rendered weak in face of public outrage -- especially so as to climate change, since all will be impacted.
Noemi Pollack

Posted by: Noemi Pollack at February 10, 2010 3:11 PM


I agree with this last comment posted. Due to the tragedy in Haiti, the disucssion in Coppenhagen was far less agressive than it could have been.

Hopenhagen was a strong branding message, however, I think that we tend to overlook long term damage such as the climate crisis when there's something to address 'in the now.'

It's unfortunate that the opportunity in Copenhagen was somewhat lost because of scientists not knowing how to better communicate these facts to the general public. I admire the University of Long Island for taking the innitaitive and addressing this problem which has caused set backs for many years.

Posted by: Katie Cerney at February 13, 2010 12:56 PM


I'm so glad you've blogged on this subject, Richard, but I would go much further in expressing pessimism about the way the global scientific community and IPCC are responding to the corrosive impact of the climate change deniers, who are using the failure at Copenhagen and pedantry to undermine the political consensus that existed prior to Copenhagen for global climate change action.

Perhaps I am being too alarmist, but the IPCC needs to consider the possibility that the smear tactics are not only working, but that the tide has already turned as a result of climate deniers' simple and alluring message that "they've lied, we can all forget about it".

That message dovetails perfectly to the profound sense of powerlessness that most people have with respect to climate change. Just recycling old newspapers and tin cans isn't going to save the world and we all know it.

In the meantime, the undermining of IPCC science looks to me like a classic "loss of trust" issue, where the previously "trusted" scientists will take too long to realise - or perhaps may never get over the sense of affront to be disbelieved - and fail to mount an effective strategy to regain trust in their work.

This will not be achieved by rebuttal, but by acknowledging up-front the loss of trust and starting right from the beginning again to rebuild climate science models in a transparent manner that allows sceptics to have their say on the way through.

The most likely reason for something like that not to happen is that it will take so damn long. But that's the point - trust lost takes a long time to restore. The less effort is made at the critical moment when trust is lost, the longer that timeframe will be.

Posted by: Pattrick Smellie at February 15, 2010 4:36 PM


Richard, Thanks for the post. I heard you speak at the Climate Disclosure Project Launch during Climate Week NYC in New York. Your admonition to "tell stories" directly affected a keynote I gave at Purdue University the following month. My presentation was about applying the ideas of W. Edwards Deming to climate change. I told the story of the Northwest Passage and all the men who gave their lives trying to find a route, getting stuck in the ice, wintering for consecutive seasons, and many perishing. For 400 years the search was deadly and futile. Today however the once impossible task is accomplished by a cargo ship (even without re-inforced hulls) in a matter of weeks! The contrast gave context and perspective to climate change, and it told a human story. I got many positive comments and I believe it got people thinking differently. Another tool I have used is to embrace climate change as a theory. Gravity, Evolution, Relativity - all theories - have brought about new knowledge and changed the way human beings understand and interact with their surroundings. Climate change theory is just as powerful and is also bringing forth new knowledge.

Posted by: Andrew J McKeon at February 18, 2010 9:45 AM


As public relations professionals, we are called to be open communicators between organizations and the public. A middle man, if you will, between the high-powered intellectuals and “average Joes.” Science is a difficult subject for a majority of people due to the content of the topic, the concepts, the jargon. It is hard for the average person to comprehend and interpret data like scientists do. That is why scientists need to improve their ability to communicate on matters that concern the entire public, especially when they are as controversial as global warming. I agree with you, that PR should be involved in the release of scientific discoveries, findings and studies because communication is key. In order for scientists not to lose their credibility, they need a way to learn how to improve their delivery of “accurate and compelling information” in an unbiased way that is easy for everyone to understand. It is vital, however, that these PR professionals who are presenting scientific information do not overstep their boundaries and move from an unbiased perspective to a biased one. If you did not conduct the research yourself, you can’t stand behind the facts and data and be able to explain it better than the person who actually conducted the study. As public relations specialists, we are here to assist with the communication process, not to persuade someone that fiction is fact. We can not make something that is not credible, credible, which is why we must solely present the facts, but just in a way that every single person in your target audience can understand and comprehend them.

Posted by: Stephanie Romano at February 22, 2010 1:28 PM


It is a very valid point that PR practitioners need to be careful on how they communicate facts and information from the science world to the public. The public depends on journalists and PR practitioners to find out the truth and clearly communicate what scientists are finding out, so that the public can read and learn in a language that is easy for them to understand and still be knowledgeable of what is going on in their world and surroundings.

It is the job of journalists and PR practitioners to convey accurate information and to hold accountable the scientists who are releasing the information. If scientists do not have people who are checking their work and reading and understanding their material, there would be no accountability.

It is also necessary to see who is funding the projects of the scientists and to make sure that the information they release is accurate and not twisted for the people who supply the money. The public needs to know that so the scientific world does not produce biased information or information that is incorrect.

I agree with you that PR practitioners have to be the ones that find out the facts and give credibility to the information that scientists and researchers discover. PR practitioners do not need to debate government actions or explain hypotheses, but simply explain the findings and help the public have a full knowledge.


Posted by: Bekah Garr at February 22, 2010 5:33 PM


I agree with you that this initiative at Stony Brook University is an excellent idea and will be to the great benefit of emerging scientists. The average person neither has the intellect nor the patience to understand the important information that scientists have to report. It is definitely to a scientist’s advantage to learn how to better communicate their message so the public will be truly able to understand the latest advancements in science.

Another aspect that needs help is making science compelling. Even if scientists can clearly communicate their message they must also remember that people often find science to be dull and must not only make it understandable but also interesting.

As public relations practitioners we can also have a great influence on getting out the messages of these scientists. We know the way people hear things best and can help scientists communicate their message, like you mentioned, with the least bias possible. And many times it can be easier for PR practitioners to speak for the scientists so that they are able to focus on their work. If we each focus on our strengths then we can each be successful and can accomplish a similar goal of distributing the scientific information to the world so it can benefit everyone’s lives.

Posted by: Megan Dunlevy at February 24, 2010 8:10 PM


As PR professionals, it is our duty to communicate the ideas of our clients to the global community through different media outlets. When it comes to scientists, you make a good point in acknowledging that scientists are not always the best at explaining their findings in an understanding way to men and women with only a common education of science. In a situation where advancements in knowledge have occurred in areas like global warming or stem cell research, the information must be understandable. The Center for Communicating Science at Stony Brook University is on the cutting edge of journalism, providing ways for scientists, journalists, and PR professionals alike to learn how to tell science stories clearly and understandably. It is important for PR professionals to take advantage of this new education. When asked by a client to relay information to people involving complicated scientific research it is important that we can do so in a clear and precise way that allows people to walk away in total understanding of the findings. We must be the bridge between the scientists and the people. The only way to do that is to work hard with the scientists to find a way to take their research and present it in a way that does them justice but can be read and understood by a high-schooler. That is a PR professional’s job, to educate and inform.

Posted by: Emily Heeb at March 22, 2010 10:30 PM


Post a comment




Remember Me?

(you may use HTML tags for style)

| TrackBack


February 3, 2010

A Sober and Reflective Davos

I attended my twelfth World Economic Forum meeting in Davos this past week. In previous years, there were exuberant “dot-com” savants (1999), self-assured US diplomats just before the invasion of Iraq (2003), impressive sovereign wealth funds (2007) and confident private equity barons (2008). In turn, each has been humbled within eighteen to twenty four months. Last year in Davos, the world stood at the precipice, with insolvent financial institutions looking to government as lender of last resort and global trade plummeting as recession gripped the economy. Economic collapse has been averted but this year’s Davos attendees were forced to reconsider such basic assumptions including the role of business in society and the private sector’s relationship with government. One left the ice and snow with a distinct sense of unease. Here are a few observations from WEF 2010 about the priorities of world leaders that may inform your thinking and client counsel:

  1. Government on the front foot: Nicolas Sarkozy, president of France, took a very aggressive position on the future of business, calling for “moral capitalism” in place of the selfish, bonus-addicted behavior that led to the crash of 2008. The president of Korea, Lee Myung-bak, noted that the unprecedented cooperation among G-20 nations had staved off the crisis. He called for strong regulation to “counter pro-cyclical financial institutions” and an end to “too big to fail banks.” Larry Summers, chief economic advisor to President Obama, said, “We were there for the banks, now they need to be there for us and for the country. It is the task of progressive activist leadership not to work against capitalism, but to strengthen the market economy. The system cannot work for the benefit of the limited elite.” A few business leaders pushed back, for example Eckhardt Cordes of Metro Group, who said that government is now too “interventionist,” citing the Opel case in Germany where “there was a private sector solution available.”


  2. Bankers on the back foot: Mr. Profumo, CEO of a large Italian bank, said, “Banks have a huge reputation problem. We need a significant regulatory framework to restore trust.” Howard Davies, former head of the UK’s Financial Services Authority, noted “mounting public anger against the bankers; broad discontent among the people.” Brian Moynihan, CEO of Bank of America (disclosure: a client), said that “pension funds need to have more sober assumptions on investment returns so that they don’t make speculative purchases.” Joe Perella of Perella Weinberg acknowledged that the “incentive system does affect behavior. You cannot have extreme bonuses linked to short term profitability. But the leadership of a firm sets the tone on culture; what are the priorities?” Bob Diamond, CEO of Barclays, took a strong stand against the Volcker plan to limit bank involvement in proprietary trading or hedge funds, saying it will hurt their ability to serve clients.


  3. Business’ endorse stakeholder model: Indra Nooyi, CEO of Pepsico (disclosure: a client) calls it Performance with Purpose. Mr. Caleo, CEO of Vodaphone, calls for “zero tolerance for bad values; lots of rope on operations.” However you characterize it, the consensus of CEOs was in favor of evolving the model away from Milton Friedman (the social responsibility of business is to make profit) toward a more nuanced approach of business’ positive contribution to society. Michael Porter, professor at Harvard Business School, said, “The greatest competitive advantage for business will be social. We used to believe there was a trade-off between profit and social issues. Now we know differently. We thought work place safety and environmental stewardship were expensive, but the highest return on investment comes from zero accidents and reengineering the supply chain to make you more efficient. Companies which understand complex social issues will turn them into competitive advantages.” Tim Flynn, managing partner of KPMG, said that a CEO needs to be explicit and transparent and take a long term point of view on shareholder value.


  4. Copenhagen round moves forward: On the positive side, Copenhagen marked the first international meeting based on a consensus on the science (maximum desirable temperature rise of two degrees Celsius), the aid package from the developed to the developing world and a smaller divide between north and south on emission targets/caps. The negatives include failure to deliver on target amount or period in which to achieve the ‘goal by nation’; absence of private sector involvement; and the lack of capacity of the United Nations in negotiating. A senior minister from India acknowledged that climate change is now linked to trade competitiveness, economic development and politics in each nation; “let’s not trash the multilateral process.” President Calderon of Mexico, who will host the next round in December, 2010 in Cancun, said, “We must reestablish trust among the parties. We have two gaps that threaten us; the rich versus the poor and man versus the environment. Let’s connect the solutions to both problems.” Caio Koch Weser of Deutsche Bank suggested public private partnerships such as that between his institution and the German Government to provide 10% of the country’s power needs from solar projects in the Sahara Desert, with the government agreeing to take the “first loss on equity projects.” Mr. Cameron of the Climate Action Project said we will not have a low carbon economy for at least thirty years—carbon sources will account for at least 70% of supply until 2040. Mr. de Boer of the UN said, “There will be winners and losers. No way China can do 8-9% growth per year and have a low-carbon economy.” Ed Markey of the US Congress, warned that “other nations will not be allowed to exploit the US commitment to better environment because it will cause job losses. We will have tariff protection against those actors.”


  5. Sustainability as a core value: Water needs to move to the center of planning for development. According to Peter Braubeck, chairman of Nestle, “Seventy percent of our use of water is in agriculture and 85% of that is used in less developed nations. We must improve agricultural efficiency and raise the intensity of production. In fact, 20% of our water use is in manufacturing and 10% is for drinking and personal hygiene.” It was suggested that water used in cities could be recycled but that a significant psychological barrier remains. Vindi Banga of Unilever (disclosure: a client) said that the carbon footprint on a typical Unilever product is 2% at the company offices, 25% at the factory, 10% in logistics and 50% when the consumer uses the product. He said that it is a company’s responsibility to educate consumers, to provide enough background so the consumer can make well-informed product choices. Mark Parker, CEO of Nike, said companies should take on the case for the environment. “Consumption has been seen as linear, from ‘Buy to Use to Throw Away. We have to recapture the value in reuse. We have to tell our investors how we are saving money and creating a sustainable business model.”


  6. Education: There are 72 million children who do not go to school, half of whom live in Africa. Queen Rania of Jordan cited the “marginalization of girls and minority groups. We must offer access to all. We should also empower parents in the local environment; they are the best advocates.” Her campaign, 1Goal seeks to raise the $16 billion needed to build schools and hire teachers for those outside of the educational system. Terry McGraw, CEO of McGraw Hill (disclosure: a client) described a program his company is rolling out that “prepares workers seeking re-training over a ten week period to be ready for their next jobs via on-line training modules.” He suggested educating the teachers via broadband, so that they teach critical thinking skills instead of rote instruction.


  7. Chronic disease is preventable: The threat of obesity, tobacco and alcohol abuse to incidence rates of heart disease, cancer and diabetes is now present not just in the West, but in China, India and Africa. George Halvorsen, CEO of Kaiser Permanente, said, “We have intervened aggressively, offering every blue collar worker who is overweight a personal trainer. We have achieved lower rates of back pain, heart disease, absenteeism and diabetes.” He asserted that there is “no deterministic link between rates of obesity and education or income.” The health minister of Tanzania said that 60 years ago, cancer and diabetes were rare in his nation, “now many children have Type I diabetes and cancer kills more of our people than AIDS, tuberculosis and malaria together.” The panel agreed that there should be incentives for people to modify diet and start exercise. There is potential for technology to be used in disease prevention, with weight and blood pressure monitors linked to PCs. I attended a dinner on Altzheimer’s, where Dr. Robert Butler of Mt. Sinai Hospital called for a public-private partnership to fund a massive study on use of drugs in prevention, not treatment of the condition.”You have to get to the patient early, even at age 40 when abnormal proteins begin to be produced in the part of the brain where memory lives. One important discovery is that the disease is not genetic.”


  8. Emerging market consumers: The consumer in the developing world is seeking to trade up, while the consumer in developed markets is trading down, according to a Boston Consulting Group study released at Davos. Consider that the Chinese saving per family is dropping from 26% of income to 13% of income. In the developing world, 85% of purchases are made by women, who go to 3-5 stores as “deal hunters.” The CEO of Carrefour said these women “value affordability, aspiration and availability. They are smart and empowered.” Newly wealthy people in developing nations “have high aspirations. They want high value premium brands.” In fact, China will pass Japan next year as the #2 luxury market in the world. The CEO of tech giant HTC of Taiwan, Ms. Sher, said that companies must move to local production, given the demand for ecological stewardship. “We need much better communication to customers on the provenance of the product.” In a session on media in developing markets, Shekar Gupta of the India Express Co. said that locally produced content does better than global content. Eddy Saramedia of Indonesia’s leading media company said that he buys scripts from Korea and India, then localizes the creative and shoots at home. I met the creator of “99” comics from the Middle East, super heroes of the Batman and Superman vintage, except of Arabic origin. “I make the story lines local. I give my writers a character guide—no romantic scenes allowed.”

The World Economic Forum experience is akin to being thrust into a blender with the world’s smartest people for four days, then being poured out on the other side. I come away convinced of the necessity of explaining how and why business exists. It is not good enough to generate strong financial returns, outstanding stock price or to have a celebrity CEO. We must demonstrate that business is a change agent, a flexible and fast instrument of social good through employment and better life. Those of us in PR play a vital role in this endeavor.

Posted by Edelman at 4:49 PM | Bookmark and Share

Comments

Dear Mr Edelman,

I interrogated the survey here:

http://paulseaman.eu/2010/01/edelmans-trust-survey-interrogated/

It is the third time in a row I have done so.

Posted by: Paul Seaman at February 4, 2010 8:05 AM


You and I agree on most points. I am happy to make Trust about commitment and action. It requires a different sort of communication approach as well speaking via employees, academics, NGOs... not just from the top of the company. Thanks for taking the time to review the Trust Barometer in depth.

Richard

Posted by: Richard Edelman at February 4, 2010 11:50 AM


Dear Mr. Edelman,

I thought this post was very informative as a student studying public relations. Public relations is ever changing and constantly being influenced by different things such as what you chose to write about, world leader’s priorities, and social media. I chose to comment on 6 of the 8 points you made in your post of world leader’s priorities that you observed from WEF 2010.

Concerning your point of government on the front foot, I agree with Mr. Cordes in saying that the government in today’s world intervenes much too frequently. Regarding the Opel case in Europe, I read in an article titled “UPDATE 3-Germany says EU concerns don’t endanger Opel deal” on reuters.com that the German government offered 4.5 billion Euros to the General Motors European arm in return for a promise not to fire any of the current workers for the car company.

With all of the news about banks such as National City going bankrupt, this is a very important topic to discuss. I agree with Mr. Perella on the notion of how one can’t have extreme bonuses linked to short-term profitability. I believe that by participating in that kind of behavior is considered counter productive and is giving employees the notion that the bank business is doing well since they are getting a significant raise when in fact, banks are experiencing exactly the opposite.

From a public relations point of view, displaying a positive image of the company you are representing to the public is very important and is best done through contributions to society. I agree with Mr. Porter and believe that companies need to take on social issues such as work place safety and environmental stewardship in order to raise investments within the company. I believe that if you contribute to society and show the public that you care about your employees by improving work safety or that you care about the effects your company may be having on the environment and find ways to cut down your company’s carbon footprint, then people will notice you are making an effort and thus be more likely to invest in your business.

President Calderon of Mexico said that there are two gaps that are threatening us: the rich versus the poor and man versus the environment and I semi agree with his statement. I think this is an issue in the United States as well. The rich are getting richer and the poor are getting poorer, thus leaving the middle class to become thinner and thinner. This is exactly the opposite of what we want; ideally we would want the majority of the people to be in the middle class with small amounts of people in the upper and lower. The gap between man and environment is less of a problem because we are doing and advertising many ways for us to be more environmentally friendly. Companies such as Toyota are coming out with hybrid cars, companies such as Energy Star have come out with fluorescent light bulbs that save energy, companies such as Wal-Mart have pushed using reusable bags when we shop, and companies such as Brita have pushed water filtration systems in place of buying bottled water. I feel like companies and people have come a long way and are being more environmentally conscious in their actions.

In your point, “Sustainability as a core value,” I noticed that you said that it was suggested that water used in cities be recycled but that psychological barriers still exist that prevent that from occurring. I can honestly say that I wouldn’t feel comfortable with reusing the city’s water; there’s just something about me drinking water that has been used to clean someone else’s body that unnerves me. I do however agree with Mr. Banga is saying that it is a company’s responsibility to educate consumers so that the consumer can make well-informed decisions. In the paragraph above, I stated companies such as Toyota, Energy Star, Wal-Mart and Brita and these companies have done just what Mr. Banga says is a company’s responsibility: educating consumers about sustainability issues and then solutions that the company may offer to combat such issues.

I think it is an awesome idea to link technology such as weight and blood pressure monitors to PCs in disease prevention because that is where the majority of individuals at any age spend their time- in front of their computer.

I really appreciate your post revealing some of the priorities of world leader’s so people like me, who are studying public relations in hopes of going into a career of public relations, can cater our thinking and client counsel around these observations you made while you attended WEF 2010. Thank you for your insight and documentation of your observations so that others may learn from your experiences and thus be more efficient in his or her public relations role.

Posted by: Tracy Scherzer at February 20, 2010 4:55 PM


Dear Mr. Edelman


I found this post, particularly the comments on education extremely interesting.By making education possible to those it was not an option for before would be like allowing an entire part of the world to help each other by helping themselves. If those 36 million children in Africa that currently are not allowed an education were given the option to go to school that would greatly decrease the amount of poverty, sickness, and who knows what else. In turn this would greatly increase the quality of life, amount of opportunities available to people, and economic well-being of Africa. Giving these people the option to be educated will empower them by allowing them to help themselves more than any other donation we could give to them would. Violence, terrorism, and poverty will then become less profound in areas where it now runs rampant.


But, we all already know this. What I feel most people do not think about is where we are going to get the people who are going to educate those in need. I am happy to see this is a point being addressed by McGraw Hill. Teachers need to be educated in ways that allow them to take what they learn and apply it to the changing market; education shouldn’t just be about what you know anymore. It needs to be about what you know and then how to use what you know and do something useful with it to benefit society as a whole. Having the program online is a great idea because I have found online classes take more self-motivation and discipline. Consequently only those that really want to learn the material and digest what they are learning will do well. Because of this, you will get teachers that really want to do a good job, and that really want to be doing what they are doing.

First it is our goal to find those educators who want to deliver a quality education to those who want and need it more so than ever. That being said, educating them first takes priority. I am a current PR student and I feel that being socially responsible is one of the most important things and I am so glad to see this being recognized.

Posted by: Jane Wood at March 1, 2010 4:00 PM


Post a comment




Remember Me?

(you may use HTML tags for style)

| TrackBack