How to ruin a reputation

I’ve always been a big fan of Charlton Atheltic F.C.  Like Koreans, a few Irish footballers get to star in the Premiership and Irish people, like Koreans, will generally root for the clubs they play for.  Charlton always had Matt Holland (and that goal in Japan) and the club had taken great pride in being the ‘family club.’   My impression was that a lot of sports club say it, but Charlton Atheltic actually did it.  In short, I liked Charlton Atheltic.

Then I read this.  This is a prime example of how not to handle stakeholder relations.  It looks like they’re scrambling around to save face and get a sponsor on board, but I think if they understood the importance of the female set-up they’d have been scrambling around before.  Maybe they were, but they did not communicate the closure of the operations to the female players in the best manner, according to Danielle Murphy’s account.

It’s a great example of how a strong reputation built over a long time can come crashing down overnight.

My Goodness, My Guinness

I’m pretty speechless at the prospects of losing Guinness here.  All that would need to happen next would be to lose pasteurised milk!  Those two go, I’m gone…  Me and UHT do not go. 

Anna Fiefield and Song Jung-a wrote about the potential Irish community’s nightmare here.

Here’s a post from The Marmot’s Hole which paints a picture on how foreign companies seem to be treated unfairly in comparison to domestic.  I’m drawn to this debate in my emotional state (!) and agree that foreign companies have to work a lot harder to build their reputation here and keep them.  I’m sure also there’s more to this and I’d be very curious to know how solid the companies’ stakeholder relationships were in Korea.

How NOT to do media relations

One of the facets of the Korean media environment that overseas companies find it most difficult to understand is the wide use of anonymous “sources” that provide – occasionally accurate – information to reporters. For executives who come from an environment in which media relations are usually coordinated through a designated office and approved spokespersons, the fact that literally anyone in the company would talk to a third party about the internal operations of the company is quite incomprehensible.

Long time residents of Korea understand that this is in part a function of the widely extended networks that characterize Korean society – “I had to give him the information because he’s my senior” is a rationale that will be quite understandable and even acceptable to a Korean boss but will make an expatriate manager see red.

From another perspective, however, Korean companies really need to start formalizing their media relationships. As the Internet massively restricts the amount of time a reporter has to research and write a story, it is important for companies to ensure that their that inaccurate or sensitive material is not leaked into the media and thence online.

A cautionary tale in this respect appears in todays DongA Ilbo relating to the leak of an internal report on Presidential hopeful Lee Myung-bak’s grand canal project. Following speculation of Blue House involvement, the leak was eventually traced to Kim Sang-woo, the Executive Director at the K-Water Corporation who leads the research and planning team that wrote the report. Kim Sang-woo passed the report to Kim Hyun-joong, a friend from the Seoul National University Advanced Management Program and the CEO of a matchmaking service company.

According to the newspaper:

The police agency was told that Kim [Hyun-joong] handed the report over to a weekly paper reporter who is his acquaintance at a hotel coffee shop in Seoul on June 1. Kim Sang-woo stated, “Kim [Hyun-joong] said that he is very interested in political matters and the Gyeongbu canal, and I just passed it over to him when he wanted to see it. That’s all [emphasis mine].” Kim Hyun-joong said, “I delivered a copy to the weekly paper reporter because he showed his interest in the canal [emphasis mine].”

The fact that Kim Sang-woo seems to think that the dissemination of a confidential report to an acquaintance with no connection to the organization he represents is a rather trivial think should be worrying enough for that organization. That a third party would then indiscriminately distribute that report to the media should have every Korean organization reviewing its internal and external communications protocols.

It’s not enough to say simply that media requests must go through the communications team – corporate cultures need to ensure that everyone at every level fully understands his or her responsibilities with regard to the privileged information to which they are party during course of their working day.

Fortunately for K-Water, this incident has so far had a negative outcome only for the two individuals involved. However, it is not difficult to see how a similar lack of discipline regarding a confidential report on the organization’s own activities could have severe and lasting consequences for that organization’s reputation.

Conflict of Interest

I raised an eyebrow at Airbus’s  latest PR issue at the Paris Air Show covered in Businessweek.   I even felt a tinge of empathy as I imagined the PR manager cursing and pulling his hair out as he hung up the phone to the journalist who joined the dots over selling the fuel efficient per passenger and ‘environmentally friendly’ A380 to a private individual.

Quite simply, if Airbus had linked in its PR messaging to a CSR policy concerning the new A380 i.e. it’s not going to sell this huge plane to individuals, or license its use to have a minimum number of passengers (based on more environmentally-friendly fuel efficieny), than this may been avoided.  The policy just needed to be a bit more foresightful: something concrete to back up its messaging other than a metric.   Or, maybe, Airbus simply wanted to sell as many planes as fast as possible.

It comes down to how communications should be linked across the entire organization and have a role at C-Suite level…I won’t bore you with the mantra. 

Friday, smiling on,  I searched the latest chatter on this on technorati – here and here, for example.  I then came across how aviation enthusiat (I think he used to be a Qantas Ambassador) John Travolta is test piloting these beasts.   Hmmm.

Joining the communication dots myself, that tinge of empathy has gone away.

The Fall of Advertising and the Rise of Newstand Prices

This post at the Harvard Business Online Conversation Starter blog on price rises at the Wall Street Journal and the FT has some interesting ramifications.

The traditional selling point of PR has been that it derives its credibility from third party editorial while advertising is less credible because it’s paid for. Whether or not the perceived lack of credibility is contributing to the decline of adspend, it is interesting that this trend is translating into reduced profitability for even the most established traditional print newspapers and thus driving readers online. Both the WSJ and the FT, of course, derive subscription revenue from their websites but the move online occasions other changes in the business model. Online newspapers in general increasingly incorporate more commentary and debate among readers both on the website itself and in the extended web of trackbacks and links.

The result is that the value of credible third party commentary climbs even higher, as that commentary is in turn commented upon and amplified by the most credible of spokespersons – Someone Like Me. The result is a kind of positive feedback loop – the more credible people find third-party content the less companies are prepared to spend on less credible forms of communications. The vendors of those less credible forms of communication move into media that have a lower cost of production, which in turn has the effect of increasing their credibility.

And the value to companies of well-crafted communications strategies that incorporate the unique characteristics of the new medium also increases by default.

So what does responsible mean?

A former colleague undertook some extensive research on CSR in Ireland.  As he mentioned in May’s Center for Corporate Citizenship newsletter, one of his biggest bug bears in this area is the notion of just doing enough to get by, the tick box approach to being responsible.

He says, “Interestingly 25 percent state that ensuring the company does not engage in bribery is CSR rather than standard business practice. Given that the sample was drawn predominantly from accountants it is equally interesting that 10 percent of respondents state that accurate management and reporting of company finances is an act of CSR as opposed to standard business practice.”

The social context of CSR practies are critical.   It is why Korean companies must consider what being socially responsible means for them as a Korean company and also from the point of view of their stakeholders.   The social context is essentially what social responsibility is from their stakeholders’ point of view; this is – its employees, its customers, its partners, law makers, the media etc.   When companies wish to engage overseas markets, what social responsibility means takes on whole other set of implications from their global stakeholders.

This case was brought to point last Monday’s International Herald Tribune which examines the increasing role of women in Korean corporate society and the resistance to team building through heavy drinking, sometimes enforced by management.   There’s been a landmark case where the Seoul High Court ruled that “forcing a subordinate to drink alcohol was illegal and pronounced the manager guilty of a violation of human dignity.”

My friend Alan would argue that the adoption of a policy that discourages enforced drinking would not be socially responsible.  It should just be a standard business practice.

However, I was pleased to see the reference to Posco adopting a related policy as far back as 2005.  Standing up and taking leadership in this area is being socially responsible.  Similarly, when an issue concerns a company’s stakeholders such as the environment, developing products that benefit the environment not just because of impending regulation but because it is in line with stakeholders wishes (the social context) is being socially responsible.  Going beyond minimum requirements is socially responsible.

Social responsibility is not adhering to legal requirements.  It’s about standing out from the crowd.  The expression of this practice should then, in turn, benefit the business rather than being a burden.

Company Evolution

Some food for thought for Monday, from Greg Hackett, Goodyear executive professor at the Kent State University business school.

“A study of the profits of 3,200 of the largest companies trading publicly on the U.S. stock exchange between 1960 and 2004 has revealed a third go out of business and a third are acquired on average 23 years into their existence.”

Companies on Hackett’s ‘danger’ list include mammoth companies:

• Amazon.com
• Dell
• Google
• Microsoft
• Starbucks
• Wal-Mart
• Yahoo!

It left me wondering about the inevitability of business and how even the biggest companies will fall, the pace accelerated by a global marketplace.  How will Korean chaebols cope within this market reality?  And if the giants fall, where are the new companies coming from?  Is Korea Inc. prepared?  Should Korea be encouraging more entrepreneurship? 

I look forward to seeing new Korean heavyweight companies emerge.

Required Reading for Frustrated Clients and Consultants Alike!

This is a great article I read this morning about the relationship between companies and their PR consultants.  The themes are universal, and in varying degrees and frequency, come up between the ‘clients’ and ‘PR consultants’ all the time. 

There’s some good points on:

• How clients and consultants should come up with story angles that show conflict (leading to success) as this simply makes a good read;
• And how developing the right kinds of stories makes for a happy journalist;
• How not 100% of articles will be positive but engaging with the media increases the company’s credibility and builds trust;
• A great case study on turning a negative into a credible positive (good to hear it from the person who actually implemented this initiative this time round, as I have seen this story posted on time and time again…personally I’d like to hear more examples of this kind of approach to crisises);
• And the importance of team work and giving credit, when credit is due (I think this work two ways too.  When clients try something brave that doesn’t quite work or works very well, they should be commended by the consutlancy too).

There’s some great lessons in there.