Transparency and Trust

In The Strategic Benefits of Transparency on Harvard Business Online’s Conversation Starter, Dave Balter, founder and CEO of BzzAgent asks a question that should be top of mind for any business facing an issue – or even thinking that they might, one day, face one.

There’s a perception of risk that comes along with radical transparency. It’s the “what if” dilemma. Just before tearing open the corporate veil, most companies blush. Then blink. They think: What if we screw up? What if profits shrink? What if we have layoffs?

But what they should be asking is, “What if we never regain the public’s trust?”

At Edelman we call it the Paradox of Transparency.  Essentially, stakeholders are more likely to trust you if they get an accurate picture of what you are doing – warts and all.

It’s not always easy – our own firm has been burned for a mis-step in this area and we are certainly not alone.  However, the massive volume of public conversation today means that whatever your company is doing the truth will probably out.  Employees blog, or talk to friends that blog.

The Internet is a giant water cooler with millions of people standing around it and exchanging news and gossip.  Any company has a choice between being a credible voice in the conversation or being the opinionated loudmouth that skirts around the edge of the group trying to shout down everyone else.  Trust-based relationships will always win out over communications “campaigns” that put the emphasis on spin over substance.

Yes, it’s a tough decision to make, but companies have been doing it for years.  Look at Pepsi. Look at Tylenol.  Ultimately it happens when companies think “If I were a stakeholder in this company, how would I wish to be treated?”

One issue that I face all the time is the reluctance of clients to share information that is regarded as “confidential” with their communications team.  There seems to be a belief that anything you say to the PR folks is going to end up in tomorrow’s newspapers.  Of course, all companies have information that they need to keep confidential.  But that’s not the same as saying as saying that companies need to keep all information confidential.

Personally, I don’t like it when I beleive I’m being lied to and I don’t trust people who I beleive are less than honest with me.  I don’t know anyone who feels any differently.

So why to so many companies  seem to think that they can get away with it?

Premature announcements

An editorial in The Hankyoreh today refers to Presidential candidate Lee Myung Bak’s “disgrace” that the White House has denied that President Bush will meet Lee while the latter is in the U.S. Setting aside Lee’s own more cautious response to media questions on the topic, as reported in the Chosun Ilbo earlier this week, what you’re left with yet again is an organizational spokesperson making a premature announcement to media and shooting an important initiative squarely in the foot. That there was an outreach to the White House is certain. Whether the meeting would ever have taken place is less so. However, by publicly announcing the meeting before it was properly confirmed, Lee’s aides essentially ensured that the White House would back out rather than be painted into a corner.

Despite the predictable indignation from The Hangyoreh, this is far from an unusual event. A good number of foreign companies have been wrong footed when their Korean partners announced details of upcoming deals, “committments” that were entered into in closed meetings, “investment plans” that don’t really exist – the list is endless. In some cases these announcements have been shrugged off, in others they have had a serious impact on important relationships.

In part, this is a cultural difference and it is clear that Korean organizations need to make a closer effort to understand their international partners. It also reflects the lack of an effective media communications function. Korean organizations – public and private – need to be much smarter about they way they address the media, particularly in respect of deals with non-local institutions. Routing communications through a specific channel, and ensuring senior-level oversight of all such communications, is essential in ensuring that this kind of embarrassment does not happen.

However, the easiest thing in the world is to confirm with a partner that a given communication can be released rather than just proceeding unilaterally. A simple e-mail or telephone call confirming that this meeting could be announced to media in Korea would have prevented this embarrassment. After all, isn’t that what a “partnership” is all about?

Should Korean CEOs Blog?

I came across an interview with my U.S. colleague Steve Rubel on Canadian TV discussing the question, “Should CEOs Blog?”  It’s towards the end of the show here; if you have a spare hour by all means go ahead and watch the whole thing but Steve’s interview is from 46.40 if you fast forward and goes for 8 minutes.

The interview raises some important concerns about companies and CEOs beginning to dip their toes into the blogopshere but raises some good points about having dialogue with your customers.    The point that sticks out to me is Steve’s advice that companies should think about “what [they] want back” from a blog.  Simply: a blog is a conversation.

Message control has been paramount for Korean businesses; it’s intertwinned with business culture here.  However, this is certainly something that Korean companies have faced up (or are still facing into) when dealing with international media: it’s very hard to control your message 100%; you have to be realistic and understand the channel you’re communicating in.  This is no different when thinking about communications through the internet; you can shape and direct the conversation but you can’t control it.

I think there’s a lot of room for identifying the “passionates” within Korean organization and having them be the blogging advocates for the company; getting a CEO to blog openly and honestly is going to be challenging considering the structure and controls in place in Korean organizations.  This seems like a good initial step for a Korean companies and it’s something our online team here would agree with and recommend.

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.

When Coverage Isn’t Coverage

One of the most interesting things to come out of Edelman’s Asia-Pacific Stakeholder Study is the very high credibility of international mainstream media in Korea compared to local media. Of the stakeholders surveyed, only 10% thought local media was “Credible” to “Very credible” while 27% gave the same ranking to international mainstream media.

The reason for the credibility is in part because the high-level stakeholders that make up the subject base for the Study tend to be more international in their outlook (the average Korean citizen probably doesn’t read the Wall Street Journal) but also because the local media will pick up a story in the international media that has a Korean angle, thus giving the international coverage bot added credibility and a kind of “halo” effect. Savvy communicators can use this tendency to enhance the credibility of their announcements by incorporating international media into the mix. Anything that enhances the reputation of Korea overseas is good news in Korea.

For that reason, Korean companies will sometimes issue a news release when they they get some good ink in a respected international media – and the local newspapers will pick it up. However, the same companies also sometimes make the mistake of attaching the same logic to global releases of good international media coverage. I have actually been asked quite seriously to issue a release when the company for which I worked was featured in the Wall Street Journal – coverage which arose as a result of a pitch that I made myself!

To most PR people, it is self-evident that the simple fact that an article was carried in one newspaper is not going to be seen as news in another, competing media. Granted there may be different angles that media may pick up on, but no-one should expect to receive a lot of coverage for a release that begins “According to the Financial Times…”

However, what is the situation with product tests? When consumer media run product comparisons, do the results make good news stories? Is a glowing review in “Consumer Reports” worth a media alert?

As tempting as it may be, my perspective is that, as a standalone release, no it isn’t. However, that doesn’t mean that you can’t get generate more media coverage from the story. Pitch an angle relating to advances in product quality, customer service, distribution, marketing or some other corporate function and use the good review or test result as a proof point.

Ofcourse, the rules are different for industry awards: no-one would suggest that a top JD Power ranking, an Oscar or a TIPA award shouldn’t be used in media releases. There are also some media awards that transcend the media themselves – the Fortune 500 list, for example, is a global indicator of quality. But for most awards or test results that essentially represent the opinion of one media outlet, I would say put it in the boilerplate but leave it out of the lead paragraph. There are many other ways to tell your story in a way that media will be interested in covering.

Brand Health Check

Preparing a breakfast seminar with Martin Roll, author of Asian Brand Strategy, I started thinking about how a typical Korean company thinks about brands.  I would guess that for most Korean companies the “brand” entails the logo, an advertising slogan and maybe a celebrity face (though it’s often hard to remember who Rain is representing this week!) – and very little else.  There appears to be a very generic and, dare I say, superficial appreciation in Korea of how deep a brand has to go before it really affects the way that customers respond to it.
Martin Roll focuses on Asian brands and argues that branding should be an issue for the boardroom, not just the marketing department. I agree with that 100%, but I’m not sure that a lot of Korean company boardrooms would have branding on the agenda in a meaninigful way. Ultimately, to drive the brand from the top needs a lot of buy-in and public evangelism from senior executives. However, Korean senior executives are generally very publicity shy, largely for fear of repurcussions from their comments.

Which implies that the development of global Korean brands will require more than just a shift in strategic focus: it will need a wide-ranging change in many corporate cultures.

Let’s talk, not fight!

Karl Marx’s gravestone famously reads, “The philosophers have only interpreted the world; the point, however, is to change it.”

 

For better or for worse? What would’ve happened if the likes of Mr. Marx or Mr. Rousseau met K’ung Fu Tzu? I doubt they’d rush into consensus of a shared enlightenment…

 

I attended the regular Korea Business Forum here in Seoul this morning, hosted by the KABC. Today’s Forum bravely tried to take on the topic, “Corporate Culture: can you teach a Korean workforce how to assimilate to western ways?”

 

OECD figures from 2005 were presented on labour productivity and put Korea way down the list. Korean figures (per hour worked) are about one half of the OECD average, and Korea’s down the list with Mexico, Poland and Turkey. Of course, there are exceptions to this low level of productivity. Productivity in manufacturing, for example, is higher relative to services and the rest of the economy. But it’s not as if Korean workers are kicking back and having a laugh; what’s more worrying is that Korean workers aren’t too happy about conditions either – along with Japan, the workforce is uncertain about their future and has become demoralized and frightened.

 

What does this mean: something’s not quite right with management structures? You’d think it’d be quite obvious.

 

The big fear is that Korea, facing today’s global business challenges, is not working smarter but merely harder. Instead of increasing productivity, it’s increasing efforts to reach the necessary output and with that: burn out.

 

Surely then, yes, you need to change the corporate culture?

 

An interested debate evolved. East meets West. US versus EU. Young Korea versus ageing Korea. Even inter-chaebol differences and how the character (or foresight!) of the family affects the corporate culture of the organization. The debate could have ran for hours…and it did.

 

And it made me think back to my years in London when on a sunny autumnal day I stumbled (almost literally) across Marx’s gravestone in Highgate cemetery and read that phrase. Why do you need revolution? Why tear down and fight against a corporate culture that isn’t going to change?

 

I go back to our Stakeholder data…my bedrock in Korea. The biggest driver of corporate reputation in this market is employee development and employee benefits – far outweighing management and product quality, very important drivers themselves. Yet when asked whether Korean corporations live up to their expectations in terms of communicating freely and openly with their employees, Korean opinion leaders believe that companies drastically do not live up to expectations (9% against an expectation rate of 59%).

 

So, did we get anywhere at the KABC Forum? Can you assimilate a Korean workforce to Western ways or can you bring management change to induce a more productive workforce? I think a better employee dialogue and relationship would be a good start.

 

Now…as for changing the world…