Archive for the ‘Global Affairs’ Category

Jackboots on the Forklifts

February 19, 2013

Let us spare a thought today for poor Amazon as it lurches forward from perhaps the most out-of-left-field crisis of the decade. According to The New York Times, the company has now severed its ties to the security firm it had hired to protect its warehouses in Germany who, it was disclosed, had, at the very least, a predilection for Neo Nazi outerwear. One could raise the question whether anyone at Amazon thought it odd that the security firm’s name in acronym spells out H.E.S.S., the name of Hitler’s deputy, but to us, this crisis is an object lesson in the futility of crisis “playbooks.” We award a golden pompom to anyone who could have predicted that such an event might befall Amazon which is precisely why lengthy crisis playbooks that purport to spell out what to do in any eventuality are relatively useless. By all means, have prepared language for the most likely problems but the best practitioners focus on the process more than the content. If you can get the right team on the line quickly and effectively you will have accomplished more than will be found in any playbook no matter how extensive.

The Uncertainty Principle

August 6, 2012

Heisenberg famously calculated the limits to our ability to measure the position and momentum of sub-atomic particles at the same time.  Perhaps that is why it is hard to pinpoint the exact level of collusion between business leaders asserting that uncertainty is holding them back from investment and hiring.  Obeisance to the great god, uncertainty, became a cliché of business rhetoric two years ago after the worst of the depression had passed.  Today’s New York Times’ piece by Nelson Schwartz takes the lamentations to a new level.  “We’d love to hire more people, but we’re saying no,” Schwartz quotes Legrand’s CEO as saying.  Timothy Powers, Hubbell, Inc.’s chief executive told Schwartz that he is not filling 100 positions that are open.  The political impasse driving these concerns is the failure of opponents in Congress to find consensus on Bush-era tax cut extensions, but the sub-text in a presidential election year has a frisson to it that should give business leaders pause.  At some point, complaints about uncertainty due to partisan rancor run the risk of looking like the American business community is sitting on its hands because a brisker recovery might aid an Obama victory in November.  There is no evidence of this, but if this narrative takes hold it could generate an anti-business momentum that will be damaging for everyone.  This is a Pandora’s Box that it is in no one’s best interests to kick open accidentally.

We Are the J Students! We Are Proud!

August 19, 2011

Yesterday’s news brings yet another tale of unanticipated reputational threat arising from the terminally outsourced world in which we currently live. We can, I think, confidently say that the Hershey chocolate company never in its wildest imaginings considered the possibility that employing international students through a government program would become a “sweatshop” flash point as reported in today’s New York Times 

This most recent example of the networked enterprise focuses our attention once more on the critical need for employers to have transparency in their supply chain.  Many years ago, energy companies tried to argue that because the tanker truck in the freeway pile up was operated by a contractor, they bore no responsibility.  That argument didn’t wash then and any suggestion that a long outsourced HR supply chain absolves Hershey of responsibility for work performed to get its own product to the end customer would be equally wrong.  The vigilence is all, and having ordinary managers who can spot an obvious disconnect when they see one.

Jack Dorsey is not Johannes Gutenberg

June 16, 2011

Let’s call it The New York Times effect. Just as surely as buying the naming rights to a sports complex is the inflection point at which a corporation’s fortunes turn south, a phenomenon covered to saturation by The New York Times is doomed to disappear before very long. Yet another heavy breathing story about Twitter and opposition to non-democratic regimes around the world signals that its moment has come and gone. At first no-one “got it” and then it was adopted by people who spend a lot of time waiting in public while ignoring others — celebrity musicians and actors. In its final act, Twitter is home to everyone standing in line anywhere — airports, bus stops, grocery stores as well as social media mavens who are terminally bored at social media conferences. At some point, even The New York Times will stop writing the same story over and over again. And then, quietly but surely, everyone else will just stop. Good night, Tweet prince, and flights of angels sing thee to thy rest.

Privacy as Competitive Advantage

May 23, 2011

The Sony Playstation imbroglio and the stealth campaign attempted by Facebook on Google have once again pointed up the critical sensitivity towards the issue of privacy. The astonishing fact that Apple felt the need to respond to allegations about geo-location data it was collecting suggests an acute consciousness of the reputational toxicity of privacy. Or, perhaps, it is merely recognition of the fact that each of these competing eco-systems occupy very similar turf and privacy could be the wedge issue that pushes customers terminally towards one player and away from another.
There are many conspiracy theorists willing to explain in great detail all of the nefarious things that companies want to with the data they have, but we have always been adherents to the view that inertia explains more than malice. To us, it looks almost as if it’s the effort involved in getting rid of the data that is getting companies into trouble rather a secret master plan to exploit it.
So we’d like to make a modest proposal that there is at least a possibility that there’s a business to be made in being the wired company that cares enough to purge responsibly, with a patented and fully transparent data cleanse system ™. Certainly, the race to the top in data cleansing would lol a lot more edifying than the sheepish mumbling about enhanced data privacy settings that is today’s standard response to each succeeding data revelation.

Pawning the Family China

December 29, 2010

We’ve grown used to superlatives about the Chinese market, its billions of consumers, trillions in investments, the all-consuming maw of its energy needs.  Global companies have proved willing to do almost anything not to be left out of the competition to meet these needs, even when the costs and risks have been astonishingly high.  Now the Wall Street Journal reports on two massive deals in which GE agrees to combine its global avionics business with AVIC, the Chinese aviation company and GM expands its joint venture with SAIC, the Chinese automotive company, to sell its no frills Wuling mini-van throughout Southeast Asia.

We can leave to more competent analysts such issues as the intellectual property risk. There has already been pointed commentary on the joint venture that Kawasaki Heavy Industries and Siemens  created with a Chinese partner in high-speed railroads that has in short order produced a competitor for them all over the world.  What interests us is the increased reputation risk that GE, GM and other companies have taken on with these intense and intimate partnerships.

We make no allegations against any specific Chinese companies, but it is clear that a century or more of corporate reputation building by GE and GM is not matched by their fledgling (if giant) Chinese partners.  The ethical care and commitment to international standards across a broad swathe of business practices exemplified by companies such as these stand for respected corporate brands that have now been placed in the hands of their Chinese partners.  Having spent decades ensuring that their supply chains around the world are behaving in accordance with their own standards, these companies now arguably face reputation risk on an unprecedented scale.

In avionics henceforth, at least so it looks from the outside, GE is AVIC and AVIC is GE.  A manageable challenge, certainly, but  no-one should mistake the shift in the order of reputation risk magnitude that has taken place.

The Market State

November 17, 2010

Last year, corporate executives spent a lot of time talking about the problem of headwinds in a difficult economy.  They never talk about tailwinds in a good economy but that’s another story.  What they have talked about this year is “uncertainty” by which they apparently mean excessive government regulation brought on by the global fiscal crisis. A McKinsey white paper published earlier this year suggests that companies would be better off preparing for much more activist national governments and the challenges they will present than whining about uncertainty.  The authors of the study suggest that the challenge for sovereign states in dealing with slower economic growth while still providing affordable safety nets will entangle the private and public sectors in the future in ways that are unthinkable in today’s developed economies.

While there are clearly financial and operational implications of this shift, there are also reputational dangers and opportunities.  If McKinsey’s predictions are correct, the term corporate social responsibility may take on entirely new meanings.  U.S. companies have long bemoaned the emergence in the 1950s of employer-supported health benefits.  If the market state is truly the wave of the future, they may have seen nothing yet.

Wanted: Social Capitalists

November 1, 2010

Social Network consultant Valdis Krebs plays along with Brian Lehrer on NPR today to create a “Six Degrees of Separation” game for Andrew Cuomo and Carl Paladino, each striving to win New York’s gubernatorial race.  It features the usual political figures, both foreground and background, lobbyists and campaign consultants.  This kind of social network analysis has been used in  numerous ways, such as mapping the relationships between senators, lobbyists and corporations with respect to health reform.

Digging a little into the social capital theories of Ron Burt at the University of Chicago we find useful measures of power relationships in social networks such as “betweenness” and “closeness.”  We also learn that most networks, left to their own devices, develop a high degree of homogeneity — more connections between more of the same kind of people.  Undiversified networks such as these offer none of the supposed benefits of social networks, such as innovation and cross-fertilization of ideas that come from unanticipated inputs.  In order to create these benefits, social networks need to be actively managed and nourished.

It strikes us that fostering these networks is one of  the critical contributions of the corporate communications function in the 21st century.  In an environment of intense flux and the disappearance of boundaries between industry sectors and functions, having a strategy to build your company’s social capital is no longer a luxury.  Wherever new threats emerge, we need fresh and diverse connections to understand and manage them.  New opportunities can only be seized when the diversity of our corporate networks alerts us to them.

The good news is that social media make the work of measuring your social capital and finding new potential connections easier than ever before.  The bad news is that building social capital is time and resource intensive.  Since some things don’t change, though, we will need new titles to describe our social network experts.  We think Senior Vice President for Social Capitalism has a nice ring to it.

The Politics of Localization

July 20, 2010

Full credit to companies that have successfully localized their products around the world.  In a heavy-breathing article in today’s Financial Times, various pundits give companies credit for their deep insights into cultural differences around the world.  MacDonald’s somehow managed to figure out that Big Macs wouldn’t fly in India and that this vast country could accommodate regional preferences for lamb or vegetarian dishes.  Starbucks has deployed its immense resources to discover that the British like an Australian espresso-type drink called the “Flat White.”  Let’s assume they really tortured the metadata to get to that insight.

Forgive us for viewing these triumphs of cultural localization as relatively trivial.  For us, the real challenge is on the corporate and public affairs side, where the nuances of cultural and political history are often built upon centuries, if not millennia of enmities and where apparently innocuous matters are heavy with symbolism.  Especially in emerging markets, where business and political elites are strongly intertwined, understanding the family and ethnic backgrounds of  business partners can be crucial.  Labels such as liberal or conservative, free market oriented, or state capitalist are usually misleading overlays for much deeper economic and historical distinctions.  Recent news stories bring to light, for example, that the fundamental issue in Pakistan is not religious fundamentalism but that dynastic landowners don’t pay taxes.  Where true political power is concentrated  in China is a complex question and yet corporations routinely hire consultants for their apparent connections but who turn out to come from families on the “wrong side” of history.  In some countries, such as the Philippines, it’s which branch of a particular family you associate with that can spell the difference between success and failure.

As the ability of American and European business to use raw economic power to obtain results in emerging markets diminishes, it will be ever more important to understand the internal political and historical dynamics when entering a new market.  It’s not about global or local.  It’s about knowing where family, political and business networks intersect with history.

Management Skills and the Bhagavad-Gita

May 14, 2010

Embedded in every business success story from Standard Oil to Ikea, there is a culture story and the power of a distinct corporate culture to enable greatness.  A timely reminder of this truism is the story of the New Delhi metro as told in today’s New York Times.  On time and on budget, the metro appears to be a miracle of infrastructure renovation in a country not universally known for the success of its public works.  What is behind this miracle?  A visionary 77-year old who, according to the Times, hands out the Baghavad-Gita to his senior managers as a management training tool.  As a spokesperson for the agency pithily observed: “It is the story of how to motivate an unmotivated person.”

Those of us worn out by the leadership lessons of the Tao Te Ching, Helmuth von Moltke and Genghis Khan, could do worse than turn to the wonderful story of King Arjuna and the Lord Krishna disguised as a charioteer.  Risking the scornful howls of scholars, we’ll give away a couple of central themes: “it’s up to you” and “persevere,” but viewed from a management perspective it’s actually a fascinating discussion of action/inaction and the mental obstacles to successful execution of a strategy.  We’ll leave you with a quote from Text 47 in the Macmillan-Collier edition of 1972: “You have the right to perform your prescribed duty, but you are not entitled to the fruits of your action.  Never consider yourself to be the cause of the results of your activities and never be attached to not doing your duty.” 

Companies can stumble into greatness, but few can sustain it for very long without a powerful narrative of purpose that is consistently communicated to all employees.  If sacred texts are not your cup of tea, The Purple Crayon works, too.