Archive for the ‘Public Affairs’ Category

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.

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.

Cognitive Fluency

February 15, 2010

New research by Adam Alter at New York University’s Stern School confirms what we have long known about the power of simplicity: if something is difficult to think about, we reject it more often than when something is presented simply.  His study shows that the stocks of companies with names that are simple to pronounce out-perform those of companies whose names are harder to pronounce.  This is a concept called “cognitive fluency.”  It also appears to apply to visual stimuli.  Information presented in familiar fonts is rated as easier than information presented in unfamiliar fonts, whether that information describes recipes or exercise regimens.  Bizarrely, the study, which is described by Drake Bennett in the January 31, 2010 Boston Globe and sourced on Arts and Letters Daily also shows that people answer a personal questionnaire less honestly when the questionnaire is written in a less legible font.

At the same time, there is also a mirror effect called (wait for it) “cognitive disfluency” which has some positive potential.  People seem to pay more careful attention to instructions written in a less legible font and  make fewer mistakes as a result.  Finally, Bennett describes the effect of asking people to make short and long lists.  Students who are asked to make a short list of why they would succeed in a test felt more confident than students asked to make a long list.  Even though they listed more reasons, the difficulty of the task made them less confident.

It’s nice to have a scientific construct for what good communicators have practiced for decades — keep it simple, describe the subject in familiar terms, frequency promotes familiarity promotes favorability.  If you’re trying to scare people, make it sound complicated.  The terms also have a nice ring to them.  I can almost hear the public affairs executive shouting “Where’s the god**m cognitive disfluency in this campaign!

China

October 19, 2009

The fascinating evolution of Chinese public policy poses myriad threats to multinationals as they seek to become leaders in this vast market.  Freshfields, the global law firm, writes intriguingly about the development of private party anti-monopoly litigation in this country.  What strikes us about their description of Article 17(7) as a “catch-all” for “abusive exploitation of dominant market position” is how perfectly the statute seems to be suited for putting pressure on all companies to meet the Chinese government’s social policy ambitions.  The firm, in its research note, refers to the quasi “public advocacy” nature of private suits under these rules.  It seems clear to us that the implicit threat of such actions could exert a very powerful force on multinationals trying to secure positive corporate reputation in China to comply not just with the law, but the government’s social and economic policy objectives as well.

EU Presidency

September 28, 2009

By the end of the week we will know, courtesy of the Irish referendum, whether the Lisbon Treaty is alive or dead.  If the Irish vote yes, we will have in the goodness of time the new position of President of Europe.  Writing in The Independent today, Sir Ivor Roberts reminds us that this finally provides us with the answer to the question posed by Henry Kissinger thirty years ago when he asked: “Who do I call when I want to call Europe?”

Given the powers of national sovereignty retained by individual countries, this new position will clearly have a strictly limited executive function, but the creation of a permanent leadership position for Europe will inevitably create a new power center beyond the expectations of the treaty drafters.  Indeed, the personality and style of the first EU president could far outlast his or her tenure, just as George Washington’s character and chosen behaviors imprinted practices for the presidency of the fledgling republic 220 years ago.  Not a new imperial court, perhaps, but certainly a web of influence extending far beyond the job description.  Public affairs specialists should watch the staffing support model for the first permanent EU presidency with great care.