Monday, October 30, 2006

Giving U.S. Business a Competitive Edge

Conventional wisdom agrees: the Internet has made the world a smaller place. You certainly don't need to be a U.S.-based company to be a U.S. market leader. Take a look at Nokia, Toyota, Mercedes-Benz, Samsung, HSBC, SAP, IKEA, Novartis, Philips … the list goes on and on. The real price of admission to today's global marketplace these days is a great idea, efficient production and brilliant marketing … and that's something our country has no monopoly on.

In his book, "The World is Flat", Tom Friedman cites an old African proverb that gets right to the heart of the matter:

Every morning in Africa, a gazelle wakes up.
It knows it must run faster than the fastest lion or it will be killed.
Every morning, a lion wakes up.
It knows it must outrun the slowest gazelle or it will starve to death.
It doesn’t matter whether you are a lion or a gazelle.
When the sun comes up, you better start running.
In other words, being fat and lazy puts your future at risk. In my opinion, one of the most blatant example of fat and lazy — and therefore one of the biggest threats to American competitiveness — is compensation that is not tied to performance.

Gretchen Morgenson's recent piece in The New York Times — "The Best and Worst in Executive Pay" — cites a study by proxy firm Glass, Lewis & Co., which suggests that, far too frequently, CEO compensation has little or no relationship to shareholder value.

At the 25 companies with the most egregious cases of pay-for-nonperformance, the CEO's take-home pay averaged $16.7 million in 2005, while stock prices fell an average of 14% and overall net income dropped 25%. On the other hand, there were the 25 large-company executives who delivered well for their shareholders and received modest pay: $4.4 million, on average. Their companies' net income grew by nearly 44% and their shareholders reaped average one-year stock gains of almost 40%.

As the playing field becomes larger and more level, CEO pay is one of the most visible symbol of the incredible importance of incentives. If we want our country to continue as an economic leader, we need to stress harder the importance of pay-for-performance. The only way the United States is going to beat competitive nations is by providing value and being rewarded for it … not through guarantees, whether value is provided or not.

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Monday, October 23, 2006

Perception Creates Reality

Do you need more proof of the importance of image and reputation? According to "Old but Not Frail: A Matter of Heart and Head", a story by The New York Times science reporter Gina Kolata, a positive self-image can mean a longer, healthier life!

Researchers have found that, in many cases, a single factor, undetected cardiovascular disease, is a major reason many older people become frail. But a second finding -- one that is surprising skeptical scientists -- is that the old cliché is true: you're only as old as you think you are. "Rigorous studies are now showing that seeing, or hearing, gloomy nostrums about what it is like to be old can make people walk more slowly, hear and remember less well, and even affect their cardiovascular systems," writes Kolata. "Positive images of aging have the opposite effects."

The 20-year Ohio Longitudinal Study of Aging and Retirement revealed that people who had more positive views about aging were healthier over time. Moreover, they lived an average of 7.6 years longer than those of a similar age who did not hold such views... regardless of age, gender or socioeconomic status. (I wouldn't be surprised to learn that a good self-image also enables corporations to live longer lives, as well!)

Dr. Becca Levy, a psychologist at Yale University, sees a bright future for today's middle-age people if they avoid negative stereotypes (e.g., "decline," "senile," "confused" and "decrepit.") and embrace a positive self-image when it comes to aging (e.g., "wise," "alert," "sage" and "learned"). "Then they become a self-fulfilling prophecy," according to Dr. Levy.

There's a real PR challenge out there in terms of the discriminatory attitude of Americans towards the elderly. With all due respect to AARP -- and the excellent job it's doing to enhance quality of life for everyone over the age of 50 -- the image issue is a challenge I'd like to see the Public Relations Society of America take on as a pro bono effort.

I've said it before and I'll say it again: Perception creates reality.

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Thursday, October 19, 2006

MakTalk: "Getting to the Heart of Blogging at GM"

On Tuesday, Steve Cody, managing partner and co-founder of Peppercom, and I recorded our second joint installment of RepChatter and MakTalk. The second podcast in the series is called "Getting to the Heart of Blogging at GM - An Interview with Bill Betts."

We were privileged to have the opportunity to interview Bill Betts, GM Communications web services manager. GM is an organization that has recently been in the vanguard of consumer-generated media. The company's FastLane Blog has been a hit in the blogosphere. GM also operates the FYI Blog, which they launched in April.

To download MakTalk for use with your iPod, iTunes, or other MP3 software, right click the link below and click "save target as." Then load it into your favorite MP3 player and enjoy!

Download MakTalk: "Getting to the Heart of Blogging at GM - An Interview with Bill Betts" (19:50, 13.6 MB)

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Monday, October 16, 2006

Material Disclosure Exclusively on Blogs? No!

It's always a good thing when a company pushes for greater transparency and timelier, more relevant communications. I empathize with Sun Microsystems CEO Jonathan Schwartz's contention in his letter to SEC Chairman Christopher Cox that material corporate disclosure on a personal blog should meet dissemination requirements. However, I believe granting such a request would inhibit fair disclosure -- in effect, compromising simultaneous dissemination to all investors.

I don't even see this as a grey area. How in the world would anyone but an informed investor know that information is out on a personal blog, unless the blog were marketed by an RSS feed to the same news sources as a news release or unless a recognized search engine recovery approach is promoted ... neither of which Schwartz is advocating? The personal blog alone should suffice, Schwartz says, instead of "an anachronistic press release or telephone conference call."

Experience has shown that even the most disciplined companies are tempted to give preference to friends in the market when they release material news. And as for the undisciplined companies -- well, why say more?

While I vote to continue simultaneous access, I do feel that blogs should be included as an optional disclosure channel as long as the other required channels have been employed.

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Monday, October 09, 2006

Playoff Passion

No one can describe the anxiety I have felt over the years as a loyal New York Mets fan waiting for the year when they would finally take it all. Even this year when the team achieved the best record in the National League and is now making its way through the playoffs, always in the back of my mind are the defeats of prior times, making current developments seem more like fantasy. Is this really happening?

So perhaps, if you are a Mets fan, or even if you are not but can put yourself in my shoes, you will understand what happened to me the other night as the Mets were playing the Dodgers for the National League Division Championship.

My wife and I were having dinner in a restaurant with another couple during the game. Not being sports fans, it was hard for them to identify with me ... as I periodically –- with apologies -- accessed the internet on my Treo for scores. While the Mets jumped out to an early lead, the Dodgers tied it. I was feeling insecure ... the insecurity that has haunted me for years. Suddenly my internet access was not connecting. I asked the waiter, "Do you know the score?" He looked at me as if I had hailed from another planet. While his English was halting, I finally made him understand and soon another waiter came over, told us the score and advised that the game was on the TV in the bar.

By the time the four of us were ready to leave the Mets were winning 9-5. I stopped by the bar on the way out to see if the guys were still on top. It was the eighth inning. My wife strongly suggested that I listen to the balance of the game on the car radio during the drive home. It was now nearly 11:30 p.m. The other couple was suggesting we bid our goodbyes outside as we waited for the attendant to bring our cars. My insecurity got the best of me. It was true that the Mets had a four-run lead, but could they sustain it? What is a real fan to do in this situation? Although our friends left, I could not desert my team or settle for a mere audio version when I had the chance to SEE a potential victory and SEE the team embrace as champagne corks were popping all over the place! I prevailed. We hung out at the bar until the very sweet end. No fantasy this time. It really did happen. And we are now on to the National League Championship Series ... which I greet with composure, at least for now.

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Monday, October 02, 2006

The Drivers of Happy Agency-Client Relationships

The famed author, Peter Drucker noted that "the only profit center is the customer." Studies show that it costs between five and six times more to attract a new client than it does to keep an existing one. Think about that! That means that the longer you keep the right client, the more profitable your business is likely to be. The big question, therefore, is what does it take to keep them?

As you recall, last week I wrote about the right questions we need to ask clients to find out about their satisfaction with our work. Today I am focusing on the drivers of a happy agency-client relationship. At the panel I moderated for PRSA-NY, the three panelists who addressed that issue included Michael Bulger, Director of Public Relations for Booz Allen Hamilton; Paul Ewing, Director/Team Leader of U.S. pharmaceuticals for Pfizer where he heads up the communications group and Harvey Greisman, Group Executive, Worldwide Communications, for MasterCard Worldwide.

"What is the single most important factor in terms of your satisfaction level with your agency?" I asked each. Here are their answers:
  • Chemistry

  • Execution

  • Being challenged ... and results achieved
Big surprise! It all boils down to "being one with the client" ... seeing the world through the client's eyes but with an independent perspective and delivering the results they may not even have known they wanted (exceeding expectations) ... before we're asked.

Michael, Paul and Harvey provided a number of other useful insights into how to delight a client:
  • Think like the client. That means understanding the client's client and knowing his/her politics and priorities.
  • Learn how the client wants to measure success and what they anticipate in terms of ROI (Return on Investment).

  • If you are not clear, ask questions ... no matter how dumb you may think you appear.

  • Tell the client what they need to hear, not just what they want to hear.

  • Deliver solutions: It can set you apart.

  • Get results which positively impact the client's business and drive their competitors crazy.

  • Understand the client's industry so well that you can make suggestions that the client wouldn't have thought of.

  • Find ways to sustain the "new assignment" attitude. Complacency can easily set in in long-term relationships, so it pays to look at what you are doing with fresh eyes.

  • Make an investment in the client, in terms of both passion and dollars. Clients like to see that their agency's commitment to their success matches their own.

  • Deliver the expertise of the agency's senior staff ... but ensure that every single piece of work is as good as if the most senior level employee had completed it.

  • Admit mistakes. Clients understand that people are imperfect.
At the conclusion of our panel discussion, I noted observations about client satisfaction attributed to Stew Leonard, founder of one of the most successful food stores in the nation:
  • Rule # 1: The customer is always right.

  • Rule #2: If the customer is wrong, go back to Rule #1.
I asked the panelists if they agreed with that assertion.

Interestingly, there was consensus that the customer is not ALWAYS right. In fact, they said that clients rely on their agencies to be strong enough to challenge them. The best relationships -- the happiest ones -— are those that create an environment in which both sides are comfortable having frank conversations with each other.

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