Take a Hard Look in the Mirror

In this age of transparency, how do you explain a battle among obesity experts over a New York rule, scheduled to become effective in March, requiring calorie counts per item to be listed on menus at chains with 15 or more restaurants (including fast food restaurants)? Common sense would tell you that the more information the better. Right? Particularly for people trying to lose or maintain weight.

Anyone can understand why Burger King might be against having 990 calories written across from its Double Whopper with Cheese. But really, in today’s world, fast food management has to face a public relations reality: customers can find such information on the internet. And if customers discover that management is opposing such disclosure, they can cause a maelstrom on the web which will likely end up hurting the restaurant more than the calorie listing does. Responsibility for listing the calorie count could also be a factor that encourages restaurants to offer a healthier choice.

But this situation takes an unexpected and challenging public relations twist. The person leading the battle against the New York rule, according to “Conflict on the Menu,” an article in the February 16 issue of The New York Times, is none other than the incoming president, Dr. David B. Allison, of the Obesity Society, an organization of obesity doctors and scientists.

Dr. Allison, the article reveals, is about as conflicted as he can be. He is a paid consultant to Coca Cola, Kraft Foods, Frito Lay and the New York Restaurant Association. In fact, the latter paid him to write and submit an affidavit to the U.S. District Court for the Southern District of New York arguing that the new rules could backfire “whether by adding to the forbidden-fruit allure of high-calorie foods or by sending patrons away hungry enough that they will later gorge themselves even more.” He even cites a study that dieters who were distracted [whatever that means!] while eating were more likely to overeat when presented with high caloric information.

Question #1: Why would the Obesity Society not be more thorough in vetting the background of someone who is elected president?

Question #2: Why don’t the members of the Obesity Society fire their incoming president — someone who is obviously using his new title to merchandise consulting business … to the point of taking a position that appears to be contrary to the basic philosophy of the Society he leads? Dr. Allison says he is “happy to be involved in the pursuit of truth.”

Question #3: Why would the Obesity Society stand by and permit its reputation to be tarnished in broad daylight? One would assume it is dedicated to healthy eating. Why would it sanction someone who feels there may be value in holding back information that helps people make healthier choices?

Fortunately, at least one member of the Obesity Society — Dr. Barry M. Popkin, director of the Interdisciplinary Obesity Center at the University of North Carolina is very angry about what Dr. Allison has done. He is now filing an affidavit supporting the city’s position … but the entire organization needs to take a hard look in the mirror.


Technorati Tags: obesity, dieters, fast food, calories, Obesity Society, Dr. David B. Allison, Coca Cola, Frito Lay, Kraft Food, New York Restaurant Association, Dr. Barry M. Popkin, business, communications, public relations

Thinking Time

Lately I've been doing a lot of thinking about thinking time. Why? Because more and more I realize how critical it has been to the positive things that have happened to me in my career. I define "thinking time" as that period of the day or week when I can isolate my mind and just focus on whatever I want to think about without interruption. Thinking time is critical for important business or personal decisions, and if there is insufficient time dedicated to it, generally I find important things do not turn out as well. Extrovert that I am, perhaps thinking time appeals to the introvert in me, that wonderful time when I can be alone with my thoughts and really gain a perspective on everything I am involved in.

Nevertheless, with my busy business calendar, it is a real challenge to get adequate thinking time, unless I actually schedule it. When many issues accumulate and there are lots of complex documents to read and think about, I indeed put plans on my business calendar to spend the day out of the office ... usually at the local library. I also address those decisions I need to mull over, when one quick think session is just inadequate to resolve the matter.

Sometimes, great thinking time happens when I take a pause from work, or go out to lunch or dinner alone. The best thinking times for me – and I believe for many people – are short sessions at odd times: walking down the street, taking a shower, working out in a gym, listening to my iPOD, riding a train or subway or just sitting in a comfortable chair, staring into space. Fortunately or unfortunately, I have gotten used to thinking between interruptions at the office, even though I don't like to do it that way, and it is my last resort. But I don't always have a choice; and these brief "stolen moments" can be productive.

What kinds of things do I think about? Mostly, business, client, employee or family matters. It could be mulling over a creative solution to a client problem, the organization or direction of the firm, an employee's aspirations, rewarding someone who has done a great job, a financial challenge, a strategy for a meeting I will lead, marketing ideas for a client or the firm, themes for a speech I will be giving or an article I'm writing, developing new services or strengthening current ones.

Do you recall Coca Cola being called "the pause that refreshes"? Thinking time is kind of like that for me. It clears my mind, invigorates me and enables me to move forward.


Technorati Tags: time, thinking time, Coca Cola, business, communications, public relations

Are They Killing the US Capital Markets?

I have been very concerned about the state of the US capital markets of late. The market’s gyrations aside, we have seen a marked decline in initial public offerings over the recent years. I discussed this matter with Mitch Gross, the founder and former CEO of Mobius Management Systems, Inc., a publicly-traded company which was acquired last year and was formerly a Makovsky Investor Relations client.

Q: Why the lack of IPOs?

A: There are three things that are killing the public markets: 1) government regulation; 2) Reg. FD; and 3) overly aggressive shareholder activism.

Q: What about shareholder activism?

A: Today, corporate boards and managers live in fear of activists. Boards and corporate managers are afraid to invest to build their businesses or make acquisitions for fear of things not working out leading to loss of market value making it easier for activists to launch an attack to oust management. As a result, market and growth opportunities are missed as well as efficiencies given the curtailed investment in capital improvements. This is particularly problematic for small cap growth companies that lack easy access to the capital markets.

Q: What happens to these companies? They can’t continue to operate this way, can they?

A: Ultimately, these companies wind up selling out in an attempt to realize some measure of value. Studies have shown that most boards and managers act both in the companies’ and perhaps more important, their own interests. When attacked by outside forces they react accordingly. Typically, the price is not optimal as managers grow weary of the glare of public scrutiny. Oftentimes, the acquiring company “guts” the business hoping to realize some economies of scale, resulting in a loss of jobs and perhaps market position for the products acquired.

Q: What about the regulatory environment particularly Reg. FD and Sarbanes-Oxley?

A: I believe that Reg. FD - which curbs the practice of selective disclosure of material nonpublic information - has had a very profound impact both on companies and investors. Reg. FD has instilled a disclosure muzzle on management because of the simultaneous release requirement and has severely inhibited the flow of information and the ability of corporate management and boards to communicate with shareholders. To greater or lesser extent (probably greater), this has exacerbated the problem of shareholder activism. You can’t make investment decisions without information. Other regulations pertaining to the disclosure of executive compensation and corporate governance (particularly in the area of proxy voting) will place additional stress on corporate managers and make being public less appealing.

When it comes to Sarbanes-Oxley - which came into force in July 2002 and introduced major changes to the regulation of corporate governance and financial practice - I look at it simply as a “poor man’s tax.” You have to comply and you have to spend the money to comply. So, like a tax on bread, Sarbanes-Oxley effects smaller, less well financed companies dramatically more than the larger entities. These rules and their associated costs are pushing companies to either stay private or sell out. As a result less companies go public and the investing public has less good opportunities in which to invest. The end result? The current growth in “private equity” funds that enable the wealthy investor to take private stakes in growing, innovative companies.

Q:What can be done to change things?

A: That’s a tough one. It would help if shareholders were better educated so as to understand the difference between corruption and bad business decisions. Years ago, people understood the risks. You invested based upon a wealth of information and if you were smart you stood to make a reasonable return. Now only the rich benefit from the future of America through their participation in private equity vehicles.

Q: Is there a chance for legal changes?

A: Perhaps, we might move toward a more prudent system. I think boards and legislators should resist the recent trend toward changing proxy voting rules such as requiring minimum votes to elect board members. These regulations tend to take the control of companies away from boards and management and turn it over to the “voting public.” Companies just cannot be expected to take advantage of opportunities and perhaps risks if they are continually worrying about the next proxy and the next vote.

In their zeal, regulators have opted for more laws in stead of efficiency. It would be better if Corporate America asked itself: “Is this right” as opposed to “Is it legal.” Ours is now a class action culture with the lawyers being the chief beneficiaries. There might be some changes to Sarbanes-Oxley based on a company’s size which could lessen the burden on smaller companies. However, I don’t believe there will be changes in the near future.


Technorati Tags: US Capital Markets, Mitch Gross, Mobius Management Systems, Inc., shareholder activism, Reg. FD, Sarbanes-Oxley, business, communications, public relations

Do You Have a Right to Privacy Online?

Google is an essential tool for almost every public relations person I know. In addition to being a terrific search engine, it’s also a central clearinghouse for our photos, videos, e-mail, phone numbers, blogs, news feeds, maps, contacts, blogs, documents, credit-card information … and much, much more. We already know about all those people whose missteps — whether real or not — are preserved for all eternity by the power of Google.

Now, according to “Inside the Googleplex,” a fascinating article in The Economist, “Google could soon, if it wanted, compile dossiers on specific individuals.”

Edward Felten, a privacy expert at Princeton University, says that this presents “perhaps the most difficult privacy issues in all of human history.”

The results of a study released late last year by Britain's Economic and Social Research Council found that 56 percent of Internet users have concerns about privacy online. Privacy on the internet is a topic that should concern everybody.

While the European Union explicitly requires all member states to ensure the right to privacy of their citizens, the U.S. does not. (However, the Bill of Rights does address the people’s right “to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures” [Amendment IV]. Also, Amendment IX states that the “enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.”)

I believe that determining who we trust should be an active, personal decision. I do not have a problem selectively revealing personal information online … provided I trust the person or institution requesting the information, and it is my decision to do so. I never want to automatically surrender that right to a giant internet monopoly, like Google, or a governmental entity on a fishing expedition, or anyone else who does not get my permission. Everyone under our Constitution has that right of freedom from prying and that protection should be enforced.

What do you think?

Technorati Tags: google, privacy, search engine, Edward Felten, Economic and Social Research Council, European Union, Bill of Rights, business, communications, public relations