Thursday, July 18, 2013

The Value of Trust Deposits

Public relationships share something in common with hard assets:  they have currency, just like money in a bank.  Specifically, they create what I call “trust deposits.”  When companies engage in actions and behaviors that nurture strong public relationships with all their key constituents, and they do that in a consistent manner, they are building trust reserves not unlike bank deposits, which they can redeem when hard times come.

Let me cite a business example of how this principle works.

Martha Stewart is a brilliant businesswoman who has, in certain quarters, established unprecedented loyalty and trust.  But she also has a shadow reputation for being arrogant, controlling, and self-righteous.  In 2004, when Stewart was charged with and ultimately convicted of insider trading, that negative perception, whether unfairly or not, was widely reinforced.  This image was damaging to Stewart’s business for two reasons.  First, it contradicted her public persona as a gracious hostess.  Second, because she had assumed the company’s almost exclusive public face, her descent had an outsized impact on the stock of Martha Stewart Living Omnimedia (MSLO).  It took two years for the company’s valuation to recover.  It seems clear that had Martha Stewart made some trust deposits with her more critical publics — diversifying and showcasing company management to investors, softening her image through sincere, high-profile charity work — the damage might have been mitigated.

Thus, it is worth dispelling here the myth that public relations can “manufacture” a positive image from whole cloth.  The truth is that practitioners can only shape, rather than create, reputations.  Without the basis for building a desired reputation, a campaign will invariably fail. Further, social media has enhanced transparency.

But Martha has learned some lessons since those days. After leaving prison, she began a comeback campaign in 2005, returning to television with various shows, releasing a number of new books, adding product lines and in 2012 returning as Chairman of her namesake company.

But she decided to do it differently this time — with more heart.  As part of the Clinton Global Initiative, Martha cofounded the impressive Martha Stewart Center for Living with Mount Sinai Hospital in New York.  It serves to promote and facilitate access to health and resources for older adults and enhance the public perception of aging.

Good public relationships rarely, if ever, just happen.  They are established and maintained by commitment to a strategic plan that targets each of its constituents with a rationale for building a relationship.  Then a company needs to establish the messages and the best channels to communicate these messages and reach those  constituencies.

While the value of public relationships is intangible, one leading accounting firm estimated 35% of a company’s value to be non-financial intangibles, such as goodwill.  Thus, trust deposits work to a company’s benefit.

Wednesday, July 03, 2013

The Difference Humanities Makes in Business


What do you do with a BA in English?
What is my life going to be? 
Four years of college and plenty of knowledge
Have earned me this useless degree.
 --Avenue Q (Broadway Show)

The above verse from the Broadway show, Avenue Q, sums up how so many feel today about a degree earned from majoring in the humanities, specifically English majors.  This attitude has lingered but it was personified in this hit show, which picked up steam in the heat of the financial crisis.  The show’s takeaway:  Be practical!
This thinking is further evidenced in a recent article by Verlyn Klinkenborg in The New York Times.  The author of “The Decline and Fall of the English Major” cites some depressing statistics from the American Academy of Arts and Sciences:  at Pomona College, only 16 students graduated with an English major out of a student body of 1560, a fractional number. In 1991, 165 students graduated from Yale with a B.A. in English Literature; by 2012 that number was 62.
Of course, I find these numbers shocking only because I believe so strongly in how the humanities shape us as individuals, who cannot only write and think clearly but can carry on a conversation with the world around us.
For those who choose public relations/communications as a profession, focusing on the humanities, as I did during undergraduate years, provides other advantages.  Our business is all about being a quick study of a client’s business and the environment in which the client exists.  The ability to capture the essence of that information quickly, assess its strategic value and communicate the story with the right messages are skills developed in humanities courses.
We, at our firm, often debate the value of humanities majors vs. public relations majors.  As I see it, the study of humanities builds the foundation that supports an array of sophisticated public relations skill sets.
Nevertheless, as the Times article points out, “Parents have always worried when their children became English majors.  What is an English major good for?”  In other words, will it lead directly to a job?  The article offers this answer:  “Wait and see – an answer that satisfies no one.  And yet it is a real answer, one that reflects the versatility of thought and language that comes from studying literature.” 
The editor asserts that former English majors turn up almost anywhere.  In my opinion, many have the edge in public relations over the more practical PR major. Need everything we do in life pay off immediately?  Perhaps “it takes some living” to find out that the gift of the humanities is “clear thinking, clear writing and a lifelong engagement with literature,” giving us the “word consciousness” that makes copy sing.
A deeper issue is that thought leaders in the humanities have done a poor job of marketing the value that humanities bring.  And right now, there has never been a greater opportunity.
As a friend notes, “since content and content development are the bloodline of the commercialization for nearly all businesses because of the internet, writers are critically important.  Positioning humanities as a ticket to work for online publications of the 21st century could change this perception of students that studying the humanities is not a viable choice.”
Writing well is a fundamental principle of the communications business, deeply appreciated by clients and all others we work with.  Our business is just one of many examples where training in the humanities stands strong.  Whether you are an engineer, mathematician, actor or senior executive, everyone who possesses the “grace and energy” that the humanities develops in us, can only be secure in appreciating the rich heritage they have been given.
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