public relations + risk communication + social theory

How can the 'most hated company in America' be worth $100 billion in an IPO? |#CrisisPR #PR

From the Daily Dog:

It could be a huge week for Facebook, which is expected to file for its highly anticipated initial public offering in the coming days. The IPO, which is expected for the second quarter, could raise as much as $10 billion and could value the social network between $75 billion and $100 billion, the Wall Street Journal is reporting. Because of its profound imprint and unarguable dominance of the social genre, anything less than $75 billion would be seen as a disappointment.

And yet, Facebook also ranks No. 1 on 24/7 Wall Street's recent list of the 10 Most Hated Companies in America:

Facebook currently has more than 800 million users. Any company of this size is sure to have some detractors. Compared to other leading social media sites, however, Facebook has the lowest customer satisfaction score from the American Customer Satisfaction Index. The site has repeatedly irked users by neglecting personal privacy. Notable events include the introduction of facial recognition software, which spurred an investigation by the European Union, and the Facebook timeline. Facebook received significant negative press for forcing new settings on users that changes how their personal information is shared with others. CEO Mark Zuckerberg has only recently said that the company will no longer do this. According to the MSN Money-IBOPE Zogby International customer service survey for 2011, 25.9% of Facebook users described the company’s customer service as “poor” — the lowest rating.

via 247wallst.com

All of which leads to this question: How is it possible to outrage so many stakeholders on so many issues, and yet be worth so much money on the open market?

Thoughts?

Is #Twitter ready to give into censorship? | #OWS

From the Daily Dog:

Daisy chains of tweets already have played instrumental roles in political protests throughout the world, including the Occupy Wall Street movement in the United States and the Arab Spring uprisings in Egypt, Bahrain, Tunisia and Syria. It's a role that Twitter has embraced, but the company came up with the new filtering technology in recognition that it will likely be forced to censor more tweets as it pursues an ambitious agenda. Among other things, Twitter wants to expand its audience from about 100 million active users now to more than 1 billion, USA Today reports.

Reaching that goal will require expanding into more countries, which will mean Twitter will be more likely to have to submit to laws that run counter to the free-expression protections guaranteed under the First Amendment in the U.S.

via www.bulldogreporter.com

Worst Practice #68: Offer free merchandise in exchange for positive online reviews

According to the New York Times, a web merchandiser stoked its online reviews by essentially offering free product to anyone who would give the product a five star review on Amazon:

By the time VIP Deals ended its rebate on Amazon.com late last month, its leather case for the Kindle Fire was receiving the sort of acclaim once reserved for the likes of Kim Jong-il. Hundreds of reviewers proclaimed the case a marvel, a delight, exactly what they needed to achieve bliss. And definitely worth five stars. ...

By last week, 310 out of 335 reviews of VIP Deals’ Vipertek brand premium slim black leather case folio cover were five stars and nearly all the rest were four stars. The acclaim seemed authentic, barring the occasional indiscretion. “I would have done 4 stars instead of 5 without the deal,” one man bluntly wrote.

Besides being unethical, this is just stupid. If the mainstream media don't expose you, an angry blogosphere will, and -- soon -- so will algorithms.

Researchers like Bing Liu, a computer science professor at the University of Illinois at Chicago, are also taking notice, trying to devise mathematical models to systematically unmask the bogus endorsements. “More people are depending on reviews for what to buy and where to go, so the incentives for faking are getting bigger,” said Mr. Liu. “It’s a very cheap way of marketing.”

TV stations join together to oppose ... transparency? | #PR

From Steven Waldman at the Columbia Journalism Review:

Local television stations have now rallied against the key elements of the Federal Communications Commission’s media transparency proposal, which would require broadcasters to move their “public inspection files” out of their filing cabinets and onto the Internet.

I described these proposals in detail here and here, but the surprising hostility from TV stations—news organizations—to this transparency plan raises a broader question: Do broadcasters believe that they even have “public interest obligations” anymore? Judging from some of the unintentionally hilarious comments they submitted to the FCC docket (more on that shortly), they enthusiastically embrace the concept as long as it remains completely devoid of meaning.

via www.cjr.org

Surprising hostility? Not at all. Mainstream news media are owned by very large companies, and very large companies HATE transparency. This puts mainstream journalists in the odd position of demanding transparency from everyone -- except the folks who write their checks. Especially in the wake of the global economic meltdown, Big Media should lead the charge for corporate transparency. But it ain't gonna happen.

The crisis at Apple: Tim Cook's fleeting opportunity to step out of Steve Jobs' shadow

Critics are jumping all over Apple today in the wake of a New York Times story that basically accuses the company of:

• Mistreating its workers in China.
• Knowing it and even documenting it.
• Ignoring it, in favor of maintaining its supply chain.

Here's the most damning quote in the article from a former Apple executive: "We’re trying really hard to make things better, but most people would still be really disturbed if they saw where their iPhone comes from."

Apple is in danger of becoming Nike or Walmart: Another large company that (critics say) makes billions on the backs of overseas workers. But Apple can't afford that to happen ... not if it wants to survive, much less thrive, in the coming years.

Worst Practice #183: Hold a pregnant customer to her contract after her husband loses his job

From the Wall Blog in the UK:

(Gym chain LA Fitness) has been shamed into dropping £360 in charges it was trying to extract from a pregnant woman whose husband had lost his job.  Nice. It took Twitter to descend upon the brand to make it see sense and force it into a deeply embarrassing climb down, which has left its social reputation shredded like so much old gym wear.

via wallblog.co.uk

Online critics make hash of McDonald's hashtag promotion on Twitter

From the Daily Mail (London):

The Big Mac has come under attack, after McDonald's became the subject of an outburst of vitriolic hatred on Twitter when critics hijacked a promotional hash-tag created by the fast-food giant. 

Opponents accused the burger franchise of making customers vomit, serving pig meat from gestation crates and dishing up a burger containing a finger nail.

One fierce critic claimed he would rather eat his own diarrhea than visit the famous Golden Arches.

via www.dailymail.co.uk

Said it before, and I'll say it again: The blogosphere is a kill box for any corporate brand.

Looks like Netflix will pay a long-term price for outraging its stakeholders

From AdAge:

Netflix would have to sign up four to five streaming subscribers to make up for the loss of one DVD subscriber who canceled because of last year's price hike, according to Janney Capital Markets analyst Tony Wible.

In addition, content costs are expected to continue rising, putting further pressure on profits and margins.

via adage.com

Here's a dissenting opinion from the Harvard Business Review.

A nice thought. But is anything 'permanent' in a corporate boardroom?

From the Daily Dog:

Sustainability now occupies a central and permanent place in corporate boardrooms, as 31% of companies say sustainability is contributing to their profits, and 70% have placed sustainability permanently on their management agenda, according to a new global study by MIT Sloan Management Review (MIT SMR) and the Boston Consulting Group (BCG).

via bulldogreporter.com

 

Google gets netflixed

From the Washington Post

Google’s announcement that it is sharing more user data across its services has already raised the hackles of privacy advocates, technology writers and caught the attention of at least one national data-protection agency.

On Tuesday, the search giant announced that it was placing 60 of its Web services under a unified privacy policy that would allow the company to share data between any of those services. (Google Books, Google Wallet and Google Chrome are excluded due to different regulatory and technical issues.) Any user with a Google account — used to sign in to services such as Gmail, YouTube and personalized search — must agree to the policy. Users who don’t want to have their data shared have the option to close their accounts with Google.

via www.washingtonpost.com

The guys at Google apparently learned nothing from Netflix's nightmare. The Netflix lesson is simple: Don't try to rewrite your social contract with your stakeholders without consulting them.

This is the problem with PR that is based on messaging. The assumption is that, if you just get the words right, the stakeholders will accept any action you want to take. It's crap. PR is no longer (if it ever was) about getting the message right; it's about getting the relationships right. It's about understanding your stakeholders, anticipating their concerns, and sharing the process of making key decisions.

Netflix didn't get that, and paid a steep price? Will Google?

Worst Practice #467: Offer a discount to shipwreck survivors

From the Miami Herald:

Carnival subsidiary Costa Cruises faced outrage Monday over a purported offer by the Italian cruise line to give survivors of the deadly Concordia capsizing 30 percent off their next voyage with the embattled company.

It’s unclear if the offer was actually floated, but the global fall-out marked the most bruising day for Costa since the Jan. 13 accident blamed for at least 15 deaths.

Costa briefly refuted the stories, then retracted the denial — the latest flashpoint in a public-relations response that has both Costa and Carnival’s Doral headquarters under fire.

via www.miamiherald.com

The issue isn't the size of the discount. Survivors would be no less outraged if Costa had offered "free cruises for life."  Outraged stakeholders are not interested in negotiating a settlement or cutting a deal. What they want is revenge. What they want is atonement. What they want is blood. You have to calm the outrage first; only then can you attempt to bargain with the aggrieved.

Not everyone at Wikipedia is thrilled with the blackout over SOPA

From the Daily Dog:

"My main concern is that it put the organization in the role of advocacy, and that's a slippery slope," said editor Robert Lawton, a Michigan computer consultant who would prefer that the encyclopedia stick to being a neutral repository of knowledge. "Before we know it, we're blacked out because we want to save the whales."

via www.bulldogreporter.com

Here's why SOPA failed ... in 39 words

Josh Bernoff of Forrester Research in AdAge:

The forces behind SOPA want to create friction. The people who consume Internet content -- all billion of us -- hate friction. And we're scared about giving the power to create that friction to people who may make arbitrary decisions.

via adage.com

Legal liability vs. social vulnerability: Why Joe Paterno is paying such a high price

Few recent controversies better illustrate the difference between legal liability and social vulnerability than the Joe Paterno case.

Here is how Paterno's attorney described his client's situation to the Washington Post:

According to Sollers, the attorney, Paterno has no legal exposure in the Sandusky case. Paterno has cooperated fully with the investigation, and has “met on multiple occasions voluntarily” with representatives from the attorney general’s office, Sollers said. “In my judgment Coach Paterno has no legal liability in this matter. In fact, he acted completely appropriately in reporting the only allegation he received to his superiors and had every expectation that the allegation would be investigated thoroughly.”

Now here is how the Post describes Paterno's social situation:

His son Scott says Paterno has been “shunned” by many in the university, though he did hear from current Penn State President Rodney Erickson last week when he made a $100,000 donation to the school. His name has been removed from trophies. The Maxwell Football Club of Philadelphia has discontinued its Joseph V. Paterno Award, which was to be given to coaches who made a positive impact. A nomination for the Presidential Medal of Freedom was withdrawn.

In short: Though Paterno apparently fulfilled his legal obligation, he has been judged (fairly or unfairly) to have failed to meet his social contract. When you are a living legend like Paterno, society expects you to do more than hand off a serious problem. That's part of the social contract. As a result, Paterno has lost everything that really matters to him -- except his family.

There is a clear difference between a client's legal responsibilities and a client's social responsibilities. Lawyers like to pretend that if you take care of the first, the second will take care of itself. And clients -- particularly CEOs and their companies -- tend to believe them. 

It's total crap. The legal and the social are almost always in conflict. That's why a client should have a legal counsel AND a public relations counsel when caught in a high profile controversy, and should insist that the two work together to chart a course that best serves the client.

Uncertainty is manageable, but ambiguity is a bitch

Dev Patnaik, cofounder and CEO of strategy firm Jump Associates, tells Fast Company:

"There's a difference between the kind of problems that companies, institutions, and governments are able to solve and the ones that they need to solve. Most big organizations are good at solving clear but complicated problems. They're absolutely horrible at solving ambiguous problems--when you don't know what you don't know. Faced with ambiguity, their gears grind to a halt.

"Uncertainty is when you've defined the variable but don't know its value. Like when you roll a die and you don't know if it will be a 1, 2, 3, 4, 5, or 6. But ambiguity is when you're not even sure what the variables are. You don't know how many dice are even being rolled or how many sides they have or which dice actually count for anything."

Businesses that focus on uncertainty, says Patnaik, "actually delude themselves into thinking that they have a handle on things. Ah, ambiguity; it can be such a bitch."

via www.fastcompany.com

Why public relations is the essential profession

British sociologist Anthony Giddens says that social relations -- particularly face-to-face conversations -- are the essence of human existence. What's more, all social structures (including rituals, traditions and institutions) are artificial, he says. That is, they are created by humans, and tend to change over time. These social structures are the result of those conversations.

If you agree with Giddens, then you understand why public relations (when practiced properly) is the essential profession. PR is the only discipline devoted to studying and influencing the conversations that lead to the construction of rituals, traditions and institutions.

This is why public relations is a superior profession to law. As Bernays said: Law is based on precedent, but PR establishes precedent.

(So why do we allow just anyone to hang a shingle and call themselves a public relations counsel?)

Raising the price of government oppression

New York Times columnist Nick Kristof says:

A lot of people including me were really taken aback by the videos of police violence during Occupy Wall Street. A decade ago nobody would have known about that because there wouldn't have been a reporter there and even if someone did write about it, it wouldn't have been that dramatic. Likewise in Syria, widespread video does provide some constraint on a government if it knows that if it massacres people, there will be video of that. They may still decide to massacre people, but it raises the price.

via www.fastcompany.com

The difference between an icon and a footnote

In 1966, a talent manager called two young British singers to his London office. Their mission? To paint the office's interior to earn some extra money.

One singer was named Mark Feld. The other, Davy Jones. For the next few hours, the two whitewashed the walls and shared their visions for becoming pop stars

Within six years, the two singers achieved their visions: Mark Feld as Marc Bolan, the front man for the insanely popular glam rock band T. Rex, and Davy Jones as the reinvented prince of androgyny, David Bowie.

Today, David Bowie is an icon. Marc Bolan is a footnote. Why?

Toward a new definition for 'public relations': My vote is for No. 2

The Public Relatons Society of America revealed this week its three candidates for redefining "public relations." My support is for No. 2:

Public relations is a strategic communication process that develops and maintains mutually beneficial relationships between organizations and their key publics.

It's clean. It's clear. It's direct. And it includes the key phrase, "mutually beneficial relationships."

The future belongs to organizations that generate and protect their social capital as carefully as they do their financial capital. The only way to do that is through relationships that are mutually beneficial. Clearly, the only profession designed to manage that is public relations.

Engaging the public vs. serving the public

Richard Edelman, the president/CEO for public relations giant Edelman, recently called upon PR pros to consider a new approach to meet the needs of a more complex world.

He identifies four principles for what he calls "public engagement."

First, he says, PR should drive every company's operating strategy. Second, companies should practice radical transparency with the public. Third, companies should tap into all four platforms for mass communication: mainstream media, hybrid media, social media, and owned media. Fourth, PR should aim to attract and develop talent with a broad range of skills.

I largely agree with all of that. But Edleman has come up short by at least two principles if we want to take the next step from "engaging the public" to "serving the public." This next step is made inevitable by the sea change that is taking place in Corporate America.

Inevitable? Yes, driven by public outrage about Wall Street's participation in the global economic meltdown, and about the roles of Big Business and Big Government in weakening the American middle class. These aren't political arguments; they are observable facts. Within five years, the corporation as we know it will be forced (by law and by circumstance) to become far more responsive to public demands than any MBA-educated executive can begin to imagine.

Thus merely "engaging" the public is too timid for the next generation of public relations. The next phase can be called "Service PR," and will include all four of Edelman's principles, with at least two more:

• Adopt responsiveness as a survival strategy: The companies that respond quickly and effectively to changing public opinion, and that best manage community outrage, will thrive. Those that dismiss, ignore, or attempt to circumvent these factors will die. It's that simple.

• Put the public's interests ahead of the company's: Certainly an anathema in the modern corporation, which is designed by law to act only in its own interests, and to wait for government and the courts to rein in any excesses. But the formation of public policy no longer belongs to the elite. It belongs to the digerati, who can bring their power to bear upon any offending corporation in a matter of seconds.

This is the new reality. Deal with it.