1. Naked Conversations
by Robert Scoble and Shel Israel
Many business leaders fail to understand, or prefer to ignore, the fact that conversations about their company—involving their customers, shareholders, communities and employees—are taking place every day. The decision facing corporate communicators is not whether those conversations will continue, because companies are powerless to prevent or control them; it is whether to ignore those conversations or actively engage in them.
An increasing number of those conversations are taking place on the Internet, at sites called weblogs. And the good news for companies is that they can join in any time—as long as they do so respectfully, with honesty and humility as their guiding principles. The even better news is, companies can initiate some of those conversations themselves, using the same medium to start a dialogue with their stakeholders—as long as they are prepared to talk to them like a real person, and to listen to what other participants have to say in response.
That was the message Robert Scoble and Shel Israel, authors of Naked Conversations, sought to convey in one of the first books about business blogging. The book is not a definitive picture of the new phenomenon—the technology and its adoption are both moving too fast for that—but it does provide a valuable snapshot of the blogosphere in its infancy, and if the picture is still a little blurry, it’s still possible to discern a pattern and learn a good deal about what’s going on and why so many people are so excited about it.
Still it’s no surprise that the blogosphere—an environment where the rules are so different, and which appears to some observers to have no rules at all—makes many public relations executives (and their CEOs) nervous. But therowing popularity of blogs means that companies need to make a decision about whether—and how—to engage with bloggers.
“Businesses need to join these conversations because they build trust,” say Scoble and Israel. “Most companies know the value in that. Blogs also humanize companies, or at least the people who work in them… The more you talk with someone, the better you understand who he or she is, and you are most prone to conduct transactions with people you know well enough to trust….
“If you choose to join the conversation, your company will be the better for it and your customers will be happier. You will develop better products and services by enjoying their collective wisdom, and you will save a ton of money by dumping expensive marketing tactics that not only don’t work, but annoy the people they target.”
The book describes several levels at which companies can choose to engage. At one level, companies are simply monitoring what is being said about them in the blogosphere, responding to criticism. At another level, they can engage bloggers proactively, treating them no differently than they would treat any other medium covering their business. And at another level, they can join the blogosphere themselves, becoming active participants, initiating conversations rather than merely responding to them.
The book also provides advice on how to respond when bloggers attack (with examples of early victims and the lessons they learned); the potential benefits of treating bloggers just like any other media; establishing guidelines for employees who choose to blog; and launching a corporate blog of your own.
“We believe that blogging is not just wise for businesses wishing to be closer with their customers, but essential,” says Scoble and Israel. “We envision a day in the near future when companies that don’t blog will be held suspect to some degree, with people wondering whether those companies have something to hide or whether the owners are worried about what the people who work for them have to say.”
Their advice includes:
• Talk, don’t sell: Blogging was born in an environment of anti-pitch sentiment. People visit blogs to see what others care about and know. Over time they will either come to trust you or they won’t. If you sell to them, they’ll just leave—if you’re lucky.
• Post often and be interesting: Posting often helps you with search engine ratings, and being interesting motivates others to link to you.
• Write on issues you know and care about: A good blog is passionate and shows authority.
• Blogging saves money but costs time: You need to join the conversation by reading other blogs, linking to them, and putting comments on them.
• You get smarter by listening to what people tell you: The unwillingness of big companies to listen to what everyday people have to say is one of the big reasons for anti-corporate sentiment, and blogging can help.
There are also, needless to say, numerous examples of companies that get it wrong—a list that would be even longer today than it was 12 months ago.
2. The Ultimate Question
by Fred Reichheld
“Too many companies these days can’t tell the difference between good profits and bad,” says Fred Reichheld, director emeritus at management consulting firm Bain & Company and customer loyalty guru, in the opening salvo of The Ultimate Question, a manifesto for a radical overhaul of corporate priorities that is profoundly relevant to public relations counselors and PR agency managers. “As a result, they are getting hooked on bad profits.”
The consequences, Reichheld argues, are disastrous. “Bad profits choke off a company’s best opportunities for true growth, the kind of growth that is both profitable and sustainable. They blacken its reputation. The pursuit of bad profits alienates customers and demoralizes employees.”
By this point, skeptical readers will be wondering just what “bad profits” look like. Those who have spent too long feeding the quarterly earnings beast will presumably be complaining that “bad profits” are the ultimate tautology, that all profits are by definition good—and that anyone who says otherwise is probably some sort of commie subversive.
But Reichheld knows what bad profits are: they are profits earned at the expense of customer relationships.
“Whenever a customer feels misled, mistreated, ignored, or coerced, then profits from that customer are bad,” he says. “Bad profits come from unfair or misleading pricing. Bad profits arise when companies save money by delivering a lousy customer experience. Bad profits are about extracting value from customers, not creating value.”
Bad profits destroy relationships, ensuring that customers will defect at the earliest possible opportunity. But in the Internet age, they do worse than that: they create “detractors” who have the power to destroy customer relationships before they have even started. So even companies that manage to build high switching costs into their business models—effectively trapping customers—suffer from bad profits because those trapped customers can generate negative word-of-mouth.
“Detractors are customers who feel badly treated by a company—so badly that they cut back on their purchases, switch to the competition if they can, and warn others to stay away from the company they feel has done them wrong…. Customers who feel ignored or mistreated find ways to get even. They drive up service costs by reporting numerous problems. They demoralize frontline employees with their complaints and demands. They gripe to friends, relatives, colleagues, acquaintances—anyone who will listen, including journalists and regulators...
“Detractors tarnish a firm’s reputation and diminish its ability to recruit the best employees and customers.”
Conversely, companies that focus on good profits can generate positive word-of-mouth.
“Good profits are dramatically different,” Reichheld insists. “If bad profits are earned at the expense of customers, good profits are earned with customers’ enthusiastic cooperation. A company earns good profits when it so delights its customers that they willingly come back for more—and not only that, they tell their friends and colleagues to do business with the company.”
When Riechheld and his colleagues began their research into the connection between loyalty and growth almost 25 years ago, they started by looking at customer retention, and compiled data showing that a 5 percent increase in retention could lead to an improvement on profitability of anywhere from 24 to 100 percent. But the core of The Ultimate Question is a more reliable metric, one based—as the title suggests—on the answer to a single question.
“We discovered the one question you can ask your customers that links so closely to their behaviors that it is a practical surrogate for what they will do,” Reichheld says, without either modesty or apparent exaggeration. “By asking that question systematically, and by linking the results to employee rewards, you can tell the difference between good profits and bad. You can manage for customer loyalty and the growth it produces just as rigorously as you now manage for profits.”
The question is one that has been used in customer satisfaction surveys for decades: would you recommend this company (or product, or service) to a friend of colleague? By subtracting the number of detractors (those who give a company 6 out of 10 or less) from the number of promoters (those who give the company a 9 or a 10), a company can arrive at what Reichheld calls its Net Promoter Score, a measure of how well it is generating loyalty.
Public relations consultants should know their clients’ Net Promoter Scores, but they should also know their own.
3. The Elements of Influence
by Alan Kelly
The Elements of Influence: The New Essential System for Managing Competition, Reputation and Buzz, focuses on the ways in which public relations people, and others in the influence business (from advertisers and marketers to politicians) use communications to position themselves, their products and ideas—and deposition others—in competitive markets.
To better understand that process, author Alan Kelly (founder and former CEO of Applied Communications) focuses on various communications strategies, what he calls “plays.” He has identified 25 of them, organized them into classes, and in The Elements of Influences he analyzes how each of the plays works, when they should be used, their benefits (and possible negative consequences), the ways in which they can be identified (decoded) by both competitors and their intended target audiences, and even the appropriate plays to use in response.
In so doing, he provides the first comprehensive framework for understanding how communications works in a competitive environment, a toolkit that will be equally useful for those in the influence industry and those with an interest in deconstructing the corporate and political messages with which they are bombarded every minute of every day.
Says Kelly: “The pursuits of strategy, positioning, influence and advocacy have virtually no standard or reliable reference for plotting and planning the movements and motives of players in their marketplaces, whether of allies and rivals alike.”
The best professional communicators have been doing on instinct what Kelly now suggests needs a desk reference. But that doesn’t mean that even they—and certainly the rest of us—can’t benefit from a deeper understanding of how communications works. And the need for greater understanding of how communications work goes beyond the professional community.
“Plays are everywhere,” says Kelly. “From an audacious Super Bowl TV ad to an outrageous blog posting, from a coworker’s power play to a competitor’s end run, plays are the strategies we employ to get us where we need to go, whether as a by-product of our ambitions, our sense of duty, or our sense of survival….
“You run plays. Plays are run on you. Every organization and every person runs plays to increase their relative competitive advantage in busy marketplaces. Some do it well. Some try to avoid it. Some do it directly. Some use surrogates. Some run one play at a time. Some run many simultaneously. Almost all do so on instinct and fewer yet with the support of stated objectives, policies, and augmenting research.”
A play, according to Kelly, is “a stratagem, one of a finite set of discrete strategic maneuvers a person or organization employs to improve its relative competitive advantage in a marketplace.” A Playmaker is “a strategist whose stock in trade is to call, run, decode and counter competitive moves in a marketplace.” And Playmaking is “a discipline for deploying and systematically managing plays… to continually influence, control and sustain the sentiments, discussions and decisions of a marketplace.”
“Plays can and should move a player forward, hold another in check, or both,” says Kelly. “It’s ideal, of course, to propel an entity up and away from the other guy, particularly if the plays you’re running are at allies, like employees and customers. But it’s okay, too, if progress is made by stopping or slowing the competition. And if both occur, so much the better, because a play’s central purpose is to create relative competitive advantage.”
Kelly has organized his 25 plays into a periodic table of sorts, The Playmaker’s Table, which he says will enable playmakers answer critical questions from what are we doing and how are we doing it to what is our competition doing and how should we react to it.
The plays are divided into three classes: assess, condition, and engage. Plays in the Assess class, which Kelly defines as “subtle, typically passive monitoring and profiling of players and marketplaces) are typically less confrontational than those in the Condition class (“moderate, often indirect, encouragement or suppression of actions to influence or reform the sentiments of players and marketplaces”) while the most confrontational of all are in the Engage class (“active, usually overt, interventions that destabilize players and marketplaces, assert a player’s leadership, or invite competitive responses”).
The Elements of Style will be a valuable addition to the library of anyone engaged in advocacy. It will provide younger professionals with a framework for deciding how to introduce new ideas to the marketplace and to respond to the ideas introduced by their competitors, and even older and more experienced practitioners are likely to find that the playmaking approach clarifies their understanding of the communications process.
Finally, for those who wish to better understand and deconstruct the spin, manipulation and deceit with which they are confronted daily, The Elements of Influence will be invaluable.
4. Where the Truth Lies: Trust and Morality in PR and Journalism
By Julia Hobsbawn (editor)
Historically, the relationship between journalists and public relations people has been shaped by the perception of the former that their business involves the pursuit of truth, coupled with the conviction that the latter engaged primarily in manipulating or concealing the same commodity in pursuit of a narrow and self-serving agenda.
It’s time to reevaluate those assumptions. In the modern media environment, a case can be made that standards of honesty and truthfulness are now considerably higher in the public relations profession than they are in the world of journalism. Certainly, public relations practitioners are more accountable for the accuracy of their pronouncements than their counterparts in the fourth estate.
This rather dramatic change in the nature of the relationship between public relations professionals and reporters is explored in Where the Truth Lies: Trust and Morality in PR and Journalism, edited by public relations professor Julia Hobsbawn with contributions from luminaries from both sides of the divide, and published in the U.K. earlier this year.
Most of the individual essays are interesting in their own right, but taken overall they provide a fascinating snapshot of a relationship in transition, as the balance of power between journalists and public relations professionals shifts and assumptions about the integrity of both parties are challenged.
Simon Walker, director of communications for Reuters and formerly communications secretary at Buckingham Palace, hits the nail on the head when he writers that “the weakening of professionalism among journalists and strengthening of competence within corporate communications is combining with financial regulation and the absence of any meaningful press regulatory regime to create a paradox: corporate PR is actually becoming more honest than retail journalism.”
As a result, “corporate PR has to be more accurate than journalism. The rules are old ones. Behave honorably. Tell the truth. Be realistic. Don’t do deals with bandits. Relationships matter so act for the long term. Of course you can deceive any reporter once. But he or she will never believe you again.”
Anne Gregory, who is director of the Centre for Public Relations Studies at Leeds Metropolitan University, echoes that point: “Public relations seeks to build and maintain relationships of trust that are mutually beneficial,” she says. “Trust implies reliability, integrity, and good faith; organizations that want to be trusted are best served by practitioners who themselves are trustworthy.
“Organizations continue to exist because the public gives them a ‘license to operate.’ Part of the job of public relations practitioners is to stress the requirement of public approval to their organizational masters and this should act as a regulator of organizational conduct. Indeed, public relations should not only help to regulate bad conduct, it should actively promote good conduct in the form of ethical practice and social responsibility.”
This is a book I don’t believe could have been written in the U.S. I don’t think it would have been possible to prevail on so many top-flight editors or journalists to think deeply about the relationship between media and their sources, or to acknowledge the existence of such a relationship, beyond the standard grouching about PR people not bothering to read the reporters they target.
Nor would it be easy to find public relations people courageous enough to go on the record with comments about the reporters upon whom many still believe they are dependent.
But even if most of the contributors to Where the Truth Lies are from the U.K., the book explores an issue of global significance, to reporters, to public relations people and to citizens who sense that our culture is spinning out of control and want to able to decipher that spin and discern the “truth” that lies behind it.
5. The Market for Virtue
by David Vogel
In The Market for Virtue, University of California political science professor David Vogel takes a hard-nosed clear-eyed look at the so-called “business case” for social responsibility and comes away convinced that there is none. The fact that Vogel is an advocate of corporate social responsibility makes his findings all the more compelling.
But Vogel’s skepticism about the business case—often over-stated by supporters of CSR in an apparent reaction to the hostility of business leaders who worship before the altar of Ayn Rand and Milton Friedman—does nothing to undermine his support for corporate social responsibility. Rather, he liberates it from the shackles of exaggerated expectations and demonstrates that even if CSR can’t be all things for all companies, it has a role in the corporate arsenal.
In the process, he reinvents corporate social responsibility for the 21st century. That the 1990s saw a resurgence of interest in business virtue—which Vogel defines as “practices that improve the workplace and benefit society in ways that go above and beyond what companies are legally required to do”—is beyond dispute. But why?
The business case for CSR is predicated on the belief that better corporate citizens will benefit financially: attracting more customers, recruiting better employees more easily, perhaps even attracting more capital from socially conscious investors. The business case for social responsibility has become a favourite not only of CSR advocates but also of business executives: a 2002 study by Pricewaterhouse Coopers found that 70 percent of chief executives believed (or said they believed) that CSR was vital to their companies’ profitability.
But Vogel demolishes the business case, and does so—to my chagrin—convincingly.
“Unfortunately,” he writes, “there is no evidence that behaving more virtuously makes firms more profitable.” A thorough review of the literature purporting to link virtue and value finds that “at best [the evidence] is inconclusive… Social responsibility and irresponsibility may well matter,” Vogel concludes, “but their impact on the long-term financial performance of companies is typically dwarfed by a host of other factors.”
But the business case does not have to apply universally for social responsibility to be a valid strategic choice, Vogel says.
“It is not necessary to find a positive statistical relationship between CSR and profits to claim that some firms may benefit financially from being more responsible or suffer for being irresponsible. This is certainly true.” But advocates of the business case would prefer to go further, to show that behaving more responsible is in the financial interest of all firms, all the time.
It is this absolutism that Vogel rejects, while suggesting that for most companies social responsibility is a strategic choice that is unlikely to help or hurt their financial performance dramatically. Shareholders will not necessarily flock to a company that makes that choice, but there’s no reason—whatever Milton Friedman might think—they should abandon it or even worry about a negative impact on profits.
6. The Triple Bottom Line
by Andrew Savitz and Karl Weber
Andrew Savitz, a lead partner in the sustainability business services department at management consulting firm PricewaterhouseCoopers, states early in his introduction to The Triple Bottom Line that the “centerpiece of this book is the concept of sustainability,” defining the sustainable corporation as one “that creates profit for its shareholders while protecting the environment and improving the lives of those with whom it interacts.”
According to Savitz: “Sustainable organizations and societies generate and live off interest rather than depleting their capital. Capital, in this context, includes natural resources such as water, air, sources of energy, and foodstuffs. It also includes human and social assets—from worked commitment to community support—as well as economic resources, such as a license to operate, a receptive marketplace, and legal and economic infrastructure.
“A company can spend down its capital for a while, but generally not for long. A firm that honors the principles of sustainability, by contrast, is built to last.”
He even goes on to make the case that sustainability is preferable, as a description, to corporate social responsibility, because “responsibility emphasizes the benefits to social groups outside the business, whereas sustainability gives equal importance to the benefits enjoyed by the corporation itself.”
And Savitz hits on a key difference between the U.S. approach to responsibility—built around charitable donations—and the more holistic European model when he says that sSustainability is not about philanthropy.
“There’s nothing wrong with corporate charity, but the sustainable company conducts its business so that benefits flow naturally to all stakeholders, including employees, customers, business partners, communities and of course shareholders. It could be said that the truly sustainable company would have no need to write checks to charity or ‘give back’ to the local community because the company’s daily operations wouldn’t deprive the community but would enrich it.”
In other words, the whole notion of giving back becomes redundant if the company doesn’t take anything to begin with.
I’m not sure that The Triple Bottom Line breaks any dramatic new ground, but it does add to the growing body of literature on a subject that ought to be central to corporate public relations thinking right now, and it is full of useful examples of companies that have at least started to move in the right, long-term direction.
7. Grapevine: The New Art of Word-of-Mouth Marketing
by Dave Balter and John Butman
Contrary to conventional marketing wisdom, your brand is not the product of all the things you say about yourself. It is not determined by your advertising or your marketing, or even by the work of your public relations department. Your brand is the product of all the experiences consumers and other stakeholders have with your products and services, and of all the conversations they have with each other about those experiences.
Some marketers would prefer to ignore those conversations. Earlier this year, marketing consultant Jack Trout, writing in Forbes, dismissed the idea that word-of-mouth was the “next big thing” in advertising, arguing that “There’s no way to control that word-of-mouth. Do I want to give up control and let consumers take over my campaign?”
In his book Grapevine: The New Art of Word-of-Mouth Marketing, Dave Balter provides a strong, compelling response to Trout’s criticisms. He makes the point (obvious to many of us, though not to some old-school marketers) that consumers talk about products and services and brands whether companies encourage it or not. And since they are taking place anyway, smart marketers should be participating in those conversations.
And he makes a convincing argument, based on his experience as founder of word-of-mouth marketing pioneer BzzAgent, that those conversations can be instigated and influenced by the company even if they cannot be controlled—and that in any case, total control may not be quite as powerful and important as mainstream marketers think.
“Everybody talks about products and services, and they talk about them all the time,” say Balter and his co-author John Butman early in Grapevine. “Word-of-mouth is not about identifying a small subgroup of highly influential or well-connected people to talk up a product or service. It’s not about mavens or celebrities or people with specialist knowledge. It’s about everybody.”
It’s possible to argue that BzzAgent’s approach to word-of-mouth, which involves recruiting “agents” who plug products, often in exchange for samples or inside information, is somehow deceptive or inauthentic. Truly spontaneous word-of-mouth—the kind I believe public relations people should be focused on—should follow the same approach PR people have historically followed in dealing with the media: identify individuals or groups with influence; tell them the company’s story (or the story of the product or service); then let them go out and tell that story to the wider community.
That small quibble aside, even those PR people hoping to follow that approach to word-of-mouth will learn a lot from Grapevine.
8. Making News
by David Henderson
There are so many mediocre books on media relations, that it’s a true pleasure to come across one that lives up to the claim on its cover. David Henderson’s publisher bills Making News as a “straight-shooting guide to media relations” and the book delivers. Henderson, an Emmy award-winning CBS correspondent turned PR pro has delivered a book full of insight into the news process and pragmatic advice for generating positive media coverage.
Henderson interviewed 100 or so reporters for Making News, and quotes them extensively, but it’s his own experience and perspective that makes this a valuable contribution to the literature.
Henderson is unfashionably enthusiastic about the role of media relations. At a time when many of the PR industry’s leaders are at pains to point out that the discipline can do much more than generate media coverage, Henderson emphasizes the benefits of earned coverage—and the potential pitfalls of mishandling the news media.
“You can achieve significant success when you’re smart and fast on your feet, and when you understand the news media’s playing field, how to control the message,” says Henderson. “You can boost brand awareness for an organization, prominently position a product or service, provide clear and accurate information in a crisis, and help to right a wrong.
“Because of the near-instant credibility and widespread audience reach that comes with news coverage, media relations can be the most influential tool in an organization’s marketing strategy.”
Having made the move from network news correspondent at CBS to public relations executive, Henderson says he realized “few people relations people ever consider what a reporter needs for a story. Even fewer have ever bothered to develop working relationships with the news media, preferring instead to send news releases indiscriminately to as many journalists as possible.”
He chastises seasoned public relations executives who no longer work to maintain close relationships with reporters.
“Too many agency executives consider pitching reporters to be beneath them, and the execs hand off the assignment to junior employees and interns with little or no training to actually do the work.” Says one reporter: “Sometimes they sound as bored and rote as a telemarketer, and you know the PR agency has dispensed an intern to read off a sheet.”
At the end of the day, Henderson makes a strong case that dealing with media is too important to be delegated.
9. Profit with Honor: The New Stage of Market Capitalism
by Daniel Yankelovich
Less than a month after the death of Milton Friedman, one of the most influential economists of the 21st century and author of the famous dictum that “there is one and only one social responsibility of business: to use its resources and engage in activities designed to increase its profits,” was a good time to review a new book by Daniel Yankelovich, for the past 50 years one of the leading researchers in America (he founded research giant DYG as well as two other companies) and on the evidence of Profit with Honor: The New Stage of Market Capitalism, one of the most thoughtful.
Friedman’s only qualifier to his paean to the primacy of profits was to note that business should “stay within the rules of the game… engage in open and free competition without deception or fraud.” It is one of the strengths of Profit with Honor that Yankelovich paints a vivid picture of what that philosophy has wrought.
Yankelovich believes “we should take the new wave of mistrust seriously. Mistrust is a corrosive emotion that distorts everything it touches.” To regain the trust of the American people, he says, business “must institute far-reaching changes, or else suffer punitive reforms imposed by government….
“The time has come for market capitalism in the United States to advance to a new stage of enlightened self-interest. American business needs to develop a new ethic—a coherent set of social norms—both to counteract the forces leading to the scandals and to meet the challenges of the global economy that call upon business to take on many new responsibilities.”
Yankelovich is arguing for what he believes is (to quote his subtitle) a “new stage of market capitalism,” an approach that balances the need for corporate profits with the need for rebuilding trust in institutions, an approach he calls “stewardship ethics.”
Stewardship ethics, Yankelovich says, involve caring for multiple stakeholders, emphasize the need to develop communal values, respond positively to higher societal expectation, recognize the conscious effort retired to reconcile profitability with social good, and always seek to leave the institution better off than it was when the CEO’s stewardship began.
Stewardship ethics are based in an understanding that companies need to go beyond Friedman’s requirement that they “stay within the rules of the game,” that mere compliance is sufficient.
I’m not sure the enlightened self-interest he proposes is any more likely than a wholesale embrace of social responsibility, or that the “stewardship ethics” Yankelovich proposes offer any more hope for real change than the voices of business critics.
I am sure, however, as Yankelovich is, that unless business changes, trust will continue to decline and running a successful company will become an even greater challenge.
10. The Marketer’s Guide to Public Relations in the 21st Century
by Thomas Harris and Patricia Whalen
Yes, it’s essentially a new edition of an old book, but that old book is one of the seminal texts on public relations by Thomas Harris, co-founder of GolinHarris and one of the most insightful marketing public relations professionals in the history of our profession and while the format is similar to the original, about 80 percent of the content is new.
And yes, I disagree with Harris about the nature of the relationship between marketing and public relations (I’ve always believed that the former should report to the latter) but Harris’s book deals with the realities of a world in which marketers hire public relations people and public relations firms—often without a clue what they should be looking for.
It’s been 15 years since the original Marketer’s Guide hit the shelves, so industry veterans familiar with that text will benefit from a refresher course. And this new work should be required reading for those newer additions to the profession, who may not be familiar with Harris’s engaging writing style and extraordinary knowledge.