Tuesday, January 30, 2007

Business Diplomacy

Global corporate communications

ND Batra
The Statesman

Global companies have a lot to say and promises to keep, whether it is the new AT&T ready to deliver the world to your touch pad, Cisco’s human network making you the centre of creativity, or Intel with its new wondrous nanometer chip that will make 30,000 angels dance on the head of a pin.

Communication is the key in the conduct of successful corporate public affairs. Without a comprehensive communications strategy that takes into account all stakeholders who interact with the company and form its business environment, corporate communication cannot be effective. At the heart of communication is persuasion, even when a company is simply trying to inform the public about a new product, for example, a new nano-nano-transistor. Information is never neutral.

Power to persuade is the soft power that companies exercise to win the hearts and minds of the people.But to do so in a multi-channel environment over which a company does not have much control needs finesse, especially when the company has to operate in a global environment. Companies like AT&T, Cisco and Intel have become de-localised. They are no longer woven into the fabric of local communities as they used to be in the pre-digital age.

Company employees do their work in a virtual environment and their mobility makes them less concerned with what is happening in their neighbourhood. In an environment where companies are spread globally, it becomes difficult to communicate locally because companies don’t have local roots and they are not embedded in local cultures.

In an environment such as this, it would take extraordinary effort by global companies to communicate and present their position in a persuasive manner. Perception is reality and many people look at global companies as more powerful than the government, which draws enhanced critical scrutiny from the news media and NGOs. The image of power that global companies project raises expectations and fear in the minds of the people.

Growing expectations of corporate responsibility create unusual challenges for corporate communications and diplomacy. Because of the recent corporate scandals in the USA, which have put many senior corporate executives in jail, the Americans expect greater transparency from companies.

This may not be true of other countries, for example, China, where companies such as Cisco, Intel, Google and others may get away with behaviours that would not be acceptable in the USA, Japan or Europe.Since expectations of corporate behaviour differ from country to country, corporate communications strategies must take such cultural differences into account. Since effective communication takes place in a cultural context, understanding the host country’s political culture is important for corporate communications to be effective.

Culture includes the legal system as well as rules, which must not be violated in the host country. Keep in mind that good corporate behaviour is seldom rewarded; on the other hand, bad behaviour is punished as it sullies the company’s reputation. Companies should be problem-solvers and not become part of the problem.

Look at BP (Beyond Petroleum). It says it is an energy problem solver. Yet not much green has come out of its entrails. Each country has abiding cultural icons, its sacred cows that make global corporate communications quite a challenge. What is culturally and politically correct in one country may not be so in another.

Not understanding national cultural sensitivities and differences can create a nightmare for companies doing business abroad. While these general observations in the context of global communications are important, for corporate communication to be effective, it must be aimed at specific groups or audiences, especially, relevant to the company. They are: customers, financial analysts, government authorities, and non-business stakeholders such as NGOs.

Customers are the most important constituency for a company. They are the reason for the company’s business and the most important source of its strength. In a competitive environment, where one product may not be qualitatively much different from the other, keeping the customer coming back to the company requires communication at multiple levels, including what affects the product, price, image, and most of all the company’s reputation.

Let’s see who else, apart from Intel, can push Moore’s Law to the extreme. How a company presents itself publicly, through images, symbols and slogans, and how customers perceive the company would determine its place in the crowded marketplace. Trust and reputation are the basis of communication with customers. Wall Street analysts and financial journalists have become important because through their writings and analyses, they inform the investing public how valuable is the company in the marketplace and thereby sustain and promote shareholder values.But as many, recent, corporate scandals have shown, to raise the market value of their shares, companies sometime make false promises.

Analysts and financial journalists, instead of being impartial and objective reporters and critics, sometime become a part of the vicious conveyer belt, destroying public trust, and provoking harsh regulations.Communicating honestly with market analysts and financial journalists is important because it is through them that a company manages its image of financial strength and growth. Raising false expectations for short-term benefits can destroy a company’s reputation.

Corporate behaviour is regulated by rules which are framed in the public interest and in consultation with the industry. But once the rules are in place, not only the authorities but also public interest groups, many of which have established global networks to monitor compliance, closely watch companies’ errant behaviour. The Microsoft ordeal in the USA and Europe for anti-trust violation is a case in point. There are thousands of NGOs who have made it their business to scrutinise the behaviour of local, regional and multinational companies to protect the public and environment from exploitation. With well-defined demands, global NGOs with their huge and broad-based financial and legal support system can swing into a campaign mode against a corporation quickly.

Cooperating and communicating with them requires special diplomatic efforts. What and how to communicate is important. The importance of global reporting initiative is that it lays the foundation for transparency and trust. It provides guidelines for reporting on non-business matters, especially, sustainability and environmental concerns.

Such information eventually impacts business and a company’s reputation.One might argue that not every country is concerned about environmental and sustainability issues, so why bother. Global NGOs such as Greenpeace have no international borders and they make it their business to scrutinise every global company, including, one day, Google, Intel, Cisco and others.

No comments:

Post a Comment