Tuesday, August 26, 2008

Nano: A poltical football?

Becoming a sustainable corporation

From The Statesman
ND Batra

Tata Motors’s Nano project’s difficulties in Singur triggered in my mind a stream of random thoughts as to how a global corporation should build a sustainable enterprise that takes into account not only the government but all stakeholders including the humblest farmer with a “two-bigha” plot of land. But this column is not about the great Tatas, the pride of India.

The idea of what constitutes a company’s individuality, reputation and trust is important. Image and identity contribute to these intangible assets. McDonald’s, Nike, Pepsi, Coca-Cola, Chevron, and, yes, even ExxonMobil, for example, are powerful global brands and in many ways they project what the US is all about. Protecting brand reputation, when a crisis hits a company, big or small, is of paramount importance. Successful executives are great communicators and diplomats. They don’t threaten to walk away; they solve problems.

In the age of 24/7 media, corporations have become righteously obsessed with their reputation. Investigative journalists thrive on controversies and apart from serving their own self-interest, they serve a very useful social purpose. They keep corporate America on its toes. Imagine if Enron, WorldCom and other companies that went down the drain because of corruption had been subjected to an intense media scrutiny. Millions of people would have been saved from grief.

Before “60 Minutes” and similar television investigative programmes invite their subjects for an interview, they do their homework. Company whistleblowers and insiders supplement the news media’s own internal investigation.

The important point is that since corporate America cannot ignore the news media, the best thing is to make professional preparations to meet them and give them necessary cooperation. It is important to know how to communicate effectively and persuasively during a crisis so that the situation can be brought under control and remedial measures taken to re-establish the company’s reputation. Today all major corporations scan the burgeoning blogosphere and social networks. Most have their own blogs and they invite their stakeholders to contribute to them. NGOs and social activists have as much access to the news media as any big corporation.

Business culture in India has been changing rapidly and Indians are more open to global corporations today than they were a decade ago. And like Europeans, Indians too demand that global companies maintain the same high standards as they do in the US.One cannot underestimate the importance of the perpetual news cycle for the corporate global and the necessity of having an adequate response structure in place in order to take corrective measures in case the news media inadvertently damage the company’s reputation.

Many corporations use institutional advertisement to inform the public about facts that might have been ignored by the news media. Advertisement is a very important tool not only for promoting products but also for advancing a company’s vision of its social responsibilities. This is one form of communication over which a company has full control. During a crisis, a transnational company should hire the services of local agents and public relations companies. Local knowledge is very important during crises.

A corporation should report to the public about its social responsibility activities in a manner that can stand public scrutiny. Some corporations use their social responsibility activities as a tool of corporate diplomacy to build social capital and goodwill. They use their social capital when hit with a crisis. If a company has a code of ethics, let it be known to the public as to how the company is following the code. Of course, every corporation should have a code of ethics.

Europe might seem to us a house divided against itself, but when it comes to dealing with US global corporations like GE, Microsoft, Apple, et al, or a country like China, EU takes a united stand. Instead of getting help from Washington, global corporations develop their corporate diplomacy. All major corporations, Boeing, Microsoft, Google, for example, have their own corporate diplomats who use the same tools and talents as political diplomats do in dealing with international crisis. Many of them are retired ambassadors, state department officials, and military officers; and they know their jobs.

Not pulling out but lying low and waiting for the situation to improve might be a better option for transnational companies when in trouble. Even in Venezuela, the fifth largest oil producing country, some oil companies have decided to stick around, hoping that the situation will improve. In some countries, for example, KFC (Pakistan) and McDonald’s (France), outlets have been set on fire, demolished or boycotted by anti-global activists; nonetheless, business operations on the whole have continued.
Instead of quitting altogether, holding back further direct investment or even curtailment may have a remedial effect. Perhaps Tata Motors should think again these lines. The government’s backing is important but help should be sought as a last resort. Global companies should develop their own public relations, including relations with the local news media and coalition-building with local interest groups.

Although an early awareness/warning system could help predict many problems before they turn into crises, not every catastrophic event can be predicted. An early awareness system shows the potential of various issues that might emerge.If an issue has already emerged and if preventive measures are not taken before it reaches the take off stage, the issue will turn into a full-blown crisis involving NGOs and the news media.As a corporate public affairs expert, one has to cultivate public goodwill and manage public perceptions. Public goodwill is a valuable asset for a global corporation.

The complexity of dealing with multiple stakeholders is very important in understanding the parameters of doing business abroad. Monsanto, for example, had a setback in Europe but not in other countries such as China, India and Brazil. Cultural differences even in India cannot be ignored.
Were Tata Motors an American company planning an operation in India, they wouldn’t have allowed Nano to become a political football.

(ND Batra is professor of communications at Norwich University)

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