Advertisment can stimulate the economy

When the economy is down, call the adman

CYBER AGE ND Batra
From The Statesman

In spite of the fact that unemployment has been rising, more than 90 percent Americans still have their jobs. But people are not spending liberally as they used to do. In this season of recession here and depression there, the adman’s song and dance is becoming extremely loud and captivating.
In the United States, advertising since long has been a most important mode of social, political and economic discourse; it is partly so because the adman knows how to cut through the glut of information and hit the target audience with promises of fulfillment of needs and desires.

The adman knows who you are: your taste in wining and dining; your preferences for the car; whether you love kids or pets or both; what’s in your medicine cabinet; what’s in your refrigerator; whether you play golf or video games. He knows what you do each part of the day and how to reach you through your demographic-psychographic profile. The adman researches people not as individual human beings but clusters of interests, preferences and tastes; as communities of shared values, seeking similar pleasures. The adman is a cultural spy as well as promoter of culture.

You need to observe how the adman cleverly propels millions of children to toy stores in order to get to the parents’ pocket books. He does it through after-school television programmes and Saturday morning cartoons, programmes that alternate with commercials so rapidly that the kids can’t make sense whether they are watching programmes or commercials. And at the same time kids feel fascinated with imaginative characters from SpongeBob SquarePants to Power Rangers.

Few parents know how to withstand the pressure from their children, ranging from outright grumpiness to passive-aggressive non-communication. Even in these difficult days when household budgeting is a challenge for many families, children come first. Children and teenagers’ consumer market is huge. Adman turns everything into “cool,” and that is the buzzword.

But imagine how the adman is dealing with a most rational group in the United States, the physicians. Direct-to-the patient “Ask Your Doctor” ads about prescription drugs, which are mostly aimed at the elderly and women, have become so common that sometimes you wonder if Americans suffer from every global disease ranging from allergies and erectile dysfunction to sagging breasts in urgent need for uplifting.

A typical “Ask Your Doctor” advertisement, for example, Detrol, which is used for incontinence and overactive bladder, may show a happy middle-aged couple walking on the beach hand in hand, so happy because they have discovered Detrol through their doctor; or middle age buddies who can sit through an entire baseball game without rushing to the bathroom.

Through these direct-to-patient ads that seem to give vital and authoritative information, the adman uses persuasion to elbow people to take the initiative and ask their physician why this drug is right for them. Of course in a rapid-fire speed-reading mode, the narrator issues warnings for the drug’s side-effects.

In a behavioural advertisement, the adman appeals directly to people’s emotions and tickles the image they have of themselves especially when he sells a value product such as an expensive luxury car to uppity rising people trying to catch up with their neighbours. But by mixing both kinds of appeals, emotional and informative, many pharmaceutical companies make a direct pitch to patients from “If Viagra isn’t everything you hoped for, don’t give up” because there is Cialis for 36 hours and even for daily use to “Now I trust my heart to Lipitor”; and so on.

Many drug manufacturers are using television celebrities to push their prescription drugs, a strategy that might make a physician wonder if it’s worthwhile to resist the pressure and lose his or her patients to another healthcare provider.

The adman’s approach to these two large and almost captive markets, children and the elderly, is quite similar. To get to parents, the adman, like a magician, snares children by creating what is “cool”; to get to physicians, he goes to their patients by using a direct and immediate health benefit appeal. Both appeals use subtle emotional pressures, pushing on ethical boundaries.

But in spite of all his faults, the adman is indispensable to a free market society. The adman impacts society in multifarious ways by bringing buyers and sellers together in the marketplace of goods, services and ideas, and thereby helps distribute economic and intellectual resources of the society.

The social discourse today is all about stimulating the economy through buying and selling because in a consumer society like the United States if the trips to shopping malls diminish, so would the economy. Sooner or later, therefore, the adman would get us because he can take us everywhere we want to be. And he keeps the economy moving even in these times of recession when our lives have become rather fearful of tomorrows. The American adman may be President Obama’s best ally in fighting the economic downturn.

(ND Batra is professor of communications at Norwich University)

India: A two-book nation

Can India rebuild global trust?

NDBatra
From The Statesman

The challenge of Satyam is the challenge for a rising economy, a rising nation that wants to play a global role: how to go beyond the trust based on family ties, old boys’ network, caste and religion, especially in a diversified and multicultural world, so that investors can repose their faith in the system ~ a system that must be so open and transparent that it creates verifiable trust; and trustworthiness. There lies the future of India.

But what is trust? Carolyn McLeod writes in Stanford Encyclopedia of Philosophy that “Trust is both important and dangerous. It is important because it allows us to form relationships with others and to depend on others ~ for love, for advice, for help with our plumbing, or what have you ~ especially when we know that no outside force (for example, the law) compels them to give us such things.” But trust can be risky because the trusted person or organisation may not be able to fulfil the obligation whether it is due to inability or changed circumstances. Or sheer greed, as it happened in the case of Wall Street trader Bernard Madoff whose Ponzi (pyramid) scheme defrauded investors of $50 billion, including several charities, Hollywood celebrities and his own Jewish community members, who trusted him as one of their own. Satyam’s B Ramalinga Raju is a mirror image of Bernard Madoff. Crooks are found everywhere.

Erosion of trust is a global phenomenon. President Barack Obama sees the rebuilding of public trust as one of his major challenges and therefore the subject of transparency reverberates in his public communication; for example, in a memo on the Freedom of Information Act he said that the government would work “to ensure the public trust and establish a system of transparency, public participation, and collaboration. Openness will strengthen our democracy and promote efficiency and effectiveness in Government.” What is good for the government is equally good for corporate governance.

Doing business is essentially building social trust, which is imperative for foreign direct investment (FDI) especially if a company is dependent upon global customers as many Indian companies are increasingly becoming. Family is the basic unit of mutual trust. Families whose members trust each other because of transparency and openness do well in business, provided they are enterprising and risk-taking people. But in the age of globalisation, when capital flows in and out at warp speed, trust cannot be limited to families.

When enterprising families join hands with government, business growth can be rapid in the initial stages, because regulatory constraints and market accountability can be waived to access credit and investment. The rapid growths of companies like Satyam was not due to the miracle of unique Indian entrepreneurial spirit but because of the government-family conglomeration of economic interests, contemptuously though rightfully called crony capitalism.

To build a company like Satyam you need more than one person; you need a community ~ of political supporters. Although crony capitalism is present in every society, it flourishes best where the flow of information, both economic and political, is limited. This has been the pattern in most of the Asian countries and India fits into this pattern. India is a two-book nation and if you are in the accounting & auditing profession, you know what I mean, don’t you? A few years ago, I asked an Indian economic expert visiting the Tuck School of Business at Dartmouth about the size of the informal (black) economy in India; he said it might be about 40 per cent. If Satyam were only a local domestic company, it would have easily gotten out of the trouble. In fact no one would have noticed any problem. But being a global player, Raju like Madofff, went to jail.

The protected family-based business system reaches its limits of growth when it needs infusion of technology and capital for expansion, which can come from sources outside the family. Investors, especially now when they have many competitive opportunities available all over the world and can electronically transfer their investments instantly, demand sunshine ~ transparency, openness and accountability, the new mantra of the Obama administration. You cannot separate business from politics, global corporate from global politics. It is possible to create trust beyond the family-based business system but it can be done only under the supervision of an independent watchdog authority that creates a level-playing field for all. In the United States, the Security and Exchange Commission (SEC) monitors business corporations and stock markets.

Markets are complex but fragile systems, which do not thrive on family ties but on honest and open communication with investors. But even the best system is open to abuse, as we have been painfully observing (and suffering the consequences of) what has been happening to some of the legendary banks and financial institutions.

Since the market crash of 1929 and the Great Depression, corporate America is required by the law to make full disclosures and communicate regularly with the investing public in certain prescribed manners, under the vigilance of the SEC. At the heart of the US market vigilance system is the anti-fraud provision, which is supposed to operate in order to prohibit insider trading. Insider trading is a serious crime and occurs when knowledgeable insiders in a corporation, who are privy to critical information not available to outside investors, purchase or sell the corporation’s securities, stocks and bonds based on prior knowledge. To create an equal opportunity field for all investors, whether they are investors or employees of the corporation, material information about the company must be made to the investing public by the release of reports to the financial press and general circulation newspapers promptly, without any attempt to mislead.

This had been the foundation of trust, which attracted millions of investors not only in the United States but also from rest of the world. That trust has suddenly disappeared. Rebuilding global trust is the biggest challenge for corporate and political leadership in the age of uncertainty.

(ND Batra is professor of communications at Norwich University)

The re-Education of a businessman

What business schools need to do

From The Statesman

CYBER AGE - ND Batra

Business schools emphasise quantitative analysis and sophisticated computer modelling as if real life in the street could be enclosed in a Gaussian Bell Curve and events could be predicted within margins of error. But modern tools of business and economics cannot capture outliers, for example, the rare and extreme event such as the global financial crisis that is crushing us today.

While one cannot prevent a tsunami from hitting a country, one can certainly imagine such an extreme event occurring and build enough reserve resources to reorganise and restructure.Nor do business schools teach how to resurrect and rebuild the most invaluable human asset: trust and confidence. How do you restore people’s faith in a system that has failed them?

When the CEOs of Detroit’s big three automakers went to Congress for a $25-billion bailout to avoid bankruptcy, member after member asked them why they should trust them for doing the right thing for taxpayers and consumers. Show us your business plans before we give you the money, they said, after scolding them for flying in in their private jets. The best argument the trio could muster was that bankruptcy would put millions of people out of job, which was not only unpersuasive but also a dangerous half-truth.

The foreign automakers ~ Honda, Toyota, Hyundai, BMW and Mercedes ~ who run non-union auto plants in the South are after all doing not that badly in these bad times. No one wants Detroit to disappear as an important auto-manufacturing hub that radiates its energy through every walk of American life and directly and indirectly affects the lives of 2.5 million people.

But Detroit is an exemplar of failure in persuasion. It has failed to persuade the American consumer that its cars are better than those made by Germans, Japanese and South Koreans. It has failed to persuade Congress that it is capable of making better cars ~ fuel-efficient and green. Business schools claim that they create future business leaders but they don’t teach the fine art of how to become influential in a democratic society. They train technocrats who feel more comfortable with their BlackBerrys and talking into Bluetooths rather than sitting across a hostile group of people such as a congressional subcommittee and turning them into friends.

In the ultimate analysis doing business is about persuasion. Therefore, what business schools need to do is to develop a new concentration of courses that prepares MBA students for creating and exercising soft power. For want of a better term, some people call it lobbying, though I believe advocacy is a better word. Mr Richard Hall and Mr Alan Deardorff of the University of Michigan wrote in the American Political Science Review (2006) that, “Professional lobbyists are among the most experienced, knowledgeable, and strategic actors one can find in the everyday practice of politics.” But lobbyists are sometime reviled as unethical because most people think of lobbying as greasing, golfing, wining and dining ~ an unfortunately negative attitude about a socially useful activity.

Lobbying is a multimillion-dollar global service industry. China, India, Israel, the EU and Arab countries, for example, have hired some of the best lobbyists to look after their interests in the US. The US-India nuclear deal would have never been passed by Congress but for the excellent work done by some very talented groups of people who changed perceptions about India even though the country did not sign the Nuclear Non-proliferation Treaty. Chinese lobbyists want to ensure that Americans do not turn protectionist.

American lobbyists abroad (call them by whatever name you like) prowl and trawl throughout the world wherever decision-making power is concentrated. They know how to negotiate with the powers that be and use the news media and other resources to protect their national interest. Lobbying substitutes the power of the gun with the power of the tongue. In the US, lobbying is a legitimate activity protected by the First Amendment. In other democracies too, lobbying is considered a rightful and justifiable activity.

One of the most arduous tasks for anyone is to unravel and understand the labyrinthine activities of the US Congress ~ how it works and wields power through its committees, subcommittees and public hearings. How issues emerge in the public consciousness and how they are transformed into bills that become laws.

It is important for us to understand and appreciate the role of lobbyists in the halls of power and how they facilitate legislative processes both at Capitol Hill and in state capitals. If you take away lobbyists from Washington, Congress might turn into a permanent lame-duck institution. In fact, the failure to help the Detroit automakers is as much a reflection on Congress’s disarray as it is of the big three automaker CEOs’ inability to change the perception that they can do better.

Apart from being extremely knowledgeable and strategic thinkers, lobbyists put to use an indispensable tool of persuasion, which is negotiation. While it is said that most things in life are negotiable, the art of negotiation does not come easy whether one is dealing with friends or foes.Another important aspect of lobbying is to build and manage public campaigns, which include political (presidential), corporate (as the big three are doing now), and global (environmental, human rights) campaigns.

Besides teaching negotiation and campaigning skills, business schools should teach students how to work with the news media and use the Internet and social networking sites for grassroots community building.The learning focus could vary from the outstanding success of Mr Barack Obama’s presidential campaign to the ongoing international bailout efforts to save the international financial system. Advocacy, negotiation and campaigning should be central to every management programme.

(ND Batra is professor of communications at Norwich University)

A New Home For Nano

Nano to Nowhere?

From The Statesman
ND Batra

The Nano is dead and will live happily hereafter in Gujarat.The crisis in Singur, West Bengal, nonetheless, drew global attention especially in comparison with China where a similar project would have been consummated long ago. No one would have heard of the protesters. Mamata Banerjee of Trinamool Congress, who spearheaded the opposition, would have been in jail in China, perhaps, waiting for international humanitarian rescue. Now you understand why foreign direct investors prefer to set up their manufacturing facilities in China rather than anywhere else. The noise and chaos of unruly democracy is not heard in China. Ratan Tata would have received a friendly welcome in China. Perhaps I am exaggerating. Mr. Tata received a warmer reception in Gujarat than he would have gotten in China.

Moving the Nano to Sanand, Gujarat, should leave no doubt that industrialization in India too can be hastened but only by consensus and persuasion; and not by decree, as the Buddhadeb Bhattacharjee government in West Bengal, in spite of its good intentions, tried to do. In a democratic country, a well-organized opposition party can wield tremendous negative political power, the power to frustrate the government, which of course is not the same as the power of creative destruction. But losing a shining icon of progress and modernity, which had stirred global imagination, to Gujarat or any other state, was the last thing on the mind of anyone in West Bengal. I thought everyone would come down from their hobby horses and compromise in the interest of the people of West Bengal. But political brinkmanship of mutual recrimination and humiliation became the endgame. It will be sometime before such a beautiful thing happens again in the state of West Bengal. Many Bengalis must be angry with the government; and they should be. A Kolkata friend, a financial expert and lover of poetry, recently wrote to me in desperation, saying: “Over the last three decades CPI (M) turned West Bengal into a graveyard of industries, which had gone to the top position in industrialization among all the Indian states during the time of Dr. Bidhan Chandra Roy. With no nobler object, but to tide over the election round the corner CPI(M) wanted to showcase the Nano even by ruthless destruction of agriculture and dislodgement of the farmers from the most fertile land in the country, a most horrifying recent record of cruelty and human rights violation.” The Nano shouldn’t have become a contest between the sickle and the hammer.

A few years ago I heard a similar cry of pain from a Kolkata industrialist whose chinaware and pottery works factory, which once upon a time was known for its quality all over India, was systematically decimated by the CPI (M) government supported goons. To be fair, I have been in no position to verify the allegation. After all, many industries are doing very well in West Bengal, though, you might say, in spite of the government. Gujarat has not only gained the Nano but has also refurbished its sullied image. Before Gujarat became the new home for the Nano, the state had permanently become associated with the communal riots of 2002 when the fire-bombing of a train carrying the returning Hindu pilgrims had led to widespread riots killing of more than two thousand people, mostly Muslims. One wondered how the gentle Gujarati known derisively as a passive and timid shopkeeper could suddenly turn into a ferocious monster. But when Mr. Tata told his admiring audience in Ahmedabad (Gujarat) last week that bringing the Nano to Sanand was like homecoming, it seemed the gods of industry might forgive Gujarat after all. “We chose Gujarat because of the conducive and industry-friendly environment as well as infrastructure. Also, the location of the land (1100 acres) that was being offered was very attractive,” Mr. Tata said. The Tatas are Gujarati-speaking Parsis, but industrialists are seldom sentimental when they invest their millions. Safety and growth of their investments is their primary concern. “This is Tata Motors’ maiden venture in Gujarat, and will broad-base the company’s manufacturing footprint. We are happy to contribute to Gujarat’s strong industrial progress by creating an auto cluster, which will have a cascading impact on the state’s economy,” Mr. Tata added. But that is exactly what was supposed to have happened in West Bengal if the politicians had not played the Russian roulette with the state’s future.


However, not everyone is so forgiving. Visiting Gujarat recently, historian William Dalrymple, the author of The Last Mughal: The Fall of a Dynasty: Delhi, 1857, was quoted in the local media having said, “Chief Minister Narendra Modi might have proved that he is an efficient administrator by bringing the project to state, but the world is still waiting for him to bring justice to riot victims and punish the culprits.” Some people implicate Mr. Modi for being silent too long and not taking aggressive steps in stopping the killing in the 2002 riots.

Perhaps the greatest humiliation for the West Bengal government came when Mr. Modi had the gall to advise Mr. Bhattacharjee and opposition leader Ms. Banerjee to cooperate for the good of state. In an open letter to Bhattacharjee, Mr. Modi said, "The condition for the growth of (the) Nano has not yet developed in West Bengal in view of its present work culture despite your serious efforts.” He did not explain what is wrong with the Bengali work culture when the state is one of the most highly industrialized states in the country. He apologetically said, “People of West Bengal may think I have snatched (the) Nano to Gujarat. But it is not so. There is no scope of misunderstanding." In a similar open letter to Ms. Banerjee, he advised her to "shun ultra-leftism” in outdoing “the Leftists and show West Bengal the rightist way to usher in development." One wonders at the audacity of the man whom the US government has been treating as a pariah, refusing to give him a visa for visiting the United States. Maybe Mr. Modi is not such a bad person. He has many admirers. In any case he has the interest of Gujarat above all. Mr. Modi said that he supports the Nano in the “national spirit,” adding that “After ship-breaking, pharma, petrochemicals and textiles, this project will make Gujarat a force to reckon with in the surface transport sector as well as automobiles.” But who is listening? Chief Minister Bhattacharjee? Ms. Bannerjee? They have their own political axes to grind.

(ND Batra, the author of Digital Freedom, teaches communications and diplomacy at Norwich University. He is working on a new book, This is the American Way, Stranger.)

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)

Doing business transparently

How business can be media smart

From The Statesman
ND Batra

I am invariably asked how a company should deal with rabid journalists for whom “If it bleeds, it leads” makes a good story.

The news media have begun to play a very significant role in the conduct of both national and international business, as you see in the current global economic crisis that originated primarily in the United States bad lending practices but now has affected rest of the world economies. Television news in convergence with the Internet makes events live and spontaneous beyond the traditional editorial controls. Bloggers, online whistle-blowers and civic groups present alternative views of what companies are doing. Rumours spread fast on the Internet. The rumour about the health of Steve Job, Apple’s CEO, who had cancer surgery, for example, might have contributed to the recent sudden decline in the company’s stock.

Today business cannot be conducted beyond the public view. The reason for this increased interest in how companies do their business is not difficult to appreciate. The impact on people’s lives even if they are not directly invested in a company is tremendous. The very presence of Coca-Cola, Pepsi or Wal-Mart in a town raises apprehensions and expectations, which calls forth close scrutiny by the news media.

It is true that the news media is itself a global business and is subject to rules and regulations like any other business; nonetheless, being regarded as the fourth estate the news media has a privileged position. For example, the news media has the unique privilege of issuing corrective statements as the stories develop. While the reader or viewer might think this is the news, journalists regard news as events in progress, which they must report.

In the United States, it is extremely difficult to win libel damages against the news media because of the legal provision that plaintiff must prove “reckless disregard for truth.” Proving media negligence only is not enough to win libel damages. The near immunity from libel gives the news media large freedom and encourages investigative reporting and keeps the society healthy.

Because of the inescapable fact that our economic well being, pensions, retirement savings, environment and quality of life have become dependent on the marketplace, no business can escape media attention. Bigger companies invite healthy suspicion about their activities by the news media. Add to it millions of blogs that feed upon each other. Keeping silence is not possible in an open society, well, not for long.

So how should global companies deal with the news media? A company doing business globally has to become media savvy and must understand how news organisations work and how they produce stories. Corporate communicators have to understand the news media’s sources of information and their reporting methods and how to influence them by providing them correct information. Companies have been using adverting as a major method of influencing the public, as oil companies, BP and Exxon-Mobil, for example, have been doing to divert attention from the charge of extortion at the pump. Advertising if done properly is still a powerful mode of direct communication with the public at large. But advertisement cannot beat headline news, breaking stories, or special reports with which the news media try to draw the public attention distracted by too much noise. It is a big challenge to be heard when electronic media has limited attention span.

Corporate communicators should keep in mind that a reporter cannot turn a damaging story into a good one, especially in the time of crisis. News is a competitive business and no one can afford to keep silent over a story that impacts the public and also draws big audience. In good times, a company that has excellent working relations with the news media can strengthen its positions by presenting positive stories and thus enhance its reservoir of public good will. Consequently, when a crisis hits the company, it would be able to draw upon the public sympathy. Building intangible social capital is as important as building tangible market capital.

The traditional method of issuing press and video releases is still relevant especially in the local news media outlet, where the paucity of manpower resources might prompt a local television station or a newspaper to repackage a company’s story as a news item. This is a common practice in the United States. But at the same time we should keep in mind that national news media organizations are inundated with e-mail news tips, and video and press releases, therefore, they hardly pay attention to junk mail. It is important to target the right people in the news media. Steps for dealing with the news media effectively require research.

Smart corporate communicators take several steps to make their stories relevant; for example, they determine whether they have a worthwhile story and whether it needs to be told to the news media and why.

They know the audience for the story, which news media would be the best to reach and the reporters who normally cover such stories. Through their networks they know which reporter would be most sympathetic to their story and whether the reporter is accessible.

When the news media ask for information, reactions and comments, the company should offer full cooperation; and the spokesperson should be ready with facts and figures or promise to provide the data promptly to meet the reporter’s deadline. Whatever information is provided, it should be done thoughtfully and judiciously.

It is difficult to undo or delete the information once it is out, even though the news media promptly issue corrections. Providing reliable and prompt information is one of the best ways to build bridges with the news media; so when the need arises, the company could count upon the media good will. It pays to be on the right side of the news media.

(ND Batra is professor of communications at Norwich University)

CORPORATE SOCIAL RESPONSIBILITY

Indians lagging behind in corporate social responsibility

From The Statesman

ND Batra
Last week BBC World News carried a report on how in the midst of plenty hundreds of thousands of children in India are dying of malnourishment. The dinnertime videos of wasting children in Madhya Pradesh were heart-wrenching. The same day, The New York Times published a report about high-towered, gated communities in Gurgaon and other places in India rising amidst sprawling shantytowns. You wonder where the 9 per cent annual growth has been going.

With food and oil prices going up every day and the spectre of starvation rising in many poor developing countries, the governments cannot talk about gross domestic product (GDP) without assuring the public that it is being distributed equitably. Nor can global corporations keep themselves aloof from the sufferings of the people. They cannot afford to look after only shareholders’ interests. Some global corporations have begun to realise that their social responsibility goes beyond profit-making.

Addressing a shareholders’ meeting last week, Mr H Lee Scott Jr, the chief executive of Wal-Mart Stores, said, “People’s expectations of us ~ and of corporations in general ~ changed…. It is clear that today people look at Wal-Mart as a solution. And we want to be seen that way. We want to act that way.” Society will hold Mr Scott’s feet to the fire on his promises.

The global retailer ~ which generates sales of $374.5 billion ~ buys cheap and sells at low prices. It was perceived a few years ago as a damned sinner, one of the worst global exploiters. But today with its avowed mission of protecting the environment and with a $4 prescription healthcare drug plan its image has improved along with its profits.

That’s how Reliance and the Tatas should be judged, not only because they grab MTN or bring Jaguar/Land Rover to India and fulfil the fantasy of the elite about India becoming a superpower.

“Regardless of who wins the election in November ~ and what party they are from ~ we stand ready to work with the new President and the next Congress,” Mr Scott told shareholders. Have you ever heard Indian corporate executives talk with such confidence about their companies’ social responsibilities? Corporate social responsibility is a form of business to people ~ diplomacy, an effort to win the hearts and minds of the people, which is essential in an open society.

A corporation’s report about its social responsibility, which can stand public scrutiny, should be the goal. Some corporations use their social responsibility activities as a means of building social capital and goodwill. If a company has a code of ethics, it should be known to the public how the company is following the code. Of course, every corporation should have a code of ethics.

The European Union (EU) might seem a loosey-goosey congeries of states, but when it comes to dealing with US global corporations like GE, Microsoft, Apple, for example, or an export juggernaut like China, EU takes a united stand. One should not underestimate the growing power of Brussels in spite of the recent setback when Ireland voters refused to ratify the proposed governing treaty. Instead of getting help from Washington, US global corporations have been developing their corporate outreach programmes to be seen as people-friendly.

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 crises. Many of them are retired ambassadors, state department officials and military officers; and they know how to communicate with global stakeholders. In The United States of Europe: The New Superpower and the End of American Supremacy, Mr TR Reid wrote, “The Europeans were concerned with bigness itself ~ the fear that a company with an overwhelming presence in certain markets would use its sheer size to drive out competitors, and then drive up prices for consumers.”Since some crisis or the other is likely to hit a global corporation, what kind of corporate policy will work?

Instead of pulling out in a huff it is better to lie low and wait for the situation to improve. Even in Venezuela, the fifth largest oil-producing country, some oil companies have decided to stick around, hoping that the situation will get better. In some countries, for example, KFC and McDonald’s 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 salutary effect. At the same time a global company should do what Wal-Mart has been trying to do in these economic distressful times ~ become part of the solution.The home government’s backing is important but help should be sought only when all other avenues have been explored.

Global companies should develop their own diplomatic resources, including relations with the local news media and coalition-building with local interest groups. Europeans, like Indians, are very sensitive to US government interference on behalf of its global companies.

Although an early awareness system could help predict many problems before they turn into crises, not every catastrophic event can be predicted. No one thought the long simmering Tibet problem would suddenly erupt when China was getting ready to shine on the world stage as an upcoming superpower; nor that an earthquake would devastate an entire province. Such events fall into the category of what Mr Nassim Nicholas Taleb calls the “Black Swan”, nevertheless, if a corporation has built enough social capital, people are likely to support it in a crisis.

Sustainable growth, affordable healthcare and poverty-reduction are the chief concerns of society, which corporate leadership cannot ignore. Perhaps there is money to be made in reaching out to people at the bottom of the pyramid, in slums and shantytowns, as Mr CK Prahalad and other management gurus have been saying.

(ND Batra is professor of communications at Norwich University)

Brand India

Becoming a global brand and keeping it

From The Statesman
ND Batra

It is doubtful if Ford Motor Company would have sold a high-profile brand portfolio like Jaguar and Land Rover to a Chinese auto company. Tata is embedded in a multicultural open society where workers’ rights cannot be easily trifled with. Besides, Tata knows how to communicate in a global environment.

Tata is good because India is good.
Mittal Steel adopted a global corporate diplomacy to persuade Europeans that the Mittals were no carpetbaggers; they’re coming as partners. Mittal Steel’s takeover of Arcelor might have made Tata acquisitions of global brands comparatively smooth.

As corporate India expands globally, it must communicate well. Excellent communication is the key to effective corporate public affairs and global diplomacy. Without a comprehensive communications strategy that embraces all important stakeholders, who interact with the company and form its business environment, global corporate diplomacy cannot be effective. In this age of global transparency enforced by the “always on news cycle”, the Internet, the YouTube, and reporting standards established by global watchdogs like Global Reporting Initiative, multinationals can neither run nor hide.

Companies just cannot afford not to communicate about an issue that concerns stakeholders in their business environment. And since they have to communicate, they must do it efficiently. Corporate communication is essentially persuasion, even when a company is just trying to inform stakeholders.

Power to persuade is the soft power that transnational companies apply to win the hearts and minds of not only consumers but public at large. But to do so in a multichannel-Webbed environment over which they don’t have much control, companies need to be diplomatically smart, especially when a company has to operate in a foreign environment.

There are many reasons for doing so. For example, companies have become de-localised (Tata, Mittal Steel, IBM, Wipro, for example). They are no longer woven into the fabric of local communities only as they used to be in the pre-Internet 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 like this it would take extraordinary efforts for global companies to communicate and present their position in a persuasive manner.

That’s why Sovereign Wealth Funds are so threatening. They are faceless behemoths and who knows they may have hidden political agendas. Perception is reality and many people perceive global companies as more powerful than the government, which draws enhanced critical scrutiny from the media and NGOs. The image of power, which global companies project, raises expectations as well as fear in the minds of the people. Growing expectations of corporate responsibility create unusual challenges for corporate communications and diplomacy. Because of corporate mismanagement and scandals in the United States (the subprime crisis that has rocked global finance) and Europe (Siemens corruption is the latest), public watch groups expect greater openness and transparency from companies.

A corporation in India may get away with any kind of behaviour, but that may not be acceptable in the United States or Europe. Since expectation of corporate behaviour differs from country to country, corporate communications strategies must take such variables into account. It is necessary to point out that effective communication takes place in a cultural context.

Understanding the host country’s political culture is very important for corporate communication and diplomacy to be effective, a lesson corporate India must learn quickly. Political culture includes the legal system, and the rules and regulations, which must not be violated in the host country. Good corporate behaviour may not be rewarded; bad behaviour is not only punished but also sullies the reputation of the company.

Since each country has its own enduring cultural symbols and icons, doing effective global corporate communication is quite a challenge. What is culturally and politically correct in one country may not be so in another country. Not understanding national cultural differences can create a nightmare for companies doing business abroad. Moreover, global corporate communication in order to be effective 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 doing the business and a very important source of a company’s 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 ~ product, price, image, trust and most of all reputation the company.

Trust and reputation are the basis of communication with customers. Communicating effectively with market analysts and financial journalists is very 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. And sometime when analysts and financial journalists instead of being impartial and objective reporters and critics become part of the vicious conveyer belt, they destroy public trust and provoke harsher regulations. Corporate behaviour is regulated by rules and regulations, which are framed in the public interest and in consultation with the industry. But once the rules are in place, not only authorities but also public interest groups, many of which have established global network to monitor compliance, closely watch companies’ errant behaviour.

Recent Microsoft ordeal in Europe for anti-trust violation is a case in point. The US transparency law (Sarbanes-Oxley Act of 2002) was enacted in the aftermath of Enron’s collapse and other scandals.

There are thousands of global 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 clear and well-defined demands, global NGOs with huge and broad-based financial and legal support system can swing into campaign mode against a corporation and even a country very quickly and very efficiently.

Think how NGOs are pressuring governments and global corporations to boycott the Beijing Summer Olympics unless China lifts its stranglehold on Tibet. China has yet to understand the power of the shopping cart, especially in Europe which values quality as well as human rights.

(ND Batra teaches communications and diplomacy at Norwich University)

Corporate Leadership

What makes a successful leader of a global corporation?

Heart and mind at the service of all stakeholders of society, said Narayana Murthy of Infosys at the Stanford Graduate School of Business.

Read More …

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Sweatshop Free, China Free

GAP in consumer awareness

From The Statesman

I gaped in amusement a few days ago when I received Diwali greetings from a telecom company. Someone wanted to help me to save my money only if I would switch over from my present long-distance carrier to them.

Lightheartedly I said I was more interested in saving time and wanted to be left alone. That was the end of the conversation but the beginning of a serious concern, which many Americans have today that they are being profiled, clustered and targeted for data-base marketing. The company knew who I was: an Indian Hindu, one most likely to respond to the Diwali message, especially when no child labour was involved.

This paradigm shift in marketing communication, individually designed messages, is seen even at the shop-floor level, where most of the sales are finally clinched. Recently I went to the Home Depot, a cavernous store which sells everything you need to build, repair or decorate your home. The young salesman not only helped me in selecting the four-by-ones but also cut them to the size, and assured me that the material was so good that he had bought the same stuff for his father. The store, he said, has a no-question-asked return policy. The aggressive marketing was so kid-gloved that the Home Depot indeed felt homey.

A specialist in marketing communication explained to me that American businesses are embracing a new concept, integrated marketing communication (IMC), heralding the end of mass marketing era. One size fits all may still be true but the message should be custom-designed for different people. Now you understand why the telephone company sent me the Diwali greetings.

The technology to segment masses into clusters of tastes and special interests is available. It gives advertising and marketing experts the tools to reach the customer as if he were very special. People may drive the same model car, wear the same designer clothes and eat the same food in a restaurant, but they feel special about their choices because they receive individualised messages. For many of us, personal freedom means to make our own choices, although some time too many choices puzzle us.

Remember how our grandmothers made us feel so special when we were kids. Of course she did the same with all our siblings and made them feel equally special. That’s why we love our grannies. Something similar is being done by today’s marketing communication experts. Like a child, every customer is special.

Companies are moving away from the traditional Four P’s of marketing - price, product, packaging and promotion - a formula that worked well in the era of mass-produced culture, when consumers were struggling with their basic needs. No longer in the United States can a manufacturer simply make a product and price it to sell by packaging and promotion through the mass media.

Consumers do not tolerate being treated as undifferentiated mindless dolts; they resent manipulative and condescending messages. No wonder the Wal-Mart salesman, I observed lately, was so apologetic to the housewife because the GPS that she had used for more than a year did not work very well, and he gladly returned her money. He took the blame for her choice. This is salesmanship in a new key.

Consumers have rising expectations because of the variety of sources from which products and services are available, and they prefer to buy things which enhance the quality of life, especially in regard to environment, human rights and child labour. Experts say that consumers today not only buy a product; they buy the company which produces them.

The entire matrix of marketing communication, that’s, advertising, public relations, sales promotion and even employee communication should appear to the consumer as a stream of information from one single source that establishes a distinct identity for the company. Call it raising a brand. Brand creates public trust. It reveals core values and business philosophy.

GAP, of course, is good: but who makes the product? Children, who should be in school rather than in a sweatshop? Today buyers of imported rugs want assurance that no child labour is involved in their manufacture, and they look for label such as Kaleen, promoted by the Government of India and the carpet industry; and RugMark, an international non-profit organisation which guarantees to customers that they have gone thorough inspection.

The recently published undercover story in the **Observer**, a British newspaper, has persuaded GAP to work with the Global March Against Child Labour to develop a plan for putting a label on its products: “Child Labour Sweatshop Free”.

The other day when I was browsing through Macy’s domestic section, I overheard a customer asking the salesman whether she could buy chinaware not-made-in China. The salesman apologetically said that everyone was asking the same question.

Millions of toys and other made-in-China products have been recalled by US companies because of the hazardous materials including lead that had been used. It is not going to be easy for a company to be able to sell made-in-China products in the United States unless it certifies product safety. In fact, some companies in the United States have begun to put a label: China Free.

Conscience of the consumer is awake. Children should go to school, not work in sweatshops. Clothes and toys should be made for children but not by children. Above all, children should be safe when they use products made for children. All factories in China and India should be open to international inspection.

(ND Batra teaches communications and diplomacy at Norwich University. A googled edition of his new book, Digital Freedom is available, and it is free:

http://books.google.com/books?id=MKh9sZYo5FsC&printsec=frontcover&dq=nd+batra#PPP1,M1)

Sweatshop Free

GAP in consumer awareness

From The Statesman

I gaped in amusement a few days ago when I received Diwali greetings from a telecom company. Someone wanted to help me to save my money only if I would switch over from my present long-distance carrier to them.

Lightheartedly I said I was more interested in saving time and wanted to be left alone. That was the end of the conversation but the beginning of a serious concern, which many Americans have today that they are being profiled, clustered and targeted for data-base marketing. The company knew who I was: an Indian Hindu, one most likely to respond to the Diwali message, especially when no child labour was involved. This paradigm shift in marketing communication, individually designed messages, is seen even at the shop-floor level, where most of the sales are finally clinched.

Recently I went to the Home Depot, a cavernous store which sells everything you need to build, repair or decorate your home. The young salesman not only helped me in selecting the four-by-ones but also cut them to the size, and assured me that the material was so good that he had bought the same stuff for his father. The store, he said, has a no-question-asked return policy. The aggressive marketing was so kid-gloved that the Home Depot indeed felt homey.

A specialist in marketing communication explained to me that American businesses are embracing a new concept, integrated marketing communication (IMC), heralding the end of mass marketing era. One size fits all may still be true but the message should be custom-designed for different people. Now you understand why the telephone company sent me the Diwali greetings.

The technology to segment masses into clusters of tastes and special interests is available. It gives advertising and marketing experts the tools to reach the customer as if he were very special. People may drive the same model car, wear the same designer clothes and eat the same food in a restaurant, but they feel special about their choices because they receive individualised messages.

For many of us, personal freedom means to make our own choices, although some time too many choices puzzle us. Remember how our grandmothers made us feel so special when we were kids. Of course she did the same with all our siblings and made them feel equally special. That’s why we love our grannies. Something similar is being done by today’s marketing communication experts. Like a child, every customer is special.

Companies are moving away from the traditional Four P’s of marketing - price, product, packaging and promotion - a formula that worked well in the era of mass-produced culture, when consumers were struggling with their basic needs. No longer in the United States can a manufacturer simply make a product and price it to sell by packaging and promotion through the mass media. Consumers do not tolerate being treated as undifferentiated mindless dolts; they resent manipulative and condescending messages.

No wonder the Wal-Mart salesman, I observed lately, was so apologetic to the housewife because the GPS that she had used for more than a year did not work very well, and he gladly returned her money. He took the blame for her choice. This is salesmanship in a new key.

Consumers have rising expectations because of the variety of sources from which products and services are available, and they prefer to buy things which enhance the quality of life, especially in regard to environment, human rights and child labour. Experts say that consumers today not only buy a product; they buy the company which produces them. The entire matrix of marketing communication, that’s, advertising, public relations, sales promotion and even employee communication should appear to the consumer as a stream of information from one single source that establishes a distinct identity for the company. Call it raising a brand. Brand creates public trust. It reveals core values and business philosophy.

GAP, of course, is good: but who makes the product? Children, who should be in school rather than in a sweatshop? Today buyers of imported rugs want assurance that no child labour is involved in their manufacture, and they look for label such as Kaleen, promoted by the Government of India and the carpet industry; and RugMark, an international non-profit organisation which guarantees to customers that they have gone thorough inspection.

The recently published undercover story in the Observer, a British newspaper, has persuaded GAP to work with the Global March Against Child Labour to develop a plan for putting a label on its products: “Child Labour Sweatshop Free”. The other day when I was browsing through Macy’s domestic section, I overheard a customer asking the salesman whether she could buy chinaware not-made-in China.

The salesman apologetically said that everyone was asking the same question. Millions of toys and other made-in-China products have been recalled by US companies because of the hazardous materials including lead that had been used. It is not going to be easy for a company to be able to sell made-in-China products in the United States unless it certifies product safety. In fact, some companies in the United States have begun to put a label: China Free.

Conscience of the consumer is awake. Children should go to school, not work in sweatshops. Clothes and toys should be made for children but not by children. Above all, children should be safe when they use products made for children. All factories in China and India should be open to international inspection.

(ND Batra teaches communications and diplomacy at Norwich University. A googled edition of his new book, Digital Freedom is available, and it is free: Click here

A supply-chain of knowledge?

Building a global supply-chain of knowledge

From The Statesman
The challenge for information technology guys from Bangalore, Silicon Valley, and other knowledge hubs is to create a system that is capable of aggregating and accessing available sources of knowledge and mining all modes of information, whether audio, video, pictorial, textual or in the form of a spreadsheet. The system should create a protocol, much like TCP/IP protocol, that transcends cultural, semantic and computer language/format barriers. And finally, as Gupta suggested, the IT system should be capable of customizing knowledge as per individual or group needs. For example, the IT system should be capable of automatically converting a report about Mynamar protests into various formats, such as newspaper, radio, television, and mobile devices such as cell phones to which editorial value could be added subsequently.
The world of collaborative knowledge seeking and innovation has just begun.

Innovate or perish

Keep innovating or you’ll perish

From The Statesman

Technological and economic forces are generating innovations like iPhones. They are creating new opportunities, new wealth and new billionaires.
Global corporations must be opportunistic.
They must always be on the lookout for new ideas and the possibilities of their practical applications; and moreover they should be ready to do so before anyone else does. That is the only way a corporation can go from one exponential change to another and always be on the cutting edge of technology and management.
For global businesses, the best strategy is to look for a technology, an idea or a business method that creates new market space and a cyber-niche that never existed before, and establish market dominance until another one appears and makes it obsolete. But a company doesn’t have to be inventing newer technologies; instead it should be on the lookout for them and adopt them. This is one of the reasons that the US companies are offshoring their businesses abroad because offshoring is inshoring and extension of brainpower.
By offshoring work to India, the United States is gaining brainpower. If we network the world’s best brains, the rate of innovation should increase dramatically. But that also means that the rate of obsolescence too would increase, leading to a state of turbulence, which could be a source of self-renewal or self-destruction.
File sharing in creative expression, for example, in music recording, has been generating turbulence that has necessitated new business models, since lawsuits against piracy don’t work very well. The Internet is challenging old business models. Businesses, however, flourish in a stable environment.
Whatever good or evil Microsoft Corp. might have done because of its monopoly practices, Windows operating system has provided a universal standard and created desktop stability. But some time a unique application could be replaced with a clone without adverse effects or disruption. For example, Netscape’s Navigator, which had reached a critical mass, was overtaken by Microsoft’s Internet Explorer.
In the digital age, one cannot count on the blessings of killer applications for too long because they have a short life span. Just as transistors transformed the global economy from industrial to an information age, mobile computing and the Internet are transforming the information age to virtual age. Gordon Moore predicted that every 18 months, computing power will double at constant cost and his law has held its sway. The same has been true of the bandwidth, which is becoming faster and cheaper.
Miniaturisation, mobilisation, and speed have gone hand in hand with the power of networks, whose value increases dramatically with each additional node and hotspot. From subways to highways to public buildings, inexpensive digitisation has begun to penetrate all things, enabling them to network and collaborate and become sentient in a manner of speaking. Whatever is digitised can be networked and shared.
Every human activity can be digitally designed and built with an Internet connection. In short, whatever can be networked makes it both a consumer and a supplier of information, which makes the global supply-chain system of information an inexhaustible source of further value added information.
Networked databases can profile potential customers, for example, for greater marketing efficiency through target marketing. Offshoring reduces transaction costs but of course global corporations should have a larger vision than merely reducing transaction costs more effectively. A horizontal or hetrararchical core and ring management structure - a dynamic and stable core of top executives and a fluid and flexible ring of disposable employees, such as outsourced contractors or offshored workers - is the emerging shape of a modern business. And from this point of view, a global corporation is dynamic network of mutually beneficial and productive relationship with workers, business partners and customers. Not bricks and stones, only digits shall rule. That’s the future.
Let’s keep in mind that the networked world, a world of collaboration first began when telegraph reached a critical mass in 1843, making possible the rise of Associated Press, the first network of collaborative information gathering and distribution. However, not all ideas and inventions have the same impact on society.
Chinese invented the moveable clay and metal type printing press in 1041 with little social consequences for the Chinese society. But when a German craftsman Johannes Gutenberg re-invented the movable type printing press in 1436-1440 and published the Bible in 1452, he couldn’t have predicted the unintended consequences. In the hands of Martin Luther, printing became a revolutionary application, which he used with a devastating effect against the Church and unleashed Protestant Reformation that led to prolonged civil strife in many European nations.
We do not know how the convergence of innovations and emergence of newer practical applications will impact our daily lives and the networked economy in which we work today. For example, how iPhone and its competitors will change the real world as they incorporate the virtual social worlds of Second Life, MySpace and YouTube and the mirror worlds of Google Earth is difficult to say. But an innovative corporation will be on the lookout for a killer application emerging from the great convergence that is taking place now and adapt to its own advantage before anyone else does it.
(ND Batra is professor of communications and diplomacy at Norwich University and is the author of Digital Freedom)