Is Corporate Communications Optional?

Early in my PR agency career, our team was summoned by the CEO of a prestigious client. He was a brilliant and entrepreneurial hospitality executive who had been brought in to turn around a luxury travel company. The CEO fulminated about competitors getting better trade coverage than his company. He even tossed one of the offending rags on his table as our team and the long-suffering corporate communications head promised more aggressive outreach. As we left the office, he muttered, “I could do the PR better than anyone if only I had the time.”

That CEO was in many ways correct. He certainly knew more about the business than anyone. Of course he never would have found the time or discipline to manage a media a relations function, and it would have been a poor use of that time. But his words stuck with me, in part because they epitomized the classic PR agency challenge – you must earn your fee by adding value every day.

High-impact PR roles under pressure

The same can be said for corporate communications. As an agency person I’d always assumed that those in client-side roles were safe. After all, any major company needs a strong corporate communications function to manage its reputation, especially in a chaotic and unpredictable news environment. It’s indispensable, right? It was that way, but now things aren’t so simple. Elon Musk’s example has the PR community wondering if his company is the exception to the rule, or possibly a sign of something to come.

As Musk-watchers know, Tesla disbanded its internal PR group at some point last year (we’re not sure when, because there was no announcement and no confirmation from Tesla, naturally.) For months, it has relied on its founder’s Twitter account and the company’s YouTube channel for outbound communications. Media, naturally, didn’t take the decision well. The PR community was also underwhelmed. The Public Relations Society of America responded with a statement warning that, “Disengagement is not a path to success and can result in dramatic reputational ramifications with long-term consequences. Strategic communication counsel is a critical element of reputation management, as is a robust, fully functioning, effective and transparent communications process.”

The Trump model of corp comm

Not so Tesla. Call it the Trump model of corporate communications. If you don’t like your media coverage and don’t trust the journalists who cover you, why bother? Like the former president before his Twitter ouster, Musk can command social and media attention with a mere tweet. He resents bad press and often seeks to punish or freeze out those who don’t cover his businesses the way he’d like. He prefers to communicate directly to friends and fans. (Remind you of anyone?) But as EV news site Electrek observes, “Elon simply doesn’t have the bandwidth to answer even just 1% of inquires, but also… seems to be almost exclusively responding to fans who are lavishing praise on him via Twitter and almost never challenge his views.”

That would be a red flag for most companies, but, face it, Tesla isn’t most companies. Yet it signals potential changes for communicators who represent high-growth, entrepreneurial organizations.

How corporate communications has changed

First, cynicism abounds.  We cannot assume the public believes a given company is operating in good faith. Although businesses in general probably inspire more trust from the public than government and even religious institutions, the environment we work in is sharply polarized. You have to demonstrate your intentions through behavior. Also, relationships have suffered during the pandemic; the typical PR-media relationship is more transactional than friendly, and it’ll probably stay that way.

Stakeholders have growing influence. Stakeholders like partners and especially employees wield enormous reputational influence. That’s why we’re seeing powerful businesses like Google drop its work in warfare technology for the Pentagon, for example. More recently, a group called Amazon Employees for Climate Justice publicly urged the company to commit to getting its electricity from renewable sources. Within months, Amazon pledged to reach 100% renewables by 2030. That’s real power, and it makes sense to focus where the influence is.

Social content is as powerful as earned media. Owned media may not be as credible, but for many organizations, corporate content channels are a safer and even more potent option than earned media coverage that may include criticisms or mentions of competitors. Even more persuasive are user views and social content from legitimate influencers. Today’s corporations have many more tools and far more content at their disposal than they ever did in the past.

What it adds up to is that corporate communications is changing along with everything else. Like agency work, it requires diverse skills, constant proactivity, and experience that extends well beyond traditional PR and media relations. The top-tier corporate communicators of today and the future must be content experts, media strategists, and internal facilitators who earn their own reputation every day.

The PR Losers Of 2018

Against the backdrop of an ever-faster news cycle, 2018 has featured brands and personalities who seized unexpected opportunities to generate positive PR.

By the same token, 2018 has brought public disasters for others. Which stories captivated us in 2018, and who came out where? Here’s part one of my list for 2018 PR Winners and Losers. Let’s get the bad news out of the way first.

Facebook just can’t catch a break

It’s on every communications professional’s “worst” list. In 2018, past misdeeds caught up with Facebook. After the Cambridge Analytica scandal exploded, CEO Mark Zuckerberg embarked on an apology tour, capped off with a cautious, contrite, and highly rehearsed performance before a Senate Committee in April. It was a detente of sorts, but the calm didn’t last. In November, The New York Times broke a blockbuster story based on three years’ worth of insider accounts of Facebook’s handling of the scandal. Its strategies were right there in the title — Delay, Deny, and Deflect. Even COO Sheryl Sandberg, who some have seen as a future presidential candidate, was badly tarnished by the piece. At a time when Big Tech’s reputation has plummeted, Facebook is a convenient scapegoat for an entire industry, but many of its problems are of its own making. There have been too many apologies that later rang hollow, and its bank of good will is nearly empty.

The NRA retrenches

Though controversial, the National Rifle Association has long been considered an indomitable PR force. Its aggressive stance on any and every issue related to gun ownership rights, coupled with its lobbying clout, made it a feared competitor. But 2018 brought a sharp reversal in its fortunes and its public image. The problems started with the activism that grew out of the Valentine’s Day shooting at Marjorie Stoneman Douglas high school. The Parkland students mounted a PR-savvy campaign to register young voters and focus attention on sensible gun legislation. What’s more, 2018 ended with a guilty plea by Maria Butina, the young Russian who allegedly tried to influence U.S. policy by infiltrating conservative groups, most notably the NRA, by posing as gun-rights activist in her own country. The story’s not over yet, but a willingness to stake out a middle ground on the firearms issue might have softened its critics. But as it stands now, the NRA will end the year with an eroding membership and declining revenues.

CBS has a #metoo moment (again)

The Tiffany network was again rocked by an unfolding scandal related to workplace sexual harassment. This time it claimed the job of network chief Les Moonves, costing Moonves his $120 million severance package and the network its reputation. In fact, CBS barely had a chance to recoup after its most recent #metoo scandal. The revelations that Moonves actively obstructed the investigation into claims that he sexually harassed and even assaulted employees came nearly a year after CBS fired Charlie Rose for sexual harassment. Worse, it seems that at least one CBS Board member knew about the allegations but said nothing. The mess just goes to show that most secrets don’t stay hidden forever, and that corporate cover-ups rarely stay that way. It’s usually best to expose all the bad news at once.

Scandal engulfs McKinsey

2018 was a regular annus horribilis for the blue-chip consulting firm. McKinsey was embroiled in a corruption and cronyism scandal in South Africa that nearly wiped out its business in the region. It even returned the $70 million in fees earned for the engagement due to widespread outrage over the “looting” of the South African economy. In June, the consulting giant announced it would no longer work for Immigration and Customs Enforcement (ICE) after the relationship became controversial among its own staff. A third reputation hit came in October with yet another investigative piece about its work in Saudia Arabia. Though it broke no laws, its representation of controversial clients has at best shown an inconsistent adherence to its own stated corporate values.

Tesla hits a wall

What to do when a company’s greatest asset – its founder – is also its biggest PR liability? That’s the dilemma Tesla faced this year when founder Elon Musk made news with a series of erratic moves in two-month period. In July Musk lashed out at one of the divers who helped rescue 12 Thai soccer players from flooded caves this summer, precipitating a wave of negative stories and a libel suit. Weeks later, he claimed in a series of tweets that he had secured funding to take Tesla private, startling investors and employees and triggering an SEC action and more litigation. As if that weren’t enough, in early September, Tesla shares nosedived and two senior officers resigned just hours after Musk smoked marijuana on a live web show. Despite its founder’s shenanigans, however, Tesla ended the year strongly, so here’s hoping it can stay on track in 2019.

Papa John’s feels the heat

Mercurial founders aren’t only in technology startups. Scandals burned pizza chain Papa John’s after founder John Schnatter’s use of a racial epithet during a phone meeting that was meant to be a media prep call, of all things.  Schnatter was ousted by Papa John’s board, but he sued his former company, and the result has been a mess of toxic PR for the brand. Apparently company franchisees are divided about Schnatter’s status, and his ouster precipitated more ugly disclosures, including at least two NDAs signed by women who accused the pizza king of sexual harassment.
“I am the American dream,” Schnatter once said in describing his company’s success. But in 2018, his behavior was a nightmare for the brand he created.

Kevin Spacey is “frankly” creepy

Thought we could close out 2018 without another #metoo moment? Think again. On Christmas eve, actor Kevin Spacey released a very strange video that may – or may not – have been a response to disturbing sexual assault allegations against him. His “frank” remarks were delivered in full villain mode as “House of Cards” antihero Frank Underwood and have generated over seven million views (more than any single season’s audience of the show).  Yet it was not a great PR move. In the video, Spacey seems to be urging his fans to look at his offenses the same way they do the murderous deeds of the character he played. Judging by the reaction on social media, most don’t buy it. Also caught in the turmoil was Netflix, which almost certainly had no advance warning of the video.

Mnuchin makes the wrong call

Another late-breaking PR crisis happened on when Treasury Secretary Steve Mnuchin attempted to calm financial markets after the government shutdown and a wildly gyrating DJIA. In a letter posted on Twitter, Mnuchin reported that he had held a call with major bank CEOs and denied a “brewing economic crisis no one knows about,” as Salon’s Matthew Rozda put it. The letter stated that “the (bank) CEOs confirmed that they have ample liquidity…for lending to consumer, business markets, and all other market operations.”
The problem, of course, was that no one was really worried about a liquidity crisis, so the call seemed like a panic move and backfired badly, helping to send the stock market spiraling further downward. It’s the classic “never deny a negative” rule; if you don’t want your target audience to worry about an unlikely development, try not to mention it.

Next up: PR Winners: The Best Stories of 2018

When A Founder Does PR Damage

For a fast-growing startup, a dynamic founder can be a huge PR asset. A charismatic entrepreneur is the face of his brand, its best media spokesperson, and the embodiment of its values. The most talented can attract a top workforce and inspire it to achieve beyond expectations. From Steve Jobs to Marc Benioff, the examples of PR-savvy founders are varied, but they share many of the same attributes.

Have charisma, will backfire

But what happens when the founder’s impact turns toxic? Take the recent soap opera unfolding around Papa John’s founder John Schnatter.  Forced to resign as chairman of the business he started after an ugly, racially-tinged episode came to light, Schnatter is fighting back. He’s now blaming the marketing agency involved in a media training session for goading him into uttering a racist word. Although Papa John’s has recovered a bit from a stock price drop right after the scandal broke, nothing about this is good for the brand or the business. Who can focus on competitors when the founder is his own – and the company’s – worst enemy?

Elon Musk also made waves with a self-inflicted PR crisis this week — this one on a more global scale. Musk was enjoying mostly positive coverage after his company’s prototype submarine became a sidebar as a possible aid in the rescue of the boys trapped in the Thailand cave. Happily, the sub wasn’t needed for the rescue, but when one of the cave divers criticized it as a “PR stunt,” Musk exploded. He tweeted an angry response and called the diver a “pedo.” The insult to a true hero of the high-stakes rescue naturally brought a furious backlash. Musk walked back his comment and deleted the tweets, but the tantrum startled investors and caused a temporary drop in the share price of Tesla, Musk’s troubled electric car company.

It’s the Travis Kalanick problem. Sometimes the very qualities that lead an entrepreneur to achieve extraordinary success can spell trouble as a company matures. When it comes to taking on the risks and obstacles involved in scaling a world-class business, brazen self-regard and iron confidence are useful. But when confidence metastasizes into arrogance and self-interest, the company’s reputation – even its very survival — can be placed in jeopardy.

Boards must wrangle renegade founders

So, what’s the answer? In most cases it falls to Board members and investors to wrangle a toxic founder before things go irretrievably bad. Gene Munster, founder of VC firm Loup Ventures, offers relevant advice in an open letter to Elon Musk following the cave diver episode. Munster advises Musk to ignore short sellers and reminds him that the perception of “think-skinned and short-tempered” leadership is not helpful to his company.

Thankfully, the road to regaining investor confidence is well traveled. It starts with an apology. Then, focus your message on your progress toward achieving Tesla’s mission. You might consider taking a Twitter sabbatical. Twitter might keep Tesla in the news but it won’t help continued improvements in production and product.

Board members, officers, and investors have a critical responsibility here, and one’s that’s increasingly being scrutinized among venture-backed tech companies as well as others. The Theranos fraud showed the consequences of a board that’s overly credulous, asleep at the controls, or badly chosen.

There are always warning signs. A deeper look into Papa John’s reveals a company that in the words of one former employee, is a “public company operated like it is privately owned.” Founder Schnatter has a history of controversy; he resigned under pressure in 2005, only to return three years later to install cronies in top company and board positions. The red flags were there.
Real leadership means making the proper corrections or ultimately the painful changes that can ensure a successful company’s survival, even if that means the guy who started it is the one who needs to go.