I enjoyed last night’s panel on Power and Impact of New Media: Coping with the Economic Crisis at the Harvard Business School Club of New York. My notes follow.
Biographies of the panel participants:
Harris Diamond is CEO of Constituency Management Group (Interpublic Group of Companies (NYSE: IPG.). The group includes IPG companies in the areas of public relations, public affairs, sports and entertainment marketing, corporate/brand identity and experiential marketing, including Jack Morton Worldwide, GolinHarris, FutureBrand, Octagon, DeVries Public Relations, MWW Group and Rogers & Cowan. He also serves as the CEO of IPGs Weber Shandwick Worldwide, a public relations industry leader. Regarded as one of the industry’s great experts in corporate and industry positioning, Mr. Diamond has counseled Fortune 500 companies that were undergoing profound changes or facing intense public scrutiny. While specializing in crisis and change management, he also provides ongoing strategic communications counsel to an array of clients, including several industry and trade associations.
Mr. Diamond is a member of the Board of Directors of the not-for-profits, Business for Diplomatic Action and the Ronald McDonald House of New York. He is also on the Board of Councilors of the University of Southern California’s Annenberg School for Communication, and is the former Chairman of the Council of Public Relations Firms, the U.S. trade association for public relations agencies.
Previously, Mr. Diamond served as a political campaign consultant working on U.S. gubernatorial and senatorial campaigns, and advising foreign governments and political parties. He has held senior positions in the public sector. Mr. Diamond holds both MBA and JD degrees, and is a member of the New York State Bar.
Amy Binder is CEO of the New York City-based RF|Binder Partners, Inc., one of the companies of the Ruder Finn Group. RF|Binder Partners has a reputation for research-based strategic counsel and creating a symbiotic approach across communications channels. Among the firms major clients are Bank of America, L.L. Bean, Citibank, Dunkin Brands, Eli Lilly and Company, Reebok, and Staples.
Ms. Binder brings 25+ years of experience developing corporate reputation and branding programs. For the five years leading to the formation of RF|Binder Partners, Ms. Binder, as President of Ruder Finn Americas, was responsible for growing the firms work with Fortune 100 corporations as well as entrepreneurial start-ups which were developing new business models as a result of the Internet, new technologies and the dynamic business environment. Before joining the Ruder Finn Group, Ms. Binder was Director of Communications for the City of New Rochelle where she focused primarily on community based programming and economic development initiatives. She left there to form the Ruder Finn Groups Urban Marketing division and worked for corporations involved with community relations including American Can, and for cities around the country.
Amy Binder started her career as a freelance photographer primarily handling corporate assignments. She studied at Rhode Island School of Design and the Center of the Eye in Aspen, Colorado. She has two published books of her work.
Ms. Binder is a board member of the Columbia University Graduate School of Business E-Business Initiative, The Institute for Public Relations and the Media Advisory Council for Brown University, as well as a member of The Arthur W. Paige Society. She received her A.B. with Honors from Brown University and her M.B.A. from the Graduate School Of Business, Columbia University.
Lex Suvanto is the Managing Director, Strategy and Operations, at The Abernathy MacGregor Group. At Abernathy, Mr. Suvanto provides strategic counsel on corporate communications, financial public relations and investor relations. He has particular expertise in strategic planning for communications, supporting complex media and investor outreach programs, and speechwriting. Mr. Suvanto also serves as an operational leader of the firms marketing and strategic planning activities.
Lex Suvanto has extensive experience working for media, entertainment and Internet companies. Selected client experience includes Comcast, Viacom, Sony, THQ, Take Two Interactive, IAC, Gemstar/TV Guide, AOL, CBS, Blockbuster, Quadrangle, DivX and RealNetworks. Mr. Suvanto has helped a number of media companies transition to the public markets, having worked on Viacoms split from CBS, Discovery Communications split from DHC, IACs spin-off of HSN, Ticketmaster, Lending Tree and Interval, and Blockbusters spin-off from Viacom. He also has significant M&A experience having worked on recent deals such as CBSs acquisition of CNET, Viacoms acquisition of DreamWorks, the merger of RealNetworks and MTVs online music properties, Sonys (and private equity) acquisition of MGM, Quadrangles acquisition of several media companies, Comcasts acquisition of various cable and internet properties, and Gemstars sale to Macrovision. He also has significant experience working with Web 2.0 companies both public and private to devise strategic positioning and raise visibility.
Before graduate school, Mr. Suvanto spent five years working in business development at Hearst Magazines, where he worked as part of an executive team launching new consumer publications which included titles such as ESPN Magazineand SmartMoney.
Mr. Suvanto has an honors degree in Economics from Harvard College and an M.B.A. from Harvard Business School. He serves on the board of the Urban Video Game Academy and provides pro bono communications support to various non-profit organizations.
Justin Fox is the Business and Economics Columnist for Time magazine and writes the Curious Capitalist blog at Time.com. Before joining Time in January 2007, Fox spent more than a decade at sister publication Fortune, where he covered a wide variety of topics related to economics, finance, and international business. In 2000 and 2001, he was the magazine’s Europe Editor, based in London. Before joining Fortune, Fox worked at several newspapers, among them American Banker and The Birmingham News. He has a B.A. in International Affairs from Princeton University.
Fox is a Young Global Leader of the World Economic Forum. His book, The Myth of the Rational Market, will be published by HarperCollins in June.
Justin: This panel started with a very different focus, just on new media. We asked last week, in light of recent events: do we need a new focus?
Lex: This crisis initially caused old media to re-emerge as the most credible source. Everyone turned to Wall St. Journal, etc. At the same time, theres tremendous hype around Twitter. Ebay recently tweeted its analyst meetings and last three quarters of earnings. (How do you squeeze safe-harbor statements into 140 characters?) An issue that I struggle with: is this just a new vehicle replacing the old?
Three sources of info about a company: what the company says, the research analysts say, and the media say. Arguably the first source is the least credible. Now we have a 4th source: social media (your peers). And many people paying attention only to that 4th source.
Does this change something fundamentally about how a company talks about itself?
Amy: Historically you could talk to a group on a party line phone, or in the town square. Then the media became the only way to group-communicate. Now, were going back to the old model.
JP Morgan now has a button on their site where they correct miscommunication about themselves.
Obama was a model: he said, Im not going to allow media to publish misinformation about me.
Harris: I have 5000 employees but my kids say that on Facebook it says I have no friends. The web allows misinformed people to roll up into a force that has a voice.
Example with AIG: the bonus story came out several months ago, and then again in Dec., and then again in Jan. But only now has it become a big story. The Web created a furor via the amount of people who got in touch with politicians, old media, etc. Politicians saw this, seized on it. Were not going to see an eruption like this that often. (Teten: I’m forced to disagree with that statement.) The web empowers people to create movements that can shape public policy/perception of companies. That can be dangerous.
The web also allows companies to better engage with people.
Social media have destroyed ability of old media to become news vehicles, because they cant keep up with the new information flow; they become commentary vehicles.
Justin: How is the AIG furor different than past media frenzies?
Harris: its different both in nature and scale. Reasons:
– Democratic administration
– Business that cant communicate the way it used to
Amy: Youtube et al. make TV more engaging, because people can see again a video any time. It used to be if there was a bad TV story, it would fade quickly, because TV is an evanescent medium. Now, anyone can see a video at any time.
Lex: We had a situation with a large services company, which was a few months from bankruptcy. All 800 Managing Directors were leaking information onto chat rooms. In the past, you could keep this information more quiet, maybe just in the Wall St. Journal. Past conventional wisdom if a journalist asked comment on rumors about bankruptcy: say, We dont comment on rumors.
However, in this case, the CEO said, Well, lets talk about what bankruptcy would look like. He had to address what everyone knew.
Harris: US Attorney General says, If you give comforting facts to the media, and then file for bankruptcy not long after, you may have violated securities laws. Regulation has not caught up with the consequences of this transparency. Problem: if you talk about bankruptcy, customers/suppliers will immediately stop doing business with you, and the problem becomes self-fulfilling.
Transparency has costs, can be dangerous. It can trigger events.
Amy: We cant ignore this anymore.
Harris: AIG is over as an entity. Insurance is about trust, and they dont have it.
Lex: we had a case: some class action lawyers were on facebook. They were trying to get $ from a university. They had made a facebook page to discuss an issue that the particular university had, in order to collect participants in the class action. Lawyers went to university and committed Facebook blackmail: give us what you want, or well keep doing this. We decided to use a completely different channel to respond.
Harris: we own a very small % of Facebook. (which is equivalent of 4th biggest country in world, with 175m people.)
Wikipedia has a rule: no PR firm can put input into Wikipedia. UK had major controversy over this, because many PR firms were doing this. However, part of the job of a PR firm is to correct misinformation about us.
Q: What should company do with employees who want to participate online?
Amy: Much easier for consumer products co. to address this. Dunkin Donuts has rules on this. Much more complicated for an investment bank.
Lex: you have to monitor the online sources that are monitoring you.
Harris: As of end of February, 31% of companies in finance industry have something on their websites about the finance crisis. 69% dont. Shouldnt more of them engage?
Lex: I heard someone say, Websites are so 90s.
Teten: Were moving from mark to market to mark to media accounting. How do you advise a distressed company on how to respond all the buzz about their problems?
Harris: we used to get periodic emails from SEC saying, Do you know any of these people? We would hope that no one we knew was on that list, and definitely no employees. We get fewer of these messages now, because the SEC cant keep up with the deluge of information.
With a blogger, you have a little more time to react to his opinion, because at least initially, only one lone blogger might raise an issue. With the Wall St Journal you have to respond that day. Everything is on trigger mode now.
Someone asked me, how come CEOs arent coming forward with solutions? The reason is that senior business figures are scared that if they do that, someone will pull out skeletons in their closet. Have you noticed how the number of CEOs on the TV news shows have plummeted?
Q: When is the media going to report positive stories?
Fox: All the optimists have been discredited.
Harris: You cant minimize the amount of skepticism about there. People dont believe what they might have used to believe.
Lex: You can leak news that moves stock (like Citi releasing news that it had made $ in first two months of 2009), and then have 4 days to submit an 8-K.
Harris: Online will have biggest amount of influence on stock prices. In old world, Obamas comment about bitter voters would not have been picked up. Nothing is private anymore.
Amy: You move public opinion by reach & frequency. Nothing has reach & frequency like online.
Harris: More & more companies are emulating Clinton/Carville war room concept in order to respond to media.
Lex: The amount of non-consensus information in the market has exploded, which means volatility has gone up. Millions of people think they know about a company, but really dont.
Harris: People think theyre entitled to influence on companies .are they?
Can you imagine GE today fighting the battle of the Hudson River? Its unimaginable. Theyd have to deal with hundreds of good government groups.
Q: How big a problem are imposters? E.g., a rival posts negative information about you.
Harris: I’ve always held: A statement that is unanswered is accepted and believed as true.