The|Intangibles » Managing Intangibles http://blogs.hillandknowlton.com/boydneil Selected posts from Boyd Neil's blog at http://www.boydneil.com Tue, 23 Nov 2010 20:22:30 +0000 http://wordpress.org/?v=2.9.2 en hourly 1 Reputation Key in FDI http://www.boydneil.com/blog/2009/9/1/reputation-key-in-fdi.html http://www.boydneil.com/blog/2009/9/1/reputation-key-in-fdi.html#comments Tue, 01 Sep 2009 11:12:23 +0000 Boyd Neil 417677:4590288:5052388 An analysis by Shawn McCarthy in Canada's national newspaper The Globe and Mail of PetroChina Co. Ltd.'s investment in Canada's oil sands (through an investment in Athabasca Oil Sands Corp.) makes this assertion:

Despite some concerns about PetroChina's ultimate control resting in the hands of senior mandarins of China's ruling Communist Party, the company will likely face little opposition from the federal government on this deal.

Just two weeks ago, Finance Minister Jim Flaherty was in Beijing and told officials that Canada welcomed commercial investments in resource development from Chinese companies, so long as they are subject to proper corporate governance.

It is indeed an important test of the Canadian government's new guidelines for state-owned foreign direct investment. But broader public understanding of - and support for - foreign investment by offshore suitors would help the government along. For this to happen, these companies need to do a better job of making their case before announcing a deal. There are at least four things that should guide their reputation building strategies, assuming they care about public opinion:

  1. Being transparent and honest about their global business strategy
  2. Introducing their senior executives to the host country to temper mistrust
  3. Creating healthy sources of information online about the company, its management and its investment and operational track record
  4. Committing to integrity and openness in corporate governance and providing evidence of this  commitment through a world-class and defensible code of business conduct

The alternative is to hope the host government will not experience, or will ignore, public doubt or opposition. And with any elected government that is always a questionable proposition no matter its ideological commitment to foreign investment.

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An analysis by Shawn McCarthy in Canada’s national newspaper The Globe and Mail of PetroChina Co. Ltd.’s investment in Canada’s oil sands (through an investment in Athabasca Oil Sands Corp.) makes this assertion:

Despite some concerns about PetroChina’s ultimate control resting in the hands of senior mandarins of China’s ruling Communist Party, the company will likely face little opposition from the federal government on this deal.

Just two weeks ago, Finance Minister Jim Flaherty was in Beijing and told officials that Canada welcomed commercial investments in resource development from Chinese companies, so long as they are subject to proper corporate governance.

It is indeed an important test of the Canadian government’s new guidelines for state-owned foreign direct investment. But broader public understanding of – and support for – foreign investment by offshore suitors would help the government along. For this to happen, these companies need to do a better job of making their case before announcing a deal. There are at least four things that should guide their reputation building strategies, assuming they care about public opinion:

  1. Being transparent and honest about their global business strategy
  2. Introducing their senior executives to the host country to temper mistrust
  3. Creating healthy sources of information online about the company, its management and its investment and operational track record
  4. Committing to integrity and openness in corporate governance and providing evidence of this  commitment through a world-class and defensible code of business conduct

The alternative is to hope the host government will not experience, or will ignore, public doubt or opposition. And with any elected government that is always a questionable proposition no matter its ideological commitment to foreign investment.

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Newcastle United – How NOT to Manage Reputation http://blogs.hillandknowlton.com/boydneil/2009/07/16/newcastle-united-how-not-to-manage-reputation/ http://blogs.hillandknowlton.com/boydneil/2009/07/16/newcastle-united-how-not-to-manage-reputation/#comments Thu, 16 Jul 2009 21:41:51 +0000 Boyd Neil tag:typepad.com,2003:post-6a00d83451d94369e20115720f534d970b Newcastle United FC is a storied franchise in English football and ‘my club’ in the sense that I was born a Geordie (the name used to describe people from the northeast of England) and therefore am genetically predisposed to being a member of The Toon Army, as frustrating as that can be. My father (long deceased) was a friend of one of the team’s legends, Jackie Milburn (‘Wor Jackie’ as he is known), from when they both lived in Ashington in the 1940s.

This past season was a disaster for the club, with managers changing three times during a 38-game season and poor performances on the field by highly paid "stars’. The result is an ignominious demotion to the Coca-Cola Championship from the Barclays Premier League (where such other well-known franchises as Manchester United, Chelsea, Arsenal and Liverpool play).

The owner — Mike Ashley, who has been problematic, if not a disaster, from the beginning according to most reports — has been trying to sell the club since at least the last day of the Premiership season. It is now being coached by an interim manager.The players are furious and many of the first string players are asking for transfers. Even Ashley admits he has made a mess of things: “It has been catastrophic for everybody. I’ve lost my money and I’ve made terrible decisions. Now I want to sell it as soon as I can."

I have watched the public relations calamity unfold online on an almost daily basis through news reports from British newspapers and the NUFC’s website (which tends to report absolutely zilch about what is going on). The extraordinary thing is that management appears to be saying naught. News reports are based almost exclusively on comments by players or "sources’ close to the club.

From what I can tell, management has said nothing to reassure the city of Newcastle nor the club’s extraordinarily devoted fans that the coming season in the lower division will be nothing short of a debacle. No reassurances are being given; no sympathy expressed; no plans outlined; no time frames given; no deadlines offered . . . in other words, completely counter to basic crisis communications principles.

Okay, maybe management doesn’t see the situation as a crisis. Maybe management’s solicitors or investment bankers have said it must say nothing. Maybe it is sending out news updates that no news outlet is picking up. Maybe it has a social network, YouTube channel, blog or Twitter presence which I just haven’t been able to find. Or maybe management simply doesn’t recognize the damage that is being done to its reputation.

The supporters will be there for the players on the pitch when the dust settles: but when Geordies are called on to support an NUFC management business initiative, when the city is asked for a concession or a tax, or when the club’s history is written, who will be there to defend management’s interest and its "license to operate" the Geordies’ club?

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Social Media and News Miscellany http://blogs.hillandknowlton.com/boydneil/2009/06/12/social-media-and-news-miscellany/ http://blogs.hillandknowlton.com/boydneil/2009/06/12/social-media-and-news-miscellany/#comments Fri, 12 Jun 2009 14:10:34 +0000 Boyd Neil tag:typepad.com,2003:post-68018891 Lots of juicy factoids and information today that add a little more to my thinking on new communication memes:

  • Twitter_logo_header Of the many striking statistics in a report called ‘Inside Twitter‘ out of Canada’s Sysomos people, this one stands out for evidence of the sheer stupidity of the hordes who now call themselves  ’social media consultants’: “Of people who identify themselves as social media marketers, 65.5% have never posted an update (on Twitter).” I guess they just can’t be bothered . . . or don’t have time?

  • To be filed under the tab ‘Public Relations Through the Rear View Mirror’, according to an article today in the Ottawa Citizen Canada’s National Defence HQ has a new ‘conduit’ approach to public relations (in which all media questions are funneled through public affairs staff, with the journalist never allowed to speak to a subject matter expert directly) that the writer calls the 24 DAY news cycle: “Into this brave new world of hyper-speed news gathering, NDHQ has rolled out what I’ve termed, the 24-day news cycle. Yes, 24 days…..That’s about the length of time I figure that it takes NDHQto answer a question from the news media…..if it is answered at all.”
  • Bear with me on this one. Those who follow me on Twitter will know that as a native ‘Geordie’ I am an ardent — and frustrated, some would say foolish — supporter of the Newcastle United football club, formerly of the English Premier League now relegated to tier two football as a result of an abysmal season this past year. Thankfully, the owner has put the club up for sale (at 0,,10278~3488677,00 about US$200 million). Before he did so, he published a statement in which he said “I’m sorry” about four or five times. Frankly, it sounded hollow given Ashley’s unwillingness to invest in the club and his lack of commitment to its success in spite of having one of the most loyal fan bases of any football club. The lesson here is simple . . . saying ‘Im sorry’ in a crisis is not enough. An apology has to be backed up by action to resolve the underlying problem. In this case, the owner getting out is the right move, although that is not counsel I would give to many CEOs.
  • Finally, this about philanthropic giving . . . “Today, the Committee Encouraging Corporate Philanthropy (CECP) shares a first-look at results from its annual philanthropy survey of nearly 140 leading companies, revealing that 53% of companies increased their total philanthropic donations in 2008, and 27% increased their giving by more than 10% year-over-year.” So things are not as bad as the CR critics would have us believe.

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Reputation Risk and Water http://blogs.hillandknowlton.com/boydneil/2009/06/01/reputation-risk-and-water/ http://blogs.hillandknowlton.com/boydneil/2009/06/01/reputation-risk-and-water/#comments Mon, 01 Jun 2009 12:38:54 +0000 Boyd Neil tag:typepad.com,2003:post-67499873 Reputation risk for companies is an underestimated consequence of global concern about climate change. Rather than expending more inventive energy on denying a relationship between CO2 concentrations and global temperature, smart businesses should be looking for ways to gain come reputation capital by managing climate change risks in cooperation with communities and global agencies.

Last week, the UN Global Compact and the Pacific Institute released a short paper on climate change and its impact on water which recommends a number of sensible management strategies. The context for the paper is the statement that:

“There is overwhelming scientific evidence that burning fossil fuels has altered the chemistry of the atmosphere. Figure 1 shows that atmospheric CO2 concentrations are reaching levels that are likely higher than in the last 20 million years.Rising CO2 concentrations along with other greenhouse gases (GHG) are changing the planet’s climate. Global mean temperatures have increased three-quarters of a degree Celsius since 1900 and 11 of the 12 warmest years since 1850 have occurred since 1996.These climatic changes are expected to accelerate over the coming decades.”

The paper argues that a significant body of scientific evidence suggests climate change will affect the scarcity, sustainability and quality of the global water supply, which increases business risk, especially with respect to energy supply management, raw material inventories, industrial production systems and the associated financing costs.

Reputation risks can easily follow, for example as “people become more aware of their rights to access water . . . local businesses may find themselves using copious amounts of water in regions where people lack sufficient water to meet basic needs.”

The paper outlines some business strategies which mirror two dominant themes on how businesses today need to think of corporate responsibility (CR): CR as part of business strategy discussions (integrating “water and climate change into strategic business planning and operational activities”) and engagement of stakeholders in responsible planning (engaging “key stakeholders as a part of water and climate risk assessment, long-term planning and implementation activities”).

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Reasons to Feel Uneasy or Exhilarated http://blogs.hillandknowlton.com/boydneil/2009/05/31/reasons-to-feel-uneasy-or-exhilarated/ http://blogs.hillandknowlton.com/boydneil/2009/05/31/reasons-to-feel-uneasy-or-exhilarated/#comments Sun, 31 May 2009 21:45:29 +0000 Boyd Neil tag:typepad.com,2003:post-67483033 Philip Sheppard, a past president of the International Public Relations Association, brought to my attention this exhilarating and numbing video called Did You KNow? posted on the Pilot Theatre (from Wakefield West Yorkshire) website . . . Lots to make you think about business, communications, knowledge management and North American education (strengths and failures).

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Restoring Reputation http://blogs.hillandknowlton.com/boydneil/2009/05/27/restoring-reputation/ http://blogs.hillandknowlton.com/boydneil/2009/05/27/restoring-reputation/#comments Wed, 27 May 2009 21:32:11 +0000 Boyd Neil tag:typepad.com,2003:post-67340393 The stock of CSX Corp., a Jacksonville Florida-based railway company has been discounted as a result of lingering criticism of “poor management”, according to UBS analyst Rick Paterson as reported today in the Financial Post. (I can’t find a link: The Financial Post’s website doesn’t make it easy.) It should be trading at a premium to its competitors according to Paterson.

He goes on to say “Four or five years ago that (“poor management”) was probably true, but we think these days are long gone and (mis)perception is lagging reality.”

If that’s the case (and I have no idea if the company has been actively trying to restore its reputation), then why is it that investment bankers and equity analysts stubbornly resist the idea that a good reputation, consciously developed, nurtured and communicated, can have a measurable impact on valuation? And why is it that some companies have such a hard time understanding that reputations don’t recover solely through solid financial performance?

There are strategies for reputation recovery. But they require commitment, humility and honesty . . . and the support of financial advisers, lenders and legal counsel.

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Philanthropy – No Stand-In for Better Behaviour http://blogs.hillandknowlton.com/boydneil/2009/05/22/philanthropy-no-stand-in-for-better-behaviour/ http://blogs.hillandknowlton.com/boydneil/2009/05/22/philanthropy-no-stand-in-for-better-behaviour/#comments Fri, 22 May 2009 16:11:10 +0000 Boyd Neil tag:typepad.com,2003:post-67153317

The Economist, not normally a booster of corporate social responsibility (CSR) or sustainability as it  tends to be known in Europe, this week has a piece on CSR that hits the mark. The author concludes that corporate philanthropy (contributions to charitable causes) is being cleaved but the attention being paid to behaviour — ethics and governance in particular — is holding steady, as it should.

“There is one other important reason for thinking that companies will
maintain their commitments to sustainability through the downturn and
beyond: the need to restore confidence in business. The financial
crisis was triggered by a bout of corporate social irresponsibility on
a massive scale that has tarnished the reputations of even the bluest
of blue-chip companies. Now corporate leaders have a chance to show
that they are not just motivated by short-termism after all.”

As Intel (a client) says in the management analysis and strategy
portion of its 2008 corporate responsibility report (Note . . . I agree with ridding CSR of its restrictive ‘S’),  “By incorporating
corporate responsibility directly into our strategy and objectives, we manage our business more effectively and understand our impact on the world more clearly.”

Corporate or ’strategic’ philanthropy is a programmatic means by which a company contributes to its community. Philanthropy evidences a corporate recognition that profits are derived from the community and that a return to the community in the form of wages paid for labor and consistent dividend payments to shareholders as well as steady share price growth is — at least in terms of today’s social expectations — insufficient.

Communities expect companies to give back, and companies have obliged either through random acts of kindness or more structured investments in causes which match company values or business goals.

But let’s be honest. Philanthropy is unlikely to define or affect company behaviour when it comes to choosing business strategy, rewarding employees, managing supply chain relationships, committing to respectful and sensitive business principles and overseeing board and C-suite conduct.

A generous philanthropy program, and commitment to a cause, can comfortably sit side-by-side with dishonest accounting, excessive senior executive compensation, autocratic and harsh management, deferential governance, poor labour and sourcing practices, and denial of environmental impact. Philanthropy provides a reputational sheen, but it doesn’t de facto require ethical conduct or a socially astute business strategy. Philanthropy buys goodwill but it doesn’t drive responsible behaviour nor build social trust.

If The Economist is right, and I think it is, and the decline in spending on smoke-screen philanthropy is NOT being matched by a retreat from investment (time, focus, intensity) in better behaviour, then maybe out of the current crisis we will see a steady push-back within companies against insular corporate boards, inappropriate rock star-like CEO salaries, and short-sighted and opaque business strategies.

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Blogs on Leadership http://blogs.hillandknowlton.com/boydneil/2009/05/04/blogs-on-leadership/ http://blogs.hillandknowlton.com/boydneil/2009/05/04/blogs-on-leadership/#comments Mon, 04 May 2009 13:18:58 +0000 Boyd Neil tag:typepad.com,2003:post-66342823 CEOs must have a tough time deciding what to read among all the blogs, online news sites, management school journals and mainstream media which offer points of view on how CEOs can lead better. Alright, they likely don’t read any of them.

Should they change their minds, here is a recent addition to the plethora of leadership punditry that may be worth watching: The Syd Blog is by Sydney Finkelstein, the Steven Roth Professor of Management at the Tuck School of Business at Dartmouth College. The blog is subtitled “Insight into the force and follies of leaders.”  His latest post looks at how Bank of America CEO Ken Lewis, who was stripped of his chairman title last week, may still lose his CEO position even though Bank Of America is run by what Finkelstein calls a “rubber-stamp board.”

Sounds like Finkelstein would not be displeased.

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Tightening the Rules http://blogs.hillandknowlton.com/boydneil/2009/04/26/tightening-the-rules/ http://blogs.hillandknowlton.com/boydneil/2009/04/26/tightening-the-rules/#comments Sun, 26 Apr 2009 21:02:08 +0000 Boyd Neil tag:typepad.com,2003:post-65423345 The legislators in the Canadian province in which I live recently charged the Ontario Securities Commission with reviewing corporate reporting standards in order to establish best practices for disclosure of environmental, social and governance practices. The commission has been asked to report back to the House by January 1st of this year. The announcement warranted only about 125 words in Canada’s national newspaper which means it can easily die a languid death.

Behind the order to review disclosure practices (other than the standard opportunism of politicians looking to take personal advantage of a crisis in trust), is acknowledgment that the public and minority shareholders have this indistinct but genuine feeling no one in corporate boardrooms is championing good behaviour.

Never having sat on a corporate board (I have been a director on a hospital foundation board) I have no idea how discussions about things like executive compensation, minority shareholder rights, and environmental and social commitments are raised and debated.

Having read Dickens, Marx, Althusser and Levy, and being ready to believe anything Gretchen Morgenson writes about boardroom mischief, I do feel a sort of native mistrust that the impact of a decision or policy on ordinary shareholders or a community ever factors into the colloquy.

Worse, I end up silently cheering regulators (although seldom legislators) when they study corporate reporting standards and insist on more transparency, even though I know I shouldn’t given the nasty stuff they can foist on business.

By all appearances, I’m not alone in mistrust.

But I also know that many corporate directors are honest and ethical people. They work hard to balance conflicting interests and to do what is right for the company, its shareholders and the community. So let’s hope that out of the OSC’s review the government doesn’t default to punitive regulation. Rather it should encourage board-lead custody of ethical, inclusive and open behaviour. A good start would be to put forward suggestions for ways boards can collect and aggregate meaningful contributions (not just by shareholder resolutions and voting proxies)from people who deserve to have a say in crucial (not all) decisions — in particular minority shareholders and ‘communities of interest’.

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Corporate Blogging: Still Hesitant After All These Years http://blogs.hillandknowlton.com/boydneil/2009/04/24/corporate-blogging-still-hesitant-after-all-these-years/ http://blogs.hillandknowlton.com/boydneil/2009/04/24/corporate-blogging-still-hesitant-after-all-these-years/#comments Fri, 24 Apr 2009 12:00:23 +0000 Boyd Neil tag:typepad.com,2003:post-65964009 More Fortune 500 companies are blogging, but the pace of growth is still shall we say restrained.

The full results of a study by Dr. Nora Ganim Barnes, Ph.D. and Eric Mattson, CEO of Financial Insite
Inc., a Seattle-based research firm are available here and a summary of the key findings are in a news release by the Society for New Communications Research.

Of the findings posted in yesterday’s statement, here are few of particular interest:

  • 81 of the Fortune 500 or 16% currently have public-facing blogs, compared with 39 percent of the Inc. 500, 41 percent of the higher
    education sector and 57 percent of the nation’s Top 200 Charities.
  • 28 percent of the Fortune 500’s blogs link to Twitter accounts
  • 90 percent of the Fortune 500’s blogs have the comments feature enabled
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