There was no upside to HP’s reputation from ridding itself of Mark Hurd. The Economist described HP as Hurdless chickens. Wall Street pulled the rug on the share price. Shareholders looked on bewildered as, as the FT reports, transparency turned to opacity as the Board lost its nerve. Now let’s review how this might make a movie.

Married and slightly nerdy CEO gets obsessed with an events contractor, B-movie actress and former soft-porn star. He buys her dinner more times than he ought. She claims she was sexually harassed and hires a top lawyer with a nose for publicity.

The CEO gets cleared of the charge by the company. But he has difficulty explaining the more than $10k (perhaps $20k) he claimed on expenses to entertain her. He gets told to jump ship. As a result, HP’s share value drops by around $13 billion. That would be the opening scene. Then would come the flashback.

Mark Hurd’s predecessor knocks billions off HP’s share price after her fraught merger with Compaq proves nigh on disastrous. The Board that once backed Carly Fiorina decides to ditch her, but the news leaks. Yet only fellow Board members were in the know. So she orders private detectives to spy on the Board to uncover the traitor. Before they can report, Carly’s fired.

However, the chairman of the Board continues with the investigation (widened to include senior executives), which stoops to lies and deceit and unethical borderline legality. When the rest of the Board discovers how the culprit was identified, members resign in protest and the chairman is forced out. From then on, whenever somebody knocks on their front door, they fear that they’re being bugged by a colleague (the film would portray their spouses’ paranoia).

Carly’s merger antics alone mean that from day one, Mark Hurd is CEO of a company with a psychologically damaged and neurotic Board. The breaking of the spying story and near-implosion of the Board, just deepen his problems. But against the odds, he restores HP’s fortunes, winning widespread praise for the turnaround.

To top it all the temptress in the story proves to have a heart (surely that’s a heart on her sleeve?). She weeps and says she never wanted him fired. She backs up his defence and says that they never had intercourse. The audience weeps with her on behalf of their fallen hero.

What can we learn from this mess?

Above all, the scandal at HP is more about a failure of corporate governance, team-building and trust, than it is about Mark Hurd’s peccadilloes. The major issue for the Board was trust, and the issue of Hurd’s seemingly falsified expenses.

Contrary to popular opinion, corporate governance is not about CSR and personal ethics so much as about improving corporate performance. It is about making the right operational choices. It is about protecting shareholder interests and about assessing strategies to ensure that corporate assets are used properly to achieve corporate purposes. As Larry Ellison has pointed out, HP’s Board has clearly failed to do its job.

The PR consultants at APCO recommended, rightly, that the Board should proactively make a full disclosure of the “scandal”. However, they wrongly advised that Hurd should be sent packing. They produced mock scandalous headlines of what the media might say if Hurd was not ousted. This scared the risk-adverse, emotional Board. In APCO’s favour, however, they probably knew better than anyone else just how broken were the internal relations at the top of HP (leadership requires trust to function). This was no ordinary crisis.

The Board was like a rabbit caught in headlights. It first froze, then panicked. Not for the first time it collectively put personal feelings before the company’s interests.

Meanwhile, Wall Street punished the Board and the company for firing Hurd.

But what about Mark Hurd’s role in all this? His comment about his resignation (cue $40 million pay off) was revealing. He said:

“I did not live up to the standards and principles of trust and integrity that I have espoused at HP”

So, he knew that he broke the bonds of trust at HP, and that he was guilty of hypocrisy on the morality front. So here’s my guidelines for how to avoid such moral hazards in future:

• Don’t let PRs sell the politically correct narrative of your personal life.

• Don’t use personal virtues as a shield to promote your professional ones.

• Headlines about your personal virtues are hostages to fortune.

• Avoid the temptation to indulge in moral outbursts on any topic.

• Don’t bring your personal life to work or include it in your PR.

• Those who live by the sword die by it.

• Don’t lecture anyone (especially not your staff) about personal morality.

• Always assume that everything always gets into the media in the end.

• The public love sinners and winners. It loathes saints.

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She was out and about in Florida. She was there sending out reassuring PR messages to tourists. She told them not to abandon the Gulf Coast, in other words not to believe all the environmental catastrophe talk they’d been hearing on the news. She reminded the world that:

“There are still thousands of miles of beaches not touched by the spill. There are still opportunities to experience these beautiful beaches,”

She added:

“… folks here in Florida and across the Gulf Coast are still depending on visitors and tourist dollars to put food on their tables and to pay their mortgages and to send their kids to college.

Talking of paying bills. A local restaurant owner by the name of Patronis told the First Lady that oysters were off the seafood menu, not because they weren’t available but because “all the oystermen are working for BP,” leaving few men to scrape the oysters from nearby Apalachicola Bay.

Thank God for Mrs Obama and for the local tourist lobby who briefed her well. Her words couldn’t have been better timed, coming as they did as BP finally – we hope – plugged its deep-sea leaking oil pipe. If all goes well, by August the relief oil wells will have sealed the leak permanently. I predict that we will all be shocked by just how quickly the environment and BP’s reputation recovers.

Of course, my message, and I’m sure Mrs Obama’s message likewise, is not that environmental harm has not been done. The message is simply to keep it all in perspective.

This little incident highlights the power of competing PR agendas. There’s been a lot invested by environmentalists and politicians – not least Mrs Obama’s husband – in traducing BP over this spill. But the criticism was hyped and bordered on scaremongering. That had consequences far beyond BP.

Actually, early on in this crisis, President Obama also found himself stressing how lovely and open most of the Gulf beaches were. His remarks then, even more than Mrs Obama’s now, remind us that catastrophism is a very dangerous weapon. Being doomy is great when you’re trying to deflect blame and raise the stakes, but it’s less good when real hoteliers, for instance, get side-swiped as collateral damage.

The trouble is that it is hundreds of times easier to spread ideas, impressions and images of damage – and make them seem widespread, severe and permanent – than it is to remind people of a nuanced picture. This is an important effect of the media, which is much more the politician’s tool than reality is. The media can make one oiled pelican stand for all nature and for every pelican. Reporters can easily go to the most damaged spot and make it stand for the generality of damage, and make damage seem general.

Anyway, after a few months of uncertainty, noise and safe exaggeration, perhaps Mrs Obama’s remarks will see the beginning of a subtler picture. Of course, we have yet to see what the real damage of the spill is. We’ll know much better about a year from now.  Let’s hope Louisiana has thriving seaside and wildlife tourism between now and then and long after.

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BP is on a knife-edge. They can’t seem attractive (and suitably penitent) whilst blaming others, and yet they are not alone in causing the accident in the Gulf. (Leave aside that they’ve got a gaffe-prone CEO who says that he wants things to go well because “I’d like my life back”. A severe shortage of pre-accident media training there, I fear.)

But in time – and that time isn’t yet, not by a long chalk – BP may well find itself able and required to discuss (first in private with sympathetic mature journalists and opinion-formers) where other parcels of blame lie.

It may well be that Transocean or Halliburton or others are culpable in some degree, perhaps even greatly. But how about those nice regulators who are the thin line between corporate greed and the fragile public and planet?

I am pretty sure that if there’s blame to be spread, the regulator is as much at fault (or as innocent) as BP or other firms. Indeed, I am inclined to think that the regulator is more to blame based on what I’ve learned from the circumstances behind all of the disasters I’ve ever studied. I’ll return to this another time, but from Titanic to Three Mile Island, I’m struck by how technological failure has flowed from regulatory failure rather than greed. I mean that very often – most often – the private sector fails when the public sector thinks it’s doing fine and has signed-off on its behaviour. (The modern financial failures are examples of this, by the way.)

So I reason that it was more the regulator’s job to drive, own, the “what-if” process than BP’s. It isn’t exactly BP’s job to be gungho and alpha-male. But, certainly, in the modern highly-regulated and accountable world the corporation is in a proper and allowed tension with its regulators. Indeed, I hold the view that regulators are rather feeble in hardly ever accepting a proper share of responsibility.

Unless BP has purposely pulled the wool over our eyes, something I doubt, or didn’t carry out its agreed obligations, which remains possible, I think BP ought to be cut a good deal more slack than it actually will be.

It looks likely that BP was operating in the Gulf of Mexico at the edge of technology’s capabilities in a high risk environment. (Krauthammer in the Washington Post argues that’s because of green prejudice, a nice argument I won’t pursue.) If it turns out that BP’s bad luck was to have an accident that no regulator or operator on earth had made allowances for then BP has the makings of a sound defence.  Though, paradoxically, even if that’s proven true, that’s an argument which can’t be pressed too loudly in polite society without risking a backlash.

There’s little doubt, then, that the blame will stick with the corporations (it may widen from BP as Shell fears here). That’s not least because regulators and the politicians will wriggle out of it and the media will prefer to hound BP and the other corporations to hounding the regulators and governments. That’s unless, and I’m dreaming here, the balance of third party opinion comes down on BP’s side.

I am almost sure – and far from happy about it because I believe BP should say what it knows or believes to be true – that there is very little BP can say today credibly in public. It cannot exonerate itself to any degree without appearing to avoid responsibility. It is up against quite deep human prejudices and tastes.

People love disaster and villainy. That’s why certain accidents have had mythic narrative power which no amount of good evidence can shift.  The Titanic, Three Mile Island, Chernobyl and Exxon Valdez, are powerful cases where the very names have stuck emblematically in our minds. Their very mention comes with the clutter of preconceived ideas about class, capitalism, corporations, technological over-reach. BP will, presumably, now join that list. Like the others, it will probably be a good example of an operation which went on to do good work whilst exploiting plenty more technology. But it will serve as an example of bad-intentions and hubris.

It is just possible that this event will sink BP. But that would make it truly unique (even the owners of the Titanic didn’t go under).

Away from the hype, the financial market will look at this issue in a wholly cash manner. What will the accident cost? Will BP face difficulty getting US or other licences? Yes, this might well be a transformative event for the entire petroleum industry. But the market may think that BP is becoming case-hardened in a big-time way.

Therefore the outcome of the whole affair provides BP with an opportunity to take pole-position in the battle to reshape the industry’s worldwide image. After all, the world remains as dependent as ever on petroleum, so there’s a lot of mutual self-interest out there. There’s also a lot of cognitive dissonance. Plenty of firms feel forced to align their reputations with tragedies, real and very often imagined, as if they were responsible for them, but still do good business regardless. Some of my colleagues – cynically, perhaps – call that hit on the company’s reputation the price of securing a licence to operate.

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There was something very panicky about what Shell called its visionary remediation plan for Nigeria. The press release partly explained the company’s motivation thus:

“The expected hurricane of regulation and policy change across industry, resulting from the negligent practices [in the Gulf of Mexico] by one pair of companies especially, means that all of us need to try to push harder in the interests of long-term survival. Shell will therefore distinguish ourselves by being the first oil company in history to cease taking risks with important delta ecosystems.”

But Shell has no more idea what caused the accident in the Gulf of Mexico than does BP. There’s been some discussion as to likely causes at a Senate hearing (dubbed the blame game by President Obama) but there’s been no conclusive evidence revealed that negligence sparked the accident. It is highly indecent, opportunistic and disrespectful of a rival for Shell to say or suggest otherwise right now.

Let’s get back to Nigeria. There is a blinding omission in Shell’s picture of its work in the Niger Delta. It has completely ignored the truth of the damage it is supposed to have done. Instead, it has scapegoated itself. It has seemed to accept responsibility for stuff it didn’t do. Maybe the “truth and reconciliation” work it is funding will start to reveal the rights and wrongs of all the parties in Nigeria, but I frankly doubt it. This is a pity. Nigerians have the right to know the truth about their country’s workings.

Poverty won’t be dented much

Shell proposes to spend $8 billion over the next two years followed by $1 billion per year over the following ten years to clean up the Niger Delta. That’s a region in which more than 30 million people live. So there’s no way that an investment of $2.50 per person per week for two years, followed by $0.62 for ten is going to lift the region out of poverty.

Such an expenditure might help clean up the Niger Delta. Equally (perhaps more than likely) it might not. Shell promises to use locally-sourced suppliers and staff in a region in which it was and remains responsible for just a small proportion of the overall oil pollution, and in which it has little power to tackle the problem of leaks at source. Moreover, the Niger Delta is the most corrupt region in one of the world’s most corrupt countries (the world’s 130th most corrupt state, and falling) as I recently explained in my personal account, CSR: it’s not the same in Lagos as in London.

Shell also said yesterday that it proposes to establish a $4 billion fund earmarked for compensation for perceived injustices in the Niger Delta caused by its operations since 1958. In describing its intentions, Shell borrowed emotive language from post-apartheid South Africa. It talked about creating a $45 million ”truth and reconciliation process” fund, which will assess and award reparations. That’s likely to create a feeding frenzy centred on locals involved in the fund in which those that win bank in Zurich, and those that lose reach for their guns and head back to the Niger Delta’s creeks.

To glimpse the trouble Shell might encounter, we need only examine how hard it has been for Pfizer to handover around $30 million worth of compensation to 100 or so so-called victims of its meningitis-related drugs trial in the north of Nigeria. Unlike Pfizer, however, Shell possesses no DNA data-bank of the people affected by its activities (regardless of the evidence, Pfizer has been unable to convince the other side of who is entitled to compensation and who is not).

China seeks to replace Shell

But there was also some more weird stuff wrapped up in yesterday’s press release from Shell. I say weird because it strikes me as unreal, and therefore as untrustworthy. Shell promised to:

“…cap oil production at current levels until 2015, and then to gradually reduce production to 10 percent of current levels by 2050, while compensating for this reduction through the development of renewable energy sources.”

Yet Nigeria has just concluded a deal with the Chinese to construct three oil refineries at a cost of $23 billion. It is clear from this that Nigeria is dreaming of an oil-filled future, not one based on renewables. But this deal might explain Shell’s warped CSR strategy, as the WSJ says:

“For the Nigeria government, the deal represents a victory of sorts over U.S. and European oil companies, which have long turned a deaf ear to Nigerian government calls to operate refineries in the country because of the poor financial returns.”

The real prize for China is getting its hands on Nigeria oil reserves. To do so it needs to displace the Western companies already established there with their rights to exploit the resource. So that perhaps explains why Shell took the bold step yesterday to cease:

“…deepwater drilling off the coast of Nigeria until the conclusion of a full independent safety review by our local government partners with international oversight.”

This will, as Shell explained in its release, ensure that it has a secure long-term licence to operate in the region (assuming it jumps this self-made hurdle). This pro-active move might well strengthen Shell’s grip on the Nigerian market in the face of stiff competition. It might well explain Shell’s CSR flannel. But yesterday’s announcement is not so easily dismissed. Hidden away, low down in the release was this very significant global commitment to create:

“…local stakeholder program [s] that gives decision-making and veto capacity over new and ongoing projects to communities affected by Shell and SPDC projects worldwide, pending more formal control at the level of local government.”

Exactly how this will be implemented is not explained. Whether Shell would really give, say, the spokespeople of 500 000 local Ogoni tribes people in the Niger Delta region the right of veto, when it has the support of the Nigerian government representing 150 million citizens, remains to be seen.

Lending Goodluck a hand?

There’s a new President in Nigeria. Goodluck Jonathan’s chances of remaining President come the next Presidential election depend in large part upon whether or not he can secure peace in the conflict-ridden Niger Delta region from where he hails. So one suspects Shell has a two-pronged approach. Its latest strategy looks like a ruse to see off Chinese competition and to curry favour with the new President. As I see it, Shell simply decided that its survival in Nigeria depended upon it helping to fund the peace process through its CSR initiative.

Much of yesterday’s announcement came wrapped in today’s obligatory language of sustainability:

“The unique geology underlying these deltas have sustained our shareholders very well, but we must not let that kind of sustainability come at the the expense of the biodiversity, carbon absorption and O2 production that are their true worth.”

But Nigeria’s economic future and sustainability depends upon oil revenue. The sustainability of Western economies also in large part depends upon continued oil supply. China’s future economic growth depends upon cheap energy much of which it hopes to obtain from Africa.

Some home truths

Sure, nobody can doubt that the Niger Delta needs cleaning up and that Shell should have stopped gas flaring years ago, which it announced it was ceasing immediately. Sure, it is also welcome news that Shell now proposes to exploit the surplus gas instead to provide free energy to local people. Sure, nobody can argue with a commitment to protect the region’s biodiversity. Actually, though, Shell has wanted to reduce gas flaring for many years and for several years (I cannot speak for the very recent history) its investment was bedevilled by the failure of its Nigerian government partners to cough up their share.

The issue I’m exploring right now, however, is what’s really driving Shell’s new strategy.

We immediately meet the oldest problem in discussing CSR. When a firm claims to be interested in environment and society, does it matter if these are cloaks for its own self-interest? Is it morally and strategically sort of OK for firms to claim an interest in being virtuous when, after all, it happens that the wider human and planetary good happens to flow alongside their own advantage?

I would not want you to think I am too much of a purist. Hypocrisy and humbug are often valuable. We need lots of sleeping dogs to have their peace.

But when a firm announces a CSR programme, half-way sensible people start digging (it’s better than running straight for the doors). Maybe we’ll never know what Shell’s motives really are. One casualty of the CSR process is honesty: outsiders will never now know what Shell is really thinking. We have to speculate.

Using Nigeria as a poster child

My main guess is this: Shell has decided that it will turn the Niger Delta into a poster child. It will do a very great deal to buy itself a good global reputation by its work there.

I believe that Shell’s imprudent comments on the Gulf of Mexico disaster reveals boardroom-level angst about the likely consequences of the spill for the entire petroleum industry. That will have tempted the company to over-hype the virtue of its CSR spend in Nigeria and throw into the mix some loose global commitments to listen more to stakeholders.

There must also be a very big Nigerian dimension. It takes very little cynicism to speculate that locally, regionally and nationally in Nigeria, these new CSR schemes have been designed to do some quite shabby or at any rate covert and unseen work whilst flying the CSR banner.

So I can’t help feeling that Shell’s response is a self-interested and cynical abuse of CSR and all that it should stand for.

Peter Vosper puts his foot in it

There is something comic in hearing CEO Peter Voser say:

“At long last the words ‘stakeholder’ and ‘sustainable’ will actually mean something. CSR-ND means planning not just for short-term profits, but for what actually matters, including the viability of the planet itself.”

It’s as though he’s admitting that CSR has been hogwash so far, and this time it isn’t, honest injun. But maybe his successor, and his successor’s successor, will be making similar declarations that CSR is at last the real clean, saintly, truthful thing.

Shell’s stunt may work on most levels. The Niger Delta may be a slightly nicer and happier place. Shell may secure its place in Nigeria’s tortuous political economy. The firm may acquire a global bloom at tolerable cost. It may be able to feel better about itself.

I still think it matters to say that corporate culture is polluted when the necessary, expedient and self-interested are dressed-up as outward looking, transformative and virtuous. I don’t know how much narrow self-interest and canny show-boating lies behind this new strategy of Shell’s, but my guess is that there’s a fair bit of it. Anyone interested in the well-being of Shell, but especially of Nigeria, ought to keep watching and inquiring.

Maybe we should be asking Shell to archive its discussions on this CSR programme, and promise to publish them in 30 years. In the interests of intellectual and moral sustainability, you understand.

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As the three companies faced their interrogators, behind sat protesters wearing T-shirts embossed “Energy shouldn’t cost lives”. When the proceedings closed the protesters screamed at the BP spokesman, “Hey, Hey, Lamar MacKay, how many fish did you kill today?” They chanted “Boycott BP”. They seemed to have friends in the Senate. Bob Menendez, the Democratic senator from New Jersey said:

“We were told that the Titanic was so technologically advanced that it couldn’t sink, and we were told that this well was so technologically advanced that it couldn’t spill. Unfortunately both of these technological marvels ended in tragedy.”

Actually, nobody ever said that either accident couldn’t happen. Though the makers of the Titanic and BP both at some point understated the potential risk involved in their respective challenges. That’s all the more reason, I believe, for BP to use this latest incident to set the record straight with the public about the realities of its business.

But right now the White House has vowed to “keep a boot to the throat” of BP. That’s an understandable response while the oil flows unchecked from the seabed. That does not mean that either PRs or BP should see it that way.

However, PR dogma suggests that BP should bite its tongue. The PR rulebook, designed to maintain a licence to operate, opines that if people think BP’s the villain it should act like one. Larry Smith of the Institute for Crisis Management and Timothy Coombs of Eastern Illinois University advocated this viewpoint to Slate:

[It's] literally true: BP owns the oil but not the rig. But it’s a shoddy communications strategy, says Smith. Wherever the fault lies, BP shouldn’t be splitting hairs. Companies should take the fall and work out recriminations behind closed doors, says Coombs. For example, when the chain Taco Johns had an E. coli outbreak, it didn’t publicly blame the lettuce supplier. It took responsibility. And, of course, sued the lettuce supplier later.

Effectively, Coombs is arguing that BP should adopt a cynical strategy in which it says one thing in private and another in public. His logic – and that of most PRs – is that the truth is too nuanced and complex for the public to comprehend. The argument goes that perception is everything. As the WSJ explained, they’ve got a point:

When you consider that analysts’ worst case scenarios put the eventual cost to BP at around $8 billion, yet $30 billion has been wiped off the company’s market capitalization since the crisis began, it becomes clear that this reputational damage has a value.

The problem is that by accepting full responsibility for the accident, BP would promote itself (dishonestly) as incompetent. How would that help maintain its credibility and reputation? Hence, I much prefer BP chief executive Tony Hayward’s strategy of accepting full responsibility for cleaning up the mess caused by its oil, while quietly but firmly disputing that it caused or was responsible for the accident. But Malcolm Gooderham, MD, TLG Communications, dubbed Hayward’s approach a “Miss” in PR Week. He also contrasted Hayward’s stance to that of his predecessor, Lord Browne:

“The virtue of Browne’s tenure was that despite the disasters, he is revered because of his strategic achievements. The challenge for BP today is to define a new thought leadership agenda.”

Browne’s thought leadership led him to re-brand British Petroleum as Beyond Petroleum. It was deceptive positioning and slightly bonkers to boot. To his credit, when Hayward took control of BP, he quietly downgraded the tag-line’s prominence. It now merely serves as “shorthand for what we do”, which is petroleum, and it hardly features at all in BP’s PR. What’s more, the irony of BP’s current plight is that it follows Mr Hayward’s determination to re-oritentate itself on technological competence rather than geo-political flair.

So what’s my advice to BP today?

• BP should concentrate on proving itself committed and competent as it cleans up the mess and reconsiders safety strategies
• BP has to speak with one voice in public and in private, now and in the future
• BP should use this crisis to educate the media, public and political elite about the realities of complex accountability
• BP should seek to lay the blame wherever the facts take them, even if some more of it falls on them
• BP should remind the world that energy is bottled force; BP is as good as any in handling the hazards involved in fueling our world
• BP should state the Browne years of Texas and Alaska lapses are behind them and what happened in the Gulf of Mexico was not caused by the same internal flaws
• BP needs to stress that the oil that’s now being drilled is located in inhospitable conditions and has inescapable risks
• BP should repeat and repeat that whatever lessons can be learned will be learned and that no stone will be left unturned in discovering them.

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Before we go on, it is worth building on part 1′s theme: what exactly do the Stockholm Accords expect to achieve? Here’s what the event’s website says about their objective:

“The aim of the Stockholm Accords is to articulate and establish the role of public relations in the “communicativeorganization”[sic] within a fast-evolving digital and value-network society.”

In essence, the Accords suppose that we live in a new “networked society in which communicative organizations are vital to organisational success” (forgive the clumsy words, they’re theirs, not mine).

In essence my beef is that this exercise over-complicates everything. Most PR is an effort to help clients both be and appear more attractive. You can usefully enrich that proposition by noting that there are internal and external audiences; that everything about an organisation can be part of its good or bad messages; that building up a good reputation may be useful for when things go wrong (as they will). One may want to stress how non-stop and intrusive and persistent modern observers are. Perversely, the globalised, modern world is more like a village than ever: everybody thinks everything is their business.

As I argued in part 1, the Accords ignore the obvious: society is, and always has been, networks personified. Moreover, all human interaction depends upon communication and relationships, or nothing whatever would have been or will ever be achieved. Of course, the digital bit is sort of new. I say sort of because the internet is now second or third generation. It strikes me that the Accords’ authors are really saying that their thinking boils down to considering technology’s influence on human behaviour. This narrow obsession has sent them and their new definition of PR’s role off in the wrong direction.

There’s no wisdom in a mob, but there’s often treasure buried in crowds. So, of course, I accept there is something in Reed’s Law. (See: “The Law of the Pack”). I accept its proposition that digital networks can scale exponentially by transforming technological platforms into social networks that add value. But in the business world, Reed’s Law is just a statement of potential. It remains a theoretical construct that might prove to be hopeless if taken too far. The commercial world is in recession. It is not currently up for the risky experimentation and investment that would be required to test the weaknesses and strengths of Reed’s Law. This is something I discussed in part 1 No. 2 & No. 14 (without mentioning Reed). In part 1, I also cited SM’s irrelevance in the British General Election and its only fleeting influence on American politics.

My charge is that the authors of the Stockholm Accords lack historical or sociological insight. Most of today’s social developments from the breakdown of traditional politics, to the shift in community alignments, or the fall of religious influence, to the decline in trust in, and authority of, traditional institutions, pre-dates the internet.

In other words, the internet and social media usage were shaped in the wake of already existing currents, including the already declining mass media. That was particularly the case with SM, which is more often used as a retreat from public life rather than as its lifeblood. That’s one thing China’s SM usage has in common with the West’s. There’s mass disengagement and passivity in society, which is the polar opposite of empowerment, which so many PRs like to crow about. That’s not to say SM is irrelevant, or that it does not have influence or empower people, sometimes, in this or that circumstance or usage.

It is the failure of the Stockholm Accords to look at these real world tensions during the boom and now during the recession, and the Accords’ myopic worship of all things digital, which I criticise. But let me make it plain. This blog celebrates technology and advocates innovation. It is obsessed with understanding them and with exploiting their potential. But it does not endorse technological determinism, which I believe the Accords’ authors do.

So, that’s the preamble. Let’s now look at the Stockholm Accords one by one.

Stockholm Accords on governance:

“The increasingly adopted stakeholder governance model empowers board members and organisational leaders as ultimate custodians of stakeholder relationship strategies and policies, as well as of monitoring their implementation.

“In today’s value networks, a communicative organization requires timely knowledge of economic, social, political, legal and environmental developments, as well as opportunities and risks affecting the organisation, its direction, its actions and its communication.

“Public relations professionals:
• co-create organizational values, principles, strategies, policies and processes;
• constantly report on the dynamics of stakeholder involvement;
• inform, shape the organisation’s overall communication abilities;
•  measure, evaluate and account for results;
• deliver timely analysis and recommendations to ensure an effective governance of stakeholder relationships, enhancing transparency, trust and sustaining the organisation’s ‘licence to operate.’”

My reply

I dealt with the above extensively in part 1. But let me now add a few more brief remarks;

• The stakeholder governance model or doctrine is seriously flawed. An organisation can’t look to outsiders as the first source of its probity and efficiency.
• Firms, governments and institutions primarily pursue self-interest. This will include a measure of enlightened and widened self-interest.
• PR is indeed uniquely useful in our complicated, media-orientated times. But we should beware over-stating the newness of our skills and roles.

Stockholm Accords on management:

“Effective and timely decision-making related to operations and resource management are essential for organizations seeking to enhance their license to operate. These management choices must be sensitive to the concerns of internal and external stakeholders, seeking equilibrium between societal and organizational goals.
A communicative organization listens to its stakeholders, uses this input to improve the quality of its decisions, and communicates through its behavior.

“Public relations professionals:
° help understand and interpret broader societal, political and economic interests and aspirations;
° participate to the solution of organizational issues and lead those that are particularly focused on stakeholder relationships;
° help to legitimize the organization; by increasing the communicative value of products, processes, services; and building financial, legal, relational and operational capital.”

My reply

Yes, PRs are the professional diplomats of the modern organisation’s internal and external relationships. But we won’t do the job better by having theories and ambitions which are too fancy for the valuable but recognisable work they have to do. Way too much of the Stockholm Accords’ approach brings in more posy sociology, management-speak, media studies, post modern guff. This is the way to lose the interest of clients and audiences alike.

Stockholm Accords on sustainability:

“An organization’s sustainability is based on balancing today’s demands with the ability to meet future needs, based on economic, environmental and social dimensions.

“In this network society, sustainability leadership offers a transformational opportunity for the communicative organization to enhance it’s license to operate and demonstrate success across the triple bottom  line.- economic, social and environmental.

“Public relations professionals identify, involve and engage key stakeholders contributing to appropriate sustainability policies and programs by:
• interpreting society’s expectations for sound economical, social and environmental investments that show a return to the organization (the advocate);
• creating a listening culture – an open system that allows the organization to anticipate, adapt and respond (the listener);
• ensuring stakeholder participation to identify what information should be transparently and authentically reported (the reporter);
• going beyond today’s priorities to anticipate the needs of tomorrow, by engaging stakeholders and management in long-term thinking (the leader).”

My reply

Sustainability has to do with robustness and flexibility, which can be darn hard things to reconcile. We need to be modest: sustainability is about the future, a thing we know very little about. We should not pretend to know the recipe for survival (or to assume, for instance, that environmentalists are any cleverer at it than supposedly un-green capitalists).

Stockholm Accords on the new boundaries of internal communication:

“Internal communication enhances recruitment, retention, development of employee loyalty and commitment to organizational goals by ever more diverse and segmented publics.

“In the network society a communicative organization goes far beyond today’s traditional definition of full-time employees, understanding that internal stakeholders now include full-timers with tenure generally shortening, part-timers, seasonal employees, contractors, consultants, suppliers, agents, distributors, volunteers and more.

“Public relations professionals constantly address:
° how organizational leaders communicate;
° how knowledge is shared;
° how decisions are made;
° how processes and structures are created;
° and expand communication to include many boundary publics that are also often considered as highly trusted sources of information about the organization and essential players contributing to the organization’s success.”

My reply

Yes, many of an organisation’s relationships are now both important and fleeting or arm’s length. Actually, that will often require an unattractive wariness. The need for secrecy, privacy and caution is greater than ever and has to be communicated as well as possible.

Stockholm Accords on the new boundaries of external communication:

“The network society mandates that a communicative organization expand its scope and skills to focus on customers*, investors*, communities*, governments*, active citizenship groups*,  industry groups*, mainstream, digital and social media*, and other situational stakeholders*.

“Public relations professionals:
° promote, support and contribute to modify products, services or processes;
° bring the voice of the organization into regulatory and community decisions;
° adopt social networking and research skills and tools to listen to stakeholder demands and report to management so that they may be appropriately interpreted and, where relevant and effective, integrated into the decision making process;
° strengthen brand loyalty* and equity*, thus reinforcing the organization’s license to operate;
° work with all organizational functions, through every step of production and delivery, to craft and implement effective communication programs*.
° actively participate in dialogue*, evaluate and measure results*, and accordingly adjust their practices.”

My reply

This looks like PR’s pitch to stick its nose in everywhere. Nice try, and to some extent justified.

Stockholm Accords on co-ordination of internal and external communication:

“In value networks, each communicative issue* is multi faceted*, multi stakeholder* and inter relational within and between different networks* and positioned in diverse legal frameworks.

“The communicative organization must balance global transparency, finite resources and time sensitive demands dealing with dynamic changes in inside/outside territorial borders and new conflicts of interests emerging from multiple stakeholder participation*.
Dialogue with internal, boundary and external stakeholders must be coordinated with the organization’s mission*, vision*, values*, implementation*, promises*, as well as actions* and behaviors*.

“Public Relations professionals:
° research, develop, monitor and adjust organizational behavior and communication behaviors providing leadership for issues based on stakeholder and societal relationships;
° develop a knowledge base that includes social and psychological sciences, best practices and formative research to create, evaluate, measure and implement programs for continuous improvement.”

My reply

This looks like a pitch for PRs to be rulers of the universe: all-seeing, all-knowing, etc. I don’t mind this accord but it is not so much edifying and energising as yawn-making. How about: “Almost every aspect of your work will convey a message about your organisation, so expect a good PR to take an interest in everything you do.”

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From the Catholic Church to Nestlé, famously troubled for years over its alternatives to mother’s milk. Synchronicity, man (new readers go here).

This time, the firm has tangled with the Rainbow Warriors rather than feminists.

The story started when Greenpeace posted a video on YouTube (view it here) that attacked Nestlé’s use of supposedly unsustainably sourced Indonesian palm oil in its products. The video showed a man unwrapping an orang-utans’s finger from his Kit Kat snack. As he eats it he gets blood all over his face and desk.

Nestlé had YouTube take down the video because it breached copyright (perhaps also because they didn’t like the message). Greenpeace then alerted the media about the ban. That provoked a mob to descend on Nestlé’s Facebook homepage.  Some of the comments they left there were offensive:

“If you or I were to kill a person we’d be put in jail. Nestle has killed tens of thousands of people and it’s just considered a part and parcel of the job. Nestle has killed more people then most terriorists! But that’s okay, people need Nestle products.”

I imagine the blogger was harking back to the baby milk saga.

In response to such tosh, somebody at Nestlé lost their cool, started pointing out spelling mistakes and became sarcastic:

“So, let’s see, we have to be well-mannered all the time but it’s perfectly acceptable to refer to us as everything from idiots right the way down to sons of Satan?”

The answer to Nestlé’s question is yes, you’ve got to take it. If Nestlé wants a presence on SM it must rise above the crowd. Having entered the lion’s den and opened up its Facebook page to all comers, Nestlé has to behave in a restrained and corporate-like fashion if it wants to hang on to its reputation (see some of the damage here here here).

Here’s the thing: Social Media (SM) maybe sado-masochism for the individuals who trade prejudices and insults on the web. It’s mostly masochism for corporates.

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Most of the accusations of sexual abuse go back to the 1970s. That was a period during which such practices were commonplace, if not common. It was only in the 1990s that the extent of the problem became a major concern for society.

What was uncovered was that in state-run care homes, Scout troops, St John’s Ambulance Brigade, public schools and religious bodies of different denominations across Europe there were similar scandals lurking under the surface. So the Pope in his letter of apology was right to say that:

“It is true, as many in your country [Ireland] have pointed out, that the problem of child abuse is peculiar neither to Ireland nor to the Church.”

There are some other punches we should pull. I, too, am enticed by the argument that enforced celibacy among Catholic priests encourages such appalling conduct. But then again, how do we explain the behaviour of married women and men who behave the same way? Are young boys more at risk from gay men than from those who say they’re straight? No. We all know it is not that simple.

The goings-on in the British state’s care homes were probably far worse than what went on in the Catholic Church’s domain. The scale of abuse in British public schools between older and younger boys and teachers and all their boys was rampant. Yet that is often the subject of giggles on TV chats shows among celebs who attended them. It seems that some forms of sexual abuse are more lightly thought of than others.

The Catholic Church, like many other religious bodies, does good work. Some of the most formidable minds I’ve ever encountered were the product of Catholic Schools. There is still much to be said in favour of the Church. Besides, for those who share its faith, its mission and purpose are way beyond the terrestrial. It would be a shame if its great (and perhaps inestimable) value was obscured by the real fact of the damage some of its people did and whose harm its culture was not well-adapted to deal with.

But we’re gathered here as PRs, whether in the sight of the Lord or not. Have the RCs handled this well? On recent evidence, I’d say they have. They’ve apologised and shown a determination to change the bits of their world which were wrong. They’ve also come out fighting: they’ve noted that their sins were the sins of the age. Actually, for the RC hierarchy, that takes a bit of courage, since their usual USP and pitch is to declare themselves timelessly aloof from the crisis of the times. But it’s also rather Vatican II: that is, it is in line with a determination to remind itself and the sceptical world that it is a human institution with a divine aspiration to be of use to real people, now.

I’d say the Church is on the way to fixing this crisis. It then faces the long haul of surviving in a secular, populist, demotic world in which almost all its messages – even compared with those of other churches – look very hard to sell. But, hell, the RCs never did have an easy pitch, and they’ve survived – and sometimes outlived – plenty of critics before now.

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The problem is that “get it right” often conflicts with “get it fast”. Three Mile Island got it fast and wrong; there had been a core meltdown and they said they’d be back online soon. The British police embarrassingly got it fast and wrong when they said emphatically they’d shot a terrorist at Stockwell tube; he turned out to be an innocent Brazilian on his way to work. They got it wrong again when Ian Tomlinson died at the G20 summit. The police said he never came into contact with them; this innocent bystander was shown later on video being hit by police.

So the urge to “get it out” and “get it over” can make the crisis live on embarrassingly forever as a stain on the reputation, as it did in all these cases.

“Get it right” should always be what matters most. So I’d add to Mr. Buffett’s advice that if getting it right means a crisis-hit body pauses for thought while the heat’s on, so be it.

The media may be hacked off at first if the people at the centre of the storm beg for forbearance whilst they work out exactly what’s happened. But that phase will pass and then what’s remembered is that no-one got fobbed off with lies. What’s more, if a culture of quick response gets too rooted, organisations develop a line – a self-serving line – which can’t then be shifted in favour of the truth.

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As somebody who once was accused of organising a race riot in Handsworth, Birmingham, I know something about definitions.

My first defence was to say that if it was organised, it was not a riot. The police perhaps kindly ignored that challenging thought and moved on to my second line, and accepted it: I was attending a conference in London when it happened.

But I digress. Here’s some examples of some crises.

When Edward VIII abdicated from the British throne in 1936 so that he could marry his American lover Wallis Simpson, it created a crisis. It did so because it threatened the nation’s sense of itself and might even have wobbled the UK’s constitution. The credit crunch was a crisis. It threatened to very severely disrupt capitalism by destroying huge amounts of wealth (especially savings) and confidence. Note: what actually happened was very nasty but has so far fallen well short of what was threatened. So it was a crisis and we seem to have got through it.

Those events threatened abrupt or decisive change. They created very real and deep fear. The worst outcomes were seriously in play, and did not materialise.

There are, of course, cases where dramas needlessly become full-blown crises.

For example, there are the cases where people imagine a danger which would be dreadful if it did occur. One was Three Mile Island in 1979. The ironic thing about Three Mile Island was that the worst case scenario core meltdown occurred within the first minutes of the accident. It was such a non-event that nobody noticed, not even the plant’s operators. Meanwhile, the world’s media stood outside the plant for weeks hyping up the “what ifs”. (BTW: Three Mile Island still generates electricity today, just as electricity was generated by Chernobyl’s nuclear reactors until very recently.)

Here’s another twist. Disasters are quite often not crises. That’s to say, a chaos is unleashed, but nothing very much is threatened. When Richard Branson interrupted his holiday to fly to the scene of a Cumbrian train crash in 2007, that was not crisis management, so much as good PR and (for all we know) a compassionate act of a good boss responding to a disaster. Of course, if Branson hadn’t turned up, and was thought callous, that might have produced a drama for Virgin, since one cannot afford nowadays to be invisible at such moments. Even so, it would not have been a crisis.

Interestingly, when it comes to accidents, firms rarely get punished as hard as did Windscale, Value Jet, and Union Carbide, all of which anyway survived their genuine crises. Yet it is at least possible that rebranding a disaster or crisis-hit organisation merely produces a legacy of bad-taste jokes and ill-feeling about slippery PR. That’s to say, there may be a deep understanding among the public that accidents do happen. That understanding can withstand, I maintain, the media approach (and victim reproach) which tend to assume that total safety is available and would have been achieved except for the villainy of firms and governments.

As people speculate about Toyota’s fate, the fact is that there’s never been a major car firm destroyed by a recall or by an accident. Companies destroyed by sudden events are normally in the class of totally corrupt Enron and its grey accomplice Arthur Andersen. In both companies trust collapsed because their skulduggery accurately defined what their brands were about. Their reputations were beyond repair, and quite rightly so.

Then there’s the likes of Ratners. The collapse of that company had more to do with a loss of nerve in response to a gaffe than, arguably, necessity dictated. But Ratners’ experience was another exception that stands out precisely for that reason. If you doubt that, just look at the positive share prices of oil companies today and then review their accident-prone histories.

But let’s stay contemporary here. Toyota’s worldwide recall is not a crisis in the true sense of the term. It is actually a drama focused on a narrow range of issues. The chances are slim that it will become a long-term disaster for Toyota. That’s not to say that slow sales, halted production lines and global recalls of millions of cars is business as usual. It is just to remind us to retain a sense of perspective.

For a start, who’s panicking? Who thinks their Toyota (their car, their share, their job) is really threatened here? Here’s the important thought: we see this storm and we think, “Toyota’s a damn good car-maker and will be an even better one after this”. Maybe a few victims (some half-embarrassed that they panicked instead of finding neutral), with their US lawyers rubbing their hands behind them. But I don’t think anyone seriously believes that Toyota’s existence is threatened by its current problems. Though I imagine that the pressure must be bloody uncomfortable for Toyota’s bosses, and not good for the nerves of Japan’s stock exchange in the midst of recession.

Before we lose our nerve, or tell Toyota to, we should remind ourselves how well Ford survived its tribulations with its “exploding” fuel tanks in the Pinto and Mercury Bobcats (1.5 vehicle recall). It was claimed they killed 27 people. Ford ordered the recall – and did not contest the accusations – because it was more motivated by supposed public perception than by what it knew to be true (The Suicidal Corporation: How Big Business Fails America, by Paul H Weaver, a Touch Stone Book).

So most things labeled as being a crises aren’t any such thing.

We PRs need to consider very carefully whether we should avoid the elephant trap which is laid for us here. We should perhaps develop a determination to avoid reacting to every drama and panic and even disaster as though it were a crisis for our clients. The media, after all, is in the business of making a crisis out of drama, and we all too often risk doing half their work for them.

Heather Yaxley writing on PR Conversations hit the notes well recently. She attacked PR crisis management theorists for their panicky hyper-active overreaction to dramas:

Tell it fast becomes tell it before you know anything.  Tell it all means let the media and its rent-a-quote experts speculate about worst case scenarios.  Be open means unlimited social media engagement (regardless of what the legal or other ramifications may be). Have the CEO (or celebrity if a personal faux pas has occurred) lead communications with mandatory appearances on chatshows, a tour of news stations,  and a YouTube apology.  Mea culpa – the universal panacea: “I’m sorry if…” – anyone resisting the calls is bullied until they comply.  The pound of flesh must be paid.

I fear she rightly roughs me up a little for my recent piece Where was Mr Toyoda yesterday? She certainly compellingly argues that every so-called crisis is different. She adds that too many PRs try to impose commoditized crisis management plans onto unique situations:

It’s a comfort blanket of how to…, what not to do…, common mistakes and miracle cures.

I would add that PRs often corrupt the everyday management of risk in business. The sensible cry from PRs for clients to stay ahead of the game risks turning the commonsense desire to spot problems before they occur into crisis management paranoia.

The result is the creation of a risk-adverse culture which inhibits innovation. That’s a point that is well argued in Paul H. Weaver’s The Suicidal Corporation. It is why I’m recommending people read it. The creation of a risk-adverse culture helps spread indecision and insecurity. During media hurricanes it becomes a sort of PR own goal. In other words, making decisions under under pressure calls for risk-taking, but risk-taking like winning and losing is habit forming.

The truth is that people admire and respect risk-takers and they make allowances for their failures. Moreover, unpopularity in the media is just as temporary and superficial as popularity. Bad headlines don’t destroy good reputations, no more than positive ones make them. Good reputations are based on innovation, delivery on promises and a certain arrogance based on success. They are sustained by people’s experience of the brand  (El Buli, Ryanair, Apple, Toyota and much more).

Hence, rather than becoming hyper-active advocates of risk-aversion, PRs should instead do more to inspire courage and balls into the mindset of their clients. PRs could do much more to push back on media and other agendas and to help their clients ride out the storms they face with their integrity intact.

The reassuring lesson from most Toyota-type troubles is that consumers are as quick to forgive as they are to condemn. So I’ll risk a prediction. There’s every chance, as Insigna’s Jonathan Hemus says here in The Guardian, that Toyota will come out of its storm with its reputation enhanced (though his advice is too skewed toward institutionalized risk aversion for my liking).

So a crisis is a crisis when it threatens the viability of something or other. Otherwise it doesn’t qualify. The job of PRs is to make sure situations never do qualify or to clear up the mess if the you know what hits the fan.

Oh, I never did advocate that people riot, dread the thought. But I do own up to having been a revolutionary, which is something completely different.

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