Sandbu, economics leader writer at the Financial Times, explains:

“…decisions that transform and create economic value affect people’s lives. That makes them morally significant in many ways, the most obvious being how they determine whom the business activities enrich and whether they make people worse off in the process.” Page 16

Sandbu says Kant’s relevance as a philosopher rests on the stress he places on the intuitive primacy to moral thinking of universality and autonomous rational (informed) decision making:

“Rational autonomy, then–the will freely directed by reason–is the fundamental moral value: It is what moral action is and it is what freedom is. Acting against morality is to act against reason and, therefore, to be unfree, in thrall to one’s [or somebody else's] inclinations [manipulation].” Page 149

What is most useful about Kant’s thinking and Just Business‘s contribution is that they provide methodologies for thinking through business ethics. They also provide useful insights into how to develop PR strategies.

In essence, Sandbu argues that firms should align their moral values in the Kantian Enlightenment tradition, which says that people and institutions:

“Act in such a way that you treat humanity, whether in your own person or in the person of any other, always at the same time as end and never merely a means.” Page 149, quoting Kant

In defence of the great philosopher’s real-world relevance, Sandbu clarifies that:

“We should emphasize the ‘merely’. Kant does not say you may never treat someone else as instrumental to your own goals; that would rule out most business and, indeed, a lot of other innocent non-business human interaction.” Page 151

What Sandbu is saying is that if business, or any institution, wants to obtain consent for its activities – which is the licence to operate PRs seek to ensure – then it needs to be able to morally justify how it behaves. The key to success lies in being able to demonstrate that any other rational person in a similar position would have made similar choices. The premise is that whenever somebody’s pursuit of self interest is being restricted it can be justified if it can be shown:

“…that he would himself accept the principle that requires the limitation, if he did not seek to make an exception for himself. Similarly, whenever the social contract theory permits someone to pursue his self-interest in ways that harm the interests of others, it justifies this to them by showing that they themselves would have endorsed the principle permitting the conduct in question had they thought they had an equal chance to be in a position to benefit from doing the same.” Pages 179/180

This draws on the famous position of the social contract theoretician John Rawls: one should act in a way which creates a situation one wouldn’t mind being parachuted into. It is also like the position adopted by many global enterprises: they should behave in the worst-regulated countries much as they would in the best-regulated:

“It also provides a systematic approach to partial compliance theory, which deals with the moral rules governing how to behave when others violate morality (as opposed to the ideal compliance theory, which deals with the right thing to do provided everyone complies with the rules.” Page 196

This approach acknowledges that everybody has pre-determined objectives of some sort. Its practical value is that it helps us work out what business, or indeed any client, ought to do when faced with moral dilemmas.

Kant’s methodology helps us speak honestly and directly about difficult issues such as corporate social responsibility or worker and workplace-based rights:

We can [using Kant's philosophical reasoning] assess the right content of any particular right-claim by asking whether the purported rights protects the claimant’s rational autonomy. A right to organize would seem straightforward to defend on this basis; a right to periodic holidays with pay, in contrast, much more dubiously so. We can similarly begin to determine the content of our imperfect duties by considering, in the situations we find ourselves, which action would not merely respect the autonomy of others but actively promote it. In this light, periodic holidays with pay start to look more plausible…” Page 151

Sandbu also uses Kant’s logic in a way that I believe helps PRs avoid setting their clients up to be accused of greenwash. Using Kant’s moral reasoning, he argues that CSR that’s positioned by PRs as being good for the bottom line lacks moral value. That’s because, as he says, it is not because we will receive rewards that we should save drowning people:

“Only if the motivation behind them [CSR initiative] is to do ‘the right thing’ – that is, only if businesses in question see CSR as a categorical imperative, something they should do whether it benefits them or not – only then, according to Kant’s reasoning, can their action be said to be of moral worth.” Page 144

So, according to Kant, Sandbu and me, Milton Friedman (see part-1) was right about that issue all along.

Universal values matter

The proposition that there are universally valid moral values in an increasingly globalised world is not to be sniffed at. The recent Arab uprisings have vividly reminded us that the virtues of freedom, democracy and individualism have universal appeal.

The rebellions in Bahrain, Egypt, Libya, Tunisia and Yemen also undermine the claims of those who say there are multiple valid versions of human rights and value systems based on, say, Asian or Arabic values. Similar cultural-relativist views have been popularised within our own societies in the form of multi-cuturalism. However, the version of it that said that everybody’s culture had a right to exist in its own separatist bubble has been abandoned because it was seen as divisive and as undermining the values of western society (by western I mean Enlightenment-based, which speaks to the universal validity of our values). Though, of course, respect for each other’s traditions remains as important as ever.

When it comes to understanding universal values, Amartya Sen has helped us see things clearly:

“[The] so-called Asian values that are invoked to justify authoritarianism are not especially Asian in any specific sense… The people whose rights are being disputed are Asians, and [the] case for liberty and political rights turns ultimately on their basic importance…[This] is as strong in Asia as it is elsewhere.” Page 129, origin Amartya Sen, Human Rights and Asian Values

Sandbu’s criticism also focuses on the logical inconsistencies and moral shortcomings of the cultural relativist’s beliefs. He says, and I agree, that just because a majority of people believe something is right in China or Iran or Saudi Arabia, does not make it right:

“For the notion of moral advancement and moral decay presuppose that some moral beliefs are better than others, precisely what relativism denies. But surely, attempts at social reform or resistance against it, while variably noble or contemptible, are not illogical. Of the many things one could say about Martin Luther King or Strom Thurmond, that they made no sense is not one.” Page 56

So Sandbu is a realist. He accepts, as I believe we all should, that there is something positive and pragmatically useful in social relativism’s thinking. Cultural differences are owed respect and we cannot simply impose our society’s ways and means without modification in countries that oppose them. Sandbu qualifies this point well:

“…the least experience with the diversity of the human experience suggests different rules may indeed apply, morally speaking, in different cultural contexts. Realizing this does not require us to accept any alleged moral equivalence of national cultures – not just because such moral equivalence does not follow from an admission that cultural practices matter (that is the logical mistake of cultural relativism), but because there is nothing special about national cultures.” Page 187

To reconcile this seeming contradictory position he draws on the useful work of Donalson and Dunfree. They say there’s a need in such communities for “moral free space” and for “micro-social” contracts to function based on their own established norms. We should, they say, acknowledge the existence, up to a point, of an indeterminate social contract that’s based on pragmatism. I agree (see my CSR: it’s not the same in Lagos as in London).

Dare to question

Martin Sandbu has written neither a manifesto nor a textbook. But while Just Business is clearly judgmental, its author attractively invites readers to subject his prejudices and preferences to the same critical analysis he applies to the theories he rejects. So the book makes no bold claims to having resolved all of the issues Sandbu examines:

“The social contract approach is not without problems of its own.” Page 195

What emerges from Just Business is that Sandbu is no dogmatist. He does not say that we should accept Kant’s views on rational morality – his categorical imperatives – as being absolutely right. He acknowledges, there’s worthy debate about that. He even rebukes Kant, using Kant’s own methodology, for being absurd for arguing that one must always tell the truth, even to a murderer who demands to know where his victim is hiding out.

Moreover, Martin Sandbu urges us not to throw the baby out with the bathwater. He says that we need to rescue the best insights from Milton Friedman and stakeholder doctrine, not to mention conventionalism, consequentialism and utilitarianism. I agree.

Just Business: Arguments in Business Ethics

Martin Sandbu, Wharton School, University of Pennsylvania
Pearson, 2011.
ISBN-10: 0205697755  ISBN-13:  9780205697755

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1. Cant or Kant? PR-think gets heavy (part 1)

Yet how our clients juggle individual moral rights, social roles and social conventions cuts to the heart of what PRs communicate. As Martin Sandbu, economics leader writer at the FT, says in his new and accessible book, Just Business – Arguments in Business Ethics, philosophical thought can illuminate how these processes are managed.

Sandbu begins by ripping to pieces the two dominant, and conflicting, management mantras that guide business decision making today: Milton Friedman’s shareholder primacy theory and stakeholder doctrine. He then uses Kant’s methodology to put forward what I consider to have the makings of a superior alternative.

First, he interrogates Milton Friedman’s managing-for-shareholders mantra and finds inconsistencies inherent in the theory, which casts doubt on its usefulness as a guide to action:

“Friedman himself admits to qualifications on shareholder primacy. He says that mangers’ responsibility is to conduct the business in accordance with [shareholders'] desires, which generally will be to make as much money as possible while conforming to the basic rules of society, both those embodied in law and those embodied in ethical custom. But this is as unhelpful as it is eloquent. What is a manager to do if shareholders do not particularly care for ‘conforming to the basic rules of society’ – whether those of the law or those of ethical custom? …..

“…if by ethical custom we mean the morality conventionally believed by a majority in society, it could conceivably be the case that conventional moral beliefs require society to be ‘socially responsible’, even against the desires of shareholders. If so, conforming to ethical custom would bind managers to pursing ‘socially responsibility’ to the detriment of shareholder profit, which is surely the opposite of what was intended.” Page 20

I have to agree with Sandbu. There is a contradiction, though we both agree there’s also much to admire at the heart of Friedman’s position, not least when it comes to property and shareholder rights.

However, while Sandbu is tough on Friedman, he reserves most of his wrath for the incoherencies inherent in stakeholder theory. He observes:

“The imperialist nature of the stakeholder concept – its tendency to include an ever wider range of groups within the orbit of ‘managing for stakeholders’ – is part of what is wrong with stakeholder theory. For the more groups count as stakeholders, the less plausible it becomes to claim that managers either can or should run their business in the interest of all of them. Even if we set aside the difficulty of identifying who is and who is not a stakeholder, without which the admonition to ‘manage for stakeholders’ is rather unhelpful, there remains the problem of what exactly it means to manage in their interest. For, obviously, different groups have different interests, and sometimes those interests conflict. If we think of stakeholder theory as saying that managers should maximize the benefits of stakeholder groups – much as shareholding primacy says they should maximize the return for shareholders – we are hampered by the inconvenient mathematical truth that it is impossible to maximize two or more objectives simultaneously. If, alternatively, we think of the theory as saying that managers are the agents of stakeholders – much as shareholder primacy make managers the agents of the shareholders – we shall quickly find managers stymied by duties that conflict with one another. Shareholder primacy does not suffer from those problems. Even though it is mistaken in claiming managers’ duty is to maximize profit, there is at least no incoherence in what that duty, if it is actually applied, would consist of.” Pages 25/26

The real problem with stakeholder theory, according to Sandbu, is that it lacks a coherent (logical) normative core that answers the question for whom business should be managed. Stakeholder doctrine cannot identify those stakeholders with an intrinsic moral importance (shareholders) from those with an instrumental moral value. Moreover, as R Edward Freeman, the guru of stakeholder theory, puts it, there are a number of stakeholder theories each with their very own normative cores. Sandbu remarks:

“If there is no one definitive stakeholder theory that specifies the moral status of stakeholder groups and the duties of management, all that stakeholder approach per se does is to underline that such a specification is necessary.” Page 28

Amusingly, Sandbu concludes that stakeholder theory is not a theory at all but merely an acknowledgement that business is a moralized activity:

“Since that is something we already knew, we do best by simply leaving the term ‘stakeholder theory’ behind.” Page 28

So, having shown how the existing “philosophical” and theoretical frameworks are deficient, let’s look at Martin Sandbu’s proposed alternative. He suggests, and I tend to concur, that a social contract approach, which draws heavily but not uncritically on the work of John Rawls, provides a more durable framework for corporate image-building. Here, in Martin Sandbu’s words, is why the social contract approach to business and reputation management is so compelling:

“Once we acknowledge that business behavior must be morally justified and that mere social convention about norms cannot provide that justification, we recognize the need for principles, external to socially defined norms, that can adjudicate the truth and falsity of the claims those norms imply about what business ought to do. The metaphor of contract, the archetypal form of human intercourse in the economic realm, should be particularly congenial to those seeking an appeal of offering a general method for thinking about specific problems by focusing on what rational persons in an appropriate contracting situation would endorse. This is also its moral appeal: Unlike utilitarianism, social contract theory formalizes the need to justify morality’s commands to all affected individuals.” Page 179

So, how realistic would it be to adopt a social contract approach based on Kantian morality? Sandbu says:

“…the reasoning must be done in the face of the concrete challenges one may face. The true test of the social contract approach, or any other theory of business ethics, is whether it can help business people move from denial or confusion that recognitions of moral dilemmas often trigger, toward a more stable reflective equilibrium.” Page 195

To give us a guide into how Kantian logic could be applied to real-life corporate dilemmas, he uses it forensically to examine some classic PR case studies. He pores over Texaco’s oil spills in Ecuador, Enron’s fraud, Guidant keeping quiet about its faulty defibrillators, Google’s support for state censorship in China, LeviStrauss’s child labour scandal, executive pay and remuneration, and sub-prime mortgages, to name a few among many.

Turning to the practicalities of his approach, he says that the normative conventions of corporate cultures of, say, Microsoft and Google, might well require different moral codes of behaviours for their internal and external communication (variety will remain powerful differentiators).

Indeed, it strikes me that my Ryanair case study – perhaps not as Sandbu might like – highlights a robust and social contract-type approach to a firm’s staff, customers and suppliers. Arguably, Ryanair has re-educated a whole industry in a whole new set of normative conventions, ones that have become accepted as the price of low-cost flights and commercial success. It also strikes me that the banks are in dire need right now of a social contract, though perhaps one that is nothing like Ryanair’s (though don’t get me wrong, I’m a big fan of the airline).

But Sandbu reminds us – as perhaps Michael O’Leary never would – that profit is not everything:

“…there are a host of management theories that say that it is good for business to respect workers as rationally autonomous beings. In contrast, Kantian ethical theory argues that respecting autonomy is morally required, whether or not it helps the bottom line.” Page 153

Martin Sandbu is on to something. What he writes about is very much a PR’s concern; it addresses what PRs do and what value they add to business and modern institutions.

His work suggests (at any rate I infer from it) that firms (and our clients in general) need to apply quite tough and honest rules to the contract they are seeking to strike with the outside world. When the contract is more self-interested than obviously aspirational, the underpinning of their case can be both moral and pragmatic. PRs should be skilled in helping clients develop that contract, with its curious blend of the selfish and the virtuous. PRs, of course, need to become especially skilled at framing narratives that are not full of the flaws that Sandbu exposes.

At the very least, I hope that corporate ethics, conflict resolution and reputation management will increasingly be influenced by the ideas Martin Sandbu explores in Just Business.

Just Business: Arguments in Business Ethics
Martin Sandbu, Wharton School, University of Pennsylvania
Pearson, 2011.
ISBN-10: 0205697755  ISBN-13:  9780205697755

No related pages.

Here’s the essence of Professor Karnani’s case:

“Companies that simply do everything they can to boost profits will end up increasing social welfare. In circumstances in which profits and social welfare are in direct opposition, an appeal to corporate social responsibility will almost always be ineffective, because executives are unlikely to act voluntarily in the public interest and against shareholder interests.”

Here’s the essence of Mr. Edelman’s reply:

“[Edelman's case studies] demonstrate that contrary to Karnani’s assertion, the decision isn’t whether to run an effective, “smart” business or a socially responsible, engaged one. Performance with purpose (a term used by PepsiCo CEO Indra Nooyi) is not an either/or proposition.”

Now, as it happens, Richard Edelman makes a good point. But he also misses it completely. The core social purpose of a corporation is to provide whatever goods or services it is in business to deliver – be that street cleaning, cigarettes, incubators, medicines, machine guns or bubble gum. Mr Edelman, in contrast, believes that a smart business is an engaged one with a purpose. Engaged in what else other than what it does, I ask.

Mr. Edelman tries to explain it with three examples drawn from his client base:

“Unilever’s Omo Detergent adopted the “Dirt is Good” campaign – aligning with the brand’s business proposition by asserting that “every child has the right” to be a child and get dirty. After fielding new academic research highlighting the importance of outside play for the physical and social development of children and engaging parents, governments and NGOs to take action, the campaign triggered real social change – Vietnamese schools agree to assess national provisions for school recess while the brand commits to build 100 playgrounds over three years.”

He’s shooting himself in the foot. Unilever’s campaign has self-interest at its core. The aim here is to produce more dirty children that will require the use of more of its product to clean up the mess. Moreover, from my experience as a parent, kids don’t need much encouragement to get their clothes dirty or to play outside (try stopping them).

He tells us how the Clorox Brita’s FilterForGood campaign:

“…inspires consumers – and communities – to take a personal pledge and even engage in (planet) healthy competition with others to reduce their bottled-water use, as well as informs them about other environmentally-friendly decisions that each can personally make.”

In essence, he’s positioning his client’s “healthy product” against the bottled water industry’s and mains suppliers’ supposedly environmentally unfriendly or unhealthy alternatives. That is, for as long as Brita remains a client and come the day Edelman represents, say, San Pellegrino, or has to convince us that a utility produces a product fit to drink straight from the tap. This should warn us that the “public interest” Mr. Edelman favours is often just the selfish interests of his clients.

Then, if those two weak cases weren’t enough, he adds:

“The Pepsi Refresh Project, partnering with NGOs and experts, is directly crowd sourcing ideas from consumers to foster innovation in social good – awarding more than $20 million this year to fund local community initiatives and ideas that refresh the world.”

Regardless of the trendy crowd sourcing, that’s just a classic – old-style – brand marketing and awareness-raising campaign. It is, actually, a very low budget one for a company with $9.4 billion in revenues.

One wonders why Mr. Edelman didn’t mention another esteemed client: Ryan Air. It is one which is likely to accuse Professor Karnani of being soft rather than harsh in his defence of profit. Ryan Air states unambiguously that shareholder value comes before its staff, customers, partners and suppliers. Ryan Air has little time for stakeholder PR or for CSR, except as the butt of jokes. Here’s the brief that Edelman pitched for:

“Wanted: PR firm who is able to LOL at the advertising gags, and doesn’t mind poking fun at expensive airports, rivals, prime ministers … and even popes! No precious, sensitive, politically correct or clock-watching publicists need apply. Long hours, stamina and patience of St. Christopher, the patron saint of travel, are all prequisites.”

Now, don’t get me wrong. I’m not against corporations acting responsibly or managing their risks properly. I accept Ryan Air is an outlier; though it is one which has moved an entire industry’s behaviour in its direction. It is just that most CSR is shallow dishonest nonsense that sails close to propaganda, as BP’s Beyond Petroleum clearly did.

It is precisely such transparent charades and double-speak that generates the disabling cynicism that undermines public confidence in modern institutions. So there’s something refreshing about Professor Karnani’s bluntness and Ryan Air’s Michael O’Leary’s loud mouth.

Of course, in one sense there’s a bit of voodoo coming from both Mr. Edelman and Professor Karnani. The problem with deciding between profit-first or profit-with-purpose is that they are difficult to separate. Firms live within society and have all kinds of unavoidable obligations to fulfill as they produce profit.

One has to ask some tough questions about Mr. Edelman’s motivation, however. His main concern seems not to be the public good as much as helping firms restore their credibility and by so doing avoid state interference in their affairs. He says:

“We are at a very important moment in the relationship between business and society. The catastrophic economic events of September 2008 undermined the confidence in the private sector’s ability to self-regulate. Bankruptcies of centerpiece companies in the global economy, such as GM, plus reputation issues for leaders in finance (Goldman Sachs), energy (BP) and transport (Toyota) have called into question the values of corporate leaders. In the race for public credibility, it is fortunate for business that its prime regulator, government, is not seen as a worthy replacement as the leader in the dance.”

My beef is not with what Mr. Edelman wants to achieve; a free and mostly self-regulated market place. It is with how he believes that he can win public acceptance for it. I rebel, as do most people who are moderately sceptical of corporate humbug, to his pandering to the more infantile elements of this discussion; you know, the audience who cannot (supposedly) be told the truth because it would destroy their illusions.

So, I’d like to leave you with what I think is an effective demolition of Mr. Edelman’s style of PR, by quoting Professor Karnani’s robust expose of it:

“Executives are hired to maximize profits; that is their responsibility to their company’s shareholders. Even if executives wanted to forgo some profit to benefit society, they could expect to lose their jobs if they tried—and be replaced by managers who would restore profit as the top priority. The movement for corporate social responsibility is in direct opposition, in such cases, to the movement for better corporate governance, which demands that managers fulfill their fiduciary duty to act in the shareholders’ interest or be relieved of their responsibilities. That’s one reason so many companies talk a great deal about social responsibility but do nothing—a tactic known as greenwashing.”

Exactly!

No related pages.

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.

No related pages.

The hacking of Google email accounts and the stealing of its worldwide log-in authentication code for every Google service, presumably by the Chinese military, threatened the brand’s core being. That’s because Google’s shareholder value depends on a combination of intellectual property and public trust, based on the exploitation of a worldwide web infrastructure it does not own or control. What’s more, Google can only optimise its money-making if its users divvy up more of their privacy in exchange for its world of “Free”.

So the pull-out from China was never about money. It was never about Google’s failure to gain market share in China. Neither was it about defending the right to the free flow of information or the freedom of speech. Google withdrew its co-operation with the Chinese government’s censorship of the internet in retaliation at the hacking of its users’ emails and the theft of the company’s property.

If Google’s users cannot rely on the privacy and security of the firm’s platforms, applications and services, then Google does not have a sustainable business model.

Google’s return to China – like its entry in to the market – comes with the implicit acceptance, however reluctantly conceded, that the government there has the right to restrict access to internet content. This time around, Google simply relocated its servers securely in Hong Kong. It has allowed the Great Firewall of China to censor access to them. It is a pragmatic compromise. As the BBC points out:

“The battle between Google and the Chinese government appears to have ended in a score-draw.”

Of course, Google’s reputation remains a victim of its split personality. On the one hand, the company was built on the premise of an ambiguous “Do No Evil” slogan and on the utopian notion of enabling unhindered free flow of data and information across the web. On the other, Google has always been a profit-driven, share-price sensitive animal, which pushes it to be pragmatic and not to be overly ideological in practice.

The latest development in China highlights how Google is growing up fast. It reveals a company which is learning how to keep hold of its integrity and USPs while remaining sensitive to the real-world forces and issues, many of which it is not in a position to influence. Nevertheless, Google has been scoring some own goals recently. One example was Google Buzz, which failed partly because its clumsy “auto-following contacts” in Gmail upset users. Another was the wifi privacy intrusions by Google’s mapping vehicles.

The PR challenge now for Google is to convince a sceptical world that it can be trusted long term with our personal and social networking details, viewing habits, interests and data. It’s my view that unless Google handles privacy issues well it will be replaced by the next big competitor that comes along. However, the news from China suggests that a grown up Google might survive into old age.

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I’m not qualified to know whether Mr Thiam was more right than wrong in seeking to buy AIA. What I do know is that too many CEOs believe that they are laws unto themselves or that today all stakeholders are equals.

So the assertion by Pru shareholders of their power to stop the bid for AIA is a timely reminder of where the priorities and corporate lines of accountability lie. The deal’s collapse makes it clear to CEOs everywhere that they must listen to their shareholders more.

I’ve been predicting that in the future shareholders will, and need to, assert their power more and more. That’s because – contrary to popular mythology – one of the lessons from the last boom and today’s bust is that shareholder-value was not over-valued so much as marginalised in the pursuit of short-term interests. Real long-term shareholder value was denigrated by management teams which ran companies more or less for their own benefit whilst covering themselves in the rhetoric of wider stakeholder interests.

My bottom line (and the firms’)? Shareholders may be quite good custodians of long-term value after all. Perhaps even better ones than the “stakeholders” who bang on about sustainability.

I’m not saying that always applies or is even what’s applying in this case. I’m saying that it’s wrong to assume that modern shareholders always fit the short-termist stereotype that’s foisted on them.

What’s more, it may be that Mr Thiam has understood where the long term prospects of the Pru really lie (it may be that his spate with shareholders was mostly about the price of AIA rather than his strategy).

The challenge now is for the Pru to repair its broken relationship with its shareholders, particularly with Prudential Action Group, which planned to oppose the deal at a shareholder vote due to be held on 7 June.

Personally, I hope that the impressive Mr Thiam survives. I believe he should be given room to learn from this setback. But if the price is his head, so be it, because it will provide a much-needed reality check throughout the corporate and PR worlds.

No related pages.

Yesterday “Shell” (go to hoax press release) said it was going to clean up the Niger Delta, compensate local communities for past injuries, and institute a local stakeholders’ program that will help lift the region out of poverty. That sounds like good news. But what if the real victim is the truth?

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 Voser 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.

No related pages.

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 public relations professionals (let’s just call them ‘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.”

No related pages.

Pulling together hundreds of academics, public relations professionals (let’s just call them ‘PRs’) and business leaders to meet in Stockholm to discuss the role of public relations today is a great idea. This post is a contribution to that debate. I want to try to frame discussion.

Yes, the world is changing for our employers and clients, and especially for our best customers in big business and big government. Yes, PRs are trying to position their trade in this new world. Yes, PRs feel that the world of new media is changing the ground under their feet. However it is my contention that the current new-wave of thinking being expressed in the Stockholm Accords has not been thought-through properly. It is open to serious question and in some cases should be rejected altogether.

I have two prongs to my attack. One is that the Accords do not describe the problems well. The second is that they won’t work, and that’s partly because people will see that the premises are wrong, and partly because the Accord’s assumptions steer our clients away from the kind of robust messaging which stands a chance of surviving scrutiny and events.

Because the proposed Accords are complex, I’ve decided to post my contribution in three parts. The first will interrogate the glossary of terms which inform the overall thinking of the Accords. The second will examine the Accords themselves on Governance, Management, Sustainability, Internal and External (communication), and Coordination. The third will offer a much shorter summary of my key points of concern and some pointers to taking a more robust approach.

I’ve decided to print in full what the glossary says so that I cannot be accused of quoting out of context and so that people can make their own assessments by contrasting what’s been said. Here goes:

1. Stockholm Accords on stakeholder governance model:

“It implies that a corporation’s board of directors, or the elected leadership of a social or public sector organization, in the case of conflicts between contrasting stakeholder group expectancies decided which of them needs to be taken more into account, on the basis of a sound listening of those expectancies.

“The shareholder model instead – even when it recognizes that other interests beyond those of the shareholders need to be taken into account- tends to privilege, in the case of conflicting expectations, the latter.”

My reply

The idea that all stakeholders are equal is erroneous. To pretend that organisations think they are is to be open immediately to charges of double-speak.

Shareholders set the objectives of firms, control them through shareholder democracy, provide the funds to run businesses and reap the rewards from their long-term success while carrying the risks from their failure. Firms and institutions have self-interest at their core and there should be no shame in saying so. Of course, other stakeholder interests need to be taken account of to fulfill shareholder expectations because firms fulfill their objectives by providing goods or services which add value to society.

I’ve spelled out what’s wrong with today’s all-to-prevalent stakeholder doctrine and presented a manifesto in defence of shareholder value elsewhere on my PR blog here and here.

2. Stockholm Accords on value network:

“In the network society, the traditional and consolidated strategic planning process based on Michael Porter’s value chain model, which is mostly linear and material, is either replaced or at least integrated by another planning process based on value networks.

“This recognizes that much of the value created by the organization stems today from fuzzy (and not linear) and immaterial (rather than material) networks that normally disintegrate the distinction between internal and external publics because their components play specific and value added roles or are expelled from the value process.

“The value itself is based on the quality of the relationships which exist between the various components of each network and on the quality of the relationships which exist between the various networks.”

My reply

Society has always consisted of a collection of social networks held together by common values and interests. The question we need to address is what’s new about how they’re formed and interrelate. We need to ask sociological questions rather than get obsessed with technology and novelty.

Michael Porter’s supply chain model is as appropriate today as is Adam Smith’s account of the productivity boost and added value that comes from the division of labour in society (Porter just builds upon that sound logic: see also No. 14 in this text). Moreover, society is experiencing the exact opposite tendency to the one described in the Stockholm Accords. Value networks based on class and traditional communities are breaking down, as are old fashioned political allegiances and ideologies. But these social developments pre-date the internet and social media. They are hurting newspaper circulation, hollowing out political party organisations and undermining people’s self-definition as members of this or that class or community. In that sense traditional value networks are disintegrating.

It is also a myth (approaching technological determinism) that the internet and SM has created a new world of meaningful value networks. Take politics and public opinion. The UK election just showed that the internet is almost irrelevant to politics and to political outcomes (see here, here and here). The US election showed how the internet can have a major influence on politics, but not quite the way many commentators claimed. Even there it still played second fiddle to mainstream media, as demonstrated here. It is worth noting that the US-experience was a temporary one-off. There’s no relationship being forged between Obama and the masses via social media today, because a relationship is not a relationship unless it is ongoing. Moreover, as the 50-year-old and even older Tea Party GOP veterans turn to social media to vent their anger, Obama’s more youthful team increasingly condemns the medium itself (see here).

3. Stockholm Accords on the communicative organization:

“A communicative organization recognizes that even the most empowered public relations director cannot realistically hope to govern more than 10% of its communicative behaviours.

“Therefore the communication leader of the organization plays two fundamentally strategic roles:

“an ‘ideological’ role by supporting and providing the organization’s leadership with the necessary, timely and relevant information which allows it to effectively  govern the value networks as well as an intelligent, constant and conscious effort to understand the relevant dynamics of society at large;

“a ‘contextual’ role which implies the constant delivery of communicative skills, competencies and tools to the components of its value networks so that they improve their relationships amongst each other and with the other value networks.”

My reply

This is third-rate Machiavellian thinking. Indeed, its whole tone is the very reverse of the ”listening”, associative, socialised entites the Accords seem mostly to want our clients to aspire to become.

I insist PRs are not in the job of governing behaviour; not even among 10% of their audience. PRs do not and never should act like propagandists playing “an ‘ideological’ role” that seeks to “govern value networks”. PRs communicate as advocates. PRs seek to influence behaviour; not govern it. They influence debate and opinion and try to ensure positive outcomes on behalf of their employers. PRs explain and spread understanding and attempt to win consent for the views and activities of whomever they represent. Of course, that involves developing messages, positioning clients and defining what they stand for and wish to be known for. It also involves writing the narratives that connect with audiences, and it mostly requires us to cooperate with other groups by taking on-board their views and stances in a meaningful fashion (one that maximizes or acknowledges mutual benefits and honest disagreements). This was always so. But if there is a difference today to the past it is that the role and importance of professional PRs in ensuring positive outcomes is more understood and valued than before. Another major difference is that most post-1945 communication assumptions are becoming redundant precisely because there’s fewer clearly defined value networks of substance in play. Right now there appears to be more atomization and social disengagement in society than ever, which the internet and SM for all its potential doesn’t bridge and often accentuates.

4. Stockholm Accords on licence to operate:

“To reach its conscious objectives every organization needs to constantly nurture and improve its ‘licence to operate’ by improving relationships with its stakeholder groups and society at large on whose opinions, attitudes, behaviours and decisions the achievement of organizational objectives rely on.”

My reply

This is fine as far as it goes. But it is both obvious and empty. An organisation’s real licence to operate is its legality, the demand for its services and the willingness of people to deal with it. I have seen very few instances of the informal “licence to operate” being withdrawn where real-world acceptability was in place.

5. Stockholm Accords on boundary spanning and/or issue management:

“Beyond its direct and indirect relationships with active or potential stakeholder groups, the organization needs to identify and analyse those economic, political, social, technological issues whose dynamics impact on the achievement of its strategic and tactical objectives.

“In doing this and in prioritizing those issues through a careful importance/possibility-to-influence analysis, the organization must identify those subjects who either directly or indirectly impact on those dynamics and dialogue with them to convince them to either reduce their hostility or increase their support for the organization’s objectives.”

My reply

I agree. With luck PRs do operate as antennae, spotting reputational downsides and opportunities beyond the purview of clients who may well be too busy perfecting widgets to have ears to the ground, etc. And PRs ought to be good at spotting social changes which require changes in their clients’ behaviour.

6. Stockholm Accords on sustainability:

“In organizational management speak the term (once also defined as corporate social responsibility or CSR) is used to indicate those policies and programs which ensure the economic, environmental and social being of the organization well beyond the short and medium term, and is directly connected to its licence to operate, the quality of its stakeholder relationships as well as the concern for societal and presumed future generations expectations.”

My reply

This is a minefield in which a lot of nonsense gets said. Some firms and institutions are in it for the long term and some merely (but just as reasonably) for the short term (that goes for shareholder value too). Organisational structures are rarely sustainable because they are designed to meet specific challenges at specific times; hence the saying “the only certainty is change”. The word “sustainable” does not always fit comfortably with the word “development”. Of course that does not mean that firms ought to sacrifice their long term interests in return for short term gains. One of the big issues in society – perhaps partly responsible for the recession – has been the pressure to boost short term shareholder value at the expense of long term business success and at the risk of business implosion and collapse.

7. Stockholm Accords on economic, environmental, social dimensions -  transformational opportunity:

“Sustainability policies and programs, even more than external consequences for the organization, represent possibly the most relevant leverage for its leadership to drive internal cultural change and transformation.”

My reply

I think this means that being environmentally aware may achieve nothing much except for a feel-good factor within the organisation. This is OK so far as it goes but it seems (a) a bit inward looking and (b) a terrible mangling of the English language.

8. Stockholm Accords on stakeholders:

Are those publics which are aware and interested in dialogue with the organization because its activities bear consequences on them and/or whose activities bear consequences on the organization.

Potential stakeholders are instead those public which, if made aware of the organizations strategic or tactical objectives, would be interested in dialogue with the organization. The prevalent communicative mode with the first is pull and for the second, at least initially, is push.”

My reply

I have dealt with this issue above and refer readers to an in-depth piece by me here.

9. Stockholm Accords on advocate, listener, reporter, leader:

“These four roles of the organization’s communication function, as much as the internal articulation may allow, imply different professional skills and competencies.

“While the advocate needs to be highly familiar with the contents of the argument to be advocated as well as nurture rhetoric skills, the listener must know the basics of desk analysis, opinion and attitude research as well as be equipped with the skills to objectively comprehend and subjectively interpret inspired by organizations objectives the collected materials.

“In turn, the reporter needs to be an excellent narrator capable of finding the correct formats and preparing the most attractive contents to attract the attention of organizational stakeholders while the leader needs to be highly credible inside the organization as well as be a good manager in enabling other to be effective in group and project work.”

My reply

This sounds like a CV written by an over-educated and under-experienced chancer.

The real danger here is that listening and an over-reliance on research leads to confusion, indecision, caution and the abdication of responsibility by decision-makers. In a world as fluid as ours there is often not a coherent set of views, or even a clearly defined audience (never mind audiences) to examine and interpret what’s in their interest. The duty of PRs is more to help their bosses lead than it is to help them listen; though listening is a must-have PR skill. The real problem is defining what the public interest is, which is far from easy. Mostly it is not definable by opinion surveys or research. The public interest is a constantly changing reality; a moving target. Moreover, PRs are not the best advocates of the public interest or in the best position to interpret it objectively because they represent their employers first and foremost. Suspicious minds might also remark that no company ever claims to act against the pubic interest and that no PR campaign ever made opposing it a positive part of its platform.

10. Stockholm Accords on falling boundaries between internal and external communication:

“With every individual potentially being a globally accessible medium and with the constant decline in credibility of institutions and authorities, traditional internal publics are increasingly being considered as the most trusted sources of information from the organization.

“Vice versa, and for the same reasons, any customer or supplier or competitor opinion on the organization is immediately accessible by traditional internal publics.

“What is more, border publics such as shareholders, consultants, agents and partners are considered highly credible subject by both traditional internal and external publics.  Most boundaries between publics are tumbling down.”

My reply

Yes, everyone’s got an opinion and it’s amazing who gets attention. So yes, you want to be in touch with a huge range of voice. But – and it’s a huge but – firms, governments, institutions, NGOs and all our clients still have to aim to get trusted, and they’ll do it best by speaking in a trustworthy way about their work.

11. Stockholder Accords on leadership communication:

“Organization increasingly define and attempt to implement policies and programs which imply coherent and cross functional leadership styles. This is a core and natural role for public relations professionals operating inside or working for the organization.”

My reply

Perhaps, and certainly it’s the job of PR to grease the wheels of whatever structure our clients fancy. But fashions change. One day, the business is a network or a matrix. The next it’s a series of radiating lines. Like, one day organisation is by region, the next by function.

The fact is, old-style top-down management techniques still predominate the business world today for good reasons. Even so-called old-fashioned silos still make business sense and define best practice – not least for setting lines of accountability and responsibility. Moreover, successful and innovative businesses today are increasingly centralised and command and control-led: look at Apple, Google, Facebook, Ryanair and Microsoft. Some businesses do well with a decentralized and locally empowering approach, such as coffee shops and other retail chains (though only up to a point because their backbones are tight and efficient). It is worth noting that many of Toyota’s recent problems were caused by over-centralisation on the one hand, and a too loose a grip on its suppliers on the other (so there’s always a tension involved in managing such challenges successfully).

At the level of the state we can expect to see lots of change (for instance, the US state may do more, the UK state less). States’ management and regulation of the economy is changing fast, and unpredictably. Firms and the Third Sector may get much more involved in previously non-commercial welfare roles. The transition and restructuring that all this involves will require a lot of consensus-busting and unavoidable conflict. Such an environment requires honest and robust PR. It also requires a rejection of much of the language, logic and thinking currently being proposed in the Stockholm Accords. Increasingly, both firms and governments are going to have to be brutal to survive – let’s not pretend otherwise.

12. Stockholm Accords on knowledge sharing:

“The sharing of knowledge inside and increasingly also outside the organization is considered one of the more precious immaterial assets in and amongst value networks.

“This is enhanced by smooth and productive relationships amongst network components and the public relations professional in appropriately performing h/er ‘contextual’ role can be instrumental.”

My reply

Holding on to intellectual property has never been more important or more difficult. But sure, firms and other institutions probably should be more adventurous in their pro bono use of their skills, wisdom and information.

13. Stockholm Accords on decision making processes:

“Effective and timely decision making process are essential to the success of the organization. By professionally listening to, understanding and interpreting stakeholder expectations before decisions are made by management, the public relations professional allows leadership to improve the quality of those decisions, to accelerate the time of their implementation and, in those recurring circumstances in which decisions are not adapted to include a specific stakeholder group expectancies, allows the organization to better anticipate and prepare to deal with potentially disrupting actions by that stakeholder group.”

My reply

This is a statement of the obvious.

14. Stockholm Accords on processes and structure:

“Ever changing processes and structures inside and amongst value networks are constantly framing change management programs of the organization. Change management, if and when it really works, mostly relies on sound and realistic objectives and effective relationships, which in turn are driven by good communication.”

My reply

Again this is motherhood stuff. However there could be something in this that the authors of the Stockholm Accords don’t get. Some modern companies are increasingly partner-focused and dependent on integrated inter-company networks. The success of such endeavours requires collaboration and the management of processes throughout the value chain. This is very much in line with Michael Porter’s thinking, which the authors of the Accords mistakenly believe is now largely redundant (see No. 2). The innovation here lies in the introduction of end-to-end data access between the various companies. In other words it is about the integration of one company’s internal information systems with another’s. The objective is for staff from different firms to work in sync to maximize the use of social and technological capital. Of course, this does throw up some challenges for PRs, but it is much more the realm of CIOs and other business disciplines than it is of ours. Moreover, such developments do not put a stop to command and control or top down leadership techniques, even though they encourages collaboration and real-time decision making. I’m of the opinion that it is from this fledgling field of cross-company systems integration, in which social media could play a major innovative role, that the Accords’ authors grabbed the term “value network”, and then bent it out of shape and made it valueless.

15. Stockholm Accords on stakeholder groups:

“These are individuals and organizations who are aware and interested in developing a relationship with the organization because the organization’s actions bear consequences on them or through their actions they bear consequences on the organization. Not necessarily a favourable relationship.

“These stakeholder groups are not chosen by the organization, but decide by themselves to be and act as stakeholders. It is clearly up to the organization to acknowledge them and to responsibly involve and/or engage with them, at its own peril.”

My reply

I have tirelessly – indeed to the point of tedium – combatted the idea that all and sundry are one’s stakeholders. I do accept that it’s no use assuming one’s critics are one’s enemies and can be ignored or fought, as opposed to schmoozed, co-opted, or otherwise engaged where possible. I think it is also true, by the way, that one’s clients’ supposed friends are often very false. So sure, a PR’s job is to engage widely. But reticence will sometimes be useful, and it can be extremely dangerous to pretend to be all things to all men.

16. Stockholm Accords on situational stakeholders:

“Stakeholder groups may also be situational as they form and dissolve according to social and organizational dynamics which need to be carefully monitored by the public relations professional.”

My reply

Well said. That’s a pompous way of saying that a lot of one’s support and opposition is temporary and opportunistic. It doesn’t do to get too bogged down in today’s PR battles. As is the case in bringing up children, quite often problems have just gone away long before one’s worked out a clever strategy to deal with them.

17. Stockholm Accords on brand loyalty:

“This is a traditional marketing term which has grown to include the quality, the trust, the commitment and the power balance of the relationship of a customer or any other stakeholder with the organization.”

My reply

It’s a big mistake to think that there is much new about brands: they were always valuable and wide-ranging. Just think of what Ford or Boots or Cadbury or ICI meant to people. Anyway the statement, like much of the wording of the Accords, reads like an assault on the English language, which does little to enhance our image as professional communicators.

18. Stockholm Accords on brand equity:

“This is one of the immaterial values attributed to an organization’s overall capitalization. Often expressed in monetary terms, this value is calculated by conventions amongst peers which relate monetary value to immaterial indicators.”

My reply

Agreed. Intangibles such as reputation have a direct influence on tangibles such as share price and market share.

19. Stockholm Accords on dialogue, participation:

“An organization’s stakeholder relationships may be differently categorised according to their acknowledgement, involvement, engagement, separation, divorce programs. A relationship begins with the two subjects acknowledging each other (acknowledgement); then proceeds when the organization stimulates its stakeholder groups to access the information they believe stakeholder groups require to keep abreast on their relationship and are enabled to provide feedback (involvement); the organization may also decide that in order to more effectively achieve its objectives it should engage some of its stakeholder groups in direct dialogue and conversation on specific issues in order to find mutually beneficial outcomes (engagement):

“Sometimes this does not work, and there is a period of time between separation and divorce in which the organization can attempt to involve them”

My reply

The degree to which any organisation engages with another is driven by self-interest. Of course it can be enlightened. Anyway, isn’t this Accords statement a complicated PC way of saying the obvious: that you often need to sup with a long spoon?

20. Stockholm Accords on success, evaluation and measurement:

“The most importance measure of success for public relations professionals, beyond the visible and tangible achievement of the organization’s specific objectives, within a given time frame and a given amount of financial and human resources, is based one or more selected evaluation or measurement tools which today are abundant and certainly no fewer than those available to other management functions. Evaluation implies the prevalent use of qualitative tools while measurement implies a prevalent use of quantitative tools. The new frontier, as is happening for other management functions, relies in quantilitative (sic) tools which integrate both evaluation and measurement.”

My reply

“Quantilative”: we can hope that doesn’t last. There’s an obsession with measuring intangibles which borders on nonsense. It is partly driven by the research industry itself (call it their marketing success) and partly by insecure PRs trying to justify their budgets. Much of what constitutes research and its results is self-justification and not to be trusted. Some is invaluable. Naturally enough, as a PR you will be valued when you prove yourself in a crisis. The rest of the time you’re trying to prove you’re valuable because of something which didn’t happen, and that’s a tough call.

21. Stockholm Accords on communicative issue:

“A communicative issue is one which, in its analysis and operative process by the organization coherently with its objectives, implies and requires an above average focus on stakeholder relationships and effective communication.”

My reply

I have a feeling that a “communicative issue” is a communication problem or opportunity. So that would be an issue involving diplomacy and messages. Do you mind if I repeat that our trade does itself no good when it wraps simple ideas in the kind of windy guff that is more in place in a third-rate sociology department?

22. Stockholm Accords on Multifaceted, multi-stakeholder, inter-relational:

The concepts of network society, value networks and communicative organizations imply that issues are more than often multifaceted (they provide different perspectives and angles according to the single stakeholder group perspective), multi-stakeholder (individuals and organizations increasingly belong to parallel stakeholder groups who may even have conflicting interests, for example shareholders, employees and sometimes even suppliers…), and inter relational in that value network components may in parallel belong to more than one network and perform different roles which implies that relationships amongst value network components as well as different value networks may be also in conflict.”

My reply

There’s nothing new in the insight that society consists of a tangle of webs in which contradictory values and interests co-exist. (Bernays, for instance, was clear about that.) It has also always been the case that most people rarely grasp how their differing interests are irreconcilable or at least conflicting, or even how downright hypocritical their own views are. It was always true that customers could be shareholders, employees, activists and consumers. The truth is we can’t have it all and often we don’t know what we want anyway.

23. Stockholder Accords on networks:

“Networks are today the core components of society, as well as of single public, social, private or mixed organizations.”

My reply

There’s never been a society without networks. Society is networks personified.

24. Stockholm Accords on mission, vision, values, strategy, implementation, promises, actions, behaviour:

“The mission describes the organization’s identity. The vision describes the organization’s aspiration to be in a defined time frame. The values are related to the defined behaviour the organization declares to abide to in migrating from mission to vision. The strategy is the path the organization decides to pursue in its migration from mission to vision; while the business plan defines the operative steps the organization plans to implement to pursue that strategy.

“The promise is what the organization claims it will deliver to and with its stakeholder groups. The actions are the operative behaviour of the organization in implementing its business plan, and communication is in itself a behaviour.”

My reply

Almost all mission statements play down the things an organisation really has to do and play up the things its critics would like it to do. Fine: but since most mission statements also make one feel slightly sick, one can hope they either wise-up or go out of fashion.

25. Stockholm Accords on highly trusted sources (Edelman trust barometer):

“For many years now, Edelman Worldwide has been conducting an annual global effort to monitor the concept of organizational trust by different stakeholder groups. The overriding ‘fil rouge’ is that official and institutional sources are decreasing in public trust while peers and friends and neighbours are increasing.”

My reply

The latest Edelman trust survey points in the other direction altogether. People’s trust in “people like me” is falling rapidly as a consequence of the recession as people seek authoritative sources of information and opinion. This is a trend PRs should encourage. I believe that the faith people supposedly put in “people like me” was always overblown and now it appears to be no longer even fashionable to make such claims.

I agree that PR can’t altogether ignore or disparage the anti-institutional fashion. If social media networks are now what people trust, PR has to get in amongst the social media and get heard there (and, yes, listen carefully too). But the big thing to remember is that “people like me” are less likely to have means of being serious, informed, experienced or even honest than do well-managed, long-haul, publicly-accountable bodies of the kind PRs get paid to represent. Doctors have to stand by science-based medicine; astronomers understand the heavens better than astrologers; I’d rather fly in a Boeing than by levitation. Likewise, PRs need to value honest, serious, information: they need to know it when they see it; promote it fairly; and defend it against the shrill relativism of much social media and vox pop noise.

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This manifesto might seem a lost cause. Speaking at the RSA/Sky Sustainable Business Lecture Series in London, Richard Lambert, director-general of the CBI, the British employers’ group, said “what you might call Jack Welch [1980s] capitalism” was drawing to a close – a reference to the former General Electric chief executive’s championing of shareholder value. Last year Welch dubbed his old mantra “the dumbest idea in the world”. He added: “Shareholder value is a result, not a strategy . . . Your main constituencies are your employees, your customers and your products.”

Richard Lambert advocates that doing good is good business and that:

“The risk now is that the public and political response to what’s happened will itself have troubling consequences. If you don’t trust an institution to behave well, you impose regulations – perhaps to a point that undermines the dynamic workings of a market economy, and in turn holds back the forces of job creation and sustainable economic development”

He’s not alone in thinking that shareholders are now just one of many competing interest groups CEOs work for. In a recent FT interview, Paul Polman, Unilever chief executive, said:

“I do not work for the shareholder, to be honest; I work for the consumer, the customer. I discovered a long time ago that if I focus on . . .  the long term to improve the lives of consumers and customers all over the world, the business results will come.”

I think these intelligent people are setting up a false dichotomy. Shareholder value is not necessarily at odds with social value. Customers and employees are not necessarily at odds with shareholders. Sure, running a socially respectable, customer-facing business may well be the ticket for shareholder value.

So I prefer the more robust approach of Lord Haskins, the former chairman of Northern Foods, who has questioned Mr Polman’s assertion that he does not work for Unilever shareholders, saying:

“Isn’t it the shareholder who appoints him, provides him with the funds to run his business, and awards him with his substantial pay package?”

Moreover, many firms, such as Swiss Re and DuPont, to name but two, still put creating shareholder value at the top of their stated objectives: see here and here.

To echo Michael Skapinker writing in the FT, before we consign the shareholder value movement to the dustbin, it is worth remembering why it arose: to prevent chief executives from running businesses in their own interests rather than those of the companies’ owners.

So here are my manifesto’s key points:

The problems:

• The emergence of a generation of CEOs who ran companies for their own benefit;
• A generalised passion for short-term stock value.

The solution:

• CEOs (agents) should be more accountable to the owners (principals) of their businesses;
• They should agree and assert the kind of firm they are running (long or short term value, for instance);
• They should communicate and sell these propositions.

Some principles:

• As a fan of Theodore Levitt, I’ve no doubt that Welch and Polman are right that great products, services and customer focus are the key ingredients of a successful company;
• No firm can function without a licence to operate;
• Key stakeholders need to be kept onside – employees, customers, suppliers and the like;
• If the longer term is what counts most, CEOs need to do more than they currently do to invest in innovation and in R&D (here’s a useful manifesto addressing this issue).
• Longterm profits matter a great deal to some firms, but that requires great flexibility and constant change.

PR challenge

PRs would do a much better job for their employers and clients if they spoke plainly and honestly about the realities of business. The current recession is caused by a crisis of profitability and negative growth. It is experienced as a crisis of confidence and trust. But it is not helpful to the cause of restoring growth and boosting reputations in society when PRs communicate that profit and growing shareholder value no longer matter most.

Today, the reality is that millions of people are losing their jobs, accepting pay freezes, going part-time, and feeling insecure about their futures, precisely because there’s not enough profit or a strong enough expectation of long-term shareholder value growth in the system. We’d all do better with our PR if we faced the truth rather than evaded it.

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