Monthly Archives: January 2009

No surprise — trust in business takes a ten year dive

The Edelman 2009 Trust Barometer is out and — no surprise — the business scandals of 2008 have led to the sharpest decline of trust in corporations over the 10 year history of the study.

How to repair? Well, first and foremost I’d say, “Do the right thing.”  But According to the Trust Barometer, communicating frequently and honesty on the state of business is in third place behind offering quality products and services and treating employees well. So clearly engagement in social media represents a major opportunity for corporations to win back trust. Indeed, I would revise the statement to say, “Engage frequently and honestly in open dialogue on the state of the business and the concerns of stakeholders,” as this would be even more effective.

The trust debacle has happened mainly in the established economies of North America, Western Europe and Australia, and generally across all industries.  Not surprisingly, perhaps, trust in business is on the rise in emerging markets like Brazil, China and India.

Recommendations from Edelman for rebuilding trust echo some of the perspectives presented in my last post, “A Hippocratic oath for managers — is it an idea whose time has come?” Below are some excerpts from Edelman’s executive summary:

Business must partner with governments and NGOs to address key policy issues and the world’s most pressing problems, not merely the ones that impact their bottom line.

Companies must realign their business practices so they deliver dual objectives: benefit society and the bottom line.

Okay.  I guess Edelman is also saying, “Do the right thing.”

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A Hippocratic oath for managers — is it an idea whose time has come?

My first post of the new year expressed the hope of a new, better type of marketing inspired by social media and online communities: “Marketing that is truly transparent and honest, that acts with integrity — always.   …That will raise the title of ‘marketer’ in the public’s mind at least a few rungs up from its current ranking slightly above used car salesman as the grungiest, most lowly of professions.”

Apparently two professors at the Harvard Business School, Rakesh Khurana and Nitin Nohria, share similar hopes.  In a visionary article entitled “The Reinvented Manager,” which appeared in the 1/2009 issue of the Harvard Business Review, German Edition*, Khurana and Nohria make the case for transforming business management into a true profession, including a code of ethics and a supervisory body to oversee professional standards.  There would be an exam, like the bar exam all lawyers must pass in the United States, as a prerequisite to practice, and the overseeing organization would have power to censure individuals violating established standards of conduct.

The article is particularly topical in light of the recent excesses of the financial sector, but it reflects the same shift of outlook embodied by online communities, social media and the conversations taking place online thanks to web 2.0 tools.  It’s a shift that demands integrity, partnership and responsibility to the community from brands and businesses.

Here are some of the most interesting and thought-provoking perspectives from the article:

Over the past ten years there as been a decline in the self-control of, and ensuing trust in, business.  Managers have lost much legitimacy.  They will only regain society’s trust by rejecting the economic philosophy that management’s sole concern should be the maximization of shareholder value, while markets and government take care of the rest. (Milton Friedman be damned!)

Managers should serve a higher purpose — society as a whole.  They “should view society as their real customer and strive ultimately to provide society with sustainable businesses that create value.”

To the question whether codes of ethics are actually effective, the authors reference the American political scientist, Robert Axelrod.  According to the article, Axelrod has shown that a defined and unified ethical framework and shared professional ideals influence behavior decisively.  Khurana and Nohria  conclude that “Morally impeccable behavior is an important component of the self-image of professionals (like doctors and lawyers) and most will seek to preserve this sense of professional self.” (Doctors maybe. Not sure about lawyers.)  “We know from the social sciences that people’s actual behavior is strongly influenced by the expectations that are placed upon them.”

The authors go on to provide a draft for  a “Hippocratic Oath for Managers.”  This is my favorite part of the oath from a consumer-centric, social media point of view:

“I will undertake to represent my company’s performance correctly and transparently to all relevant parties, in order to make certain that investors, consumers (my italics) and the general public are able to make informed decisions.”

Khurana and Nohria elaborate on the challenges that the establishment of business management as a profession would face.  But they believe these can be overcome and their vision achieved.  Above all, they are convinced it is necessary, an idea whose time has come.  They don’t pretend that this would eradicate all marketing transgressions in future.  But they do argue convincingly that it could bring about a meaningful and worthwhile shift for the better.

*The original article appeared in Harvard Business Review, October 2008, under the title, “It’s Time to Make Management a True Profession.” Reprint or PDF available at Harvard Business Publishing.  Quoted passages are my translation from the German.


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Obama launches the Citizen’s Briefing Book

Barack Obama’s use of social media and web 2.0 tools has been universally lauded as heralding a new era in political campaigning and acknowledged as playing a key role in his successful bid for the Presidency.  Since the election, however, it’s been much quieter on the Obama social media front.  And everyone has been speculating on how he will leverage the various online communities he built prior to the election to address the monumental challenges facing his administration, the country and the world, post-inauguration.

picture-21Enter the Citizen’s Briefing Book — just launched on Obama’s web site.  Here you can log on and provide ideas to the new administration on any issue, as well as comment, build and vote on the ideas of others.  The site will collect the ideas that rise to the top via the “wisdom of the crowd” and be presented to the President in a Citizen’s Briefing Book.  This method for filtering ideas or other content is already well established in social media, with Dell IdeaStorm, My Starbucks Idea and Digg being some well-known examples.

It’s great to see President-Elect Obama continue to explore the potential of communities and social media beyond the campaign, now employing web 2.0 tools to enable citizens’ voices and ideas truly to be heard and to continue to energize people and make them a part of the change his campaign espoused and the country so desperately needs.

Yes WE can.

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Business executives say they’re tired of hearing about web 2.0

The actual statement they ticked the box on was “industry buzz words most tired of hearing.”  At the top of the list were web 2.0, social networking, social media and blog.  The findings come from a survey conducted for the Marketing Executives Networking Group (MENG) by Anderson Analytics.  Faced with recession in 2009, “Marketing executives are going back to basics this year, putting renewed focus on satisfying and retaining customers and investing in research and insights,” according to an article in Marketing Vox reporting on the study.

Fear is a terrible thing.  It paralyzes you, and blinds you to strategies and tactics that could be precisely what your company needs to help you weather the current economic storm.  CC Chapman sums it up elegantly in this video segment.  In today’s economic environment, you need to be even more in touch with your consumers.  Now more than ever, you should engage and energize them to be even stronger brand advocates in the online communities where people share information, experiences and recommendations about products.  In tough times, consumers will turn to their peers even more to help them make wise purchase decisions.  That’s precisely where social media can help, by ensuring you are continuously in touch with how people are feeling about your products, addressing questions and concerns, and building trust and loyalty among your brand enthusiasts so they continue to recommend you to others.


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Wikipedia raises $6.2 million to keep its servers running

But for how long?

Jimmy Wales, the founder of Wikipedia, is not a fan of advertising, which could be a potential source of revenue for the online, crowd-sourced encyclopedia.  Wikipedia is run as a foundation, and to date has not accepted advertising. In a recent appeal to users, Mr. Wales  was able to raise $6.2 million from 125,000 contributors.  That averages out to just under $50 per contributor.  And I would suspect that the vast number of contributions was way under that amount, balanced out by a smaller group of especially generous heavy hitters.

Okay, I’m no enemy of advertising.  And in this blog I write about social media and its potential for marketers.  Still, I find it very inspiring that users of Wikipedia have stepped up to the plate in terms of funding.  I’m not aware of many examples in which the consumers of online content have demonstrated they are actually ready to pay for it.  It’s a testament to the value of Wikipedia for its users and for its “citizen” editors, who I suspect also contributed.  (Imagine that — paying the organization I work for instead of the organization paying me for the work I do.)

Could this be a viable financial model for certain online content providers?  Perhaps this grass roots type of funding can indeed work.  Especially when the organization stands for a set of  values that its public also holds, and the appeal for support comes from a real person who embodies the organization — be it Jimmy Wales in the case of Wikipedia, or Barack Obama in the case of the U.S. democratic presidential campaign.  The question is if this could actually by an ongoing way to fund online content providers.  Can the funding model charities use work for online content?

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Social media can change marketing for the better — forever

The juncture between an old and a new year is a time for reflection and evaluation.  So forgive me if I wax philosophical about my wishes and vision for social media and marketing as we enter the new year.

At the risk of sounding airy-fairy, moon eyed and idealistic, I’ve been playing around in my mind with the notion that social media and online communities will be the platforms for a new, better type of marketing.  Marketing that is truly transparent and honest, that acts with integrity — always.  That truly respects the intelligence and humanity of the “consumer.”  That will raise the title of “marketer” in the public’s mind at least a few rungs up from its current ranking slightly above used car salesman as the grungiest, most lowly of professions.

I would hope that more and more marketers begin to recognize that honesty and transparency are more than simply virtuous.  In a digitally-connected world that enables people to find out in a flash the truth about products, brands and the companies behind them, these values are good, even essential, for the future of their business.

But whether they do so will depend on whether consumers continue to step up to the plate in greater numbers.  To demand integrity and transparency from brands and corporations.  To demand that companies engage with them directly via social media channels and tools, monitor and listen to their questions and concerns, collaborate, take their suggestions seriously, and respond.  To use the community and sources of information about brands that are now so easily accessible on the internet to determine whether a marketer is being truthful about their product claims, their employment policies, their treatment of suppliers, their sustainability  efforts.  To spread the word and connect with others via the web when they’re unhappy or delighted with something a marketer says or does.

Thanks to the unprecedented access to information and the ability for people to support each other on questions of mutual importance via the web 2.o internet, consumers are truly more empowered than ever before in their relationships with brands and the companies that market them.  As they exercise that power more and more, marketers will also have to step up to the plate.  They will need to practice marketing that lives up to a much higher standard of integrity, honesty and transparency than was required in the past.  And that will be a very good thing — for business, for consumers and for society as a whole.

Happy new year!


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