Tag Archive: Harvard Business Review


Tuesday was the day that Facebook Wunderkind Mark Zuckerberg came to Capitol Hill.

As Zuckerberg spoke on the right-side of the CNBC split screen, the left side told the story of surging Facebook shares.

Facebook’s market capitalization (share price x # of shares) vaulted $21.5 billion that day … that’s serious money.

When the dust settled Tuesday, Facebook’s total market value was $479.4 billion.

Who says you can’t quantify effective public relations? You can … let Almost DailyBrett illustrate at least $21.5 billion reasons why branding, marketing and reputation management make a world of difference.

If you are scoring at home, Facebook (NASDAQ: FB) yesterday jumped $7.11 per share or 4.5 percent to $165.04 at Tuesday’s close of markets. The stock continued to climb today (Wednesday) to $166.32 or a total market cap of $483.2 billion … nearly $4 billion more.

For Zuckerberg, there was no hoodie, no t-shirt, but instead a nice navy blue suit with a royal blue tie.

The 33-year-old Phillips Exeter Academy grad/Harvard University “dropout” said all the right things (at least in his prepared testimony).

Was it a day in which Zuckerberg … Veni, Vidi, Vici … Came. Saw. Conquered?

Maybe not the latter … He was indeed grilled by U.S. senators Tuesday and members of the House of Representatives today, bringing a sense of Schadenfreude to many of the misguided, who want to see these daring entrepreneurs brought down, crashing to earth. Indeed, no good deed goes unpunished.

Nonetheless, Zuckerberg reassured his investors, who have placed their faith and their hard-earned discretionary cash into Facebook shares.

The largest communications platform – let alone social media site — in the history of the planet with its 2 billion-plus subscribers lived to fight another day, albeit government regulation is likely on the way.

Apology Tour?

“We didn’t take a broad enough view of our responsibility, and that was a big mistake. It was my mistake, and I’m sorry.” – Mark Zuckerberg

Zuckerberg was chastised by members of Congress for repeatedly apologizing. Keep in mind these are the same critics who rant-and-scream that Donald Trump never apologizes. Which is worse: Saying you’re sorry or never giving a rat’s behind about anybody else’s feelings?

Almost DailyBrett has a habit of coming down in favor of the risk-taker, the entrepreneur, “The Man in the Arena” as described by Teddy Roosevelt in his famous address at the Sorbonne.

Mark Zuckerberg is surely not perfect as this blog has reported, but at the same time he obviously takes PR advice. He wore the suit, demonstrating respect and deference to the hallowed halls of Congress. His statement was well crafted, not overly long, not legalistic and most of all, it was humble.

He was coached and for the most part was prepared for the grind, the pressure and the questions.

Certainly, the Cambridge Analytica mess harkens concern. Facebook was five-days tardy in responding and the social media post was TLDR (Too Long, Didn’t Read). The last few months have not been the best of times for Facebook. They have not been the worst of times either as the company has the opportunity to do better.

What scares Almost DailyBrett is that members of Congress contend they are tan, rested and ready to craft, pass and enforce regulations to fix Silicon Valley, not only Facebook but Google, Apple and Amazon.

Watching Senator Charles Grassley (R-Iowa) reading a prepared set of questions developed by his staff, one comes away with the sense that the honorable senator wouldn’t know an algorithm if it bit him on his gluteus maximus.

How will the senator and the majority of his colleagues, who are virtually clueless about Silicon Valley, develop regulation legislation that does not stifle the creativity of an American $40.7 billion market leader, employing 25,105, just 14 years after being created in Zuckerberg’s dorm room?

Almost DailyBrett must ask: Who are more vital to America’s future – entrepreneurs such as Jeff Bezos, Tim Cook, Elon Musk, Larry Page, Sergey Brin, Zuckerberg – or the regulators?

Has there ever been a Harvard Business Review article about regulators, let alone museum exhibits.

There are zero statues erected to honor critics, let alone regulators.

https://www.wsj.com/articles/silicon-valley-to-washington-why-dont-you-get-us-1523451203

https://www.nytimes.com/2018/04/10/us/politics/mark-zuckerberg-testimony.html

https://www.cnbc.com/2018/04/11/facebook-ceo-mark-zuckerberg-testimony-key-points.html

http://variety.com/2018/digital/news/facebook-stock-mark-zuckerberg-testifies-senate-1202749625/

http://fortune.com/2018/04/10/heres-why-facebook-just-gained-21-billion-in-value/

https://almostdailybrett.wordpress.com/2018/03/25/too-long-didnt-read-tldr/

https://almostdailybrett.wordpress.com/2012/01/16/in-search-of-another-suite-h33-kirkland-house/

 

 

 

 

 

“There you go again.” – Ronald Reagan debating Jimmy Carter in 1980

Wonder why more than a few consider “corporate social responsibility” to be an oxymoron?

Can corporations, especially publicly traded companies, serve both masters: fiduciary responsibility (do well) and CSR (do good)? It can be done, but the effort has to be sincere and meaningful.

Sorry 5-hour ENERGY®. There you go again.

5-hourvets

First, Living Essentials (parent of 5-hour ENERGY) mounted a mucho grande marketing campaign with special pink raspberry bottles in order to make an un poquito contribution to Living Beyond Breast Cancer (LBBC). The Integrated Marketing Communications (IMC) campaign even came with a plethora of television ads and a specially decaled NASCAR racer being driven by Clint Bowyer

Now, it is time for yet another mucho grande marketing campaign with special red-white-blue bottles in order make another un poquito contribution, this one to the Special Operations Warrior Foundation (SOWF). Do you think that 5-hour ENERGY just commissioned another specially marked Bowyer stock car for the occasion?

Does a bear relieve itself in the woods?

In addition, the company even sponsored a 400-mile NASCAR race in Kansas just in case you missed any of 5-hour ENERGY’s ads.

Even in-your-face syndicated radio sports jock Jim Rome got into the act, pimping for these $2.99 (today’s retail price) red-white-blue bottles of 5-hour SPEED.

And how much will be raised for the wounded vets? (Drum roll) Not less than $75,000.

Wasn’t the $75,000 minimum the same figure for when 5-hour ENERGY contributed a nickel from the sale of each $2.99 pink bottle (less than 2 percent of retail) to the breast cancer foundation?

Why is Almost DailyBrett underwhelmed?

Real Corporate Social Responsibility

“It is amazing what you can accomplish if you do not care who gets the credit,” – Harry Truman

SBUXCI
Contrast the shameless 5-hour ENERGY CSR-in-disguise campaign with the synergistic relationship between Starbucks (NASDAQ: SBUX) and Conservation International (CI) on behalf of the environment and the farmers in the Chiapas region of Mexico. This is the same case that was examined in-depth by Harvard Business Review. 

The relationship between the for-profit Starbucks and the NGO Conservation International took time to develop. Starbucks wanted to help, but it insisted on not compromising the quality of its mild Arabica coffee beans for its discerning customer base. In the end the two disparate entities teamed in setting standards for Starbucks’ coffee supply chain in the Chiapas including the planting of shade trees and no coffee pulp being thrown into the rivers.

Just imagine, Starbucks and its NGO partner, Conservation International, accomplished impressive deeds together without the need for specially marked cups or a spiffy race car.

This same is true for Ronald McDonald House Charities, including the 338 Ronald McDonald houses around the world, a direct offshoot of the fortune made by McDonald’s founder Ray Kroc. Ditto of the Home Depot Foundation and its $1.5 million partnership with Habitat for Humanity to build homes for veterans.

Let’s not forget Nike founder Phil Knight’s $100 million contribution for the Knight Cancer Institute at Oregon Health & Science University (OHSU), and another $125 million for the OHSU Cardiovascular Institute. There were also some celebrated “Uncle Phil” contributions to the University of Oregon and Stanford University.

And of course we need to salute the efforts of another billionaire, Bill Gates and his spouse Melinda, establishing the Bill and Melinda Gates foundation. The foundation’s $38.3 billion endowment targets promoting health care and reducing extreme poverty around the world.

“Pink Washing” Close Call

kfc

Before 5-hour ENERGY got into the Think Pink act, YUM Brands’ KFC Division launched a controversial “Buckets for the Cure” campaign benefitting the Susan G. Komen Foundation.to combat breast cancer. A portion of the sale of each specially marked bucket of grilled chicken was devoted to the work of the Komen foundation.

Some have called this effort true CSR. Others have labeled it, Pink Washing. Whichever way one comes down on the “tastes great” vs. “less filling” divide, there is no question that KFC raised a reported $4.2 million to combat and find a cure for breast cancer.

There are many, who simply do not like KFC (formerly Kentucky Fried Chicken) and will not see anything positive undertaken by the company. Having said that, there is a legitimate debate whether “Buckets for the Cure” was a crafty marketing campaign, a well-intentioned CSR thrust or a combination of the two. Let the Fiduciary Responsibility vs. Corporate Social Responsibility debate commence!

5-hourspecial

When it comes to 5-hour ENERGY and its guarantee of $75,000 to the wounded vets, compared to its massive marketing campaign, NASCAR race and race car, one has to make the call:

5-hour ENERGY once again stands guilty of disguising its massive for-profit marketing campaign as an attempt to help (fill-in-the-blank).

There you go again.

http://www.5hourenergy.com/5hrNews-2014-04-14.asp

https://almostdailybrett.wordpress.com/2013/10/10/5-hour-pink-washing/

https://almostdailybrett.wordpress.com/2011/12/05/lattes-cappuccinos-mochas-and-csr/

http://www.hbs.edu/faculty/Pages/profile.aspx?facId=6413&facInfo=pub

http://www.brainyquote.com/quotes/quotes/h/harrystru109615.html

http://www.rmhc.org/what-we-do

http://www.homedepotfoundation.org/page/our-partners/habitat-for-humanity-international

https://almostdailybrett.wordpress.com/2012/10/11/buckets-for-the-cure/

https://almostdailybrett.wordpress.com/2012/09/25/taxing-uncle-phil-to-death/

http://en.wikipedia.org/wiki/Bill_%26_Melinda_Gates_Foundation

https://almostdailybrett.wordpress.com/2011/12/13/fiduciary-responsibility-vs-corporate-social-responsibility/

http://www.nascar.com/en_us/race-center/sprint-cup-series/5-hour-energy-400.html

 

 

 

 

 

 

 

 

 

“Pleas for corporate social responsibility will be truly embraced only by those executives who are smart enough to see that doing the right thing is a byproduct of their pursuit of profit.” – Arneel Karnani, University of Michigan associate professor of strategy, Wall Street Journal, August 23, 2010.

“Whether one likes or dislikes Starbucks or its philanthropy, the Starbucks CSR model looks like a recipe that many corporations recognize as a solid formula for social responsibility,” – Rick Cohen, The Non-Profit Quarterly, April 20,2011

starbuckscoffeecup

Celebrating its 40th year in business, Starbucks Corp (NASDAQ: SBUX) is a profitable $11.7 billion roaster/retailer of specialty coffees with operations in 50 countries around the world. Last year, the world’s leader in the sale of upscale coffee (e.g. mochas, lattes, cappuccinos and whole/ground beans) reported a net profit of $1.24 billion and recorded $33 billion in market capitalization.

Throughout its history, the company has made a commitment to fiduciary responsibility, generating profits and returns to its shareholders, while embracing a company culture that includes a focus on corporate social responsibility (CSR). Early forays into this latter field included support for the anti-poverty organization, CARE, and for the environmental non-government organization (NGO), The Environmental Defense Fund.

Starbucks’ first CSR efforts began in 1994 as an activity incorporated in its Environmental Affairs Department with a modest budget of $50,000. Five years later, a separate-and-distinct Environmental Affairs Department was established, focusing on five areas: business practices, environmental, community affairs, corporate giving and the Starbucks Foundation. By 2002, the 14-member department was working with a budget of $6 million.

Starbucks chief executive officer and president Orin Smith drew a linkage between shareholders and stakeholders, which include customers, suppliers, partners and coffee growers. “It’s (CSR) an integral part of the new business strategy,” said Smith.

Worldwide concern about the plight of the Amazon rain forests and sensitive species has put a public magnifying glass on the production of coffee in the tropics, including the mild arabica beans used by Starbucks to serve its global customer base. The majority of the coffee crop (the world’s second largest commodity) is grown on small-and-medium sized farms, many in areas of significant environmental impact containing a wide variety of fragile species. The plight of these regions has been the mission of environmental NGOs, including Conservation International.

At the same time, the public esteem and trust for these NGOs has steadily increased. For example, the 2011 Edelman Trust Barometer revealed that not-only are NGOs (seen as responsible third-parties) the most trusted in society, but their level of popular support is growing from  57 percent in 2010 to 61 percent in 2011.

Starbucks collaborated with one of these more trusted NGOs, entering into a strategic alliance with the professionally oriented Environmental Defense Fund (EDF), to develop a more environmentally friendly coffee cup. The question facing the company was how could it enhance its reputation as an environmentally conscious corporate citizen without compromising the quality of its supply of mild arabica beans?

Could the company grow revenues and profitability and promote shareholder value (fiduciary responsibility), while being seen as a good steward for the environment and to improve the standard-of-living for its suppliers, the medium-and-small farmers (corporate social responsibility)? Enter biodiversity NGO, Conservation International (CI).

ci

The first uneasy meeting between Starbucks and Conservation International representatives took place in 1997. Starbucks expressed its concern about the quality of the coffee that it was buying for its discerning customer base. Conservation International was focused on the impact of hundreds of medium-and-small coffee farms in the hills of the environmentally sensitive region of Chiapas, Mexico. Concurrent with this meeting were the letters and cards coming from the customer base asking Starbucks whether it is actually buying shade-grown coffee and about protecting the forests where coffee is grown.

Conservation International saw that Starbucks could exert considerable influence as a major purchaser on the company’s supply chain (includes the coffee farmers) to protect the environment. So why did the strategic alliance between a major, publicly traded, for-profit corporation, Starbucks, and an influential, non-profit, environmental NGO, Conservation International, work for the benefit of not only both parties, but the overall environment as well?

Due diligence was definitely one factor. Accumulated trust eventually became a second factor. Both entities took the time-and-effort to comprehend and appreciate the position of the respective parties. Starbucks as a publicly traded company has a fiduciary responsibility to grow the top-and-bottom lines and to generate superior value for its shareholders. The top line increased from $1.68 billion in 1999 to $2.64 billion just two years later. Gross profit margin expanded slightly in the course of these three years even though COGS expenses grew by $742 million. Total net income increased from $101 million in 1999 (6.1 percent) to $181.2 million (6.8 percent). These revenue and profitability enhancements were recorded after Starbucks signed a memorandum of understanding (MOU) with Conservation International (not implying a direct effect of the strategic alliance on company financials).

Starbucks impressed upon Conservation International that it was not going to serve its customer base by purchasing politically correct, shade-grown coffee beans that are substandard from a quality standpoint. Conservation International responded by teaming with Starbucks, finding common ground, even playing a direct role on coffee farmer quality control. Was Conservation International in effect helping Starbucks maintain its fiduciary responsibility, while exerting pressure on the corporation for CSR?

Starbucks CEO Smith even extolled the “synergies” between Starbucks and Conservation International with the former focusing on quality coffee and the latter on the environment. Typically, the word “synergy” is reserved for evaluation of mergers and acquisitions. Smith was a member of the Conservation International Board of Directors as of October 31, 2001.

Eventually, the Chiapas project led to signed agreements between Conservation International and certain Mexican coffee producers and their respective cooperatives. Upon meeting Starbucks quality standards, producers could sell an increasing percentage of their crop to Starbucks for premium prices (Especially important considering the drop in prices for mild-arabica and rustica coffee prices worldwide). Starbucks eventually became comfortable guaranteeing low-interest loans to these small farmers, providing them with needed capital.

chiapas

In exchange, these farmers agreed to not harvest trees on producer farms or the Chiapas Biosphere Reserve, a wide variety of shade trees would be planted, and no coffee pulp could be thrown into local rivers.

Starbucks’ “synergistic” and cooperative strategic alliance with Conservation International followed the company’s professional and managerial relationship with the Environmental Defense Fund. Does that mean that Starbucks enjoys the same relationship with all environmental NGOs? Unfortunately, the answer is “no.”

While the relationship with EDF was professional and the interchange with Conservation International was synergistic, Starbucks’ was subjected to a wave of confrontational tactics undertaken by other environmental NGOs. For example, Global Exchange launched a protest at the company’s annual meeting and demanded that Starbucks sell fair trade coffee.

After a series of discussions, Starbucks entered into an agreement with TransFair USA, which provides certification for all Fair Trade Coffee in the United States. Starbucks offered a similar approach, comparable to its relationship with Conservation International to TransFair. The aim was to improve coffee quality, provide financial assistance to farmers and raise public awareness of biodiversity issues in the tropics. TransFair rejected Starbucks’ advance, stating that is only sells certification seals and would only deal with Starbucks in that fashion.

Ultimately, Starbucks did sign an agreement with TransFair to purchase Fair Trade-certified coffee, providing that it met the company’s quality standards that were needed to respond to consumer demand. Starbucks even paid 10-cents per pound licensing fee to TransFair. Even with this agreement Global Exchange and TransFair were badgering Starbucks to buy even more Fair Trade-certified coffee.

Contrary to the actions of Conservation International, TransFair had no interest on improving quality among its registered farmers. TransFair said this was simply not its mission.

Starbucks chief executive officer Smith acknowledged, NGOs are critical influencers. And there are some (e.g. EDF, Conservation International) that are willing-and-able to work with a multi-national company for their mutual advantage. Alas, there are others (e.g.TransFair) that are at best cordial, if not antagonistic and downright confrontational with multinational enterprises (e.g. Global Exchange, Seattle Audubon).

For Starbucks and other publicly traded companies, there will always be fiduciary responsibility (buy low, sell high). And to an increasing extent, there is also corporate social responsibility, including exerting pressure through the management of the supply chain to demand greater adherence to environmental stewardship. There is also the question of building brand equity.

A proactive, collaborative working relationship with a NGO, such as Conservation International, can directly benefit fiduciary responsibility and corporate social responsibility. They are not mutually exclusive terms of art.  These strategic alliances can also help inoculate or at least mitigate a MNE against outright hostility by certain NGOs that deliberately choose corporate antagonism as their modus operandi.

(Editor’s Note: The following analysis was made based on a May 1, 2004 Harvard Business School case presented by James E. Austin, Harvard professor, emeritus and Cate Reavis, senior researcher from the Global Research Group. To learn more about Austin’s impressive publication and research record, please visit http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=pub&facId=6413).

“The way in which information is exchanged so quickly has forever changed the way in which people want to consume information. They demand that things be condensed into 20-second sound bites. With complex problems, this is exceedingly difficult, but to be an effective communicator and leader you need to be able to condense complex items down to the core and be able to do this quickly.” – Tony Blair, former UK Prime Minister.

The Values behind Market Capitalism - Tony Blair

They say hard work never killed anybody, but I say, why take chances?” – President Ronald Reagan

The grumbling in Strategic Management class was hard to ignore.

We were being asked to synthesize our market assessments, proposed recommendations and projected timetables for major company executive management into no more than two pages. But how can complex issues with so many variables be reduced to a couple of pages? Actually it can be rendered in one page.

During the course of my career, I have witnessed on-camera media training sessions for both loggers and PhDs. Guess which one was smoother?

The problem with intelligent people is that they have to remind everyone that they are so friggin smart. And how do they do that? With a literal Blitzkrieg of facts, data, commentary and analysis with absolutely no or very little consideration for the poor sap who has to listen to their blather.

What do Ronald Reagan, Winston Churchill and Dwight D. Eisenhower all have in common besides being the chief executives of their respective countries? One answer is that they insisted on one-page decision-making memos.

“Reagan began a practice in Sacramento, which he carried with him to the White House, that he called ‘round-tabling,’” wrote Steven Hayward of the American Enterprise Institute. “Reagan liked to hash out different points of view on an issue with his advisers. Reagan relied on a controversial managerial device to drive this process: the one-page memo.

“Reagan required officials and staff to boil down an issue into a one-page format with the following four elements: the issue, the facts, reasoning and recommendations. His cabinet secretary, William P. Clark Jr., helped develop the routine. ‘It has been found,’ Clark said, ‘that almost any issue can be reduced to a single page.’”

“Ronald Reagan was famous for asking for one-page summaries and today many executives follow that example,” leadership consultant John Baldoni wrote in Harvard Business Review. “It is good practice because it challenges the petitioner to reduce his idea to its barest essentials as a means of ensuring understanding as well as developing a platform for advocacy. This methodology is something that I have coached executives to ask for as well as to develop for themselves.”

Hmmm…the issue, the facts, reasoning and the recommendations. Interesting.

Let me pose this question: What is more effective? Presenting an exhaustive 70-page memo to an overly stressed executive which will be at best skimmed or a one or two pager that will be read, and maybe read two or more times?

When you are writing memos for incredibly bright, talented and supremely busy people, such as a governor or a chief executive officer, do you think they appreciate if you reduce the issue to manageable proportions and spare them the ancillary details? Will they ask questions? Of course and it doesn’t matter if you presented the issue in one or two pages or 70 pages. My recommendation is present the issue completely and succinctly in a couple of pages and be prepared to respond to the inevitable questions.

Prime Minister Blair in his quote acknowledges the obvious issues with the reduction of complex issues to 20-second sound bites and one-page memos, but that quite simply is the world that we live in.

Baldoni is justifiably concerned that this practice reduces salient issues down to bullet points, sacrificing critical points that should be considered for the sake of brevity. And didn’t your mother tell you that “Haste makes waste?” Yes she did, but really concentrating on what is legitimately important and purging trivial details is not hasty, it is efficient.

A suggestion offered by Baldoni is to consider preparing pro argument one-pager and a separate con argument one-pager. Does that mean that two pages are better than one? Maybe.

The point is that in our interactive information overloaded world, we are forced to really concentrate on what is truly important — the need-to-know as opposed to the nice-to-know – This practice, whether it be one-or-two page memos or getting to the point quickly verbally, I humbly submit is absolutely critical to being successful in the cabinet room or the board room. We as PR counselors want a seat at the table. We do not want the chief executive to stop listening before we stop talking.

http://blogs.hbr.org/cs/2010/04/avoid_over-simplifying_your_on.html

http://www.aei.org/article/20661

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