Why Brexit communications make me concerned at a lack of vision

I’ve just deleted 400 words explaining why I don’t agree with Brexit that I realised is superfluous. That’s not the point of this blog. The point of this blog is that from the perspective of the communications consultant I have no idea what either the UK Government, or the wider pro Brexit establishment, actually want to gain from Brexit.

I’m not questioning whether it was the right or wrong thing. The votes were cast and a majority of the population that voted chose to leave the EU.

In general, government communications will give a steer as to preferred outcomes of diplomatic engagement. However, despite the geopolitical, legal, social and economic consequences at stake, at the moment I’ve no clue as to whether HMG has a vision of the UK’s place in the global system. What is the overall strategic objective? What are its ideal, neutral and worst case scenarios realistic scenarios and how will this effect my family’s well being?

Comments such as going back to the Commonwealth, the Anglosphere and even worse “empire 2.0” demonstrate a lack of understanding of how international trade works, the position of the UK in the global economy and the perception of the UK in the countries that used to be run from Whitehall until the middle of the 20th Century. See here for some interesting ONS statistics: http://visual.ons.gov.uk/commonwealth-trade-in-focus-as-uk-prepares-for-brexit/

Then there’s the Irish issue which is not really about the Brexit arguments that have been made in England, but about how the Island of Ireland should function on an economic, trade, social and political level. Brexit is the catalyst for a new conversation about partition, unionism and the future direction of sovereignty on the Island, which Westminster seems singularly unwilling to consider, but whilst they close their eyes and ears, other parties are making the case for change. I don’t think we’ll see a return to the 70s and 80s, but things could get bad quickly. Ostriches that stick their heads in the sand can have their arses shot off.

I’m sure some Brexit supporters will tell me that I’m being unduly negative and that my support for Remain is blinding me to the potential for the UK once it’s free from the EU, or that my Irish connections make me unpatriotic. Then there’s the public affairs advisors that will say “why shouldn’t HMG keep their powder dry until negotiations actually start? You wouldn’t give away your M&A strategy until you make your offer would you?”

I’m not sure I buy either argument. Politics is generally about selling a vision of the future, even if it’s pretty broad brush stuff. I’m just not seeing anything other than the blandest generalities that have little or no meaning. The lack of communication of any sort of detailed vision makes me feel there is a general lack of confidence in a strategy that is already announced. This in of itself invalidates the M&A argument. The initial offer has been made. Now is the time to get shareholders on side.

My genuine concern is that with the massive task approaching them, they are like a rabbit in the headlights, unable to make a decision until the oncoming HGV (probably a Mercedes of VW) crushes it.

I hope they’re just playing clever. I don’t think they are.

Imagine Brand Was Worthless….

This is going to be a fairly brief blog that might turn into something longer that involves proper research depending on feedback from peers and (ex)colleagues.

3 months after leaving agency for a new role in house, I’ve had a few offers of support from my communications advisors. I’m always happy to meet and chat, although as I’ve told everyone, I’m not looking for external support at the moment. My initial role as an inaugural Head of Comms is to properly define the value proposition of communications to my new employer. They’ve shelled out on me and the associated costs of hiring, I’m not in a position to justify further investment at the moment.

Anyway, a few people I’ve met commented something along the lines of “if I had any spare budget that had to be used by the end of the year, they’d be happy to take it off my hands”

I know it was a joke, sort of, but that line has combined with some long standing misgivings about our industry and associated trades (marketing / advertising etc) and has led to the title of this blog.

I wonder how much communications / PR / marketing / advertising work carried out in London has virtually no value – or at least nowhere near the value of the services that are actually paid for?

Take a fundamentally commoditised product sold wholesale to cost conscious clients. There is no difference between this product and that sold by rivals. They both create the same outcome. Often they are created in the same place and traded multiple times. They are entirely interchangeable. Let’s say this product might be quite close to my heart and professional experience.

Does brand really matter in this case? Is there truly a justifiable benefit for the $millions spent on any number of communications services designed to help drive sales of this and many similar products?

I’m honestly unsure of the answer. I have deep respect for senior ex colleagues & peers who have had very successful careers doing exactly this sort of work. I also respect a number of the companies that have committed both philosophically and financially to this approach. Obviously it gets more complicated if one is dealing with a consumer product, however I still have this little nagging voice at the back of my mind.

This isn’t about agency or in house. It’s not about big or small agencies. I’ve now worked for a small agency, one of the world’s largest and I’ve just gone in house. It’s about communications as an industry and whether we can be accused of maintaining a loop of self justification for what can be extremely expensive products that have limited discernible benefit?

Of course evaluation methodology is improving but equally this could be included in the self justification argument; as to be truly objective, we should consider what the commercial outcome would be without a communications solution, or at least a more limited baseline. Think about that for a second. Would products still be sold if our work didn’t exist? AMEC’s “Barcelona Principles” are a strong step in the right direction here, but I’m not sure they answer that nagging question in the back of my mind.

This isn’t a Jerry Maguire moment. I’ve seen people fall out of love with PR and say, “It’s all a load of BS; I don’t believe in what I’m doing and certainly don’t believe what my clients are selling” – this isn’t the case for me. I love working in the communications industry and I’m committed to doing the best job possible for myself, my employer, and more so now than earlier in my career, for the wider industry.

I would however welcome thoughts and feedback from peers or all levels, as this is the sort of thing we need to work together on. We’re naïve if we don’t recognise that communications can have a negative perception with those outside the industry – some of whom we need to persuade to sign off on budgets and / or hire us.

All thoughts welcome, thanks in advance

National Oil Companies: when financial communications plays a genuinely strategic role

There are two big oil IPO stories circulating through global media at the moment: Saudi Aramco & DONG Energy. What links these two transactions is the sovereign element – and this raises a communications challenge.

National Oil Companies are not designed to run in the same way as the global oil majors we’ve all heard of. Shell, BP, Exxon etc are all designed to facilitate combined equity growth / yield by hitting quarterly profit targets and report profit when calculated through reserves replacement – finding oil as well as producing it, to ensure the core valuation of the company remains constant.

NOCs are different. They are designed to extract long term benefit from the natural wealth of the sovereign. Long term value creation is the name of the game. Short term profits are often eschewed for strategic gain. Reserves are often so massive as to not need replacement in the same way.

Communicators have to explain this contrast in a positive context. Financial communications is essentially a process of providing context to a process of comparative analysis. “Why should I invest in Aramco rather than Exxon?” “How is DONG valued compared to Conoco?”

Our role is to disrupt standard practice and demonstrate that NOCs should not necessarily be compared to other companies, but should be understood on their own terms. Aramco to Exxon is essentially a false comparison due to their fundamentally contrary strategic drivers.

The other thing to remember is that the IPO creates a prism for a much wider audience. Global regulators, diplomats, politicians, media and business partners take more notice when an NOC goes public, due to the increased transparency (although DONG is typically Scandinavian in its transparency) An IPO is a brilliant opportunity to introduce the corporation, its people, operations, strategy and ethos to a global community of stakeholders that will influence the long term success of business strategy.

The core communications challenge of an IPO is not therefore financial; it’s more about strategic identity – demonstrating why NOCs should not be compared to the dominant IOC model but judged on their own terms.

That’s before we get to the geopolitical angle and role of resources liquidity / volatility in foreign policy, but that for another blog.

https://next.ft.com/content/be1011a8-1697-11e6-b197-a4af20d5575e

“Myopia caused by dollar signs in the eyes is a contagious condition. Still, it is sensible to question how realistic the Saudis are about this float. If Aramco wanted to list shares in London as depositary receipts, it would need to go halfway towards meeting UK governance standards. “Comply or explain” does not sound like a very Saudi Arabian concept.”

The article above shows that Aramco and the wider Saudi communications establishment still have a little further to go in terms of educating their audience. This is a classic case where “classic” finacnial communications needs to be tempered with a more strategic understanding of both the energy industry and the perception of the sovereign accross a range of audiences.

The Saudi PR offensive is a really exciting development. The challenge for those managing it is to take a wide range of views into account, and also to consider long term reputation drivers as well as messages that will drive positive coverage in the short term.

Saudi Aramco: when IPO communications is about more than just $

The recent announcement in the Economist of the potential for a Saudi Aramco IPO got the energy, capital markets and communications community in a bit of a flutter. After waiting for the dust to settle, and a bit more information to come out of the Kingdom (eg this won’t be a full IPO of the holding company), I’ve attempted to put my thoughts on the matter into some sort of cogent order.

As you might know, I’ve advised 4 national oil companies, a number of energy ministries and some sovereign state; so I have a certain amount of experience around this subject, but cannot claim any sort of inside knowledge and understanding. I could be as wrong or right as the next commentator.

An unusual announcement:

The recently announced intention by Saudi Armaco to consider some sort of IPO is, as has been noted by an anonymous banker in the FT, rather against usual practice. (behind paywall) https://next.ft.com/content/5b6ac53c-b875-11e5-bf7e-8a339b6f2164
Bankers would have us believe that it’s in the reputational interest of the client to keep quiet until a transaction is all but guaranteed. Whilst I remain agnostic on this, as the reputational risk is far greater for the investment banks than it is for the corporate; the greater control exerted by the primary advisor to IPO over the last decade or so means that corporate actors and their communications advisors today rarely get the luxury gauging market reaction through a bit of strategic communications. The news about Saudi Aramco considering an IPO is therefore very rare.

 

Consider the motivation:

This discussion is derived from an exclusive interview in the Economist (paywall) http://www.economist.com/news/briefing/21685475-possible-ipo-saudi-aramco-could-mark-end-post-war-oil-order-sale , not with Saudi Aramco, but with Kingdom’s deputy crown prince, Muhammad bin Salman. We must therefore consider this news through a wider prism than a normal IPO. Corporate and financial considerations will be central to the campaign, but the needs of Saudi Arabia itself are interlinked.

Consider the current reputational challenges that KSA faces. Geopolitical conflict in Yemen and beyond; low oil prices and their consequent internal financial challenges; a lack of consensus within OPEC to Saudi production targets and finally the fundamentally cultural perception challenges when Saudi politics and society are viewed in Europe or North America.

The Kingdom took the brave decision to go on the front foot and tell their story directly. I’m sure there will be been long negotiations between the Economist and the Kingdom as to what areas were “fair game”, but that doesn’t change the fact that this was both a serious coup for the Economist and a brave and rare decision by the Saudi leadership to make a balanced on the record statement of belief and positive intent. The long interview with Prince Salman shows that there is another way to look at the myriad of dynamics in which the Kingdom is involved. Whether you agree or not, the article is persuasive that the Saudi point of view is worth considering.

 

The Sovereign / parastatal reputational connection

Sovereign states have every right to use their operational and financial assets as communications exemplars to enhance their reputation. Even Aramco’s harshest critics admit that it’s incredible that such a massive, complex corporation manages to run as effectively as it does. It is very much a potential jewel in the crown of Saudi global communications; an example of the way Saudi Arabia has developed both in corporate but also technological and financial terms.

This status would only be enhanced by the transparency and corporate rigour necessary to list equity on any stock market, including the Tadawul (Saudi Stock Exchange). In fact a listing on the Tadawul would be perfect, as it would enhance global interest and liquidity in the Saudi Stock exchange – raising the global profile of another Saudi institution, and demonstrating the continuing development of the modern Saudi state.

 

A PR Stunt or combined value narrative?

Matching the needs of the Saudi Arabia, the NOC and wider stakeholders = Great PR
So the big question here is whether this all a “PR stunt” designed for short term gain? In general terms, it depends on the commitment of the State in question (in this case Saudi Arabia). Good PR demands true operational commitment. For a narrative to resonate, there has to objectivity. For Saudi Arabia to truly enhance its reputation through an IPO of one of the most important companies in the world, it has to be genuinely committed to the success of the IPO and provide ongoing growth to the stock – or at least guarantee yield.

If this is part of a reputation enhancement campaign for Saudi Arabia – and Aramco probably doesn’t need new capital – investors have no reason to be concerned. Their interests and those of the Kingdom are in fact intertwined.

By choosing to IPO Saudi Aramco, the Saudi political leadership may well have created a positive ongoing narrative that will allow it to continually present a successful, modern, innovative face to the world. Assuming the listed vehicle is commercially successful, everyone’s a winner.

Energy Communications in 2016 – Paddy’s Crystal Ball

The energy industry in a post COP21 environment: a view on 2016

(written in partnership with my colleague Daniela Stawinoga-Carrington)

The last minute agreement at COP21 in Paris has been hailed as an “outstanding achievement for French diplomacy” and “an end to the fossil fuel era”. Apart from a very vocal but tiny minority, we all accept that the world is heating up due to human activity and unless carbon intensive practices are constrained in some way, life will become intolerable for billions of people around the world. Something clearly must be done. 2016 could be the first year that the energy industry, as one of the major carbon emitters, is forced to genuinely re-evaluate its business model, and the way it communicates across all channels and audiences.

However, it’s worth stepping back from much of the supportive editorial coverage the Paris Agreement has driven. It has been noted that much of the cheering and hugging on the floor at COP21 was actually being done by journalists, who appeared to forget their role as objective observers. Many environmental journalists are advocates as much as analysts – they start from the point that “something must be done” as opposed to “what is happening?”

There is a perfectly acceptable view put forward by different sections of the commentariat that whilst COP21 shows a significant amount of international support there is no legally binding mechanism and limited policy or commercial rationale to fundamentally transform international industrial paradigms.
So what will happen in 2016?

1. Coal to get a kicking
Spend a few days in a coal fired city wearing glasses or contact lenses and everyone will understand the basic truism that coal fired powerstations are a bad thing not only for the environment in a carbon sense, but also for the lungs of anyone breathing in various pollutants. The health effects are crucial here. Carbon is a long term problem that can be put off by policy makers. Hospitals filled with asthma and emphysema patients and the wider societal and economic effects are a major challenge for today – across all markets, but particularly in APAC.

2. Gas to try and differentiate itself from “fossil fuels”
Gas has been fighting hard to break away from the “fossil fuel” tag beloved by the environmental lobby. Gas will look to use its inherent advantages over coal and oil (it burns much cleaner) whilst also making the case that it can be the best partner for renewable energy. It’s also worth noting the significantly enhanced percentage of revenues generated by natural gas by companies such as Shell & Exxon. Oil companies are becoming gas companies, thereby enhancing the likelihood of enhanced gas advocacy.

3. Renewables to try and hold on to the COP21 feel good vibe
Renewables now have their big chance to force policy makers and investors to take them more seriously than may have been the case up till now. Get ready to see the ongoing references to “promises made” at COP21 as the renewables industry looks to both capture the optimism of the Paris Agreement and turn it into an issue of trust with policy makers and investors alike. “#COP21promise” anyone?

4. Fear grips the oil industry
Will oil hit $20 a barrel as some predict? As Saudi Arabia keeps pumping and Iran is set to start production again after the end of sanctions, the oil industry is likely to continue having to deal with a glut of supply and a low-price environment. 2016 is likely to see more job cuts and projects being shelved for companies to even have a chance to maintain dividend. Topped by the latest COP21 “the end of fossil fuels” agenda and the clearly needed re-evaluation of the energy industry’s business model, makes for challenging times for communicators.

Finally two major issues for consideration. Money & technology. Without major technological leaps forward, “green” energy is often significantly more expensive than the alternative or is simply not an industrially viable competitor. In an era of constrained capital, the environmental lobby will have to work very hard to convince policy makers, industrial executives and finally the average consumer that higher bills are an acceptable price to pay for cleaner energy.

It’s not impossible. It’s happened in Germany – all be it with some major compromises. What is certain that COP21 has the potential to change the game for energy communicators the world over.

HOW TO PROTECT YOUR CLIENT’S REPUTATION… When you don’t have the full picture

Originally written for my mate and ex colleague’s rather good PR blog http://www.prliberated.com/index.php/how-to-protect-your-clients-reputation/?utm_content=buffercdc38&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

There’s a silly picture of me at the end of the article that I’m not putting on this blog

Q: “I’ve started working at a new agency and my core client is a big name in an industrial sector. It’s a change to anything I’ve worked on before and one of the things I’m struggling with is the lack of information the client gives us. Twice now the client has been featured in a big news story but we’ve been provided with little or no information as to what is happening. I feel like I trying to protect my client’s reputation in the dark and I’m also putting the new relationships I’m making with journalists under strain. Worst of all, it makes me look stupid! The rest of the team seem to accept the situation without question but I’m at a loss how to work this way (and keep my contacts onside). Thoughts?”

A: It’s a great question – and one that I’ve asked my old colleague Paddy Blewer from Ketchum to answer. With more than 13 years advising the energy industry (amongst others), spending time in the former soviet union, the middle east and sub Saharan Africa. Paddy’s deep sector knowledge makes him well-placed to offer advice. This is his response:

“This is an issue that everyone in communications faces at some point, because it is challenging to know every detail of a deal, a new product or a senior hire unless you are 100% immersed in the team running that project. My basic advice is as follows:

Hoover up every fact and opinion you can, and if possible, talk to the client honestly about why you need further information. Then its time to use your objectivity to put their narrative into a wider context.

In practice this means understanding where our clients fit in, whether that’s their vertical industry, policy area, investment cycle or across differing geographical regions.

Let’s take your client. My advice would be to read everything you can about them and their industry. You should always start with the company’s annual report to understand what their purpose is; and how their structure and operations are designed to help them meet their mission statement. Next talk to your colleagues and learn from their different perspectives. Try out different ideas and scenarios. Immerse yourself in the client’s world.

Then there is their key media. Search out key profiles written over the past few years to develop an understanding of how they are viewed both in terms of themselves and in terms of comparative analysis within their peer group. What’s worked and what hasn’t?

There may well be relevant analyst reports on this client. Either analysis of their products, or on a different level investment banking reports analysing the equity and debt investment propositions.

Finally you’ve got to get out there and meet people. It’s incredible how many serious and important people will give you the time of day over a drink in the hope of getting a nugget of valuable information from you. Meet your client’s other advisers, be that legal, comms or financial. Meet their rivals’ advisors. Network furiously to get a more personal feel of how the client is viewed and how their industry works – you could even try potential messaging ideas and platforms out on a strictly background or off the record basis.

You won’t become an expert overnight, but in an ideal world you should be able to develop a deep understanding of the client’s core communications profile, alongside the business itself quite quickly.

Once you get the above sorted, you won’t be losing credibility with journalists. You’ll be providing them with useful perspective.

This is why some agencies have vertical industry teams, or individuals develop as broad and deep understanding of a number of vertical industries. After multiple years advising energy / real estate / banking, you’ll know as much, if not more than many journalists covering the sector.”

What does the wild west have to do with modern communications?

It’s funny how the term “brand” has developed from its original use to today. The development of the concept from the brand mark given to livestock to denote ownership, to today’s rather more complicated and multi-faceted concept of branding has at its heart a conflict that many companies and organisations have to manage.

“Who owns a brand and what is its purpose?”

This question is particularly relevant when considering the split between corporate and consumer branding. Consumer brands and the campaigns that they help drive are all about the consumer; how the perception of the product can be positively enhanced by the perception of the brand. Corporate brands traditionally bear more resemblance to the mark of a cattle baron on a steer in Lincoln County. (Yes I am a fan of westerns). It’s about ownership and equity value.

The times however are a changing. The move to break down silos and integrate as much as possible between previously unbreachable walls is changing the way we communicate. The growing trend of integrating corporate branding into pre-existing and previously separate consumer brands has demonstrated significant value across a number of vertical industries. From FMCG to Financial Services and beyond, many industry leaders see this as the future.

If only it were that simple.

A bit of anecdotal evidence. A well-known UK consumer brand was acquired by a foreign conglomerate that had made the decision to integrate corporate and consumer branding. The product brand communications team argued that this would damage the value of their historic brand, and potentially diminish market share – thereby negating the rationale for the takeover. The result was that the corporate brand was integrated, but a lot of the product team found new employment as the argument became so heated that bridges were irretrievably burned.

Clearly this sort of issue needs very careful risk management, and with this case there were also post-merger communications issues in play as well. However it also brings up another management challenge and objective: ensuring global integration of operations and identity. A corporate brand can be used as a form of control, ensuring that subsidiaries of global corporations do not develop an identity that is so independent that their operations begin to develop a serious level of risk for the wider group – thereby preventing potentially major corporate scandal and value destruction.

Finally this leads us to the internal value of a brand. We are all contracted to our employers, but it’s not just a signature than binds us. We are passionate about the brands that work with. There is an emotional connection that binds us to the task just as strong as our contractual obligation. The integration of the corporate and consumer brands can leverage this passion for the brand as a positive motivation tool and create a real sense of belonging, of being part of something bigger than the individual – building something of value for the long term.

In the world that most people reading this will inhabit, the biggest challenge to maximising the combination of corporate and consumer brand is one of internal silos. Marketing doesn’t speak enough to corp comms, who don’t speak to investor relations – even though we all do a job that could be described as “enhance the external perception of the brand”.

Then there’s the disruptive role of social media that means we are all brand ambassadors, therefore bringing “internal communciations” into the sphere of external communications.

In short, we need to talk more. If possible, formal committees need to be set up to exchange information, techniques and best practice. If a structure is too rigid to allow this, what’s wrong with an informal chat over a cup or glass of something? Basically it’s an awful lot easier to stop a conflict before it starts, than someone having to put their blue peace keeping gear on.

Branding has come a long way from the Bar T ranch