GLOBAL PERSPECTIVE Emerging Views, Trends and Issues
June 2011
Ten Tips for Positioning Global Energy Companies
Energy powers our world. It is fundamental to modern lives and societies. As it is currently produced, energy also involves a lot of unintended or undesirable consequences. Geopolitics, globalization, the environment, poverty and prosperity, food and water supplies and prices, national economic security and stability, technological progress, military strength, industrialization, urbanization, education, healthcare – which of these, for better and for worse, is not impacted to a major degree by the supply of energy? With global energy consumption set to increase by around 40% by 2030 and an ongoing reliance on fossil fuels for the vast majority of our energy (from 81% of the global energy mix in 2008 to 74% in 2035) – how much will energy issues shape our future? From renewed concerns about nuclear energy following the tsunami in Japan, to the stability of oil and gas supplies from fragile states, to the utilization of renewable energy to fight climate change and increase energy security, to the emergence of global energy players from the BRIC countries, there is no doubt energy issues are becoming increasingly global, interconnected and complex. To meet growing global energy demand sustainably – it is imperative that we accelerate diversification of the energy mix and expand supply with new energies and new technologies – while finding and producing the remaining hydrocarbons in smarter, less damaging ways. We need to be much more efficient in producing and consuming energy – to do far more, with less. In essence, we need to deliver more energy at a much lower overall environmental, political, social and economic cost. Global energy companies and the technology and expertise they provide have major roles to play in meeting this challenge. No less than the future of the planet and human civilization depend on it. Meeting this challenge requires transformational changes and paradigm shifts which will reshape the global energy landscape and energy industry. It requires technology breakthroughs and innovation to rival or surpass any that we have witnessed to date. It requires much more integration and collaboration. As we move forward, new players, new stakeholders and new alliances are emerging – and established players need in some cases to reinvent and redefine themselves to survive. The ability to partner effectively across more complex and diverse energy value chains and ecosystems is becoming increasingly important. In this age of uncertainty and rapid change, and with energy challenges getting tougher and more urgent, global energy companies need more than ever to be able to communicate effectively to fulfill their role as energy providers and partners in sustainable development. Strategic communication is critical to success and performance in many aspects of the global energy business. Company competiveness, longevity and license to operate depend significantly on the ability to communicate effectively – and to be and be seen as a good partner. Strategic, evidence-based communications can help companies to adapt and evolve, to align with evolving stakeholder expectations and needs, to build trust, credibility and acceptance, and to shape the operating context in myriad ways.
With this in mind, here are 10 things global energy companies can do to better position themselves with stakeholders and to manage related risks and opportunities. 1. Know your stakeholders. 2. Tell the core energy enablement story globally and locally. 3. Educate. 4. Balance proactive and defensive communications needs. 5. Integrate communications. 6. Clarify your purpose. 7. Highlight partnerships and collaboration. 8. Tell the technology and innovation story (so that it can be understood). 9. Don’t get sidetracked. 10. Humanize the company image. 1. Know your stakeholders. Continuously update institutional understanding and knowledge of who your company stakeholders are, what they think and how they impact your business and operations in different parts of the world. Conduct research and analysis so your assessment is evidence-based. With a process of regeneration and renewal underway, leaderships – including government and corporate – are in transition in many regions of the world that are especially important in terms of global energy dynamics (including in some places where there has not been a leadership transition for a very long time). And, in sustaining your right to operate or seeking expanded opportunities in a particular country, you may need to attach more relative importance to different stakeholder groups than you did in the past. Consider also the fact that your relationship with certain stakeholders may have evolved, with different expectations and relationship dynamics arising from new realities. In certain situations, for example, global energy companies may have declining influence and leverage vis-à-vis local / national players. In other situations, on the contrary. Understanding historical and cultural currents is essential. But it is equally important not to be duped by historical precedent or flawed cultural assumptions. It is obviously important for strategic communications to know which channels are effective (and ineffective) in reaching various stakeholders. There are significant variations among regions and stakeholders to be aware of. This includes differences by region within a specific country, with significant urban and rural as well as local and regional variations. Based on such stakeholder knowledge and insights, more targeted communications programming can be developed to support the business and your operations. Understanding the evolving goals and aspirations of Arab youth may not have been seen as a major priority by energy company executives in the past. Today it is becoming increasingly important in various direct and indirect aspects of the energy business. ASDA’A Burson-Marsteller’s Arab Youth Survey conducted in 2009 provided a clear indication of rising expectations for democracy in the Arab world among the fast growing youth population. It also found they were concerned about economic issues and prospects in terms of jobs, housing and the cost of living (with unemployment in the region very high by global standards). This was reinforced in a much more momentous way by the uprisings across the region in 2011. Such research is one of many ways to help continuously update institutional stakeholder understanding to better inform relevant positioning and decisionmaking.
2. Tell the core energy enablement story globally and locally. Energy is essential to human progress and sustainable development (even if many take it for granted and do not intuitively join the dots between affordable energy and the quality of their lives). It is important to remember that for many, energy is foremost a local story, even if it is becoming increasingly globalized and interconnected. People want to know about their local energy supply, how fairly and smartly local energy assets are being developed, how expensive and risky energy is locally. This requires global communications frameworks with significant scope for adaptation to the local context and local stakeholder expectations. Global energy companies need to tell the story of how they are aligned with and supporting local efforts – in partnership with local stakeholders -- to meet local challenges and needs, cleanly, fairly, efficiently and safely. This requires a careful balancing of global and local level capabilities and responsibilities, with there often being a real need to further develop and empower teams at the local level to undertake business critical communications.
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There is an important difference between a global company and an international company – with global being an ideal that many aspire to, but do not always achieve. Global certainly needs to be manifest more and more in the way the communications function works and plans communications globally. Global companies should look at ways to ensure they benefit from the diversity and smarts of all the people they employ around the world in communications roles. Mechanisms for sharing best practices and exchanging knowledge globally are very important – with technology a key enabler of global team collaboration and integration – but not a substitute for face-to-face interactions. Programs or ideas developed at the local level can be taken global or to other parts of the world with similar needs if they prove especially relevant and effective. Another approach is to rotate people from localities in to roles at group headquarters and vice a versa. Developing regional or country level communications plans that fit within a defined global communications framework is also a valuable means of ensuring global / local coordination and impact. In many cases it makes sense for global-level communications to simply be adapted and utilized locally. However, local-level communications specialists also need scope to develop programming that supports specific local business goals and reflects the realities of the local operating context. Global messages should certainly be tested to see how they resonate in specific markets (with priority given to the ones that work best) and localized with strong local proof points. Local-level messages should also be developed to complement the global narrative and support specific local goals. If need be, this can be done with support and guidance from relevant specialists at headquarters. Global agency partners can also help in various ways to support these efforts – including by providing parallel team structures that match the global presence and needs of the specific energy company.
Of course, in what can be a hugely capital intensive industry, it is important to consider that the global story helps validate your business strategy with investors and business analysts that want to understand how you are aligned with key global / local trends and needs. Digital and social media have opened up new possibilities for such storytelling and related dialogues with stakeholders. It is also important to remember to tell your story in the language of your stakeholders in a particular region or country (something simple that is neglected far too often by international organizations). And do remember what it means to be a global company when positioning yourself as such with stakeholders, as opposed to a Canadian, Indian or Brazilian company with international operations. It is obviously not clear-cut – and national origins are a legitimate part of the company profile – but you do need to keep in mind the distinctions and strike an appropriate and credible balance. With global energy demand rising rapidly, growing concerns about peaking (or plateauing) supplies of fossil fuels and huge numbers of people around the world still without even basic energy access (approximately 25% of people in the world don’t have regular electricity supplies), the importance of the role of energy companies will not diminish any time soon. Yet energy companies don’t get a lot of credit. In fact, global energy companies are viewed with varying degrees of favorability and trust in different parts of the world and by different stakeholder groups – often due to local political, economic and historical factors. Undoubtedly, this also partly comes down to the fact that engineering-oriented organizations have not always been the best storytellers – there are many untold stories that could have helped greatly improve the reputations of energy companies. Sometimes they have also been too defensive and too risk averse. Sometimes they perhaps felt they didn’t need to tell their story to anyone but a small group of elite decision-makers. Sometimes they simply did not meet stakeholder expectations of good conduct. Whatever the case, such old-school thinking and behaving certainly won’t cut it in today’s 24/7, digitized, globalized world. Indeed, with the pace of change accelerating in many areas, articulating how the company is itself evolving in light of fast changing local and global dynamics will be more vital moving forward – especially when stakeholders may soon have an outdated or incomplete image of the company. Keeping pace requires frequent and consistent communications through multiple channels.
3. Educate. Help improve overall understanding of shared global energy challenges, and the role energy companies play in meeting them. Highlight collective and individual responsibilities and benefits. Help people comprehend just how tough the challenges being faced are – and how tough they could be in the future if we don’t get our collective act together. Help people understand the real constraints facing the global energy industry, including political, geological, environmental, technological, safety and economic constraints, and what this means in practical every-day terms. Help make a virtue out of energy efficiency. Help people understand the reality of the current and projected global energy mix and just how dependent we all are on efforts to secure new sources of supply and to produce energy more cleanly. Help people understand energy economics and the importance of incentives.
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Help stakeholders understand why restrictions on foreign investment in energy development can be a ‘lose-lose’ (instead of a ‘win-win’). Help people comprehend the holistic value propositions of new technologies (economic, environmental, geopolitical etc). Help build understanding of the overall energy system and close the many wide gaps that exist between perception and reality on key energy topics.
Energy issues and topics are becoming more complex and there is undoubtedly much scope and common interest to further build collective understanding in a range of related areas. Following the Gulf of Mexico oil spill and the Japan nuclear disaster, education is certainly needed to help ensure that public risk perceptions are aligned with the reality of the hazards being faced in producing energy and there is better understanding of the trade-offs involved for humanity. Continuous fact-based education will help legitimize the role of energy companies and lead to more sustainable and rationale outcomes – including in areas of public policy that shape the operating context for global energy companies, such as subsidies, market access restrictions, environmental legislation and health and safety standards. Energy companies on their own may have limited credibility on certain topics so they often need credible third parties and independent assessments to help make the case, to build trust and credibility. At the same time – from operating at the nexus of a range of the most important challenges facing humanity – they have a perspective on global issues and developments which can be highly differentiated and valuable. This provides unique opportunities for global thought-leadership and related stakeholder dialogue and engagement – which can in turn serve a range of communications and corporate positioning objectives. Indeed, local partners often see the global perspective and reach of such companies as being a key part of the value proposition. So make sure to highlight it.
4. Balance proactive and defensive communications needs. Make sure to achieve a balance between efforts devoted to positive and proactive communications on the one hand and issues and crisis management on the other. Some energy companies spend so much time on issues that they neglect to tell legitimate positive stories. Others are so focused on the good news story or a specific message campaign that they fail to be adequately prepared for issues or a crisis. This was perhaps true for some in the renewables sector who may have thought the ‘green halo’ would provide immunity to certain types of issues more commonly associated with hydrocarbons. Given the communications challenges facing energy companies, they need to be global leaders in both crisis and issues management AND corporate image building. Given recent developments, it may be a good time to conduct a rigorous assessment of such capabilities and to benchmark them against industry competitors and global best practices. This would help to identify actionable areas for improvement and capacity building. For both sides of the communications equation, energy companies need to be better at being part of the discussion. Digital tools provide new possibilities and new requirements for such engagement. Certain energy companies have learned the pitfalls of ignoring the digital discussion the hard way. Whatever the case, digital capabilities can no longer be postponed. Energy is inherently political and energy players will also need to utilize political and public affairs capabilities increasingly in the future, locally, nationally and globally, to successfully achieve their goals. Such capabilities can be used to drive new market opportunities (e.g. through public policy support) as well to maintain the license to operate for established businesses. And in all of this, remember that openness and accountability build trust, whether for proactive or reactive purposes.
5. Integrate communications. Avoid silos that can easily occur in large engineering and technologyoriented organizations. Coordinate your efforts at multiple levels and through multiple channels. Make sure that the people managing issues are connected and coordinated with the people trying to proactively build the corporate reputation of the company, while appreciating the need for differentiated strategies for issues management and image building. You may have focused strategies to address or manage different aspects of the organization’s reputation, but there should never be a disconnect.
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Make sure the government relations people, the sustainability people and the marketing and media relations people are all correctly aligned. Make sure business units are aligned at the corporate level. This means across geographies as well. On a macro-level they should all be part of delivering agreed global corporate narratives, bearing in mind the various touch points the organization has with its stakeholders around the world and specific local stakeholder expectations and proof points. Such stories or message campaigns can serve to bind together various parts of the organization and show how they are meeting specific challenges in concert, providing integrated value propositions to stakeholders. Storytelling is a vitally important part of communications. Our brains are wired for stories. Stories help us compute information in terms of basic narratives involving heroes and villains, challenges and solutions, progress and failure, justice and injustice and so on. The challenge for energy companies is to be able to convert what they are doing into stories that can be understood and appreciated by diverse stakeholder groups. This is not always easy given the range and complexity of the factors involved in finding and producing various energies. Global energy companies especially need to be aware of the narratives that they are a part of. Generally speaking the better they can align their corporate story with the story of local progress and development in a particularly country, the better their reputation will be. Conversely they need to be careful when their presence in a country becomes part of a story involving villainous leaders, rights abuses, mismanagement of local resources or environmental degradation. The latter type of story can obviously cause major damage to corporate reputations and undermine the positive story that energy companies have to tell globally. In this age of hyper scrutiny, global connectivity and digital empowerment – it is much harder for any company to sustain a narrative that is at odds with the facts (so make sure that when the facts speak the story is a good one). Those that oppose energy companies on various issues – be they large international NGOs or solo documentary film makers – have proven very effective storytellers with a sophisticated or intuitive understanding of what it takes to capture the public mind and to shape stakeholder perceptions (digital technology is one factor that has greatly leveled the global communications playing field with large corporations no longer enjoying such large asymmetrical advantages in shaping or controlling the narrative). While some may argue that their opponents do not always respect the facts, are prone to gross oversimplifications and are perhaps more interested, in some cases, in creating a good ol’ fashioned ‘David Versus Goliath’ yarn to justify themselves – there can be no disputing how effective and sophisticated some of these storytelling efforts are. Indeed, energy companies would benefit from studying techniques and methods used by their most sophisticated adversaries – for instance in utilizing digital platforms to mobilize others in the telling of the story – as well as the use of iconic imagery and visuals. By studying such methods energy companies will be better able to defend themselves and may even learn a thing or two about cutting-edge communications. Global energy companies are perceived by many to have increased power and influence in world affairs (despite actually having a reduced role in certain aspects of meeting the energy challenge). So strong communications capabilities will certainly be needed to continuously build and sustain trust and legitimacy going forward.
6. Clarify your purpose. Define your vision and mission so that it is credible and highlights the core value proposition of the company. By harnessing technology and applying various forms of expertise, energy companies help meet energy demand in a cleaner, safer, more efficient and sustainable way. While differentiation is important, a mission doesn’t need to be too complicated and it certainly should not be overhyped. Some energy companies perhaps regret going a little too far in hyping themselves in certain areas after the gaps between reality and the rhetoric became too great. They could do better perhaps in making clear how the global mission and vision work at a local, human level – highlighting local proof points to differentiate and make it real, as well as global strategies and strengths. In our experience, energy companies build trust through straight talk and realism – especially with audiences that are tired of corporate spin and hyperbole. There is often much low-hanging fruit to be picked simply by better communicating local success stories in the context of a global or regional strategy. Of course for global companies it often also pays to help your stakeholders understand your true global presence and strengths – particularly where relevant to the actual or potential needs of your local stakeholders. In many cases we find local stakeholders have limited appreciation for what a global company has done elsewhere and how they fit in a global strategy.
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7. Highlight partnerships and collaboration. Global energy companies increasingly need to partner and collaborate across the energy value chain. This doesn’t just mean with other energy companies: technology is tying together new energy ecosystems and helping old ones work smarter and more efficiently with much more potential for horizontal integration. There is also increasing potential for partnerships on the global stage with partners that may have previously been confined to a particular country or region. The emergence of Chinese companies in various global energy sub-sectors provides a case in point. Partnerships can be with governments and non-government organizations as well – including in areas that are broader than energy, and can be very important in building acceptance for global energy companies, such as education and social investment. In highlighting partnerships, there should be appropriate emphasis on shared benefits, as well as recognition of the contributions made by each partner (although in some situations it is important to be aware that a local partner may in fact desire to take more of the credit, to satisfy local stakeholder expectations). To increase differentiation and relevance, partnerships can be explained in terms of how they support specific development goals in the countries or regions in which you operate. And in your overarching partnership narrative, don’t forget to join the dots together on all the various tangible and intangible contributions you are making through such partnerships and generally (e.g. enhanced energy security and production, adding value to energy resources, facilitating global opportunities, local procurement and supply chain development, local jobs and talent development, local industry enablement, technology and knowledge sharing, enhanced environmental protection, financial investment and economic contributions, etc). The partnership message is especially important in countries where there may be some reluctance to work with global energy players because of concerns that they might unfairly profit from or dominate a local market. Ideally global energy companies want to be seen as the ‘partner of choice’ for local stakeholders – and the ability to effectively partner is a key area of strategic differentiation. Understanding your partner’s objectives and expectations is a key foundation of an effective partnership. So you need to be good listeners and institutionalize processes that encourage listening. Understanding the expectations on your partners from their key stakeholders (government, customers, etc.) within specific countries can add another valuable layer to your understanding. Demonstrating that understanding in proposing long-term solutions to their challenges can help generate business opportunities and deepen existing partnerships. This type of understanding may also help you to decide not to waste your time in an area where international participation is unwelcome or too sensitive.
8. Tell the technology and innovation story (so that it can be understood). As energy challenges become more extreme, the technology being developed and applied by global energy companies is right up there with the most advanced and ground-breaking in the world. What energy companies do on land and under the sea is up there with anything that goes on in outer space. However, in general, the complexity and magnitude of what global energy companies achieve through project expertise, engineering, science and technology – is not well understood. Better understanding in this area would help people see the value proposition of energy companies more clearly. In an age where technology enjoys a certain halo effect – this is certainly a good value proposition to highlight – especially where it is making possible the previously impossible. At the same time energy companies need to avoid coming across as arrogant or hubristic even with the smartest technologies and project expertise going. Developing countries especially seek technology and knowledge transfers – so make sure you highlight these when making such contributions, without diminishing the importance of your local partners. Ultimately technology and expertise is a core part of the value proposition of a global energy company, so make sure your leadership position and technology are well understood. And remember innovation can mean much more than hard technology. Soft skills and management techniques are also very important areas of leadership and innovation to highlight. Certain leading technology companies are very adept communicators – and global energy companies would do well to study technology sector communications best practices, or at least take them as a reference point. One aspect worth studying in particular is how they characterize themselves as truly global companies and emphasize the importance of various countries and regions in their global operations and strategy. Consider also the way they elevate evolving business and technology innovation stories through thought-leadership platforms. Another aspect to consider is how they are incorporating energy messaging into the corporate narrative, with technology playing a vital role in enhancing energy efficiency and conservation. Indeed, ‘green’ energy messages are now becoming more important for a range of industry sectors due to growing concerns around energy security and climate change.
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9. Don’t get side-tracked. For example, don’t spend too much time on unwinnable arguments with groups that will never be an advocate or ally – and don’t spend too much time on issues or causes that are of questionable relevance to your company. For example – should you really be sponsoring horse races or the local philharmonic orchestra? Sometimes, it does indeed make very good sense. But an energy company would usually be better focusing on corporate responsibility programs to improve energy access, safety or environmental issues associated with the energy industry. Don’t worry too much about differentiation of overall focus areas – there are very good reasons to stay relevant to the business and stakeholder expectations of the energy sector generally. Differentiation can come through the impact you make, how smart the solution is and the partnerships it enables you to build. 10. Humanize the company image. Remember it’s about people. The CEO needs to be chief communicator – but should not be overly-relied upon as the face and voice of the company. With communications becoming more important for global energy corporations, having a variety of people representing the company can help to project an image more in line with the reality of diverse organizations made up of real people working towards meeting real sustainability challenges. Having worked with a range of different energy companies globally, we have been very impressed by the overall caliber of the people working in the energy industry, and how far removed they are from the negative stereotypes of big business. Empower them to help tell the story of how you are addressing a variety of human needs and challenges – and generate more trust through openness and transparency. Focus on people at various levels of the organization, not just at the top. Show that you are aware of the perceptions, needs and expectations of people with an interest in your company, and that you welcome their input and views as you chart the way forward – as well as an opportunity to explain yourself. And remember that digital tools are providing new possibilities for enabling the conversation. While it is important to be people-centric and to master the art of storytelling, strategic communications also need to be evidence-based. Indeed, for organizations whose core value proposition centers on the application of science and technology and the ability to manage ROI, evidence-based communications should make a lot of sense. And certain global energy companies are already leaders in applying such techniques. Evidence-based entails a scientific approach to communications, driven by data at the beginning, the middle and the end. This way success is measured against organizational objectives and not just tactics or outputs, and programming is continually refreshed and aligned using evidence-based navigation tools. Going forward, a more scientific approach will be critical to validating and informing communications efforts, as well as to overall organizational success.
With communications vitally important for business and operational success in the energy sector – now is the time to get smart and get organized, if you are not already. There is no doubt that communications and the ability to partner will continue to grow in importance for global energy companies as they seek to overcome constraints and create opportunity in meeting the global energy challenge. Key macro trends and issues such as globalization, resource nationalism, digitization, environmentalism, the rise of the non government sector, diminishing supplies of fossil energies, energy diversification and integration, climate change and the rise of the BRICS and other countries – will all impact this dynamic. The important thing is to see opportunities – as well as the risks – and to act and communicate accordingly. For this to happen, strategic communications should be a core business function. This means it is part of, informs and supports business strategy – a true strategic differentiator, an enabler of sustainable success and competitive advantage.
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About Burson-Marsteller Burson-Marsteller (www.burson-marsteller.com), established in 1953, is a leading global public relations and communications firm. It provides clients with strategic thinking and program execution across a full range of public relations, public affairs, reputation and crisis management, advertising and web-related strategies. The firm’s seamless worldwide network consists of 67 offices and 71 affiliate offices, together operating in 98 countries across six continents. Burson-Marsteller is a part of Young & Rubicam Brands, a subsidiary of WPP (NASDAQ: WPPGY), one of the world’s leading communications services networks. About Burson-Marsteller’s Global Energy Practice Burson-Marsteller’s Global Energy Practice is an unrivalled global network of communications professionals focused on the energy industry and energy issues. Drawing on our worldwide Practice network of more than 100 communications and public affairs professionals with expertise and experience in the energy sector, the Global Energy Practice helps clients: • • • • • • • • •
Build compelling narratives that articulate value propositions and positions of energy sector players Develop and implement communications programs that impact energy sector stakeholders Map and identify energy sector stakeholders Develop common-cause partnerships Foster markets for new products and services Protect and extend licenses to operate Win public acceptance of needed energy infrastructure development Manage critical relationships with decision / policy makers Anticipate what’s coming next – and be prepared
Contacts: Asia-Pacific Douglas Dew (douglas.dew@bm.com)
Middle East Stephen Worsley (s.worsley@asdaa.com) Europe Bill Royce (bill.royce@bm.com) Roland Bilang (roland.bilang@bm.com) Website:
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www.burson-marsteller.com
North America Mike Lake (mike.lake@bm.com) Jim Cunningham (jim.cunningham@bm.com) Beth Diamond (bdiamond@national.ca) Latin America Ramiro Prudencio (ramiro.prudencio@bm.com)