Communication Director 03 2011 by Steffi Portfolio

COMMUNICATION

www.communication-director.eu

DIRECTOR

Magazine for Corporate Communications and Public Relations

03/2011

The match maker

Communicating mergers and acquisitions

Streamlining acquisitions from 100 brands to one Using communications to relieve M&A hangovers

Closer together through a communication of proximity How one company devised a winning formula for its post-merger strategy

Integrating your mission, vision and values

Fitting merging messages to bring two companies together

EDITORIAL

he past decade has seen frenetic merger and acquisition activity. As far back as 2003, Time magazine assured us that “the urge to merge is returning”, and it is an urge that shows no sign of abating. It would be easy to name-check recent examples here, but as the list grows with almost every passing day, perhaps it is better to direct you to Reuter’s Deal of the Day webpage. One transaction stands out: today’s f inancial press is dominated by the ongoing saga of the courtship of two great business players, the Deutsche Börse and NYSE Euronext stock exchanges. It is a story that carries considerable baggage: the carving up of new revenue streams, the creation of a new holding company, the purchase of a national icon, political sensitivities and anti-competition regulation. The communication challenges seem daunting: the communicator must convince others of the benef its of the deal without stumbling under the weight of their demands. Shareholders and the executive board must be satisf ied with the extent of information conveyed, internal audiences to whom ‘restructuring’ translates as ‘job losses’ must be reassured, communications strategies must be synchronised with a whole other organisational culture, messages must be tailored to suit diverse audiences with their own unique perspectives – the list is endless. But it is that range of roles running concurrently that makes communicating mergers and acquisitions such an exciting challenge, as our authors in this issue’s Storyteller section make clear. Their articles present different perspectives on this, the Everest of communication responsibilities, and we hope that this issue serves as a starting point for your own research into this fascinating process – a process that may very well be coming soon to a company near you.

Marc-Oliver Voigt Publisher marc-oliver.voigt@communication-director.eu

Photo: Moritz Vennemann

03/2011

COMMUNICATION DIRECTOR

“From a Berlin businesswoman to a Swiss actor, a Moroccan grandfather to an Italian law student, there is a palpable sense of cars as extensions of personalities.”

“The divas and the lone wolves in the group need to realise that it is the wrong venue for solo concerts.”

TEAM PLAYER

AGENDA SETTER

How to improve personnel management and your career

Communication ideas in the eyes of experts

Driving the message The talk of the town

CEOs in the eyes of the media

CEO Stockwatch by CARMA International

STRATEGIC THINKER

Communication in the land of the Forbidden City

Communication management under the microscope

BORDER CROSSER Leading professionals working abroad

Counterterrorism communications Exploring the different dialogues in the war against terrorism

Nicholas Labuschagne

03/2011

Results from the European Communication Monitor 2011

Howard Nothhaft

Christopher Springham

Incomplete power

Breaking down the day-to-day task management and work routine of communicators

How your company should communicate in the Chinese arena

The relationship between a conductor and an orchestra is a metaphor for successful leadership

Dejan Verčič, Ángeles Moreno and Ansgar Zerfass

The corporate and academic stand on communication

Baton-wielding managers Manfred Harnischfeger

LEADERS 14

COMMUNICATION DIRECTOR

Interview with Marianne Amssoms Vice President Global Communications, Anheuser-Busch InBev

“Europe can no longer afford to remain uninformed about the steps implemented by these emerging economies intent on conquering new markets.”

“I think that, provided you have the right expertise, strategies, and instincts, communications professionals can learn to master any issues in any industry or organisation.”

STORY TELLER

Looking at the important questions of communication

Mergers and acquisitions represent high points of a communicator’s career

Buying and selling: European M&A trends An overview of the growth in mergers and acquisitions that has shaped the European market in recent years

Laying foundations for the future A merger carries with it the promise of a new company and a new future

Frans Cornelis and Machteld Merens

72 Photos: Daimler AG/ Matthias Uhrland

Book Reviews

European Association of Communication Directors

Playing the double-sided divestment game Private equity ﬁrms increasingly favour dual-track strategies when divesting from their portfolio

QUESTIONS TO...

The personal side of Communication Directors

Brigitte von Haacke and Christian Zeintl

An aggressive acquisition strategy can lead to too many brands, necessitating a spring clean

ASSOCIATION

The story of a big match The early involvement of the communications function lays the groundwork for successful mergers

Cleanup operation

COMMUNICATIONS READER

Elena Gutíerrez García

Relatively new to international acquisitions, both China and Brazil offer salutary lessons

Johan Almquist

Christopher Kummer

New kids on the block Virgínia Drummond Abdala and Huiyi Gao

A very long engagement Dafydd Phillips

Using established values to welcome new colleagues

Atilla Yerlikaya Corporate Affairs Director, Coca-Cola Içecek A.S.

Post-merger communications beneﬁt from the personal touch, particularly when welcoming new employees

Dani Meyer

03/2011

COMMUNICATION DIRECTOR

AGENDA SETTER Communication ideas in the eyes of experts

DRIVING THE MESSAGE Conveying old messages in new ways is a challenge; so is turning an established brand into a freewheeling art project. Mercedes-Benz combined both challenges by Dafydd Phillips

n a time when companies around the world are redeﬁning their goals, their audiences and their markets, some longestablished companies are holding on to their founding visions. Whether an original sense of purpose or a recognisable motif that runs through their history, companies who want to retain their identity while moving in new directions ﬁnd that reclaiming their historical vision statement makes sound business sense. One such statement is the motto of nineteenth-century industrialist Gottlieb Daimler, “das Beste oder nichts”: “the best or nothing”. The company that he founded in 1890, Daimler Motoren Gesellschaft, was the parent company of Mercedes-Benz, who last year celebrated its 125th anniversary. To mark that milestone, and to bring Gottlieb Daimler’s motto into the 21st century, it promoted “the best or nothing” as the company’s tag-line. But the way they chose to underline that message might not be quite what Herr Daimler had in mind.

A NEW SPIN ON AN OLD MESSAGE In an awardwinning (Cannes PR Lions 2011) campaign, MercedesBenz teamed up with Hamburg-based agency Jung von Matt in order to approach the concept of “das Beste oder nichts” (which, on the surface, could appear as starkly uncompromising and potentially awkward in these post-recession times) from another angle, thereby fulﬁlling one of the company’s long-term strategic goals: connecting with a younger audience. As Sven Dörrenbächer, managing director of Jung von Matt, explains, “We were looking for unique approaches to promote the brand’s philosophy and to get in touch with a potential younger target group. At the same time we were looking for an approach that involves customers within brand or product campaigns. Such customer involvements provide brands with the opportunity to open up a dialogue and create trust and authenticity when doing so.” To help the company connect with a new 03/2011

COMMUNICATION DIRECTOR

target group, the agency sought to redeﬁne that problematic tag-line through a contemporary perspective. Or, as Dörrenbächer framed the question to Communication Director, “what does ‘the best or nothing’ mean on the street today?”

AN EXPERIMENTAL APPROACH With no brief speciﬁed by

Mercedes-Benz, the Jung von Matt team were free to express their creativity. The methodology they chose was simple: they approached Stefan Gbureck, a former model, emerging

Most of the people Stefan met... were extremely impressed and proud to become part of the project. artist and street photographer who had come to Jung von Matt’s attention via his highly-stylised photo projects for, among others, Die Zeit newspaper and the US-based sports shoe manufacturer New Balance. Gbureck would hitch-hike (‘Trampen’ in German) from iceridden Berlin to the sunnier shores of the Mediterranean, only accepting rides from Mercedes-Benz cars. Each leg of the journey would be written up and photographed by Gbureck, emailing his story each night to the team at Jung von Matt

AGENDA SETTER

Photos: Daimler AG/ Tramp A Benz

The brand message travelled through several countries in the Tramp a Benz campaign

who would then upload the results on to the campaign’s website, www. tramp-a-benz.com. Through this website, the message would be spread to online users and a whole new audience would be engaged. An opportunity, therefore, to not only explore the diﬀerent makes that build up the Mercedes-Benz brand but also the diﬀerent people that comprise the brand’s customer base. Or, again as Dörrenbächer puts it, “who are the people that at one point in their life decided to choose ‘the best or nothing’?” The free-wheeling spirit of the project was in stark contrast to the established image of Mercedes-Benz, a risk acknowledged by Dörrenbächer: “The hitchhiking trip started as an experiment. Of course, our client was informed and supported the idea but, as everyone knows: the outcome of an experiment can’t be predicted.”

ON THE ROAD The Tramp a Benz website tells its own story, and beautifully so. In return for tweeting about the project, visitors to the website are able to download a free online photo book, carefully laid out in the style and tone of a typical large-format hard-cover art book. Child-like hand writing provides a running commentary for Gbureck’s elegiac pictures, their almost formal beauty at odds with the rough-and-ready nature of hitchhiking. An elegantlyscrawled map on the first page details the trip – from an austere Brandeburg Gate south through a snow-flecked Germany, past Zurich, Lake Lugano, and the lakes of North Italy down to Genoa, and along the Mediterranean coast via Nice and Cannes into Spain and the final destination, Barcelona. The marriage of text and images is highly evocative but what makes the journal memorable is the cast of characters that Gbureck meets along the way. From a Berlin businesswoman to a Swiss actor, a Moroccan grandfather to an Italian law student, there is a palpable sense of cars as extensions of personalities. Along the way, there are also plenty of hours spent waiting in road-side rest stops as the hand-written “Nur mit Mercedes-Benz” cardboard sign morphs from a daring statement of intent to an albatross of bad luck. But, on the whole, the project seems to have pro03/2011

COMMUNICATION DIRECTOR

AGENDA SETTER

Ambivalent results (Ed.: The German Council for Public Relations (DRPR) criticised the ambivalence behind the authorship of the campaign; however, Cannes PR Lions decided that the campaign did not violate the provisions of the PR category. ) My view on Tramp a Benz is ambivalent. On the upside, I do like the creative approach and how they solved the issue of connecting a luxury brand with a younger, lower income audience. Also, how they showed that “the best or nothing” is not only a question of budget, but also of commitment. It certainly was for Gottlieb Daimler back then, and it was for Stefan Gbureck as he hitchhiked in 2010. I also like how the drivers became the heroes of the story. Their diversity filled the brand with life beyond the stereotype. And I do like the fact that they tried to leverage social media. On the downside: the ‘picky hitchhiker’ idea isn’t new. Peugeot did this first in Denmark in 2008. While Jung von Matt certainly made something different of it, it still raises certain questions for an agency applying for an award. I also take issue with their approach to transparency. The fact that the blog was presented as a project by Stefan Gbureck and Jung von Matt without disclosing the client is not okay. This matter is being investigated by the DRPR. Regardless of the code of conduct issue, it is not smart to mislead people when authenticity is expected. Finally, it is a pity they did not see the potential to really engage people in social media. Why not open the blog to Benz enthusiasts to share their ‘the best or nothing’ stories? Or make it a hitchhiking relay? So, by and large, I find this campaign to be a great idea executed with flaws.

One thing is certain: Tramp a Benz is not a traditional public relations campaign. And that’s a good thing! It shows where public relations could be headed. I applaud new formats like these, where the lines between art, PR, culture and advertising blur. But there is also room for improvement here. Mercedes-Benz aimed at setting up an onand ofﬂine dialogue, with their brand evangelists and customers, around their ‘the best or nothing’ philosophy. From an outsider’s point of view, I believe they failed. The ofﬂine campaign is visually attractive but they took a big risk with the brand experience. What would you think when offering a hitchhiker a ride and they refused? I would share that negative experience. Online, the campaign refused to use social media at its full potential. I’m not judging the numbers here, but a ‘like’ or ‘comment’ isn’t a dialogue. The oneway communications did not connect well with the broader Mercedes-Benz audience. So did they listen to what Mercedes-Benz brand evangelists and customers look for online? And what was the strategy behind not integrating Twitter for dialogue purposes? We also know that public relations does not come for free, so I’m curious to know how this public relations campaign moved the return on engagement needle. Was the campaign a perfect match for Mercedes-Benz, or would have made it more sense for, say, the Mini Cooper Countr yman and its community? Also, the PR prize shows me that Jung von Matt is still great at adver tising, but needs more knowledge of PR and social media.

Georg Kolb

Jody Koehler

Business Director, straightto

Cofounder, Coopr

Georg Kolb is business director at communication software ﬁrm straightto. Prior to straightto, his roles included social media director and key accounter at Pleon Germany, chief of innovation at Text 100 Global PR in New York, and managing consultant for the same ﬁrm’s German business.

03/2011

Changing global mentalities

COMMUNICATION DIRECTOR

In 2009, Jody Koehler co-founded Coopr, a Dutch public relations agency. He advises clients on, among others, social media and content marketing. Prior to Coopr, he worked as a public relations manager for eBay and as a consultant at several agencies. He is an active blogger for PR Daily and the Coopr blog.

gressed with astonishing ease. “Most of the people Stefan met on the street were extremely impressed and proud to become part of the project”, says Dörrenbächer. “The pictures and stories from his trip prove that.” The campaign’s success was measured by soft facts such as the number of dialogues between the brand and the online community.

A NEW KIND OF SYNERGY Finally, this modest project represents a unique collaboration between an established company, an agency and an artist. According to Dörrenbächer, “Tramp a Benz is a new format of art and culture that enables MercedesBenz to start a real dialogue with friends of the brand and customers, online and offline.” I asked him whether he believes that the kind of synergy seen here points to a new future for communications: “In order to get in touch with a young urban target group”, he told me, “it is essential to choose new and unseen ways of marketing communications.” In this case, social media has been used as a space in which the monolithic corporate image can be adapted and remoulded by means of a story expressly designed to appeal to the young and young at heart – anyone, in other words, who has dreamt of hitting the road and leaving it all behind. As for corporate-artistic collaborations, Dörrenbächer is convinced of their worth. “In terms of projects where an artist is involved”, he says, “it is of importance to fulfil the artistic expectations. Often only a closer look at the project reveals that a brand is the initiator or at least a supporter. However market surveys prove that people recognise the brand behind the project. This positively affects the brand’s images values on a long-term basis.”

Photos: Private

EXPERT OPINION

EUROPEAN

COMMUNICAT ION

��

SUMMIT2011

��

WWW.COMMU N I CAT I O N - S U M M I T. E U

AGENDA SETTER

THE TALK OF THE TOWN Sweden’s prostitution law was recently the subject of great debate, but those against repealing the law won a victory thanks to the construction of a shocking talking point in the middle of Almedalen, among the great and good of Swedish politics by Neil Cranswick

T 10

he issue of prostitution in Europe is a complex one, with the so called ‘oldest profession in the world’ enjoying different legal statuses across the continent. What is undeniable, however, if one ignores the issue of legality, is that the existence of prostitution tends to lead to an objectification of women in society, and can also act as a catalyst for criminal acts such as human trafficking, violence and rape. Sweden’s Sex Purchase Act (Sexköpslagen), adopted in 1999, makes it illegal to pay for sex, although prostitution is not illegal. The purchaser is the criminal, not the seller. However, despite this, one out of every 13 men in Sweden has paid for sex, and a recent survey (which acted as an inspiration for the following campaign) showed that around a quarter of Swedish men would like to abolish the Sex Purchase Act. Last year, as part of its stance against the purchase of sex, the Swedish state set aside a small budget to help Järfälla Tjejjour, an empowerment centre for girls (which is now called ‘1000 Möjligheter’ and works with both boys and girls), reduce demand for sex purchase and enhance awareness of the consequences of prostitution and sexual trafficking. Zandra Lundgren, who was the executive director at Järfälla Tjejjour, explained that “the government in Sweden had taken a clear stand [on the issue] 03/2011

COMMUNICATION DIRECTOR

and presented an action-plan, with funding a campaign formed by an NGO as one of the bulletpoints.” Together with gyro, a Stockholm-based consultancy, Järfälla Tjejjour decided to take advantage of the media presence at Almedalen Week, an annual landmark in the Swedish political and media calendar, to achieve the maximum visibility for their campaign. For seven days of the year, the Swedish media descends on Almedalen for events and activities planned around speeches by the major Swedish political parties. Almedalen Week in 2010 promised to be an even larger event than usual due to the upcoming election, meaning that any exposure at the event would gain even greater media coverage than usual. Christina Gillberg, the chief operating officer at gyro, explained their selection of Almedalen Week as the perfect backdrop for their campaign as such: “On such a limited budget, the only route was to provoke a true media storm. Therefore, our primary target was the nation’s journalists, politicians and news commentators – the people who shape the social conversation.” By influencing this group, they hoped to achieve remote influence on their second target group, which was the much broader group of men and women of a sexually-active age.

WHIPPING UP A STORM So how did they plan to grab the attention of the great and the good gathered in Almedalen? Gillberg explained that “our strategy was to create something that would turn everyone’s heads – directly challenging complacency and putting the trade at the top of the agenda. What did we do? We built a brothel

AGENDA SETTER

– right in the centre of Almedalen.” In the lead-up to the creation of their (fake) brothel, Järfälla Tjejjour and gyro gave the results of the recent Sex Purchase Act survey to Sweden’s biggest news channel. It did not take long for the news that 25 per cent of Swedish males wanted an abolition of the act to gain traction, and as it had begun to ﬁlter into the public’s consciousness, the media were descending

women in any way in the campaign. Another challenge was to reach out with our message through the massive amount of seminars, other campaigns, PR events and political activities during the week called Almedalen.” The goal was to stimulate the established media into creating as much debate about the issue as possible. This goal was further split into three separate aims for the coverage they received: 51 per cent of the reporting should be neutral or positive to Järfälla Tjejjour’s message; the proportion of people who were positive to the law should increase by 10 per cent; and, more generally, the issue and the brothel should be ‘the talk of the town’.

Photos: www.gyro.com

The brothel served as a discussion point and provided further information about the negative effects of prostitution

upon Almedalen to report on Sweden’s most inﬂuential politicians and opinion-formers. But when the media got there, they did not only ﬁnd the politicians and commentators; they also found a brothel. The brothel concept was supplemented with advertisements in Sweden’s biggest daily newspapers and posters in Almedalen inviting people to visit the brothel, as well as a Facebook page where the target group could take a position on the issue. They had to be very careful in their advertising, however. As Lundgren explained, “it was very important for us not to objectify or exploit

As intended, the brothel created quite a media storm, with a stream of national TV and radio presenters turning up at the brothel to report, comment and conduct interviews. Gudrun Schyman, a well-known Swedish politician, enthusiastically nominated the brothel for the Week’s Media Power Factor award, given to the person or organisation that attracted the most media attention, and leading opponents of the law, such as artist and politician Alexander Bard, attacked it and its message. In short, a full-scale debate broke out – and kept growing.

GETTING THE MESSAGE OUT In total, Almedalen Week 2010 attracted 700 journalists and 800 organisations, and featured 1400 events. Despite this high level of activity, one issue stood out for the media, winning the Media Power Factor Award: The Brothel in Almedalen attracted over twice the votes of its nearest rival. 03/2011

COMMUNICATION DIRECTOR

AGENDA SETTER

EXPERT OPINION A clever campaign The Brothel in Almedalen was a clever campaign to bring the effects of the purchase of sex on to the political agenda. Buying sex in Sweden is a crime, and yet one in every 13 Swedish men has bought sex at some point. Setting up a brothel during the Swedish political week in Visby, where politicians and interest groups meet each year, was a smart way to bring attention to the fact that those who buy sex are involved in the financing of major organised crime. All demand for the purchase of sex funds human trafficking for sexual purposes, whether the buyer’s intention is to buy from a Swedish woman or not. With the brothel, Järfälla Tjejjour (Girl’s Shelter) created a location for a discussion on the consequences of prostitution and trafficking, a discussion which continued on social media platforms. Before the political week began, Järfälla Tjejjour announced the brothel in the major national newspapers, where they offered supporters of prostitution practice as a sex worker, and sex buyers a place to feel at home. By reversing the perspective, and demonstrating resistance to buying sex in a brothel, they combined humour with seriousness, which is a great way to start a debate. The brothel became a place where feminist activists and politicians could meet and plan political activities promoting human rights and condoning human trafficking and prostitution. And, the fact that the brothel in Almedalen attracted attention abroad is a sign that the campaign was successful.

Stirring up debate Prostitution is a controversial and sensitive issue in Sweden, one which involves extensive human suffering, both from a physical and from a psychological perspective. Buying sex has been illegal in Sweden following the implementation of the Sex Purchase Act in 1999, yet, despite this, one out of every 13 men has admitted to buying sex and, according to a recent survey, as many as a quarter of Swedish men would like to abolish the Sex Purchase Act. In the light of these numbers, it is perhaps not strange that Thailand has become such a popular holiday destination for Swedish men. Putting prostitution on the political agenda by setting up a brothel in Almedalen, the major political forum in Sweden, was really a genial idea. With a limited budget, Järfälla Tjejjour managed to stir up a real debate about the highly sensitive issue of prostitution among key opinion leaders, stakeholders and politicians. Although the campaign was one of the key highlights during Almedalen week, the real challenge is to continue to drive the debate on an ongoing and long-term basis, in order to sustain the favourable perception of the Sex Purchase Act. The Brothel in Almedalen has cer tainly played an important role in this endeavour.

The eﬀect of the brothel was also felt outside of Almedalen. Leading politicians and opinion-formers publicly debated the issues involved, and, in total, over 40 reports on the brothel appeared in print, radio and TV media, the public relations value of which was estimated at 747,000 euros by MediaPilot (over eight times the actual budget), not to mention the countless arguments that took place in the blogosphere. Not only did they receive a lot of coverage, however, but the coverage was also overwhelmingly positive: 93 per cent of the articles were positive or neutral in tone, a much higher total than expected. The exposure meant that Järfälla Tjejjour representatives were able to get their message across in interviews on national radio, newspapers and on the internet, as well as in a presentation as part of a seven-minute feature on television channel TV4. The debate they provoked reached further than expected and the campaign exceeded its targets. The number of Swedes with a positive view of the existing Sex Purchase Act increased by 28 per cent (three times the targeted amount) according to the results of a survey by SIFO, and the research also showed that the number opposing the law fell from 18.2 to 13 per cent.

Amanda Mogensen

Håkan Jarlenius

Communications Manager, Feminist Initiative

Senior Adviser, Corporate Communications and CSR, PRAT PR Porter Novelli

Amanda Mogensen handles communciation strategy for Feminist Initiative, the Swedish political party. She has been involved with the party since its foundation in 2005, and has been involved in election campaigns and other important events. She has previously worked in the peace movement and as a security policy secretary in the Swedish parliament.

03/2011

COMMUNICATION DIRECTOR

Håkan Jarlenius recently joined PRAT PR Porter Novelli, having previously been deputy managing director at Edelman Stockholm, where he was responsible for cooperation with Edelman’s Nordic ofﬁces. He specialises in strategic communications, crisis and issues management, marketing communications and CSR, and worked for Porter Novelli in Madrid and Brussels before joining Edelman.

Act has since been updated, allowing for longer punishments for those who purchase sex. The debate provoked by the Brothel in Almedalen helped to raise awareness of the effect of prostitution and clarify that the existing law could be more effective. Gillberg summed up the effect of the campaign by saying that “it takes time to change attitudes and one campaign surely cannot change the world. However, it is clearly an important step on the path forward.”

Photos: Private

MOVING ON The Sex Purchase

LEADERS CEOs in the eyes of the media

CEO STOCKWATCH Watching the people who run the commercial world by CARMA International

The twin spectres of fear and uncertainty continued to stalk stock markets between March 12, 2011 and June 30, 2011 – the period covered by CARMA International’s latest survey of media reporting of business leaders. The fragility of the global economic recovery and the unfolding crisis in the eurozone rattled nerves. Continuing unrest in the Middle East and the fallout from the earthquake and tsunami in Japan also heightened tension. In the eurozone, the EU and IMF approved a bailout package for Portugal and, in late June, the Greek government pushed austerity measures through parliament, helping to spark a resurgence in stock markets. Against this turbulence, the top 20 rankings of the CARMA survey were reshuffled. Warren Buffet moved up to first place from third, displacing Steve Jobs of Apple, who slipped to fifth position. Continuing fallout from the corporate espionage scandal at Renault lifted Carlos Ghosn into third place from seventh, and bestowed on him the dubious distinction of

scoring the highest proportion of negative media mentions of CEOs in the top 20. In mid-March, Ghosn refused to accept the resignation of his deputy, Patrick Pélata, over the scandal, but both men agreed to forsake their performance bonuses for 2010 and their stock options in 2011. Bob Dudley, who replaced Tony Hayward at the helm of BP after the Mexican Gulf oil spill disaster, rose one place to fourth as his Russian deal ﬂoundered. Rupert Murdoch remained at number two, as reporting continued on his bid to control BSkyB and fresh revelations emerged of phone hacking at newspapers within his group. Nevertheless, Rupert Murdoch avoided negative mentions over the period. Five bankers featured in the top 20, down from seven last quarter, with Jamie Dimon of JP Morgan slipping three places to seventh and Bob Diamond of Barclays, Brian Moynihan of Bank of America, Vikram Pandit of Citigroup and James Gorman of Morgan Stanley falling outside the top

Top 20 CEOs worldwide | Top CEOs by volume in Q2

Top 20 CEOs in Europe | Volume of coverage in Q2

Berkshire Hathaway / Buffett News Corporation / Murdoch Nissan-Renault / Ghosn BP / Dudley Apple / Jobs Goldman Sachs / Blankfein JP Morgan / Dimon Nasdaq / Greifeld Microsoft / Ballmer Sony / Stringer Fiat / Marchionne Facebook / Zuckerberg Deutsche Bank / Ackermann Hewlett Packard / Apotheker Reliance Industries / Ambani Google / Page Sberbank / Gref HSBC / Gulliver NYSE Euronext / Niederauer Nokia / Elop

Berkshire Hathaway / Buffett BP / Dudley Nissan-Renault / Ghosn News Corporation / Murdoch Deutsche Bank / Ackermann Sberbank / Gref Nasdaq / Greifeld Apple / Jobs Goldman Sachs / Blankfein Sony / Stringer Fiat / Marchionne Lloyds TSB / Osorio Microsoft / Ballmer Facebook / Zuckerberg Barclays / Diamond RWE / Grossmann JP Morgan / Dimon Marks & Spencers / Bolland Volkswagen / Winterkorn Gazprom / Miller

0 50 100 150 200 250 300 350 400

03/2011

COMMUNICATION DIRECTOR

100

120

140

LEADERS

Quality of CEO coverage | Percentage of favourable, neutral and unfavourable coverage favourable

neutral

unfavourable

Buffett Murdoch Ghosn Dudley Jobs Blankfein Dimon Greifeld Ballmer Stringer Marchionne Zuckerberg Ackermann Apotheker Ambani Page Gref Gulliver Niederauer Elop

60%

70%

80%

90%

100%

10 per cent. Products, services and solutions fell two points to seven per cent, while legal/regulatory issues edged one point higher, to six per cent. Society issues continued to account for one per cent of reporting. There was no change in the themes that represented the smallest shares of overall reporting: labour issues, environment/sustainability and governance issues, with less than one per cent each. Themes most beneﬁcial for CEOs | Favourability of topics % favourable

% unfavourable

% neutral

100% 80% 60% 40%

20%

03/2011

Environment

Governance

Labour

Society

0% Other

twenty. Two bank CEOs rose into the top 20: German Gref of Sberbank, in 17th place, gained attention for the Russian bank’s acquisition of investment bank Troyka Dialog and the forthcoming privatisation of its government stake. Stuart Gulliver (18th) took over as CEO of HSBC in January and unveiled his strategy to overhaul HSBC in May. Lloyds’ new chief, Antonio Horta-Osorio, ranked number 23 in the global list. Six other names rose into the top 20 from lower down the previous listing, headed by Robert Greifeld of Nasdaq OMX, who was thrust into eighth place by Nasdaq’s joint $11.3 billion bid with IntercontinentalExchange for NYSE Euronext (FT, April 2). The oﬀer challenged NYSE Euronext’s agreed merger with Deutsche Borse. However, Nasdaq and ICE announced they were dropping the bid in mid May after concluding that US regulators would not approve it. The other new entrants were Howard Stringer of Sony (10th), Leo Apotheker of HP (14th), Mukesh Ambani of Reliance Industries (15th), Larry Page of Google (16th) and Stephen Elop of Nokia (20th). In terms of themes, ﬁnance increased its dominance from 45 per cent to 48 per cent of overall volume of reporting on CEOs. This was at the expense of management/leadership issues, which fell seven percentage points to 22 per cent of reporting, though commercial issues rose by four points to

50%

Legal

40%

Products & Services

30%

Commercial

20%

Management

10%

Finance

COMMUNICATION DIRECTOR

LEADERS

The best and worst presented CEOs | Top performers vs bottom performers: differences in topic

100%

Products, services

% of volume

Management

80%

Legal Labour

60%

Society Governance

40%

Finance Commercial

20%

Environment Other

Marchionne

Bolland

Pandit

Olofsson

Best performers on favourability

Ghosn

Agnelli

Worst performers on favourability

WARREN BUFFETT OF BERKSHIRE HATHAWAY Re-

porting of Warren Buffett surged over the period, to 406 mentions, more than double the 165 he gained in the last survey. This was also more than twice as many mentions as Rupert Murdoch, the second most-reported CEO. However, it was not heightened fascination with Buffett’s hallowed investment views that fuelled media attention. Instead, it was news that David Sokol, a top executive in Buffett’s investment company Berkshire Hathaway for the past decade, had unexpectedly resigned after buying shares in a company before recommending it to Buffett. Sokol’s departure brought the issue of who would succeed Buffett into sharp focus. The

FT said it deprived “the sage of Omaha of a top lieutenant and a man widely tipped to take over the company in the future” (“Buﬀett lieutenant steps down”, FT, March 31). FT headlines on April 1 included “Exit raises stakes on succession” and “Berkshire shares hit by Sokol’s departure”. The FT’s Lex Column (April 1) pondered the issue of succession for Buﬀett and Murdoch, both octogenarian billionaires who tightly control listed companies: “Some shareholders are unhappy with the way successors are being chosen”. It noted that at least Murdoch’s son has grown up with the company and may even have inherited some of his father’s business genius. “In any case, News Corp is now solid enough

Top CEOs | Geographic spread of coverage

Themes most associated with CEOs | Share of coverage of issues monitored in media

APAC

LATAM

EMEA

NAM

Labour (1%) Society (1%) Other (4%)

Environment(1%) Governance (0%)

100% Legal (6%)

80%

Products (7%)

60%

Commercial (10%)

40% 20% 0% Marchionne Bolland

03/2011

Pandit

COMMUNICATION DIRECTOR

Olofsson

Ghosn

Agnelli

Management (22%)

Finance (48%)

LEADERS

Buffet | Coverage by region

NAM (26%) APAC (41%)

EMEA (33%)

April 29 “Buffett scrambles to limit damage” (SCMP, April 30).

$ (millions)

Berkshire Hathaway | Tough times for Buffett 130 125 120

March 30 “Buffett lieutenant steps down” (FT, March 31)

April 29 “Tough questions await Buffett on Sokol affair at annual meeting” (SCMP, April 30).

115 110

22.06.2011

12.06.2011

02.06.2011

23.05.2044

13.05.2011

03.05.2011

23.04.2011

13.04.2011

03.04.2011

24.03.2011

105 14.03.2011

to thrive as a typical bureaucratic enterprise, with or without a Murdoch at the top. But unless a new Buffett-like figure can be found, complete with Buffett-like investment performance, Berkshire Hathaway will have to work hard to justify its existence.” The Wall Street Journal US also grappled with the implications of the Sokol affair: “Buffett Successor List Gets Shorter”, declared a March 31 headline. Another article commented: “Warren Buffett has said that he can’t do without Berkshire Hathaway Inc. But one question that is becoming more urgent is whether Berkshire can do without Mr Buffett” (“Sokol departure spotlights challenge of succession”, WSJUS, March 31). A handful of articles judged it had damaged Buffett’s and Berkshire’s reputation. “As Warren Buffett once observed, it takes ‘20 years to build a reputation and five minutes to ruin it.’ If events at Berkshire Hathaway, which Mr Buffett runs, have not ruined the investment conglomerate’s previously stellar reputation, they have certainly dented it. Whatever the strict legal status of the share purchases Mr Buffett’s now-departed colleague, David Sokol, made in Lubrizol, they look impossible to justify from an ethical standpoint.” (“Buffett and the value of trust” FT, April 5) German business newspaper Frankfurter Allgemeine Zeitung also took a hard line: “The good reputation of Berkshire, which had been very important to Buffett, is now threatened by the Sokol affair” It quoted Jim Cramer, former hedge-fund manager and TV commentator: “‘If even the apparent successor David Sokol behaves like this, then who the hell can know what’s going on there?’” (April 8). Questions about the Sokol debacle dominated the annual gathering of Berkshire shareholders in Omaha. Before the event, The South China Morning Post predicted: “It could be the toughest weekend Warren Buffett has ever had…there appears to be only one topic of conversation in town – Berkshire’s extraordinary claims about the behaviour of one of

its top executives” (“Tough questions await Buffett on Sokol affair at annual meeting”, SCMP, April 30). “Buffett admits errors made in Sokol case” ran a SCMP headline after the event on May 2. “Buffetted about” said an Australian Financial Review headline of April 30. “Warren Buffett has won admiration around the world for his humble and ethical attitude to business. But now he is frantically trying to explain an ‘inexplicable and inexcusable’ lapse in humility and ethics by a senior executive who worked right under him” (AFR, May 2).

BOB DUDLEY OF BP Bob Dudley got off to an energetic start in the top job at BP, striking two strategic deals since the start of 2011. In January, BP announced a 16 billion US dollar share-swap and agreement with Rosneft, the Russian state-backed oil firm, to explore the Arctic. In March, it announced it would buy Devon Energy’s Brazilian assets to enable it to begin exploring off the coast of Brazil. The two deals were supposed to open a new chapter for the embattled oil giant. However, BP’s Rosneft deal soon became ensnared in complex negotiations with a group of Russian billionaires, whose consortium, Alfa-Access-Renova, partners BP in its existing oil venture in the Russia, TNK-BP. On January 26, AAR filed for an injunction to block the Rosneft deal. An arbitration tribunal in Stockholm extended the injunction on March 24. As the FT of March 26 observed, “Bob Dudley has been chief executive of BP for less than six months but the next 20 days could prove critical to his tenure at the UK oil group”. It noted that on April 14, less than three weeks away, Dudley would face his shareholders at his first annual meeting as CEO of BP. On the same day, BP’s exclusivity period on the proposed Rosneft deal would end. “The stakes are high for Mr Dudley. His strategy has the backing of the board…but his shareholders are rattled” (FT, March 26). 03/2011

COMMUNICATION DIRECTOR

LEADERS

Dudley | Coverage by region APAC (12%)

18 NAM (22%)

EMEA (66%)

03/2011

COMMUNICATION DIRECTOR

April 14 “Dudley still standing despite investors’ grilling” (FT, April 15)

May 20 “Boost for BP as Moex agrees to pay towards oil spill costs” (FT, May 21)

$ (millions)

BP | Positives and negatives 47 46 45 44 43 42

22.06.2011

41 12.06.2011

02.06.2011

23.05.2044

13.05.2011

03.05.2011

23.04.2011

13.04.2011

03.04.2011

24.03.2011

April 14 “Crunch time for BP’s May 6 “BP cedes Arctic exploration arctic deal” (WSJ US, April 14) rights in effort to rescue Rosneft share swap” (FT, May 7) 14.03.2011

The Economist was scathing: “It is hard to feel sorry for Mr Dudley, whose dealmaking with Rosneft has jeopardised a well-functioning joint venture which paid regular dividends. Oil companies often have to operate in difficult environments…But in this instance BP’s troubles are of its own making” (“Bob Dudley, BP’s boss, has got the oil giant into a mess over its Russian Deals”, Economist, April 2-8). Dudley handled the backlash from shareholders at BP’s AGM adeptly. The meeting was “stormy but not a firestorm” and Dudley was “still standing after more than three hours of intense questioning from at times emotional and angry BP shareholders” (FT, April 15). He faced down criticisms of BP’s pay policy and its safety record (FT, April 15) and dealt shrewdly with an invasion of protestors into the meeting: “In response, an astute Bob Dudley, BP chief executive, picked the moment to read out the names of the 11 workers who died. But he then robustly rejected government estimates of the amount of oil spilled in the ocean” (FT, April15). But the failure to clinch the Russian deal before the April 14 deadline drew sharp words from the Wall Street Journal US. “The result is that BP’s crisis has been prolonged, and perhaps expanded, rather than resolved. The oligarchs’ legal success has been humbling for BP Chief Executive Bob Dudley, who touted the tie-up with Rosneft as proof of BP’s Lazarus-like revival. It has also reinforced BP’s reputation as an unusually mistake-prone company that lurches from crisis to crisis – many of its own making” (“Comeback is Sidetracked in Arctic”, WSJ US, April 19). On May 7, BP agreed to cede exploration rights in Russia’s Arctic region to TNK-BP, in a “last minute gambit by Bob Dudley…to salvage his development strategy and restore shareholder confidence” (FT, May 7). Vedomosti, the Russian newspaper, followed the twists and turns in the saga and commented unfavourably as it became clear that the deal had fallen through: “CEO BP Rob-

ert Dudley let the deal with Rosneft slip”, said a caption (“BP Lost Again”, Vedomosti, May 18). As he sought to refocus BP on other areas such as Canada, the paper quoted Dudley saying: “Russia isn’t a key priority for BP at the moment”. However, it recalled his previous claim that the Rosneft deal was “unique” (“Dead deal”, Vedomosti, June 10). More positive for public relations were Dudley’s moves to make BP’s contractors take some responsibility for the Gulf of Mexico oil spill. He took out a 40 billion US dollar lawsuit against Transocean and separate suits against Cameron International, which made the blow-out preventer, and Halliburton, which was in charge of cementing the well (Lex, FT, April 23). Moex too agreed to help meet the oil spill costs (“Boost for BP as Moex agrees to pay towards oil spill costs”, FT, May 21). Nevertheless, Bob Dudley’s ﬁrst six months as CEO have been overshadowed by his Rosneft misadventure. The FT (May 18) quoted a chess-loving investor’s view that the collapse of BP’s alliance with Rosneft had left “a double question mark” against Dudley’s name – a “commentator’s notation for a very bad move in chess, a game popular in Rosneft’s Russian homeland”.

HOWARD STRINGER OF SONY Howard Stringer, the 69-year-old Welsh-born CEO of Sony, the Japanese electronics group, had to contend with mounting troubles. Besides the after-effects on its business of the Japanese earthquake, Sony suffered hacking attacks that brought down its online gaming networks, websites and breached its databases. Yet it was not Stringer who was in the frontline in the aftermath of the hacking attacks that forced Sony to shut down its PlayStation Network in April. Instead, it was Kazuo Hirai, the Sony executive given control of its consumer electronics divisions in March. Hirai is widely regarded as next in line for the top job. “How he handles this difficult time, some ob-

LEADERS

Stringer | Coverage by region LATAM (3%) NAM (19%)

EMEA (46%)

APAC (32%)

$ (millions)

Sony | Mounting troubles

May 1 “Sony apologises over PlayStation hacking” (FT, May 2)

June 2 “Sony suffers further attack by hackers” (FT, June 3)

33 32 31 30 29 28

May 17 “Sony Chief Warns on Cybercrime” (WSJ Europe, May 18)

27 26 25 22.06.2011

12.06.2011

24 02.06.2011

23.05.2044

13.05.2011

03.05.2011

23.04.2011

13.04.2011

03.04.2011

24.03.2011

May 18 “Sony hit by fresh security problems” (FT, May 19) 14.03.2011

servers say, could determine whether he takes the final step to becoming chief executive” (FT, May 7). In contrast, Howard Stringer stayed in the background. Hirai bowed deeply in apology to Sony customers at an emergency news conference on May 1. It was not until May 6 that Stringer commented, apologising on a Sony blog for the “inconvenience and concern” caused by the hacking attack. Stringer acknowledged that some customers were unhappy with the speed of Sony’s response. “I know some believe we should have notified our customers earlier than we did. It’s a fair question,” he said (“Chief apology”, FT, May 7). Further security breaches continued to undermine confidence in Sony and its online defences. Stringer told The Wall Street Journal Europe that he could not guarantee the security of its videogame network or any other Web system in the “’bad new world’” of cyber crime (WSJ Europe, May 18). Sony disclosed a 260 billion yen net loss for the accounting year ended March 31 – the third straight year of losses – and it emerged Stringer had taken a 16 per cent pay cut (“Struggling Sony cuts CEO’s pay”, WSJ US, June 29). On Stringer’s tenure at Sony, the FT said “That the jury is still out on Sir Howard’s legacy reflects what many see as his mixed performance” (“Sony chief looks to secure legacy”, FT, May 23). The Economist was less equivocal: “Sony’s boss, Sir Howard Stringer, looks like a total failure. But looks can be deceptive” It argued changes Stringer made to the company “have paid off” and sales in certain areas have improved. “Many of the firm’s employees are conservative foot-draggers, but Sir Howard has shaken them up. Perhaps he has made Sony safe once more for a Japanese boss” (“Critics call Howard Stringer a failure. They are wrong”, Economist, May 28 – June 3).

JOSEF ACKERMANN OF DEUTSCHE BANK Like Warren Buffet, the issue of succession was a fixation of media reporting of Josef Ackermann, the veteran banker who has headed Deutsche Bank since 2002. Deutsche Bank’s senior ranks were reported to be “on the verge of open warfare” as the process of finding a successor for Ackermann degenerated into “acrimony”, (“Deutsche Bank split on succession”, FT, May 28). The article cited the views of three top bankers and two shareholders, given anonymously, that Ackermann was “seeking to hijack the succession planning process”. Ackermann had until then been a “unifying force”, continued the FT article, between the bank’s domestic heartland and its largely London and New York-based investment bank, led by Indian-born Anshu Jain. “But a Frankfurt-London gulf appears to be re-emerging as the process of picking a successor to the Switzerland-born chief executive stalls”. One London-based banker told the FT it was “very close to becoming an HSBC situation”. The HSBC succession process descended into unseemly chaos last year. Though Ackermann’s contract runs until May 2013, he is widely expected to retire a year early, said the FT. Ackermann was believed to favour Axel Weber, former president of the Bundesbank, Germany’s central bank, joining Deutsche Bank in a senior role. News in early July that UBS had appointed Weber as its next chairman was said to have left Ackermann “fuming” (“Swiss give Deutsche lesson in succession”, FT, July 2). On the other hand, Ackermann appeared increasingly opposed to the idea that Anshu Jain, the favourite of many shareholders, should be the next CEO. The FT quoted an ally of Jain: “Joe’s legacy is at stake here. He has managed Deutsche very successfully but if he tries to skew the succession process, he will be remembered for that” (FT, May 28). Deutsche’s failure to identify a succes03/2011

COMMUNICATION DIRECTOR

LEADERS

May 19 “Deutsche Bank chief testiﬁes in Kirch dispute” (FT, May 20) May 27 “Deutsche Bank split on succession” (FT, May 28)

$ (millions)

Deutsche Bank | Run-up to Ackermann’s retirement

66 64 62 60 58 56

22.06.2011

12.06.2011

02.06.2011

23.05.2044

13.05.2011

03.05.2011

23.04.2011

13.04.2011

03.04.2011

24.03.2011

54 14.03.2011

sor to Ackermann was “raising investors’ ire and fuelling concern that a drawn-out, behind the-scenes battle over the top job will leave the German bank without a strong replacement”, said the Wall Street Journal Europe (May 26). Deutsche had already botched the succession issue once in 2009, when Ackermann extended his contract for three more years, observed another FT article of May 28. “He is one of the world’s best known bankers, a survivor of the financial crisis and even a criminal trial: Josef Ackermann, chief executive of Deutsche Bank, is an undisputed figurehead of global finance. But as he draws towards the end of a remarkable career, is Mr Ackermann in danger of tarnishing his legacy by muddying the search for a successor?”

STEPHEN ELOP OF NOKIA Stephen Elop became the

ﬁrst non-Finnish CEO of Nokia, the struggling Finnish mobile phone company, last September, when Olli-Pekka Kallasvuo was ousted amid shareholder discontent over the company’s plunging share price and shrinking market share. By early June, Elop’s honeymoon with investors, declared the FT, had come to “an abrupt halt” (“Elop honeymoon well and truly over”, June 4). Elop’s decision, announced in February, to forge an alliance with Microsoft, his previous employer, to build a new series of phones based on Windows Phone software, remained under scrutiny. Two months later the debate was “still raging over whether the move was suicidal or savvy”, said an FT article of April 8. It recalled a leaked memo before the Microsoft deal, in which Elop likened Nokia to a man standing on a “burning platform”, faced with a choice between certain death and a risky leap into the unknown. This assessment foreshadowed Elop’s decision to phase out Nokia’s Symbian operating system, which had lost market share to Apple’s iPhone and devices Ackermann | Coverage by region NAM (9%)

APAC (12%)

LATAM (1%)

EMEA (78%)

03/2011

COMMUNICATION DIRECTOR

using Google’s Android platform. Elop called 4,000 job losses a “difficult reality” (FT, April 28). In further bad news, a profit warning sent shares tumbling. The FT’s Lex (June 1) said investors should not have been surprised: “Stephen Elop pushed Nokia off its ‘burning platform’ in February well before the life-raft had arrived. He pronounced the old proprietary smartphone operating system dead, even though Nokia will only produce a phone on the new Microsoft system at the end of this year. Little wonder smartphone sales and prices are falling fast – why would a consumer buy, or an operator support, obsolete technology?” Elop found himself fighting more fires in June, including takeover speculation and the news that Nokia’s chief technology officer had taken indefinite leave of absence (“Nokia chief denies talk about a bid”, WSJ Europe, June 10). In late June, a leaked video of Elop presenting Nokia’s first Windows smartphone to staff appeared on YouTube, in which Elop warned them to turn off cameras and recording devices “because this is something that is super-confidential”. The FT (June 23) was sceptical: “The CEO doth protest too much, methinks?” It quipped: “Stephen Elop seems to suffer as many unfortunate events as Lemony Snicket when it comes to keeping Nokia’s business private”. But it urged Elop and his public relations department to take credit for jazzing up “a revelation that is barely surprising” by the “‘super-confidentiality’ of a private event whose leaking has created hundreds of headlines”.

SO WHAT DO WE LEARN? In the latest reporting period the issue of succession loomed large for Warren Buﬀett, Josef Ackermann and Howard Stringer. For these three veteran CEOs the search for a successor has become critical and highlights a number of questions. How impor-

LEADERS

Elop | Coverage by region

NAM (23%)

APAC (29%)

EMEA (48%)

June 7 “Nokia debt downgraded to brink of junk territory” (FT, June 8) April 12 “Nokia unveils new Symbian phones” (WSJ Europe, April 13)

$ (millions)

Nokia | Dealing with a ‘difﬁcult reality’

9 8,5 8 7,5

April 27 “Nokia responds to ‘difﬁcult reality’ with 4,000 job cuts” (FT, April 28)

7 6,5 6 5,5

May 31 “Proﬁt alert rocks Nokia” (FT, June 1) 22.06.2011

12.06.2011

02.06.2011

23.05.2044

13.05.2011

03.05.2011

23.04.2011

13.04.2011

03.04.2011

24.03.2011

5 14.03.2011

tant is careful planning to ensure a smooth transition from one CEO to another? To what extent should the incumbent CEO be involved in the succession process? What could be the impact on the reputation of the outgoing CEO, and also for the company he/she heads, if the succession process is clumsily managed? For Buffett, the David Sokol affair demonstrates that the higher the regard in which a CEO is held, the higher the stakes. Buffett is so strongly associated with the investment conglomerate that he has built up over decades, and so revered are his investment views, that the downfall of a senior executive who was widely tipped to be his anointed successor seems to threaten the existence of Berkshire Hathaway itself. Moreover, though the ethical failings of a close colleague have not brought Buffett’s stellar reputation down to earth, the affair has certainly taken some shine off Berkshire Hathaway’s. As Buffett himself once cautioned, “It takes 20 years to build a reputation and five minutes to ruin it.” Josef Ackermann has so far avoided any personal negative media comments about his meddling in the search for his successor at Deutsche Bank. Colleagues and shareholders have generally offered their views on an anonymous basis. However, the warning is clear: after his highly successful management of Deutsche, Ackermann risks tarnishing his reputation and legacy if he is perceived to be seeking to influence the succession process unduly. But leaks and insinuations from insiders also risk harm to the reputation of Deutsche. Ackermann has been regarded as a unifying figure between Deutsche’s domestic German market and its investment banking operations. A perception of a re-emerging split between the Frankfurt and London operations of the bank could damage Deutsche’s commercial reputation. Ackermann and Deutsche should take warning from HSBC, where unseemly boardroom in-fighting followed the

resignation of previous CEO Michael Geoghegan and besmirched the bank’s venerable image. Leaks and poor communications were partly to blame at HSBC. These issues should be addressed urgently at Deutsche and the search for a successor to Ackermann concluded quickly. Howard Stringer allowed his likely successor Kazuo Hirai to take the brunt of media attention in the early days following hacking attacks on Sony’s online gaming sites. In so doing, he made the mistake of responding too slowly in telling Sony’s customers what was happening. However, by apologising publicly in early May, Stringer and Hirai repaired some of the reputational damage. Communications improved but could not protect Sony from further hits to conﬁdence as security breaches continued. Though the problems Sony faced may not have been of Stringer’s own making, they may have postponed his prospects of retiring gracefully. For Bob Dudley and Stephen Elop, recent reporting showed that the honeymoon period for incoming CEOs can seem pitifully short. Dudley scored some public relations successes by his moves to make some of its contractors take responsibility for their part in the oil spill disaster, but his attempt to break BP free from its past through an alliance with Rosneft backﬁred, and merely reinforced BP’s image as an accident-prone company. For Dudley himself, the Russian misadventure appears ill-judged and raises questions about his risk assessment abilities. For Stephen Elop, it was a mistake to pronounce Nokia’s old smartphone dead and then expect consumers to buy it months before its new Windows smartphone comes out. However, leaked video footage of the new phone has helped to build anticipation ahead of its launch. Whether Elop was behind the leak or not, it seems to have been a smart move. 03/2011

COMMUNICATION DIRECTOR

Think you did excellent communications work this year?

��

Convince our jury. ��

��

� � ��

� ��

��

� � � � � � � � � � � ��

��

� � ��

��

� ��

��

� ��

��

� � � ��

� � ��

��

� ��

��

� ��

��

� ��

��

� ��

��

� ��

��

� � ��

� � � � � � � � � � ��

��

� � ��

� � � � � ��

� ��

��

� ��

� � � � � � � � � � � � � � � � � � � � � ��

� � � � � ��

� � ��

STRATEGIC THINKER The corporate and academic stand on communication

COMMUNICATION IN THE LAND OF THE THE FORBIDDEN CITY 24

An economic powerhouse, China is the world’s most exciting ‘new’ market. Communicators who engage with this dynamic environment face a uniquely exciting set of challenges and opportunities by Christopher Springham 03/2011

COMMUNICATION DIRECTOR

STRATEGIC THINKER

t is almost compulsory to begin such a challenging subject with an old Chinese proverb. There are certainly lessons we can discover in China which would serve us all well in Brussels, Westminster or Washington DC. “Make happy those who are near, and those who are far will come.” But let’s avoid any Confucian confusion at the outset. Any attempt to generalise on this topic, to summarise concisely the depth and complexity of Chinese politics and the workings of government in such a vast country is probably doomed to failure. The best advice for communications professionals looking into China from the outside is to do just that: take local advice. But the ﬁrst question to answer is “whose advice?”

“I KNOW A GUY, WHO KNOWS A GUY…” There are numerous well-

established consultancies which claim to offer an understanding of government in China. You can find them through all the typical industry sources, but I have found that they vary greatly in their quality and resources. If you have any significant interest in China it is also fairly likely they may have already found you; some organisations employ extremely aggressive marketing techniques directed at multinationals in particular. My first words in Chinese after ‘Hello’ and ‘Thank you’ were ‘Go away!’ Asking around for a good recommendation for a Chinese agency or adviser is as good a guide as it is anywhere in the world. There are pitfalls with this approach: these different parties make varying claims regarding their experience, knowledge and connections, and selection of the right organisation to work with can determine your suc-

cess or failure. Many, particularly multinational agency networks which have established themselves in Beijing and Shanghai, are conﬂicted with multiple clients or, like sole operators, they can be linked within China to one particular individual, faction, locality, region, issue or sector. Herein, then, lies a paradox: China may be hard to know – and in some aspects hard to work in – from a communications point of view, but for international communications professionals there are strangely similar rules which apply there as they do in all international markets. Shop around for help and ensure you always have multiple sources of intelligence. In short, tread carefully.

GUIDING PRINCIPLES There are some common chal-

lenges presented to companies from outside China who seek to build their businesses there and some simple guiding principles which, if closely observed, can provide the foundation for long-term success. You can not do business in China and ignore the government. However simple your business proposition, you will come into contact with it at different levels, starting with your visa. So include this in your scenario planning and proactively examine the potential barriers for your business. Things can move very swiftly in China: you can construct that plant or open that store faster than you would ever have imagined. But then finding trained staff or securing permits can seriously undermine your returns, as can perpetual health and safety challenges, regulation violations or additional and unexpected taxation at local and regional level.

THE PACE OF CHANGE China’s communications environment is rapidly evolving. They are early adopters in e-media and social networking, are very flexible and learn as fast, or faster, than anywhere else on earth. The common perception that there is a simple and clear top-down hierarchy in government and that working with the leadership leads to direct influence and clear outcomes is simply false; it may never really have been true. Increasingly, communications takes place in a complex web with multiple influences and you ignore any one of these at your peril. Chinese government is hierarchical and centralised but it is also as influenced by public opinion and the media as it is in Europe or the US. Don’t let the question of whether or not they edit Google lead you to believe that e-media and social networks are not growing as fast in China as they have in other developing markets. It remains to be seen whether recent events in North Africa pointing to the democratising effects of social media as a 03/2011

COMMUNICATION DIRECTOR

STRATEGIC THINKER

root cause of political unrest will herald further and more onerous central measures to regulate and even to curb these potential channels altogether. Right now, in 2011, we are at a watershed.

A COMPLEX WEB In China as elsewhere, the multi-

ple vectors of business, consumers, academia and political bodies are interwoven. It is certainly possible and advisable to engage with the leadership in Beijing but you cannot ignore the power of regional and local government and you need to beware of divided loyalties and agendas. Does that sound familiar? For many international companies it is often true that the government is, in some shape or form, the customer. It is also a huge employer. The range of responsibilities within the diﬀerent bodies like the National Development and Reform Commission (NDRC) and the National Energy Agency (NEA) (to name just two which particularly interest my company) is vast but there are powerful elements throughout the system right down to local community administration which can halt your best laid plans.

REPUTATION AS PART OF THE BUSINESS PLAN It

makes sense to establish a clear reputation plan and build your proﬁle at all levels that impact your business. Do not underestimate the value of working closely with government media and information outlets: positioned correctly, you can actually surf the wave of government support to accelerate your projects and programmes. The typical formula for government relations in China is direct lobbying

Experience indicates that the same sensitivity a company might naturally demonstrate towards conduct, environmental and social issues in Germany or California, translates directly into Chinese.

to the relevant officials but this must be undertaken with utmost care. The Chinese government wants to be seen to do a good job, but individuals are always looking for the credit which derives from political achievements and the benefits that can be derived from success. There are strict boundaries regarding access and messaging but these are unevenly applied and this further endorses the strategy of ensuring your hand is held tightly by a local adviser or your own colleagues in the country. The winning formula is undoubtedly to demonstrate clearly from the outset how what you are doing can benefit the whole country, support 03/2011

COMMUNICATION DIRECTOR

EXECUTIVE SUMMARY Communicating to an emerging market A plethora of consultancies exist in China – choose wisely Impossible to do business in China without interaction with the government on several levels Chinese government as inﬂuenced by public opinion as any western example Chinese communications arena is rapidly changing, with new social media developments despite censorship The same sensitivity shown in the west over environmental and social issues should be applied in China

government strategy and reﬂect well on the leadership and individual contributors. The word ‘commitment’ is strong currency in China, especially when it is demonstrated in tangible ways with inward investment, technology and employment. Do not be surprised that aspirations towards good governance, sustainable business and community engagement are rated extremely highly, too. Increasingly, experience indicates that the same sensitivity a company might naturally demonstrate towards conduct, environmental and social issues in, for example, Germany or California, translates directly into Chinese.

MEDIA STRATEGY The mass

media also has a role to play in your government communications strategy and it is prudent to place a strong emphasis on telling your story widely. Over 2,000 newspapers are controlled by several different media groups and almost 10,000 periodicals and journals are

STRATEGIC THINKER

widely read. Almost 90 per cent of the population watches television via around 750 television and cable operators, and radio is equivalent in its reach and listenership. Since the early 1980s, there has been signiﬁcant liberalisation and, three decades later, a competitive ethos exists between news outlets, although news is still crafted within certain carefully unwritten parameters. The internet is used as much as it is in the US or Europe, and there is a constant hunger for content especially on global current aﬀairs and business. The demographic is younger, around 18 45, but interest is accelerating and user groups are expanding.

ONLINE NOODLES There is a

Chinese world view among the population which is equally as powerful (and in some ways as narrowcast) as you can observe on CNN, Al Jazeera or the BBC. While announcements

Photo: Private

The more Chinese you can be in China the better, so engage your own, internal Chinese leadership. from the government are understood to be the oﬃcial view, news outlets are widely trusted and in some aspects highly professional: they scrutinise corporate and business issues with keen interest and are more than prepared to wield the sword of truth. Not surprisingly, Chinese people like their news served Chinese-style and the internet more than any other medium reﬂects the eclectic nature of their interests and their increasingly critical powers and sensitivity. No western brand manager would deliver a strategy which did not recognise the importance of media in adding value or forging perception

of a product or service. The Chinese are becoming the world’s largest consumer market and they make their personal choices when the acquire goods and services based on value judgments too. A pre-entry communication strategy is well advised and should be cultivated constantly.

GUESS HOW MUCH? Ascribing a fiscal value or measure to a personal relationship is rather like guessing the value of a brand: it is somewhat intangible but it can show up clearly in goodwill following the transaction. No organisation with any degree of experience in China would underestimate the vital importance of direct faceto-face engagement with the most senior leaders, but the plain truth is that this form of direct lobbying is simply no longer sufficient to influence government policy or secure commercial access. An integrated approach to reputation combining government, investor and media relations is essential. Consider carefully orchestrated campaigning. In this regard there are parallels with US national politics: you have to win hearts and minds across the nation. But, the secret lies in the grassroots: the more local you can be, the more powerful your message becomes when you transpose your efforts at a national level. BE CHINESE The more Chinese you can be in China, the better, so actively pursue a strategy of engaging your own internal Chinese leadership. Concentrate on doing the business well, doing the right things and showing commitment – the long terms gains will come. The ultimate justification for such an approach is that you, or your company will certainly make mistakes along the way, and the value of a mutually beneficial, win-win strategy will show. It may ultimately also determine whether you continue to have a business at all. 03/2011

Chris Springham Vice President, Global Communications, LM Wind Power Based in the Amsterdam ofﬁce of wind turbine blades manufacturer LM Wind Power, Chris Springham’s responsibilities include media relations, ﬁnancial communications, government relations and regulation, internal communications and crisis management. Prior to this, he worked in political and media consultancy in London with a wide range of clients from Boeing to the BBC. Before that, he was director of media relations at Rolls-Royce until 2000. His career began with Mobil Oil, where he spent 15 years and became company spokesman.

COMMUNICATION DIRECTOR

STRATEGIC THINKER

COUNTERTERRORISM COMMUNICATIONS The killing of Osama bin Laden in May this year highlighted the dialogue around strategic communications as a weapon against the spread of terrorism and a tool to regain western credibility by Nicholas Labuschagne

n September 11, 2001, a massive terrorist attack on the World Trade Centre in New York City precipitated what ex-US President George W. Bush would soon call the “Global War or Terror”. A decade later the leader of Al Qaeda, Osama bin Laden, is dead. Hundreds of thousands more lives have been lost 03/2011

COMMUNICATION DIRECTOR

and trillions of dollars have been spent. It is unclear whether the war on terror is near a conclusion, or indeed, even winnable given its existing frames of reference. In the interests of clarity it is helpful to deﬁne the terms ‘terrorism’ and ‘strategic communication’. Terror-

STRATEGIC THINKER

ism may be deﬁned as the deliberate application of violence against civilians to induce terror-based behaviour. It does not matter whether the perpetrators are individuals or states, or whether their motivation is political, religious or ideological. In short, it is a very brutal tool for changing behaviour.

Photo: www.istockphoto.com

STRATEGIC PLANNING Strategic communication is frequently misunderstood. Steve Tatham, a British Royal Navy Officer and expert in military public relations and strategic communication, defines strategic communication as “a systematic series of sustained and coherent activities, conducted across strategic, operational and tactical levels, that enables understanding of target audiences, identifies effective conduits and develops and promotes ideas and opinions through those conduits to promote and sustain particular types of behaviour (…) Influence would be defined as the desired end result of strategic communication.” Strategic communication is not a new name for military information operations, advertising or marketing. It does have some similarities with commercial advertising and corporate communications, but of necessity has to be more nuanced in its execution. In this context, the results of failed or misguided strategic communication are often fatal. CREDIBILITY CRISIS Given that terrorism and strategic communication are both – albeit vastly different – tools for changing behaviour, and that, logically, strategic communication could be used to counter terrorism, how well has it performed as a counterterrorism tool? It is not possible to comment on the success of strategic communication on the

field of battle. For obvious reasons very little information on its efficacy exists within the public domain. However, what is clear is that despite enormous expense western attempts at strategic communication campaigns in the Middle East and around the world have failed and have significantly contributed to an overall loss of credibility and prestige throughout the world. This seems to be a paradoxical outcome. Western governments, political parties and corporations are highly sophisticated consumers of strategic communications services, and there is an abundance of highly qualified and experienced practitioners available for hire. The poor outcomes of western strategic communication campaigns suggest that there have been significant challenges in mobilising these resources effectively. Where did things go wrong? According to Steve Corman, director of the Consortium for Strategic Communication, there have been four major failures in western strategic communication. The first failure was caused by the use of over-simplified concepts and inflammatory language. While the simplification of concepts is common practice in western political and commercial communication and the use of words such as ‘crusade’ to describe the so-called ‘war on terror’ may have had specific resonance with domestic audiences, they were not suited to communicating complex concepts and had the opposite of what should have been the desired effect on Muslim target audiences.

COUNTERING THE TERROSIST NARRATIVE The second failure related to the use of an outdated and inappropriate communication model that was not able to account for the complex communication space that includes aggressive and sustained feedback from hostile elements of the target audience. The third failure was the inability to counter the terrorist narrative, either by disrupting it or promoting an alternative that target audiences might ﬁnd more attractive. Disrupting the terrorist narrative requires a deep religious, historical, political and cultural understanding of how the terrorist messages are constructed and how they are woven together into a compelling narrative that allows the terrorists to legitimise their existence, propagate their ideology and intimidate their enemies. The ﬁnal failure was the underutilisation of the power of victims’ narratives. Victims of terrorism are uniquely positioned because they have compelling personal stories to tell and the moral authority to challenge the terrorists directly. This is particularly relevant in terms of the discomfort felt by Muslim audiences about the issue of terrorist attacks that result in the death and 03/2011

COMMUNICATION DIRECTOR

STRATEGIC THINKER

injury of innocent Muslims. Modern conflict is carried out in an information society where control of the media is no longer dominated by a small number of powerful interest groups. The growing presence of significant numbers of independent web-based intermediaries makes it almost impossible to control messaging or any form of direct communication with a specific target audience. An entire communication space has evolved for anyone who has internet access and the desire to participate in the discourse and where it is particularly difficult to differentiate between fact, fiction and disinformation. Paradoxically, the role of communication in influencing the management of uncertain outcomes has never been more important. At the most fundamental level maintaining a modern military is extremely costly and any means that can be used to influence enemy behaviour without the need to resort to force is likely to be far less expensive than engaging in direct conflict.

FILTERS AND MANIPULATORS Where does strate-

gic communication fit into the mix of counterterrorism tools? Three broad elements are necessary for an effective counterterrorism strategy. The first element is the need to directly reduce or eliminate terrorist groups; this responsibility is given to the military and security forces. The second element focuses on delivering programmes that enhance economic and political stability in those countries where governance is marginally effective and terrorists can take advantage of the circumstances to find sanctuary and build popular support. The third element focuses on

Terrorist groups have understood the value of conducting limited military action directly supported by effective propaganda.

the use of influence in communication programmes that would reduce both the local and global appeal of terrorism by eliminating localised support for terrorism and impairing recruitment efforts. On the battlefield, the Coalition forces continue to practise a military philosophy dominated by physical operations. However, this philosophy is changing and there is an increased appreciation that the war of ideas cannot be won militarily. To this end, the US military in particular has invested in the deployment of what are called ‘Human Terrain Teams’ in the theatre of battle. These teams include anthropologists, psychologists and linguistics ex03/2011

COMMUNICATION DIRECTOR

EXECUTIVE SUMMARY Strategic communication vs terrorism Strategic communication can be utilised to counter terrorist narratives and to support interventions aimed at preventing or reducing the incidence of violent radicalisation A far more sophisticated understanding of the complex systems nature of the communication space is required Western governments’ credibility is too compromised and their ability to control the delivery of a common counternarrative is too fragmented to consider investment in such an initiative at this stage Target audiences must be understood, and effor ts should be focussed on those target groups considered to be most likely to respond positively.

perts who have the responsibility of surveying and understanding the people within the war zone, their customs and culture and their orientation towards the US forces under a variety of circumstances. This understanding is then used to develop the optimal approach for both kinetic and information operations.

WEB JIHADISTS Terrorists groups by their nature are unable to compete directly with conventional militaries. They understand the value of conducting limited military action directly supported by effective propaganda and have focused their main efforts on winning the information war. They have their own substantial media organisations staffed with communications professionals and are increasingly proficient in enlisting the support of thousands of volunteer web jihadists to act as filters and manipulators of

STRATEGIC THINKER

western communication to deliver their own strategic communication campaigns. Terrorists enjoy a further key communications advantage: the relatively small size of their organisations allows them to exercise tight control of message development and distribution. Al Qaeda in particular has understood the huge value of being able to closely manage public perceptions of their terrorist franchise. Small and widely dispersed terrorist groups around the world elect to operate under Al Qaeda’s brand in exchange for the

The current low level of western credibility in the Arab Muslim countries needs to be addressed. reputational leverage they gain from the arrangement. This allows Al Qaeda to reinforce its brand value by controlling the messaging that is embedded within a single common narrative. Western democracies have multiple competing points of view that are being simultaneously projected by a wide variety of institutions, agencies and individuals thereby rendering the development of consistent and coherent messaging within a single common narrative almost impossible.

Photo: Private

CLAIMING BACK CREDIBILITY Given these challenges, what should be done? Regaining the strategic communications advantage in counterterrorism initiatives requires a two-pronged approach that both delivers a much more attractive alternative narrative and also takes aggressive steps to exploit weaknesses in the terrorist narratives. The key success factor for promoting an attractive alternative narrative is

the re-establishment of credibility. Taking steps to ensure consistent congruence between the actions and declarations of western governments may be compromised by those same governments’ pursuit of geopolitical and economic interests that conﬂict with their professed values. The current low level of western credibility in the Arab Muslim countries needs to be addressed so that the projection of an alternative counter-narrative is not met with cynicism and rejection or becomes co-opted and turned against the west.

DECONSTRUCTING TERROR There remain many opportunities to disrupt and discredit the Al Qaeda narrative provided that sufficient effort is made to understand the target audiences and to intelligently deconstruct the many elements that have contributed to the creation of their narrative. One of the greatest challenges to effective strategic communication is the high degree of coordination required with all the other components in any counterterrorism intervention. The nature of all long term, complex and integrated activities is that they need to be effectively project managed and championed by a single powerful sponsor. Until such time that western governments and their respective agencies and militaries are able to agree upon common ownership of strategic communication at the highest level, the gaps between uncoordinated actions, unaligned messages and conflicting Nicholas Labuschagne narratives will remain open Strategy adviser, to be exploited by terrorist Government of Dubai communicators. Media Office Finally, it should be Nicholas Labuschagne began understood that even if a his career as a chemical engistrategic communication neering consultant before enecampaign is well designed tering the derivatives markets and executed, some target in the City of London. 1n 1990, he worked in South Africa as groups, particularly those a corporate strategist before with strong theological moving to Dubai in 1999. In belief systems, will always 2006 he was appointed to resist alternative viewthe Government of Dubai’s Strategic Affairs Committee. points. Efforts should inHe is currently completing a stead be focused on those degree in Terrorism Studies at deemed more likely to be the University of St. Andrews in responsive. Scotland. 03/2011

COMMUNICATION DIRECTOR

TEAM PLAYER

BATON-WIELDING MANAGERS The enigmatic art of the orchestra conductor is a powerful model for leadership in all walks of life, and can shed light on how your organisation interacts by Manfred Harnischfeger

I 32

t was during a master class for conductors with Kurt Masur, held at the Beethovenhalle in Bonn. Six young and already successful conductors were showing the maestro their skills. One of them took on the second movement of Beethoven’s Eroica and just couldn’t seem to bring it together. Unsatisﬁed, Masur gave the young man instructions for another go. “Stick your hands in your pockets and try again.” The young conductor had nothing to rely on but himself. No wild gesticulations, no wanton cues. His only tools were his personality, his charisma, his carriage and his gaze. Have you ever thought about what goes into conducting? And have you ever wondered if leadership positions in business, government, administration or a social institution have anything in common with the work of an orchestral conductor? Perhaps my life-long love for classical music had something to do with it but during my own work as a manager the parallels between the two became increasingly apparent to me. Professor Gernot Schulz and I got to know each other during an event for DHL executives. A long-time member of the Berlin Philharmonic, he was led to the conductor’s podium by none other than Herbert von Karajan. Today the music educator is an internationally acclaimed conductor. It quickly became clear to both of us just how much conducting could teach managers about themselves and their personal leadership styles.

CONDUCTING AND LEADERSHIP There are many

diﬀerent conducting styles in the professional music world and even more leadership techniques and trends in the world of business and administration. 03/2011

COMMUNICATION DIRECTOR

Thinking back to just a few of the world’s famous conductors, we have the taskmaster Bruno Walter, the dour and often angry Karl Böhm, the energetic perfectionist Herbert von Karajan, the hyper-sensitive Carlos Kleiber, the often aﬀected Lorin Maazel, the wild Gustavo Dudamel, the fearfully fastidious Claudio Abbado, and the score-obsessed Nikolaus Harnoncourt. Most people know them mostly for their interpretive work and performances, and less so from their rehearsals with the orchestras, which is where their varied and highly unusual leadership styles came – and still come – into play. The question of how best to lead others is a perpetual issue and a constant challenge within companies and organisations, no matter what their size. In today’s business environment, management is the third decisive factor alongside capital and labour. The success of a business, or even just an individual project, depends a great deal not only on the management’s professional knowhow, but on the personal, human

TEAM PLAYER

quality of its leadership. Aware of the importance of leadership, enterprises and organisations are keen to promote this aspect by providing their management staﬀ with the appropriate training. With the zeitgeist and trends dictating the methods, I pretty much saw it

all over the course of my career. That said, it is still very much needed. The misconduct and unethical behaviour of a number of top managers – a contributing factor to the recent economic crisis – make the need for reliable and authentic leadership all the more acute. Gernot Schulz and I had no intention of adding yet another variation on the theme of leadership technique teaching. Our conducting-based seminar model homes 03/2011

COMMUNICATION DIRECTOR

TEAM PLAYER

in on the unchanging essence of good leadership, namely the personality of the leader. Without a doubt, techniques such as From Pyramids to Networks, fitness programmes, positive thinking and motivational training are valuable and effective teaching tools. What they do not do, however, is reflect upon – let alone tap into - the potential in the leader’s own personality. Accepting the significance of the personality aspect is the first step in laying the groundwork for successful leadership. To do this, one needs to know one’s own strengths and weaknesses – and to experience how one’s behaviour affects others. For over four decades, I was steeped in the subject of leadership and its many facets as part of my work. My first working years were greatly influenced by Bertelsmann owner Reinhard Mohn, a man who was passionate about leadership, management conduct and establishing business as a regulatory organism. Looking back, I am now able to say that the quintessential leader is not politically-correct and haloed. Model leaders are charismatic and inspiring individuals, idiosyncrasies and all. The symphony orchestra has proven itself an ideal standin for a creative team, a department or a business unit. The musicians are the employees. They are well trained and, by practicing their craft on a daily basis, they are able to gauge their own performance and make correction and improvements along the way. The section leaders are synonymous with group leaders and quality managers. The score is the concept, the framework for business targets and goals. The members of the audience are the customers. They have paid the admission fee and expect a great performance in return. The musical performance is a service delivered under specific terms and in a specific ambience. And the conductor?

THE CONDUCTOR AS MANAGER AND LEADER

The symphony orchestra ‘team’ is truly unique, for nowhere else is the feedback so honest and immediate for the person at the helm. The orchestral setting allows the individual to see just how convincing he or she is as a manager and whether the signals sent were able to elicit the desired behaviour. During our own Managers Conduct seminar, 10 or so participants are given a unique, hands-on opportunity to try out their leadership skills with a complete symphony orchestra. When it comes to success factors and the experiential scope, success on the conductor’s platform has much in common with success in managing employees. The person that leads must be true to him- or herself, remaining authentic and focused. They need to be able feel out negative 03/2011

COMMUNICATION DIRECTOR

EXECUTIVE SUMMARY Leading from the podium Leadership of an orchestra can provide an experience that is authentic, immediate, honest and undistorted Leaders must gently but ﬁrmly ensure harmony and cooperation, and keep any potential ‘diva’ in check In symphony orchestras, feedback is direct and honest Leaders, like conductors, must have an over-all grasp of the oeuvre

attitudes and vibes within the team and diﬀuse them. It is also important to have a clear idea of the ‘oeuvre’, the ﬁnal product – the person must have a vision. Whether conductor or project manager, the leader must always be one step ahead of the rest and never lose sight of the goal. The successful manager gives clear instructions and provides cues for action without going overboard. Too many cues can quickly become disconcerting for a team.

MAKING MUSIC IN HARMONY It’s about inspiring others. This

means fostering a sense of pride in the team project. The person leading must not allow negative experiences

The divas and the lone wolves in the group need to realise that it is the wrong venue for solo concerts. with individual team members to discourage them. After all, emotions and attitudes – both positive and negative – have a direct impact on the team as well. The executive should maintain good relation-

TEAM PLAYER

ships with department heads, section heads and high performers, as they perform a liaising function with the group and help ensure the targeted quality. There are a few rules of thumb for the responsible leader. Never expose weak employ-

The parallels between conducting an orchestra and leading a team or business are surprisingly many. ees in front of others; instead, make it clear, in a way that is not without humour, that you expect more eﬀort and better results of them. The divas and the lone wolves in the group need to realise that it is the wrong venue for solo concerts, that they are expected to contribute to the overall performance of the entire group. Strong solos from top-performing individuals, however, can be important for the oeuvre and should be recognised and utilised by the manager as required.

Photo: Bertelsmann AG

LEADERSHIP LESSONS FOR A LIFETIME In the ﬁnal analysis, it

always comes down to ﬁnding and maintaining a balance between one’s own leadership acumen and the individual creativity within the team. “As a conductor, you need to remain true to yourself, completely centered and focused – until the moment comes when you let go,” says Gernot Schulz, sharing his ideas on orchestral conducting. Because whether we are talking about a musician in a symphony orchestra or a company employee, every team member brings with them a special set of skills and competencies acquired over time through training and work experience. Most teams and orchestras can get the job done

without the boss or conductor. The latter’s job is to develop strategies and deﬁne targets – and to act as a role model. Most of their work – 70 per cent of it – occurs non-verbally:

• • • • • •

Intelligibility Clarity Well-measured cues Resolve Persuasiveness Ability to inspire

There is no question: the parallels between conducting an orchestra and leading a team or business are surprisingly many. But for everyone who participates in conductingbased management seminars, the minute they mount the podium, baton in hand, and face the symphony orchestra, they enter entirely new terrain. Seminar participants enter a space in which the impact of their leading takes immediate form and articulation:

• Do I have a clear idea of what I want to communicate? Do I have a vision? • Do I give clear direction/instructions? • Are my ideas and requests realistic/feasible? • Am I convincing? • I am motivating? • Am I able to achieve the right mix of clear directions and empathy with my employees? Conducting-based management seminars give participants the opportunity to try something completely new – the chance to lead without clichés, free of moralising value judgments and hackneyed management-speak. Participants work through core leadership issues as well as emotional and sensory perception in hands-on exercises with the orchestra. First-hand experience and self-won insights like these last a lifetime. 03/2011

Manfred Harnischfeger Acting Director, Beethoven-Haus, Bonn Manfred Harnischfeger is a professor at the Hamburg Academy of Music and Drama’s Institute for Cultural and Media Management and is currently the acting director of the Beethoven-Haus in Bonn. He has worked in the upper echelons of companies such as Bertelsmann and Deutsche Post DHL. His expertise lies in CEO positioning, crisis communications and change management.

COMMUNICATION DIRECTOR

TEAM PLAYER

How to improve personnel management and your career

INCOMPLETE POWER

by Dejan Verčič, Ángeles Moreno and Ansgar Zerfass

03/2011

COMMUNICATION DIRECTOR

Photo: www.dreamstime.com

The European Communication Monitor 2011 draws an ambiguous picture: while most communication professionals enjoy a broad level of responsibilities and rising salaries, only a minority believe that they generate ﬁnancial and immaterial assets for their organisations

TEAM PLAYER

he European Communication Monitor is an annual survey of public relations and communication management in Europe and is the largest of its kind in the world. Its fifth edition in 2011 indicates the end of the crisis, with salaries on the rise and the function becoming stronger than ever. Practitioners report that the fall of earnings identified in 2010 has ended, and that we are back to figures from before 2009 and the crisis. A positive sign is that a quarter of respondents are now above the 100,000 euros mark. But while five per cent of respondents earn more than 200,000 euros, a fifth of practitioners in the survey only earn up to 30,000 euros annually. There are wide differences between the north and west, and the south and east of Europe – salaries are significantly lower in the latter two regions. There are also persisting differences based on gender: the average (median) salary of women is lower than salaries of men on every hierarchical level. Members of the EACD (the European Association of Communication Directors) are better paid: 10.2 per cent earn more than 150,000 euros annually. Although formal power is not equally distributed across the continent, the general trend is clear: most practitioners report to the CEO and increasingly have a seat at the boardroom table. This vertical rise in the power of the communication function is, however, not accompanied by a full acceptance of other management disciplines, and this horizontal dimension of power among peers is the goal for the coming years.

ECM 2011 – BACKGROUND OF THE SURVEY The European Communication Monitor (ECM) is the most comprehensive analysis of the profession worldwide with 2,209 participating professionals from 43 countries. Operating since 2007, this is the ﬁfth survey and it was conducted in March 2011. The study has been organised by EUPRERA (European Public Relations Education and Research Association) together with the European Association of Communication Directors (EACD) and Communication Director magazine, and sponsored by Infopaq and Grayling. Every European region is represented: northern Europe (27.9 per cent), western Europe (29.2 per cent), southern Europe (32.4 per cent) and eastern Europe (10.5 per cent). Respondents were, on average, 41 years old. More than 57 per cent had worked in communication for more than 10 years, half of them were heads of the communica03/2011

COMMUNICATION DIRECTOR

TEAM PLAYER

Table I Reporting lines and hierarchies of top communication managers The top communication manager within the organisation... sits on the board 17.8% does not report directly to the CEO or anyone who sits on the board 4.6%

reports directly to the CEO 59.9%

reports to another board member or function 17.7%

n = 1,450 PR professionals working in communication departments in Europe (Zerfass et al. 2011, p. 47)

tion function in their organisation, and more than 70 per cent came from communication departments (and the rest from agencies). Topics included in 2011’s survey were the credibility of public relations and alternative concepts, decision-making, leadership style and role enactment, power of communication departments, ROI of communication, strategic issues and trust, development of disciplines and communication channels, social media (governance, skills and activities) future qualiﬁcation needs and training and salaries.

RESPONSIBILITIES AND POWER It is clear that communication professionals are getting to sit at the top table and are entering the dominant coalition; the group of people who really lead organisations. The communication function is also clearly taking on broader responsibilities for the management of relationTable II Decision-making styles utilised by communication professionals European professionals

US professionals 84.7%

Rational decision making

Group decision making

Risk-acceptance decision making

90.8%

55.9% 52.9%

45.1% 53.0%

n = 2,209 PR professionals in 43 European countries, n = 843 PR professionals in the United States (Zerfass et al., 2011, p. 33; Holtzhausen & Werder, 2011)

03/2011

COMMUNICATION DIRECTOR

ships with most or all stakeholders. The communication function is solely responsible for media relations in only five per cent of responding organisations, and for only media and internal communication in a further 12 per cent. In more than 80 per cent of organisations, the communication department coordinates communication and manages relations with three or more stakeholder categories. There are regional differences, with the north having broader responsibilities than the south, but the overall picture clearly shows that the communication function has long since passed the publicityand media-management stage of development. It may well be that this broadening of responsibilities has contributed to the hierarchical growth in power. Nearly 90 per cent of respondents reported close working relationships with the CEO, with more than 80 per cent of them being responsible for at least three kinds of programmes and stakeholders (media, marketing, internal, financial or lobbying communication), and many for all kinds. And, in nearly one out of five organisations, the top communicator is a member of the board (see table I). But gains in hierarchical power are not necessarily cemented in horizontal relationships with other functions and departments: 30 per cent of respondents think that their department is replaceable, and one quarter that it doesn’t play an important role in the overall performance of the organisation. Horizontal relations are the strongest with marketing departments (77 per cent), strategy and organisational development units (62 per cent), and human resources departments

TEAM PLAYER

(54 per cent), weaker with legal departments (44 per cent) and ﬁnancial departments (39 per cent) and the weakest with the auditing and controlling units. This indicates an incomplete power of communication as a management function, a danger to be addressed in future.

DECISION MAKING. The communication function is clearly aligning itself with business strat-

Risk taking is associated with innovation; therefore....we will need a cultural change within the profession. egy: over 90 per cent of respondents say that they focus on organisational goals when planning and enacting communication activities. Over 70 per cent also feel responsible for inﬂuencing the deﬁnition of the goals that the organisations choose. This line of thinking is further supported by respondents who

report that they perform the advanced ‘strategic facilitator’ role, which is defined as simultaneously providing communication support to organisational goals as well as helping to define the goals. But there is a substantial difference in leadership style between Europeans and their colleagues in the United States (see table II). While practitioners on both sides of the Atlantic report a preference for rational decision making based on an evaluation of all information available, Europeans seem to be risk averse: only a minority accept that a risk not taken is an opportunity lost. Risk taking is associated with innovation; therefore, in the interest of the healthy development of European communication management, we will need a cultural change within the profession.

MISUNDERSTANDING ROI The strategic alignment of communication with business strategy and other management functions has brought with it managementspeak. Almost every second practitioner claims to use the term ‘return on investment’, a concept developed for proving the economic value of activities. Six out of 10 communicators in Spain, the UK and Sweden use the term to evaluate their communication activities, while only three out of 10 do so in Norway, Slovenia and Germany. The term is more commonly used in the higher echelons of the communication profession than in the lower, and, interestingly, more in southern Europe (followed by eastern and northern Europe) than in western Europe. Research-

Table III How communication professionals (mis)understand the ROI concept

ROI can be expressed in achievement of communication objectives

83.1%

ROI requires ﬁnancial assessments of the resources used for communication *

72.5%

ROI can demonstrate the non-ﬁnancial value of communication

70.5%

ROI expresses communication’s contribution to the formation of organisational strategy

62.8%

ROI needs a standardised ﬁnancial valuation of results achieved by communication *

58.0%

ROI is the ratio of financial profit resulting from a communication activity against its actual cost * ROI has to be defined in monetary terms *

52.8% 38.3%

Only statements marked with * are consistent with the standard economic deﬁnition of ROI. n = 2,209 PR professionals in 43 countries (Zerfass et al. 2011, p. 70)

03/2011

COMMUNICATION DIRECTOR

TEAM PLAYER

ers asked respondents about the ways in which they understood the term ‘return on investment’ and the results are very interesting (see table III). Only about half of all respondents agreed with the standard management definition of ROI, which is the ratio of financial profit resulting from a communication activity against its actual cost, and less than half with the notion that ROI needs to be expressed in monetary terms. This raises questions about communicators who aspire to become managers, yet are not versed in management terminology and concepts. A more thorough operational management education is needed.

E U R O P E A N C O M M U N I C AT I O N M O N I T O R 2 0 1 1

FULL RESULTS

EMPIRICAL INSIGHTS INTO STRATEGIC COMMUNICATION IN EUROPE R E S U LT S O F A S U R V E Y I N 4 3 C O U N T R I E S

PARTNERS:

�

SPONSORS:

Switzerland 32.1% Germany 43.4%

Netherlands 31.7%

Slovenia 53.2%

Belgium 33.3%

“The term ‘public relations’ is discredited”

Croatia 65.8%

France 40.0%

United Kingdom 37.1%

Serbia 62.2% Italy 44.4% Denmark 38.7%

n = 2,209 PR professionals in 43 countries (Zerfass et al. 2011, p. 23)

03/2011

COMMUNICATION DIRECTOR

Norway 45.2% Sweden 30.7%

SPONSORS:

�

A detailed report is available online at www.communicationmonitor.eu, and as a book published by Helios Media: A. Zerfass, P. Verhoeven, R. Tench, A. Moreno, & D. Verčič (2011): European Communication Monitor 2011. Empirical Insights into Strategic Communication in Europe – Results of a Survey in 43 Countries, Brussels: EACD, EUPRERA, ISBN 978-3-942263-12-2

Table IV Negative perceptions of the term ‘public relations’

Spain 55.1%

PARTNERS: �

�

TOWARDS A NEW PARADIGM While the term ‘public relations’ is commonly used to describe communication management activities (at least in the English language), the term is rated as very poor in Poland, the United Kingdom, Norway, Croatia, Denmark, Slovenia, Serbia and Germany (see table IV). Even in the rest of Europe, at least three out of 10 practitioners report negative perceptions of the term. This negative perception of public relations carries with it consequences for practitioners and their work, and is largely correlated with negative images of public relations in the media.

Poland 51.5%

EUROPEAN C O M M U N I C AT I O N MONITOR 2011

Practitioners in Europe prefer other labels for their work, with ‘corporate communication’ (68 per cent positive), ‘strategic communication’ (61 per cent positive) and ‘communication management’ (56 per cent positive) leading the pack. The terms ‘integrated communication’ and ‘organisational communication’, often used by academics, are less popular in the field of professional practice. It is, however, too early to deduce consequences for the practice as nomenclature is determined by global trends, and we need similar evaluations for the Americas and Asia in particular before being able to speculate on the global trend. The survey also identified two main issues of importance. Over half the respondents (55 per cent) see the technological changes that they and their organisation face as the key challenge for the next three years. This was identified as ‘coping with the digital evolution and the social web’ and was cited in first place as

TEAM PLAYER

EXECUTIVE SUMMARY The communication function is gaining inﬂuence in Europe: six out of 10 top professionals report directly to the CEO and 17.8 per cent of communication professionals are board members Coping with digital evolution and the social web continues to be the most important issue Two disciplines to watch are internal communication and personal coaching: communication professionals predict a growth in importance above average, a stable trend since the 2009 edition of this survey Although almost every second practitioner claims to use the ‘return on investment’ (ROI) concept, the research shows that basic knowledge about management concepts and accounting is missing in the profession

Photos: Private

Professionals across Europe report negative connotations of ‘public relations’ in the mass media and, as a consequence, most favour alternative labels for the profession – especially corporate communication, strategic communication and communication management

a priority strategic issue until 2014. The second most relevant issue is the on-going challenge of ‘linking communication efforts with business goals’. We could say that technology and accountability lead the change process within the communication function. Yet, at the same time, the survey showed that there are large gaps between qualification needs and the kind of training offered today in European organisations. While over 80 per cent of respondents see knowledge of the effects of traditional and new media, relationship building and communication technologies as being important in five years, only 21 per cent of their or-

ganisations offer training in media effects, 17 per cent in relationship building and 21 per cent in communication technologies. While over 70 per cent of respondents see organisational change and development being important in five years time, only 15 per cent of organisations offer training in these. The subject of ethics is in a similar position: over 70 percent see it as being important in five years time, but only 17 per cent of organisations offer any training on ethical issues. Professional communication is gaining power in organisations, although according to this study, it still needs to be consolidated. Rethinking the way communicators think and talk about themselves and how they are educated and trained is the next necessary step towards a full recognition within management circles. The European Communication Monitor identified several gaps between reality, needs and perceptions that need to be addressed in order to fully develop the potential of the communication function in European organisations. Moreover, it provides a baseline for similar studies on other continents. The next challenge for researchers across the world is to initiate such research, so that we can analyse and contextualise developments of the communication function from a global perspective. 03/2011

Dejan Verčič

University of Ljubljana Dejan Vercic is a professor of public relations at the University of Ljubljana, Slovenia, and organiser of BledCom, the annual international public relations research symposium at Lake Bled, Slovenia.

Ángeles Moreno University Rey Juan Carlos Ángeles Moreno is a professor of strategic communication and director of two postgraduate programmes of communication management at the University Rey Juan Carlos in Madrid, Spain.

Ansgar Zerfass University of Lepizig Ansgar Zerfass is a professor of communication management at the University of Leipzig, Germany, lead researcher at the European Communication Monitor, and executive director of the European PR Education and Research Association.

COMMUNICATION DIRECTOR

TEAM PLAYER

COMMUNICATION MANAGEMENT UNDER THE MICROSCOPE How do communication directors and spokesmen carry out their work? What roles do they ﬁll within their organisations from day to day? To ﬁnd out, a recent study observed communicators at work by Howard Nothhaft

ince the 1950s, management has been researched from an actor-centered, empirical perspective. Researchers such as Rosemary Stewart, John Kotter and Henry Mintzberg began to question the theoretical ideal role models of management instructors: they were all too sterile, too smart, too heroic. They broke away from the question of what the perfect manager should do. Observational studies allow us to move on to the question of what a real manager does during the day and what management truly is.

WORK PROFILE Immersive attempts at understanding

the roles of press officers and communication directors are extremely rare. Therefore, I decided to undertake such an attempt. Inspired by Henry Mintzberg, who in 1968 accompanied and observed five CEOs, I spent one week with eight top communications officers at German companies: they were long, eventful days. The spectrum ranged from the spokesperson of a regional company with 15 employees up to the director of corporate communications at a global DAX-30 (the German stock index) enterprise with 140. Of course, conclusions from such snapshots are not to be hastily generalised. Yet the results show that the job of the communicator is a management job through and through, including characteristics that occur regularly in management research. The study shows that communication management is work dominated by the desk and by the meeting-room. On average, the eight managers spent 03/2011

COMMUNICATION DIRECTOR

43 per cent of their time in ‘desktop sessions’, i.e. talking on the phone, working with correspondence, reading, writing and editing etc. They spent 35 per cent of their time in ‘meeting sessions’, both formal and informal. Other types of sessions, such as tours (‘walking around’), played a comparatively small role.

Acting for the organisation is inextricably linked to acting in respect of one’s own standing. But the diﬀerences between the people showed a pattern: companies’ directors of corporate communication consistently spent more time in meetings or events than the spokespeople. One of the observed managers from a DAX-30 company spent more than 60 per cent of his time in meetings and get-togethers and stated that meetings were the stage on which you play your role within the Group. The comparable ﬁgure for a spokesperson was 11 per cent;

TEAM PLAYER

to compensate, the candidate spent more than 60 per cent of his time at the desk. His work profile was selfselected, however. He stated that most meetings are ineffective, and that he, as the press officer, must always be reachable.

What the manager does on site demonstrates the enormous variety of tasks that fall under the concept of ‘management’. In his study, Mintzberg identified 10 different roles, such as ‘problem solving’, ‘liaison’ and ‘figurehead’. My study reconstructs ‘management’ as a series of tasks fulfilled by taking on roles. Figure one shows how the manager, jumping from project to project, solved problems by combinations of tasks and roles. For example, one of the observed managers was asked to settle a dispute between two business partners. The task was to be a problem solver; the chosen role, however, was very specific: the spokesperson became a gentlevoiced ‘agent of common sense’ who brought together the warring parties by making reference to what “the people” would think of such trifles and what the press would write about it. The study showed that communications managers assumed a number of similar, unofficial special duties within the organisation.

A FRAGMENTED JOB In his

SPHERES AND FIELDS In the course of this study, I identiﬁed six distinct spheres: (1) the candidate’s subordinates, (2) superiors, (3) colleagues, (4) business partners, (5) the personal network, and (6) the ‘real’ job as perceived by the candidate. Figure two overleaf also shows (7) an inner circle, wherein processes of information processing, planning and coordination are located. If you divide the spheres schematically into three categories, ‘Thinking’, ‘Leading’ and ‘Doing’, then it becomes clear that communication management is a distinctively cognitive job. Managers spent

Figure I Chunks, Projects, Agenda

Task/Roles

Chunks

Liaison Negotiator Lead

Completed projects ... new project

TIO N

Information gatherers Planning, Thinking

ATT EN

Agenda

1968 observations, Mintzberg noted that more than half of the recorded activities lasted for less than nine minutes. Mintzberg further showed that, in the work of the CEOs, strategic decisions of great importance alternated with trivialities and routine tasks. This fragmented character explains why managerial jobs are so demanding. My study showed a similar picture, with an average of ﬁve minutes devoted to each activity. Yet one has to distinguish between the observable surface structure and the unobservable deep structure, and here it is crucial to understand how managers mentally integrate their fragmented days. Figure one on this page shows the mental structure that was observed in my study. Each manager identiﬁed projects – a new website, the design of outdoor facilities, the public viewing in the corporate headquarters. One manager spoke of juggling balls; another referred to about a dozen batches of documents on a sideboard as “my projects”. For some managers, the projects seemed to merge into an overarching agenda. All had, however, become accustomed to projects and tasks being divided into parts and sections (chunks), which they would then process when confronted with them.

Information distributor

Spokesperson

TASKS, ROLES, JOBS Figure one

shows that the ordinary working day can be understood as a process of jumping from project to project.

Direction of time Source: Nothhaft 2010

03/2011

COMMUNICATION DIRECTOR

TEAM PLAYER

about a third of their office work time with ‘Thinking’: the lowest figure was 32.1 per cent, the highest was 47.6. That is not to say that the candidates would spend three out of nine hours sitting and pondering at their desk, as planning and coordination are often carried out in teams and informal meetings. But it does mean that modern organisations have become so complex that any significant action is preceded by a careful study of existing information. Each ‘Doing’ action requires a wide range of planning, coordination and assessment processes. The most time-consuming activity was that of scheduling: to arrange an appointment with another person. Younger managers chafed at this ‘organisational resistance’, which keeps them from their proper job. The old hands took it as inevitable: they had become accustomed, said one of the candidates, to move within this gelatinous substance, the Group, with the least possible effort. The spheres represent functional fields in which the manager acts for the organisation. However, the study reveals that acting for the organisation is inextricably linked to acting in respect of one’s own standing. The communication managers also reflected on their work as a volatile element. On the one hand, their position granted them prestige among journalists, industry insiders and board members. On the other hand, they may be forced to risk and lose personal prestige for the benefit of the compa-

EXECUTIVE SUMMARY A day in the life The job of communication management is dominated by both the desk and the meeting room The fragmented nature of management makes it a demanding job; nevertheless, managers are able to balance and process their different tasks as they jump from project to project throughout the working day Managers assume different roles and combine these with tasks in order to surmount challenges Communication management is a cognitive job, divided into Thinking, Leading and Doing Acting on behalf of an organisation is inextricably linked to acting for personal/ career beneﬁt. Managers derive credibility from their position, which helps further their career

Figure II Functional Spheres

BUSINESS PARTNERS

SENIOR Politicking (organisational policies)

Inform

Handling

ing

Organisation

ce s s

Leadership

Representing

‘REAL WORK’

Coo r d i n a t i o n P l ann i n g n Pr a t io o

Direction SUBORDINATE

Liaison

Supervision

LEADING

Politicking

Networking

EQUALS

PERSONAL NETWORK

THINKING

Source: Nothhaft 2010

03/2011

COMMUNICATION DIRECTOR

DOING

ny. The majority of communicators broached the issue, at least peripherally, that they worked on their own credibility and tried to extract credibility from the standing of their position and to gather contacts for later. They saw, however, a considerable risk of the company’s actions damaging their personal reputation among journalists and professional colleagues.

AGENDA AND JOB FRAMING Despite modern methods of communication evaluation, whoever works on the image of a company may not be able to observe the progress of their work. In addition, communication managers work with material – information – that is ephemeral in nature. The managers were therefore observed at all times in ‘scan mode’: each

Photo: Private

TEAM PLAYER

piece of information that was discussed in passing at lunch could be significant. What seemed more important was a process described by Mintzberg as “job framing”: the definition of the limits of their own area of responsibility. Mintzberg distinguished between sharply defined or vague, and internally or externally defined management jobs. I suspect that, given these special circumstances, communicators are in particular danger of being in a vaguely-defined, externally-framed position, which can lead to being responsible for too many things and a lack of influence. The communication department is made responsible for everything but this does

not translate into influence on everything. The higher the seniority of the observed candidates, the stronger they perceived this. In discussion, communicators highlighted the importance of active job framing. Thus, even if management research could develop the perfect model of a press officer as head of corporate communications, the position would still be largely defined by the person holding it. Science is still far from understanding the continuing definition and redefinition of the job.

COMMUNICATION

Howard Nothhaft University of Lund Dr Howard Nothhaft is an assistant professor of strategic communication at the University of Lund, Sweden. As part of his dissertation project he observed spokespeople and directors of corporate communications at German companies. The resulting study was published in 2010 by VS Verlag.

DIRECTOR

Magazine for Corporate Communications and Public Relations

PLEASE FAX THIS FORM TO: +32 (0)2 219 22 92 ��

COMMUNICATION

DIRECTOR

��

COMMUNICATION

��

DIRECTOR

COMMUNICATION

��

COMMUNICATION

��

Anzeige_21*28fin.indd 1

23.02.2007 14:59:15 Uhr

��

Anzeige_21*28fin.indd 1

company / organisation*

��

23.02.2007 14:59:15 Uhr

��

COMMUNICATION DIRECTOR 02/2010

��

COMMUNICATION DIRECTOR 01/2010

��

COMMUNICATION DIRECTOR 04/2009

COMMUNICATION DIRECTOR 03/2009 17/2/09 10:11:45

��

date of birth

��

PLEASE COMPLETE THE FOLLOWING FIELDS: surname, ﬁrst name*

��

DIRECTOR

��

position

23.02.2007 14:59:15 Uhr

Anzeige_21*28fin.indd 1

��

COMMUNICATION

��

COMMUNICATION

DIRECTOR

��

COMMUNICATION

��

DIRECTOR

��

postcode, city*

�

��

Anzeige_21*28fin.indd 1

��

23.02.2007 14:59:15 Uhr

��

Anzeige_21*28fin.indd 1

��

23.02.2007 14:59:15 Uhr

��

Anzeige_21*28fin.indd 1

��

COMMUNICATION DIRECTOR 02/2011

��

COMMUNICATION DIRECTOR 01/2011

��

COMMUNICATION DIRECTOR 04/2010

COMMUNICATION DIRECTOR 03/2010

��

street*

��

COMMUNICATION

��

country

VAT number**

telephone

telefax

23.02.2007 14:59:15 Uhr

I would like to subscribe to Communication Director. A full annual subscription to Communication Director at the price of 120 Euros which comprises of the new quarterly magazine Communication Director (in English), full access to its online version (including archived copies and individual articles) at www.communication-director.eu and receipt of the monthly newsletter ‘Communication Directory’.

I conﬁrm that all details are complete and correct. I have read the relevant subscription terms at www.communication-director.eu and hereby ensure that I fulﬁl the requirements. I also agree to pay the annual fee of 120 Euros for the subscription package of Communication Director.

date

signature

*information required ** VAT number required if invoice to corporation/association

Communication Director 37 Square de Meeus, B–1000 Brussels,Tel +32 (0)2 219 22 90, Fax +32 (0)2 219 22 92, info@communication-director.eu, www.communication-director.eu

BORDER CROSSER Experiencing the unknown – PR professionals working abroad

MARIANNE AMSSOMS Vice President Global Communications, Anheuser-Busch InBev Interview: Dafydd Phillips

You worked as a spokesperson for former Belgian Prime Minister Wilfried Martens and now you’re working closely with a CEO. What did you learn from the former experience that helped you with the latter? I worked for Wilfried Martens during his European career, after he had resigned as Prime Minister. My scope was not just communications – I also ran his office, so I was very much involved in everything. I’m still actually pretty amazed that he gave me that opportunity, considering that I came straight from university and had no experience. I had my degrees and they were relevant to what I had to do, but I’m still extremely grateful. I started as his number two until I succeeded his then-chief of staff and spokesperson after two years, so I had a period where I was able to learn tremendously from my predecessor. But, even then, it was sink or swim – it was an amazingly steep learning curve. On reflection, sometimes you need a bit of luck and a great opportunity, and I think politics is a fantastic school for people working in communications. There are so many different angles and stakeholders that 03/2011

COMMUNICATION DIRECTOR

you need to consider, in a not-always very friendly environment, to say the least. So it helps form your backbone; you develop a thick skin and there are so many things you learn from. I didn’t fully appreciate it at the time, but as I began doing other things throughout my career, in hindsight, I realise that working in politics really was a great school. On reﬂection, sometimes you need a bit of luck and a great opportunity.

What lessons did you take from the public sphere regarding accountability and transparency?

Photo: Matthias Uhrland

Your career has taken you from political communications and the public sphere to corporate communications and the private sphere. Judging from your experience, would you say that communications professionals can turn their hand to any sphere? I think that, provided you have the right expertise, strategies, and, very importantly, instincts, communications professionals can learn to master any issues in any industry or organisation. Instinct is the tough one though, because you have to learn how to eﬀectively translate your instincts into skills.

BORDER CROSSER

That’s a very hard question. I think what I’ve always pushed for when I joined the private sector is being at the table and being involved early on, being part of the initial discussion as much as possible, because I was used to working in that type of environment. With Minister Martens, I was very fortunate. I was in all the critical meetings, travelled with him and was part of the discussion. I had the full context, and I think you can only truly add value if you have that. And I know it sounds very commonsense and easy, but I do notice in companies, that even today,

communications is sometimes brought in only at a certain point and already with a specific brief. I truly believe that you can only really add value if you have the full context, if you know the objectives and the challenges, so you can steer in a certain direction before it’s all pre-determined. So having had the opportunity to work in such a way in the political world, it was so normal for me to always push for this in my subsequent jobs. If you are allowed into the discussions and into that process, then people see how you can add value in a very different way, so that definitely is one learning. Also, I think there’s always a question about timing. You have to get a feel for when the time is right to push for certain things and that was a big learning process for me in politics. I’m a go-getter and impatient, which made me wonder sometimes how Wilfried Martens navigated, and wouldn’t force a decision but would wait. His 03/2011

COMMUNICATION DIRECTOR

BORDER CROSSER

It was extremely rewarding and just fantastic to be part of the team that helped make this happen. It’s the most visible piece of work I’ve been involved in, but that doesn’t mean that I don’t equally cherish other projects I have been able to work on that may be less visible.

As head of communications for InBev you led communications for the Anheuser-Busch acquisition in 2008. Would you say that this was the biggest project of your career so far? Yes, I think it’s deﬁnitely the most intense and challenging I’ve worked on, which meant pushing myself out of my comfort zone. The InBev team was based in Belgium; we didn’t live and work in the US, so there was a lot to learn. 03/2011

COMMUNICATION DIRECTOR

I truly believe that you can only really add value if you have the full context ... so you can steer in a certain direction before it’s all pre-determined. ter we sent. And it also helped us to be very proactive, really building momentum and creating this sense of inevitability that this deal was going to happen. It not only helped us reach our objectives – communicating the value of the deal to the

Photo: Matthias Uhrland

intuitive sense of timing was amazing, and I always kept that in mind. Sometimes, in a company, you can propose or try to achieve something, and for whatever reason, either something else needs to happen ﬁrst or the timing is just not right for it. That said, perhaps the biggest takeaway is the notion of building the right instincts, which is challenging because it is something that you can not really pass on to someone. You can teach so many things and you can learn a tremendous amount in communications, but getting that part right is tough and I think it’s critical in any environment you work in.

At what point in the build-up to the acquisition did your communications strategy begin to evolve? Were you involved at an early stage, as you recommend? We were involved pretty early on and I’m convinced that really contributed to a successful communications outreach and strategy. We fully appreciated that not living and working in the US meant we really needed to dive deep into all possible challenges and concerns. We did lots of scenario planning. That was one recognition. Secondly, as a company born out of many acquisitions, we had an established process of working together as a cross-functional team and that really helped. It was very natural that we were brought in early on. We tried to anticipate potential key issues and concerns, which resulted in making commitments from day one in the initial unsolicited bid let-

BORDER CROSSER

Anheuser-Busch shareholders and other constituents – but it allowed us to defuse the non-business issues that were potentially associated with the transaction. We were able to effectively carry out our objectives because we had mapped the concerns of all stakeholders very carefully and because we did scenario planning and so on early in the process.

Anheuser Busch was responsible for Budweiser, the iconic American beer. What strategies were in place to deal with US resistance to their major beer brands being taken over by a foreign company? We had a strategy in place to address the critical audiences. In addition to the shareholders, who mostly care about the value, there were also employees, consumers, the St Louis community and wholesalers – in the US, you can’t sell your beer directly to pubs and retail, you go through wholesalers. We did that by making very clear commitments on day one. So having done all that prework, on the day we sent the letter to the CEO of Anheuser-Busch we listed all of our commitments – for example, that the name of the new company would evoke the heritage of Anheuser-Busch (we ended up calling the combined company Anheuser-Busch InBev), that we would keep US breweries open, that St Louis would be the headquarters of the North American zone, that we would keep iconic elements, such as the famous Clydesdale horses, Grant’s Farm, and so on. Eventually, we also brought the BUD ticker symbol back to the New York Stock Exchange a year after the deal. Very clearly, we built these commitments into our day one communications and we repeated them throughout the campaign to all stakeholders

through all channels. We went directly to each of the key stakeholder groups through a deal website we created and communicated without media ﬁlter.

Was there any backlash from the political sphere? We were very proactive in our approach. Our CEO went to Washington and had meetings with the Missouri congressional delegation and leadership; we initiated a grass-roots campaign in key states and conveyed our messages through both paid and earned media. We deployed operatives with a double objective – to gather intelligence and to disseminate our messages. But, just to illustrate the potential for political sensitivity of this transaction: in the midst of our approach, then-presidential candidate Barack Obama was campaigning and his plane had to make an unforeseen landing in St Louis, of all places. He stated that it would be a shame if Anheuser-Busch were to be acquired by a foreign company. So, the risks were certainly there. That was one key area, and consumers were another key concern. We were willing to pay 50 billion US dollars for a very valuable brand

It’s the most intense and challenging I’ve worked on, which meant pushing myself out of my comfort zone. My team was based in Belgium; we didn’t live and work in the US, so there was a lot to learn. It was extremely rewarding to be part of a team that helped make this happen. and asset, so it was critically important that there was no consumer backlash. So we had plans in place and did research, focusing on Missouri to carefully monitor any signals. To eﬀectively reach the wholesalers ﬁnally, our CEO gave interviews to the two trade publications talking about the company, what we stand for and why wholesalers are great partners for our business. In summary, we had a wide range of initiatives to get our messages to our stakeholders.

Was it relatively easier to communicate the acquisition when InBev was already the product of a merger? For sure, because you learn as you go, right? It’s never perfect, you make mistakes when you carry out mergers and acquisitions, but the fact that we had gone through a number of them helped us a lot. But it wasn’t a case of applying protocol? No, but it does bring rigour to the process you follow 03/2011

COMMUNICATION DIRECTOR

BORDER CROSSER

and the steps you take. Also, our company culture is one that doesn’t pause too much on things that went really well. Of course, there is recognition, but to keep moving forward we always zoom in on what we could have done better. And, because of that, we improve the next time. So it was deﬁnitely of tremendous value that we had gone through several other deals of very diﬀerent natures.

You’ve gone from heading global external communications to being responsible for both global external and internal communications. How have you adapted to this broadening of your area of responsibility? It happened very naturally because, in eﬀect, we were already involved in a lot of that work. On many projects, you work on the full range of stakeholders and communications tools, so we were very close and deeply involved. Therefore the transition happened very naturally; it wasn’t a big step change. Why combine both disciplines in one person? Everything is so intertwined, everything is linked. External is internal, and internal is external. And employees are such an important audience and key to any business and communication strategy that it’s very logical to have both disciplines under the same umbrella.

You lead communications at a company that has a Brazilian CEO and Belgian headquarters, and your office is in New York City. What have you learned about intercultural communications? It’s interesting because I get that question sometimes: what’s it like to work with Brazilians, or Americans? But we’re just part of a very international team. So, both in our global headquarters in Belgium and the New York functional management office, there are probably about 25 nationalities working together, and it is very enriching and inspiring to work with colleagues with different national cultures and backgrounds. But it’s our very strong company culture that unites us and defines our way of working, so that is what drives us forward as a team. I think I learned a lot from working in the European parliament and that European environment. It was, professionally and personally, so fascinating and enriching, that I knew there and then that I really wanted to continue working in a very international environment. So, it’s really a journey, you continue to discover, you build empathy and understanding. That’s something that inspires me a lot personally and professionally. I always dreamed of one day living and working abroad. 03/2011

COMMUNICATION DIRECTOR

Did you welcome the chance to spread your wings and experience the world from another perspective? I had lived in Belgium my entire life and I dreamed of getting that opportunity, and suddenly, through Anheuser-Busch InBev, this opportunity came along. So it was an easy decision. I also wanted to give my children the opportunity to grow up in a very international, multicultural environment. I can already see that it is a very enriching experience for them, and I’m convinced

My impression is that there’s the same communications talent and expertise in Europe as in the US. it will shape their future lives and characters. So the combination of the professional opportunity with that personal motivation resulted in a big “Yes” to moving. My children live in this environment where there are more than a hundred nationalities, cultures and religions, and the exposure and the diﬀerent view they get on the world – I think it is a unique opportunity if you can oﬀer such an experience to your family.

What are your US colleagues’ attitudes towards the ‘Old World’? Living in the US – and I appreciate I live in New York, so I don’t claim to know the US at all – I always ﬁnd that people are very interested and eager to learn. They’re fascinated and admire the fact that we speak several languages, and that everything is so close in Europe. But, at the same time, there’s such a huge US focus; I’m amazed at the extent to which I see that now, especially in a city like New York, which is so multicultural and international. Reading

BORDER CROSSER

Photo: Privat

papers, watching television, meeting people – it’s still very US focused. I ﬁnd that intriguing, because the world is changing so fast.

Would you agree that the States are leagues ahead in their approach to communications, or could they learn anything from the European approach (if there is such a thing as a unified ‘European approach’)? My impression is – and this is just my anecdotal, personal experience – that there’s the same communications talent and expertise in Belgium or Europe as there is in the US. I think it is still very much the case – and I see it reflected in the education system and in the job market when I interview people – that Americans usually do a much better job at selling themselves, at selling their approach, their project. That first impression is so strong. But when you dig a little bit deeper, there is not that much of a difference. I don’t want to make it sound negative, because I think it’s a very important quality – people being very confident, being eloquent. I’m sure the US is better in certain areas, as Europeans are in others, but I don’t agree with the premise that communications professionals in the US are so much ahead. What I find interesting, from what I’ve seen in the US, is that there’s a relatively big number of communications professionals with a very solid business background, which, for a company like Anheuser-Busch InBev, is fantastic. I do find that quite a lot of people have a strong business education, in addition to their communications expertise or degrees. And that becomes increasingly important in the communications area, because if you want to be at the table, you need to have a sound understanding of the broader business perspective.

Your office is located on Park Avenue. Does working there fulfil all of your expectations of such a glamorous address? Anheuser-Busch InBev is not at all about glamour – quite the contrary. We have a very down to earth and frugal culture, so the choice of office was very simply based on accessibility. It’s next to Grand Central station, so colleagues who live in the city can just get on the subway, and commuters who live outside of Manhattan are a very short walk away to take their train. There’s easy access to the airports, which is important because we have global responsibilities, so most colleagues travel a lot. So it was a very pragmatic decision, which also benefited from the fact that, in 2009, the real estate market was definitely not at its height. Finally, what does the future hold for your career? Do you know where you want to be in a few years time? I don’t do that kind of planning because things happen, opportunities come along. I am fortunate to work for a company that grows, so I’ve continued to grow with it. The company I joined eight years ago, called Interbrew at the time, was completely different from the company that I work for now. Anheuser-Busch InBev is one of the world’s top five consumer products companies. And, as I mentioned at Marianne Amssoms the beginning, I love to be Vice President Global Communications, challenged, and our comAB InBev pany culture is one of continuously raising the bar. Marianne Amssoms holds a master’s degree in both poThat means you always have litical sciences and European to do better. Because we studies. After seven years in are a truly global company, politics she headed the corpowe are also able to recruit rate affairs and communications function at McDonald’s such great people that you Belgium for over three years. have to be on your toes all She then took responsibility the time. You don’t want to for the corporate affairs and communications area at InBev disappoint your colleagues Belgium for six months, before if you’re working on a team. joining the company’s global So you have to continue to headquarters as global head up your game, and if you of external communications in January 2004. She relocated to continue to grow, that’s AB InBev’s global office in New what matters. And who York in 2009 to head up both doesn’t want to work for a global external and global inbeer company? ternal communications. 03/2011

COMMUNICATION DIRECTOR

STORY TELLER Looking at the important questions of communication

03/2011

COMMUNICATION DIRECTOR

STORY TELLER

THE MATCH MAKER Communicating mergers and acquisitions

“A very long engagement” by Dafydd Phillips page 54 - 59

“Buying and selling: European M&A trends” by Christopher Kummer page 60 - 63 “Laying foundations for the future” by Elena Gutíerrez García page 64 - 67

“The story of a big match” by Frans Cornelis and Machteld Merens page 68 - 71

“Playing the double-sided divestment game” by Brigitte von Haacke and Christian Zeintl page 72 - 77

“Using established values to welcome new colleagues” by Dani Meyer page 78 - 81

“New kids on the block” by Virgínia Drummond Abdala and Huiyi Gao page 82 - 85

“Cleanup operation” by Johan Almquist page 86 - 89

03/2011

COMMUNICATION DIRECTOR

STORY TELLER

A VERY LONG ENGAGEMENT Mergers and acquisitions are arduous, prolonged processes. But the communications challenges are their own reward

by Dafydd Phillips

03/2011

COMMUNICATION DIRECTOR

STORY TELLER

verybody enjoys a celebrity wedding. They legitimise our need to indulge in speculation, gossip and feverish media coverage. One recent example ticks all the boxes: “Deutsche Börse, NYSE Agree to Historic Merger” (Reuters, February 15; “Merger mania: Frankfurt borse eyes heart of capitalism” (Sydney Morning Herald, February 10); and “Deutsche Börse Group To Merge With NYSE, Create World’s Largest Exchange” (Huffington Post, February 10). Headlines like these have dominated the financial press since news of a proposed merger between Frankfurt-based stock exchange Deutsche Börse and NYSE Euronext, the operator of the New York stock exchange. To become better partners for their globalised clients, Deutsche Börse and NYSE Euronext have joined a growing list of stock exchanges that are taking advantage of changing European regulations and entering into global merger talks. The UK’s Daily Telegraph calls it a “race for repositioning”. Alongside DB and NYSE, 2011 saw merger talks between the London Stock Exchange and Toronto’s TSX, as well as Singapore’s SGX and Australia’s ASX. When six of the biggest players in an industry are all looking to merge, the entire European business landscape will need to be reconfigured. Job creation and job cuts, new companies and brands, new revenues and an altered market are all implied by this special transaction, a transaction that represents a life-changing watershed for a company. It also puts immense pressure on the company’s communications function, and so Communication Director decided to investigate

the many roles that are demanded of the communicator through this dramatic process.

FIRST STEPS The ﬁrst phase of the deal leads up to

the signing of the business combination agreement, effectively the moment that the intention to merge is made public. This phase of the journey will be lead by the executive board, who approach their own shareholders as well as the board of the other company and persuade them of their vision and win their approval for the deal. The communications function plays a key role, not least in establishing the compatibility of the two companies. Cultural similarities and dissimilarities – organisational as well as national – can ease or hinder the execution of a merger or an acquisition; after all, merging companies not only combine their businesses but also their separate organisational cultures. According to a report by strategy consultants Roland Berger, cultural knowledge is one of the five key success factors in mergers and acquisitions. In New Opportunities for Strategic Acquisitions, they write that “successful European M&A players attach great importance to ‘cultural fit’ from the earliest days of their deliberations”. The definition of what constitutes a cultural fit will vary. Caterina Moschieri is an assistant professor of strategic management at Madrid’s Instituto de Empresa. She told Communication Director that “multinational

According to a report by strategy consultants Roland Berger, cultural knowledge is one of the ﬁve key success factors in mergers and acquisitions. companies tend to prefer wholly-owned modes of entry (termed ‘greenﬁeld’ investments) when the culture of the host country is similar to their own, while they opt for shared ownership arrangements (e.g. alliances and joint ventures) under the opposite circumstances”. When targeting an overseas company, Moschierie recommends the CAGE (Cultural, Administrative, Geographic and Economic) model to measure the distance between the two companies. Another key role is assisting with the drawing up of the opening salvo. In her interview, beginning on page 46, Marianne Amssoms speaks of her work at Belgian brewing company InBev in formulating the initial unsolicited bid letter addressed to the shareholders of US beer company Anheuser-Busch. Extensive scenario planning and a cross-functional working arrangement (born of InBev’s 03/2011

COMMUNICATION DIRECTOR

STORY TELLER

chequered history in mergers and acquisitions) helped create a firm offer that also addressed the manifold concerns and non-business issues that attend any such complicated transaction. This is also the time to draw up your communications plan for the future, as Juan Francisco Polo (director of communication and corporate responsibility at Spanish transport company Ferrovial) did in the build up to Ferrovial’s December 2009 reacquisition of one of its subsidiaries, Cintra. “Prior to the merger”, he said, “a communication plan emphasising the financial and operational benefits for the companies and their shareholders, clients and employees was devised.” His plan also painted the future in rosy colours: “The second phase of communications focused on the operational advantages and synergies produced for the new Ferrovial, after the merger with Cintra”. Letting employees in on the picture during this early phase is a complicated proposition. A study conducted by David Schweiger of the University of South Carolina and Angelo S. Denisi at Rutgers University, and reported on in an article in the Academy of Management Journal, evaluated the impact on workers of being provided with a realistic merger preview. They found that being appraised in advance of a pending merger results in reduced dysfunctional outcomes for the organisations involved. However, disclosure of sensitive information while the deal is under development could backfire, and at this stage the terms of the agreement are clouded in ambiguity. But as soon as the deal is signed communications in cooperation with human resources should have a comprehensive plan at hand of how to present the deal to the employees, who, after all, should be regarded by both parties as an invaluable asset. Striking the wrong tone could result in an unstable work force, an undesirable state of affairs so soon after the deal is sealed.

SECOND PHASE Once the agreement has been signed by the other company it is time to convince everyone else of the value of the transaction, internally and externally. This phase must surely represent the pinnacle of any corporate communicator’s career, with a range of roles required in the process and an unparalleled cross-functional reach. Communications will be responsible for the timeline of the deal, planning documents and coordination exercises. Communications will be called on to arrange events such as road shows, develop advertising campaigns and organise stakeholder conversations, including one on one meetings and investor talks (working here in conjunction with the investor relations department). They must also secure 03/2011

COMMUNICATION DIRECTOR

COMPETITIVE BIDS Fighting off unwelcome interventions The ongoing saga of the Deutsche Börse and NYSE Euronext merger highlights one of the more difficult trials of the merger and acquisition process: competitive bids launched by other companies. In this case, Nasdaq OMX and InterContinental Exchange (ICE) joined forces to bid 11.3 billion dollars for NYSE Euronext in a deal they claimed was better for New York’s future as a financial centre. In the case of a rival bid, the two original companies are obliged to separate their communications for a specified amount of time – in this case, NYSE Euronext and Deutsche Börse did not communicate with each other for two weeks in the wake of NASDAQ and ICE’s bid. Experts say the rival bid helped boost Deutsche Börse’s chances: the tone of Nasdaq’s communications inadvertently persuaded Germans opposed to the original deal to rally behind their home team. Although US anti trust regulators ultimately blocked the Nasdaq/ICE bid, Nasdaq continues to voice its concerns over the deal.The Wall Street Journal reported that Nasdaq claimed the proposed new group would “establish a monopolistic situation” that would hinder competition.

political influence and engage in ongoing dialogue with opinion makers relevant to the market, particularly those in a position to oppose the deal on whatever grounds. They could be political groups concerned with the knock-on effect of a takeover or the various unions involved who are determined to uphold their members’ interests (and who, just to complicate matters further, may have conflicting priorities). Along the way, outsider help will be engaged. There is a long list of financial and legal advisers who specialise in mergers and acquisitions and offer extra manpower at a time when even the biggest communications department reach their maxi-

STORY TELLER

mum level of capacity. Advisory firms are in special demand in international cases, where on the ground support and first-hand knowledge of new markets are valuable. There is also another, less measurable benefit to hiring expert outsiders: in the words of Paul Argenti and Janis Foreman, writing in The Power of Corporate Communications (McGraw Hill, 2002), they can also provide “the cool-headed perspective and impartiality needed when internal politics heat up and steer sessions in ways that benefit the interest of particular factions or individuals at the expense of the overall good to the company.”

OPEN DIALOGUE Internal en-

gagement should be embarked upon in close collaboration with human resources, and the goal should be to manage, if not reduce, the ambiguity that inevitably accompanies a change of this magnitude. Ambiguity fosters fear and fear negatively affects share prices and the potential for success. The trick is to recognise the specific issues that are relevant to various interested parties and that may not be as immediately apparent to, or uppermost in the minds of, the management. Annette Risberg is an associate professor in the department of intercultural communication and management at the Copenhagen Business School. She researches critical organisational and behavioural perspectives in mergers and acquisitions, and she explained to Communication Director the kind of miscommunication that can plague the transaction process. “[Employees] are often occupied with, and try to make sense of, very specific issues that are only relevant for them or for their department”, she said. “If these issues are not addressed by the

management – who mostly focus on general and organisational overall issues – they may feel neglected and then experience a lack of communication. Thus, what happens is not that there is a lack of communication, but that the communication taking place does not address the department or person-speciﬁc issues.” Her view is that constant engagement and transparency is the answer. “One way to avoid this could be to provide opportunities for employees to ask questions whenever they want, or, even better, to inform middle managers as soon as possible so that they can keep their employees informed.”

WITHHOLDING INFORMATION? Complicating the communications task in this crucial phase is the degree to which important information can be conveyed, and who should be privy to what knowledge. Messages must be balanced between consistency and being tailored to the various audiences. In the course of a merger management, those ‘in the know’ will have a very diﬀerent set of expectations and views than employees on the ground. Communicators must somehow honour both these perspectives. Ivo Lingnau is managing director at the Frankfurt oﬃce of Financial Dynamics, a global consultancy that specialises in mergers and acquisitions. Speaking to Communication Director, he summed up his advice to corporate communicators: “Following on from a very de-

If you can’t answer all the questions employees might already have early in the process, then it’s important that you have relevant holding statements and clear expectations management. tailed strategy discussion in the boardroom, you then have to bring it out in a more digestible way for the employees.” Empowering middle management to converse with their teams about the process is important here, according to Lingnau: “One shouldn’t underestimate the importance of making sure that middle management is well equipped for dealing with their internal communications responsibilities, because they are the ones who people first turn to. People obviously don’t ring up the CEO to ask their questions, they walk into their boss’s office.” Revealing information is also subject to timing: as mentioned earlier, the first stage of the transaction is by necessity shrouded in secrecy. To reassure employees, Lingnau recommends setting up a timeline of revelations promising light at the end of the tunnel. “If you can’t answer all the questions 03/2011

COMMUNICATION DIRECTOR

STORY TELLER

employees might already have early in the process”, he said, “then it’s important that you have relevant holding statements and also have clear expectations management when people can expect to get more detailed information on the timeline.” Close liaisons with the communications department at the other company should be established in order to draw up a mutually-beneﬁcial and consistent communications plan. Constituents of both companies should not feel that their opposites are privy to more or better information than they receive: this will only lead to a residual bitterness or a sense of enmity.

REGULATORY PHASE Approval must be won from several different antitrust authorities of varying importance. In Deutsche Börse’s case, the two most important European authorities are the Directorate General for Competition in Brussels and the Hessian Ministry of Economics in Wiesbaden. You would be forgiven for thinking that the regulatory phase of the deal is largely out of the hands of the company, but the need for communications at this juncture is as strong as ever. The European Commission has submitted a 175-page questionnaire to Deutsche Börse’s customers and rivals in its ongoing evaluation, and although direct lobbying is frowned upon, companies can seek to influence media coverage in their favour. Positive headlines in business papers can contribute to the general atmosphere within which politicians and legislators are expected to come to their decision. And you can rest assured that opponents to the deal will take this opportunity to press their case through the media, as recent headlines about the Deutsche Börse deal will confirm: “LSE attacks planned D Börse-NYSE Euronext merger”, said the Financial Times on July 26, while on July 28 Bloomsberg ran with “Deutsche Börse-NYSE Merger Threatens Competition, AFME Tells EU”. The final round of regulatory deliberations are expected to last until the end of 2011.

Communicators should work closely with human resources to develop communications related to benefits, retirement, severance, incentives and so on. 58 FINAL PHASE Should the deal be given the green light, then communications must launch their post-merger strategy. Following the intensity of the negotiations and announcement period, there is a danger of relaxing into a state of complacency. But the integration phase is the most prolonged and critical and determines whether the 03/2011

COMMUNICATION DIRECTOR

DEFENSIVE MOVES Against hostile takeovers It is by no means a given that every takeover bid is welcome. Several defense strategies are permissible under the scrutiny of supervisory authorities. ‘Poison Pills’ refers to anything the targeted company does to make itself less attractive as an acquisition. These pills come in a variety of ﬂavours: the ‘People Pill’ involves valuable high-level employees threatening to leave the company en masse should the transaction take place; the ‘Crown Jewels’ defense sees the target company selling off a highly-prized division to another company or spinning it off into a separate corporation; a ‘Flip-In’ allows shareholders to buy more stocks at a discounted price, thus cheapening the worth of all existing shares and reducing the voting power of the shareholders. The success of these strategies ultimately depends on the market. For example, when Mittal Steel fought to take over Arcelor, the latter put up strong defenses including an extraordinary dividend, a proposed buyback and the lock-up of a strategic asset in an independent trust. These moves were accepted by the market, as it was expected that they would result in an improved offer by Mittal Steel. However, Arcelor’s second defense – a proposed merger with SeverStal of Russia – was heavily criticised by analysts and was rejected, paving the way for an improved, and ultimately successful, offer from Mittal Steel. Eero Vaara, professor of management and organisation at the Hanken School of Economics in Helsinki, told Communication Director that he believes that “the best defense usually requires both pointing to the problems of the takeover attempt and providing a credible alternative for the future. Also, it seems important to be able to mobilise key stakeholders to demonstrate widespread resistance.” However, Professor Vaara is dubious of the overall merits of defensive strategies: “Usually a great deal of goodwill is lost in offensive and defensive moves where protagonists and antagonists provide arguments for or against takeovers. The end result is often only a partial victory. If the defense wins, negative reactions among investors may lead to decreasing share prices. If the takeover succeeds, defensive tactics have often undermined the legitimacy of the acquisition and subsequent development of the company.”

STORY TELLER

envisioned goals of the merger will be realised. Depending on the deal, integration will take on a lower priority. If a deal results in the creation of a new entity led by a holding company in a third-party neutral country (as in the case of the Deutsche Börse–NYSE Euronext deal), cohesive integration may not be desirable or possible. This could also be true in the case of international acquisitions of beloved and highly emotive national icons, where the decision to leave well alone requires limited cultural change. However, it is imperative that communications embrace the new post-merger reality. Not least because the media will keep a hawk-eyed look out for any signs of potential cracks. “Here are 12 reasons why the AOL-Huffington post merger is going down in flames”, crowed a headline on the Business Insider website. In this issue, Dani Meyer of Danone writes about her company’s approach to welcoming new employees and encouraging people to get to know each other (see page 78). Communicators should work closely with their counterparts in human resources to develop communications on benefits, retirement, severance, incentives and so on.

CORPORATE

ADVERTISING

External expectations and assumptions about the new company must be carefully managed. For example, large post-merger companies face negative associations of their bloated, unwieldy size, and are often seen as corporate monoliths created for the benefit of rapacious stockholders and of no real benefit to anyone else. In The Power of Corporate Communications, Argenti and Foreman single out Pfizer as a case study illustrating how such assumptions can be successfully negated. “The new

Pfizer – a merger of two pharmaceutical giants Pfizer and Warner-Lambert in June 2000 – seems to have anticipated the negative response to its increased size and turned this stereotype on its head by emphasising the advantages of size, the company’s larger commitments to R&D, the range and depth of its products, and the growth of its global marketing capabilities.” Pfizer’s advertising cleverly communicated new benefits to both its customers and its investors. “To create a better world, we’ve created an even better company” ran one glowing advertisement.

NEW COMPANY, NEW VOICE The post-merger state of aﬀairs should see a new lease of life for the communications department. According to Andrew McCallum, director of communications and external aﬀairs at Gatwick Airport, this was the case following the sale of the airport by BAA (itself owned by Ferrovial) to Global

We have established a voice for Gatwick that didn’t exist while it was part of BAA, a voice in the media, a voice on political and policy matters and a voice in the broader aviation industry. Infrastructure Partners. “Our communication approach is much more proactive and challenging under our new ownership”, he said. “We have established a voice for Gatwick that didn’t exist while it was part of BAA, a voice in the media, a voice on political and policy matters and a voice in the broader aviation industry.” The opportunity for rebranding following a merger or acquisition is the most visible sign of a new direction. In this issue, Johan Almquist of Electrolux writes about his company’s rebranding eﬀorts, particularly following acquisitions in Brazil (see page 86). In the case of Gatwick airport, their post-acquisition branding inﬂuenced the very way in which they communicate. McCallum described his company’s ‘Your London Airport’ strapline as central to their new voice, going “way beyond the logo and identity, and [it] is much more about the tone and style of our communications. One example is the way we’ve embraced innovative social media tools in our communication with passengers and stakeholders.” Gatwick’s example reminds us that, in the post-merger phase, just as in the build up to the signing of the deal, success is dependent on communications. Time will tell how the new company born of the Deutsche Börse and NYSE Euronext’s merger will leverage their communications. 03/2011

COMMUNICATION DIRECTOR

STORY TELLER

BUYING AND SELLING: EUROPEAN M&A TRENDS The prevalence of mergers and acquisitions in the European market illustrates the fact that this kind of transaction is a great way for companies to grow strategically and successfully by Christopher Kummer

03/2011

COMMUNICATION DIRECTOR

STORY TELLER

ergers and acqu isitions are an important means for companies to realise their strategies. The reasons are manifold: many deals are done to enter new markets or segments, add new products, get hold of technology or to cut costs. This article will review trends in European mergers and acquisitions with regards to number, value, industries, largest transactions, hostile takeovers, cross-border deals and countries. In the ﬁnal part, we will describe an integrated approach to the merger and acquisition process from the perspective of a buyer and summarise some important factors for successful transactions.

periods while interest rates are low. These two last factors allow companies to arrange ﬁnancing with relatively ease with the issuance of new equity or debt. Currency issues are also of importance – during periods of weakness for the US dollar, for example, there are more cases of European ﬁrms making acquisitions there (and vice versa).

INDUSTRIES AFFECTED During the period from 1995 to 2011, the industries most affected by mergers and acquisitions in Europe in terms of numbers are consumer goods and services (19 per cent), industrials (17 per cent) and high technology (11 per cent). When it comes to the value of transactions during the same period, transactions in the financial services sector come first at 19 per cent, followed by energy and power at 15 per cent and telecommunications at 11 per cent. LARGEST TRANSACTIONS The largest European transaction since 1995 was the hostile takeover (which basically means that the management of the target firm did not agree to a transaction when first approached by the acquiring company) of German Mannesmann by UK-based Vodafone for 205 billion euros. By a significant distance, the creation of GlaxoSmithKline in 2000 (Glaxo Wellcome PLC being the acquirer company and SmithKline Beecham the target) comes second at 75 billion euros (not even worth half of the Mannesmann deal). Figure I: Announced European mergers and acquisitions, 1995 – 2011YTD 1 Number

Value Value (in billion euros)

20 18 16 14 12

2,500

2,000

1,500

10 8

1,000

6 4

500

2011YTD*

2010YTD*

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

0 1997

0 1996

Number (in thousand euros)

year, about 17,600 transactions with a known value of 762 billion euros, were announced in Europe. Activity in the first half of this year increased a little bit (up by 14 per cent in value and two per cent in numbers) when compared with the first six months of 2010. A look at the long-term trend in mergers and acquisitions shows that deals come in cyclical waves (see figure one). At the moment, values in European mergers and acquisitions are relatively low and numbers relatively high. Therefore, we can expect another wave of mergers and acquisitions in the future. If we review the macroeconomic factors that correlate with peak periods of mergers and acquisitions, we find that the economic outlook and climate is usually very favourable with growing gross domestic products. Stock prices soar during these

1995

Photo: www.dreamstime.com

M&A TRENDS IN EUROPE Last

as of June 30; Source: Thomson Financial, Institute of Mergers, Acquisitions and Alliances (IMAA) analysis

03/2011

COMMUNICATION DIRECTOR

STORY TELLER

The top three is completed by yet another hostile takeover, this time in 2007 when RFS Holdings BV – a consortium of Royal Bank of Scotland, Fortis Group and Santander – completed their increased tender oﬀer for Dutch bank ABN-AMRO for 71 billion euros. There are also a number of large transactions that had been announced but then failed to take place. For example, in 2007 UK-based mining company Rio Tinto announced their intention to acquire Australia’s BHP Billiton in a transaction valued at 99 billion euros. Due to concerns over competition, however, the deal was roundly rejected.

EXECUTIVE SUMMARY European M&As: 1995 to present day The industry most affected by mergers and acquisitions in Europe was consumer goods and services. The ﬁnancial sector saw the most valuable transactions The largest European transaction was the hostile takeover of Mannesmann (Germany) by Vodafone (UK), valued at 205 billion euros

HOSTILE TAKEOVERS Research indicates that hostile takeovers are less successful than friendly deals; nevertheless, two of the three largest completed transactions in Europe have been of a hostile nature. In total, however, hostile takeovers have a relatively low share in the total number of transactions, with the average share of transactions since 1995 at only 0.13 per cent. The trend shows that hostile takeovers have become less en vogue in terms of numbers (see ﬁgure two). Their average share in value, however, is much higher because some hostile transactions are fairly large: the ﬁgure was at 5.9 per cent during this period.

43 per cent of European transactions were cross-border cases The UK, France and Germany are the top 3 acquirers, and the US, Australia and Canada are the top three non-European acquirers

CROSS-BORDER TRANSACTIONS Cross-border

transactions are a very important feature of mergers and acquisitions in Europe, with roughly half of all cases tak-

Figure II: Share of announced hostile European M&A in total announced European M&A, 1995 – 2011YTD Value

0.4%

Value

Number

0.35%

16%

0.30%

14% 12%

0.25%

10%

0.20%

0.15%

0.10%

0.5%

03/2011

COMMUNICATION DIRECTOR

2011YTD

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

0.0% 1995

18%

ing place across borders. From 1995 to today, on average 43 per cent of all transactions, and 55 per cent of their value, were across borders. The trend shows that, in the past couple of years (from around 2007), crossborder activity has fallen somewhat below this average. One of the reasons for this is that, in economically diﬃcult times, national combinations represent less risky and easier to realise synergies.

EUROPEAN M&A BY COUNTRY The most frequent European

acquirers are companies from the big European economies, led by the United Kingdom with more than 50,000 transactions worth 3.9 billion euros since 1995, and followed by France and Germany. Those three countries are also the locations where the most acquisitions take place in Europe. Most active non-European buyers are companies from the United States, Australia and Canada, while most acquisitions by European companies out-

STORY TELLER

Figure III: Integrated M&A process Strategy

Corporate Finance

Strategy

Approach Target Companies

Valuation

Due Diligence

Negotiation and Closing Integration Execution

Due Diligence

PostM&A Review

Financing

side of this region take place in the US, Canada, Brazil and Australia.

Photo: IMAA

AN INTEGRATED APPROACH Aside from all these macro-trends from a company’s point of view, most studies claim that the majority of mergers and acquisitions turn out to be a failure – usually the failure rate ranges between 50 per cent and 75 per cent. Of course, the recipe for disaster features a long list of ingredients. A lack of sufficient emphasis on strategy-related issues is surely one ingredient: many people are too focused on the corporate finance process even though other aspects are decisive in ensuring success for a deal. In our experience, an integrated approach that combines strategy and corporate finance (and not a sequential process) increases the chances of success for acquirers (see figure three). This process must start with a firm idea of the strategy and logic for a transaction. Clearly, companies should only do deals that fit their strategy. The second thought should tackle the issues of post-merger integration. All other steps of classical corporate finance – approaching target companies, valuation, due diligence, negotiation, closing and financing – have to be related to integration issues. Aligning integration and other steps allows all involved to

be more realistic about the true beneﬁts of an acquisition. Due diligence should not only cover the risks, but also uncover and explore the various opportunities available. After all, an acquisition is an entrepreneurial investment decision: deals need to be structured very carefully to avoid overpaying and management must possess the discipline to walk away from uneconomically-viable deals. Of course, valuation and assumptions can be twisted to meet the price – but this should not be done unless new information justiﬁes changes in the model.

HARD WORK Although all the steps necessary until the closing of the deal are highly time-consuming and costly, the real challenge lies in the execution of the integration process. While there are diﬀerent approaches to integration (from standalone to full transformation), in this phase everyone has to work hard to achieve the economic Dr Christopher gains hypothesised. An inKummer tegration process often runs President, from six to 24 months – and IMAA some projects last even longer Dr Christopher Kummer is a than this. After integration, professor and adviser on stratit makes sense to conduct a egy and mergers and acquisipost-merger review in order to tions. He is president of the Institute of Mergers, Acquisianalyse aspects that have been tions and Alliances (IMAA) and handled well and identify afﬁliate professor at Grenoble points that can be improved Ecole de Management in next time. Acquisitions are France. As an adviser, he supports companies with strategy no money-making machine, formulation and execution of but they can be a great way for alliances, acquisitions, disposal, companies to grow successattracting investors and postfully. merger integration. 03/2011

COMMUNICATION DIRECTOR

STORY TELLER

LAYING FOUNDATIONS FOR THE FUTURE A merger between two companies results in a new organisation with a fresh identity, vision and values – an ideal opportunity to bring out the best in strategic corporate communications by Elena Gutiérrez García

03/2011

COMMUNICATION DIRECTOR

STORY TELLER

either a merger nor an acquisition could be described as an ea s y-going period in a corporate lifetime. Looking at the results of several studies of mergers and acquisitions, one could be forgiven for believing that several company executives and their communication directors are failing at their job. Why? A recent study by the Wharton Business School at the University of Pennsylvania states that 83 per cent of mergers and acquisitions failed to produce any benefit, especially to shareholders, and over a half ended up reducing financial value instead of increasing it. In 2001, research conducted by Dr Patricia Whalen for the International Association of Business Communicators found that, although mergers have been growing particularly since the 1980s, they have not met their expectations. According to the experts, among the reasons for not succeeding are deficient planning, poor management of talent, cultural clashes or an inadequate tackling of environmental changes.

A COMPLEX GRID Financial and management problems shed light on the relationship between mergers and acquisitions and communication professionals. The success of this type of corporate deal seems to be focused on the way executives handle culture clashes, investor expectations, and the involvement of regulators. However, in the entire business environment, with its diverse external constituencies, communicators should establish an exhaustive roadmap that would drive success in an inherently diﬃcult process. While executives keep their mind on the ﬁnancial and legal aspects, communicators pay close attention to

other aspects and arguments. They know that any corporate process is accomplished due to a complex grid of arguments and sensitivities that go beyond the merely ﬁnancial.

A QUESTION OF PERSPECTIVE According to several academic studies, common arguments used in a merger or acquisition are rooted in a financial perspective: “it is necessary for growth”, “it will provide more wealth for our shareholders”, “it will provide us with an extraordinary opportunity in the face of current economic challenges”, “it is a good deal that will create synergies, diversify risks, and provide a cost-saving framework.” Although these arguments reflect the necessary ground that sustains the agreement between the involved companies’ board of directors, as well as the necessity of convincing investors, they fail to reflect a more complex reality. The narrative of the news cannot only pivot on financial data. Of course, it is key, but one should think of a more holistic approach. As Rudi Palmieri of the University of Lugano states in his research into argumentative interactions in mergers and acquisitions, the commonly-shared perspective is the one that stresses communication with the financial community and, at best, with employees. In other words, specific communication programmes for a merger process tend to exclusively highlight these arguments, even in their relation with other stakeholders (journalists, providers, public authorities, unions, etc.) UNDERSTANDING THE POLITICAL FRAMEWORK Certainly, this vital corporate event requires a specific communication programme that stresses concrete messages to specific publics – the financial community, such as investors and analysts, and financial journalists (this is especially true in the case of listed companies). But managers are already conscious that any given external climate can determine the success or failure of the merger or acquisition, and it is often not only reliant on solely financial aspects. In recent decades, many European countries have witnessed failed mergers due to issues not directly related to the corporate and financial aspects of the mergers, but rather to do with the political framework that surrounds any big corporate event. How can we forget controversial deals beset by the fears of political or regulatory national bodies and the national press? Politicians or the national media are frequently afraid of losing control of national and strategic industries: think of Ferrovial and the acquisition of British BAA airports, Santander Group and Abbey National Bank, British Airways and Iberia, Kraft’s hostile takeover of Cadbury, and so on. 03/2011

COMMUNICATION DIRECTOR

STORY TELLER

ELITE COMMUNICATIONS CIRCLE Nonetheless, any merger or acquisition represents a great transformation that will result in a new and different company. The reality of the company that will emerge after the process needs to be communicated from the very beginning in an integrative and innovative manner. A different approach should be taken into account in the case of a hostile bid, but if the merger is a friendly one, the communicative process requires a strategic mentality. Any number of external circumstances can affect the way mergers are carried out and, in the current economic and financial climate, strategic communication is more crucial than before. Present conditions demand consistency if companies are to maintain the trust of stakeholders. As I will argue in the following paragraphs, strategy can be translated as consistency. And consistency is not only a matter of well-designed messages tactically delivered through the right choice of newspapers. From this prespective, strategic communication is often equated with sophisticated publicity gained in the financial media. Aeron Davis of the University of London calls it the “elite communication” circle, in which companies communicate with specific stakeholders – regulators, analysts and investors - through the financial media. Consequently, what seems to be public communication is in fact narrow communication; a practice that focuses on specific groups and forgets the whole picture.

MISSION, VISION AND VALUES However, as management academics remind us, the whole picture is one in which strategic thinking must be applied. Communicators can provide a holistic angle from which several stakeholders and ideas can be presented to the C-Suite. From this perspective, we could ﬁll this article with ideas commonly shared, or perhaps it is more interesting to take another standpoint that presents a comprehensive and strategic communication point of departure. For this purpose, mergers and acquisitions are paradigmatic cases. Firstly, they involve all the dimensions of a company’s nature: a merger and acquisition process results in a new company with a new identity, vision and values. It involves thinking of a new communication strategy, but the facts must be above all clear. The vision cannot be sustained only by numbers: incomes, cash-ﬂow, or EBIDTA data. Mission, vision and values are the heart of a company and need to be understood, shared, and legitimised by its stakeholders. The deal has to be fully explained. The following mantra should inspire the 03/2011

COMMUNICATION DIRECTOR

EXECUTIVE SUMMARY Making the case for a merger Mergers and acquisitions are paradigmatic cases of strategic communications and require a holistic approach Mergers and acquisitions involve all dimensions of a company, and result in a new entity The ﬁnancial perspective is important, but only one among many needed to convince the public Communicators can give context and present several stakeholder groups and ideas to the C-Suite

entire communication programme: honesty, consistency, frequency and management reliability. In general, stakeholders do not trust companies that fail to clearly state the reasons for their decisions, and this is particularly true in turbulent business environments. Financial data is not enough for convincing the company’s publics. The market and society as a whole

Mergers and acquisitions involve all of the dimensions of a company’s nature... the process results in a new company with a new identity, vision and values. are flooded with those kind of arguments, which unfortunately have on occasion, proven to be false, misleading or deceptive. The public’s distrust of business is not only rooted in certain financial scandals. The lack of credibility could be traced back to communication practices focused on the commercial side of the firm, on advertising campaigns that stress – when not exaggerating

STORY TELLER

– the company’s virtues, or on a oneway communication style in which the company speaks too much and listens too little. When executives ﬁnd that their ﬁrm has a bad image among stakeholders, they frequently blame it on the way in which the message was disseminated: “The problem is that we didn’t know how

Companies need to be managed with a philosophy that stresses an open dialogue and stakeholder engagement.

Photo: Private

to explain ourselves properly”. But instead of shooting the messenger, they should ask themselves: “Do we have clear ideas and/or strategy? Do we know what is going on with our stakeholders, their expectations, attitudes, reactions?” These questions are a way of scanning the external environment for any conﬂicting issues. As public relations and corporate communication literature reminds us, continuous and systematic research is the intelligence function that sustains any ﬂourishing strategy.

GAINING SUPPORT Another example of the paradigmatic nature of mergers and acquisitions is that they involve many stakeholders with many diﬀerent interests. Clearly, it is important to engage and convince them and gain their support. Attracting interest and credibility for the new company is not easy. Employees face uncertain times and need to feel part of a new project because they will have to work in a new place, with a diﬀerent culture, management leadership and objectives. At the same time, investors and shareholders put pressure on companies because they want maxi-

mum profitability, while regulators and public entities watch over the consumer interests and the transparency of information. Consumers, providers, trade unions, civic associations, and journalists, on the other hand, behave like watchdogs, keeping an eye on the company’s movements. The described myriad of stakeholders’ demands is a challenge for real strategic communication. It demands a rich perspective on different publics in which executives have to handle different expectations and demands, even contradictory and simultaneously. The challenge is to draw up a wide-ranging communication programme that involves specific plans that adapt different messages to specific publics’ needs. If well coordinated, it will ultimately accomplish a consistent message.

APPLYING THE FIVE WS To sum up, all the circumstances listed above cannot be effectively faced without clear and open messaging. In other words, without clear ideas that respond to what journalists call the Five Ws of their work: what, who, why, where, and when. Perhaps a merger or acquisition fiasco should not be considered as a communication failure (“they did not understand us”); sometimes it is not a matter of delivering insufficient messages and a lack of understanding by the public, but rather a lack of clear vision. Managers and communicators need to be attentive, firstly and foremost, to the ‘whys’, in order to discuss with the executive suite if the ‘whats’, the ‘wheres’ and the ‘whens’ are appropriate for the company and for the stakeholders. Once again, communication is not a simple question of spreading information in order to convince. At the present time, companies need to be managed with a philosophy that stresses an open dialogue and stakeholder engagement. The public is no longer content to be passive: they want to get involved Elena Gutiérrez García because they are consumers, School of Communication investors, employees, providUniversity of Navarra ers, regulators. They have a Professor Elena Gutiérrez stake in companies and inforGarcía is the deputy direcmation helps them to decide tor of the master’s in political whether they are satisfied and corporate communication at the University of Navarra, with an organisation in which Spain, where she lectures and they are involved, and which researches on public relations contributes to their happiness and corporate and financial communications. or quality of life. 03/2011

COMMUNICATION DIRECTOR

STORY TELLER

THE STORY OF A BIG MATCH The merger of Randstad and Vedior was the largest in the stafﬁng industry to date. The key to its success was the early involvement of the communications team by Frans Cornelis and Machteld Merens

n a Friday in early December 2007, trade on the Amsterdam stock exchange in shares of the international staﬃng services company Vedior was brieﬂy suspended: the price was moving up rapidly following rumours that Vedior was in discussions with a mysterious major competitor about a merger or takeover. The communications teams of Vedior and Randstad, a worldwide temporary employment company who turned out to be the rather unexpected other party, would come to remember the weekend that followed very well. From that Friday until the following Monday night, the team members barely saw their beds as their top management, and their advisers, hammered out the necessary details before the stock exchange opened again. In a hastily-convened press conference early on Monday morning, the world learned the details of the deal.

A SURPRISING INVOLVEMENT? The involvement of

Randstad in this deal was a surprise to many industry pundits. At first sight, many journalists and analysts noted the striking difference between Randstad, who had a clear main brand strategy and a strong, unified and long-standing culture, and the Vedior Group, which consisted of hundreds of diverse businesses operating under their own brands and cultures. Also, Randstad prided itself on its capacity for organic growth, while the Vedior Group had been very active in midsized acquisitions and disposals. Integrating the two was assumed to be a major communications and branding challenge. Both were roughly the same size, so it would not 03/2011

COMMUNICATION DIRECTOR

be matter of a large unit simply absorbing a small one. There had been speculation about a possible combination involving the Vedior Group and some other company, but most pundits had focused their attention on other contenders. However, they should not have been too surprised. Under the new leadership of Tex Gunning, a former Unilever top executive with a strong reputation in marketing, Vedior had in fact already embarked on an internal journey of streamlining their brands and cultures into larger chunks. Another major factor was that the business portfolios of the two groups were a very good match, both geographically and from the perspective of a services portfolio. The combination plugged some major holes in Randstad’s geographical coverage (particularly in France) and it created one of the largest global contenders in the general staﬀing segment, as well as in the fastgrowing and proﬁtable professionals segment. It is the largest merger in the industry to date. A new global leader emerged, next to the two incumbents, creating a massive gap between it and the next company, which was much less than half the size of the top three global leaders. And in this business, scale matters.

HOW COMMUNICATIONS AND BRANDING TACKLED THE CHALLENGE The most important

success factor was our early involvement in the project. In Randstad, a small number of insiders had been preparing months before the start of talks. Furthermore, Randstad had a competitor-measurement system in most major markets, so detailed reports of the position, image and reputation of the larger Vedior Group labels were easily available. Com-

STORY TELLER

Photo: Randstad Holding nv

Randstad’s merger with Vedior improved its geographical coverage

plete sets of drafted press releases and communications materials in response to several possible scenarios were prepared for the stakeholder groups, all carefully ﬁled under special code names. Branding was also high on the project team’s agenda, as it was a primary strategic work-stream from the very beginning. A number of strategic brand decisions and actions were agreed long before the closing of the deal. For example, a primary merger objective was to create a strong position in France under the Randstad brand. Extensive research conﬁrmed that this could be done. As this was going to be the largest campaign by Randstad that year, and given the fact that the Vedior’s French business was several times larger than the existing Randstad team, Vedior’s French communications and marketing teams were asked to cre-

ate the new international Randstad campaign in collaboration with their agency. They were very surprised but intrigued by this request, and they subsequently learned all about the brand and did a fantastic job, so much so that today, when we take a taxi from the airport, we no longer have to explain the way to our head oﬃce: one taxi driver even complained to us that his children kept singing the theme-tune of our television commercial whenever they passed by the building. These campaign materials have since been adapted for use in many other countries, most recently in the UK.

SECURING ALIGNMENT Faced with the diﬃculty of aligning the interests of investor relations, communications and marketing amongst themselves and with the other process owners, we chose to work with a small home team from the very beginning. This team worked very closely with the executives involved. Our CEO, Ben Noteboom, and CFO, Robert-Jan van de Kraats, had both been active champions of an integrated, holistic and factbased approach. Investor relations, internal and external communications, and marketing presented a uniﬁed view from the beginning, and that made it much easier to focus on the “how” questions, rather than the “what” questions with the many other parties involved. 03/2011

COMMUNICATION DIRECTOR

STORY TELLER

In such processes, it is very important to be able to make use of speed, momentum and initiative. If we had not been able to work together so well, or if we had not completed so much preparatory work in advance, developments such as the leaking of the deal on that Friday in December could have thrown us completely oﬀ track. The early and close involvement of the marketing department was also a critical element. Compared to a standard communication department, marketing departments have access to tools, skills and systems that can easily cope with the communications challenges at hand. The Randstad web platform for branding, with its photo database, style manuals, research base and case studies, proved invaluable in educating the many new colleagues involved. The skills to produce and distribute brochures, mail, videos, branch materials and many other items made life in the communication department much easier. A large role in the process was allocated to our new global intranet. As Vedior’s intranet technology turned out to be much more ﬂexible and modern than Randstad’s, this became the basis for the new Randstad@Work. In line with our philosophy, we made sure that it opened on the day of the formal closing.

THE CULTURE ISSUE Our experience is that we

needed to adhere to a limited number of key principles. Starting with an objective fact base is key. The second key insight is that one should not try to blend two existing cultures into a new mixture: the result is usually less suc-

The psychological advantage was that the external and visual actions matched the internal messages, and all the changes were happening at a time when people were expecting it.

cessful than any of the two original cultures in their pure form. Then, any internal programme should have a visible internal leader from the start. Any external experts and advisers should stay oﬀ-stage. This also means culture is not an add-on, but an integral design element in the whole integration process. It means, for instance, that you have already selected and announced many of those leaders before the closing of the deal. The internal programme was one of most complete we have ever done. It started with carefully orchestrated ‘getting to know you’ sessions between key management, moved on to securing alignment on the ﬁne-tuning of 03/2011

COMMUNICATION DIRECTOR

EXECUTIVE SUMMARY Before, during and after the deal Business portfolios of the two companies complemented each other Pre-established competitor measurement systems supplied Randstad with detailed information about Vedior Internal and external change projects were initiated at the same time for the sake of consistency and momentum Randstad used Vedior’s intranet as a new platform for internal communications from the day the deal closed 130 brand change projects were completed in the course of two years

Randstad’s future core values, and used a whole array of other central and local actions. It culminated two years later in 22 global events for all employees (all on the same day and following the same format) celebrating the 50th anniversary of Randstad. For this last event – which also involved 22 synchronised stage-size hologram projectors – we received the 2010 European Excellence Award for internal communications. According to our internal surveys and benchmarks with other companies in other industries, we have a high and rising degree of pride in the new Randstad. We have a young, predominantly female and very professional workforce, most of whom were students just a few years ago. In most cases they have reacted very well to the many changes. For example, in Australia we had employees spontaneously painting the logo on their faces!

SYNCHRONISED

CHANGES

We know that conventional think-

STORY TELLER

ing often prescribes a long internal change management programme in preparation for major projects such as a rebranding. However, in our case, we chose to design a programme that would get the majority of our ‘new’ employees into their new brand situation within a year. That meant that we would need to change the brands and the house styles of more than 100 companies, varying in size between 50 and 3000 employees, and in some 40 countries.

Photos: Randstad Holding

PSYCHOLOGICAL ADVANTAGE Within the largest units, the programme started almost immediately after the closing. The major strategic staffing units were rebranded into Randstad or Tempo-Team, depending on the best fit with the local market and the existing strength of the Randstad main brand in the country. This happened during the cultural and internal communications programmes, so many people felt the change at once. Managing that was a challenge, but the psychological advantage was that the external and visual actions matched the internal messages and all the changes were happening at a time when people were expecting them: after all, when a merger deal closes, everyone expects change! We centrally sourced items needed for physical rebranding, so in the course of two years we used the capacity of our suppliers and our marketing and property people to produce and place literally thousands of new light boxes, branch interior designs, paint jobs, brochure lines and the like. Because of the economies of scale inherent in these processes, we were able to cut costs in such a way that we managed to fit almost all the actions and the incidental new campaigns within the existing and pre-arranged

marketing budgets. After two years, we had executed about 130 brand change projects. Of course, not everything went exactly according to plan: in France, we had a signiﬁcant delay in the integration process due to the length of time it took to complete the consultation rounds with the various social partners. But in general, most actions stayed on schedule. As every change project increased the strength of the main brands (Randstad and Tempo-Team), the brand awareness in our top 12 global markets kept rising, also in comparison to our competitors. We also had another unexpected beneﬁt to this ultra-fast approach: towards the end of 2009, the market turned sharply for the worse. It was fortunate that we had the major moves and investments behind us, as they Frans Cornelis would have been harder to Managing Director, Group start in the middle of one of Marketing & Communications, the sharpest decelerations our Randstad Holding industry has seen in many decades, if ever. Frans Cornelis started his cur-

LOOKING BACK ON THE MAIN INSIGHTS If we were

to pick out one main lesson learnt from this process, we would say that early involvement and meticulous preparation were essential, and that if we could do it over again, we would try to do many things even faster. It was absolutely necessary to involve our new colleagues in self-delivering the many projects from the day of the closing. Never allow an outside adviser or consultant to lead a sensitive project! The recession almost distracted us, but this process is like the ﬂight of a rocket: once you have committed, changing course is very risky. We are incredibly pleased that our executive board had the wisdom to stay the course. 03/2011

rent position at Randstad, the temporary employment company, in 2003. He joined from KPN, the Dutch landline and mobile telecommunications company, where he was corporate marketing director.

Machteld Merens Manager Group Communications, Randstad Holding Before joining Randstad in 2007 as manager group communications, Machteld Merens worked as a consultant, ﬁrst at Coebergh Communicatie & PR in Amsterdam, and then as a ﬁnancial communications consultant at Hill & Knowlton.

COMMUNICATION DIRECTOR

STORY TELLER

PLAYING THE DOUBLESIDED DIVESTMENT GAME Private equity ďŹ rms are major players in mergers and acquisitions. When divesting a company, they often pursue two options simultaneously: a public offering and a sale. Communicating this dual-track strategy is a high-stake game by Brigitte von Haacke and Christian Zeintl

03/2011

COMMUNICATION DIRECTOR

STORY TELLER

rivate equity ﬁrms often pursue dual track strategies to divest from a portfolio company. The rationale is quite simple: minimise the transaction risk and maximise the sales proceeds through an additional exit option. However, there is no guarantee that this strategy eventually pays oﬀ. Effective dual track communications is an essential value-adding contributor to the success of the transaction.

Dual tracking is an increasingly popular phenomenon: be it specialty chemicals company Cognis or cable operator Kabel Baden-Württemberg, most of the important disposal processes over the past years have been (more or less publicly) designed as dual track processes. This comes as no surprise given the resurgence of the equity markets and the easing of debt constraints as a prerequisite of a credible dual track strategy. A recent example is industrial supplier Norma Group. Based on a solid business model, a future-oriented strategy, and consistent communications, Norma went public on April 4, 2011, and reached a total issue volume of 386 million euros. The successful initial public oﬀering (IPO) is testimony to the heightened transaction certainty of dual tracks in times of high market volatility. The hope associated with dual track processes is to reach higher valuations for the seller by creating additional exit options and a competitive dynamic in the divestment process. In practice though, dual track strategies do not always pay oﬀ. If not properly planned and

Dual tracks with a consistent communications strategy achieve an average premium of 14.2 per cent. executed, a dual track process might even result in a significant discount of more than 20.6 per cent for the seller. Conversely, dual tracks with a consistent communications strategy achieve an average premium of 14.2 per cent compared to the industry average and peer group respectively. These findings are based on our empirical study, including all dual track transactions in Germany from 2004 to mid-2010 which were publicly communicated or perceivable as dual tracks and generated sufficient media coverage.

HEDGING YOUR BETS Communication plays a crucial role in this process as it minimises the transaction risk caused by negative messaging. The rather inconsistent communications of motorway service operator Tank & Rast’s dual track process in 2004 is an instructive example. Frequent and sudden changes over a period of eight days undermined the seller’s strategic position and bargaining power. This perceived lack of consistency led to a loss in reputation, which was also reﬂected in the negative tonality of the media coverage. The press openly questioned the IPO option, labeling it as a “half-heart03/2011

COMMUNICATION DIRECTOR

STORY TELLER

ed” “tactical manoeuvre” to push up the sales price. Tank & Rast was eventually sold to private equity house Terra Firma, suﬀering from a discount of 28 per cent compared to the average industry multiple of 11.1 per cent (based on earnings before interest, taxes, depreciation, and amortisation). On the other hand, strategic dual track communications can serve as a bargaining instrument in order to increase competitive price tension and eventually improve the valuation of the target company. If properly applied, dual track communications is a value-adding contributor to the success of the transaction as seen by industrial gases and engineering company Linde’s sale of its Kion Group forklift unit to Kohlberg Kravis Roberts & Co and Goldman Sachs in 2006. By applying a consistent and persistent communications strategy against the background of favourable market conditions, Linde was able to capitalise on the price tension between both tracks and ﬁnally reached a “fairytale price” according to media reports.

EMPIRICAL STUDY To examine which dual track communications strategy is most effective in terms of tonality of media coverage and valuation of the target company, we conducted a comprehensive empirical study. The analysis included all those 15 cases between 2004 and mid-2010 which were publicly communicated or perceivable as dual track processes and provided sufficient media coverage. The results clearly show that dual track cases with a consistent communications approach benefitted from a significantly better tonality of media coverage and achieved an average premium of 14.2 per cent on valuation compared to its

Case Study: Landesbank Berlin On January 20, 2007, the city state of Berlin officially started the sale of its 81 per cent stake in Landesbank Berlin in accordance with conditions set by the European Union after the city bailed out the bank in 2001. From the beginning to the very end, the sales process was communicated as a dual track process, simultaneously pursuing an auction and a secondary placement. Thilo Sarrazin, finance senator and leading negotiator of the city state of Berlin, had consistently stated that both options were equal and real alternatives. However, the auction had always been the dominating topic and most likely option in the media coverage. Nevertheless, with two feasible options at hand, the seller had a comfortable position and thus considerable bargaining power throughout the whole process, leading to an overall positive tonality of media coverage. Also, due to the political peculiarities of the transaction, the city state of Berlin was able to reach comparably high proceeds with a significant “political premium”.

Seller: City State of Berlin

Target: Landesbank Berlin

21.12.2006 “UBS will execute a dual trackprocess” Handelsblatt

Buyer: German Savings Banks Association (DSGV)

06.02.2007 “I’m highly pleased with the bids from top-tier ﬁnancial players” Finance Senator Sarrazin Börsen-Zeitung

Communication Factors Consistence high Preference low Persistency high

Outcome Tonality positive bias Valuation overvalued

30.05.2007 “These are theoretical games but real alternatives” Finance Senator Sarrazin Handelsblatt

04.06.2007 “IPO is still an equal option” Sarrazin Süddeutsche Zeitung

IPO M&A

20.01.2007 “We might take a last minute decision” Berlin spokesperson Börsen-Zeitung

03/2011

08.05.2007 “Both options are still possible” Handelsblatt

IPO led

IPO & M&A equal

M&A led

Single Track/ﬁnal decision

COMMUNICATION DIRECTOR

16.06.2007 “DSGV pay €4.5bn for stake in LBB” Süddeutsche Zeitung “Berlin has reached a very good price” Berlin mayor Wowereit Die Welt

STORY TELLER

respective peer group or industry average. In contrast, inconsistent dual track cases suffered from a valuation discount of 20.6 per cent on average. Therefore, sticking to the set strategy eventually pays off in terms of media tonality and sales proceeds. Moreover, dual track cases which communicated both options as feasible over a long period and announced their final decision at a late stage in the process achieved an average premium of 11.8 per cent. Cases with early single track announcements were undervalued by five per cent instead. These findings provide supporting evidence that persistent communications capitalises on the strategic rationale of dual tracks by

creating a price competition between both tracks. Therefore, announcing the ﬁnal decision for one track too soon in the negotiation process decreases the seller’s bargaining power towards potential investors and leaves potential gains untapped. However, there comes a point where the

Inconsistent communications is penalised with an average valuation discount of 20.6 per cent. withdrawal of one track might have negative implications for the further divestment process. Therefore there is a trade-oﬀ between maximising sales proceeds and preserving the seller’s credibility and reputation. Both M&A-led and IPO-led dual tracks proved to be equally successful options as long as they were communicated consistently and persistently. The choice of strategic options therefore needs to be based on the given market environment and the individual speciﬁcs of each case.

Case Study: Kabel Deutschland The dual track communications of Kabel Deutschland, Germany’s largest cable operator, had been mainly subject to media reports and speculation. The process did not demonstrate a consistent communications strategy and no favourite option was communicated until the final decision and public announcement of the IPO. Despite the parallel bidding process and offers from financial investors, KDG did not use the IPO as a tactical vehicle in its public communications in order to put some pressure on the bidders’ side. Against the backdrop of the uncertain stock market, media assessment of the outcome was rather unfavorable. Accordingly, the overall tonality of media coverage was negatively biased and the final valuation with a discount of seven per cent undervalued.

Seller: Provided Equity

Target: Kabel Deutschland

Outcome: IPO

30.07.2009 “We Think we’re ready to ﬂoat” KDG CEO von Hammerstein Financial Times Deutschland

Communication Factors Consistence low Preference medium Perstency high

28.01.2010 “CVC, Carlyle, Advent, BC Partners and Apax have shown interest” Süddeutsche Zeitung

Outcome Tonality negative bias Valuation undervalued

22.03.2010 “KDG goes narrowly public at issue price of €22” Süddeutsche Zeitung

IPO

Photos: Txxxxxxxxxxxxxxxxx

M&A 18.11.2009 “IPO is very realistic” Draper, Execution Limited Research “M&A is more likely” Jaeger, Société Générale Financial Times Deutschland IPO led

IPO & M&A equal

M&A led

Single Track/ﬁnal decision

23./24.02.2010 “KDG goes public [...] Only a tactical manoeuvre?” Süddeutsche Zeitung

03/2011

16.06.2010 “Price range is lower than expected” Financial Times Deutschland

COMMUNICATION DIRECTOR

STORY TELLER

STRATEGIC COMMUNICATIONS OPTIONS In practice, the alternative dual track avenues are not always treated equally. Often, there is a bias towards one option. From a communications’ perspective, there are three different strategic communications options (see table below). From a communications point of view, pursuing an IPO-led dual track strategy offers the most benefits to the seller. The advantage of this approach is that the IPO is perceived as a credible exit route while at the same time placing the seller in a comfortable bargaining position on the M&A track. Considering an IPO and thus demonstrating the willingness to keep a considerable stake in the company also signals that the owner believes in the target company’s upside potential. This has also a positive impact on the M&A bidding process. However, there might be a potential loss of credibility in case of a later M&A deal. An exemplary case of a successful IPO-led dual track strategy is the sale of utilities billing company Ista from CVC Capital Partners to Charterhouse in 2007. Based on a consistently and clearly communicated preference for an IPO, Ista managed to maintain the M&A track as feasible option throughout the whole process. This was also reflected in the mainly positive media coverage, which regarded the change to a secondary buy-out at the end of the dual track process as a reasonable decision. The strong financial power of the bidding private equity firms had rendered the IPO unattractive.

COMMUNICATIVE GOALS Optimising valuation: in the case of dual track processes, communications must serve as a bargaining tool in order to create price tension between the M&A and IPO tracks and push up valuation Minimising transaction risk: dual track communications should foster a positive tonality of media coverage and prevent negative messaging to ensure a smooth transaction process

egy on both tracks, all communications measures should be aligned with the key messages and equity story. Furthermore, a joint leak strategy should be prepared and a

Dual track communications plays a crucial role in inﬂuencing media coverage and valuation. Both consistency and persistency are success factors for an effective communications strategy.

COMMUNICATIONS PROCESS – PHASE 1: SETUP INFRASTRUCTURE/ DEFINE COMMUNICATION STRATEGY In the ﬁrst phase, the necessary communi-

cations infrastructure has to be set up and a communications strategy deﬁned. This requires a decision which strategic communications option to pursue (M&A-led, IPO-led, or equal options). To ensure a consistent and integrated implementation of the communications strat-

common time line deﬁned, stating who communicates what at which point in time.

PHASE 2: RAISING PROFILES The objective of this ‘pre-selling’ phase with regard to communications is to raise the target company’s proﬁle and position it as an at-

Strategic Communications Options Option 1: IPO-led

Option 2: M&A-led

Option 3: Equal positions

IPO as preference, M&A as possible alternative

M&A as preference, IPO as possible alternative

IPO as preference, M&A as possible alternative

+ IPO as credible exit channel + Comfortable M&A bargaining position - Potential loss of credibility in case of a later M&A deal

+ Strengthening of M&A bargaining position through additional alternative - IPO could be regarded as stalking horse - Potential failure of M&A process may negatively impact on IPO

+ Strong bargaining position as long as both options are credibly communicated - Indifference could be perceived as lack of strategy

03/2011

COMMUNICATION DIRECTOR

STORY TELLER

EXECUTIVE SUMMARY Keeping your options open Dual tracking is increasingly popular, but not a fail-safe strategy Keeping both options open creates price competition, but a delayed decision risks provoking a backlash Communications should be consistent and persistent Communications strategy should be clear which option is preferred, or whether it is an equal approach. Either way, communicators should avoid being seen to pay lip service to either option

Photos: Hering Schuppener Consulting

tractive investment. It is crucial for a successful transaction to establish an understanding and acceptance for the business model and place the key messages in the mind of the relevant target groups. A proactive communications approach and anticipation of potential concerns minimises the impact of unexpected risks.

PHASE 3: DECISION TIME The decision of which avenue to ﬁnally follow tends to be delayed as long as possible. The tactical reason is that the seller strives to gain more reliable and comparable valuations while at the same time putting pressure on the bidders by maintaining two feasible options. However, a decision made too late has a negative impact. Pulling the IPO in the very last minute bears the risk that institutional investors react with distaste and will be more reluctant in case of a future dual track. Thus it is paramount that the time for making the decision public is chosen very carefully. Even though the

right moment to make a decision public depends on the individual dynamics of each case, the Intention to Float should be regarded as a point of no return. In any case, it is vital that the decision is communicated to the market in a diligent way.

CONCLUSION Dual track communications plays a crucial role in influencing media coverage and valuation. Consistency and persistency are important success factors for an effective dual track communications strategy. In particular, a combination of both factors tends to achieve the most effective results reDr Brigitte von Haacke garding the tone of media Partner, Hering Schuppener coverage and a premium on Consulting valuation. As a result, an efDr Brigitte von Haacke is fective communications strata partner at Hering Schupegy helps mitigate the risks of pener Consulting and works out of the Frankfurt office. She uncertain market conditions advises clients on all aspects by increasing price tension of strategic positioning, M&A and fostering a favourable metransactions and dual track dia environment. processes. She is a graduate of the Cologne School of JourBased on these findings, nalism and studied Economics it is recommended to pursue at the University of Cologne, a consistent dual track comwhere she also completed her PhD thesis. munications strategy while communicating both options as feasible alternatives as long as possible without putting the seller’s credibility at risk. In order to preserve the vender’s credibility, both options should be pursued with serious intent. Paying lip service to one exit option Christian Zeintl while actually pursuing the Client Executive, M&A team, Hering Schuppener other one damages the seller’s Consulting reputation in the course of Christian Zeintl works as a the transaction as well as in client executive in the M&A the long term. To conclude, team at Hering Schuppener both exit options have to be Consulting. He graduated from feasible and credible as a prethe Berlin University of the Arts with a master’s degree in requisite condition in order strategic communications and to capitalise on an effective planning. Zeintl holds an MBA dual track communications from the Grenoble Graduate School of Business. strategy. 03/2011

COMMUNICATION DIRECTOR

STORY TELLER

USING ESTABLISHED VALUES TO WELCOME NEW COLLEAGUES How do you integrate a new business into a well-established company? Danone successfully integrated Numico’s baby and medical nutrition business through a strategy based on the importance of proximity by Dani Meyer

03/2011

COMMUNICATION DIRECTOR

An image from the Danone Connections programme

Photo: Danone

any years ago – in the early stages of my communications career – I thought that PMI must be an abbreviation of some sort of physical or mental disorder. I found out otherwise in 2004, when I got the opportunity to support internal communication in line with the acquisition of Roche Vitamins (the world’s leading bulk vitamins and ﬁne chemical producer) by DSM, a Dutch chemical company. Joining their corporate communications department in the Netherlands, I got a great insight into the communication strategy, processes and tools of a company in the middle of a post-merger-integration (PMI) phase. Their laser-focused integration approach, steered centrally, and combined with an abundance of professional on- and oﬄine communication tools, added a great deal of experience – and a new meaning to this abbreviation.

STORY TELLER

THERE IS NO ONE-SIZE-FITSALL RECIPE After a couple of years

and many internal communications do’s and don’ts further down the road, I started to work for Danone in 2008. Danone, the Paris-based food company, had just acquired Numico, a Dutch baby nutrition and medical nutrition business, headquartered in Amsterdam. I was hired as the SPOC (single point of contact) to help facilitate the integration, liaising between Danone headquarters in Paris, our divisional Baby Nutrition head office functions in Amsterdam and our more than 50 worldwide Baby Nutrition country business units and factories. Given that this was my second post-merger communication case, I expected that this would be a smooth ‘been there, done that’ experience for me. As if! My biggest finding, right at the beginning, was that there is no onesize-fits-all integration communication recipe that can seamlessly be applied to every company. Why? Because the success (or failure) of a merger depends on the culture of the companies involved. And we, as communicators, have to develop a keen sense of the different cultures and be able to translate it into a cohesive programme. In my case, it simply meant I had to trash the checklist approach to communication that had previously worked well in a more technical and engineering company environment. To assume that I could simply copy and paste the strictly-orchestrated and centrally-driven communication roadmaps from the previous case into the Danone/Numico scenario would have led to a failure. In Danone, people are aligned and integrated differently. It took me less than a week to realise that Danone is less about excessive formality, organisation charts and

policies. To my great astonishment and pleasure, I saw that I had joined a company whose main competitive advantage was its strong culture: strong on cooperation and non-hierarchical networks, and preferring speed of execution rather than strict processes. In this environment, top-down cascading, glossy internal magazines and a fancy intranet would not succeed in bringing people on board and making them feel welcome in a company that – due to its unique personal style and warm culture – had so much to oﬀer.

IT’S THE VALUES, STUPID! Danone’s culture is fundamentally rooted in its four values: humanism, openness, proximity and enthusiasm. After the takeover, and with the help of our dedicated ‘Values Workshops’, our 11,000 new Baby Nutrition division employees realised from day one that Danone truly is a company with ‘Something Special Inside’ (to quote the title of an internal brochure and recruitment communication programme). We were also adamant that these four values should not be paid some sort of lip service, merely advertised in a corporate brochure, but should instead constitute a framework that visibly deﬁnes all ‘Danoners’’ behaviour and communication style. Our new employees were immediately enchanted by their new parent company’s family-like, jovial style, the easy access to top management and its focus on people, rather than rules and guidelines. It was for them, to put it mildly, a culture shock, though a culture shock in the most positive sense. We understood that the priority of face to face dialogue over impersonal tools was the name of the game. This is what Danone means by its ‘proximity value’: being close to its stakeholders. And this is what inspired me, the new communication specialist on board, to go back to the drawing table, and re-think my strategy to bring proximity to life in the Baby Nutrition division. A COMPANY OF PROXIMITY COMMUNICATES DIFFERENTLY Compared to other companies of a similar size,

Danone has a rather lean internal communication structure – both at headquarters and at local level. Often the general manager or human resources manager will engage in internal communications as a sideline activity in many of our (almost 50) Danone Baby Nutrition country business units. This is especially true for our smaller country business units. We do not have divisional communications managers either – with me in Baby Nutrition being the only exception. As a result, living our proximity value translates into management being central and irreplaceable in internal communications. It is the team leader who becomes 03/2011

COMMUNICATION DIRECTOR

STORY TELLER

the main vehicle for internal communication and the most credible and most legitimate source of information. The closer the message giver is to the receiver, the more eﬃcient the communication. That is our assumption in Danone. We feel that in a company of proximity, internal communicators act as facilitators of proximity management. We help our management build a local architecture of face to face communication and dialogue culture. And the tools and initiatives we oﬀer them follow this concept.

The success of a merger depends on the culture of the companies involved

A THREE-PILLAR APPROACH TO LIVE THE CULTURE AND PROXIMITY VALUE The most interesting

It is the role of communicators to develop their understanding of the different cultures into a cohesive programme

finding for me was – and still is – that Danone (despite its size and success) has managed to keep an open, dynamic and truly unique culture. Flexibility overrules rigid hierarchies and fixed procedures. Face to face communication is our number one communication objective and is, whenever possible, implemented regularly and everywhere. Face to face also means that you can not run for cover, but must stand firm and be accountable and transparent, and – with an entrepreneurial spirit – encourage your team to aim for a high-level performance. I see humanism, openness, enthusiasm and especially the proximity value applied at every level in internal communication – from empowering

We as communicators have to develop a keen sense of the different cultures and be able to translate it into a cohesive programme.

individual employees in one to one meetings all the way through to monthly townhall get-togethers. As a result, corporate communications does not seek to centralise all activities across the global business but entrusts individuals and local teams to make their own plans and decisions. This is also why communication material is primarily offered in English and French (we are a French company after all) and translations left to local levels. So, my quest was to find out which communication strategy, tools, techniques and processes would enable our management to make their plans, take the right decisions and play their role as proximity leaders and communicators. We developed a simple, pragmatic, yet highly effective three-pillar approach based on the three communication goals: align, reach and connect. The approach aimed for both visible quick wins as well as long term achievements. It also considered the scarcity of internal communications staff by empowerment of line management. 03/2011

COMMUNICATION DIRECTOR

EXECUTIVE SUMMARY Closeness through communications Proximity management means one to one communications with employees and other stakeholders

Middle managers are empowered to create proximity with their new postmerger teams

1. ALIGN: DANONE INDUCTION: Engagement of new employ-

ees and encouraging them to become ambassadors can only succeed with a good knowledge of the company’s history and strategy. Building on the aforementioned Something Special Inside communication kit, we extended it to a full induction toolkit with great company presentations, heartwarming videos, corporate anecdotes and quizzes. This made it easy for all new Baby Nutrition ‘Danoners’ to fully delve into the beauty of the 90year Danone legacy. In parallel, we created a New Joiner Induction Day, during which we handed out the ‘Baby Nutrition induction toolkit’. The induction process was kicked oﬀ at our divisional headquarters in Amsterdam and then tailored locally and implemented in all Baby Nutrition business units worldwide. In addition, the toolkit was sent to all baby nutrition managers, who – although not new joiners – were equally appreciative of the handy toolkit. They used (and still use) the induction material for all sorts of occasions by cherry picking the elements they

STORY TELLER

need (for employee conferences, supplier events and even media interviews). De facto, everybody in Baby Nutrition has been aligned with our company. This induction process infects employees with our company’s spirit, inspiring other Danone divisions and headquarter departments to formalise their induction eﬀorts based on the baby nutrition example.

2. REACH: DANONE CONNECTIONS Danone managers and team

leaders relay major messages and information issued by the group, and in many cases without the support of an existing internal communication manager. It is the responsibility of line managers to reach out to their employees and this task is not delegated. We have therefore developed a programme with speciﬁc tools and elements called Danone Connections. This is a fun and interactive programme for local management teams (implemented by in-

Photo: Danone

The programme’s objective is to develop employee engagement and thus align them with company objectives and strategy. ternal communicators in cases where there are such managers) to acquire communication skills and to learn more about how to create proximity through monthly face to face employee meetings. The objective of the programme is to develop employee engagement and thus align employees with company objectives and strategy. It contains practical tools such as presentations, quiz cards, didactic videos and sample templates for monthly staﬀ meetings. To date, it has successfully been rolled out in over 13 Baby Nutrition business

units, ranging from bigger markets, like China or Turkey, to smaller business units like Austria, Switzerland, the Baltics or Iran. We have tailored Danone Connections to the respective markets, acknowledging their team size, market share and strategic goals, whilst establishing a good opinion and appreciation of the diﬀerent aspects of intercultural communication.

3. CONNECT: INTERNAL COMMUNICATIONS COMMUNITY Bringing our proximity value to life

means that the development of a network culture plays an essential role in Danone’s internal communication. In Baby Nutrition, we have therefore established the Internal Communications Community, a network that spans all baby nutrition locations worldwide. One representative of each location – ideally, the internal communications manager, but in reality often the general manager or human resources manager – participates in this virtual platform. During our quarterly online meetings, or our face to face regional meetings, we share knowledge and exchange good practices and experiences. The community is closely linked to the corporate Danone ‘IC Hub’. These are just a few examples that illustrate how integration can be done differently, applying a hands-on, simplistic and personal approach. Danone is a company that dares to be different, by giving an incredible amount of personal freedom to its over100,000 employees. This freedom goes hand in hand with a communicative credo to not tell people exactly what to do at every turn. ‘Make it yours’ is our internal magic phrase that encourages our local managers and communicators to not surround each project or idea with rules or red tape, but to build on a few corporate initiatives – like the three pillars mentioned earlier – and transform them accordDani Meyer ing to their local needs. Senior Manager Each company has their Internal Communications, Danone Baby Nutrition specific cultural traits. Assessing them, understanding the Dani Meyer joined Danone in managerial behaviours and 2008 and led the post-merger their communicative needs integration communications following Danone’s acquisition of and deliver up to them – that Numico that same year. Before is the differentiating factor in joining Danone, she worked at successful post-merger comvarious multinationals including munication. DSM, Roche and adidas. 03/2011

COMMUNICATION DIRECTOR

STORY TELLER

NEW KIDS ON THE BLOCK Companies from the BRIC countries are the latest to experience international mergers and acquisitions. What can Europeans learn from how Chinese multinationals adapt to Brazil? By VirgĂnia Drummond Abdala and Huiyi Gao

03/2011

COMMUNICATION DIRECTOR

STORY TELLER

s a consequence of the globalised world in which we live, companies have become increasingly involved in international marketexpanding operations such as mergers, acquisitions and other strategic alliances. In addition to the classic Triad ‘countries’ – the US, the EU (represented mainly by Germany and France) and Japan – and their foreign direct investments (FDI) around the globe, we can now witness a new phenomenon played out by emerging countries, particularly the BRIC countries (Brazil, Russia, India and China), who have lately consolidated their position as major actors on the worldwide stage. Thus, within our current geopolitical context, Europe and the US can no longer aﬀord to remain uninformed about the steps implemented by these emerging economies intent on conquering new markets. In this article, we will take a closer look at the experiences of Chinese multinational companies within another emerging country, Brazil. It is not a secret that an international merger process implicates several hurdles to be overcome, especially ones concerned with cultural integration.

A NEW ANGLE ON A FAMILIAR SCENARIO The question of cultural integration during mergers and acquisitions is not a novelty in the world of research; we could cite hundreds of research studies undertaken in the last 20 years. The interesting fact is that, for the ﬁrst time in their lives as global actors, multinationals from countries such as China, India or Brazil are facing the consequences of decisions made in the home countries from where policies must be elaborated and later widespread. Recent reports have

shown that Chinese companies have faced cultural problems in the course of their internationalisation processes, and here we will concentrate on the Chinese and Brazilian relationship in the wake of mergers and acquisitions, their difficulties in building up long-lasting post-merger synergies, and the ways in which they might be able to do so in the future. For western companies that have been dealing with these difficulties for a longer time, this portrait of cultural obstacles faced by two emerging countries’ multinationals can help them to reflect on how their own experiences as European multinationals can be put into the service of these new global actors, and thereby constitute a useful competitive advantage in the near future.

WHEN EAST MEETS WEST Since 2009, we have been

closely observing an evolution in the relationship between our two countries, Brazil and China, through a European perspective (we were both professors in France, working within French institutions). Our interest was to grasp the phenomenon beyond its economic aspect: as specialists in human and cultural issues, we realise that there is an interesting cultural connection to be analysed between China and Brazil, which could develop into a solid and sustainable bridge between the west (represented here by Brazil) and the east (represented by China). We have concentrated our analysis of the two different cultural systems on the basic identification of social mechanisms that could be used for construction of solid synergies for business, through a process of identifying similarities in terms of social behaviour in both Chinese and Brazilian cultures. Brazil and China’s relationship has reached a new, specific and increased relevance. While presenting a challenge to European and American companies still suffering the effects of 2009’s financial crisis, the year 2010 saw a consolidation of the presence on the world stage of Brazil and China, a wake-up call to the rest of the world heralding the economic importance of their bilateral relationship. Never before in the respective histories of both countries have the two had such a comparable visibility as they do today on the globalised stage. In 2010, China became Brazil’s first commercial partner with the total value of their commercial exchanges reaching 56.4 billion US dollars, as compared to 2.3 billion in 2000. Nevertheless, Chinese foreign direct investments (FDI) were still very low in Brazil last year. But things change fast, and when Brazilian president Dilma Roussef visited China in April 2011, the situation became much more complex and reached beyond imports and exports. This confirmed the growing interest of Chinese multinationals in investing in a long-term relationship 03/2011

COMMUNICATION DIRECTOR

with Brazil, as for example did the Taiwanese company Foxconn, which invested up to 12 billion US dollars in order to build plants to manufacture liquid crystal for Apple Ipads in Jundiaí, a suburb of São Paulo. During this trip, Ren Zhengfei, the CEO of the telecommunication company Huawei, revealed his intention of opening a research centre in Campinas, another suburb of sprawling São Paulo. All in all, this represented a total of 350 million US dollars’ worth of investments. The main consequence of the growth of FDI, from and within emerging markets, is the internationalisation of their companies and a confrontation with the local contexts of the host countries – something that has dogged European and American companies for over three decades. Actors such as CEOs, governments, managers, senior leaders and investigators have been trying to answer the recurrent question, “How can we maintain our global strategy and obtain success in a local context at the same time?” Among those attempting to answer this question, we could quote the reﬂections of Guillen and Garcia-Canal (2009) on the comparison of the American model of multinationals facing new, derived models of multinationals from emerging countries, including China and Brazil. However, we note that the previous investigations into China and Brazil are still limited to the economical success of the relationship, without entering in the context of communications, cultural obstacles and adaptation of human resource practices.

DIFFICULTIES IN TAKING ROOT As in the case of any basic western merger or acquisition, Chinese multinationals should be attentive to certain specificities of the local contexts within which they are operating. It seems that Chinese multinationals have much to learn from their western counterparts on how to deal with cultural differences when transplanting their global strategy from home to host country. This strand of knowledge, which the Chinese have not yet acquired, can and should be valued by European and American companies (such as Renault, Siemens, and CocaCola), who have been facing these problems for decades during their own processes of internationalisation. For the past six months, we have closely observed the difficulties faced by some Chinese multinationals in obtaining success in Brazil. As suspected, these difficulties have their roots in poor intercultural management and unsuccessful adaptation of Chinese managerial practices within a Brazilian context. The Brazilian newspaper Folha de São Paulo has recently published a report providing a detailed list of the main difficulties Brazilian employees face when working for Chinese companies in their own country.

EXECUTIVE SUMMARY A game of mix and match Over the past two years, Brazil and China have consolidated their bilateral relationship International mergers and acquisitions force companies to confront local contexts of the host country Poor intercultural management and failed adaption of managerial practices have resulted in 69 per cent more turnover in Chinese companies than other multinationals Ambicultural management distils the best of both worlds

According to the report, Chinese multinationals have experienced 69 per cent more turnover than other multinationals in Brazil, including those from Europe and the US. The main complaints of the Brazilian employees who quit their jobs in Chinese companies are that the daily workload is too heavy; there is too much pressure for unrealistic goals and deadlines; and that there is no room for negotiation. Brazilians also report a perceived lack of trust in the existence of “double jobs” – in other words, the existence of two executives, a Chinese and a Brazilian, for the same job.

AMBICULTURAL DISTILLATION Reading these testimonies re-

minded us immediately of what was written in a November 2010 issue of the Academy of Management Perspectives magazine. Authors Chen and Miller commented on an interview with Stan Shih, the CEO of Taiwanese Acer, on the strong and weak points of the Chinese style of management. According to the au-

STORY TELLER

thors, Shih attributed the success of Acer to its capacity to adapt managerial practices in an opportunistic way from both hemispheres, thus reconciling west and east in one distillation of management, a distillation he called “ambicultural”. According to Shih, the secret of Acer’s transformation into the second-biggest producer of computers in the world was a positive combination of elements originating from both western and eastern cultures. In the interview, Shih described what he “borrowed” from the Chinese management culture, namely its holistic patience and a communitarian, collectivistic orientation. He also described what he adopted from the western culture (principally the American style of management): a bigger decentralisation within the organisation and a bigger concession of autonomy or empowerment.

Photos: Private

MAKING SENSE OF CULTURAL CHALLENGES Cultures can be seen

as systems, in that they allow human groups to organise their collective life, ﬁnd solutions for everyday problems, and develop and crystallise practices and behaviours which can often be destructive or ineﬃcient when transplanted to another context. According to Shih, the Chinese culture is still characterised by standards of communitarian behaviour and collective attitudes that are deeply rooted in the China’s national unconsciousness, and which have been transplanted to Brazil without any consideration for the local context. This threatens its long-term chances of success. From this we can conclude that Chinese multinationals engaged in mergers or acquisitions abroad have much to learn from their European and American counterparts, who have been dealing with cross-bor-

der mergers and acquisitions for more than three decades. Not that they should replicate the western management style, but in order that they learn from the experience of adapting global strategies to local contexts. An old challenge that western multinationals have been facing for a long time is now applicable to emerging countries’ multinationals, who are increasingly becoming major actors in the global scenario. And the cultural challenges of those news actors are far from being overcome.

PICK AND CHOOSE Finally, returning to Acer’s CEO, Stan Shih, the key is in finding an “ambicultural” balance between two different tendencies and, in addition to this, identifying positive, similar mechanisms in the other culture through an effort of mutual understanding. For Shih, there are elements to be collected and elements to be avoided in the Chinese management style. He advises the Chinese abroad (in Brazil and elsewhere) to adopt an appreciation of the long term; to promote harmonisation by means of granting collective interests more priority than individual interests, as well as by promoting respect for the experience of older, more senior managers. On the other hand, he warns Chinese companies to avoid aspects of their culture such as suspicion, centralisation of powers, retention of information and exacerbated ethnocentrism. As seen in the analysis of the testimonies of Brazilian employees within Chinese companies in Brazil, translated into a lack of communication and transparency, these negative aspects have been the cause of widespread disillusion, frustration and anger. 03/2011

Virgínia Drummond Abdala Fundação Dom Cabral FDC Virgínia Drummond Abdala is a professor at Fundação Dom Cabral FDC, Brazil. She earned her Ph.D in management science from the Université Paris Dauphine, France, and is an expert in intercultural and crosscultural management and HR development.

Huiyi Gao ESDES Management School Professor Huiyi Gao is associate head of the International Business Department in the ESDES management school, University of Lyon, France. Having earned her Ph.D in management sciences, she is an expert in strategic management and international management.

COMMUNICATION DIRECTOR

STORY TELLER

CLEANUP OPERATION By the early 2000s, Electrolux’s aggressive acquisition strategy had resulted in a heavily diversiﬁed portfolio; it was time to get back to basics. Simpliﬁed brand communications was key to their post-merger cleanup by Johan Almquist

p until about 10 years ago, even our accountants had a hard time guessing the exact number of brands that Electrolux had acquired. Today, we are pretty close to achieving our goal of one overarching premium brand complemented by a handful of regional mass brands. It has been a bumpy ride, but worth every scrape and bruise. Early in the last century, Electrolux had emerged as a pioneer and innovator in the appliance industry. It launched the world’s ﬁrst electric refrigerator and the world’s ﬁrst ergonomic vacuum cleaner. Equipped with runners, its light weight scored a big hit in its main target 03/2011

COMMUNICATION DIRECTOR

group at the time: maids and housewives. By the 1970s, globalisation was impacting all industries; scale and volume become the chief focus for many businesses. In response, Electrolux embarked on an extended period of acquisitions. Between 1970 and 2000, Electrolux grew sales from approximately SEK 2 billion to SEK 124 billion.

AVOIDING THE MIDDLE-MARKET TRAP Around the millennium, the situation became untenable. It

STORY TELLER

Photo: www.dreamstime.com

was no longer possible to juggle over 100 brands with younger, nimbler competitors from low-cost countries nipping at our heels. We were being squeezed between inexpensive Chinese appliances, fast South Korean innovators and premium German goods. This gives you an idea of just how polarised the domestic-appliances market was about to become. Because the consumer either buys a premium kitchen out of emotional needs, or the purchase is triggered by the most basic needs such as clean clothes or warm food. The market for mid-priced, mid-advanced, mid-aesthetic appliances was rapidly decreasing and becoming commoditised. If there was one thing we were determined to avoid, it was getting stuck in this middle market-trap.

THE REMEDY We adopted a three-pronged strategy. First, we needed to get back to our roots, to rediscover our rich heritage of innovation and consumer understanding. This was the best way to achieve long-term diﬀerentiation and relevance to inoculate us against midmarket traps. Second, we had to make a bold decision: should we go premium or mass-market? After a lot of soul-searching, we decided we had to do both. But we vowed to never, ever veer into the middle. The key was better consumer segmentation, based on unspoken consumer needs together with deep understanding of the future regarding both macro and technical trends. Third, we needed to go on a strict diet. Our brand-body mass index was atrocious, so we developed a brand transitioning strategy in which regional brands would be phased out and replaced by Electrolux. Not an easy call at the time, but one we would never regret.

REVISITING THE ROOTS OF CONSUMER INSIGHTDRIVEN INNOVATION The success of Electrolux can be

traced to the 1921 V-model vacuum cleaner – the company’s breakthrough product. Company founder Axel WennerGren recognised the value of ergonomics for the primary users of this appliance category at that time: housewives or maids. So instead of copying his competitors and oﬀering 20 pounds of solid engineering, he made the Electrolux model lighter and gave it an appealing design. Since the company’s humble beginnings, attention to consumers’ unspoken needs has come naturally to us because we view the art of listening as integral to the art of the sale. We come from a tradition where marketing communications is not about business-to-business but door-to-door. When a salesperson sat around a customer’s kitchen table, they were not just pitching a product; they listened, and we incorporated what they heard into the next generation of product communications. When the Electrolux shopping spree was over, we had done more than just acquire over 200 companies. We had also adopted 200 separate and distinct corporate cultures. We had to make sure our own corporate culture of brand driven innovation and consumer insight didn’t get diluted. So the central marketing team was given more resources and more power. The department became the consumer’s advocate. No process was allowed to start if it did not address a certain consumer need. We also ensured that our consumer insight process was second nature to every employee. Like the door-to-door salesman of the early 20th century, we all tried to be good listeners.

ELECTROLUX ACQUISITIONS TIMELINE 1970s A record 59 companies are acquired in this decade; among the largest are National Union Electric/Eureka, Arthur Martin, Tornado, Husqvarna and Tappan. Electrolux enters the US, French and German markets. 1980s Acquisition of White Consolidated Industries, featuring brands such as Frigidaire, Kelvinator, metal conglomerate Gränges and automotive industry supplier Autoliv. After acquiring Zanussi, Electrolux leads the European appliance market. 1990s A restructuring programme is launched. The group is streamlined by divesting in non-appliance operations. Electrolux strengthens its position in the Latin American market by acquiring the second-largest white goods manufacturer in Brazil, Refripar, which later becomes Electrolux do Brasil. In Europe, AEG is acquired. 2000sThe Group reaches an agreement on the acquisition of Email Ltd, Australia’s largest appliance company. Hence, Electrolux becomes market leader in Australia. Electrolux decides to spin off most non-core businesses, with Electrolux Outdoor (Husqvarna) probably the most signiﬁcant.

03/2011

COMMUNICATION DIRECTOR

STORY TELLER

SEGMENTATION Aiming for both the high and low end of the market does present some challenges. The key was to find a more finely tuned dual brand-portfolio model. We needed to slice the market by price segments. In both the premium and mass part we then zoomed in on specific needs, future macro and technology trends and, most important of all, our future anticipated brand positions. This way we could be much more focused on maintaining low-end brands at relevant price points, while at the same time building a differentiated and relevant offer with our premium brands – without cannibalising. In order to achieve the right portfolio and be sure that we developed only products that people would like to buy, we needed to demonstrate that we understood the consumer and the future better than anyone else. To do that, we invested heavily in at-home customer visits. Some years later, we conduct approximately 80,000 – 90,000 such interviews annually. And we do not just ask people what they want. Electrolux consumer insight work is an art form that has more to do with anthropology than marketing research. All the knowledge is in the end transformed into a number of premium and low-end products, each addressing a specific consumer need, sales channel and price point. This brand and innovation strategy then guides our commercial launches and product development. Making products we know people will buy is not about not taking risks; it is about having a genuine interest in the human condition. TRANSITIONING FROM 100 TO ONE IN 10 YEARS

The third component of clean-up was to phase out a lot of brands. First, we sold all operations outside the three core areas: home appliances, professional appliances and outdoor products. Later, we also dropped outdoor products and leased out brands that were not core to our future business. Everything after this has been about reducing the number of brands and repositioning those that we stayed with. It may seem obvious in hindsight, but at the time I can assure that it was not; it was tough. We were about to kill oﬀ a great number of strong brands and replace them with the untested and often unfamiliar brand of Electrolux. The model that we used for the transition phase was double branding: introducing the Electrolux logo next to the existing brand. Gradually, the Electrolux brand took up more space, while the other brand became increasingly inconspicuous, and after a number of years, it had completely transitioned into Electrolux. A key takeaway here is that there is no such thing as a smooth transition. In markets where we allowed for longer transitions, we actually 03/2011

COMMUNICATION DIRECTOR

EXECUTIVE SUMMARY After the acquisition Electrolux entered the Brazilian market via its acquisition of Prosdocimo A double branding approach was used in the post-acquisition phase, i.e. introducing the Electrolux logo alongside the existing brand before gradually phasing out the latter Following acquisitions, brand must be adapted to ﬁt new market While there’s no such thing as a smooth transition, a speedier transition

had worse outcomes than in markets where we had a concentrated transition period.

A BRAND WITH MANY ACCENTS It would have been impossible to build the Electrolux brand in this way had we been unable to speak in diﬀerent accents. For example, in Brazil, Electrolux primarily communicates to women because

The model that we used for the transition phase was double branding, introducing the Electrolux logo next to the existing brand. they are the ‘bosses’ of the family and consequently the decision-makers on home appliances purchases. While in Australia, Electrolux talks more to the well-paid urban males. In the USA, we have successfully struck a chord with working professional moms using a celebrity endorsement strategy. If you are truly global, your brand must speak in one voice, but many accents.

STORY TELLER

BIG IN BRAZIL With everyone madly trying to ﬁgure out the comings and goings of China, it is easy to forget the other BRIC countries. Brazil is booming, for instance, thanks largely to a rapidly expanding middle class. To be successful in this market however, you need to understand the consumer. In 1996,

We went out of our way to understand consumers and their needs. We gave the Electrolux brand a local accent. Electrolux acquired the Prosdocimo brand, which after a mere four years of double branding had transitioned to Electrolux and grown its market share from 12 to 29 percent. Here’s how Electrolux did it:

THE MARKET The world’s eighthlargest economy and home to 192 million, Brazil has been Electrolux’s second-largest market after North America since 2007. The booming economy and rapidly growing middle-class continues to fuel demand for appliances. The Brazilian household appliance market has proven quite resilient to potential external threats, too. Electrolux got its foot in the door with the 1996 acquisition of Prosdocimo, the country’s secondlargest brand at the time. It was recognised as the leader in freezers and stood for quality and innovation. Its slogan was: “The quality that life deserves.”

Photo: Electrolux Group

THE

CONSUMER

INSIGHT

When entering a big new market, it is easy to fool yourself into thinking that it is easy to grasp the new culture, values and consumers. More often than not, companies learn the hard way through costly trial and

error – or, even worse, exit. We managed to do it gradually and with a certain degree of ﬁnesse. Granted, owning a top-three brand like Prosdocimo helped, but tearing something down is always easier than maintaining. So we went out of our way to really try to understand consumers and their needs. Simply put, we gave the Electrolux brand a local accent. In Saõ Paolo, we set up the group’s largest R&D shop. Our staﬀ here conduct over 5,000 interviews annually, leading focus groups and poring over hours of footage of people unloading their dishwashers.

THE TRANSITION We announced the acquisition by way of a TV ad campaign. The commercial, titled A Marriage Of Convenience, announced the union of Electrolux (the global leader in appliances) and Prosdocimo (the Brazilian leader in freezers). The main goal was to persuade audiences that Electrolux’s acquisition of Prosdocimo was a win-win situation. Electrolux used double-branding in 1995 and 1996; in 1997, the company name was changed to Electrolux do Brasil and products only featured Electrolux branding. Post-transition, spending time with the consumer remains the key success factor. A hit-and-run scenario would have been unthinkable. We spend a lot of time tapping into consumer insights. And we stay very close to the deal itself, in true door-to-door fashion. Every day, we have more than 450 promoters greeting and interacting with consumers in retail settings, because you Johan Almquist never know when insights might strike. Senior Vice President, Global Brand and Marketing, We are currently applyElectrolux Group. ing the way we have relieved and pre-empted acquisition Johan Almquist is a senior vice hangovers in Brazil all over president, brand and marketing for Electrolux Group. He the world, in Asia and Eastjoined Electrolux in 2006 and ern Europe speciﬁcally. The today is in charge of a global world’s middle class is growbrand and marketing team responsible for brand strategy ing by 70 million people every and management, marketing year and, by the year 2030, two strategy and consumer insight, billion more people will walk business and marketing intelthe planet. It means more inligence and all digital marketing. Before joining Electrolux, sights to mine and more needs Almquist was Nordic Region to meet, communicated with vice president for TBWA Worlda single brand voice spoken in wide and a CEO and founding many accents. partner at TBWA Sweden. 03/2011

COMMUNICATION DIRECTOR

BOOKS Communications Reader

ecent events concerning Rupert Murdoch’s News International have dragged out into the open issues surrounding individual integrity within large organisations, as well as the need to take responsibility for being alert to internal risks. This new book – from a senior adviser to the FBI – is about taking the message of corporate reputation from the conﬁnes of the communications function and embedding it into each layer of the company. Drawing on considerable research and supporting his insights with apt case studies from a wide range of industries, Diermeier positions the communications head as a weather vane that galvanises the entire organisation to become their own sensors of potential threats to the corporate reputation. Communicators should urge their colleagues throughout the company to think of impact of each and every decision made: “Companies make decisions without considering the reputational impact of those decisions, so decision makers fail to act as the stewards of the company’s reputation”. The book is particularly good on what he calls “the expert trap”, the tendency of experts to focus on one aspect related to their ﬁeld of expertise and thus miss the bigger picture that appeals to the general public.

INFLUENCE IN THE SOCIAL MEDIA ERA “If you’re in business, you’re in the business of influence”. So begins a typically thought-provoking chapter from The Business of Influence that explores the concept of the Influence Scorecard and the non-tangible results of new communication tools. Communicators looking to keep pace with the digitalisation of the industry and its consequences for business strategies would do well to pick up a copy of this book: modestly-proportioned, it nevertheless demands a high-level of concentration of the reader as strategies, theories, diagrams and a thorough selection of the latest in public relations and marketing thought pack the pages. Philip Sheldrake takes a lively approach to the mass of material, arguing with, comparing and contrasting the ideas that crowd his writing – the book is all the better for the numerous interjections by the author. This is no bloodless textbook, and Sheldrake makes a convincing case for the creation of a ‘Chief Influence Officer’ within the organisation, “charged with making the art and science of influencing and being influenced a core organisational discipline”. According to Sheldrake’s vision, marketing and public relations will “ultimately come under the CInflO’s domain”, a bold vision characteristic of this visionary book. 03/2011

COMMUNICATION DIRECTOR

REPUTATION RULES DANIEL DIERMEIER MCGRAW HILL APRIL 2011

THE BUSINESS OF INFLUENCE PHILIP SHELDRAKE JOHN WILEY JUNE 2011

BOOKS

POWER PERFORMANCE TONY SILVIA/TERRY ANZUR WILEY-BLACKWELL JUNE 2011

PUBLIC RELATIONS AVERILL ELIZABETH GORDON OXFORD UNIVERSITY PRESS MAY 2011

DELIVERING MULTIMEDIA PR Anyone who’s been politely-but-firmly asked by the boss to do a to-camera piece for the company’s intranet will not need to be told how alarmingly awkward many such experiences turn out to be. The humiliation is amplified to a deafening pitch should the video find its way onto the company’s YouTube channel or other social media embarrassmentmagnifiers. Three cheers, then, for Power Performance: Multimedia Storytelling for Journalism and PR, here to transform you from stuttering fool to suave pundit. The book is essentially a comprehensive guide to writing and recording (quite technical details on the latter point) multi-media press kits. Although the emphasis is in favour of media journalists (included are several interviews with US television journalists, including Brian Williams of NBC News and 30 Rock fame), the authors have a serious point to make about the revolutionary effect of multi-media online tools on public relations: the middle man, ie the journalist; can be bypassed; the PR professor is freed from having to mould their news to fit the agenda of the media outlet and can present their stories directly to audiences via social media (a process began with pre-delivered Video News Releases, press releases in the form of television news segments submitted to news channels). A BROAD BUT HELPFUL INTRODUCTION This glossy, smartly-designed book is aimed squarely at the public relations student – broad introductions to concepts ranging from gathering intelligence to issues vs crises are presented via a range of progress tests, “learning skills portfolios” and resources for instructors. The book’s strength lies not in depth but in the sheer span of topics covered: this is handy one-stop starting point to virtually every issue that a career in communications will eventually touch on. Does the book live up to the august reputation of Oxford University Press? On balance, yes, although some readers will doubtless feel that the backcover’s boast that it features interviews with “some of the biggest names in PR” is a little overly-generous. And although it is positively antediluvian to complain about the amount of weblinks listed in the references at the end of each chapter: the shelf-line of web references is as yet unreliable. Now based in New Zealand, Gordon worked for a consultancy in London, which helps to explain the book’s UK bias. It is also heavily geared towards the consultancy end of the public relations field – of the 13 “practitioner insight” interviews that start each chapter, only four are non-consultancy. 03/2011

COMMUNICATION DIRECTOR

ASSOCIATION

European Association of Communication Directors

Javier Moreno, editor-in-chief of Spain’s El País newspaper, gives the ﬁnal keynote

THE 2011 EUROPEAN COMMUNICATION SUMMIT On June 30 and July 1, communications professionals from across Europe gathered in Brussels for the ﬁfth annual European Communication Summit by Neil Cranswick

he ﬁfth European Communication Summit took place on June 30 and July 1 at The Square in Brussels. Over 600 communications professionals from a wide range of industries gathered together to learn from real-life case studies, workshops and keynote speeches. More than 50 prominent communications ﬁgures were invited in order to not only provide informative and eye-opening presentations, but also to provoke fruitful discussion among the attendees. After each session, participants in the Summit had the chance to actively engage in discussion with both the 03/2011

COMMUNICATION DIRECTOR

speakers and other audience members, as well as take advantage of their free time to continue their conversations, using every moment available to learn more about diﬀerent aspects of contemporary communication.

LEADING COMMUNICATIONS IN THE NEXT DECADE This year’s Summit was dedicated to

the topic of communications leadership. Throughout the sessions, the role of communicators and the communications function within organisations was explored and attendees discussed how communications should take on a leading role at the strategy table. The subject was present throughout all of the various strands of the pro-

ASSOCIATION

The interactive percussion session

Dr Peter Witt, head of Siemens’ Liaison Ofﬁce in Brussels, receiving

Photos: Matthias Uhrland; Helios Media

the award on behalf of Peter Löscher, Siemens’ CEO

gramme, from keynotes that enabled communicators to keep abreast of new developments to best-case presentations that displayed the work done by communication leaders in all fields. This year saw three over-arching ‘main sessions’ added to the programme, complementing the traditional sessions on topics such as internal communication and corporate social responsibility. In addition to the first main session on leadership that opened the Summit, there were main sessions on future strategies and social media, with experts taking turns to provide their perspectives on the main issues affecting communicators today. If attendees were left in any doubt as to the role that leadership played in successful communications after the main session, the first afternoon session on day one will have removed any lingering uncertainties. After the lunch break, attendees experienced a unique, interactive demonstration of the power of strong leadership

communications. Mark Collazo of the Percussion Shop provided each attendee with a percussion instrument, before providing an interactive demonstration on how to motivate and lead teams. This highly enjoyable session opened everyone’s eyes (and ears) to the power of aural representation. In a break from tradition, and after feedback from participants, the results of the European Communication Monitor 2011 were presented across two sessions. A cooperation between the European Public Relations Education and Research Association (EUPRERA), the EACD and Communication Director, the survey’s highlights were presented by Prof Dr Ansgar Zerfass, on the first morning, with a focus on leadership. A more detailed discussion of the survey was held as a workshop towards the end of the first day. You can find selected results from the survey in this issue.

COMMUNICATING THE EUROPEAN IDEA At the close of the ﬁrst day of the Summit, the participants were invited to a ceremony to celebrate the presentation of the European Communication Award. The award was designed to honour the individual or organisation that has been the most successful in their European communications over the past year. In a revamp of the more formal occasions of previous Summits, this year’s event brought a change in location and format. Gone were the speeches and formal presentations, with more time for informal networking and a shorter presentation ceremony. The winner of the European Communication Award 2011 was announced as Peter Löscher of Siemens. Löscher was chosen for the award through an online poll of EACD members, who voted for him in recognition of the impact his communications strategy had upon Siemens’ recent restructuring process. AN EXCELLENT COMMUNICATION PLATFORM No doubt, discussions begun over the course

of the Summit will continue in its wake, as participants take the opportunity to contact those they met over the two days in order to share strategies and success stories. The Summit has established itself as a unique ﬁxture in the communications calendar, as shown by its increasing popularity. Why has the event gone from strength to strength? Perhaps Albert Klinkhammer (marketing and communication director at Mondi), has the answer: “The Summit is an excellent communication platform to share best practices and learn from others.” 03/2011

COMMUNICATION DIRECTOR

ASSOCIATION

REGIONAL FOCUS: SPAIN Regional Coordinator Alfonso González Herrero gives his views on the EACD’s activities in Spain and discusses the importance of the EACD’s regional networks. Can you tell us about the formats and topics of events that you have hosted and the feedback you have received? The EACD has had a presence in Spain since its origins in 2007. Since then, we have held several regional events every year with increasing levels of attendance and interest from our growing number of members. We’ve covered issues such as corporate social responsibility, environmental and risk communications, and social media, as well as other subjects. What plans do you have for the Spanish Regional Group for the rest of 2011 and on into 2012? In terms of membership, we hope to continue with our current growth rate, which has reached more than 30 per cent in 2011, which shows the interest of the local public relations community in the EACD. Regarding our local activities, we will continue with the current format of regional meetings, focusing on the role of communications in a global market and oﬀering our members the opportunity to learn more about how to compete in a multicultural environment. Also, we plan to continue the existing cooperation with other local communication associations, such as Dircom.

Is there anything that you think speciﬁcally characterises the public relations community in Spain? I think the Spanish public relations environment is formed by a talented and creative group of communication leaders who are able to cope with their day-today work, as well as with unforeseen issues in a very proactive and intelligent manner. So, both talent and creativity are remarkable characteristics of our community. On the other hand, however, some local – mostly smaller – companies still lack eﬃcient internal structures, processes, and skills to compete successfully in an international scene; which is something that is also a common issue in other European countries. That is probably an aspect that could be improved, and we aim to help our members to do so by sharing with them the best-case examples in every industrial sector. 03/2011

COMMUNICATION DIRECTOR

What do you see are the main beneﬁts that the EACD can bring to the Spanish communications community? I would mention a few of them. First, the EACD provides an excellent setting to share experiences with colleagues all around Europe, and to benchmark your company’s processes and way of doing things with those of other colleagues, both inside and outside your industry. In addition to this knowledge and training opportunity, the EACD provides a superior context for networking within the communications industry for individuals interested international and multicultural environments. Finally, I would also emphasise the quality of the EACD’s events and publications, which provide excellent reference materials for all communication professionals. You recently attended the European Communication Summit. If you had to share a few of the thoughts you picked up at the event with the rest of your regional group, which do you think would be the most useful? Neither companies nor professionals can remain competitive in their industries by looking only towards their ‘home’ markets. Successful organisations and individuals will be those that are not afraid of competing on a global scale. The EACD provides us with knowledge and tools to better compete at that level, and the European Communication Summit is good proof of that.

Upcoming event in Madrid: September 29, 2011 – “International Communication: Doing business in China”, hosted by Teléfonica ALFONSO GONZÁLEZ HERRERO Alfonso González-Herrero is manager of external communications at IBM SPGI (Spain, Portugal, Greece, and Israel). Prior to joining IBM Spain, he held senior positions at Hill & Knowlton in New York and Burson Marsteller in Madrid.

ASSOCIATION

WORKING GROUP NEWS Below you will ﬁnd some recent information upon the working group activities in the ﬁrst semester.

Working Group EU Institutions – New Coordinator Neil Corlett was elected as the new coordinator for the EACD’s EU Institutions Working Group at the European Communication Summit 2011. Corlett has been the spokesperson and head of press for the Liberal and Democrat Group in the European Parliament since December 2004. He takes over the reins from Helmut Weixler, who led the group for several years. Weixler will, however, remain in his position as an EACD board member. At their working lunch at the Summit in Brussels, the group members also developed new ideas and discussed topics such as ‘crossed communication lines between Brussels and the EU member states’ and ‘EU institutions – best practices in communicating Europe’, for future workshops and meetings.

Photos: EACD; Matthias Uhrland; www.ﬂickr.com; Private

Working Group Social Media At this year’s European Communication Summit (writes Philippe Borremans, head of the EACD’s Social Media Working Group), 13 members of the group gathered over breakfast for a very straightforward discussion about how the topic of social media could be put forward through the group. As a result, the group decided to support other working groups around the themes they cover by integrating – at their request – social media examples, practices and case studies. The idea of the group is to function as a kind of specialised support group that collaborates closely, if and when needed, with the other Working Groups. In addition, the group will look for and distribute guiding documents, case studies and best practices on the subject of social media which assist other colleagues across the EACD.

Working Group Energy – Relaunch The EACD Working Group Energy has a new coordinator. Andrew Hogg, vice president communication-exploration and production at Total in Paris, took up this position in August. Due to the absence of a coordinator, the working group had lain dormant; however, a new kick-oﬀ meeting will be held at the EACD Anniversary in November to relaunch the group and discuss next steps and projects for the future of the group. Should you have any suggestions for topics to be covered by this working group, please contact us at energy@eacd-online.eu

03/2011

COMMUNICATION DIRECTOR

ASSOCIATION

WELCOME! The following communicators have recently joined the EACD

Tuija Aalto-Setälä, Head of PR/ Fiskars Home division, Fiskars Corporation Najiba Abdellaoui, Communication Consultant, TNT Nederland B.V. Jukka Ahonen, Head of Communications, Nordic Investment Bank Mohammad Khairi Al Mufti, Corporate Relations and Outreach Manager, American University of Sharjah Lesley Allan, Corporate Communications Director, TUI Travel PLC Khalid Almubarak, Media Counsellor, Embassy of the Republic of the Sudan Jorge Álvarez-Naveiro, Head of Communication, PROSEGUR COMPAÑIA DE SEGURIDAD, S.A. Laliv Amrami, Communications Manager, Amdocs Israel Ltd Katarina Andric Milosavljevic, Puplic Relations Director, Directorate Civil Aviation of the Republic of Serbia Pia Arrhenius, Senior Vice President, Corporate Communications and IR, Sponda Plc Erna Balk, Director Communications and Advocacy Relations, TuBerculosis Vaccine Initiative Martin Barlebo, Director Group Communications, ALK-Abellò Ahu Baskut Alyanak, Corporate Communication Group Manager, Migros Ticaret A.S. Rune Bjåstad, Head of Culture and Communication, Norway Embassy Rebecca Bleasdale, Group Communications Manager , Research Machines plc Rachel Bosworth , Director of Communications, Medicines and Healthcare products Regulatory Agency Andreas Brandtner, Head of Public Relations/German Generation - Head of Communication Generation Fleets, E.ON Kraftwerke GmbH Florence Bribosia, Manager Internal Communication, SPE-Luminus Jamie Brookes , Global Head of Asset Management Communications, BNY Mellon Asset Management Andrew Brown, Group Communications Director, Regus plc Caoimhe Buckley, Marketing and Communications Director , UK Trade & Investment Jonathan Butterfield, Director Communication, CLS Group Martine Casteels, Director of Marketing Communications, Spandex Belgien Sophie Caverzasio, Communications Asisstant, Mercuria Energy Trading S. A. Vasco Cecchini, Chief Communications Officer, PSP Group Services AG Ralph Charlton, Director of Global Public Relations, The Sage Group PLC Celine Chaverot, Manager of PR & Communications Departement, Majencia Andreea Chitan, PR Expert, OMV Petrom S.A. Robin Clémence, Communication Manager, IMACE-European Margarine Association Susan Cleveland, Director, European Communications, MeadWestvaco Ilaria Conti, Communication Officer and Policy Advisor, European Federation of Energy Traders Robert Couter, Communications Leader Europe/Canada, Merck Sharp & Dohme Limited Hans Daems, Public Affairs Officer, Hitachi Europe Ltd Roberto D’Agostino, Deputy Director-Director of External Affairs and Communications, Open Joint-Stock Company Enel OGK-5 Natacha Defeche, Communication & Marketing Manager, Bain & Company Belgium, Inc. Paola Dell’Armi, Communication Manager, Italia Lavoro S.p.A Ana-Maria Diceanu, PR Manager, Inquam Photography SRL Kate Dinon, Group Manager Corporate Communication, Nyrstar Dennis Doodeman, Senior PR & Corporate Relations Manager, BT Global Services Julie Dorel, Marketing and Communications Manager, Tyndall National Institute Carsten Dybevig,Vice President Communication, Norske Skogindustrier ASA Ernst Eichinger, Head of Communications, BIG Bundesimmobiliengesellschaft m.b.H.

03/2011

COMMUNICATION DIRECTOR

Carlo Eijkels, Communication Manager, BP Rafﬁnaderij Rotterdam Angelika Elser, Director Public Affairs & Communications, Ethicon-Endo Surgery (Europe) GmbH Liam English, Associate Communications Director, Eli Lilly Benelux S.A. Yasemir Erdemir, Protocol Manager, Turkish Airlines Inc. Murat Ermert, Assistant General Manager / Corporate Communication Department,Yapi ve Kredi Bankasi A.S. Thomas Evensen, Communications Senior Adviser, The Research Council of Norway Livia-Stefania Fericean, Project Manager Corporate Branding, OMV Petrom S.A. Ioana Florescu, Business Partner Marketing & Corporate Communications, OMV Petrom S.A. Andrew Flowers, Communications Manager, Nokia Alexandre Fourtoy, Director of Communications, UEFA Karen Frazer, Head Public Affairs Communications, MasterCard Europe sprl Sonia Fumagalli, Administrator, Council of the European Union Sylvie Glandier, Director of Marketing Europe, UK Trade & Investment Fatima da Gloria, Director of Brands and Communications, KLM SkyTeam Steven Goldfarb, Outreach, Education & Communication Coordinator, University of Michigan Cedric De Grande, Marketing Manager, Callataÿ & Wouters Nana Marie Gyrup, Marketing and communication specialist, Unifeeder A/S Britta Hallbauer, Corporate Communication Manager, TAQA Bratani Ltd Mark Hamilton, Deputy Head of Corporate Communications, KPMG Kerstin Hartung Alexandre, Dierctor Marketing & Communication, ACE European Group Limited Katariina Hietaranta, Head of Group Communications, Huhtamäki Oyj Sabine Hoffmann, Media Relations Manager, Syngenta International AG Christoph Hug, Head Corporate Communications, Hochdorf Holding AG Mike Humphrey,Vice President Marketing and Communication,Volvo Construction Equipment Anna Illarionova, GR Manager, Open Joint-Stock Company Enel OGK-5 Marco Incerti, Head of Communications & Research Fellow, Centre for European Policy Studies Bobbie Ireland, Director Corporate Communications - Americas, Wood Group Cor Jansen, Marketing and Communication Director, Universiteit Utrecht Helén Jansson, Communication & Market Manager, SSPA Sweden AB Nancy Jewell , Head of Corporate Communications , Zurich Financial Services Ltd. Tomas Jørgensen, Communications Director, Strategic Change Communications, Carlsberg Group Valdas Kaminskas, Director of Corpotate Communication Unit, teo LT AB Tamara Karagity, International PR Manager, MOL Plc. Maija Karhusaari,Vice President, Communications, ABB Oy Erkki Kauhanen, Head of Communications, The Finnish Forest Research Institute Marisca Kensenhuis, Public Relations Manager, KLM SkyTeam Ian Kenyon, Head of Media and Communications, Merseytravel Rauha Kiljunen-Ruotsalainen, Communications Specialist, Finavia Corp., Helsinki Airport Liisa Kivela, Diretor External Communications, KONE Corporation Finland Hans Michael Kloth, Head Of Communications, International Transport Forum Martine Konorski, Director Corporate Communications, Sorin Group S.p.a. Kim Koppenol, Manager Corporate Communications, RTL Nederland Elena Krasteva, Advertising and Corporate Communications Manager, Sopharma Plc Makar Kuznetsov, GR Manager, Open Joint-Stock Company Enel OGK-5 Ria Lagerweij, Head of Corporate Communications, Oracle Nederland BV Uwe-Stephan Lagies, Director of Corpotate Communication, RWE Dea AG Michael Lavery, Director of Communications and Marketing, Durham University

ASSOCIATION

Jacek Lawrecki, External and Internal Communications Manager, Novartis Poland Sp. z o.o. Christina Lindberg,Vice President Communications Europe, AB Electrolux Björn Lindström, Marketing and Communications Manager, AB Ph. Nederman & Co Sara Lipscombe , Group Communications Director , Atkins Cristina Lita, Consultant at the Department of Public Relations, Registry, Secretariate and Protocol, Superior Council of Magistracy Sabine Lobnig, Communications Officer, shecco SPRL Kristian Lysgaard, Communications Manager,VELUX A/S Simon Macdowall, Director Communications and Marketing, HM Revenue and Customs Marija Mandic, Head of Global Media Relations, Sandoz International GmbH Konstantina Markova, Communications Manager, BTV Media Group EAD Giannarita Martino, Communication Manager, Italia Lavoro S.p.A Magdalena Maruszczak, Marketing & Communications Manager, KPMG Sp. z o.o. Bangu K. Masisi, Director for The Netherlands & Belgium, South African Tourism Board Elena Mateeva, Specialist Advertising and Corporate Communication, Sopharma AD Muriel Mathis, Director Internal & Marketing Communications Europe, Smith & Nephew Orthopaedics AG Amy Mclean, Director, Global Public Relations, Amdocs Management Ltd Mary Meehan, Online Communications Specialist, Genencor International B.V. Tatyana Meshcheryakova, Communication responsible, Atlas Copco Airpower N.V. Monika Mihokova, Head of Communication, T-Systems Slovakia, s.r.o. Paivi Mononen-Mikkilä, Director Communications and CSR, Finnish Fur Sales Karin Nakhai, Communications Manager, ADEG Österreich Handelsaktiengesellschaft Andreea Nastase,Vice president Corporate Communcation, SC Rosia Montana Gold Corporation SA Ciaran Nelson, Head of Media, Anglian Water Services Andreea Nicolae, Communication Manager, Holcim Romania Maria de Sá Nogueira, Communication and Media, Sérvulo & Associados, Sociedade de Advogados, RL Marika Nöjd, Information Officer , Finavia Corp., Helsinki Airport Sergei Novikov, Head of Communications Department, State Atomic Energy Corporation ROSATOM Tanja Nummijärvi, Communication Manager, Research and Analysis of Media Laoise O´Murchu , Communications and Public Relations Manager, Tallaght Hospital, Irish Health Service Majella O’Doherty, Communications Manager, Continental Europe, Goodman Group Esra Öner, Sponsorship/Event and Communication Manager, Castrol Limited Ippolita Papale, Communication Manager, Italia Lavoro S.p.A Tanguy Du Parc, Corporate Communication Manager, Callataÿ & Wouters Isabelle Pericarpin, Global Marketing Manager, euroscript International S.A. Tapio Pesola, Communication Manager, Wärtsilä Corporation Francesca Pisa, Communications Europe Manager, TenarisDalmine Tiziana Pollio, Head of Corporate Communications, Nokia Italia SpA Corinne Pralavorio, Communication Manager, European Organization for Nuclear Research Elizabeth Pratt, Chief advisor in communication and public awareness, COWI A/S Janina Radulescu, Government Relations Coordinator, Coca-Cola HBC Bulgaria Laure Ragueneau,VP Communications, Orange France Telecom Concetta Tiziana Ragusa, Head of Communications & Press Office - Senior Consultant, Ge.Fi. S.p.A. Paul Reynolds, Director of Corporate Affairs, Pension Protection Fund Clare Richardson, Internal Communications Director, Ideal Standard International Anders Rikter, Director of Communications, Schibsted Media Group David Ringrose, Head of Communication, European Commission Karin Ronijak, Innovation Project Communications Manager, Austriamicrosystems AG Veronique Roquet-Montegon, Corporate Press & Public Relations Director, Schneider Electric France Ramón Rovira Pol, Assistant General Manager // Communication & Institutional, Banco Sabadell

Meral Ruesing, Communication Manager, European Payments Council Jacqueline Rutten, Head Development and Events,Van Gogh Museum Janne Saarinen, Communications Director, Pöyry PLC Raymond Salet, Director of Corporate Communications, SNS REAAL Agnès Salgues de La Brande, Communication Director, Total Petrochemicals Lauren Sayeski,Vice President, External Communications and Stakeholder Engagement, Coca-Cola Enterprises Ltd. Martine Scheuren, Head of Corporate Communications, Cargolux Airlines International SA Bernhard Schneider, Global Communications Manager, Sandoz International GmbH Sabine Schneider Nash, Director Corporate Communications, Covance Inc. Mathias Schuch, Director Corporate Communications, AREVA NP GmbH Patrizia Sferrazza, Communication & External Affairs Manager, Shell Italia S.p.A. Sylvia Shin, Head of Corporate PR, Corporate Communications, Sony Europe Una Shortall, Deputy Secretary General and Spokesperson, Council of European Energy Regulators Milos Simic, Marketing Director, Grand Casino Belgrade Slavica Simunovic, Public Relations Manager International, EnOcean GmbH Jacob Søby Bang, Head of Communication and Spokesperson, LIFE - University of Copenhagen Marie-Laure Soulié, Group Communications Director, Mazars France Simon Spillane, Senior Advisor - Communications, The Brewers of Europe Rob Sproston, Marketing and Communications Manager, Sibelco UK Limited Francis Stalder, Senior Manager Division Communication, Genencor International B.V. Julia Staunig, Public Affairs Manager, Danske Bank Bénédicte Stievenart, Communications Manager, MasterCard Europe sprl Jenny Svederman, Head of Media Relations, Lantmännen Annette Svensson, Manager, Corporate Public & Media Relations, Ericsson Rolf Tanner, Director Media Relations, Swiss Reinsurance Company James Taylor, Communication and Public Affairs Officer, Society of Audiovisual Authors André Teixeira, Communication Coordinator, Total SA Petia Terzieva, Marketing and Communications Director, BTV Media Group EAD Adam Thilthorpe, Director of Professionalism, Communications and Public Affairs, BCS, The Chartered Institute for IT Corinna Tinkler, Spokesperson, Director of Corporate Communications, REWE International Dienstleitungs GmbH Gina-Maria Tondolo, Head of Public Relations and Marketing, schoenherr attorneys at law Nazli Topcuoglu, External Communication Manager, Sanofi Aventis Ilaçlari Ltd Sti Bruno Tourne, Internal Communication Director, ALSTOM Constantinos Tziamalis, Head of Investor Relations, ASBIS Cyprus Patrick Valkenberg, Internal Communication Manager, European Patent Office Françoise Vanthemsche, Internal Communication Manager Benelux & France, Anheuser-Busch InBev Maria Jose Vazquez Vilarino, Senior Manager, PR & Communications,Vestas Mediterranean Sandrine Verdelhan, Head of Public Affairs and Media Relations, Mazars Barbara Vermeire, Communications Manager, GE Europe NV Nicolaas Vlaeminck, Senior Advisor (senior strategic communications and external), MEDEA Vilhelmiina Wahlbeck,Vice President, Corporate Communications, DNA Ltd Lesley Walker, Communication Manager, SHV Holdings N.V. Anne Westersund,Vice President Communications and Marketing , Cargotec Corporation Florian Westphal, Deputy Director of Communication and Information Management, International Committee of the Red Cross (ICRC) Tina Wilhelmsson, Communicator and web manager, Sandvik AB Saira Zaki, European Marketing and Communications Manager, Skadden, Arps Erwin Zijlstra, Director of Communications Europe, Avery Dennison Lorena Zinkhann, Senior Marketing & Communications, RTL Nederland Jelena Zlatanovic, Public Affairs Manager, U.S. Steel Serbia, d.o.o Elena Zomeni, Director of Development and Communication, The Cyprus Institute

03/2011

COMMUNICATION DIRECTOR

QUESTIONS TO... The personal side of communication directors

ATILLA YERLIKAYA Corporate Affairs Director, Coca-Cola Içecek A.S. How do you explain your job to your friends? We are to our companies what the ministry of foreign aﬀairs is to nations. We advocate a position; present who we are; we build alliances; we provide early warnings. We deliver the message.

cator may only get to experience in 50 years. And they do not make a very big story out of that.

Who is your favourite character in history? The Suﬁ poet Rumi, who says “Be like the sun for grace and mercy. Be like the night to cover others’ faults. Be like running water for generosity. Be like death for rage and anger. Be like the Earth for modesty. Appear as you are. Be as you appear.”

What has been the most emotional moment in your career? In all of my previous jobs and today at CCI, either we had international awards or praise, celebrated great successes, and cut big deals. But the most emotional moment is always the departure of a retired colleague after many years of service. Every time it teaches me that we are all the humble stewards and not the distinguished proprietors or venerable masters.

Who are your present-day heroes? Emergency Room staﬀ. In just one night they manage the amount of crises that the most seasoned communi-

What do you detest the most? Greed and envy.

A masterpiece of corporate communication was…? A verse by Rumi that says “Silence is the language of God, all else is poor translation.” If heads of corporate communications didn’t exist, what would be your profession? I would probably go back to journalism and start from where I left for the rest of my life – publishing the Turkish edition of the National Geographic magazine.

Atilla Yerlikaya Corporate Affairs Director, Coca-Cola Içecek A.S. Atilla D. Yerlikaya worked as a journalist and publisher for more than 10 years; he was the general manager of Dogus Magazine Group and was the publisher of many international brands in Turkey, including Car, Ofﬁciel, Formula 1 Racing and National Geographic’s Turkish edition. Prior to joining CCI, he held senior managerial positions at Philip Morris SA and Shell. Yerlikaya is the auditor of the Foreign Direct Investment Association YASED, vice chairman of AmCham Turkey and the president of the Istanbul Chapter of European Movement.

Editors: Dafydd Phillips, Neil Cranswick, Grit Fiedler Graphical Concept: Stefﬁ Butter, Franziska Söhner Layout: Stefﬁ Butter, Sarah Schlingmeyer Illustrations: Burkhard Piller Photo Editor: Stephan Baumann Advertising: Norman Wittig (norman.wittig@helios-media.com)

03/2011

COMMUNICATION DIRECTOR

Web design: Dennis Otto (dennis.otto@helios-media.com) Publishers: Rudolf Hetzel, Marc-Oliver Voigt Contact: Square de Meeûs 37 B-1000 Brussels, Belgium Tel +32 (0)2 219 22 90 Fax +32 (0)2 219 22 92 info@communication-director.eu www.communication-director.eu

Helios Media Square de Meeûs 37, B-1000 Brussels, Belgium Price: 120 euro yearly: 4 editions of the magazine, access to the website, regular newsletter. For members of the EACD, a yearly subscription to the magazine is included in the membership fee. Print: Offsetdruckerei Holga Wende Meeraner Straße 19, 12681 Berlin

Photo: Coca-Cola Içecek A.S.

Imprint