24/11/2003
Speakers: David Varney, Chairman, mmO2 plc, Chairman, Business in the Community
It's a privilege to be here today among a group of people who have so much collective experience in the world of corporate communications.
I'm sure you feel as I do - that PRWeek makes an invaluable contribution, not only with its articles, polls, surveys, and forums such as this one today, but also by making it possible for those in the communications game to keep track of what their colleagues are doing as they move from job to job!
Today I am wearing two hats - as chairman of Business in the Community and as chairman of mmO2, the mobile network operator. I want to say a few words about the need to fashion a comprehensive approach to corporate responsibility, and the role that corporate communications plays in that effort.
The field of corporate communications has expanded enormously in recent years. I remember when the job of the corporate communications team was to be react, to respond whenever something happened - good or bad. Today it's not about being reactive but proactive, thinking ahead.
It's about media communications, it's about brand communications, it's about political, regulatory, and parliamentary affairs. It's internal communications, it's investor relations (or at least, it works in concert with IR). It's all of these, and it only works to maximum effectiveness if you can fit all the parts of the jigsaw together into one coherent whole.
You are all experts at this - I'm not telling you anything you don't already know. As for corporate responsibility, that field is also undergoing a transformation.
Many people think corporate responsibility is the new kid on the block, but it's actually not so new. Business in the Community got started in 1982, prompted by the urban riots in Toxteth and Brixton. The city centres were in bad shape, unemployment was high, people were justifiably angry, and so the rather straightforward notion arose that companies owe something back to their communities.
Linked to that was an associated idea -that companies not only had responsibilities, but also resources that the government didn't. These were not just financial assets, by the way, but human assets - a mindset and an orientation towards innovation and performance, and a practical awareness of the realities of the marketplace. This was a visionary idea, one that I can take no credit for, since my own personal awakening didn't come until more than a decade later.
I joined the board of Shell UK in 1995 and was there when the decision was taken to dispose of an oil buoy in the North Sea called Brent Spar. (pause) It wasn't our actions that were at fault but our arrogance. It was the fact that we had lost touch with our community and failed to anticipate their concerns.
Many people have identified Brent Spar as a key moment in the environmental movement. For me, it was a real turning point. It forced me to think hard about how corporations relate to their communities.
I have watched with enthusiasm as the corporate responsibility movement has gained credibility around the world. Unfortunately, some of that credibility has come as a result of unwelcome events. The downturn in the economy, the political uncertainties, the protests against globalisation, the ongoing corporate and financial scandals - all these have played a part.
Corporations are finding that the public is more demanding, and more critical of their behaviour - this same public appears to us in many other roles as customers, shareholders, employees, investors, partners, and government. Some companies turn to corporate responsibility purely because it's the right thing to do. Others adopt it as a defensive strategy. Often it's a bit of both. In either case, it signifies a welcome shift in attitude.
Last summer, O2 hired MORI, the research firm, to survey the attitudes of the British public on corporate responsibility. In comparing the results to previous years, they found a significant attitude shift.
The respondents were asked whether, when they buy a particular product or service, it was important that the company show a high degree of social responsibility. In 1997, 24 percent said yes, it was important. In 2003, 38 percent said yes. Something has definitely changed in the past six years.
But as more companies have joined the movement, the challenge has grown in complexity. It's not just about making a commitment to corporate responsibility, but how do actually put that into practice? How do you balance your bottom line with the greater good? What about the conflicts of interest?
When approached in the right way, corporate responsibility forms part of the bedrock of a company. It informs everything the company does - every department, every relationship. I've heard about organisations where corporate responsibility exists in a world of its own, where the individual in charge literally sits in a separate department. This makes no sense.
I realise some communications directors run into difficulty selling the importance of corporate responsibility to their boards. Some boards might say this is a waste of money and time. We don't need it. But I hear less and less of that as the movement has become more mainstream.
In fact, it has become so mainstream that an entire PR sector has arisen to support the corporate responsibility agenda, including glossy publications, the social and environmental reports, the declarations of intention and best practice. Naturally, some critics say it's window dressing.
I'm not terribly concerned about this - perhaps some of it is, but it's also inevitable. The point is to make sure more companies are aware of the need for positive engagement and doing something about it. We need more communication, not less.
I would like to turn for a few minutes to our experiences at mmO2, where the corporate communications challenge was formidable. We are a new company. When we started life in November 2001 by demerging from BT, we were saddled with a tired, state-owned heritage. BT Cellnet had a poor service reputation and limited brand appeal. The market was already saturated. Mobile penetration in the UK was 73 per cent.
We knew we couldn't simply putting up some blue bubbles - the brand had to stand for something. We realised our best chance of delivering long-term value to our stakeholders was through open dialogue, transparent operations, and positive engagement in society. Those became our values: openness, integrity, and responsibility.
We wanted a culture where everyone is accountable for what they do and how they behave. Our goal was not to be holier than thou, but to establish a relationship with our stakeholders that held the product we were providing to the absolute highest standard.
From the beginning, one of the main objectives of O2's communications strategy was to ensure the company was seen as a good corporate citizen. To do that, the company has committed itself to active engagement with all stakeholders - that means our employees, our investors, our customers, our suppliers, and our local communities.
We also committed ourselves to benchmarking - to measuring our accomplishment in the corporate responsibility arena so that we can compare ourselves to our peers and have an objective standard for accomplishment.
The transformation was a huge success. We have created a brand that appeals to both the fashion-conscious youth market and older business segment. We have been active politically, promoting industry issues at the Home Office, in the PM's policy unit, and at the party conferences, and we've have an increasingly high profile in Brussels. Last week, we announced our first profit.
The main point is that we haven't split our corporate responsibility efforts from our overall communications strategy. They are inseparable. Everything your communications team produces - the annual report, the shareholders' messages, the corporate responsibility reports, the press releases - everything must explicitly convey the company's values, with corporate responsibility at the core.
The bottom line is that if you don't deliver financial results that are at - or better than - the market's expectations, then the very best communicators in the world can't help you. You can't build a house of cards. But if you are delivering financially, then how you handle your external communications can make a profound difference.
At O2, corporate communications is like the Roman god Janus, it wears two faces - one looking outward and the other inward. The communications team knows what the board thinks, and they know what the outside world thinks. They take the external perceptions and communicate them internally, and they take the internal perceptions and communicate them externally. They are at the heart of the organisation.
They have to be ready for anything, and at the same time, they have to do everything possible to prevent "anything" from happening. They serve as the eyes and ears of the company, they know what's happening in the marketplace and can anticipate what's ahead, so that there are no surprises.
I'd like to spend a moment talking about one company where the values, the message and the product were not working together. That company is McDonald's. It's probably the world's most famous brand - a company that for many decades successfully promoted itself as a family business, with roots in the heartland of America. Its employees were so loyal they had ketchup in their veins. The corporate values and image were clean and wholesome: Ronald McDonald. Happy Meals.
But today, the McDonald's brand is tarnished. We associate it with the World Trade riots, with the exploitation of low-paid workers, with McJobs and dehumanising assembly line work. It no longer matters whether these images are grounded in reality. The name has become synonymous with bad things.
Now the company faces declining sales, closing restaurants, and a real crisis. What can they do about it? It's an uphill challenge. What they've done is come up with a new marketing strategy, hoping they can revitalise the brand and connect with youth culture.
They've introduced healthier products like McShakers and yoghurt. They've brought on the "Go Active Meal" - a salad, a bottle of water, a book of exercise tips, and a clip-on pedometer to encourage people to walk.
This is because McDonald's - and other fast-food companies - now face criticism for contributing to the growing number of obese people. The company is desperately trying to rebrand itself as a purveyor of healthy food and dodge the lawsuits.
If you're not careful, you can end up like that.
If you really want a company to success in this complex environment, you have to have a vision, you have to have values, and you have to make sure they are directly reflected in your products, your services, and every aspect of your communications. You have to live and breathe and articulate those values every day. There has to be a real coherence between your actions and your words.
I'd like to say a word about integrity, the most important value in any company. I have always believed the message starts from the top. The top management team has to set an example for everyone else, because behavioural patterns reverberate downwards. Leaders have to walk the talk.
While the tendency to deflect blame is surely universal among the human species, it is my belief that here in the UK we specialise in it. Victim mentality seems to be deeply ingrained in our way of thinking. The implicit model of behaviour in our culture is that we are all passive agents of forces beyond our control, and that our helplessness legitimises our lack of performance.
The only way to encourage good teamwork, open communication, and commitment to results throughout the organisation is to demonstrate it at the top level. It means accepting the principle that if something was going on within the organisation - whether good or bad - the management is entirely responsible. It's a matter of integrity.
When you get it right, you can feel it. It's almost a physical experience. The closest analogy I can make is when you start going back to the gym after a break. For a while you feel lousy, but when you can feel yourself gaining strength. You can feel all the parts moving together, coordinated, working at peak performance. That's the way a good corporate team feels.
The standards have to be high. And in a society where communications standards are defined by the likes of The News of the World, The Daily Mirror, and Hello magazine - keeping those standards high is no easy task. Of course, those publications have nothing in common with PR Week!
People form impressions of companies based on what they read, what they hear and see and experience, directly or indirectly. If communicators are doing their job well, then the politicians are less likely to want to regulate you, the media is less likely to attack you, talented people are going to want to work for you, and your customers are going to buy your goods and services.
It's a virtuous circle - and it's all to do with how the company behaves, and how it is perceived.
At the risk of sounding like a romantic, I passionately believe that business has vastly more potential to do good in the world than evil. The moral challenge is to find the most effective ways to channel our resources towards meaningful and enduring social change, and to communicate that persuasively to all our stakeholders.
Thank you.
