Friday, January 16, 2009

Changes in the Value Chain has to change the role of PR

We are living through extraordinary times. As people gain access to online all the time communications tools with their cell phones and computers at home and at work they are changing the nature of interactions in the value chain.

The 20th century view was relatively easy to understand. The organisation was was largely a discrete entity, could survive using mass media and marketing was largely in charge of interactions between organisation and customers (broadcast messages supported by sales support) downstream and dependant on vendor marketing and selling capability upstream.
It could be described like this:

In the 21st century the value chain began to change. Internet driven transparency meant that much more was visible to everyone in the value chain. It replaced corporate public relations because competitive advantage required that organisations to make more information available to all constituents.

Today this model is becoming more general. Companies make public their CSR policies, vendors and customers and much more. In addition a lot of other organisations and individuals make information available about organisations. Classic example is the information made available to the public about organisations are websites like Companies House and Whois lookup which, in the past would have required a lot of expertise to discover and now are used as commonplace tools to find out more from third party sites. This has empowered constituents upstream and downstream as well as employees.

In addition, the range of channels by which actors in the value chain can interact have grown and many of them are, as we know interactive and part of interested networks.

Internally, there are changes too. Departmental barriers have come tumbling down because of the growth of new additional forms of communication such as email and instant messaging. These have made it easier for people to form relationships both between departments and between the historic hierarchies of typical 18 to 20th century organisational structures.

Now a new paradigm has emerged. Every organisation is outsourcing. Few organisations realise the extent to which they have outsourced and many will be surprised at some of the outsourced activities that happen automatically. An example is the automatic updates (patches) that happen to desktop PC's right across the organisation. They just happen. Other examples from auditing to logistics are common.

These third parties are part of the organisation cloud and are a form of transparency whereby internal and, in the past, confidential information is shared with third parties under an array of contractual agreements - many of which are inferred. Such agreements are often only as good as the relationship between the parties and have little by way of legal grounding.

Where, for example is the agreement between an organisation and a search engine?

Thus the value chain is changing very rapidly and is much more dependant on relationships than contracts.

This has profound implications.

It demands interaction in many more forms and between a wider range of actors and demands relationship management across a much more diverse range of constituents.

For the practice of public relations this change is very significant. Practitioners now need to be able to understand relationship management in a much more holistically and need to be able to explicate the changed nature of organisations and an understanding of how to implement management strategies and policies to the advantage of the organisation.

Teaching public relations, training practitioners and developing expertise is part of what we need to do.

There is one other imperative, which is very relevant to those organisations that represent the industry which is to explain this enhanced role for PR to organisation managers.

What exciting times we live in.

More reading:

Benkler Y 2002 "Coase’s Penguin, or, Linux and The Nature of the Firm" Yale Law Journal Volume 112, Issue Number 3

Martin Bailie

More to come....