Monday, May 08, 2006

Evaluation - again

There is discussion about evaluation arising from my post about CyberAlert's recent announcement.

The discussion is relevant because it calls into question different approaches to this area of Public Relations practice.

I would recommend every practitioner read Don's post and the Annenberg study posted today.

To be able to really get to the bottom of this issue we need to take on board the opening chapters of the Watson and Noble book (Watson, T., & Noble, P. (2005). Evaluating public relations: A best practice guide to public relations planning, research and evaluation. London: Kogan Page.)

Here, they begin by asking what is public relations. It is a topic I covered recently and where I gave a definition that adapts from Edward B. Tylor's definition of culture.

Knowing what PR is, helps define Public Relations evaluation there is an equal imperative to be encompassing. I am on record saying:

“Public Relations Evaluation has application in the formative analysis for setting objectives, strategy and planning; it confirms best application of resource; it aids control of the strategic and tactical public relations programme; it is a continuous and integral part of the total PR programme to inform the practitioner as to whether PR activity is optimised for success and it has application in the final review of efficacy.”

This means that PR Evaluation has to be inclusive and how I can defend a view of the CyberAlert development.

An anonymous commenter suggested said “I don't know... Garbage In, Garbage Out. It looks a lot like KDPaine's DIY dashboard charts (maybe they're partnering on it?).

What I see is simply a charting of self-reported analysis. The only thing you get for the money are pre-formatted charts most of which won't really excite many senior business executives. The clips still need to be manually read, tagged, and sorted, and all the old crap deleted - which with a web-based clipping service is a significant number. I think our industry has a looonnggg way to go before we have something truly useful for the Boardroom.

I am sure that there is a KDPaine element and her dashboard. She comments on it on her blog.

I do not subscribe to the view that the CyberAlert service provides garbage statistics. I agree that it is possible for a dishonest PR person to rate content with tinted glasses. I do not believe that most PR people are dishonest and feel that the criticism is unfounded except for the last sentence.

We do have a long way to go.

What is significant is that there are now metrics. Few people in PR have taken on-line clips seriously and now there will be numbers that are comparable to 'bog standard' print stuff including trend data (which are the most important content). Add these data to NLP data and numbers from the likes blogpulse and the data sets are impressive for analysts.

This is the intelligence that practitioners need for evaluation. Its application in the board room is irrelevant. For the most part it has no role on the boardroom table. After all does one see bought ledger analysis there?

If we want to go further in terms of content analysis then the industry has to get used to the idea of automated inference and neural networks, LSA and fuzzy logic. It is possible and I have many such tools but there is little enthusiasm for it.

One can guess why. Most PR consultants are owned by advertising agencies. Mono-cultural deserts. The Press Agentry people (typically working in a so called 'marcoms' environment) people do not want to know what is happening. It is not their job. Being part of the advertising industry press agentry, for the most part, is 'Scream Marketing'. Why count the number of people you made deaf?

The most that this kind of activity needs is a measure called thud factor (weight of press clips).

We do find excellent research among some in-house teams and it is there where the best evaluation has been done. What we need is much more of that kind work and we need a vehicle by which best practice can be discussed among practitioners.

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Stakeholder mapping

From time to time, I have mentioned stakeholder mapping as the means by which practitioners can benchmark the relationships their organisations can establish the communities that influence them.

One methodology that Dr Jon White and I have used for some time is now used by quite a large group of practitioners and academics who can be described as the Clarity Movement.

In essence this group of consultants and educationalists use an approach based on a concept developed in the 1990's. It is one approach to identifying the value of relationships.

In its simplest form almost any practitioner can use the concept.

The primary approach is to identify a stakeholder group and ascribe notional values to its relationship with an organisation. Such notional values are: Importance, Influence and Attitude.

For example a stakeholder group such as 'employees' may have a notional value of 60% important; 70% influential and + 75% attitude towards the organisation.

The next part of the process is to identify a second stakeholder group and attribute a notional value relative to the first group.

For example, a stakeholder group such as 'customers' may have a notional value greater than 'employees' in importance, say 65%; of lesser influential value at say 60% with lesser value of attitude (but never-the-less positive) attitude of + 60% attitude towards the organisation.

The process can be continued for as many stakeholder groups as necessary (examples might include: vendors, investors, regulators, competitors, local community, professional associations and so forth).

Both the list of stakeholders and the values attributed to them are nominated by the person or people who are creating the benchmarks.

As the process continues, there will be adjustments made to prior assumptions until an agreed range of stakeholders and their relative values has been created.

For best results this activity is undertaken using the expertise inherent in an organisation with an experienced moderator and the most powerful methodologies for gaining these insights will use approached such as visualisation help such groups make collective and collectively agreed decisions.

For many practitioners, this kind of approach is helpful as an aid to explain the role of public relations for organisations. Used in a group of senior mangers (and an Executive Board is ideal), it shows the range of influences and pressures that are significant to the organisation and it also identifies the relative significance of publics, stakeholders or social groups to the organisation (like this example).

Applications are not limited to organisations and this kind of mapping is very well suited to identify and benchmark stakeholder that are significant for the management of issues.

There are refinements to this approach. The first is that it is possible to project forward from an initial benchmark to set relationship objectives for the future and, of course, to identify and evaluate effectiveness of activity since a previously established benchmark.

After many years of using this approach, I think its greatest significance is that it shows just how wide the practice of public relations is and the breadth of responsibility that rests on the shoulders of those with Public Relations responsibilities.

Picture: Map of the World Mappa Mundi

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Friday, May 05, 2006

On-line evaluation - its here now

For a long time we have been waiting to find exactly how powerful media coverage is when it goes online.

Wait no more.

CyberAlert is now providing a powerful range of media analysis tool for on-line content.

It covers content in newspapers web sites, blogs and Usenet

Called ClipMetrix, the service offers a wide range of measurement and evaluation tools for media relations experts.

The programme automatically generates a wide array of charts and graphs displaying data delivered with online news clips from CyberAlert.

The ClipMetrics service can automatically and instantly generate the following charts and graphs for any time period you choose:

Coverage



The ClipMetrics tools also enable you to easily assess and measure articles for the following parameters:

  • Tone of article (positive, somewhat positive, balanced, somewhat negative, negative)

  • Type of article (news, editorial, review, round-up, feature, analysis, other)

  • Prominence of your company or brand in the article (headline, photo, top 20%, bottom 80%)

  • Dominance of your company or brand in the article (exclusive, dominant, average, minor)

  • Incidence of your key messages in the article (1, 2, 3, more)

  • Spokesperson quoted (yes, no)

    ....and more.



After you assess your clips for tone, prominence, dominance and key messages, ClipMetrics automatically generates the following measures/graphs, in addition to all of the above:

Tone

Dominance

Prominence

Key Messages

Type Of Story

Spokesperson



If your CyberAlert news monitoring service also delivers articles about your competitors and you opt for the competitive measurement option, ClipMetrics also measures, in addition to the above charts:

Coverage



And if you monitor the news for competitor's key words (company name, brands), ClipMetrics generates the following measures after you assess the competitor's articles for tone, etc.

Tone

Prominence

Dominance

Story Type

Media Type

Messages

Spokespersons




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Friday, April 28, 2006

The Value of Public Relations

On Drews Blog Dennis Howlett sugested that “The BBC has probably the richest source of media assets anywhere on the planet. Anyone want to put a price on it? Try this - Time Warner is worth $78 billion - what say you for the BBC? $200 billion?"

Well, I am not going to argue price. What I am going to argue is value of the relationships that the BBC has among its many stakeholders.

These have made the Corporation. Without these relationships the BBC would be worth the value of its properties (a few million I guess).

Nearly all its properties are intellectual properties and this where the value lies. It is the capability of relationships to lever value from IP.

So the value of relationships should be on the balance sheet – right?

Relationship management should be an investment to create and sustain the value of its IP – right?

So it is not a cost and does not belong on P&L.

Ergo PR is not a cost at all, its an investment.

Hmmmmm.....

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Definitions in Public Relations

I am working on the value of public relations and need to work on definitions. So I thought I would blog them as they emerge from the studies.

Public Relations is that complex whole which creates cultural space for an organisation including knowledge, belief, art, morals, law, custom, and any other capabilities and habits acquired by man as a member of society to lever values for organisations though the creation of effective relationships.

Cognitive psychologists say that we carry a model or personal image of the world, relationships and other concepts around with us. We have several such models and apply the most relevant to the context of the moment (which I call a 'social frame').

As the senses provide information we adjust these perceptions to arrive at cognitive consistency, (and resolve cognitive dissonance).

From a PR perspective the role public relations plays is in identifying the tokens and values within cultures that have sufficient resonance with a person's perceptions (when they use their senses e.g. read something or hear something etc.) in context such that they pay attention.


The PR process then has to offer tokens and values in an appropriate social frame which adds the campaign 'messages' to the understanding or personal model of the recipients. When this is done in such a way that both the organisation and the recipients gain an added value or understanding, the PR campaign will have been effective.

In this way, the nature of public relations creates an understanding in the mind of publics that is new but of the model or personal image of the world, relationships and other concepts around by the target public. This is new 'cultural space'. Examples such as big brands, political movements and religions are the mega stars of this concept but it works just as well for small organisations too.

Both parties will have a new understanding and new values. On the one hand the organisation will have gained an empathetic understanding and relationship with the recipients (publics) values and the recipients will better understand the organisation and messages.

Picture: Andes Web Ring

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The Voice of Our Education

Can Public Relations practice keep up with the vast amount information that is changing their lived. In the hurleyburly of everyday work there is so much to find out. perhaps there is a case for just looking at the fundamentals such as those provided by Vin Crosbie's post 'What is New Media'. It puts communication in a framework that we can all understand. It contextualises the role of 'media relations and it will broaden the minds of practitioners. In addition, Danah Boyd's article on culture is significant for people who are at work in advising clients (and students) on relationship management.

Alternatively, should we be more pragmatic and deal with those intermediate concerns about rules of engagement. In general, two 'New Media' Guides are relevant to PR practitioners. They are American and so the legal standing is not the same as for other legal jurisdictions but the principles are very similar. The new Podcasting Legal Guide Wiki is important for podcasting practitioners and is a a companion to the Legal Guide for Bloggers, a collection of blogger-specific FAQs. Or should we spend time on old and new strategies and competencies to be able to use a blog or wiki. The latter are both about the use of tools and an ability to try out, evaluate and deploy tools as they emerge or become popular. A must for every practitioner. But they need to be deployed within a cultural and legal framework and in the even wider context of our own humanity. Even in the latter, there are new discoveries. Where do we aim continuous Professional Development?


Picture: Beach Essentials
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Thursday, April 27, 2006

Clash of cultures

Keira Knightley has topped the FHM poll of the world's 100 Sexiest Women reports ITV. But its Becky Rule who adorns FHM's web site.

But I guess, the Oscar nominated English rose is not quite the style for FHM. But she is named today as the new face of Chanel's Coco Mademoiselle perfume. The choice fits with Chanel's style of classic refined beauty.

Cultures are so important especially for actors and FHM and Chanel.

But here is how to find the top ten:

1. Keira Knightley

2. Keeley Hazel

3. Scarlett Johansson

4. Angelina Jolie

5. Kelly Brook

6. Cheryl Tweedy ( a site with amazing pop-ups)

7. Beyonce Knowles

8. Evangeline Lilly

9. Jessica Alba

10. Jessica Simpson

Picture: BBC

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Answering the Critics

In the PR industry (practitioners and academics) there is a doubt about the importance of New Media. It is like a layer of communication and relationships that lies over the PR domian.

There is an argument that blogging is most of all for people who want to express themselves. Just don't belive it. The empirical evidence in The Learning Organization Volume 12 Number 5 2005 pp. 418-435 is provided by Tim Finin, Li Ding, Lina Zhou and Anupam Joshi they show it is a social network.

“Friend of a Friend” (FOAF) datasets were analysed to discover how FOAF is being used and investigate the kinds of social networks found on the web. They found that the FOAF ontology is the most widely used domain ontology on the semantic web.

I then hear people ask if blog and wiki and IM and chat conversations are 'real'.

The extent to which 'conversation / dialogue as we understand that in real life situations' are akin to Blogs is a red herring.

There are differences which are of the sort that were identified between face to face conversations and telephone conversations in research done in the USA (I think during the 1930's – but my memory fades).

But there is lots of evidence that such 'conversations are real and are real life'. Standage notes that ‘despite the apparently impersonal nature of communicating by wire, (the telegraph) was in fact an extremely subtle and intimate means of communication’ (Standage, T. 1998 The Victorian Internet. London: Phoenix Books. p. 123).

Certainly modern Neuro-scientists can identify the extent to which physical presence has effects and they are significant (Quarts and Senowski 2002 Liars, Lovers and Heroes pp 183 HarperCollins) but so too are other communication stimuli.

Such conversations are different and have different characteristics. This is not an unusual state of affairs. An example is provided about other modern forms of communication such as SMS by the BBC. In addition as more and more organisations use Instant Messaging (and here is a good one for group conversations), the critics had better hang on to their hats as IM goes mobile. The reason IM is so significant is that big companies are integrating phone, and messaging to save costs. Its the next big thing in corporate communication technology and a communication channel that we need to understand.

These are real conversations.

There is also the issue of difference in useage which is covered in the UNESCO paper Measuring Linguistic Diversity on the Internet, A collection of papers by: John Paolillo,Daniel Pimienta,
Daniel Prado,et al. (http://www.unesco.org/wsis).

Then, I understand, we seek to find out under what conditions weblogs create social action, more than just comments of individuals. I can report that there is research (so far unpublished) and evidence as to the extent that coverage in newspapers provokes effects in blogs (one kind of inter media behavioural cause and effect). There is evidence that Blogs do affect consumer behaviour. In addition, the influence seems to be significant.

There is also a lot of empirical evidence from the old fashioned telegraph, peer to peer radio, Morse Code, Usenet, SMS and so as which shows such effects. As Sherman notes (2001), it is a little too early to say whether the Internet is amplifying or transformative, but ‘As history has illustrated, it is wise to remain open to all possibilities’ (p. 68. See also Joinson, A.N. (2003). Understanding the Psychology of Internet Behaviour: Virtual Worlds, Real Lives. Basingstoke: Palgrave Macmillan).

Were this the level of consideration relevant to PR practice it would be significant but other things are happening. The next big thing on the web is computers learning to "reason", as the long march to artificial intelligence begins in earnest. Tim Berners-Lee, the man behind the world wide web, says the "semantic web" is learning to do it and is reshaping society.

Then there is the extent to which people are active online. The ratio between active participants and lurkers. Less than 5% of people use the interactivity available according to Mon Tsang CEO and Founder of Boxxet and Chairman and Founder of Biz360.

.
I have some experience of this. The news service has a very powerful editing and archive capability which no one uses. They are just recipients of news.

These are just a few reasons why the PR industry needs to be active in New Media.

There is more to come.

Picture: Sky on Sky

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Wednesday, April 26, 2006

Evaluation for PR

Yesterday I comment today on Don Bartholomew's blog about the CPRS MRP system. I expressed a range of doubts and David Jones one of the committee members (and an active blogger) came straight back at me offering me a test drive of the system to try for myself and provide some feedback. I paraphrase his very civilised and interesting comments: 'The Canadian Public Relations Society has created a tool to provide PR practitioners in Canada with a way to evaluate the media coverage they are generating. It is a simple tool that attempts to provide a measure of total readership, listenership and viewership using uniform data. They are also attempting to give PR folks the ability to evaluate how effectively the coverage is getting their messages out.

'This tool does not measure outcome. It is a simple, stripped down tool to allow practitioners to provide their clients and/or bosses with a media coverage report that also gives a snapshot of how effective they have been at reaching their publicity goals. They want to keep working as a committee beyond this tool to continue to engage discussion about measurement on a larger scale through their blog and through interaction with leading thinkers like Don, Katie Paine and others.

"Contrary to Don's post," says David, "we don't use multipliers (we use audited data from third-party suppliers) and we don't use ad equivalencies. There is still work to be done in developing a cost-effective and meaningful way to measure PR outcomes, but this media coverage measurement tool has been an important first step for us and we are keen to hear what you think."

I am both chastened and enlightened and will be taking up his offer.

I thought that this was a good moment to put my current views forward:

The whole area of media out-takes is now much more confusing than it was. I am not convinced that print or radio or TV can be evaluated in isolation. And I am very wary of output being substituted for outcome which I feel is a great danger.

There is a place for viewing print specifically but as part of a relationship using many channels.

I think we have to be clear what we mean by evaluation and offer:

“It has application in the formative analysis for setting strategy, objectives and planning; it confirms best application of resource; it aids control of the strategic and tactical public relations programme; it is a continuous and integral part of the total PR programme to inform the practitioner as to whether PR activity is optimised for success and it has application in the final review of efficacy.”

The issue we face is, in a disintermediating world, can we identify the the drivers of organisations and the influences and influencers affecting them. At that point we may be able to usefully identify the channels that affect relationships and the content that makes them affective. Such thinking follows on from a paper I presented last year and which is published this month. This would suggest that in a multi cultural and multi media world we have to deal with evaluation of individual channels and the combined effect of all channels. Print, radio and TV being three individual channels. Print will always have a place. But how long it remains a primary channel is open to question.

The evolution of media is making the whole area most interesting.

As I have commented before: Muti-tasking is growing fast. The number of touchpoint for the Big Brother programme now combines a primary touch of TV, iTV, Web and SMS with secondary touch of newspapers, magazines, land and cellular telephony, email, discussion lists/Blogs and interpersonal communication.

The feature of this form of communication is that there are three types of consumer inter-reactions. These are: a primary touchpoint (TV); plus secondary (iTV, Web and SMS) and tertiary (newspapers, magazines, land and cellular telephony, email, discussion lists, Blogs, Wiki's events, posters and interpersonal communication). Any of these channels can be primary, secondary or tertiary and in any combination for different forms of communication. The most successful PR and marketing programmes will use this breadth of contact points and each offers a different experience.

To make this even more interesting, we now need to research inter-media responses (e.g. print to blog etc) to see what can be developed by way of interpretive behaviour evaluation. Some of the early findings look promising and others not. I note that marketers are suggesting that blogs provide consumer intelligence and I now know that this is far from proven. It is not as simple as the painting-by-numbers brigade would have us believe but it is beginning to show that some content provokes behaviours showing that some articles are read and absorbed and acted upon.

Picture: The News is not in the newspapers
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Tuesday, April 25, 2006

In my Carphone Warehouse PR disaster experiment


In my Carphone Warehouse PR disaster experiment, I set up a search in google blog search at 11:29 on 25th April there were three references` to carephone in the previous 24 hours.

In Technoratti this search was used at the same time

There were no citation for the previous 24 hours.

In Blogpulse, I used this search which gave rise to the above graph.

If this story has legs (and 40,000 web site hits per minute and progression of cock-ups should evoke some response), then we will see how effective the 'long tail' really is.

This blog only gets about 32 visits per day so it really is a' long tail' blog.
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The Carphone Warehouse a PR disaster

Jupiter Research has come out with yet another scare report about how bloggers can damage your brand.

Of course this is a load of baloney. You can damage your brand and bloggers can egg you on but bloggers won't damage your brand.

In fact, it takes a lot to really damage a brand on-line. The number of companies forced out of business by Internet comment in the last 20 years is remarkably few. The threat of brand criticism for a reasonably ethically run corporation is marginal.

Julian Smith, JupiterResearch Analyst and lead author of the report, said: “Marketers need to identify key contributors, using buzz monitoring tools and techniques, and map out the network through which conversations spread. Profiling and pinpointing marketplace influencers enables marketers to move beyond a mass-audience monologue approach toward a comparatively more engaging and potentially powerful targeted-audience dialogue approach.”

Who is a 'key contributor'? In a network environment the long tail is just as important. By the time the 'key contributor' has the story (and I am guessing that he is thinking of so called 'A List' bloggers etc.), the story is half way to the Antennae galaxies as well.

Why marketers? How is the painting by numbers brigade going to understand the nature of a network? What do they know of conversations?

Two way symmetrical communication is no place for marketers.

Most brand criticism on-line is part of a conversation.

For example, I am very hacked off with Onetel at present. Last Thursday my browser stopped working at about 9:30 pm and I spent hours trying to find out which setting I had upset at the end of a long working day. By Friday, I had worked out that it was not me (Skype worked ok) and re-set all my settings. A succession of phone calls to Onetel made sure there was nothing at my end that could be done and it was just down to their engineers finishing a cup of coffee and plugging the servers back in. This they did on Monday afternoon. For me, this was a disaster. I lost two days of being on-line. I expect to get some recompense for the problem.

Now that was not so bad was it?

Onetel is not dead yet. Lets stir it up a bit more.

Onetel is owned by Carphone Warehouse .

The Carphone warehouse PR company is Freud Communications has a glitch with its web site today – a natural disaster for a communications company.

OneTel has a and sister company TalkTalk who, by a strange co-incidence also has had its web site up and down like a clown's pyjamas because it can't cope with the traffic its marketing campaign.

Now, the both Onetel and TalkTalk take an age to answer the phone and contacting their press office takes a very long time.

So.... I called Freud Communications (who look after consummer work) to ask them what was going on with the Carphone Warehouse companies. They are looking into it (but certainly not at blog speed).

At 10:26 on Tuesday the 25th March, Carephone Warehouse had an answering machine asking me to call Michelle Parrish because she handles 'out of hours' calls.

At Citigate Dewe Rogerson, who handle the TalkTalk's Public Relations, Mark, a spokesman for Carphone Warehouse, (yes I was confused too), told me that it was unfortunate but last week they were getting 40,000 enquiries per minute and so on occasion the server has fallen over.

Apparently they did anticipate interest but enquiries are at upper end of expectations. They 'have enough people to handle enquiries', Mark said, 'but but not the technology to cope. Carphone Warehouse cannot get enough servers to run the web site.” This debacle can be reduced to talking to the sheep in Animal Farm “People good, communicating with them bad”.

Carphone Warehouse had a turnover of £2,555,100,000 to the year April 2 and profits of £102,100,000 which is amazing when they have such a problem with computers.

“Organisations ignoring community based influencers face the danger of small-scale disgruntlement being exposed to a mass audience, resulting in a disproportionately large-scale public relations problem that can directly affect their bottom-line,” added Julian Smith to his Jupiter Research column.

Well, lets find out.

If this story get round the bloggersphere we will be interested in the 'damage' it really does.

My guess is not much.

Picture: Carphone Warehouse






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Monday, April 24, 2006

The education of PR students

This is a simple question. What should the academic institutions offer to aid the Public Relations industry including undergraduate and post graduate as well as practitioner students when it comes to new media?

The Department of communications and journalism at Auburn University is a great enterprise and Philip Young at Sunderland has a considerable capability.

They are teaching skill sets that anyone who is going to be serious in communication needs to know.

But for a university, teaching skills is one thing, teaching the principle is a completely different.

The skills will come and go. Usenet is unheard of today in the post blogging era and the discussion about the demise of email\last week was a similar pointer.

To help practitioners today and tomorrow, we have to look ahead to see what underlies these drivers in communication and technologies.

Do we teach the technicalities, the components of HTML, XML and the finer points of how RSS works?

Should we focus on the the convergence of new communications tools and their relevance to communication or relationship building?

Transparency is changing the way organisations conduct business. It is profoundly changing management practices. The mashup of management demands active involvement to embrace the human forcefields of change. Should we cover such new fundamentals in the academies?

Alternatively, is the role of academia to point to the effects of these new and many channels for communication as they change the way people and organisations interact; how this changes the public and private institutions. Do we demonstrate the immense impact this is having and will continue to have as widespread, multi-channel global and always on ICT changes the international economy and its cultures.

Compare this decade with the 1990's. The web was new, email was new, Windows operating system was new and cell phones, blogs, wikis, VoIP and MP3 have now all arrived. Nearly all of them were not in common use even ten years ago. The young professional of 2010-19 will need skills in use an application of so many channels for communication. Some available now, many available in the future.

But, compared to the last decade, will practitioner need to be able to make sense of the revolution more than making the tools work? And if we do, is the commercial world, the public sector or the culture we bring these ideas to, able to cope with such concepts?.

And, as a parting shot – how should it all be taught?


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Thursday, April 20, 2006

Disintermediation demands a new relationship management framework

What is the big common issue for car manufacturers, TV stations, retail groups, recording studios, salesmen and banks?

It is the word disintermediation.

I would also add a new and emerging framework for relationship management. We now have to think about this Brave New World.

The anticipated closure of the Peugeot car manufacturing plant at Ryton near Coventry is indicative of the disintermediation of Intellectual Property assets and physical assets. The proposals that are on the table suggest that it will be more cost effective for Peugeot to build a new factory on a 'greenfield' site to manufacture its new car models.

The actual factory and machines have a money value based on either their value in an open market or the discounted cost of the original purchase cost.

The value of the processes involved in the manufacture of components and the assembly of cars is not so easily valued in money terms. Neither is the value of the inter-personal internal relationships and the relationships with other publics like customers, suppliers, local government and institutions.
Some of these intangibles (procedural knowledge) can be relatively easily transferred in the form of instruction books and computer programmes but others, such as relationships with employees take time and the responsiveness of the whole enterprise to customer demand is even more difficult to re-create and therefore value.

What is common between all the assets is that their value is only accessible through relationships. This is not as easy to see when dealing with tangible assets (relationships with machines is irrelevant but training operators to use the machines dependant on relationships). As a result the relationship cost of transferring is seldom included in the cost of re-building a factory at another locations. However, being able to transfer so much Intellectual Property and its dis intermediation from the physical factory is very important.

As for a car factory so to for a bank.

The Economist has taken a good look at the International Monetary Fund and has found that it too is being disintermedaited.

It says: “Apart from generating reams of analysis, the fund's job is to furnish foreign exchange to countries that have temporarily run short. It can call on about $220 billion of hard currency in the first instance. That sounds like plenty. But some of its former customers now have big, shiny fire-engines of their own. These countries have even begun to pool a small fraction of their combined hoard, under what is called the Chiang Mai Initiative. The build-up in reserves reflects a lasting anxiety about financial markets, but also a lingering distrust of the IMF.“For all its mystique, the fund is at bottom just a financial middleman, as Michael Dooley, of the University of California, Santa Cruz, has pointed out. As such, it is always hemmed in by the threat of disintermediation. Countries such as Japan, China and South Korea can either lend to their neighbours through the fund, or they can bypass it and lend to their neighbours directly. Giving Asian countries a greater stake in the fund would encourage them to make use of it."

So we can see big banks having to worry about relationships because they threaten to force disinternedation at a pace that may be uncomfortable.

But what of sources of Capital?

It may seem to be a strange place for commercial banks to find comment about its competitors but Silicon.com made the point quite clearly this week.

Zopa is making waves. Put simply, it is a web-based borrowing and lending exchange that is seeking to do to away with bank managers. It will disintermediate them.Behind Zopa are some of the people who launched Egg, the Internet bank. This is how the idea is described in the article:

“The idea is that you get credit scored (they use Equifax) and then - if you are a lender - put in an offer to lend a certain amount, over a certain time, at a certain rate. There is then a 'buyers market' - people looking to borrow money, and those with a lower credit rating go down the path of borrowing at a higher rate.”

The job of the relationship manager in creating trust and developing relationships with lenders, borrowers (not to mention regulatore and a host of other publics) should not be underestimated. These are good times for communications and relationship management experts.

But what of other industries? Television can't be disintermediated surely?

I picked this up from Rocky Mountain News this week.

“ABC announced last week that as of May 1, the network will make four of its hit shows available free on its Web site. The entry of the women of Wisteria Lane into cyberspace comes after CBS had unexpected success with Internet broadcasts of the NCAA men's basketball tournament - with more than 5 million viewers - and Time Warner launched in2TV, which streams vintage TV shows such as Growing Pains and Welcome Back, Kotter. At the cable industry's convention in Atlanta last week, much of the talk swirled around a fancy term, disintermediation - which basically means the fear that customers might decide eventually to drop their cable service and just watch TV on the Internet instead.”

Keeping audiences means being part of the New Communications revolution.

And shops?

GUS chief executive John Peace is talking about disintermediation. Says the Daily Mail. "Cutting out the middleman," he explains, sounding out every word like a patient schoolteacher, after realising ordinary people do not use such language. He is describing why the next wave of Internet ventures is likely to be more successful than the bubble stocks of the 1990s.

His interest in the property portfolios of retailers and their home in the hight street weighs heavily as does the need to maintain value added as all around GUS is disintermediating.

Greg Lindon notes that even the disintermediators like eBay are threatened by disintermediation.

Meanwhile and mainly in the US, says the Guardian, there has been an explosion of activity related to people making their own videos (with digital cameras or even camera phones) and uploading them, at no cost, to any of dozens of new websites. The biggest of them, YouTube.com claims that 30m user-created videos are viewed every day. They vary from the banal to the unexpected as people let others see them making music, reading diaries, snapping celebrities, doing citizens' journalism or putting up five-minute films, often in serial form. This follows the big success of Flickr.com, enabling photographs to be shared globally, and MySpace.com (now thought to have been purchased cheaply by Rupert Murdoch at $580m) in enabling millions of youngsters around the world to communicate about anything and create music. Both websites have spawned imitators including Faceparty.com, with a claimed 6 million members, and Bebo.com to which up to 4.5 million people in Britain have joined since its launch last year. Yet another one, started by Harvard drop-outs, is providing similar social networking to universities.This should not blind anyone to the astonishing world-wide phenomenon that is taking place in which anyone can communicate with another like-minded soul and consumers have suddenly been enabled to become producers. It is possible there will be a disintermediation of entertainment in which a new generation of people who write books, make films, music, poems, art or whatever can publish - or sell - their output directly to people who want it. This prospect has been opened by the expansion of broadband and the plumetting cost of data storage (enabling the websites to store almost unlimited videos and films without charging). Technology and creativity are marching hand in hand.

David Reynolds adds:

The personal computer and the Internet have largely eliminated the need for distribution through CDs and retail outlets. Users aren't buying entire discs full of crap music but instead are buying Brittany's sole decent song and mixing it in with other music.

Now, artists can set up a remarkably capable home studio for less than one day in a commercial studio with comparable quality and they get to own the equipment instead of merely rent it.Consider the process of buying a car. Not too long ago, the buyer walked into a show room and was at a severe disadvantage to the salesman. Now, buyers are more prepared to go head to head with a sales rep. Buyers know what the markup is, they can research specific option packages and the dealer cost of those packages. Buyers can have access to the back end rebates available to dealers. In short, buyers now have information parity with sales reps.

One sees here a need for considerable understanding of relationship building and communication is the promise it to be fulfilled in trusting relationships.

The Public Relations industry has a long way to go to grasp this nettle and opportunity.

It is a big challenge when coming from so far behind.

Picture: Brave New World

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Tuesday, April 18, 2006

The next big wave

The Big Blog Company has a great post and link back to the FT.

The FT quote says: The next wave in office productivity, represented by wikis (editable websites), blogs and other social networking technologies, is here. Experts say these tools will transform the way work is done by encouraging new types of collaboration.

The point being that these tools are handy.

But they have an inherent danger. They change not just the communication capabilities of people, they change the structure of organisations and the offer a new critical path. The capability to examine decisions and the methods derived to come to such decision is open to scrutiny. In addition the professionalism, even the relevance of the management practices involved in achieving outcomes are open to closer scrutiny.

The knowledge and relevance of process, an intangible asset, is now in flux. The ideas and patents lying around (and also assets that can be put on a balance sheet) become liabilities as employees devote more attention to their exploitation. Customers and customer relationships (also part of goodwill on the balance sheet) move from corporate assets to personal relationship assets.

The consequences are pretty profound and go on and on.

Nice article for the FT, a bit shallow and touching only on the immediately obvious.

Down the road is a much bigger story – how new media restructured the companies.

Picture: The Horses Mouth

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Friday, April 14, 2006

This post is about how Public Relations strenghtens the Ballance Sheet and increases profits using Stakeholder Relationship Management.

This is a cross post from the blog Stakeholder Relationship Management. Where companies can reduce costs, the effect on the bottom line is dramatic. A example provided by Mike Arenth, Cara Dunaway and Carrie Ericson in Supply and Demand Chain offers and example.

But, as we all know it is not as easy as that and this post examines how The Clarity Concept is more effective.

The working hypothises is asks: How do you increase profits by 50%? The first model is based on screwing the supplier:




In addition, it is a narrow and short sighted view. The impact of such strategies can be disastrous and to look at external costs in isolation is myopic.
If we model the stakeholders of an organisation with the objective of optimising the bottom line, the model looks very different. The objective of increasing profits by, say, 50% is a simple model and the numbers are easy based on profits of 5%.
If one draws a pretty standard stakeholder map and evaluate the stakeholders for three elements: Importance, Influence and Attitude, the model might look like this:


This is interpreted statistically, using the metrics that come from this kind of modelling and produces statistics like these:


Now, if one reduces vendor costs a number of stakeholder changes take place:


The remaining vendors become more important but the company looses some of the goodwill. At the same time, there will be a marginal shift among employees and customers and the stockholders show volatility.


What is noticeable is that a small shift in vendor relations has a ripple effect on other stakeholders.


Attitude difference:
Stockholders +15 (have an interest in higher yields)
Customers - 3
Employees 0
Vendors -18 (have squeezed margins)
Banks 0
Community 0
Competitors 0


Importance difference:
Stockholders 0
Customers 0
Employees 0
Vendors +15 (Fear of loosing vendors – have to be nurtured)
Banks 0
Community 0
Competitors 0


Influence difference:
Stockholders +20 (putting pressure on to get higher dividends)
Customers 0
Employees 0
Vendors +17 (Now can change the contracts with less loss)
Banks 0
Community 0
Competitors 0

The company has not grown, it has not become more competitive but it has created a stakeholder relationship issues and made itself vulnerable.


The objective for the organisation was to:


  • Either reduce vendor cost by 5%

  • Increase sales by 20% or

  • Cut overhead (usually meaning employee costs) by 20%


The company has not grown, it has not become more competitive but it has created a stakeholder relationship issues and made itself vulnerable.


The objective for the organisation was to increase profitability by %50.


The options available were:


  • Either reduce vendor cost by 5%
  • Increase sales by 20% or
  • Cut overhead (usually meaning employee costs) by 20%


and the chosen route was squeeze vendors and we have see what effect that can have.


This gives us a clue as to how effective stakeholder management can be deployed to increase profitability (not to be confused with ROI).


In this instance we view stakeholders as an asset. Some assets perform well and on all three counts while others do not. This thinking is covered more extensively in the Blog Leverwealth.


We have a set of values for each stakeholder group and need to look at each one to find out where each one can make contributions.


Thus for example if we increase the attitude of the employees can we identify the a productivity gain and, if so, how much. A 5% productivity enhancement is equal to 1% increase in profits. If we increase the influence of employees will that improve communication and reduce cost of internal communication failure, training, recruitment? If we increase the relative importance of employees will that translate into lower staff turnover, enhanced performance of other stakeholders etc?


Such judgements have to be made and quantified for each of the stakeholder groups.


Even the stockholders win because they now have an added (relationship) asset on the balance sheet with no diminution of earnings. Equally a plan to improve relationship with competitors (joint ventures, IP exchange, joint production or distribution etc) will have returns on lowering cost and increasing efficiencies and even laying off some R&D costs.


Thus, as managers responsible for each stakeholder group carry responsibility for enhanced relationship to generate their proportion of profit enhancement, the company increases its value (balance sheet), increases profits and grows.


For each of the stakeholder groups, we seek an enhanced return. Our objectives for each stakeholder group will be

SMARTso that they can be measured and, using this approach, the outcomes are measurable too.


Such a strategy for each group will be designed to spread the return on relationship asset among all stakeholders and, in this case we can spread the load between them.


Because we have a statistical base we can set realistic stakeholder relationship objectives, enhance the value of such relationships (a goodwill asset). We shift the cost of relationship management from P&L to the balance sheet.


This then is a brief examination of how stakeholder relationship management makes companies more profitable. It is Based on The Clarity Concept of stakeholder management.

Using the Clarity approach is helpful for all manner of Stakeholder mapping, evaluation, measurement and evaluation. This includes such areas of interest

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