The economic logic of socialism? Some thoughts from my colleague, MacMillan
Mac sent me these thoughts on some of the fundamental contradictions of a purely socialist system. Interesting food for thought in an era where we've gone from "government is the problem" to "government has all the answers"....
1. You cannot legislate the poor into prosperity, by legislating the wealth out of prosperity.
2. What one person receives without working for, another person must work for without receiving.
3, The government cannot give to anybody anything that the government does not first take from somebody else.
4. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work, because somebody else is going to get what they work for, that my dear friend, is the beginning of the end of any nation.
5. You cannot multiply wealth by dividing it.
Share this article: 
Insightful observations for companies with crisis risk
MacMillan sent me this very insightful analysis of how companies such as BP should be prepared for the worst. It's by Merrie Spaeth, one of his former entrepreneurship students who has gone on to build a great career advising companies on strategic communications:
MORE LESSONS FROM BP’S OIL SPILL PART II
(As of June 21, 2010)
Time to Take Risks?
Given the scope of the crisis, we’re re-examining the lessons I first drafted, “Early Lessons From BP’s Oil Spill/May 19th,” compiled at the request of the Montreal chapter of IABC*. We are also adding two new areas,one of which should have been predictable and the other comes as an unpleasant surprise. All companies, particularly large global companies, need to focus on how the “new media” channels have changed crisis communication and how the Obama administration’s philosophy complicates the situation.
- Predictable: the trial lawyers have gone into shark feeding frenzy mode. This is bad for BP, and dangerous for the oil and gas industry and for business in general. (More below at the conclusion.)
- Unpleasantly surprising is the Obama administration’s willingness to say things like, “We’ll keep our boot on their neck” with the president himself saying he would have fired CEO Hayward. Boot? Is this Nazi Germany? Modern day Russia? Again, bad for BP, but also a horrible precedent for the rest of us. A few conservative political commentators have picked up on the danger here, but the business community is so terrified of looking as if wemight be excusing BP’s problems, everyone has gone into deep closet mode. (Also more below at the conclusion.)
Let’s review the lessons thus far.
On May 19th, we noted that it’s not enough to practice operational scenarios. You must practice communication scenarios. This continues to be true with the addition that coordination with government bodies and highly localized spokespersons need to be part of the thought process. The media combed the beaches looking for anyone with an official patch on their sleeve for a quote about the progress or lack of it. Residents of affected locales learned quickly to enlist media to show their own out-of-work boats, oil-covered birds, empty motels, etc. BP frantically got people on board at the national level but needed some way to develop a campaign-like network on the ground.
We also said, “Set expectations in the beginning that things will change.” We particularly noted that statistics take on a life of their own. This has also been a key storyline. The estimates of gallons spilled or collected by the pipeline finally connected to the damaged well and hooked up to the surface ship kept changing daily. The constantly changing numbers sparked a debate among experts, provided continual fodder for news and talk shows, and made BP look out of touch at best and duplicitous at worse.The debate over the “real number” – which, of course, cannot be exactly estimated – has produced constant bickering. BP should be saying, “We’ll have an accurate determination of the amount only after we have succeeded in first containing the affected well.”
We said, “BP got it right when it decided not to communicate via the usual “corporate” full-page ads,” but then BP decided to commit a reported $50 million to full-page ads featuring real employees describing their jobs and commitment to stop the flow, and clean up the affected areas. Predictably, critics, including the administration, roasted them for the expenditure. This is the time to take risks. The perception of being a “rich” company – buying ads – is dangerous. Instead, the company should be trying creative approaches, designing the ads or apps for iPhones and asking the public to pass them on, contributing a dime for every click. These are the techniques young people are embracing, where they can send a few dollars to a charity by texting a number.
We still think BP gets good marks by using social media, tweeting its efforts and enlisting hundreds of volunteers. However, this is another example where small missteps will be magnified. A parody twitter account, @BPGlobalPR, has been posting tweets like, “Special on blackened shrimp.” When a spokesperson was asked about it, she said she was unfamiliar with it. This is hard to believe.
We noted that the company needed to be prepared for the media to pull out sound bites. We underestimated. This will be a case study. CEO Tony Hayward seemed determined to provide fodder for our BIMBO memo and other commentators. He announced, “I want my life back,” claimed that the underwater plumes didn’t exist, insisted that the amount of oil was only a teaspoon in a vast ocean and more. It’s clear that BP didn’t have any comprehensive model or philosophy of communication and that the CEO didn’t have a close, trusted advisor who could become his alter ego advising on communication. If any CEOs are still wondering if these are “soft skills,” here’s your answer. CAUTION: we see too many internal communication people who tell the boss what he wants to hear – “you were great” – rather than what he needs to hear. Note to CEOs: when your staff or your on-retainer PR firm tells you that you’re wonderful, get a second opinion. Note to chairman: get local (U.S.) eyeballs. The Rose Garden statement was actually wonderful but the phrase about caring about “small people” crowded out all the other comments.
We said, “Get training,” but without a clear methodology, what you’ve got is rehearsal, not an enabling framework. Mr. Hayward needed to sound conversational, not rehearsed, and he did – brilliantly. But it was predictable that phrases that reflected badly would be amplified. High marks to BP’s U.S. Chief Operating Officer Doug Suttles. In his interviews, he came across as committed, knowledgeable, concerned and determined. He was “authentic,” the buzz word today, and didn’t rise to snide remarks. Risk time? Let him blog about what’s going on and what it means to him. We’re betting that he’ll develop a large and appreciative following.After following blogs, it looks to us as if BP has tried to encourage participation from experts. The extent of the debate in all forms of media has been remarkable.
We said, “Ask yourselves what will the media, regulators and others find – and what will they think of it – if a disaster or problem occurs.” Media and others have looked through every public report to find every criticism, violation or sloppy report (like the one cited last time about preparing to help “walruses” in the Gulf.) This should have included looking ahead to scheduled events like a vote on the company’s dividend. They again let the politicos get ahead of them. BP should have anticipated that and located sympathetic individuals whose retirement income depends on BP. We were also initially thinking of safety plans which would be filed with public agencies, but we should have added material disclosed during litigation. A lawyer sifted through documents from the 2005 refinery explosion and found emails from the head of PR suggesting that the publicity would quickly die down over the coming holiday weekend because of the controversy over Terry Schiavo, the brain damaged Floridawoman whose parents and ex-husband were fighting bitterly over whether to end her life. We guarantee there are other time bombs which will make BP look duplicitous or unconcerned about safety. Find them before they get handed to the reporter.
The most important “pre-crisis” lesson – we said, “Have ‘competitive video’ ready to go.”The images of oil slicks on top of the ocean, deep water plumes of dark matter (obviously oil), oil-soaked birds, beached fishing boats and other similar images dominated the news. “Competitive video” should have been ready to counter these predictable images. We’re hoping that other companies are asking, “What kind of processes can we film that show our regular commitment to safety, training or good stewardship?” Again, remember, they must be real. Minimize the production values, and keep them simple.
It’s time for the rest of us to step up. We can recognize BP’s mistakes, lack of preparation, failure to anticipate, etc. but we’d also better recognize BP’s importance and the danger of allowing the vengeance and vituperation to continue. BP has over 500 leases in the Gulf, most in deep water. It produces more than any other oil company. It’s about 11 percent of BP’s output and a significant amount of our supply. The administration’s decision to halt deep water drilling risks having the billion dollar rigs hauled off to the coasts of Africa or Brazil, costing the coastal states millions in lost jobs and revenue. Once these rigs are redeployed, it will take two years or longer to bring them back. The administration’s astonishing demand that BP be liable for the wages and revenues lost because of the moratorium they ordered should concern all of us. This is one of the most anti-business actions ever taken.
Recently, a government study was published examining our readiness for another 9/11-type event. The results were terrifying. We’re not ready at all. Yet, the government isn’t addressing this; it’s beating up on BP. Again, we in the corporate world don’t want to be perceived as excusing BP because we don’t want the public to think we take safety and environmental concerns lightly.
When the president of the United States indicates that he’ll shut down a whole industry, you’d better believe other companies and other industries take note, and they behave rationally. They go elsewhere.
Another issue, which is just as bad, but perhaps we can do something about, was described by shrimp company owner when he told a reporter, “The lawyers are the only ones who ever come out winners in situations like this.”Bloomberg Businessweek’s “Who wants to be a spillionaire?” should be required reading. This is the moment for all the groups who fought for tort reform, including all the state think tanks which have sprung up over the last decade, to rally around a proposal to create a special master to oversee the lawsuits. My nominee is former federal judge, FBI director and CIA director William Webster. Judge Webster has made a name for himself mediating high profile disputes and investigating complex international issues. If President Obama really wants to help those affected, he’ll support rationalizing the process rather than making trial lawyers rich.
If Republicans and moderate Democrats are afraid to seem sympathetic to BP, perhaps they can muster the gumption to be concerned about the people affected.
FINAL COMMENT: Now it is more important than ever to rethink and revamp your company’s approach to crisis communication. We urge you to carefully review these lessons from the BP crisis and stay diligent in your crisis preparation efforts.
*Ms. Spaeth prepared the original analysis for the Montreal Chapter of the International Association of Business Communicators annual “Big Cheese” seminar which invites an internationally recognized expert to share “best practices” and insights with the group. Ms. Spaeth’s seminar was titled, “Crisis Preparation in a YouTube Age.”
Tweet This!
Share this article:
- Posted Rita McGrath on June 21, 2010
- Trackback
- 2 Comments
Bad, bad, symbolism: BP CEO goes yachting
The symbolism of leadership is one of the most powerful elements of the job. But, somehow, we never seem to learn that every action taken by a CEO or other senior leader has what Don Hambrick (my former colleague at Columbia) used to call "symbolic fallout." The more senior you are, the more every move, action and decision is dissected for meaning, beyond the substance that the executive thought they were conveying.
The latest entry in the symbolic Chernobyl follies has got to be the decision by BP CEO Tony Hayward to attend a yachting event this past weekend. Coverage has been scathing, adding to mounting public fury over the ineffective response to the spill and in all likelihood making it far more difficult for Hayward to do his job. It is often this sort of symbolic mishap - remember AIG and the bonuses - that marks the beginning of the end for leaders.
It all supports what I often say in class - you don't have a choice not to be 'into' symbolism. It comes with the job. And symbolic fallout can sink a career just as readily as getting the substance of a decision wrong.
Tweet This!Share this article:
Indiana’s Mitch Daniels and the structure of incentives in government
Those of you who follow my blog know that I've long been concerned that the incentives for people that work in government tend to lead to perverse consequences. You get rewarded for having big budgets and lots of people to supervise. Cutting costs and making things more efficient is often rejected by the system. Doing things more productively, which is rewarded in the private sector, is not in the public one, by and large. Let me also include my usual disclaimer - I'm not anti-government at all and have a degree in public policy. It's just that the adverse incentive problem requires highly skilled political skill to overcome, and is not particularly well rewarded.
It was really encouraging, therefore, to read this article about Mitch Daniels of Indiana. Daniels, the article reported, has tied cash and other incentives to job growth and cost reduction. It reports that Indiana, which has 2% of the nation's population, has generated 7 percent of its new jobs. Among other things he's supported are outsourcing some services, getting a handle on labor costs, privatizing a toll road and, ironically, increasing the number of caseworkers who look after children at risk and increasing the number of troopers patrolling the roads.
One myth that many believe is that the private sector always does things better than the public sector. Research fails to support that idea. What is true, instead, is that the structure of incentives matter, and that all too often in the public sector they do not align with the public interest. This was pointed out in a very enlightening editorial in the Wall Street Journal that suggests some practices that could bring incentives into better alignment. Perhaps Governor Daniels gives us an additional practical example of how we might help government to become more efficient.
Tweet This!Share this article:
- Posted Rita McGrath on June 21, 2010
- Trackback
- Leave a comment
David Maister on the psychology of waiting
David Maister, whose work on professional services firms is legendary, has blogged about a study he did some years ago about waiting - specifically, what makes waiting more palatable. Among his observations are that people are happier with waiting when they know how long the delay are likely to be, and when they are informed as to the reason for the wait.
I can totally relate to that - some months ago, a doctor made us wait over 3 hours in a snowstorm with absolutely no information at all. We could at least have gone for a cup of coffee if we knew how long it was to be! It wasn't the ultimate factor in deciding not to return to that practice, but it sure didn't help.
Tweet This!Share this article:
- Posted Rita McGrath on June 21, 2010
- Trackback
- Leave a comment
