CEO Michael Dell on Dell: 

“I will care about what happens to the company even when I’m dead. I just can’t let it go.”  The Economist, May 3rd

Thought I should report on some analysis we did with Planet2050, Weber Shandwick’s corporate responsibility and sustainability arm led by my friend Brendan May. As you know, annual reports often begin with a Letter from the CEO and/or Chairman to company stakeholders. When it comes time to learning about companies, I always read the CEO Letter since it encapsulates what is on the minds of company leadership and the business environment overall. These Letters always contain some clue as to what might is important in terms of company priorities.

Since corporate responsibility is increasingly in the news, it seemed that we could determine how permanent corporate responsibility really was from reading Letters to Shareholders. It would be interesting to discover whether the world’s largest company CEOs were acknowledging corporate responsibility initiatives now vs. several years ago. To just underscore the growing importance of sustainability in shaping corporate reputations today, think about this week’s announcement that KKR, the private equity leveraged buy-out firm, is teaming with Environmental Defense Fund to incorporate sustainability measures into its business operations and practices. This action is a continuation of KKR’s smart efforts to listen carefully to environmentalists as it did when it bought Texas utility TXU last year and reduced the number of coal-burning plants to minimize environmental harm.

Back to the Shareholder Letters, what did we find?

• Corporate responsibility mentions in CEO Letters to Shareholders increased 18 percent from 2003 to 2007.  I agree with Brendan when he said, “Clearly, CEOs in the second half of this decade have embraced corporate responsibility as a critical driver of business strategy and reputation-building.”
• Interestingly, broad environmental issues were the most frequently mentioned corporate responsibility initiatives mentioned back in 2003 CEO Letters to Shareholders. In 2007, energy efficiency and carbon emissions were the most common corporate responsibility agenda initiatives. Volunteerism, a topic featured in 2003 CEO annual report Letters, appeared less frequently in 2007.

When I used to review the findings from the Fortune Most Admired Companies survey a decade ago, I would be distressed that corporate responsibility was always the least important factor in driving corporate reputation.  Now we see that is permanently on the CEO agenda. That’s a good thing.

Loved the headline in this week’s Financial Times. I was flying back from Madrid on Wednesday, April 16th, and as I pulled my FT out of my bag, I saw the premier headline:

“UBS FACES THREE-YEAR FIGHT FOR REPUTATION”

UBS’ new chairman Peter Kurer is quoted as saying:

“We shouldn’t fool ourselves. We can’t pretend  that there has been no reputational damage. Experience says it goes away after two or three years.”

I wish Mr. Kurer had called me. I could have told him that research found that it takes approximately 3.5 years to recover a damaged reputation. So he was close. Perhaps I should send him my book.

I think it is nice to see CEOs and companies have a sense of humor. Part of building a CEO reputation is knowing how to leave a legacy, the last part of CEO tenure.

So if you have a few moments, take a look at Microsofts’ founder and chairman Bill Gates’ last day video (he is off to the Bill & Melinda Gates Foundation full-time). It is on YouTube and it will make you laugh. Nothing wrong with that.

http://www.youtube.com/watch?v=HEWMC4usElM

Have been saving this quote for my blog. Remember Jean-Marie Messier of Vivendi Universal fame. He lost his CEO-ship when the company found itself $35 billion in debt in 2002. He is now the head of an acquisitions advisory in New York, Messier Partners. The former CEO has had a comeback and once again we see that people can restore their reputations, including damaged CEOs. Messier is quoted in Time (3.24.08) as saying:

“The U.S. is the country of the second chance–where there isn’t so much jealousy, and if you’ve had problems that you try to rebound from, everyone will applaud and will try to help.”

Interestingly, despite all the negative press and approval ratings chatter about French President Nicolas Sarkozy’s reputation, Messier is quoted as saying that Sarkozy is the one politico who still met with him after his ouster. I thought that this type of behavior speaks to a good character trait in the Sarkozy profiling.

Quote of the Day:

“We spend a lot of time teaching leaders what to do. We don’t spend enough time teaching leaders what to stop. Half the leaders I have met don’t need to learn what to do. They need to learn what to stop.” 

Peter Drucker

Seems like everyone knows that Starbucks shut its U.S. stores last night for several hours to retrain employees/barristers. Even my college-aged son e-mailed me to make sure I knew. The news traveled far and wide. One of the reasons I have been following the Starbucks Saga is that it’s a casebook study of reputation recovery and redemption. The CEO and founder returns as savior and instills a sense of urgency with a shot of humility. In my new book on reputation recovery, CEO Schultz is a text book case for following one of my recommended steps (Step #4) — Resetting the Company Clock. As I write in chapter four,

Instilling a sense of urgency often requires getting the senior team to focus more on what has to happen next and less on what went wrong in the first place. Internal politics and finger pointing distracts leadership from attending to those critical moments when moving toward recovery is essential. Wallowing in regret and recriminations is simply not helpful and keeps the company from moving forward. Even if the company is not frozen in time by recent calamities, business as usual is unacceptable. The pace of getting things done has to be accelerated. A good solution is shock therapy in the form of an overwhelmingly heavy dose of undeniable reality. One CEO, for example, summoned his senior team and displayed charts of its rapidly falling market share. To stun the team further into accepting the facts, he showed slides of competitors with quotes mocking the company. The shock value alone accelerated the team’s drive to rescue the company from their downward spiral.

By shutting down the stores and getting employees to focus on what the chain’s core competency used to be and now needs to be going forward, the CEO has essentially built a burning platform — acknowledge the flames of doom or else we all die. Return Starbucks back to what it once was or else lose out to complacency and sameness. Indeed, all the publicity surrounding the store closings for Expresso Excellence training dramatically underscores that Schultz means business. As someone said in my local Park Slope blog wrote, let’s see how the coffee tastes this morning on Seventh Avenue. To test Starbucks’ sincerity, I went to the Starbucks’ web site to see how they were communicating –if at all – their return to their roots and rebuilding trust. Right there on the home page are links to Schultz’s transformation agenda. Nos. 7 and 8 are clearly posted and I found these words in Communications #8 about last night’s training.

Tomorrow evening, we will come together in an unprecedented event in our company’s storied history.  We will close all of our U.S. company-operated stores to teach, educate and share our love of coffee, and the art of espresso.  And in doing so, we will begin to elevate the Starbucks Experience for our customers.  We are passionate about our coffee. And we will revisit our standards of quality that are the foundation for the trust that our customers have in our coffee and in all of us.But, as I think about it, there is another perhaps equally important reason why we have scheduled this training.  It’s to celebrate who we are. We are Starbucks.  We should be incredibly proud of what we have built. We are the worldwide leader of specialty coffee.  And, believe me when I tell you, we are just getting started.  We will overcome the difficult and humbling challenges we face, and will be stronger for it.  You have my word on that.

Schultz follows my book’s third step to reputation repair and protecting its brand for the long-term — Communicate Tirelessly. I will be watching and ordering a latte today.

Great communications quote in one of the Wharton Knowledge newsletters that I get. “You can never err on the side of communication as a leader,” said Carter Roberts, president and CEO of the US World Wildlife Fund (WWF).  “In the absence of communication, you will be surprised by the incredible things they assume about you…. It’s great to have a vision, but where I see people fall down” is when they fail to “communicate that vision in every way, shape and form, every second of the day.” 

Communications is an integral part of leadership today. We see it being played out right now in the political arena. Obama is a gifted communicator. Hillary, on the other hand, had to communicate her emotional side in order to change the storyline about herself that might have cost her New Hampshire. When people ask me why communications is so important, I remind them how they felt on September 11th waiting for President Bush to speak about the horrific tragedy. Despite what people may think about him today, his words on 9.11 were critical to reassuring to Americans and helped steady this nation’s sense of loss. The wrong words would have been devastating. Unfortunately we saw what happens when leadership communications does fail — when the levees broke in New Orleans and the White House communicated too late about the destruction of homes and human lives. Without a doubt, communications can build or erode leadership reputation as much as any crisis.

A good quote for the day.

Weber Shandwick just released some new research on the executive conference business. The Global Strategic Media Group at Weber Shandwick audited the CEOs and top executives of the world’s 50 most admired companies to see where they were speaking and how the conference world had changed over the past three years.

The “Five-Star Conference” study found that executive participation in top-tier, or Five-Star, events is soaring. Since 2005, there has been an extraordinary five-fold (525 percent*) increase among elite C-level executives at five star speaking forums. For elite CEOs during the same time period, there has been an increase of 35 percent in participation at these distinguished events. Strikingly, the rising importance of these events as a vital communications tool is underscored by a 50 percent rise in the number of top-tier global conferences from 2005 to 2007.

The research also identifies the top events for CEOs (#1 WEF) and C-suite executives (Fortune Innovation/iMeme).

I am pleased to see the CEO/executive conference business heating up again. A few years ago, many of the business publications abandoned this service offering due to the expense and difficulty proving the return on investment. In my humble opinion, it’s a great way to push CEOs to think outside the box and find something important to say. It requires putting one’s thinking cap on and on that subject, I am in favor.

*Small sample size

Have been meaning to mention that I attended a luncheon a few weeks ago where Bill Holstein spoke about the relationship between CEOs and the media. Bill is an award-winning editor and journalist who regularly writes about CEOs and board members. You have probably seen his name mentioned in The New York Times, Fortune, BusinessWeek and so on. Bill just wrote a book for Harvard Business School Press titled Manage the Media (Don’t Let the Media Manage You). It is part of a new series of HBS books called Memo to the CEO. These books provide leaders with advice on a wide variety of topics pertinent to top executives.  The premise of the book is that CEOs are not managing the media well and instead are having their reputations shellacked. Bill’s advice is to manage the relationships with the media for the long-term, not just when you need it. He advises proactively working with shareholder groups, using social media, architecting messages and never underestimating the importance of communications. Instead of living in a “gotcha” media environment, take control or your reputation will suffer.

Bill had a few unconventional ideas. He suggested that all CEOs in training spend one year training in the communications department to learn how to articulate their messages better and understand the media. His hope of course would be that rising stars would see joining the corporate communications department as an opportunity and not as punishment or a career detour. Not sure this will happen soon. His second suggestion had to do with his belief that many reporters do not really understand what CEOs do. He suggested an Adopt A Reporter program where CEOs educate reporters on the overwhelming complexity of the corner office. I thought that these ideas did a good job of challenging the status quo.