1 Roger Bolton RBC Strategic Consulting Council of Communication Management Las Vegas April 28, 2011...

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Roger BoltonRBC Strategic Consulting

Council of Communication ManagementLas VegasApril 28, 2011

BUILDING AND MANAGING PUBLIC

TRUST IN BUSINESS Corporate Character, Shared Belief and Trust

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I am going to read you a list of institutions. For each one,

please tell me how much you trust that institution to do

what is right. Let’s start with business. On a 9-point scale where one means that you

“do not trust them at all” and nine means that you

“trust them a great deal,” how much do you trust

business to do what is right?

Edelman Trust Barometer1 2 3 4 5 6 7 8 9Not at all A great deal

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Arthur W. Page

AT&T PR VP, ’27 – ’46

Corporate officer

Member of board

Adviser to Presidents

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ARTHUR W. PAGE SOCIETY

MEMBERS:

Chief Communications Officers

CEOs Global Public Relations Firms

Academics

Founded 1983

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MISSION:

To strengthen the management policy role of the corporate public relations officer by providing a continuous learning forum and by emphasizing the highest professional standards.

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MISSION:

To strengthen the management policy role of the corporate public relations officer by providing a continuous learning forum and by emphasizing the highest professional standards.

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Tell the truth. Prove it with action. Listen to the customer. Manage for tomorrow. Realize a company’s true

character is expressed by its people.

Conduct public relations as if the whole company depends on it.

Remain calm, patient and good-humored.

The Page Principles


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“All business in a democratic society begins with public permission and exists by public approval.”

- Arthur W. Page


- Arthur W. Page

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PAGE THOUGHT LEADERSHIP

The Authentic Enterprise

The Trust Report

Coming in 2011:

• Values-based culture• New media• New model

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WHY TRUST?

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The Dynamics of Public Trust in Business – Emerging Opportunities for

Leaders

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WHY TRUST MATTERS

The Dynamics Of Public Trust In Business – Emerging Opportunities

For Leaders

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WHY TRUST MATTERS

“Trust always affects two measurable outcomes – speed and cost. When trust goes down, speed goes down and cost goes up. When trust goes up, speed goes up and cost goes down.”

Stephen M.R. Covey,In Chief Executive, June 1, 2007

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WHY TRUST MATTERS

“To make the McLane deal, I had a single meeting with … Wal-Mart’s CFO, and we then shook hands. ... Twenty-nine days later Wal-Mart had its money. We did no ‘due diligence.’ We knew everything would be exactly as Wal-Mart said it would be – and it was.”

Warren Buffett,Berkshire Hathaway 2003 Annual Report

Chairman’s Letter

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Public trust in business is the level of vulnerability the public is willing to assume with regard to business.

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Public Trust in Business

WHY TRUST MATTERS

“The Dynamics Of Public Trust In Business – Emerging Opportunities For Leaders”

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An UNwillingness to accept

vulnerability leads to regulation.

Post Sarbanes-Oxley: Annual U.S. cost of regulatory compliance

estimated to be $1.1 trillion – nearly 8% of GDP.

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WHY TRUST MATTERS

“The Business Case for Trust,” Chief Executive 226 (June 2007)

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WHY TRUST MATTERS

Edelman Trust Barometer 2009

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PUBLIC TRUST IN BUSINESS


For Leaders

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1890 – Sherman Act 1970 – OSHA, EPA

1897 – ICC 1972 – CPSC

1906 – FDA 2002 – SOX

1914 – Clayton Act 2010 – Dodd-Frank

1934 – SEC, FCC


A century of regulation

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Emerging “social contract”

1889 – Carnegie – “Gospel of Wealth”

1931 – Berle and Dodd – Harvard Business Review

1960 – Packard – “A contribution to society”

1970 – Friedman – “Profits”

1984 – Freeman – Stakeholder theory

2011 – Porter – Shared value


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Emerging “social contract”

Quality products and services at reasonable prices

Steady employment in a healthy and safe environment

Support for community institutions


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1980s – Shareholder value:

Leveraged buyouts, re-engineering, outsourcing, layoffs, short-termism, executive compensation

1987 – Gekko – “Greed is good.”

Breaking the contract


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WorldCom Enron HealthSouth

TYCO HP MSO UnitedHealth

– Ebbers– Lay, Skilling & Fastow

– Richard Scrushy– Dennis Kozlowski– Patricia Dunn– Martha Stewart– Bill McGuire



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2008 – Aggressive pursuit of high-risk financial instruments.

“Trust no one.”-- The Wall Street Journal, September 2008



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Goldman Sachs

BP

HP

Toyota



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He’s back!

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1976

1990

1996

2002

2007

0

20

40

60

80

100

% Very High/ High


U.S. Trust in Business ExecutivesHow do you rate the honesty and ethics of people in this field? Source: USA Today/Gallup

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U.S. Trust in Institutions How much do you trust each institution to do what’s right? Source: Edelman Trust Barometer

20

30

40

50

60

70

Business


3030


20

30

40

50

60

70

Gov't

Business


3131


20

30

40

50

60

70

Media

Gov't

Business


3232


20

30

40

50

60

70

Media

Gov't

Business

NGOs


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DRIVERS OF CHANGE

Arthur W. Page Society White Paper:

“The Authentic Enterprise”

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DRIVERS OF CHANGE

Stakeholder Empowerment

Globalization

DigitalNetwork

Revolution

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GLOBALIZATIONInternational Corporation

Multinational Corporation

Globally Integrated Enterprise

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GLOBALIZATION

The “Flat World” is reshaping the corporation.

Shifting from hierarchical, monolithic, multinational …

… to horizontal, networked and globally integrated.

Operations are componentized, virtualized and distributed over an ecosystem of business relationships.

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THE DIGITAL NETWORK REVOLUTION

Web 2.0

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THE DIGITAL NETWORK REVOLUTION

Rapid and massive changes in the way people:

Access information

Communicate

Make connections

Build communities

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STAKEHOLDER EMPOWERMENT

Common interests

Share information

Expertise

Mobilize

Highly influential new stakeholders

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COMPANY

EMPLOYEES

ACADEMICCOMMUNITY

GOVERNMENT MEDIA

INVESTORS CUSTOMERS

LOCALCOMMUNITY

NGOs

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COMPANY

EMPLOYEES

ACADEMICCOMMUNITY

GOVERNMENT MEDIA

INVESTORS CUSTOMERS

LOCALCOMMUNITY

NGOs

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DRIVERS OF CHANGE

Stakeholder Empowerment

Globalization

DigitalNetwork

Revolution

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DRIVERS OF CHANGE

Implications for enterprises:

Threats … Influential new stakeholders Demands for transparency Less control over messaging, segmentation Risks to brand and reputation Regulatory activism

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DRIVERS OF CHANGE

Implications for enterprises:

And opportunities … To reach stakeholders To advance policy interests To build brand To enhance reputation

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THE AUTHENTIC ENTERPRISE

Arthur W. Page Society White Paper

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In this dynamic and radically open environment, a company must answer:

What business are we in? What markets do we serve? What differentiates us? What do we value? What will endure?

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The enterprise must be grounded in a sure sense of what defines and differentiates it (mission and values).

And those definitions must dictate consistent behavior and actions.


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au·then·tic, adj. Conforming to fact and therefore worthy of

trust, reliance, or belief: an authentic account by an eyewitness.

- American Heritage Dictionary


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THE THREE CORE DYNAMICS


For Leaders

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Trust Safeguards– Legal compliance mechanisms

Balance of Power

– Risks and opportunities are shared

Mutuality – Based upon shared values or interests

The Three Core Dynamics

DEFINING TRUST

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CORPORATE CHARACTER


For Leaders

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CORPORATE CHARACTER

MISSION Align business interest with the public

interest in a meaningful way. Focus on the core contribution that the firm

makes to society. Strategy and operations are designed to

fulfill the mission.

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CORPORATE CHARACTER

VALUES Build a values-based culture that aligns

with mission and strategy. Ensure that values are adhered to

consistently across the enterprise.

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ALIGN BUSINESS INTEREST WITH THE PUBLIC INTEREST


For Leaders

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IBM – A Smarter Planet

ALIGN BUSINESS/PUBLIC INTEREST

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GE Imagination


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PepsiCo – Performance with Purpose


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Business Model Matters

How you make your money is

as important as what you make.

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THE VALUE OF VALUES


For Leaders

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THE VALUE OF VALUES

Our Credo

We believe our first responsibility is to the doctors, nurses and patients,

to mothers and fathers and all others who use our products and services.

In meeting their needs everything we do must be of high quality.

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THE VALUE OF VALUES

“While consistent growth is the output of this financial model, the fuel that drives it -- the

energy behind it -- is our culture … how we behave.”

-- Jack Welch, GE Annual Report 1996

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THE VALUE OF VALUES

“I came to see, in my time at IBM, that culture isn’t one aspect of the game – it is the game.”

-- Lou Gerstner, Who Says Elephants Can’t Dance?

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Top down Bottom up Formal Informal Part of the vernacular

THE VALUE OF VALUES

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STAKEHOLDER RELATIONSHIPS


For Leaders

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Coca-Cola

Activists targeted Coke’s India operations

Allegation: pollution and water scarcity

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Pledge to replace the water it uses

$20 million to help conserve seven of the world's most important freshwater river basins

Coca-Cola Partnership:

World Wildlife Fund

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How do you build relationships with disparate stakeholders?

Be transparent Listen Look for common ground Be willing to change


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SHARED VALUE AND SHARED BELIEF

The Authenticity Effect

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“Diminished trust in business is causing political leaders to set policies that sap economic growth….

“The purpose of the corporation must be redefined around shared value.”

Michael E. Porter and Mark R. Kramer, Creating Shared Value – Harvard Business Review

SHARED VALUE

ACTIONSpur decision-

makers to act on

that belief

CONFIDENCEIncrease confidence

that their actions

matter

ADVOCACY AT SCALEBuild constituency

with more audiences,

through the advocates’

networks

BELIEFEngage the decision-

maker by forging a

shared belief

SHARED BELIEF

CorporateCharacter

Values and Purpose

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Not only develop channels of communication, but networks of relationships

Not only position, but define the corporation

Not only change perceptions, but change realities

ROLE OF THE CCO

“The Authentic Enterprise”

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THE AETNA CASE

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150-year history

“Rugged oak stability”

Integrity and fiscal prudence Innovation Corporate citizenship Fairness and benevolence

THE AETNA CASE

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Aetna in the 80s

Stagnation Shareholder value

• Profitability• Death to Mother Aetna

Culture change efforts

THE AETNA CASE

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Aetna in the 90s

Focus on growth

Strategic repositioning:• Health care

Major acquisition• Managed care expertise

THE AETNA CASE

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“A head-on collision”

Best of both

AET – customized solutions, excellence, process, slow

USHC – off-the-shelf, lightening fast, anti-process, command and control

THE AETNA CASE

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Culture wars…

Process vs. command and control

Off-the-shelf vs. customized

Brutal battles for domination

THE AETNA CASE

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Customers and shareholders first

HMOs = preventive health care Strong form managed care

– Referrals– Pre-authorizations– Denials– “Mother, may I?”

THE AETNA CASE

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Anti Managed Care Backlash

Physicians, patients rebelled Additional regulation Jay Leno and David Letterman “As Good As It Gets”

THE AETNA CASE

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CAROL: They said it's not covered under my plan. And it's not necessary anyway. DR. BETTES: It's amazing these things weren't done. CAROL: F---ing HMO bastard pieces of s---. I'm sorry, forgive me. DR. BETTES: No. Actually, I think that's their technical name.

THE AETNA CASE

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And it gets worse …

Trial lawyers -- class actions suits

More acquisitions

Integration issues

Market cap = -50%

THE AETNA CASE

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Who’s angry? Doctors

Patients

Brokers

Customers

THE AETNA CASE

Legislators

Regulators

Trial lawyers

Shareholders

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New CEO - A Doctor Setting a new strategic direction Striving for operational excellence Changing the culture

THE AETNA CASE

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How we did it Mission Strategy Operations Brand Values Stakeholder relationships

THE AETNA CASE

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THE AETNA CASE

Mission

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Genetic testing Disparities in health care Care at the end of life Depression management

THE AETNA CASE

Aetna Chairman’s Initiatives

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Strategy

Cost-effective, high-quality health care

Information sharing with physicians

Consumer directed health plans

Chairman’s Initiatives

THE AETNA CASE

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New Brand Positioning

We provide information and helpful resources to help you make better-informed decisions for your health and financial well-being.

THE AETNA CASE

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Brand

“We Want You to Know” “Plan for Your Health” Aetna Navigator MedQuery

THE AETNA CASE

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THE AETNA CASE

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THE AETNA CASE

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87

48

6570

79 7982 83

84

57 56

68 6974

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2002 2003 2004 2005 2006 2007 2008 2009

Practice The Aetna Way (Values)

Proud to Work for Aetna

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Stakeholder relationships

Settle Class Action Lawsuit

Reform policies

Transparency on claims payments

Advisory Board

Foundation for Quality Care

THE AETNA CASE

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The New York TimesMay 23, 2003

THE AETNA CASE

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“The once notoriously stingy and fiercely unpopular company is now frequently cast as the country's most physician-friendly insurer.”

BusinessWeek, Jan. 4, 2006

By Jessi Hempel and Diane Brady

THE AETNA CASE

http://www.businessweek.com/

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Key Takeaways

Re-evaluate core purpose (mission) Align strategy, ops, brand Build strong, values-based culture Engage stakeholders

THE AETNA CASE

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CREATING TRUST


For Leaders

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- Arthur W. Page


- Arthur W. Page

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How do you get “public permission” and “public approval?”

By being an authentic enterprise …

… that operates in the public interest – doing the right thing for all stakeholders –

... and does it consistently – up and down the entire organization.

CREATING TRUST

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Join the dialogue at Page Turner, the Arthur W. Page Society blog:

http://www.awpagesociety.com/awp_blog/



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Roger BoltonRBC Strategic Consulting

Council of Communication ManagementLas VegasApril 28, 2011

BUILDING AND MANAGING PUBLIC

TRUST IN BUSINESS Corporate Character, Shared Belief and Trust

1 Roger Bolton RBC Strategic Consulting Council of Communication Management Las Vegas April 28, 2011...

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