Here we discuss the basic ingredients of Public Relations: Topical Issues, The backdrop - economic and social, What makes PR tick, the pain points, the problems, the positives, the negatives... almost anything under the sun related to the communication industry!

Monday, June 27, 2011

The so called PR success of the Civil Society Campaign for a strong Anti - Corruption Lokpal bill is turning into a major PR failure:

I know, I know, I will be vilified, railed against and called a Government stooge by anybody who reads the header for this blog. But I request patience and a thorough reading of the complete blog before branding (with hot iron :) me.

When the campaign for the anti-corruption Lokpal Bill was launched with the Gandhi Crusader (though many still doubt the Gandhi credentials) Anna Hazare sitting on a fast to death, the people lapped it up, being fed up with daily exposes of corruption scams, one bigger than the other (Commonwealth Games scam of US $ 20 billion, 2G Telecom Scandal of US $ 50 billion etc.). The media too got into the act and their was frenzied reporting across TV channels, Newspapers, Magazines, social media: you name a place and you had massive coverage!!!

This came as a bolt from the blue for the government that already reeling under attack for the various scams. Talks on the net and in the media turned the "civil society movement" into a mass movement and evoked images of a popular revolt like in Egypt, which was still fresh in everybody's memory (did I say everybody ....... here I err as everybody did and I will explain later how). All of this sent the government bending backwards to accommodate the Civil Society. Soon announcements were made that a joint drafting committee, comprising members from the Civil Society and the Government, was being set up to discuss and suggest a bill in a time based manner.

There were cheers all around and it was hailed as a great PR victory and perhaps one day would have served as a case study across Business Schools. So far so good.

But here is where the script started taking a turn. The Civil Society Leaders were not prepared for such a cave in and the question of whom to appoint on the Lokpal Draft Committee became a contentious issue. When the nominations were made the choice of father - son Bhushan duo drew incredulous howls from even the most ardent followers of the movement. The Government was quick to seize the opportunity and while it started engaging in meetings of the draft committee, it also started a slanderous campaign against the civil society members of the draft committee. The result was that the focus of the medial and the civil society shifted from the core issue of the Lokpal bill draft and onto the civil society members trying to counter the slanderous campaigns.

The PR managers of the Government, having tasted blood, fired their next volley. The government representatives of the draft committee started engaging in an abusive mud-slinging match with the Civil Society Leaders. Here the movement committed its next and perhaps the biggest mistake. They engaged in a "tit for tat" mud slinging match with the Government.

This battle for media bites became so shrill that everything else was drowned in its cacophony. This is what the Government wanted, and the end result today is that the Government says it will not bow down to pressure from the Civil Society movement and the Civil Society is threatening another fast unto death. Will the Civil Society succeed? It is a big question and only time will provide us with an answer, but on the face of it, it looks like the battle has been lost by the Civil Society.

Where did the Civil Society Movement err??? Let us do a dispassionate analysis. They launched a brilliant Campaign and succeeded in getting the sound bites required, but the campaign was fundamentally flawed and ignored the basic tenets of PR. When you begin a PR campaign the first thing that you do is: the timing - this is very important; then you identify the target groups - here the Government and the people of India; Once the TG is established you identify the pressure points of the TG; then you identify the influencers who have the capacity to act on these pressure points.

This is where the PR managers of the Civil Society erred. The first and the basic error was the timing - there is still more than two years to go for a General Election. While they correctly identified their Target Group, they failed to properly identify the pressure points and the influencers. The other flaw was that it looks like more spur of the moment activity rather than a well thought out process.

When I say they were correct in identifying their TG it means they correctly identified the Government and the people. While their first PR moves had the Government on the ropes - the reason was that they and the Government alike thought that the bites were covering everybody - and this was a mass movement. While the Civil Society believed and still continues to believe that this is a mass movement, the government quickly realised that this was not. The facts in India are that 70% of the population lives in Rural Areas and they are the ones who come out and vote in large numbers. While the urban population, that has all the visibility, largely engages in monologues and when it comes to action like voting, abstains.

This realisation of the Government has turned into a self belief. Another thing cementing this belief is that the elections are still a long way off and with the voters' tendency to have short memories, the government and its mandarins are safe into thinking that when the elections come this will be another non-issue. The Civil society has made its biggest error in not taking the movement to the villages, all the voice that one hears and all the leaders are urban. Is there one Rural Leader amongst the Civil Society Members who can be identified?

The leaders of the movement, should have avoided the mud-slinging match with the government and then this would not have backfired. The belief that media coverage is the end to the means is a basic mistake. They must realise that media coverage is just a tool, though a very potent one, but still a tool. Where is the connect with the "AAM AADMI" - the common man. Even if the connect is there, they have hardly managed to show it. How many rural demonstrations in favour of the bill have happened? How many people from the villages have participated? How many of them have understood what the bill stands for?

For the rural population struggling to eke out a living where it can get food for two times, Government schemes like NREGS make more sense and they see the government in that light.The promise of UID and the expectations that it will give them more money earmarked for them, makes more sense. For them media coverage and us shouting from the cocoons of our air-conditioned offices onto social media, does not make sense.

It is here that the Civil Society lost its plot. They haven't yet realised that to make the Lokpal Bill a reality, in the way they want it, they have to influence the biggest constituency of the Government - the rural population. Had the timing been 2013 -14, the pressure would have added up. But now the government is secure in its belief that its biggest pressure points - the rural population and the elections are not being affected.

This may yet end up as a case study in Business Schools, but not as a successful PR campaign for the Civil Society, but as a failed PR campaign that began with a lot of promise.

Thursday, June 23, 2011

How a Good Investor Relations Programme could have avoided the crash in Stock Prices of Over Leveraged Companies:

The week beginning 20th June 2011, saw the price of one of the stocks, GTL, crash by 70%. It was an interesting study: this had happened once around two years back when the shares of another company, Orchid Chemicals, had similarly crashed overnight by more than 50% without any fundamental change.

In GTL's case, it seems the crash was forced by rumours which were in the market for a couple of days that the promoters had defaulted on their loan repayments. The fundamental problem, in GTL now and Orchid then, was that the promoters had overleveraged themselves by borrowing against pledge of their shareholding in the company. Once the rumours started of default, there was a dip of around 10% in the stock prices, on the previous working day on the bourses. When the bourses opened on 20th everyone wanted to jump on the sell bandwagon before the lenders against shares came to the markets to sell in order to meet the margin requirements of the promoters.

This selling saw a catalytic move and, despite the promoters coming on record saying that none of the lenders had sold or were selling the shares in the market and clarifying that there was no loan obligation default, the cat was out of the bag. It was too late to stop the selling and all hell broke loose. Next day saw similar runs on the stock prices of two other companies, where the pledged promoter shareholding was large. The market is full of rumours of selling and default in other stock counters as well and there is literally a fear psychosis in the stock markets as of now.

From the Communication angle, this provides us great insight into what went wrong and how a proper communication strategy - a structured investor relations and crisis management programme, could probably have prevented such a carnage.

Let us first analyse what went wrong communicationally for GTL. Fact of the matter is that GTL is a very investor savvy company and institutions have always loved this stock. The reason for pointing this out is that if this can happen to a company like GTL, it can happen to anybody.

What were the steps that GTL should have taken proactively which it did not, in all probability, take? In India there are no regulations governing the end use of funds borrowed by promoters against their shareholding. While promoters are mandated to declare the amount of shares pledged, that is all.

GTL promoters, first, should have communicated to all their stakeholders and the investor community on the utilisation of the funds borrowed against shares. This would have ensured transparency and put to rest any doubts that one had about the promoter intentions.

Second, the promoters knew that the Indian stock markets were underperforming and were giving negative returns. They were plagued by one bad news after the other relating to Government and policy. Also they knew the dates of redemption of loans well in advance, so they should have been prepared that any slightest delay or renegotiation on loans could have negative impacts. Under such circumstances they should have kept their Institutional and other large investors fully apprised on a proactive basis, so that these investors stood by the company if there were bad times. In fact if the lenders were threatening to sell the shares to meet promoter margins or redemptions, a fully transparent management could have placed the shares of the lenders at a discount to these large investors. But the management it appears did not do so. There was, it seems,complete lack of proactive approach from the company.

Third, when the rumours started, I am sure the promoters and the company must have got calls trying to verify the facts, the company did not do anything concrete to stop the rumours. Why didn't the company come out with statements and go public when the first bout of selling happened on Friday, when the share price decreased by 10%? Because the managements were complacent.

Also, it seems that there was no Crisis Communication programme or even if there was, it failed. Another reason could be that the Crisis Communication programme did not take into account the Investor relations programme. A Good Investor Relations Programme should have anticipated the likelihood of this happening and would have proactively engaged in a much more frequent dialogue with the investing community to help keep and maintain their faith in the company.

While it is also possible that despite the best investor relation and crisis communication plan, this would still have happened but at least nobody could then have pointed fingers. Here any semblance of a Crisis Communication strategy, was completely missing from the public domain.

What I am advocating is not rocket science but only the need for Communication and Management teams to remain focused on engagement strategies, more so particularly, when the external environment is bad. Promoters need to think of expenditure on Investor Relations (IR) and Crisis Communication as a Capital Expenditure. Imagine if I had gone to the company and asked for a paltry Rs.3 million for taking care of the IR programme per year, the company would have laughed.

But see the scenario now: the company has lost roughly Rs. 20,000 million in market capitalisation; the investors are scared and sceptical about the company; and there is a run on it. Lenders confidence has been shaken, employee morale has been hit, etc. Even if GTL had engaged in an IR programme for 10 years, they would have spent only Rs.30 million and the returns would have far outweighed the expenditure.

There is still time for scrupulous Promoters and Managements, who are here for the long term and serious about their businesses, to hire professionals to undertake complete IR and Crisis Preparedness programmes. This will, in all probability, help them build sustainable brands and businesses and the Return on Investment (ROI) will start from day one.

Monday, June 20, 2011

The Perils of a slowing Indian Economy: greatly exaggerated...:

Every day the headlines and articles in leading Business papers and magazines scream at you pointing out the perils of a government in limbo - a slowing economy. Today's Economic Times headlines reads - Scared and Stifled, Babus delay decision making. Another headline says - "D Street (Dalal Street where India's oldest stock exchange BSE Is located) Mavens see Sensex sinking to 15k by December" marking a 16% fall. On the other hand you have data which says that Advance Tax collections are robust, salaries set to increase by 11-13%, PE investments on the upswing. These are contradicting news and can be very confusing to someone who wishes to analyse the investment potential of India.

True, the recent corruption scandals which are plaguing the government and the fight between the Civil Society and the government over a tough anti corruption Lokpal bill have created a sort of a Logjam. The government is busy staving off one scandal after the other and trying to protect its own turf and in the process all the decision making has taken a backseat. But this cannot continue forever. The lack of decision making at best can only be temporary. There are powerful reasons for this. Today no political party can afford to let slip on the economic growth: if they do so, they can expect to be routed at the polls. The fruits of growth have started permeating the life of the common Indian. Though the fruits are not distributed evenly, they are there for everyone to see. People who have not tasted the fruits aspire to taste them and those who have tasted them will not let go. In short, the momentum for growth has been built to such an extent that it is almost irreversible.

The businesses which finance the political system unofficially, also will not sit idle if they foresee the reversing of the economic liberalisation process.

These two factors have to be considered sooner than later by the government because if they lose the support of the people and their financers then the game will be truly up for it. This gives us real hope that in the next couple of months, the government will put its house in order by acceding to the genuine demands of the civil society by taking concrete steps to weed out corruption from the fabric of Indian society. The policy and decision making should resume and the indecisiveness plaguing the system should be a thing of the past.

Tuesday, June 7, 2011

Public Affairs and Communication Scenario in India:

Public Affairs and Communication??? If you ask a layman in India what it means the most probable response would be that it means the affairs that our politicians and other public luminaries have and their expose by the media :). Well that might mean stretching the imagination a bit too far, but I just wanted to point out the almost non existent state of this branch of Public Relations in India. However when we throw up the term Lobbyist, it is more widely known. But ask anybody to conjure up an image of a lobbyist and the image most likely to crop up is a person carrying a briefcase or a suitcase full of wads of currency and handing it over to the greedy influencer and in this I am not stretching the imagination.

Not many would know and those who know agree that Public Affairs and Communication is a very legitimate way of initiating a dialogue with the policy makers and influencers on behalf of your clients to get across their point of view. Of course the very point of the dialogue is to try and make the policy makers accept your clients views. However if there is no dialogue then how does one communicate. The recent Telecom scandal in India where the exchequer was cheated to the tune of potentially US $ 50 billion and one of the proponents of Public Affairs, Nira Radia and her company Vaishnavi, were caught on tape influencing policy for kick backs has only reinforced the image of a lobbyist with a bagful of cash.

India an emerging democratic superpower has to get its act together. The Indian public is disgusted by one scam after the other exposing the level of corruption in the Indian Political and bureaucratic setup. Increasing young population with rising ambition wants to see a country which is free from corruption and thriving. The immediate aftermath of the telecom scandal and rise of civil activism against corruption would be a knee jerk reaction of banning all kinds of public affairs practice. But is this the right approach?? If I put this to the public right now, I am sure the overwhelming response would be, YES.

But I am convinced this is not the correct way. Every section of the Socio economical fabric has the right to be heard and put their views across. This is possible only if we allow dialogue. Proponents of Public affairs are just doing a job: they are facilitating a dialogue between the concerned parties. But if we impose a blanket ban on this, do we think we can stop the rot in the system. I think not.

The way forward would be to legitimize Lobbying and Public Affairs activity and introduce laws to regulate the activity. We, in India, could learn from our global contemporaries, especially the western world, where lobbying is a permitted activity. The laws there require every person who wants to lobby to register and maintain an account of the expenditure incurred on all public figures to the last penny. These figures are then made public. What a wonderful way of stopping a politician asking you to buy a ticket for his daughter to holiday in Hawaii? Something akin to this would go a long way in stemming the rot and also cleansing the public system of systematic corruption.

I guess the time has come for all of us to ask the Lawmakers to introduce a Law governing the dealings of politicians and the corporate world to make India a truly global superpower.