LEADERSHIP COMMUNICATIONS And the New Model

1. LEADERSHIP COMMUNICATIONSAnd the New Model Roger Bolton , President Arthur W. Page Society Georgetown University September 5, 2013

2. Three things to think about • What is the role of the CCO in leading within the enterprise? • How can leaders shape an organization worthy of trust? • Can leadership communications convert stakeholders into advocates?

4. ARTHUR W. PAGE SOCIETY Arthur W. Page • AT&T VP of PR, ’27 – ’46 • Corporate officer • Member of board • Adviser to Presidents

5. “All business in a democratic society begins with public permission and exists by public approval.” - Arthur W. Page

6. “Real success, both for big business and the public, lies in large enterprise conducting itself in the public interest and in such a way that the public will give it sufficient freedom to serve effectively.” - Arthur W. Page

7. ARTHUR W. PAGE SOCIETY The Page Principles • Conduct public relations as if the whole company depends on it. • Remain calm, patient and good-humored. • 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.

8. ARTHUR W. PAGE SOCIETY Mission To strengthen the enterprise leadership role of the chief communications officer by embracing the highest professional standards; by advancing the way communications is understood, practiced and taught; and by providing a collegial and dynamic learning environment.

9. ARTHUR W. PAGE SOCIETY Mission To strengthen the enterprise leadership role of the chief communications officer by embracing the highest professional standards; by advancing the way communications is understood, practiced and taught; and by providing a collegial and dynamic learning environment.

10. ARTHUR W. PAGE SOCIETY Mission To strengthen the enterprise leadership role of the chief communications officer by embracing the highest professional standards; by advancing the way communications is understood, practiced and taught; and by providing a collegial and dynamic learning environment.

12. DRIVERS OF CHANGE Globalization DigitalNetwork Revolution Stakeholder Empowerment

13. GLOBALIZATION International Corporation Multinational Corporation Globally Integrated Enterprise

14. THE SOCIAL MEDIA REVOLUTION

15. STAKEHOLDER EMPOWERMENT Highly influential new stakeholders

16. STAKEHOLDER EMPOWERMENT INVESTORS CUSTOMERS LOCALCOMMUNITY EMPLOYEES ACADEMICCOMMUNITY NGOs GOVERNMENT MEDIA COMPANY

17. STAKEHOLDER EMPOWERMENT INVESTORS CUSTOMERS LOCALCOMMUNITY EMPLOYEES ACADEMICCOMMUNITY NGOs GOVERNMENT MEDIA COMPANY

18. DRIVERS OF CHANGE Hyper-connected Radically transparent Globalization Social Media Revolution Stakeholder Empowerment 18

19. Implications for enterprises: Threats … Influential new stakeholders Demands for transparency, responsibility, accountability Risks to brand and reputation THE AUTHENTIC ENTERPRISE

20. Implications for enterprises: And opportunities … To reach stakeholders To advance policy interests To build brand To enhance reputation THE AUTHENTIC ENTERPRISE

21. The answer? Authenticity. The enterprise must be grounded in a sure sense of what defines and differentiates it. And those definitions must dictate consistent behavior and actions. THE AUTHENTIC ENTERPRISE

22. TRUST REPORT

23. WHY TRUST MATTERS Edelman Trust Barometer 2009 23

24. 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 24

25. 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 25

26. Trust Safeguards Legal compliance mechanisms Balance of Power Risks and opportunities are shared Mutuality Based upon shared values or interests DEFINING TRUST The Three Core Dynamics

27. PUBLIC TRUST IN BUSINESS A century of regulation 27 1890 – Sherman Act 1970 – OSHA, EPA 1897 – ICC 1972 – CPSC 1906 – FDA 2002 – SOX 1914 – Clayton Act 2010 – Dodd-Frank 1934 – SEC, FCC

28. PUBLIC TRUST IN BUSINESS An ongoing debate 1889 – Carnegie – “Gospel of Wealth” 1931 – Berle and Dodd – Harvard Law Review 1960 – Packard – “A contribution to society” 1970 – Friedman – “Profits”

29. PUBLIC TRUST IN BUSINESS An ongoing debate 1981 – Welch – Shareholder value 1984 – Freeman – Stakeholder theory 1987 – Gekko – “Greed is good.” 2011 – Porter – Shared value

30. PUBLIC TRUST IN BUSINESS Emerging “social contract” • Quality products and services at reasonable prices • Steady employment in a healthy and safe environment • Support for community institutions

31. PUBLIC TRUST IN BUSINESS Breaking the contract • WorldCom • TYCO • Enron • HealthSouth • HP • MSO • UnitedHealth • Bernie Ebbers • Dennis Kozlowski • Lay, Skilling & Fastow • Richard Scrushy • Patricia Dunn • Martha Stewart • Bill McGuire

32. PUBLIC TRUST IN BUSINESS Breaking the contract 2000s – Aggressive pursuit of high-risk financial instruments. “Trust no one.” -- The Wall Street Journal, September 2008

33. He’s back!

34. PUBLIC TRUST IN BUSINESS Breaking the contract • Goldman Sachs • MF Global • Olympus • Rajat Gupta

36. COMPANIES INTERVIEWED Home Depot FedEx P&G IBM GM Computer Associates Xerox BMW PepsiCo Chevron Thomson Reuters eBay Johnson & Johnson

37. CORPORATE CHARACTER AND AUTHENTIC ADVOCACY Corporate Character What makes us unique: Our BeliefsOur Values Our Purpose Our Actions

38. CORPORATE CHARACTER Corporate Character What makes us unique: Our BeliefsOur Values Our Purpose Our Actions

39. Corporate Character refers to the enterprise’s unique, differentiating identity: Mission Purpose Values Culture Strategy Business model Brand “Character is like a tree, reputation is like its shadow. The shadow is what we think of it. The tree is the real thing.” – Abraham Lincoln

40. CORPORATE CHARACTER “Taking on the world’s toughest challenges.”

41. CORPORATE CHARACTER “Let’s build a smarter planet.”

42. CORPORATE CHARACTER

43. CORPORATE CHARACTER Defining • Ensure CEO commitment. • Create collaboration at the top. • Build on the best of existing values and culture. • Assess the needs and values of all stakeholders. • Include the entire team, from leadership to the rank and file.

44. CORPORATE CHARACTER Activating • Develop a set of “valued behaviors” that demonstrate how executives and employees can live the values. • Tell the story through consistent and far-reaching communications. • Create a series of actions and initiatives that reinforce and reward the desired behaviors.

45. CORPORATE CHARACTER Aligning • Work with the C-Suite team to develop mechanisms and processes to incorporate the values into the company’s business model and strategies. • Wherever possible, develop appropriate internal and external measurements of the impact on values on the company’s business strategies and results.

46. AUTHENTIC ADVOCACY • Building a shared belief among individual decision-makers. • Spurring action based on this belief – e.g. purchase, investment, job acceptance. • Building and instilling confidence in the action, thereby cultivating ongoing behavior. • Enabling advocacy by supporting the individual’s desire to experience personal agency and be part of a movement.

47. AUTHENTIC ADVOCACY Many to many more

48. The HMO Model Preventive health care Coordination of care Networks of physicians Wholesale vs. retail THE AETNA CASE

49. BUILDING SHARED BELIEF • Aetna believes physicians … • Practice defensive medicine. • Give patients what they want. • Make dangerous and costly medical errors. • Game the system to get paid more. • Commit fraud.

50. Customers and shareholders first FROM: PCP = care coordinator TO: PCP = gatekeeper HMO bureaucrats Referrals Pre-authorizations Denials THE AETNA CASE