Following an event for our pro bono client, the Creative Coalition, which launched the new NBC show The Philanthropist, Pamela Sorenson had some nice things to say about Qorvis. Thanks!
It seems in doing what we do best here at Qorvis (that is, win public affairs battles), we’ve struck a nerve launching our latest endeavor: the No Choke Points Coalition. From Kenneth Corbin’s blog at internetnews.com:
“You’ve got to tip your hat to Qorvis — they really know how to pick a fight. The Washington-based PR and advertising firm, which spearheaded the tech industry’s campaign last year to open access to TV white spaces over the objection of the broadcasters, is now taking on another lobbying goliath: the incumbent telecom providers….”
Yes, we’re at it again. Beyond the hard work put in by all parties involved, however, this is perhaps more reflective of having great clients with worthy causes. That’s what made us Holmes Report’s Public Affairs Agency of the Year this year.
Qorvis and National Journal’s Hotline will be hosting the second (technically, the third if you count the incredible party/quiz show we had last month) event in our “Road to 2010″ series. This uber-political wonk gathering will address the role of polling and pollsters and how they will relate to the upcoming election.
This Thursday, Qorvis and National Journal will be hosting Political Pursuit, a light but engaging event ahead of the White House Correspondents’ Association Dinner weekend. This is a part of our ongoing series “The Road to 2010.” Be sure to check it out.
Qorvis Partner Stan Collender made some interesting comments in a PR Week article today, “Public affairs pros discover new areas of opportunity.” Stan discusses the blurring of the line between lobbying and public affairs communications support, and the resulting benefit:
“Public affairs communications, where you raise visibility of an issue in a way that policymakers can’t ignore, has become increasingly popular,” Collender says, adding that Op-Eds and news stories produce the best results. “This cuts across all issues that are on the front burner—taxes, spending, financial services—and others that proponents would like to move to the front burner…. Washington is now the center of the business and financial universe,” Collender says. “Public affairs communications needs will be substantial for quite some time.”
PR Week has released its annual Agency Business Report and listed Qorvis as the 5th largest independent communications agency in the U.S., up from the number six slot last year. With 15% growth and very low staff turnover in a down economy, this speaks greatly about the strength of our team and business model. It also reinforces the recognition we recieved by the Holmes Report, which has named Qorvis “Public Affairs Agency of the Year.”
You may have seen that Qorvis has been named “Public Affairs Agency of the Year” by the Holmes Report (originally picked up by Politico). The Holmes Report said:
“…Qorvis is much more than a public affairs firm, with strong corporate and financial communications and even strategic brand marketing capabilities. But it continues to do much of its best work in the broad public affairs arena, such as its efforts on behalf of the American Cable Association (helping small regional operators tell their story to the FCC), the Wireless Innovation Alliance (a broad-based coalition educing legislators and regulators on the potential of white space technology), and the Hope Now Alliance (a coalition of mortgage lenders explaining the industry’s efforts to address the housing crisis). Overall growth in 2008 was about 15 percent—with fees of around $35 million, the firm is the sixth largest independent in the U.S.—and there was new business from the Society for Human Resource Management, the Concord Coalition, the Committee for Responsible Federal Budget, washingtonpost.com, and Sun Microsystems. Qorvis also expanded its strategic capabilities with the addition of its own in-house polling and research company, Clarus Research Group.”
We’re very proud of this distinction, which builds on an already strong year. And there’s more good news ahead…
Qorvis, along with National Journal’s Hotline, yesterday hosted the first in a series of ”Road to 2010″ events. While it might seem to the rest of the country like the 2008 election just ended, in Washington the 2010 race is already heating up. The event was moderated by Hotline’s editor-in-chief Amy Walter and executive editor John Mercurio and panelists included National Republican Congressional Committee’s Guy Harrison, National Republican Senatorial Committee’s Rob Jesmer, Democratic Senatorial Campaign Committee’s J.B. Poersch and Democratic Congressional Campaign Committee’s Jon Vogel. The panelists discussed their respective parties’ strategies in the midterm elections and what seats are their top targets.
According to TechCrunch, Mahalo CEO Jason Calacanis has offered $250,000 to get a slot on one of Twitters’ feature of suggested Users. This feature pops up when someone signs up for the first time and recommends people and originations whose followers have skyrocketed by being on the list.
By getting on to this list, Calacanis wants to gain more followers and potential customers. Twitter hasn’t responded to the offer, and even if they do there is no telling whether more followers would translate to anything other then a lot of annoying tweets but the offer does make you think twice about a site that many (myself included) mocked at the onset. The site built on the simple idea of short 140 characters has more applications than anyone would have imagined.
Today’s Washington Post had a great column by Dana Milbank. The piece largely poked fun at members of congress on their blackberry’s twittering away while listening the president make a dire assessment of the U.S. economy.
Milbank’s column highlights the importance of understanding social network mediums. Take for example, President Obama. Obama use of social networking arguably won him the election. Since taking office President Obama has been praised for his usage of social networking, from his weekly YouTube address to his revamping of whitehouse.gov.I’m not saying congress should abandon their twitter like Obama did back in November. I’m just saying tweets like Congressmen Culberson’s, “Capt Sully is here — awesome!” might be thoughts best SMS’d to a friend.In short, to use social networking effectively you must both understand the medium and control your message.
The question of which brands are the best at “socializing” with their audiences is often asked, and seldom answered. It is for that reason we applaud Vitrue for developing a Social Media Index (SMI) and publishing the top 100 social brands of 2008. There are some obvious names on the list, such as Apple, but also some less obvious ones, such as McDonalds. While names on this list span almost all industries, the one thing each has in common is that they are seeing robust financial and branding benefits from their social marketing efforts. The moral of the story is no matter what type of business you have or who your audience is, it has become clear that social media should be a significant component of your marketing mix. To see the whole list, check out The Vitrue Blog.
The Washington Post published an article today about President Obama’s staff walking in to their new workplace and finding themselves in a “technological dark age.” The article is getting a lot of attention due to the level of technology deployed throughout the Obama campaign.
I’m of two minds here - On one hand I can COMPLETELY understand why the Secret Service and those responsible for securing the White House’s communications would be extremely wary of lifting security regulations on outside email accounts, instant messaging, social networking applications - all communications vehicles that make the Executive Branch more vulnerable to an e-attack (and yes, I just made that word up).
On the other hand the American people have been subjected to our government operating in an inefficient manner for much too long, and its about time the White House was introduced to the 21st Century. These communication channels help the administration immensely by allowing them to communicate with each other, their supporters and the general electorate - something the public yearns for. After decrying the lack of transparency during the Bush years, the administration is supposed to retreat in to the turtle shell that is 1600 Pennsylvania Avenue, just like their predecessors? As a wise man once said - that’s not change, that’s more of the same.
What’s needed is a bridge between secure and open communications on the Internet. The brilliant folks in the Secret Service and the Obama administration can surely work together to figure out a way to allow Executive Branch staff to creatively and constructively communicate with the outside world while ensuring a secure system. Yes, they can!
The 5th annual State of the Net Conference, the largest information technology policy conference in the U.S., is taking place in Washington today. With a new administration and new Congress in town, a healthy, productive discussion about the direction of our nation’s technology policy has never been more important to our country’s future. The conference, created by the Congressional Internet Caucus Advisory Committee, will bring policymakers, public-interest groups, and business leaders in the technology arena together to discuss wide-ranging issues such as broadband infrastructure, Internet governance, privacy issues, healthcare technology, and digital copyright policy.
Many of these areas are ones that the new administration, and the entire country, is looking to invest in to (hopefully) turn our economy around, specifically broadband deployment and healthcare technology. Large pieces of legislation addressing these issues are expected to be introduced in the coming months (some will even be included in the upcoming economic stimulus), and their champions will be here explaining and recruiting support for their positions. So while this policy conference is definitely not the most prominent in town, it is doubtlessly one of the most important.
Mr. Charlie Gibson was nice enough to highlight our Presidential Inauguration mobile app on the World News Webcast. He said: ”If you’re headed to Washington next week for Inauguration festivities, don’t forget your iPhone or your BlackBerry. It could be your key to finding your way around town.” We completely agree. Be sure to check out Version 2.0, which features a new polling function that will allow you to answer Inauguration-related questions and see the results from others all over the country.
As millions descend upon Washington to witness a truly historic event, and what is sure to be equally historic confusion, we wanted to give visitors a way to navigate Washington while they are here. So Qorvis, in partnership with Patton Boggs, PointAbout, and FortiusOne, is offering a free application for the iPhone and Blackberry that allows users to quickly get information on pretty much any and all of the information vistors will be looking for - Inaugural events, restaurants, directions, Metro and Bus schedules, Wi-Fi Locations, Local Weather and Traffic, etc. We released the application’s second version today, which includes a polling component called Speak Your Mind that gauges real-time user sentiment about inaugural events.
We are really proud of this application and hope all iPhone and Blackberry users who will be in and around Washington for the Inauguration will find it useful! You can download the application at http://navigatingwashington.com and find videos showing how to use the application here and here.
Lastly, be sure to check out the piece CNN aired featuring the application last night.
Qorvis is honored to be able to cap off another great year with today’s news that PRWeek has named us a finalist for the category of Midsize PR Agency of the Year 2009! We’re all clearly thrilled about this recognition.
What helped driving our nomination were several achievements, including the launch of Clarus Research Group, a full-service, in-house polling and research firm; a number of new clients, including an advertising campaign for the Society for Human Resource Management (SHRM); the hiring of some top-tier talent, such as Karen Hanretty, former Communications Director for the National Republican Congressional Committee, and Lisa Bushey, a public relations veteran; and the expansion of the company’s headquarters in Washington, DC.
Qorvis is starting the year with the launch of the 2009 Presidential Inauguration Mobile App. The new, free mobile application, named “Phone App of the Week” by the New York Times, will provide visitors to Washington in January the ability to easily navigate the city with a glance at their iPhone or BlackBerry.
The PRWeek awards are among the industry’s highest accolades. Qorvis was nominated for the category for agencies whose annual revenues range from $15 million-$65 million.
SOME PREDICTIONS ABOUT THE P.R. BUSINESS FOR 2009
MediaBistro.com is an important and widely read source of news for the media community. It is very robust in its scope of coverage, and provides a constant diet of news, features, information of interest to people in the business, and interactive conversation. They link to a number of blogs they have created for several niches of the industry. One of those blogs is called PRNewser. It has become the custom at the end of one year for PRNewser to solicit predictions about what might happen to the public relations business in the year ahead. They like these predictions to be concise and pithy. Anyone who has read a previous post here on Death of Time knows that I am rarely concise, but nevertheless, here is my attempt to create a series of concise and pithy predictions about the PR business for 2009, with one caveat: What I am predicting tend to be events occurring within the process of an evolutionary process, so whereas I am willing to bet these will occur (with some shades of difference), they may not begin and/or end precisely within the confines of the next twelve months.
1. The model for the PR business will change because nobody cares how busy PR people are - they only care about the value of their work.
Time is money only when you live by the standards of the manufacturing economy. But we are transitioning ever quicker to a knowledge economy, and public relations is far from a manufacturing business with lots of fixed hard assets. So why is the PR business still based on the outdated concept of billing by time? The process of creative destruction associated with the financial crisis will accelerate the destruction of the old model, as The Washington Post’s Pulitzer prize winning business columnist Steve Pearlstein predicted in October 2006, when he discussed the Qorvis model. In 2009, we’ll start seeing more firms set fees on the basis of a fixed retainer based on the value of the effort rather than the time it may take to make it happen.
•2. Segmentation within PR firms will begin to crumble.
In a world where the desired audience for a message can be highly targeted and can be reached through many distribution channels, why are there silos and “practice groups” inside PR firms? Isn’t the idea to share experiences, approaches, and contacts to maximize all the firm’s human assets for the benefit of the client? Silos are non-productive. The only reason they exist is because time sheets allow Management to measure everything into little segments of time, so that’s what drives management actions. And time also determines how people get paid and how bonuses are awarded. And who is deemed “profitable.” And how to tell which clients are most cherished. Crazy. Chunks of time have nothing to do with what the clients want. They want great work. They are no longer going to be making their budget decisions by how many chunks of time it takes to do something; they are going to be determining the value of every dollar they spend against results delivered. Delivery on that expectation will be directly related to the degree of collegiality among talented people seeking shared goals. The silos have to go. It’s only a matter of time.
•3. The communications business will stop defining itself by virtue of a distribution channel.
Think about it. An ad agency is an “ad agency” because it buys time or space on a distribution channel to deliver its message to its targets. And a PR firm is a “PR firm” because it “earns” coverage in a distribution channel controlled by others. A digital shop focuses on digital distribution channels. Sports marketing uses another distribution channel: perhaps a stadium. But wait. Is “communications” about the distribution channel or about getting a well-crafted message to a targeted audience to achieve specific goals? So, why has the industry defined itself by the distribution channel instead of the goal of the effort? It’s about time to change the way the industry has organized itself. We’re going to see the end of PR firms, ad agencies, new media shops, etc. We’re going to see communications firms, where distribution channels are simply tools to get messages to audiences, and not the center of gravity of the effort.
•4. Social media loses the hype.
Wait! That’s crazy. Social media is THE thing. It’s going to revolutionize communications. Yup. Except for one thing: it isn’t going to revolutionize communications 100%. It’s important. It’s going to hurt other ways of communicating. It is NOT going to kill all other ways of getting messages to people. It has been over-hyped. If social media is going to become as important as it can be, it will be because it is a part (a very important part) of a total and robust communications campaign. To get there, all the proselytizers of social media have to take a breath, get a grip, get real, and bring down the hype.
•5. At least one of the multinational communications conglomerates bites the dust.
Impossible? Sure, just ask everyone from Lehman and Bear Stearns (should I mention the rest?) who also never believed that they would go bye-bye virtually overnight. Look at the big conglomerates. Massive and duplicative overhead structures. Silos within silos. Outdated business models. Offices in parts of the world where the clients have gone into comas. Offices dedicated to verticals that are on their back. Large amounts of debt from their acquisition binge. The ongoing need to make earn-out payments - and just how are they going to do that? With stock that is so low that the dilution will be enormous, or with money that (if they have it) they have to preserve?
•6. The bifurcation of the communications industry into “consumerism” and “supporterism.”
Since the post WW II expansion, the messages that have inundated the American public have been “buy this” messages. Whether targeting a business or an individual, the message has virtually always been to buy something. A small sliver of the total universe of messages has been of the “support this” variety - that is, messages that ask people to do something else: to vote or influence or urge or make a call or go to a rally or do a wide range of other things for the sake of keeping or changing public policy. That is about to change. The economy is going to lead to severe cuts in consumer campaigns, and the frequency of those messages is going to drop sharply. At the same time, the Obama Administration is giving every signal that it is going to address fundamental, game-changing issues in a large number of businesses and arenas of daily life. Every special interest group in the nation is going to have a mission critical need to defend the status quo or promulgate and promote new proposals. That will lead to a surge in “support this” campaigns. Those communications firms with a portfolio of “buy this” campaigns are going to face difficult times as they experience budget cuts from their existing clients and difficulty competing against firms that have a strong portfolio of “support this” campaigns. What should we expect? A lot of communications shops are going to try to retool, redefine and reposition their expertise to go after “supporterism” campaigns. We’ll start to see seminars and college courses and papers all about “how to run a campaign to get people to support a public issue.” Asserting expertise in running advocacy campaigns will become very hot.
•7. That will be good news for Washington; bad news elsewhere.
I realize that my own company, Qorvis, fits this description, so I keep poking myself and saying: “Make sure this isn’t wishful thinking.” But I’ve also spent four decades in this market, and have become a part of it. Here’s what I see: During the tech boom, if you ran a software company, it didn’t matter whether you were in San Jose, St. Louis, or Scotland, you were inclined to go to Silicon Valley to at least interview for your VC, lawyer, communications firm, etc. As the surge in “support this” campaigns occurs, prospective clients will gravitate to Washington communications firms, lobbyists, lawyers, and their industry trade associations, all of which comprise an existing and interlocked community. Top talent from New York and other traditional centers of the communications industry will relocate to Washington and become part of the culture of advocacy.
•8. The death of the PR lifestyle business. The rise of the PR lifestyle consultant.
A public relations business can grow large enough to go public and expand to a global presence. But that size isn’t necessary to succeed. In fact, the PR business can be a great business for individuals who pull together to form a small group of professionals and simply want to make a very good living, control their own destiny, and enjoy their work. I consider those to be “lifestyle” businesses. I understand the attractiveness - I operated as the ultimate lifestyle business (a one-person shop) for almost seven years. But very often, these firms do not have significant financial depth; nor do they have a very diversified client base. In other words, they are always vulnerable to getting hurt by a relatively few number of bad events. And those bad events are coming, part and parcel of the economic meltdown. The PR firms are going to have to do one thing to survive: cut back. And after they cut back, they will likely have to cut back more. There are only so many expenses they can cut back: people and office, and they will cut back both. What will be left will be the initial entrepreneur working out of their home. In addition, those who were cut from lifestyle firms as well as larger firms, corporate organizations, and non-profits will also move to their homes and set-up shop as one-person consultancies. Many will achieve substantial success. I think their success will be attributable to the degree of expertise they provide and their ability to find a large universe of potential clients via the web. I also think those who try to compete on the basis of being the low cost provider don’t have a prayer.
Whether right or wrong, there is an interesting year ahead of us. It will be easy to count blessings. Best to all.
By my age, habits have become pretty well etched into the pattern of my life. However, I have to admit that I am joining that crush of people who are getting more of their news online. I have grabbed The Washington Post at my front door every day for the past five decades or so. For years, my day hasn’t really begun until I have a cup of coffee and The Post. But more frequently these days, I find myself early in the morning moving seamlessly from emails to news on my own schedule without worrying about whether The Post has been delivered yet. Now, I get my news most frequently by watching one or more cable TV news networks while balancing a laptop on my lap. Usually, on my computer screen is an email from Seeking Alpha, which suits my needs for news and opinion better than anything else I’ve discovered. They assemble articles from people with very high credentials who publish on the web, often on their own blogs or news services. The people from Seeking Alpha bring their own substantial and credible editing to the process. They allow their reader to specify the topics that interest them and send them a daily morning email with links to articles grouped by each area of interest specified. One of the areas I monitor is Housing. This morning (12/23/08), I was especially impressed by an article entitled “The Housing Blame Game, Redux.” It was written by Paul Jackson, who is the publisher of “Housing Wire,” which is a respected source of news and interpretation of the residential real estate market. In his article,
The Crash Of Home Prices, Like The Crash Of The Stock Market, Was Not An Isolated Episodic Event. It Happened In A Much Broader Context.
Although I think Paul Jackson’s article was enlightening, I also think his discussion misses the major point: new and ill-conceived financial instruments and political policies certainly exerted major influence on the housing bubble, but they existed within the context of a cultural phenomenon.
From mid-1986 until the very end of 1990, I was VP at NVR, which grew from a small IPO of a Greater Washington regional homebuilding company called NVHomes to become the nation’s largest homebuilder when, in a classic minnow-swallowing-the-whale case history, NVHomes acquired Ryan Homes. I worked closely with founder and then Chairman/CEO Dwight Schar, a brilliant businessperson who (at least from what I could observe) had an intuitive genius for real estate, how to market new homes, and how to operate a homebuilding business. (As an aside, he also has become a close friend of George W. Bush, and he has been one of the major fund raisers for the Republican Party for a number of years.) While working with (and learning much from) him, I attended four years worth of conferences where we and other public homebuilders made presentations to analysts and institutional investors. In fact, I sometimes took his place making the company presentations at those conferences.
In the process, I got to see all the other publicly owned builders make their presentations over a very dynamic four year period of boom-to-bust for the real estate business. This combination of having a close-up view of the homebuilding industry as a part of the senior management team of the nation’s largest homebuilder and as an observer in the audience listening on a regular basis to CEOs of other homebuilders gave me the opportunity to see a fundamental change happening in the residential real estate market.
Product Product Product.
Consistent and concurrent with this trend, the market began to be segmented so that there was no longer just a “move-up” market but there was a “first time move-up,” a “second move-up,” and then the McMansion market. In other words, there was always a reason to sell your existing house and buy the next level up. By creating a “next step up,” homebuilders increased the size of their market. The consumer was lured to another sale. Each segment of the market was defined not so much by location but by the features and look of the house itself. Product became king. So what if the house was located in the far suburbs requiring an awful commute? Look what you could live in once you got home! How great you would feel! How impressed your friends will be when they see the house! Worth the commute.
The real estate crash of the early to mid-1990s popped the market bubble for about seven years or so until people who bought at the market high saw their homes’ value recover to the price they originally paid. When the market came back, it came back with a vengence, fueled by homebuilders who built and fed into the consumer’s appetite for more-and-better as defined by product. The marketing that was used to turn-on the market could not have succeeded unless the market itself was susceptible to that pitch. And that is my point: the market itself (our culture) also must assume a major burden for what has happened to home values. And, because the crash in home values is a major reason for the crash of the equity and debt markets, you could say by a simple extension of logic that it was our culture that gave rise to our current financial condition.
The evidence of wealth became a priority to Americans, and the house became the most important evidence of wealth. Even if you didn’t actually have wealth, you could still look like you had it. Remember the TV commercial that showed the guy with all the props of wealth who admitted that he was “in debt up to my eyeballs”? That was a perfect summary of the American Culture: The appearance of wealth not only became more important than actual wealth, it became so important that debt would be assumed to the degree that it actually undermined the reality of (or prospect of building) wealth just for the sake of giving the appearance of wealth. How perverse was that logic? So perverse that it could be attributed to only one thing: a bandwagon mentality gone horribly off-track.
Although the consumer’s ability to get themselves into that fix was helped by new financial instruments and government policies, as Paul Jackson’s article suggests, the consumer’s decisions and priorities were fueled less by financial instruments and more by the culture that dominated our society and nation at the time.
To dismiss the cultural issue when trying to identify the causes of the current financial crisis is a major mistake because if we are not sensitive to it as a cause, we will not observe cultural shifts as they occur as a necessary component of the solution. I think those cultural changes will exert at least as much influence in how and when the residential real estate market is reshaped as any new mortgage instruments that may be appear on the scene.
What Cultural Changes Might We Expect?
If my premise is correct, then the question becomes: What sort of cultural changes might we expect? I think that will be very difficult to predict correctly, but here’s my current guess as to attitudinal shifts in the American Public’s view of their homes:
If …
If those cultural changes are made as part of the revitalization of the residential real estate market, there will probably be similar and related cultural changes in society as a whole. As that occurs, the current American Dream of “Buy more … Buy bigger … Buy more expensive … Buy on credit even if you can’t afford it” will be transformed. Perhaps the transformation will include a reversal, at least in part, to the traditional American values of liberty, freedom, and individual responsibility and opportunism. We’d also be likely to see increased savings rates and decreased levels of debt. But I think the cultural change on the horizon will be much more than an updated restatement of former ideals. I believe new standards, priorities, ways of doing things and the basic definition of what makes for a “good life” will emerge.
I do not think this will happen overnight, and I think many of the changes will begin to emerge in very small and maybe unnoticeable increments (which would increase the need for being sensitive to the issue so that we can observe changes as they evolve). In the meantime, given the destroyed wealth that formerly existed in peoples’ homes, the ongoing southward direction of the equities and debt markets globally, increasing unemployment, and more dramatic stories of the Madoff ilk, it’s going to be very easy in 2009 for people to count their blessings. But the blessings they count will be less of the materialistic variety – less tied to money (or even the lack of it). And if “blessings” morph FROM things like the latest flat screen television in the media room with theater chairs TO things like reveling in family and non-capital-related assets, then the cultural change will be significant indeed. After all, there won’t be another catastrophe in sub-prime mortgages if there is no market for sub-prime mortgages in the first place.
To cap off a great week, Gadgetwise, the New York Times tech blog, has named the Qorvis / Patton Boggs 2009 Presidential Inauguration App the App of the Week.
Qorvis, Patton Boggs and PointAbout are really excited about the potential this app has to help people navigate Washington (which is the elegant metaphor for what we as companies do for our clients). The next iteration for BlackBerry should be out in the middle of next week, and new functionality for iPhone will be up soon too.
To experience the app, check out this video. Or to download it, go here. Enjoy!
Some articles from the week:
I spent ten years, beginning in 1981, heading the corporate communications efforts of three publicly owned businesses. In each instance, my highest priority was investor relations. In 1991, after leaving the third company, NVR, the large homebuilding company where I was Vice President, I started my own investor relations consultancy as a one-person business. For about the next ten years, until co-founding Qorvis in late 2000, I stayed focused almost exclusively on investor relations. That amounts to a total of about 20 years concentrating on investor relations, during which I worked with scores of companies, all of which were public or going public. During that time, I got an up-close-and-personal view of the investment community, and the way I look at the world was changed as a result. Much of what I learned rushes back into my thoughts as I watch and read about the current financial crisis. Here are some random thoughts:
JUST WAIT UNTIL NEXT YEAR.
There is a really unique feeling only an IR person can relate to. It’s that feeling you get when you wake up on the morning that you know your stock is going to get killed because you have to issue very bad news – and there is hardly anything worse than issuing disappointing earnings.
The IR person feels the heartbeat of a stock more intensely than anyone else. That’s not to say that the stock isn’t a priority concern of others, especially the CEO, but the IR person thinks about it constantly. It is the focus of their life. You speak to the investors and the analysts on a frequent and sometimes lengthy basis. You know what they think. You know their expectations. You know what will make them sellers and what will make them buyers. And you do that in a very real-time world. Issue a release. Look as it crosses a screen and becomes public news. Watch the reaction.
So you know what will happen when the news hits. You may be off by some increment, but you know when it is going to get killed.
There is also a unique feeling the IR person has when they go to bed the night of the day of bad news. It isn’t as overwhelming as what you felt in the morning – it’s more like a sigh of relief: “Well, I get to compare against this 365 days from now.”
The economic news has been so bad since the October market meltdown that the statistics next year have to show an improvement. There’s some good news there somewhere. You might have to look real close.
ITS ALL ABOUT EXPECTATIONS
A basic rule that IR people live with is: “Investors can take good news; they can take bad news; they can’t take surprises.”
Reporting a quarter that compares favorably against the same quarter in the prior year is positive, but if those results are under expectations, the benefit of reporting good period-over-period results is more than wiped out. Thus, a general rule of investor relations is: “Create expectations so that you can at least meet them, and preferably beat them.” I’d use that rule if I could set expectations for the national economy. I’d set expectations as low as possible now and by so doing set the stage for good news by beating those expectations in the future. It looks to me as if the Obama people understand this rule and are doing their best to keep expectations down.
But setting expectations isn’t as simple as it looks. Set expectations too low and you have the chance of creating a self-fulfilling prophecy; set them too high and you put yourself in the position of issuing disappointing results in the future.
So, looking forward, the actual numbers that are released will be less significant than the actual numbers relative to the expected numbers.
EXPECTATIONS MUST EXIST WITHIN THE CONTEXT OF A VISION OF THE FUTURE
I’ve written previously about how investors are driven less by the present as they are by the future (if you follow the link, scroll down to the section that is headed: “An Investor Relations Pitch That Failed Taught Me About How To Create Ideas That Can Really Exist”). Facts and past performance are important and I would never denigrate that importance. However, people are turned on by visions of the future: “The Story.”
Thinking about the nation’s economic situation makes me realize that the news and analytical coverage that dominates the nation’s consciousness is all about what has happened and what is happening right now. Although President-elect Obama has defined some important priorities and a broad approach, he has not yet painted a very clear picture of what the future will look like. In fact, that picture could be exciting: a new national infrastructure … new healthcare system … closer to energy independence … a more viable Middle Class, etc.
The sooner we start envisioning a more encouraging future, the sooner we can see start building the more upbeat view of the future that will, in turn, translate into an increase in the confidence necessary to get the economy growing again.
Perhaps Obama will take the occasion of his Inaugural speech to focus less on topical events and much more on his vision for the future. He could take the opportunity to paint a bold, opportunistic and empowering vision of what the nation can become. That vision could then become the “story” of the Obama Administration so that all individual achievements can be cast in the context of how the achievement, regardless of how little it might seem today, moves us closer to the ultimate vision. But to do that, you need the clear vision in the first place.
THERE IS ONE ESSENTIAL INGREDIENT FOR BUYING-INTO THE FUTURE VISION:
CREDIBILITY
As vital as it is, a vision for the future isn’t enough. It has to be a vision in which people can believe. However, what if the economic situation has come on so steeply that we cannot yet believe in anything other than some wishful thinking that it won’t take much longer to find a bottom? What sort of vision can you create with any degree of credibility at all if that were the case?
The irony is that in the case when things are so uncertain that you can’t even get your bearings, the vision that is bold and far off is often more credible than the less exciting vision that would be realized sooner. That is because people expect a long series of modest achievements for the bold vision to come true while they expect to see less frequent but more significant achievements sooner to believe that the nearer-term vision will come true. It’s relatively easy to report numerous small achievements and explain how they move the story forward; it’s relatively risky to place spotlights on less frequent but more significant events that have greater impact, especially when neither their timing nor consequences are highly predictable.
THE TREND IS YOUR FRIEND
Another maxim of the investment community is that things move in trends. If you believe that (as I do), then you will also believe that the trend of the past will continue into the future. The trend will continue until the trend flattens out. Once it flattens out, it will continue to flatten out until the trend changes direction again. Pretty obvious stuff. One major problem: when will a trend change?
It is clear to see when a trend changes. Plot it on a graph. You can usually see it. But inflection points become known for sure only when you are looking at the past. When the inflection point hasn’t yet happened you can only guess when they will come.
That means if you want to get in early on the wave of a new trend, if you act on the basis of what you see when looking into the past, you are likely to act with greater certainty than if you are betting on some leading indicators of the future. So, the best case scenario is to be able to read the trends accurately as soon as they have occurred and follow the trend from its very early stages. If you do that, the trend will truly be your friend.
Right now, I think there are two disparate trends in our nation. Economically, the vast majority of people believe things are very bad and going to get even worse. On the other hand, politically, the vast majority of people (about two-thirds of the nation) express very strong confidence in President-Elect Obama. I think it’s going to be difficult for both these trends to continue in their current directions for long. One of them will have to hit some inflection point. Either people are going to start getting more confident about the economy and maintain or even increase their support of Obama, or Obama will lose support and views about the economy will become even more depressed. Which trend will change when? We can make guesses now, but we’ll know for certain only when we look back.
