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COMPETITIVE PROPERTIES OF CORPORATE COMMUNICATIONS AT GLOBAL CONSUMER BRANDS
(by Jos Schuurmans)
INTRODUCTION
The hegemony of free market capitalism in the global economy has profound implications on the workings of democracy in both the developed and the developing world.
While new middle classes may be emerging in the developing world, fostering the workings of young democracies, many western democracies face dis-engagement and disillusionment of the middle class, a polarization between haves and have-nots, noveau-riche as well as new poverty. Many western democracies find themselves faced with an erosion of middle class engagement in public and political discourse.
There is evidence to suggest that the electorate's disconnect with the political system is in part being substituted by exertion of influence through commercial choices. Consumers feel increasingly that their power to influence is less apparent in voting, and more apparent in their buying decisions. Increasingly, consumers express their concern with societal issues through the products and services that they buy, rather than by periodically checking a box at the ballot.
For many years, lobby groups as well as the financial community have been pressing corporations, particularly publicly listed companies, for transparency and accountability. Governments and media have jumped onto the bandwagon. And so have consumers. For strong global consumer brands, ethically sound conduct is thus becoming a critical competitive factor.
Global consumer brands affected first
The strength of a brand, both quantitatively in terms of mind-share and qualitatively in terms of reputation, is potentially the most valuable asset of a global company. A strong brand enables the company to sell its products at a premium, even in case the non-brand properties of the product are equal or slightly inferior to those of less renowned brands.
A brand premium can contribute to higher profit margins, which can result in a positive feedback loop of competitive advantage. Higher profit margins make the company attractive to investors, raising its market value and its capacity to raise cash. If it spends its money wisely, the company can keep a leg up in innovation, efficiency in production and logistics, marketing, and the attraction and retention of top talent. These are prerequisites for growing and sustaining market share and profitability.
While ultimately every company and every entrepreneur will need to live up to a reputation, strong global consumer brands are the first ones to be affected and the most vulnerable. They are the ones who are watched most closely by pressure groups, lobbyists, media, investors, regulators, competitors and consumers alike.
Competitive differentiation through communications
It takes a generation to build a strong brand. It takes one faux-pas to set it back. Negative perceptions and publicity can significantly damage a brand's reputation overnight, causing an immediate loss in share price and market capitalization, as well as in consumer trust and brand loyalty.
In recent years, strong global consumer brands have therefore found themselves compelled to demonstrate good corporate citizenship. Some of the focus areas have been workforce diversity and non-discrimination, community involvement programmes, improvement of their environmental records, safety standards, supply chain management, ethical marketing, codification of business conduct, and transparency in financial reporting.
As these practices mature, competitive differentiation will be sought for in other areas as well. One such area is corporate communications. Brand perception is in part a function of what and how the company communicates with the world. This, in turn, is a function of its internal culture, in particular its internal communications culture.
Corporate culture and internal communications are already considered competitive factors by many Fortune-500 brands. Internal communications can contribute to productivity, innovation, employee retention, and brand ambassadorship.
Trust and credibility the top challenges
As the international political economic system has changed from a bipolar world order to a global free market hegemony, many global companies find themselves faced with a tradition of internal communications more ingrained in cold war tactics than in openness. Knowledge used to be power for those who sat on it; nowadays knowledge is power only if and when shared.
In adapting to a world in which networking, sharing, and collaborating are more productive, the number one challenge for internal communicators is trust.
If internal communications channels had, until recently, been able to keep up a one-directional stream of biased messaging, the public media have fine-tuned their conduct over centuries. Journalism is a well-developed craft with proven ethical principles, some of which might be inspirational to internal communicators.
This is all the more the case where internal communications' produce will increasingly compete for attention against information sources in the public domain. Given its heritage of biased messaging, trust and credibility are the top challenges for any internal communications effort. In order to be credible in comparison with public sources, internal sources need to be able to sustain the same scrutiny as their public competitors.
I propose to explore the viability of four principles that internal communicators need to take to heart if they want to stand any chance at competing for attention and credibility with external sources. The principles demand that all internal communications conduct and produce is (1) credible, (2) respectful, (3) relevant, and (4) appealing.
HYPOTHESIS:
Strong global consumer brands will look increasingly for competitive differentiation through their internal communications practices and culture.
While internal communication can have a positive impact on productivity, innovation, attraction and retention of talent, and brand ambassadorship, these business benefits can only be achieved to the extent that communicators, their conduct and their produce are perceived as credible, respectful, relevant and appealing.
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NOTE: I'm throwing this out into the open at an early stage, hoping to attract and share references that may help test the validity of this hypothesis, in particular the validity of the properties credible, respectful, relevant and appealing. I hope I will be able to assess these properties against current discourse, and to establish to what extent they should be considered correct or false, complete or incomplete, overlapping or mutually exclusive.