Welcome back to Communication Breakdown, a new podcast from the Observatory on Corporate
Reputation.
Thanks for joining us.
I'm Steve Dowling in Silicon Valley.
I'm Craig Carroll in New York City, each week Steve and I take a look at strategies
companies are using to shape headlines and sometimes save their skins.
It's a post game show for PR Pros this week.
First month scorecards for companies navigating the new normal under Trump.
And later in this episode, Craig has some new ideas on how we should be thinking about
stakeholders.
Interesting perspective for comms leaders and anyone interested in reputation got me thinking
that's for sure.
But first for nearly a century, presidential performance has been measured by the first
hundred days in office.
There was even a time not so very long ago when a hundred days was thought to be unreasonably
short to measure any lasting impact of a new administration.
But I could have second half of January, but like at least a hundred days already.
I mean, not to mention the three weeks since then.
So we thought a one month mark would actually be a good time to take stock of how companies
are holding up under this blood, the zone, frenzy of the second Trump administration.
We spent a lot of time last week talking about the auto industry, which we'll get back
to in a few moments as tariffs are undoubtedly one of the most consequential policies poised
to impact US companies.
But before we get there, Craig, maybe we should talk about tech.
The magnificent seven were well represented and highly visible at Trump's inauguration and
why not?
They have funded a good chunk of it.
There was that flurry of first week AI announcements, but since then, pretty quiet.
Did the tech titans cozy up strategy pay off?
I'm thinking especially of Google, Meta, and Amazon executive chairman Jeff Bezos.
They were all among Trump's favorite targets during the campaign.
Yeah.
So this is classic modulation at work.
And being the variation in the strength, the tone, or the pitch of one's own voice, if you
think about like from a singing or speaking perspective here.
So these companies came out strong.
They got their photo ops.
They made their pledges and then they disappeared.
And that's smart.
You know, they know when it comes to Trump, that proximity is risky.
You know, if you're too close and they become an easy target or if they're too distant
and they risk losing influence.
So what are they doing?
Well, they're keeping themselves in the background, kind of modulating their engagement to maintain
stability without making headlines.
And I would say, I don't know for now it's working.
But the moment Trump needs a villain though, I'd say they better have a game plan.
Yeah, I agree.
They were not subtle about pledging their support for Trump once he won.
And now that they're out of sight, they don't have to explain that support as these immigration
policies play out or anything that is getting people exercised.
I feel like though we should keep caveatting these assessments by saying like at least for
now, to your point, because I think that everybody understands loyalty with Trump is a one-way
street.
And if it becomes convenient for him to turn on one of the tech players or the sector,
then nobody should be surprised when he does.
So I feel like these companies, they shouldn't be letting their guard down.
I'm sure they're not.
We don't really know what relationship maintenance looks like with this White House.
And that's where these and other companies are going to need to balance their risks.
And I like the way they use balance here because balance is certainly key.
And you know, I'm going to have a triangle for this, right?
So I'm going to put the three piece.
I'm going to call it the chaos tension triangle power perception and principles.
These are the things that got a balance.
I think earlier I mentioned the word modulation.
This is what I mean by modulation, right?
The three sides there, they're having to think about, you know, on one hand, power being
government influence regulatory risk and corporate influence, the perception being public opinion,
media narratives or stakeholder expectations.
And then principles being your organizational values or the ethical boundaries, your long-term
commitments.
But I'm also going to say your floor, like what you're never going to step below, right?
I would say values just like at the high end, but the low end is your principles.
So your values being at the top, like what you're reaching for and principles being
before.
Yeah, and I would just add to that as companies are thinking about contingency plans, like
what would you do if somehow or at some point something, you know, went sideways on you?
You keeping a close eye on that balance of risks is really critical being prepared for sudden
shifts.
And if you have to respond to a sudden change or distance yourself from a policy, and this
is not just for people who are at the white hot center of this, you know, discussion because
we don't really know the full impact of a lot of these policies.
But for companies, even if you don't know what your specific message is going to be, you
can be planning things like your go-to channel.
Is it a publication, a specific reporter or your own way to reach customers?
How are you going to deliver that?
That's the sort of thing that I would want to be thinking about in terms of like a contingency
plan, preparation for something going wrong.
You know, tied to that.
I mean, this is certainly not the time to be hiding.
Hope is not a strategy here, right?
Hoping that this is all going to go away.
That's not going to work.
But this idea of balance, I think part of it, what I like about a triangle versus like
balancing two sides here is you got to be on your feet, right?
Any side pulls too hard or if you feel like you need to adjust, you got to be on your feet,
you got to be able to be grounded enough that you can adjust and modulate for whatever
direction that you need to go.
And it takes management even though you are not in control of the policies and you may feel
like you're on the receiving end of it, there are things that you can do to prepare for your
role if it does start to impact you and your company's reputation.
But at least for now, the tech company seem to be managing these things pretty well.
They're staying a pretty low profile for the moment at the extent that they can.
And I would just add to that, we've mentioned this before in this podcast, we still don't
really have a good read on how that position is playing with their employees.
Our proximity to the White House and those policies.
But it feels like at least right now that's a case of no news is good news.
And I think that's kind of a theme here when we think about companies and this White House.
So before we move on from the tech companies, you have a scorecard you want to give them
a grade or rating on how they've done the first 30 days?
You know, actually I do.
I developed a little scorecard here and I would say on the scale of one to ten, I would give
the tech giants here in general, a seven out of ten.
So some of the strengths were the major tech companies have largely stayed out of the limelight
by keeping a low profile since the inauguration.
They're avoiding direct association with the Trump's administration.
And right now it just seems like they're able to focus on other things and operate without
any type of immediate backlash.
I don't know, it might be this recent focus on quantum that's just popped up.
I think that's fair seven out of ten on the carol scale for the tech companies and I'm
going to score that as no news is good news.
And we'll see how sustainable that is.
But it is becoming a theme, I think.
And let's stick with that as we shift gears and talk about the economy.
Last week we talked about General Motors and Ford and their different approaches to the
tariff issue.
Yeah.
And no signs of an off ramp there.
Ford's CEO, as we recapped, went public, warned of job losses and said tariff threats
have only produced more costs and chaos to his words.
General Motors has chosen not to sound the economic alarms and that strategy continued
this week as their CFO, Paul Jacobson, I think he was talking at a conference.
He would only go so far as to say tariffs would mean a lot of impact and change.
But what are the trends that is standing out to me, Craig, the audio industry, I think
is just one example of this is how companies are being so cautious about talking about
these risks.
And Bloomberg has a really interesting report this week, the companies, including CVS,
Chipotle, American Airlines, they're adding economic risk factors to their 10Ks, burying
it in that language that very few people actually read just because it's too voluminous.
Although this would be a great application for some of our favorite AI tools.
These companies are worried about jobs, they're worried about tariffs, but for now, they're
mostly putting that in the fine print.
From my point of view, as I've always said, playing peekaboo with this stuff is risky.
And as a really basic principle, you need to be consistent in what you're saying.
Bloomberg's example, the CEO of CVS tells analysts earlier this month, he's encouraged
by constructive dialogue with new administration, Medicare and possible changes there.
But the same day, their 10K comes out with language about uncertainty and risk in the very
same area.
Yeah, look, I mean, that's tough, right?
You can't say constructive dialogue in one breath and then uncertainty and risk in your
filings and the other.
That's not modulation, that's just completely mixed messaging there.
When we're already facing so much chaos anyway, right, inconsistency is an even bigger
risk than saying nothing at all.
The companies that survive these political and economic shifts right now are the ones
that are keeping their messages calibrated across all of their stakeholder, stakeholder groups,
not just analysts and investors, but employees, customers and regulators too.
Okay, well, we've been talking about the auto industry and maybe this should have been part
of the tech conversation instead.
But I think the company whose reputation arguably has been the most impacted by Trump's
second term is Tesla.
Sales in Europe are in freefall.
The stock has recovered a little bit, but at one point it was down, around 20% in the
weeks following the inauguration.
On the one hand, Elon Musk is effectively co-president now, so there's that.
But on the other, a lot of people are really angry at him for seemingly indiscriminately
gutting the federal government.
And Tesla has become, I would say, one of the most high profile and maybe convenient outlets
for that frustration.
We have people holding rallies at Tesla factories and showrooms.
They're marching to SpaceX offices in Washington, DC.
We see cyber trucks parked in Brooklyn and Manhattan getting hit with eggs and worse.
Looks like maybe some angry dog owners targeting the cyber trucks.
So Tesla is like a proxy for a lot of people's anger.
Yeah.
Look, they're the ultimate case study right now, but what happens when you refuse to modulate?
So Musk isn't balancing power perception of principles.
He's going all in on power.
He's costing him.
Sales are taking the stock market just took a massive hit and his customer base is shrinking
as Tesla is becoming a political symbol instead of just a EV company.
There's reports also, depending on how you calculated, he's no longer the richest man in
the world.
Tough pill to swallow.
And then there's that too.
So this is what happens when you don't leave yourself room to adjust.
The tech company is here of a way out, but it doesn't look like Tesla does.
I gave him a five, actually five out of ten.
Yeah, five out of ten, right?
Yeah, I tell you know, some of the strengths here is that he's positioned himself as a power
broker with Trump.
He's got influence over regulatory decisions.
And by eliminating a traditional PR teams, he's made himself the sole voice of Tesla, SpaceX
and Twitter.
Now, the risks, and this is why I gave him such a poor score, is that the Musk Trump alignment.
That's a ticking time bomb.
If or when the bromance ends, Elon's going to be the one left holding the bag.
So if you think about Tesla's 50% sales decline in Europe and the fiscal backlash, you know,
the tax on cyber trucks, SpaceX offices, these are early warning signs.
So I would say the tip here is that the story sticks longer than the stunt.
And Musk, right now he's driving a disruption, but public memory will hold on to his role
a little bit more as a destroyer than as a builder.
So I think he needs to reintroduce some kind of vision beyond government efficiency and
performative power.
I think that's right.
Elon famously does not believe in media relations.
He fired the PR team at Twitter when he took over.
Tesla does not have ahead of communications.
SpaceX apparently has some PR apparatus.
The question is, does he even care or does he have to care about his reputation?
I think in one sense, not at all.
The calculation goes.
He's the richest man or one of the richest men in the world.
He's acting as the government now, which is he's effectively controlling both his regulators
and his biggest customers.
And he owns the platform where so much of the discussions about him are taking place.
But in another sense, to your point, the conventional wisdom is that the bromance will eventually
end in tears.
And I don't see it ending especially well for Elon reputation-wise.
He's leaning into this role as a disruptor.
And right now a destroyer and I think you're right.
That's going to stick in people's minds longer than whatever memories they have of him building
rockets or electric cars.
But this is not going to be completely good news.
But another side of this is because we have been here before.
We know a little bit about how some of these stories are going to end.
It's not going to help us in the short run, but eventually this bromance is going to run
its course.
And obviously that's not today, but we know at some point it's going to happen.
Yeah, some people are surprised that it has lasted this long.
And maybe I would probably count myself among them.
But here we are, this 30 days does feel like 100, if not more.
Okay, well Craig, no conversation about corporate communications is complete these days without
talking about diversity.
A program's formerly known as DEI have been the target of a frontal assault by the White
House, most notably through the executive orders, calling them illegal and immoral.
We talked about this a lot in January when Target became one of the most high profile companies
to roll back their diversity initiatives.
That was the first week of the new administration.
And I think it was clearly a reaction in some way to Trump's glory of activity in the earliest
hours of his administration.
And since then, Google, Disney and Goldman Sachs have made at least partial changes to their
programs, but they're not getting the same type of headlines.
What are we learning about companies, options and what's working and what's not as this diversity
fight tracks on?
Yeah, well, what we're seeing for rather hearing is that companies are choosing silence over
strategy, meaning we're hearing their silets is what I would say.
They're hoping to ride this out without making any waves and that's just not a long term solution.
The playback that we've seen so far, Target making its DEI shift immediately while others
such as Disney and Goldman Sachs are quietly tweaking policies.
This is an attempt at modulation.
The problem is there's no such thing as a quiet move in the space anymore.
The real question is whether DEI survives, whether companies are ready to own the recalibrations
publicly or whether they're going to let the fight to be redefined for them.
That's not to say when they're being silent here that they're not doing anything, right?
Some certainly are, right?
They have their heads buried in the sand and they're believing that hope is going to be
a strategy to save them here.
But on the other hand, there's so many companies that are actively ready.
Obviously, they're keeping their heads down, but they are ready.
Should they become attention?
They're just not drawing attention to themselves right now during this moment.
Yeah, I think this is continuing the theme that we've been talking about when we were talking
about broader economic concerns.
The rollbacks on diversity that we're seeing now are quieter and seemingly more subtle.
They was the street.com this week noticed that GM removed DEI language from their 10K.
Last year they said they strived to promote diversity, equity and inclusion.
This year they say they want an inclusive work environment and all employees can perform
with their best.
We've seen other changes like that on websites and other, the subtle language changes.
But again, I think companies are trying to balance doing just enough performatively, changing
their language just enough to either stay out of trouble with the Trump administration
or the activists that are working in parallel to go at these companies.
But they're also doing this quietly so they don't track too much criticism from the public.
So you have those changes where companies I think are trying to avoid disappointing, broader
public customers.
And then the positioning on the economy is happening quietly so they're not attracting criticism
from the White House.
Yeah.
So I gave three scores here because there's some it's activity going on.
So I'm just going to come up with the categories rather than, okay, I'm going to call a few
companies out, but not too many.
So there's three categories, right?
So you have corporate America's, why the DEI retreat?
You've got, I guess the target playbook, which is timing the controversy.
And then hey, I think we need to give Trump a score himself right now if you think about
his own chaos management score card out.
So I'm going to say the three scores I came up with were for corporate America as a whole,
we're thinking about GM, Disney, Goldman Sachs.
I gave them a six out of 10 on diversity targets.
That's tough, but they had the highest score.
I gave them an eight out of 10.
So something about using timing as a weapon where companies are looking to, you know, if
they have to pivot on controversial policies, then they're able to do it when, you know, the
public is largely focused on something else at the moment to avoid being in the storm,
but Trump, right?
And those companies that are deeply involved with Trump for out of 10.
So I mean, if you look at his approval rating right now, it's just dropped from 47 to 44
percent one month.
You know, the implication here's that while Trump's influence is untenable brands, they
should not assume that public support is universally aligned with the Trump administration's policies.
So right now, it just seems that the AI is still polling better than both political parties
and most politicians at this point.
Well, I'm glad you brought that up.
Quinnipiac is the poll you're referring to.
And the question was, do you think that policies focused on increasing diversity, equity,
and inclusion in the workplace are a good thing for organizations or a bad thing for organizations?
And 53 percent said good, 38 percent bad, as you point out, that's a plus 15 in favor
of diversity.
A slight majority of respondents.
And I think what's important here is this is in line with most other surveys that we
have seen over the past year.
And you know, the thing is, the AI still has a net positive rating, you know, 15 points
higher than the Trump approval rating and both parties in Congress.
So, you know, the implication here's that while Trump's influence is untenable, brands
that they should not assume that public support is universally aligned with the Trump administration's
policies.
So right now, it just seems that the AI is still polling better than both political parties
and most politicians at this point.
So I feel like I say it on every episode, but it's really important to remember that despite
this avalanche of executive orders and the pressure from Republican attorneys general
and these activist groups that have companies like Target worried, diversity is still something
that a majority of Americans value.
That has not changed.
Right.
But I think this is why we're seeing companies try to walk this tightrope of, you know, saying
just enough and quiet enough so that they are, I would call it your eight out of ten
and your six out of ten.
I would call those survival scores because what they're doing is they're really in survival
mode and sort of hoping that they can make these really minor adjustments to language
without really changing enough so that they can still tell another audience that nothing
has changed.
Yeah.
I'm going to go back to your metaphor of the tightrope here because it's really like being
pulled in three different directions.
I've heard of some people saying, you know, follow the numbers, not the noise, you know,
that a political headwinds, you know, might be pushing companies towards rollbacks, but
long term consumer sentiment is what should be guiding strategy.
But even further than that is your principles and your values, right?
And that is the third direction here that companies need to remember is that even though
there's a sense of looking at where the direction is going and where the political winds are
going that they still have to view their values and the principles as a direction that they
keep grounded on.
And I think just another for those scoring at home, this is the third or fourth episode
in row where Craig has brought up values before me.
And the Cal Ripken of values message.
I was I was trying to negotiate with you right now.
It's like I've got you look, values are super important, but right now when everyone else is
going low, you just got to keep your concom and composure and I'm thinking, no, let's keep
the just the fundamental things that we can all agree on, but you're right.
I think no, I, I support it.
I'm going to say three weeks in a row.
I'm not really safe for three, probably three.
I support, but I'm, I'm say that in a supportive way.
And since you brought up polls and I know that you maybe were not as impressed by this
number as I was, but it comes from our friends at the Harris poll.
And their poll out this week said 24% of Americans say they have stopped shopping at their favorite
stores because of their politics and the numbers are stronger among Democrats than among Republicans.
And covering those results, the Guardian pointed to target as the first example.
Yeah.
Also look at sales data.
I mean, I know what they say they're doing, but I want to see the actual behavior.
I think you can't ignore it though, because that is a reputational impact there.
Absolutely.
Right.
It's certainly, you know, something that you've got to keep your, your finger on the polls
about for sure.
Okay.
Part two of our podcast this week.
I'm going to call this bonus content for the comms, aficionados.
But everyone else is invited to stay tuned as well.
Maybe you learned something.
A lot of times on the show and out there in the real world of PR strategy, we talk about stakeholders.
What do we mean by that?
Most of us probably have a similar idea, but let's lay it out.
A stakeholder is a group of employees who have an interest in a comms decision because it
affects them in some way.
Employees are a key internal stakeholder group.
The sales department or customer service team are internal stakeholders.
They have to know about announcements and changes that you might be announcing because
they probably have to adjust accordingly.
stakeholders and the people who use your products are generally external stakeholders.
They are affected by your policies.
Maybe you're responding to their feedback.
Same with investors, shareholders, business partners, people who live in the apartments
next door to your corporate headquarters.
They might be external stakeholders too.
So my friend Craig here who spends a lot of time thinking about the way we comms people
look at the world.
Professor Carroll has come up with a different way of looking at what we often call stakeholders.
But we should really be thinking of them as Craig, you're calling them, "Relationates."
"Relationates."
R-E-L-A-T-I-O-N-A-T-E-S.
"Relationates."
Okay.
So what is a relationship?
And how does it differ from a stakeholder?
All right.
So I think what got us here was this idea that we have more than stakeholders and if everybody
is a stakeholder than nobody is a stakeholder.
So it's understanding that we've got other groups that we got to think about as well.
But in short, you know, relation to this anyone that has a connection to an organization, whether
they have a direct stake in it or not.
So the problem with world stakeholders that we've stretched so far that it's lost its meaning,
not everyone who influences a company is a stakeholder in the traditional sense.
Some are audiences, some are regulators, some are critics, constituents, some are just,
you know, the general public passive observers who can shape perception.
So this idea of relationates lets us to step back and acknowledge that there's a whole
range of relationships that matter without forcing everyone into a one-size-fits-all box.
Okay.
So does this mean that stakeholders as a term should be reserved for what we currently
call what internal stakeholders or is there a difference like who's not a stakeholder?
There's a lot of groups at art, right?
So you've got constituents, audiences, markets, publics, users, and of course you've got stakeholders.
But then you also have victims.
I picked that up from Sally Susman's last book.
Sally Susman, Pfizer Chief Corporate Affairs Officer, I think the book was breaking through.
She had true three pages devoted to it tied to the pandemic, which really shaped my thinking
on the importance of victims, but they're not stakeholders.
And of course, we've got influencers, intermediaries, and then partners, proxies appear.
So there's point is we stretch the term stakeholders too far, right?
And so, you know, look, stakeholders are certainly the most important, but we can't take our eye
off the ball of these other groups.
And if we're using the word stakeholders or to capture everyone, then we're actually not
giving stakeholders themselves enough attention and priority.
So the purpose here is to put stakeholders at the same level as these other groups, not
to dilute their importance for their priority, but just to be honest with ourselves, to say
that a lot of times we use the term stakeholders as this catch all raised to represent all the
groups that we have to interact with.
And that's really what the point is here.
So that's really what I would say is at stake here.
All right.
Why should listeners think about adopting this new framework relation at versus stakeholders?
Is there a difference in how we do our jobs or is this just kind of like a Gulf of America
distinction?
I was hoping you wouldn't go there.
Oh my gosh, but that's a whole other conversation.
We can have a whole episode on who gets to say whether this is Gulf of Mexico or Gulf
America, but that's another podcast episode for sure.
But to your question, it absolutely changes how we do our job.
So right now, corporate communication streets, stakeholders as this catch all phrase, which
leads to bad strategy.
Companies end up over-engaging some groups, under-engaging others, and missing key relationship dynamics
entirely.
So I think in terms of relation as being this catch all phrase, which we then of course have
to say which groups that we're dealing with, but there are sometimes when we need to
think more broadly.
But what this should do is allow us to be far more precise, be far more clear and stop
treating the media regulators as if they have the same needs as customers or investors or
your employees.
Now, that's not to say that they don't have some type of impact and role, but we just
got to be clear of what it is so that we're not blindsided or spending too much time on
one point that we ignore the needs and interests of the others.
So we start designing engagement strategies that actually fit the audience we're dealing
with when we're aware of how audiences who are defined by the media channels and platforms
are different.
And that just leads to better communication, smarter decision making, and fewer wide spots.
All right, relation it is.
We will try to apply that in our day-to-day work.
Gulf of Mexico, Gulf America.
That is our show for this week.
We want to thank our listeners and all our other relationships for tuning in.
And we want to thank especially Shawn P Neal and the PeopleForward Network for making our
podcast possible.
If you'd like to tell us what you think, we'd love to hear from you.
Our email address is podcast@ocrnetwork.com.
Communication breakdown is a production of the Observatory on Corporate Reputation.
I'm Steve Dowling.
And I'm Craig Carroll.
And Steve, gosh, not related to their audiences.
When our audiences come back anyway, thanks for listening.
We'll be back next week.
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