1
00:00:00,000 --> 00:00:07,440
Welcome back to Communication Breakdown, a weekly podcast from the Observatory on Corporate

2
00:00:07,440 --> 00:00:08,440
Reputation.

3
00:00:08,440 --> 00:00:09,640
Thanks for joining us.

4
00:00:09,640 --> 00:00:11,920
I'm Steve Dowling in Silicon Valley.

5
00:00:11,920 --> 00:00:13,920
And I'm Craig Carroll in Los Angeles.

6
00:00:13,920 --> 00:00:17,960
Each week Steve and I take a look at strategies companies are using to shape headlines and

7
00:00:17,960 --> 00:00:19,960
sometimes save their skins.

8
00:00:19,960 --> 00:00:23,080
It's a post game show for PR pros.

9
00:00:23,080 --> 00:00:27,200
This week the White House sends Wall Street on a wild ride.

10
00:00:27,200 --> 00:00:31,200
"President Trump has a spine of steel and he will not break."

11
00:00:31,200 --> 00:00:32,200
Break?

12
00:00:32,200 --> 00:00:33,200
No.

13
00:00:33,200 --> 00:00:34,200
Blink?

14
00:00:34,200 --> 00:00:35,200
Yes.

15
00:00:35,200 --> 00:00:39,400
Way back on Tuesday, Press Secretary Caroline Levit, brushed aside suggestions that Trump might

16
00:00:39,400 --> 00:00:41,400
back down from his tariff threats.

17
00:00:41,400 --> 00:00:50,920
34%, 104%, 145% on China, 20% on the EU for a while I think who can keep track, and a stubborn

18
00:00:50,920 --> 00:00:54,600
10% on the penguins of McDonald Island.

19
00:00:54,600 --> 00:00:58,240
Seemingly unmoved by the whipsawed, punch-drunk stock markets.

20
00:00:58,240 --> 00:01:03,480
Trump had spent days posting things like my policies will never change.

21
00:01:03,480 --> 00:01:04,960
Spine of steel, remember?

22
00:01:04,960 --> 00:01:06,400
That was Tuesday.

23
00:01:06,400 --> 00:01:11,200
Wednesday was another story.

24
00:01:11,200 --> 00:01:15,800
Market skyrocketed as Trump pulled a U-turn declaring a 90-day pause and a so-called

25
00:01:15,800 --> 00:01:17,800
"reciprocal tariffs".

26
00:01:17,800 --> 00:01:21,400
You know, the ones of the funny formula and all the Greek letters?

27
00:01:21,400 --> 00:01:27,240
That for China. And the rest of the world is

28
00:01:27,240 --> 00:01:32,280
apparently stuck at 10% far higher than when this whole process began and that sent the

29
00:01:32,280 --> 00:01:35,520
markets into another nose dive on Thursday.

30
00:01:35,520 --> 00:01:39,460
According to some reports, ultimately it was a bond market sell-off that stiffened the

31
00:01:39,460 --> 00:01:41,880
resolve of Trump's top advisors.

32
00:01:41,880 --> 00:01:47,680
Bloomberg says CEOs are crediting a TV appearance by JP Morgan Chief, Jamie Dimon, and other

33
00:01:47,680 --> 00:01:51,640
statements by business leaders calling for a different approach.

34
00:01:51,640 --> 00:01:57,160
But Treasury Secretary Scott Bessent tells it differently.

35
00:01:57,160 --> 00:01:59,600
This was driven by the President's strategy.

36
00:01:59,600 --> 00:02:06,080
He and I had a long talk on Sunday and this was his strategy all along.

37
00:02:06,080 --> 00:02:08,960
Okay, good to know.

38
00:02:08,960 --> 00:02:13,240
This week we thought we'd share what we learned during that chaotic period, proceeding Trump's

39
00:02:13,240 --> 00:02:17,400
climb down as executives watched their stock prices tumble.

40
00:02:17,400 --> 00:02:22,720
According Gary Friedman, CEO of furniture retailer RH, formerly known as Restoration Hardware,

41
00:02:22,720 --> 00:02:26,960
they source almost three quarters of their products from Vietnam, China, Indonesia, and

42
00:02:26,960 --> 00:02:28,280
India.

43
00:02:28,280 --> 00:02:31,520
Friedman was on his earnings call as the tariff news hit.

44
00:02:31,520 --> 00:02:35,800
"And I don't know, like, I don't know how sports are stock, man.

45
00:02:35,800 --> 00:02:40,600
I mean, I guess, I guess, you know, the stock went down, you know, based on some of the

46
00:02:40,600 --> 00:02:45,120
numbers he reported and then it got killed because of, uh, uh, really?

47
00:02:45,120 --> 00:02:46,120
Oh, shit.

48
00:02:46,120 --> 00:02:47,120
Okay.

49
00:02:47,120 --> 00:02:49,120
I just looked at the screen.

50
00:02:49,120 --> 00:02:51,520
I hadn't looked at it."

51
00:02:51,520 --> 00:02:56,000
While everything else on that freewheeling 90-minute call will surely be forgotten, it's worth

52
00:02:56,000 --> 00:03:00,680
noting that Friedman had earlier praised the administration as smart, even mentioning

53
00:03:00,680 --> 00:03:02,960
Trump's book, The Art of the Deal.

54
00:03:02,960 --> 00:03:07,800
But he was walking that fine line of expressing concern about the short term impact of tariffs

55
00:03:07,800 --> 00:03:12,080
while acknowledging the administration's apparent long term goal.

56
00:03:12,080 --> 00:03:16,760
And I think, Craig, over the past week, we've seen companies being tested in this new necessity

57
00:03:16,760 --> 00:03:22,640
of avoiding criticism at all costs, some spoke up, but companies literally lost trillions

58
00:03:22,640 --> 00:03:27,280
of dollars in valuation over a policy they all knew made no sense.

59
00:03:27,280 --> 00:03:29,840
And even then the silence from most was deafening.

60
00:03:29,840 --> 00:03:30,840
Yes.

61
00:03:30,840 --> 00:03:34,720
Steve, this is one of those moments that exposes exactly how limited corporate communications

62
00:03:34,720 --> 00:03:39,080
playbooks become when policy turns into performance art.

63
00:03:39,080 --> 00:03:43,920
And like every Chief Comms Officer knows out there, what this past week reminded us, it's

64
00:03:43,920 --> 00:03:48,560
not just what you say, it's when you say it, and who says it first and whether you get

65
00:03:48,560 --> 00:03:50,280
punished for saying it at all.

66
00:03:50,280 --> 00:03:54,880
Terafs like these put companies into what I'd call a "communications choke point".

67
00:03:54,880 --> 00:03:56,680
They know policy is bad.

68
00:03:56,680 --> 00:04:01,240
They know that staying quiet looks weak, but they also know that speaking out too soon or

69
00:04:01,240 --> 00:04:04,320
alone can turn a bad week into a bad quarter.

70
00:04:04,320 --> 00:04:05,320
So what do we see?

71
00:04:05,320 --> 00:04:06,520
CEO's waiting.

72
00:04:06,520 --> 00:04:08,640
Trade groups warming up the bullpen.

73
00:04:08,640 --> 00:04:10,160
Companies whispering in the background.

74
00:04:10,160 --> 00:04:11,640
Somebody else go first.

75
00:04:11,640 --> 00:04:16,920
And that's just not cowardice that is calculus because what's happening here isn'y just about

76
00:04:16,920 --> 00:04:17,920
tariffs.

77
00:04:17,920 --> 00:04:22,720
It's also about companies navigating these moments where the business risk is huge, the political

78
00:04:22,720 --> 00:04:27,200
risk is personal and the communications would just keeps getting smaller and smaller before

79
00:04:27,200 --> 00:04:30,640
markets, or the White House, forces their hand.

80
00:04:30,640 --> 00:04:31,640
So I don't know.

81
00:04:31,640 --> 00:04:36,320
I'd say if you're leading comms at a major company right now, this would be a masterclass

82
00:04:36,320 --> 00:04:41,480
in what it looks like when clarity, courage and calculation all gets in the same room...

83
00:04:41,480 --> 00:04:43,240
and nobody wants to get first.

84
00:04:43,240 --> 00:04:44,240
Yeah.

85
00:04:44,240 --> 00:04:45,240
Yeah.

86
00:04:45,240 --> 00:04:48,200
It was a really, really interesting story over the past week.

87
00:04:48,200 --> 00:04:52,840
One of them was in Politico and this got passed around online a lot over the last weekend.

88
00:04:52,840 --> 00:04:58,240
It said the headline quote was, "Everyone is terrified, but no one in the public or the

89
00:04:58,240 --> 00:05:01,520
private sector wanted to tell Trump that he's wrong."

90
00:05:01,520 --> 00:05:07,640
And then on Wednesday, after the markets had experienced all that turmoil over the past

91
00:05:07,640 --> 00:05:10,760
week and were bumping along Monday, Tuesday.

92
00:05:10,760 --> 00:05:14,740
On Wednesday, the journal published, I think coincidentally, just as Trump was reversing

93
00:05:14,740 --> 00:05:19,600
course, but their Wall Street Journal headline was 'CEOs Break Their Silence', which we had been

94
00:05:19,600 --> 00:05:22,360
seeing to various degrees earlier in the week.

95
00:05:22,360 --> 00:05:26,600
But the interesting part of that story for our audience, I think, was that CEOs were reportedly

96
00:05:26,600 --> 00:05:32,280
saying privately that trade groups should get more forceful in their opposition or start

97
00:05:32,280 --> 00:05:37,000
pulling together statements that a group of companies could sign on to, standard trade

98
00:05:37,000 --> 00:05:42,640
group stuff that they were looking for for more backup on that or maybe a tip of the spear

99
00:05:42,640 --> 00:05:46,160
or to your point that nobody wants to be the first one to speak up.

100
00:05:46,160 --> 00:05:49,840
And no disrespect to trade groups, they serve a really important purpose.

101
00:05:49,840 --> 00:05:54,120
And we've seen them make some effort on tariffs and also on the legal issues we talked about

102
00:05:54,120 --> 00:05:55,920
last week and other topics.

103
00:05:55,920 --> 00:06:00,320
They're speaking up all the time, but it's just not the same as a name you know, a company

104
00:06:00,320 --> 00:06:01,320
you know.

105
00:06:01,320 --> 00:06:04,080
And trade groups help, but they speak generically.

106
00:06:04,080 --> 00:06:07,920
And companies need to be telling their individual stories because those have more impact, the

107
00:06:07,920 --> 00:06:13,280
more relatable, they're more personal in a way, I think, and they have all the ingredients

108
00:06:13,280 --> 00:06:14,800
that you need for media attention.

109
00:06:14,800 --> 00:06:18,400
And I suspect probably for attention from the White House.

110
00:06:18,400 --> 00:06:22,240
Yeah, I think it's probably true a lot of the time. You know, companies speak directly

111
00:06:22,240 --> 00:06:26,480
breakthrough in a way that trade groups can't, but also say there is a reason why trade

112
00:06:26,480 --> 00:06:29,240
groups exist, you know, they're built for protection.

113
00:06:29,240 --> 00:06:33,000
They let companies get their message out without being individually exposed.

114
00:06:33,000 --> 00:06:34,320
So it's not always about impact.

115
00:06:34,320 --> 00:06:40,600
I think it's also about insulation. And coalitions also show alignment.

116
00:06:40,600 --> 00:06:45,040
But I wonder how much actually move public perception, you know, it's a signal, but it's

117
00:06:45,040 --> 00:06:48,760
not necessarily the story that sticks, you know, most people are not going to remember who

118
00:06:48,760 --> 00:06:53,480
signed the letter, but they are going to remember who spoke first and who spoke clearly.

119
00:06:53,480 --> 00:06:58,480
Yeah, what trade groups can do is they can help demonstrate momentum, right?

120
00:06:58,480 --> 00:07:03,320
That it's not just, you know, one company singularly making a point that it is an industry, but

121
00:07:03,320 --> 00:07:07,480
to your point, an individual company can do a better job of kicking open the door and

122
00:07:07,480 --> 00:07:08,480
getting attention.

123
00:07:08,480 --> 00:07:09,480
Yeah.

124
00:07:09,480 --> 00:07:10,720
And that you'd like the trade group to sort of be back up.

125
00:07:10,720 --> 00:07:16,240
And we, and we were starting to see companies speak up, but it was only when the markets

126
00:07:16,240 --> 00:07:17,560
really forced their hand.

127
00:07:17,560 --> 00:07:21,880
And we all know why, as Politico and others have observed.

128
00:07:21,880 --> 00:07:24,360
And we've made the same observation on this podcast.

129
00:07:24,360 --> 00:07:27,120
Like you said, no one wants to be the first one to speak up against this White House

130
00:07:27,120 --> 00:07:31,320
because dissent is disloyalty and therefore it's right for punishment.

131
00:07:31,320 --> 00:07:33,960
So the fear of the blowback is completely understandable.

132
00:07:33,960 --> 00:07:38,280
I just think you have to weigh that against the cost of staying silent.

133
00:07:38,280 --> 00:07:42,800
And I tend to believe that silence can cost you more.

134
00:07:42,800 --> 00:07:47,480
We're seeing companies use this new playbook, speak on policy rather than anything that

135
00:07:47,480 --> 00:07:50,320
could sound personal, you know, other than praise.

136
00:07:50,320 --> 00:07:51,320
Yeah.

137
00:07:51,320 --> 00:07:55,680
They stick to the facts, the what and the why without suggesting anyone's to blame.

138
00:07:55,680 --> 00:07:57,680
And that seems to be getting a little traction.

139
00:07:57,680 --> 00:07:58,680
Yeah.

140
00:07:58,680 --> 00:07:59,680
Yeah.

141
00:07:59,680 --> 00:08:00,680
You know, this is what I'm watching right now-

142
00:08:00,680 --> 00:08:05,760
How many companies have actually built a muscle to speak when the window opens?

143
00:08:05,760 --> 00:08:06,760
Yeah.

144
00:08:06,760 --> 00:08:10,240
Versus how many have gotten so used to staying quiet that they missed the moment altogether.

145
00:08:10,240 --> 00:08:13,200
You know, for me, that's kind of a pattern to call out.

146
00:08:13,200 --> 00:08:16,160
Now, some companies have simply forgotten how to show up.

147
00:08:16,160 --> 00:08:21,440
You know, they've built entire systems around risk avoidance, not voice readiness.

148
00:08:21,440 --> 00:08:23,200
And you know, silence just isn't it free.

149
00:08:23,200 --> 00:08:27,280
You know, I think at some point we're going to have to acknowledge that silence isn't always

150
00:08:27,280 --> 00:08:28,280
cowardice.

151
00:08:28,280 --> 00:08:30,360
Sometimes it's discipline.

152
00:08:30,360 --> 00:08:35,280
Sometimes it's wait and see, but the danger is when silence goes on too long and it starts

153
00:08:35,280 --> 00:08:36,280
to look like indifference.

154
00:08:36,280 --> 00:08:37,280
Yeah.

155
00:08:37,280 --> 00:08:39,880
And I think one of the problems this week was that there was a period there in the middle

156
00:08:39,880 --> 00:08:46,680
of the week where that seemed to reward the strategy of staying silent because the market

157
00:08:46,680 --> 00:08:51,440
rallied like, as Trump likes to say, "as nobody has ever seen before" on Wednesday.

158
00:08:51,440 --> 00:08:56,040
And some people probably felt that they had made the right call and to that point maybe they

159
00:08:56,040 --> 00:08:57,040
did.

160
00:08:57,040 --> 00:09:04,320
But there's so much turmoil, so much chaos to borrow your phrase, this Chaos Communication.

161
00:09:04,320 --> 00:09:11,160
The best approach I think here is to be steady, stick to the facts, talk about what company's

162
00:09:11,160 --> 00:09:13,920
goals and values are.

163
00:09:13,920 --> 00:09:19,480
And I think the other downside about silence that we saw this week was before the market

164
00:09:19,480 --> 00:09:20,880
rallied a bit,

165
00:09:20,880 --> 00:09:22,840
How are we doing on reputation?

166
00:09:22,840 --> 00:09:26,720
There was Monday, Tuesday, there was a lot of chatter about who had enabled this kind of

167
00:09:26,720 --> 00:09:29,120
behavior and why weren't people speaking up?

168
00:09:29,120 --> 00:09:32,400
Folks were starting to look around and go, like, are you okay with this?

169
00:09:32,400 --> 00:09:37,120
And I just wonder if people will be as patient as this process rolls on.

170
00:09:37,120 --> 00:09:40,520
Yes, Steve, what I see going on in the environment is a shift.

171
00:09:40,520 --> 00:09:47,200
You know, it's shift from episodic crisis response to permanent volatility management.

172
00:09:47,200 --> 00:09:49,240
I still like chaos management.

173
00:09:49,240 --> 00:09:54,800
I think this idea of playing into the permanent volatility is something that's key here.

174
00:09:54,800 --> 00:09:59,760
It's not like the old days where you manage your crisis, you clean it up and you move on.

175
00:09:59,760 --> 00:10:01,560
This is something entirely different, right?

176
00:10:01,560 --> 00:10:07,000
This is companies having to operate in chaos all the time where every signal you send out

177
00:10:07,000 --> 00:10:09,480
runs through a filter that you can't control.

178
00:10:09,480 --> 00:10:13,160
And chaos management, like every signal is a gamble.

179
00:10:13,160 --> 00:10:15,840
If you speak too early, you look alarmist.

180
00:10:15,840 --> 00:10:18,240
If you wait too long, you look irrelevant.

181
00:10:18,240 --> 00:10:19,920
If you say too much, you look political.

182
00:10:19,920 --> 00:10:22,360
And if you say too little, you look complicit.

183
00:10:22,360 --> 00:10:25,680
So I think that's kind of the box companies are in right now.

184
00:10:25,680 --> 00:10:30,040
That's why so many of them, especially right now during this tariff environment, are waiting

185
00:10:30,040 --> 00:10:31,560
for somebody else to go first.

186
00:10:31,560 --> 00:10:37,840
Yeah, I think as this volatility rolls on and because Trump did, whatever the reasons,

187
00:10:37,840 --> 00:10:43,640
pressure, all part of the plan, whatever, because he did pull that U-turn, I think, and

188
00:10:43,640 --> 00:10:47,600
this is, I think, the most important thing that I would leave people with from this podcast.

189
00:10:47,600 --> 00:10:53,280
There is a window right now for companies to take a different approach between now and July

190
00:10:53,280 --> 00:10:55,720
when the supposed pause is scheduled to expire.

191
00:10:55,720 --> 00:10:59,600
Who knows if that's real, but in the meantime, we're in a trade war with China, which is not

192
00:10:59,600 --> 00:11:03,600
good for a huge swath of corporate America.

193
00:11:03,600 --> 00:11:06,360
And the rest of the world is being tariffed at 10%.

194
00:11:06,360 --> 00:11:10,680
It's hard to tell day to day what Canada and Mexico are under- whatever.

195
00:11:10,680 --> 00:11:16,160
But with Trump's policy reversal, nobody cares really how many people in Washington call

196
00:11:16,160 --> 00:11:19,280
it a negotiating masterstroke, art of the deal, whatever.

197
00:11:19,280 --> 00:11:20,640
Everybody knows that he blinked.

198
00:11:20,640 --> 00:11:24,640
And everyone saw the immediate damage that the tariff policy was causing.

199
00:11:24,640 --> 00:11:29,760
But that started a conversation, I think, that will hopefully empower companies and they

200
00:11:29,760 --> 00:11:33,920
can use it to their advantage with a little less fear of retribution, maybe, or at least knowing

201
00:11:33,920 --> 00:11:36,040
that they've got the facts on their side.

202
00:11:36,040 --> 00:11:41,040
Corporate America kind of needs Trump to blink again on this 10% level of tariff, so I don't

203
00:11:41,040 --> 00:11:42,160
know that he will.

204
00:11:42,160 --> 00:11:47,880
But they've got to know that the audience is primed to hear criticism of tariffs.

205
00:11:47,880 --> 00:11:48,880
They've seen it.

206
00:11:48,880 --> 00:11:50,600
They've seen the damage that it does.

207
00:11:50,600 --> 00:11:55,480
And that gives them an opening to talk more about why it's bad policy.

208
00:11:55,480 --> 00:11:59,880
That the case is a lot stronger today and there's no doubt that it's rooted in facts.

209
00:11:59,880 --> 00:12:00,880
Yeah.

210
00:12:00,880 --> 00:12:01,880
Yeah.

211
00:12:01,880 --> 00:12:02,880
I think that's right.

212
00:12:02,880 --> 00:12:05,040
There's a window here, you know, but I'd say it's a narrow window and it comes with all

213
00:12:05,040 --> 00:12:07,280
the same risks that were there before.

214
00:12:07,280 --> 00:12:10,680
You know, it's just now that they're rearranged.

215
00:12:10,680 --> 00:12:16,520
Policy reversals don't just erase reputational damage, but they do create narrative permission.

216
00:12:16,520 --> 00:12:22,200
Just because Trump blinked doesn't mean reputational damage disappears, but what it does do is it

217
00:12:22,200 --> 00:12:27,120
gives companies narrative permission to speak without it sounding like partisan descent.

218
00:12:27,120 --> 00:12:29,560
You know, now it's about business consequences.

219
00:12:29,560 --> 00:12:32,120
Now it's about real world impact.

220
00:12:32,120 --> 00:12:33,840
And you know, it's not about picking a fight.

221
00:12:33,840 --> 00:12:36,640
It's about telling the truth about impact.

222
00:12:36,640 --> 00:12:40,040
The lessons for companies isn't just that he blinked.

223
00:12:40,040 --> 00:12:41,440
The lesson is why he blinked.

224
00:12:41,440 --> 00:12:44,040
It wasn't because of pressure from CEOs.

225
00:12:44,040 --> 00:12:49,080
It was because the market cracked, you know, the bond market screaming at them and Wall Street

226
00:12:49,080 --> 00:12:50,080
moved.

227
00:12:50,080 --> 00:12:51,080
Yeah.

228
00:12:51,080 --> 00:12:55,640
No, I think that was a remarkable thing about this week that even the few voices that had

229
00:12:55,640 --> 00:12:59,800
started to speak up and, you know, maybe Bloomberg is right, maybe watching Jamie Dimon

230
00:12:59,800 --> 00:13:03,520
on TV on that Wednesday morning, factored into, I'm sure it did.

231
00:13:03,520 --> 00:13:04,520
Yeah.

232
00:13:04,520 --> 00:13:05,520
Yes.

233
00:13:05,520 --> 00:13:08,760
Knowing what we know about what influences Trump's decisions.

234
00:13:08,760 --> 00:13:13,600
But yes, it was really remarkable that the stock market could fall as far as it did, but it

235
00:13:13,600 --> 00:13:18,080
was when the bond market started to wobble that they really took notice.

236
00:13:18,080 --> 00:13:19,920
Just shifting gears here a little bit.

237
00:13:19,920 --> 00:13:25,320
I thought that the furniture makers made a really interesting case study because again, they

238
00:13:25,320 --> 00:13:29,400
were, you know, really starting to feel it given how much of their business is sourced

239
00:13:29,400 --> 00:13:31,840
from the companies that were under the tariff threat.

240
00:13:31,840 --> 00:13:32,840
Yeah.

241
00:13:32,840 --> 00:13:35,880
And you know, like we can laugh at Gary Friedman's little outburst on his conference call,

242
00:13:35,880 --> 00:13:38,680
although like who can blame the guy on a day like that?

243
00:13:38,680 --> 00:13:42,880
Anybody looking at their portfolio, you know, had some sort of similar reaction, but he was

244
00:13:42,880 --> 00:13:48,360
walking that messaging tightrope, as we said, for like 90 minutes.

245
00:13:48,360 --> 00:13:51,880
Not familiar with many earnings calls that go on for 90 minutes.

246
00:13:51,880 --> 00:13:56,600
But in that journal article that we mentioned earlier, the CEO of Ethan Allen Furniture was

247
00:13:56,600 --> 00:14:01,760
quoted and he took a similar tack, urging the President to retreat because tariffs hurt

248
00:14:01,760 --> 00:14:06,600
customers, but also praising the effort to bring back manufacturing, acknowledging the

249
00:14:06,600 --> 00:14:10,480
goal, just saying that the tariff escalation went too far.

250
00:14:10,480 --> 00:14:11,480
Yeah.

251
00:14:11,480 --> 00:14:12,480
Yeah.

252
00:14:12,480 --> 00:14:15,280
The furniture CEOs are certainly fascinating here because, you know, what we're seeing is

253
00:14:15,280 --> 00:14:17,560
the classic corporate tightrope in public.

254
00:14:17,560 --> 00:14:20,840
It's not just that they're trying to have it both ways.

255
00:14:20,840 --> 00:14:22,840
It's that they have to have it both ways, right?

256
00:14:22,840 --> 00:14:26,960
You know, they're trying to stay aligned with the broader goal of reshoring of American

257
00:14:26,960 --> 00:14:31,840
manufacturing, but they're also staring down a business reality where tariffs directly

258
00:14:31,840 --> 00:14:33,960
hurt their customers and their margins.

259
00:14:33,960 --> 00:14:34,960
And that's not theory.

260
00:14:34,960 --> 00:14:35,960
That's fact.

261
00:14:35,960 --> 00:14:36,960
What do you hear from them?

262
00:14:36,960 --> 00:14:40,760
You hear a little praise for the principal and then a very clear signal about the pain and

263
00:14:40,760 --> 00:14:42,280
practice.

264
00:14:42,280 --> 00:14:45,000
Support the goal, push back on the method.

265
00:14:45,000 --> 00:14:46,000
That's the formula.

266
00:14:46,000 --> 00:14:50,240
And what I think is important here, you know, for anyone watching how companies communicate

267
00:14:50,240 --> 00:14:54,040
in this environment is that it isn't just a furniture story.

268
00:14:54,040 --> 00:14:57,240
This is going to be a template for a lot of industries going forward.

269
00:14:57,240 --> 00:15:01,280
You know, praise the goal, acknowledge the attempt, but get really specific and really

270
00:15:01,280 --> 00:15:03,440
local about what the costs are.

271
00:15:03,440 --> 00:15:07,600
You know, it's not message discipline for its own sake, it's message discipline for survival.

272
00:15:07,600 --> 00:15:08,600
Yeah.

273
00:15:08,600 --> 00:15:11,960
And so far as we've seen, I think it can be effective.

274
00:15:11,960 --> 00:15:17,280
You know, I thought about this as the market was, you know, going through its gyrations and

275
00:15:17,280 --> 00:15:19,280
tumbles over the past week.

276
00:15:19,280 --> 00:15:23,000
And I think it's supporting evidence for a data point that we've talked about on the

277
00:15:23,000 --> 00:15:24,760
podcast in the past.

278
00:15:24,760 --> 00:15:29,280
Think back to, there was about a month ago when the Yale School of Management held that

279
00:15:29,280 --> 00:15:31,720
conference for CEOs in Washington.

280
00:15:31,720 --> 00:15:35,960
And the Wall Street Journal spotted that slide with the results of a straw poll that had

281
00:15:35,960 --> 00:15:41,800
asked how much more to stock markets need to collapse before CEOs need to speak out collectively.

282
00:15:41,800 --> 00:15:42,800
Right.

283
00:15:42,800 --> 00:15:45,280
And it was a plurality of executives.

284
00:15:45,280 --> 00:15:48,600
44% said it would take a 20% decline.

285
00:15:48,600 --> 00:15:50,720
That would be the trigger for them.

286
00:15:50,720 --> 00:15:55,720
And at that point, the S&P was down, I think 7% since Trump had returned to office. This

287
00:15:55,720 --> 00:16:02,720
week, we came perilously close to that 20% down marker and low and behold, we started to

288
00:16:02,720 --> 00:16:09,600
see CEOs - pardon the pun for furniture makers - coming out of the woodwork and speaking up just

289
00:16:09,600 --> 00:16:10,600
a little bit.

290
00:16:10,600 --> 00:16:16,920
So it was an interesting catalyst, surprising to some of us that it would take that much.

291
00:16:16,920 --> 00:16:24,000
But hey, I think that with the opening that we described, the opportunity now that there's

292
00:16:24,000 --> 00:16:28,880
some cracks in the front of the facade that the White House has put up about tariffs and

293
00:16:28,880 --> 00:16:35,920
this playbook that you've articulated that there's a way to make the point maybe without,

294
00:16:35,920 --> 00:16:37,760
you know, poking the bear.

295
00:16:37,760 --> 00:16:38,760
Yeah.

296
00:16:38,760 --> 00:16:42,560
Could be really interesting as we look at the upcoming earnings season and then again,

297
00:16:42,560 --> 00:16:46,760
this supposed July deadline that that Trump has reset.

298
00:16:46,760 --> 00:16:50,880
What I keep noticing in moments like this is just how predictable some of the communication

299
00:16:50,880 --> 00:16:53,440
patterns are when the stakes get this high.

300
00:16:53,440 --> 00:16:56,000
Companies aren't rushing out to take bold stands or not.

301
00:16:56,000 --> 00:16:58,080
They're not eager to jump in front of the microphones.

302
00:16:58,080 --> 00:17:01,560
What I'm seeing is that companies doing what they've always done with business risk and

303
00:17:01,560 --> 00:17:04,680
communication risks start closing in on each other.

304
00:17:04,680 --> 00:17:06,160
They spread the risk out.

305
00:17:06,160 --> 00:17:10,440
You know, in Washington, that means letting the trade association say it first. Overseas

306
00:17:10,440 --> 00:17:14,320
it means letting the local team adjust the message or in some cases might mean just

307
00:17:14,320 --> 00:17:17,880
saying completely quiet and living in just hoping somebody else goes first.

308
00:17:17,880 --> 00:17:24,240
Yeah. I think the thing for me is that you also, I think your instinct as a comms leader

309
00:17:24,240 --> 00:17:28,600
should be that you want control in every area that you can.

310
00:17:28,600 --> 00:17:35,760
And so saying nothing or letting somebody else sort of drive the narrative about your company,

311
00:17:35,760 --> 00:17:39,560
your industry, that doesn't feel very good to me.

312
00:17:39,560 --> 00:17:46,720
And we talk about companies whose reputation may suffer or perceptions about their positions,

313
00:17:46,720 --> 00:17:52,440
 could be being shaped by an outside forest like the White House.

314
00:17:52,440 --> 00:17:58,920
I would much rather be saying something and seeing the results of that in my reputation

315
00:17:58,920 --> 00:18:05,960
or in other reactions rather than staying silent and seeing somebody else drive the

316
00:18:05,960 --> 00:18:07,440
drive the story.

317
00:18:07,440 --> 00:18:10,960
And yeah, there's so much unpredictability now.

318
00:18:10,960 --> 00:18:12,360
There's so much chaos.

319
00:18:12,360 --> 00:18:16,120
It really becomes a challenge, I think, to motivate people to go, "Well, you ought to

320
00:18:16,120 --> 00:18:18,080
just, you know, dive in."

321
00:18:18,080 --> 00:18:19,840
But you want control.

322
00:18:19,840 --> 00:18:24,960
And you can chart your own course with your communications.

323
00:18:24,960 --> 00:18:31,520
And so I think when the whole world is going crazy around you, it's important, as important

324
00:18:31,520 --> 00:18:37,580
as ever, to be consistent about your policies, your values, what's important to you, what's

325
00:18:37,580 --> 00:18:39,080
critical to your company.

326
00:18:39,080 --> 00:18:41,480
And again, chart your own course.

327
00:18:41,480 --> 00:18:43,240
Companies have the ability to do that.

328
00:18:43,240 --> 00:18:48,280
And they don't necessarily need to do it with sharp elbows to offend anybody else.

329
00:18:48,280 --> 00:18:54,480
But do it like your powering a boat through choppy waters.

330
00:18:54,480 --> 00:18:57,960
For me, with this whole episode reminds me of is just how much corporate communications

331
00:18:57,960 --> 00:18:59,600
has changed over the past few years.

332
00:18:59,600 --> 00:19:02,880
You know, it used to be (that) company's spoke up when that something to say.

333
00:19:02,880 --> 00:19:06,520
Now, you know, they speak when the environment gives them permission.

334
00:19:06,520 --> 00:19:09,040
And that permission doesn't come from the White House.

335
00:19:09,040 --> 00:19:10,480
It comes from the market.

336
00:19:10,480 --> 00:19:12,120
And it comes from the facts on the ground.

337
00:19:12,120 --> 00:19:16,480
It comes from the consequences that people can see for themselves.

338
00:19:16,480 --> 00:19:20,280
And you know, this week just didn't test companies' message discipline.

339
00:19:20,280 --> 00:19:25,600
It tested their timing, their nerve, their ability to sit and discomfort and wait for the

340
00:19:25,600 --> 00:19:27,160
right moment to speak.

341
00:19:27,160 --> 00:19:29,280
And then to have something worth saying.

342
00:19:29,280 --> 00:19:32,960
You know, in this environment, it's not just about who speaks first, it's about the credibility

343
00:19:32,960 --> 00:19:36,120
and whether anyone believes you when you finally do.

344
00:19:36,120 --> 00:19:40,640
Yeah, I think that point about people waiting for permission is a really strong one.

345
00:19:40,640 --> 00:19:44,320
Because you know that old saying, "You'd rather ask forgiveness than have to ask permission."

346
00:19:44,320 --> 00:19:46,520
I think that's sort of similarly applies here.

347
00:19:46,520 --> 00:19:50,080
Like, I don't think companies should wait around for permission to talk about something

348
00:19:50,080 --> 00:19:54,480
that is critical to their business, to their industry, to the US economy.

349
00:19:54,480 --> 00:19:59,520
And hopefully, as I said, hopefully people will recognize that there is a window now where

350
00:19:59,520 --> 00:20:06,640
it should be easier to talk about tariffs not being good, to talk about why, at least

351
00:20:06,640 --> 00:20:11,760
the approach to economic policy needs to change so that companies have more certainty about

352
00:20:11,760 --> 00:20:14,560
the markets they're going to be, and the conditions they're going to be operating in

353
00:20:14,560 --> 00:20:15,960
these markets.

354
00:20:15,960 --> 00:20:19,760
I think what I'll be watching is how companies are using this one at a reset, not just their

355
00:20:19,760 --> 00:20:22,000
talking points, but their posture.

356
00:20:22,000 --> 00:20:26,120
You know, can they shift from reactive messaging to proactive framing?

357
00:20:26,120 --> 00:20:31,080
Can they move from defending their interest, to defending their relevance?

358
00:20:31,080 --> 00:20:36,360
When policy reverses this fast, what companies say next doesn't just reveal their strategy,

359
00:20:36,360 --> 00:20:38,280
it reveals their nerve.

360
00:20:38,280 --> 00:20:39,280
Good point.

361
00:20:39,280 --> 00:20:42,040
And that's a great way to end the show for this week.

362
00:20:42,040 --> 00:20:46,720
We want to thank Shawn P Neak and the team at AdvoCast, as well as the People Forward Network

363
00:20:46,720 --> 00:20:49,080
for making our podcast possible.

364
00:20:49,080 --> 00:20:52,800
If you have comments or suggestions for the podcast, we'd love to hear from you.

365
00:20:52,800 --> 00:20:57,640
Our email address is podcast@ocarnetwork.com.

366
00:20:57,640 --> 00:21:01,640
Communication breakdown is a production of the Observatory on Corporate Reputation.

367
00:21:01,640 --> 00:21:02,640
I'm Steve Dowling.

368
00:21:02,640 --> 00:21:03,640
And I'm Craig Carroll.

369
00:21:03,640 --> 00:21:04,640
Thanks for listening.

370
00:21:04,640 --> 00:21:11,640
We'll be off next week and back with a new episode April 25th.

371
00:21:11,640 --> 00:21:21,640
[MUSIC]

372
00:21:21,640 --> 00:21:31,640
#corporatecommunication #tariffs #corporatereputation #marketvolatility #CEOresponses #communicationstrategy #businessrisk #publicrelations #tradepolicy #corporateAmerica #WhiteHouse #WallStreet #JPMorgan #RH #RestorationHardware #Bloomberg #Treasury #Politico #WallStreetJournal #EthanAllen #YaleSchoolofManagement #S&P#corporatecommunication #tariffs #corporatereputation #marketvolatility #CEOresponses #communicationstrategy #businessrisk #publicrelations #tradepolicy #corporateAmerica #WhiteHouse #WallStreet #JPMorgan #RH #RestorationHardware #Bloomberg #Treasury #Politico #WallStreetJournal #EthanAllen #YaleSchoolofManagement #S&P

373
00:21:31,640 --> 00:21:34,580