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Detroit's PR Lessons and the Right Way to Ask for Help

11:02 AM Tuesday December 9, 2008
by Kathy Bloomgarden

Tags:Financial crisis, Public relations, Recession

Edward Bernays, the "father of public relations," once defined PR as "a program of action to earn public understanding and acceptance." If that is the case today, the CEOs of the Big 3 automakers remain challenged on both aspects.

Having taken private jets to their first round of testimony, they came off as both unprepared and out of touch. Gimmicks, such as all three CEOs returning in hybrid vehicles, can't offset the impression that their plans are still not well defined.Convincing the public that the automakers have a clear plan that they can execute is key to gaining support from government.

Regaining trust at this point can only come with a patient, hard-fought campaign based on a track record of success. Actions taken by the Big 3 over the past few years have failed to restore them to a competitive position. While specific plans have been submitted on the Hill over the past few days, which include a review of brand portfolios, revised union contracts, and working under the direction of a federal oversight board, they met skeptical public reaction. Why should the public believe that these changes will be fast enough and deep enough to return the companies to a competitive state?

If Congress decides to proceed with the bailouts, the companies are likely to receive much more media scrutiny, and will need to rebuild their reputations through consistent, fact-based, transparent communications that demonstrate in great detail how the companies are changing. Some key takeaways from this week's testimony that could help in rebuilding trust with all their audiences include:

1) Be sincerely willing to talk--and act--differently

Former Chrysler CEO Lee Iacocca wrote in his most recent book, "A leader has to communicate. I'm not talking about running off at the mouth or spouting sound bites. I'm talking about facing reality and telling the truth."

As the Wall Street Journal put it, "the sad reality of creating a viable industry is all about firing workers and shutting down excess capacity." It's about changing the way the company does business - and about a culture change that impacts day to day activities deep in the companies' ranks. Just as the change needs to be transformational, so too must the communications. Truth-telling will be particularly important when faced with these tough circumstances.

2) Understand the context and present a fact-based case

The Big 3 should have been more cognizant of the danger of "bailout fatigue." After the debate about the bailout of the banking sector, it was inevitable that there would be an outcry against the government moving to intervene in other industries. There was criticism that the companies had not explored all alternatives before asking for a public handout, and did not have enough clarity about the pluses and minuses of the bankruptcy option.

From the start, the companies should have had the facts about the potential impact of their industry faltering. They should have cited statistics documenting how their failure would further drive deterioration of the US economy. It would have been wise to present the facts on competitive benchmarks in order to shape understanding of the imperatives moving forward. From the start, they should have been proactive, not reactive in outlining their arguments.

3) Admit mistakes and take the blame

Knowing when to accept blame is a delicate art that forces the best leaders to walk a line between showing strength in self-appraisal while airing their weaknesses.

During the second round of testimony, GM CEO Rick Wagoner apologized for the industry, saying "we're sorry" to ask the government for a handout. However, he went on to blame "market conditions" for putting the automakers in their current position, sapping away substance from his apology. While it is obvious that "market conditions" have played a role, had he been able to clearly outline areas where GM could have done better in responding to the market, he would have positioned himself as a leader who has learned from mistakes of the past and is prepared to lead the company forward.

Even if the loans are granted, economist Mark Zandi from Moody's Economy.com has predicted that automakers might well be back for more money by next fall. This will likely not be the last industry to hold out their hands as the economy continues to weaken, marking a trail of collapse like we have not seen in decades. The next round of supplicants would do well to learn from the mistakes the auto industry has made in this round.

Kathy Bloomgarden is co-CEO of Ruder Finn, one of the world's largest public relations agencies, and the author of Trust: The Secret Weapon of Effective Business Leaders.

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Comments

Sensitivity analysis and conformance to laws are the best routes to corporate help. The Detroit majors should have used standard strategic planning techniques to plan their cash flows better. They should now apply for bankruptcy instead of bypassing established systems to deal with crises. There are unhealthy precedents in asking tax payers to pick up tabs for incompetent and negligent management.

- Posted by Dr S Banerji 
December 22, 2008 5:33 AM

Well Kathy,
Market conditions were sure around for other manufacturers as the Japanese too. The Big 3's biggest shortcoming was in the area of detecting, studying and planning for changes in market conditions- market trends.
I believe they are suffering from a strategic myopia. It kept them from having a market's perspective and still seems to be acting. The bailout may inspire new horizons if it flows through a new and dynamic strategic vision and context. But with such strategic inertia it may go down a hole.
When myopic, you simply could not see that your PR and communications are not reaching far and deep enough. So you stick with your current procedures as if they were right and effective.

- Posted by Mohsen Parvaresh 
December 23, 2008 1:00 PM

Dear Kathy,I have not gone all through your article to know about the points.Because the big3 CEO's act of inefficiency and their approach towards presenting a viable case was quite disgraceful.I never saw any one begging while using expensive private jets for their own comfort.I wonder how those guys made it bigg and who made them CEO. Probably the approach by the CEO will contribute to the brand erosion of their respective companies.

- Posted by Pratap Kumar Pattanayak 
December 23, 2008 9:40 PM

Please check out my blog The Savvy CEO for a posting made on November 28th about what the Detroit Big 3 could have done better, which complements what Kathy has said above. Bernays' definition points out clearly what good Public Relations is and the actual role of our industry. It's unfortunate that the Big 3 chose either not to ask or not to listen to a PR pro -- they are paying the price in more ways than one and their actions will be long remembered. It takes years to build a good, strong, respected reputation and only seconds to destroy it. CEOs take a lesson.

- Posted by Joanna Broussard 
December 30, 2008 12:07 PM

Kathy, your article has me wondering: Which PR agencies were doing PR for the Big Three? Were their PR agencies asleep at the wheel, or were they just so happy to get their retainers that they forgot to do the jobs they'd been hired to do?

- Posted by Mike Barlow 
December 30, 2008 12:19 PM

Dear Kathy;

I agree with your intro point. You can only make a first impression once! Having taken private jets to their first round of testimony, the CEOs of the Big 3 automakers clear show how much out of touch they are with the real world.

PR can be very powerful. Imagine the stories if the CEOs of the Big 3 automakers have car-shared in a hybrid car to the first round of testimony?

- Posted by Mads Stoustrup 
December 30, 2008 12:54 PM

The real step that has to be made by both the manufacturers and the government is to move into the hydrogen economy. But maybe because of the power of the oilcompanies everybody keeps focussing on details of behaviour like described in this article. Public enthousiasm will be there immediately if anyone has the courage to do something really new and inevitable. Talking about presentation is part of the problem as is talking about 'being honest' if we are not honest to ourselves.

- Posted by Manfred van Doorn 
December 30, 2008 12:55 PM

Quote: "... returning in hybrid vehicles, can't offset the impression that their plans are still not well defined..."

Well, "Couldn't you have have down-graded to First Class?" was a definitive statement from the US Senate about the failure of CEO culture to realize that they are merely part of a complex web of human existence. Ultimately, their survival may be as irrelevant as what they produce.

But what is the right way to ask for an industry which (a) should suffer attrition, and (b) be partially replaced by public transport anyway? They have manipulated the game for long enough not only to the detriment of the environment but leaving America now more exposed and vulnerable to oil (price + supply) crises than ever.

In "facing reality", what appeared equally disgusting was the horde of auto dealers stupidly expecting that the world owed them a living. Strange, though, that there is no mention in this article of the effect that withdrawing consumer finance had on the auto industry and retailers in general.

- Posted by Douglas Chalmers 
December 30, 2008 1:20 PM

Most of the points have been brought out in the comments.The first Question is Are they the big three today?
If yes,Would they remain there ?
What do they intend doing ?
They should not depend on being bailed out.

Regards
Air Cmde Krishna Shankar

- Posted by Air Cmde Krishna Shankar 
December 31, 2008 4:27 AM

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