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A JOURNAL OF COMMUNICATIONS AND CORPORATE RELATIONS m ISSUE EIGHT m SPRING 2014

THE CRISIS ISSUE weathering the storm BP’s Bob Dudley reflects on the aftermath of the Deepwater Horizon accident – Sir Richard Olver on turning a crisis into an opportunity at BAE Systems – Lessons from Steve Miller, corporate America’s “Mr Fix-it” – How zombies can help in a crisis

Christie’s CEO, Steven Murphy, on expanding in China and cyberspace – k.v. kamath finds india’s shine – Legendary oilman T. Boone Pickens, still shaking things up

Plus anya hindmarch: handbags forever – poor old richard iii, five centuries of bad press Brunswick is a corporate relations and communications consultancy. We provide informed advice at a senior level to businesses and other organizations around the world, helping them to address critical communications challenges that may affect their valuation, reputation or ability to achieve their ambitions.

To download and share Brunswick Review articles please visit: www.brunswickgroup.com

editor design & production Jackie Shorey MerchantCantos

[email protected] www.merchantcantos.com Brunswick Review is printed on Redeem 100% Recycled, made project managers printed by using post-consumer waste fibers Georgina Brackstone CPI Colour and manufactured without the use Natalie Lincoln of any secondary bleaching. cover illustration feedback © Rob Ball, The Artworks Copyright © Brunswick Group LLP 2014 [email protected] we are enormously proud of the clients we Several of our contributors focus on the importance represent and aware of the trust and responsibility of being prepared. Peter Ho, former Head of the they place in us. That responsibility is felt most sharply Civil Service in Singapore, developed forward planning at times of crisis. Over the past 27 years we have been tools to help the city-state predict risks better. privileged to work alongside leadership teams all over Dr Ali S. Kahn, of the US Centers for Disease Control the world as they have faced myriad crises. This issue and Prevention, used zombies to turn the often dull of the Brunswick Review is dedicated to that theme. business of preparedness into a compelling story. His ability to combine a scientist’s rigor with an Perhaps the single most important idea to emerge from instinctive sense of how to react under pressure is this issue is this: while many people continue to talk echoed in Steve Forte’s article on the skills a pilot about “managing” a crisis, those who emerge strongest deploys to deal with a crisis at 35,000 feet. Meanwhile, from a corporate crisis recognize that managing an Brunswick’s Eric Savitz reminds us that the starting uncontrollable event is impossible. Instead, the key is to point of recovery from a crisis is often a heartfelt show leadership. apology, a defining statement of character. We lead with an interview with Bob Dudley, CEO of BP, Elsewhere in this issue, Steven Murphy gives a who discusses dealing with one of the most complex and fascinating insight into how a great heritage brand like difficult crises of recent times, following the explosion Christie’s can embrace new technology and explore new four years ago of the Deepwater Horizon oil rig in frontiers, demonstrated by its milestone expansion into the Gulf of Mexico. As Dudley illustrates, one of the China. If one of the keys to success is to have powerful critical qualities of a leader in such circumstances is the values combined with a passion for your brand, then ability to grasp the magnitude of the situation from the the success of designer Anya Hindmarch should not get-go, and to marshall all the appropriate resources be a surprise to anyone, and she does this with panache required to come to grips with the crisis. We have rarely and humor. worked alongside a client facing such a tough external environment. As many companies have come to recognize, social engagement is a key part of building brand value. Companies have to survive such challenges but, as Sir Brunswick’s Lucy Parker and Jon Miller draw on their Richard Olver points out, a crisis can also be a pivot recent book Everybody’s Business to argue that today’s point, presenting an organization with an opportunity to big companies are integral to society, not separate from bring about radical change. The transformation of BAE it. As well as delivering financial value, forward-thinking Systems under his chairmanship over the past decade is organizations are more and more concerned with how a benchmark of how to revitalize a corporate culture. they deliver social value. We also talk to K.V. Kamath, We have many other examples of finding opportunities who has been credited with leading India’s banking in crisis. Sinopec, for one, turned a freak accident sector into the modern age, a key factor in his country’s into a campaign to raise awareness about the need to development. preserve Hong Kong’s beaches, enlisting the support of I would like to thank all of our contributors – and thank like-minded NGOs. Similarly, Steve Miller has become you for your interest. If you have any feedback or ideas, known as corporate America’s “Mr Fix-it.” Starting with please don’t hesitate to get in touch with me or any of the Chrysler in the 1970s, he has helped transform a range of Brunswick team. organizations in crisis, from aircraft manufacturers to symphony orchestras. sir alan parker – Chairman, Brunswick Group brunswick review · issue 8 · spring 2014 3 guest contributors

Bob Dudley Dr Ali Khan Sir Richard Olver Ed Gillespie James Gregory — BP Group CEO — Director, US Centers — Former Chairman, — Candidate for US — CEO, CoreBrand PAGE 10 for Disease Control BAE Systems Senate in Virginia PAGE 32 and Prevention PAGE 24 PAGE 30 PAGE 20

Fu Chengyu Ron Kirkpatrick Lisa Hartenberger Peter Ho Patrick Alley — Chairman, Sinopec — National Manager, — Director, Corporate — Senior Adviser, — Director & PAGE 35 Executive/Internal Communications, Centre for Strategic co-founder, Communications, Navistar Futures, Singapore Global Witness Toyota US PAGE 39 PAGE 44 PAGE 48 PAGE 39

Steve Miller Steve Forte K.V. Kamath Steven Murphy Jinqing Cai — Non-Executive — COO, Virgin America — Non-Executive — CEO, Christie’s — Managing Director, Chairman, AIG PAGE 54 Chairman, PAGE 68 Christie’s China PAGE 50 ICICI Bank PAGE 73 PAGE 62

Christine Graeff T. Boone Pickens Anya Hindmarch Mary Jordan Chris Skidmore — Director General, — Chairman and CEO, — Founder, — Founder and Creative — Member of Communications, BP Capital Anya Hindmarch Director, The Water Parliament, European PAGE 76 PAGE 80 Tank Project Kingswood, England Central Bank PAGE 84 PAGE 86 PAGE 74 PORTRAITS: PETER FIELD PETER PORTRAITS:

4 brunswick review · issue 8 · spring 2014 contents THE CRISIS ISSUE

second section

06 Introduction 39 Hearts and minds 62 Finding India’s shine Brunswick Chairman Sir Alan Parker Employees can be valuable brand Khozem Merchant interviews explores how to deal with ambassadors in a crisis, Toyota’s veteran banker K.V. Kamath the changed nature of crises Ron Kirkpatrick and Navistar’s about his country’s changing Lisa Hartenberger tell Keith Burton corporate landscape

10 Weathering the storm 42 The hardest word 65 Everybody’s business Four years on, BP’s CEO Bob Dudley When it’s time to apologize, Big business can be a powerful reflects on the company’s response you had better make sure engine for social change, to the Deepwater Horizon accident you mean it, says Eric Savitz report Jon Miller and Lucy Parker

68 The art of sales 14 Clampdown in China 44 What are the odds? Christie’s CEO Steven Murphy How serious is China’s latest Will Carnwath and Christina Pantin tells Kim Fletcher how the venerable anti-corruption drive, ask examine how Singapore adopted auction house is learning to love St. John Moore and Gordon Guo futurist thinking to better commerce in a digital world prepare for unforeseen threats plus Ben Rawlingson Plant talks to Jinqing Cai about how Christie’s 17 When an earthquake hits ... 48 Breaking the cycle debut auction in mainland China is Daisuke Tsuchiya on communicating Patrick Alley of Global Witness a milestone for the global art market with global media in the thick of a tells Richard Meredith that quickly unfolding natural disaster companies and NGOs can work 74 Clear talking together in a crisis The single word most often used at the European Central Bank 20 Don’t be a zombie, be prepared 50 Calling on Mr Fix-it is “communication,” says Dr Ali S. Khan of the CDC tells Nobody calls Steve Miller the bank’s Christine Graeff Sarah Lubman how being creative when things are going well, helped spread a serious as Jennifer Lowney and 76 Finding the lagniappe public health message Justin Dini discover Steve Lipin and Chrysta Castañeda findT. Boone Pickens in fine form 24 The best defense 54 This is your captain speaking and still looking for change A crisis can be an opportunity Virgin America COO Steve Forte to institute fundamental change, tells Brandon Borrman what 80 Handbags forever Sir Richard Olver of BAE Systems the boardroom can learn Anya Hindmarch tells tells Michael Harrison from the flight deck Heather McGregor about craftsmanship, celebrity and 30 If you can keep your head ... 56 Truth and untruth her admiration for the woman who Political veteran Ed Gillespie Barney Southin and Louise Ward turned “handbagging” into a verb on lessons learned in crisis mode on the consequences of at the White House the supercharged spread 84 Water color of digital misinformation Mary Jordan of The Water Tank Project is creating public art with 32 Post crisis: engage or fly low? 59 How to dig a deeper hole purpose, reports Laura Dudley James R. Gregory of Corebrand Jeremy Palmer offers advice and Robert Moran examine to those who want to make 86 The only way is up the merits of an active versus a crisis much, much worse Richard III was an early victim passive strategy in a crisis of political spin, writes Member of Parliament and 35 Plastic snow historian Chris Skidmore Sinopec turned the tide on a Hong Kong beach spill, 90 Critical moment Tong Zhao and Crystal Chan report Martin Luther King’s most enduring speech reminds us that sometimes you have to throw away the script, reports Daniel O’Donnell

brunswick review · issue 8 · spring 2014 5 brunswick review · issue 8 · spring 2014 In any crisis, the mindset matters as much as the method, says Brunswick Chairman sir alan parker. Good leadership through adversity can help define an organization THE CRISIS ISSUE

runswick has always specialized in a deeper lack of values and integrity. managing critical issues for clients and over A common problem when a crisis hits is to think many years we have served on the front that you have to deal with all incoming fire, answering lines at moments of extreme drama. questions about what happened, how it happened, For more than 25 years, we have worked and who is to blame. But it is more important to B on everything from tragic plane crashes establish your view of what is happening. If you to oil spills, corporate fraud to financial meltdowns, can project that view from the outset, it will give supply chain disruptions to major product recalls. credibility to your response. We have been proud to stand by our clients at some of It is important not to let the gap between your the most difficult moments in their histories. We have organization’s self-image and others’ perceptions of learned a lot in the process and continue to do so. it grow too wide. This can be exacerbated at times of In the past year, we have gathered our teams from high political tension, for example in the middle of around the world to develop a presentation for our an election cycle. If management does not respond to clients setting out our point of view about “best this disparity appropriately, it can pay a high price. practice” when dealing with a crisis. This article There is a growing realization that companies in highlights some of the points in that presentation. a crisis must contend with the opinions of many The first maxim is to act fast but don’t panic. groups. They can face danger when they fail to fully A truly terrible event can batter an organization realize the relevance of an event to the interests of like a storm. It unfurls like a hurricane, gathering others. There have never been so many stakeholders momentum and taking on a life of its own. This in a company’s reputation. usually occurs because a trigger event reveals a One central thought that emerges from our deeper truth about an organization or collides with experience of the changing nature of corporate larger public or political agendas. Then suddenly, all crises is that in today’s world too many organizations credibility and goodwill is swept away and a howling put their faith in “crisis management.” The word gale of criticism sweeps all before it and drowns out management implies control, but trying to manage your voice. a crisis can often compound a problem in a But a bad situation need not develop into a fundamentally uncontrollable environment. crisis. We all understand that, for example, a product To continue with the hurricane metaphor, you recall can take place, that data can be vulnerable, can prepare, you can train people and have them and that no organization can inoculate itself on standby, but you can never hope to manage the entirely from individuals who act inappropriately storm when it comes. Attempting to do so is a wasted or illegally. The question, though, is whether these effort and symptomatic of a command and control

ILLUSTRATIONS: © ROB BALL, THE ARTWORKS ARTWORKS THE BALL, ROB © ILLUSTRATIONS: are isolated incidents or whether they reflect mindset, which can make matters worse. brunswick review · issue 8 · spring 2014 7 all change It is more important than ever for a business to show leadership at times of crisis. At Brunswick, we believe that while you may not be able to manage a crisis, effective leadership is defined by the ability to quickly and clearly grasp the issues and take appropriate action. Management then needs to engage and communicate in an authentic and credible way. The starting point is to recognize just how much the world has changed. Three things have transformed the way audiences think and behave: The greatest transformational shift was, of course, the financial crisis, which triggered broader economic and social change. The debate about the haves and the have-nots has become more polarized, and resentment has reasserted itself. It is not just about perceptions and feelings; the social impact has been staggering as millions of people have lost their jobs and their homes. The impact of all this is, understandably, a deep disillusionment with both government and big business. The old institutions seem to have let everyone down. The second transformation was a revolution in the nature of the public conversation. In the past few years, we have seen the birth of what has been called the “public information space,” a mass of real-time, interactive content that has disrupted the old world of communications – “key messages” broadcast to “target audiences” have been overtaken. We are now in “The Age of Conversation.” In the new landscape, the snap of a single photo, an offhand remark, or an ill-advised phrase can create narratives from nowhere that can quickly alter A crisis unfurls like the perception of a public figure or organization. These can become truly global events in a matter a hurricane, gathers of minutes. The third transformation is a product of the momentum, and takes first two. People have lost faith in established institutions, which they no longer believe are on their side. As a consequence, politicians, regulators and on a life of its own the media are now all striving to reassert legitimacy and prove they are part of the solution, not part of the problem. Many of these groups now define themselves as being against powerful banks and big business, and vigorously prosecute anything that looks like bad behavior. Indeed, their personal and collective futures depend on being seen to be “the good guys.” We live in a world where regulators are being pushed to make examples of corporate wrongdoers and are judged by the harshness of the penalty and the seniority of the scalp.

8 the crisis issue thinking straight with internal audiences, as they can be the keenest In a crisis, the response must be separated into the judges of what is authentic. Not only that, employees tactical and the strategic. Tactical moves alone will can be valuable brand ambassadors during periods never be enough. You also need the right mindset of crisis. but that is not always straightforward. Perhaps the It has been drummed into us that “content is king,” easiest way to conjure it is to examine some common so it is worth remembering that it is acceptable – missteps and explode a few myths. important even – to create your own. You may not be The most natural emotional response to a crisis able to control what everybody else says about your can also create the most dangerous mindset, that company in a crisis, but at least you can decide what is to say: “it’s not fair.” Believing that accusations you want to say, when you want to say it, and in what or implications are overstated or inaccurate, or format you want to deliver it: advertising, video, print, that a more balanced perspective would take all the online, and so on. particulars of a situation into account, is beside the The ability to tell your own story is an enormous point. It’s not about fairness. In the eyes of the public step forward. While many of the old forms of you are where the blame lies. Saying “it’s not fair” corporate content – a press release, a speech – are won’t help. still useful, you can now bring the power of digital There is, of course, the temptation to say, “We can’t and social media to bear. Just as everyone’s voice is comment yet, it’s too early to tell.” That would be a legitimized by the public information space, so is a mistake. You may not have a full or accurate sense company’s. The voice of its leadership, its employees, of events or facts but it is always possible to express indeed all of its key audiences, can be brought into concern and a commitment to respond appropriately. the conversation. Protecting your reputation requires fast thinking Authenticity is crucial, especially when making an and responsiveness by the leadership of a company apology. Conversely, corporate- and legal-speak is not and all its advisers. Marshaling an experienced and authentic. When a leader steps up and makes it clear, practiced team, seizing the initiative, and being clear in his or her own words, why something matters, about what you want to do are crucial. It is easier to what is important, and the values they bring to fixing reinforce a view that has been established early than it the problem, it is the true test of character, defining is to change an alternative view that has been allowed a leader and their business. This takes real bravery. to take hold. Prevarication or searching for an elusive Indeed, there are many cases where reputation certainty in a fast-moving and dangerous situation has actually been enhanced by adept handling of a will only increase the risks. crisis. Sinopec’s action over an environmental threat One of the most dangerous mistakes in a crisis is to has reflected well upon them. Bob Dudley’s handling dismiss negative attacks as ignorant and ill informed: of the litigation following the terrible Deepwater “It’s too complicated, they don’t understand.” If you Horizon accident has been widely recognized as can’t explain something to a broad audience, it says showing great leadership and diplomacy. Sir Richard more about you than them. Olver at BAE Systems has also been an exemplar In the new order, lawyers take a leading role in of stalwart leadership in a crisis. all major crises. The great ones understand the That brings me to one final observation. value of winning in the court of public opinion as Ultimately, a company’s reputation isn’t just about well as the court of law. Still, reputations are lost by paying taxes, abiding by regulations, and doing the hiding behind a legal defense or corporate-speak right thing by the law. The real test is whether you and avoiding open and honest dialogue in order to have wider social value. What we find inspiring is how prevent a later legal challenge. It is a commonly held many leadership teams and organizations are putting view that business leaders, when faced with serious enormous effort into doing business in a way that problems, will not only try to avoid blame but hide they and all of their key audiences would be proud behind technical or legal constraints. Instantly, of. It is very exciting to work with so many people you are 30-love down and the game has only just who are hugely committed to showing that their begun. Enlightened lawyers work to ensure that organization can be a force for good. The business communication is clear and powerful, which helps that can demonstrate this will be the champion to protect and enhance a client’s reputation. of its class. Management needs to be open and transparent in all its communications, and this should start sir alan parker is the Chairman of Brunswick Group.

9 WEATHERING

THE bob dudley on leading BP’s fight to do the right thing in the Gulf STORM Few corporate leaders have had to manage a crisis as significant as the one that confronted BP on April 20 2010 in the Gulf of Mexico. Bob Dudley, at the time BP’s managing director in charge of the Group’s activities in the Americas and Asia, switched on the TV in a hotel room in India and learned about the explosion and fire aboard the Deepwater Horizon oil rig, an accident that killed 11 workers. Dudley was soon asked to lead the company’s Gulf Coast Restoration Organization, which was set up to manage BP’s response to what became one of the worst maritime oil spills in history. In October 2010, Dudley became Group Chief Executive. Since then, he has led BP’s efforts to restore the Gulf and defend the company’s rights in litigation related to the accident and spill. He has also overseen measures to further enhance safety, based on the lessons learned from the accident and its aftermath. In an interview with Brunswick’s ellen moskowitz and stephen power, Dudley explains how BP has responded to the crisis and the issues the company continues to face.

10 the crisis issue brunswick review · issue 8 · spring 2014

What were some of the factors that BP had to five months after the explosion, concluded that it was consider in responding to the accident? a complex accident involving multiple causes and From the outset, we believed it was important to multiple parties. That conclusion has been substantially work with government officials and others to address supported by all subsequent official investigations. We the needs of people who had been affected. This have also been giving presentations across the globe – was quite personal for me, by the way, because I in more than 25 countries so far – sharing what we have spent my childhood summers on that coast. In the learned from the accident with government regulators, aftermath, BP’s credit situation was difficult. Despite industry experts and academics. our considerable resources and valuable assets, the On safety, which is and has always been of financial challenge we faced cannot be overstated. paramount importance to BP, we have made a Nonetheless, we stepped up, waived the $75 million number of enhancements. For example, the company statutory liability cap under the Oil Pollution Act of introduced a stronger, company-wide safety and 1990, and publicly committed to pay all legitimate operational risk organization, staffed by safety experts claims, even establishing a $20 billion trust to assure who set standards and have broad powers to approve the American public that funds would be available for appointments to safety-critical roles and stop work if economic and environmental restoration – something necessary. In addition, BP has enhanced its internal that has never been done before. Finally, we said we standards and practices for drilling, and has built the would work to embed the lessons learned into the state-of-the-art Houston Monitoring Center, which fabric of our organization and share those lessons with provides additional monitoring support and resources our industry colleagues and government regulators. to rig crews who have primary responsibility for monitoring BP assets in the Gulf of Mexico. What has happened since the accident? We have kept our word to the people of the Gulf Coast What has the impact been on the company? region. We have spent upwards of $26 billion, which We have come very far, and made great progress. includes more than $14 billion on the response and The accident no longer poses a threat to the company’s cleanup, and more than $12 billion on claims paid future, and we have made BP a safer, stronger and to individuals, businesses and government entities. better company. The accident caused us to look afresh That is the wealth of many nations. In addition, the at everything we do in BP – not only safety, but also company has already spent approximately $1 billion how we create value in a way that is sustainable to support the Natural Resource Damage Assessment (NRDA). This includes more than $500 million paid directly to the Trustees to conduct the scientific studies that underpin the final assessment of environmental injuries and restoration. On top of that, BP has voluntarily committed up to $1 billion through an unprecedented agreement that has allowed early restoration projects to begin, even while the NRDA BOB DUDLEY assessment continues. Our commitment has gone beyond mere dollars. Bob Dudley started his career in 1979 at Amoco, It has also included an enormous human component. which was acquired by BP in 1998. He has held a Tens of thousands of individuals, including our variety of senior posts at both companies, including President and CEO of Russian joint venture TNK- employees as well as outside contractors, have worked BP from 2003 to 2008. Following the Deepwater tirelessly to help the region recover. Horizon explosion in April 2010 he was chosen But we are still managing the fallout from the to lead BP’s Gulf Coast Restoration Organization, accident. To some extent, the current issues stem from which handled the company’s response to the the very first decisions we made at the outset of the accident. He became Group CEO in October of the crisis: to step up, do the right thing and address the same year. Dudley, who was raised in Mississippi, needs of people who had been affected. trained as a chemical engineer and has Masters’ degrees in Management and Business.

What measures have you taken internally? BP is one of the world’s oldest and largest integrated We made a commitment to cooperate with all official oil and gas companies, with 85,000 employees, investigations, but we also immediately launched operations in more than 80 countries and sales

ILLUSTRATION: NOMA BAR NOMA ILLUSTRATION: our own. Its findings, posted on our website less than of $379 billion in 2013.

11 over many decades. It has also led us to simplify decision from the District Court, which could come the company’s structure. at any time now or after the penalty phase of the trial. Around the globe, we are following a very simple Finally, we were pleased to have reached an principle: play to our strengths and don’t try to do administrative agreement with the US Environmental everything. So we have been divesting non-strategic Protection Agency lifting the suspension that was assets – we have reached our $38 billion target a year imposed on BP in November 2012. As a result of this ahead of schedule. This has significantly increased agreement, we are once again eligible to enter into the quality of the upstream portfolio while reducing new contracts with the US government, including its age and complexity – and the risks that come new deepwater leases in the Gulf of Mexico. with that. Our vision for BP is to continue to grow as a safe, focused oil and gas company, with a high BP also appears to be in a highly publicized performing, cash generating downstream, and most battle with the Claims Administrator. What is this of our capital investment going into a pipeline of high dispute about? quality upstream projects. Fundamentally, it is about We believe the misinterpretation of the agreement we making BP a safer and a stronger company – but also reached in 2012 to settle economic loss and property a sustainable one. damage claims has resulted in huge awards being made to claimants with fictitious losses or losses You said BP has been sharing lessons learned from unrelated to the spill. More than half a billion dollars the accident with regulators globally. How has this has been awarded for alleged losses with no apparent affected their perceptions of the company? relation to the spill. As we have argued in court, this Many governments are recognizing the steps we is contrary to the language of the settlement and have taken, both in responding to the spill and in violates established principles of class action law. reinforcing safety. The Brazilian government, for We are fighting in court, not only because we have example, actually cited the steps we have taken to a duty to our shareholders, but also because it is reinforce safety following the Deepwater Horizon simply the right and principled thing to do. I don’t accident in awarding us several exploration licenses. believe any company would agree to a settlement that pays businesses for fictitious losses or losses it didn’t What about the litigation? Where does that stand? cause. And BP certainly didn’t. I believe the ultimate From the outset, we tried to settle claims on resolution of this legal fight – whichever way it goes – reasonable terms. We began paying claims could have enormous implications for the US justice immediately after the accident and we settled with system and the role that trial lawyers play in it. our partners and several contractors. Then, in November 2012, we reached agreement with the Can you give some examples of how the company US Justice Department to resolve all federal criminal believes the misinterpretations are affecting claims? charges and all claims by the Securities and Exchange Some examples from our legal briefs include: a Commission against the company that stemmed wireless phone store that was closed for nearly all of from the accident, oil spill, and response. We also 2010 as a result of a fire that predated the oil spill; a reached an agreement to resolve the majority of lawyer located around 200 miles from the Gulf, who legitimate economic loss and property damage lost his license four months before the spill; a wheat claims. A lot of our legal efforts over the past year farm, more than 200 miles away, that elected not have been focused on that agreement, to make sure to plant and harvest crops in 2010. All got awards that it is implemented in a way that we believe is true from the claims program. These are not just one- to its language and fulfills its original, intended and off, false positives – there are lots of these examples, lawful function: the compensation of claimants who resulting from the systematic misinterpretation of sustained actual losses connected to the Deepwater the agreement. This is not what we agreed to and not Horizon accident. what any company would ever agree to. At the same time, we have continued to defend ourselves in the federal civil trial in New Orleans that But you have gone beyond challenging the will determine, among other things, the cause of the interpretation of the settlement agreement. One accident, the appropriate allocation of fault among could argue that you have essentially said that you the various defendants, and the number of barrels have little confidence in the claims program you of oil spilled. All of the evidence has been submitted helped create as part of the settlement. Why? in the first two phases of that trial, and we await a Eighteen months after the claims program started,

12 brunswick review · issue 8 · spring 2014

half of its senior leadership has resigned or been claimants whose alleged injuries are not traceable to fired because of allegations of serious – and, in the accident and spill. We disagree with this decision some cases, potentially criminal – misconduct. The and have advised the Fifth Circuit that we will seek independent investigation the District Court ordered rehearing by the full court. We continue to believe to look into this continues to find problems and that this is a misinterpretation of the agreement make recommendations – almost two years after the and that neither the agreement nor the law allows claims program first got up and running – to ensure for the systematic payment of claimants whose that it operates efficiently and is free of conflicts and losses were not caused by the spill. We are obviously corruption. BP has spent more than $750 million on disappointed with the current state of play on this, the administration of a facility that should operate but we also believe that our efforts to ensure that our effectively, and we are doing what we can to assure commitment is not distorted and taken advantage the integrity of the program. We cannot sit idly by of have yielded positive results, leading to the and allow dysfunction and problems in the claims matching correction. program to continue. Does BP wish it had made different choices, How are you getting your message across? given some of the things that have occurred One thing we have been doing is publishing since the accident? advertisements in major US newspapers giving In his latest book, Ken Feinberg, the expert who examples of how we believe the settlement agreement helped run the claims process shortly after the spill, has been abused. wrote that most companies choose to delay accepting responsibility when faced with large potential What are you trying to achieve with this strategy? liabilities, and that BP could have chosen to litigate We have been running the ads to inform our from the outset, imposing long delays before claimants stakeholders about the serious concerns that we have saw payment for their losses. BP did not do that. been raising for months now about the way in which We did what we believed was right – which was to the settlement agreement is being implemented. compensate those individuals and businesses in We hope that doing this will help people understand the Gulf that were legitimately affected by this why the litigation over the settlement continues and accident. Unfortunately, there are some who are the extent to which we believe that the company’s trying to take advantage of that. And judging from commitment to the Gulf is being exploited. Our my conversations with business leaders around the opponents have said in the media that we are backing world, our experience may well serve as a cautionary away from our commitments, but, in fact, it is quite tale for other companies. the opposite. Our commitment is real, and we want No other company in history has committed itself our stakeholders to know that. to a region in the aftermath of an accident the way BP has to the Gulf Coast since the spill. BP has said Where do things stand in the courts on this issue consistently, since the very beginning, that it would of interpretation of the settlement? do the right thing. We meant what we said, and we We got a favorable ruling in the courts regarding are keeping our word. The bottom line is this: we the calculation of business economic loss (BEL) are working very, very hard to meet the company’s claims. It took 10 months of litigation, but in commitment to economic and environmental December 2013 the District Court reversed its prior restoration efforts in the Gulf, while defending our rulings and found that the claims program must interests in court. ensure, as we always maintained, that claimants’ Our intention has always been to compensate those reported revenues and expenses are correctly genuinely affected by the accident. We will continue matched when determining awards. This was a big to fight to do the right thing – the right way. victory for the company and will help to significantly restore the implementation of the agreement to This interview was completed on March 14 2014 its intended function. ellen moskowitz is a Partner in Brunswick’s New York office. Unfortunately, we have so far not been as successful A lawyer, she focuses on critical communications assignments on the other interpretive issue that has made its way involving litigation, corporate reputation and crisis. She has through the courts. The US Court of Appeals for been working on BP matters since July 2010. stephen power is a Brunswick Director in its Washington, the Fifth Circuit denied the company’s request for a DC office. Formerly a journalist, he advises on public affairs permanent injunction preventing payments to BEL and crisis communications with a focus on the energy sector. brunswick review · issue 8 · spring 2014 13 the trial and conviction of high-ranking Communist Party official Bo Xilai in September 2013 – when he was sentenced to life in prison for bribery, embezzlement and abuse of power – was trumpeted by official Chinese media as the clearest sign to date that the country would no longer tolerate corruption at the highest levels and would prosecute offenders to the full, in open court. As Xinhua, China’s official news agency, noted, “Media commentaries said Bo’s treatment, fully in accordance with the law, shows that nobody is exempt from Party discipline and national laws. Whoever is involved will be thoroughly investigated and, if punished, severely punished, in accordance China’s previous with law.” anti-corruption drives The tough stance on corruption has extended to have often fizzled out foreign companies, too. In August, for example, the after a few months, Chinese authorities issued their largest-ever fine but the latest one for alleged price fixing­– $109 million – against six is different. infant milk producers, five of which are foreign: st. john moore Mead Johnson Nutrition, Abbott Laboratories, and gordon guo of Dumex Baby Food, Royal Friesland, Fonterra Brunswick, Beijing Co-Operative Group, and Biostime International, consider a new which is based in Hong Kong. campaign that shows The latest crackdown on corruption is part signs it will run long of a major campaign led by Xi Jinping since he and deep, as the ascended to the leadership of the Communist Party government seeks to of China (CPC) in November 2012. protect its legitimacy While the downfall of Bo was set in motion while addressing months before Xi took office, his trial was seen public anger as a move to dispose of a powerful political over corruption rival and also as a signal that corruption would not be tolerated at any level. “The resolute legal punishment of Bo Xilai fully demonstrates that there are no exceptions before Party discipline and state law,” People’s Daily, the Party’s main newspaper, asserted. Many anti-corruption drives under previous leaders were announced with a flurry of publicity but quickly petered out. This latest campaign, however, is clearly different. It has been running since late 2012 and all indications are that the current leadership will continue in their resolve. The new Xi leadership team has taken on board that corruption is one of the most corrosive problems facing the country, and the campaign is clearly aimed at protecting the very legitimacy of the Communist Party. Xi stated early in 2013, “We must uphold the fighting of tigers and flies at the same time,

resolutely investigate law-breaking cases of leading REX HUANCHI, XIE PHOTOGRAPH:

14 the crisis issue brunswick review · issue 8 · spring 2014 officials, and earnestly resolve the unhealthy In addition, more than a dozen senior executives tendencies and corruption problems which happen in major state-owned enterprises and private all around.” Xi’s “tigers and flies” reference is a companies have been investigated for corrupt typical metaphor from Chinese officialdom, in this activities. case signaling that both high- and low-ranking Academia hasn’t escaped scrutiny either. Several officials are targets. senior academic leaders at prestigious institutions, In November 2013, two key documents were including Renmin, Zhejiang and Sichuan released following the meeting of CPC top brass universities, have been removed from their posts. at the Third Plenary Session of the 18th Party The China Securities Regulatory Commission Congress: a communiqué and Decision on Major (CSRC) has also intensified oversight of listed Issues Concerning Comprehensively Deepening Chinese companies. In September, the CSRC Reform. Both stressed that the anti-corruption initiated 39 investigations, a 50 percent increase drive had official backing and would continue, and on the average for the previous eight months, that endemic corruption threatens the legitimacy resulting in a number of fraud penalties. of the Party and long-term sustainable economic growth and innovation. rules of the road The smallest misuse of government expense It is not yet clear how many tigers and flies need accounts, official cars, private clubs, receiving to be caught, or how many organizations or pre-paid cards, or even hosting a wedding with too companies will be investigated. What is clear is many tables, is enough to attract an investigation. that both foreign and domestic interests are at Unlike earlier campaigns, previous sins are not risk and must ensure they comply with existing being forgiven with just a warning and a slap on policies and practices. The authorities will act on the wrist. At the time of writing, more than a dozen individuals in companies if they are found to have senior officials (ranked at the ministerial level) and conducted corrupt activities. They will also impose about 20,000 junior officials have been replaced or fines for wrongdoing. And, while at the time of put under investigation for corruption. writing no foreign investor has faced corporate criminal charges in China, this may just be a matter casting the net wide of time. The fate of Bo Xilai, one of the highest ranked Responding to accusations of wrongdoing officials in China at the time of his downfall and is challenging at the best of times. Chinese a contender to join the higher ranked Politburo authorities are aggressively using the media and Standing Committee, is a rare outcome but not are able to quickly build a public case against unprecedented. Historically, committee members those being investigated. Allegations travel quickly, have been exempt from investigation. However, undermining reputations in China and abroad. reports indicate that committee member Wang In this environment, companies must undertake Qishan, who heads the Central Commission for an honest and thorough review of their operations Discipline Inspection of the CPC, the top Party to ensure that they are compliant with global values watchdog, scrapped a long-standing unwritten and principals – and that these are being effectively rule in 2013 that exempted incumbent and retired Senior Party official implemented locally too. Bo Xilai pictured (left) members of the Politburo Standing Committee Local compliance requires more than just a during his trial for from investigation for corruption. corruption and abuse translation of global documents and ensuring all The current campaign is not simply “killing a of power in 2013. employees, partners and suppliers have signed the chicken to scare the monkeys,” as the saying goes. “We must uphold the appropriate forms. Many foreign companies have It goes deeper; senior figures in the domestic fighting of tigers and invested heavily in localization, with significant business community have come under scrutiny flies at the same time,” returns, and they need to undertake a genuine too. For example, Jiang Jiemin, a former Chairman said Xi Jinping in 2013, review of local market practices and investment in shortly before taking of PetroChina and head of the State-owned Assets customized local procedures to verify compliance. office as President, Supervision and Administration Commission, warning both high- and The risks of complacency are painful. They which is responsible for overseeing China’s leading low-ranking officials bring increasing chances of high profile state-owned enterprises, was relieved of his duties against all forms investigations, a tarnished reputation among in September due to corruption allegations. of corruption Chinese customers and consumers, and a brunswick review · issue 8 · spring 2014 15 potential long-term disruption to the China growth increasingly clear, attitudes are shifting definitively story. The risks beyond China can be even greater, and there are strong political underpinnings with penalties from multiple jurisdictions in for this move. As Linda Yueh, Chief Business relation to foreign corrupt practices and a damaged Correspondent for the BBC and an authoritative global reputation. voice on Chinese business, commented recently, In October 2013, the US-China Business Council the crackdown is not aimed specifically at foreign (USCBC) published a report, based on a survey of companies but is driven by political realities. 30 of its member companies, offering guidance for “Chinese President Xi Jinping has made managing compliance in China. For decades, the clamping down on corruption one of his basis for all US companies operating abroad has main aims in his first year in office,” she wrote. been the Foreign Corrupt Practices Act (FCPA), “The reason is straightforward. There are which applies to many non-US companies, too, tens of thousands of protests across China since the US began to apply the act to foreign every year, and many of the complaints are over businesses with substantial US operations in an corruption. With growth slowing, such tensions effort to level the playing field. The USCBC report lying just beneath the surface are more likely notes that, “On paper, current Chinese regulations to flare up.” are extremely strict [but] these rules have only The clampdown is, in other words, an inevitable recently begun to be enforced.” consequence of the maturity of China’s continuing This is the dilemma for foreign companies transition to a market-driven economy, even as the operating in China. As noted in a previous USCBC leadership tries to assert political control. report, a big concern for companies is that they The campaign is not just targeting st. john moore is a Partner in Brunswick’s Beijing might lose competitive advantage in China to other office, providing counsel to Chinese and foreign officialdom or foreign companies that aren’t required to comply with the companies on cross-border M&A, public affairs and companies. The corporate reputation. He also advises on crisis issues. FCPA and which operate according to custom, even domestic business if that custom violates official Chinese rules. gordon guo is a Director in Brunswick’s Beijing office. community has come His 18 years at the Ministry of Commerce have given him That is a temptation that should be avoided, under significant first-hand government experience managing complex especially in the new climate. As is becoming scrutiny, too bilateral and multilateral issues.

In China, corrupt officials are second only to rising prices as a concern

hina’s political elite has come to “corrupt officials” was the second greatest PUBLIC CONCERNS IN CHINA recognize what outside experts – concern after rising prices, the survey found. 2008-2013 and many of its own people – have (Notably, the next biggest concern was the In the survey, the Chinese public ranked long known: corruption not only is “rich-poor gap,” followed by worries about corruption the 2nd and 9th biggest C morally reprehensible, it also holds the environment and food safety.) problems out of 17 issues of concern back economic progress. It is no wonder that politicians in China In its annual Global Competitiveness are paying closer attention to the issue of 2nd biggest concern: corrupt officials Report for 2013-2014, the World Economic corruption, especially the enrichment of Forum noted that China remains stuck in well-placed officials seeking bribes and 39% 53%

29th position, even though its economy vies special favors from foreign companies. 2008 2013 with the US to be the largest in the world Clearly, it has been a tough year for +14% by GDP, because “weaknesses – including multinational companies in China, but corruption, security issues, and low levels of domestic politics are the driving force. The 9th biggest concern: corrupt businesspeople accountability and ethical standards among corruption crackdown needs to be seen as businesses – remain.” consistent with the government’s efforts – as 21% 27% Meanwhile, the Pew Research Center’s emphasized in November 2013’s five-yearly 2008 2013 Global Attitudes Report on China in Plenary meeting of the Communist Party – September 2013 found that more than half to address citizens’ expectations, including +6% of respondents in China thought political more consumer protection, affordable SOURCE: PEW RESEARCH CENTER’S GLOBAL ATTITUDES corruption is “a very big problem.” Indeed, healthcare and a better standard of living. REPORT ON CHINA, SEPTEMBER 2013

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— DISASTER STRUCK MARCH 11 2011 I awoke to a call from a friend who urged me to turn on the TV. I’d had an eerily similar call years earlier, on the morning of January 17 1995, when an earthquake had struck the city of Kobe (also at 5.46am – Japan time). Back then, I was a student living in Tokyo but my family lived close to Kobe, in western Japan, so my first concern then was whether they were safe. It was 24 hours before I could get through to them. This time, I was working as First Secretary at the Japanese Embassy in London, responsible for communications. A magnitude 9 earthquake had struck the country’s northeast coast, triggering a massive tsunami. Immediately, I headed for the office. On the way, text messages began to pour in from people offering their condolences. At the embassy, my team was already inundated by calls from the public, concerned about family and friends, as well as interview requests from the media ...

brunswick review · issue 8 · spring 2014 17 Reaching the embassy, we had to moving ahead, and crucially the radiation quickly decide our immediate crisis levels in most of Japan were normal. The communications strategy. Chief Scientific Adviser to the British With time constraints and only limited government was helpful in this respect, information, we tried to focus our efforts giving a factual analysis that helped calm on three main tasks. concerns over radioactivity. First, we needed to inform the global Some key messages we sought to convey audience of the action being taken by to the public via the media were: the Japanese government, which had The early warning system successfully established a special task force within four halted around 30 high-speed trains that minutes of the earthquake. More than were running in the affected areas at the 100,000 Self Defense Forces were deployed time, preventing them from derailing. in the first few days for rescue operations. The high-speed rail system resumed full Precautionary evacuation zones were put service just over a month later. in place around the Fukushima Daiichi Nuclear Plant from day one. It was The main regional airport in northeast important to provide reassurance that Japan, Sendai, was submerged entirely the Japanese government was taking swift by the tsunami on the day, but was ready action. for operation just a month later, as were the scale of the catastrophe caused Second, we needed to assure the global many damaged roads. by the Tohoku earthquake and the audience that transparency would be a The actual level of radiation in the main ensuing tsunami on March 11 2011 was priority. It was a very fluid situation and cities, such as Tokyo, and even Sendai, unprecedented in Japan. As the Prime there was much that was unclear at the near Fukushima, were at or below those Minister, Naoto Kan, put it at the time: outset, with limited information available in London only three weeks later. “In the 65 years since the end of the to the government. So, we felt it was Second World War, this is the toughest important to emphasize that information Correcting misinformation outside and the most difficult crisis for Japan.” would be delivered as accurately and Japan was crucial. Nearly 19,000 people perished or swiftly as possible and nothing would be The embassy in London issued its own remain missing. The country not only concealed. holding statement and began accepting faced the wrenching loss of life caused by Third, it was important for us in the interview requests. In total, I did around the natural disasters, but also had to deal diplomatic corps to express gratitude for 30 in the first week, including the BBC, with the risk posed by damage to several the support offered to Japan. Being based Sky, CNBC, Colombian and Iranian nuclear facilities at the Fukushima Daiichi in London, we needed to thank the British television, and local radio stations. Nuclear Power Plant complex, the worst government, industry, and the public for On day one, the media mainly had such nuclear incident since Chernobyl. their support. factual questions about the earthquake And the operator of the complex, Tokyo The response was amazing, with endless and tsunami. On day two, I was in a BBC Electric Power Company (TEPCO), came offers of help and support from people all Radio studio doing an interview, when in for severe criticism for how it managed over the UK. For example, the designer Sir news came in about the first explosion at the crisis. Paul Smith was in Japan shortly after the Fukushima. The interviewer immediately Here, Brunswick’s daisuke tsuchiya, disaster and called on British businesses asked me – on air – for information about who at the time was First Secretary in to continue to trade with the country. an event I knew nothing about. charge of communications at Japan’s The Birmingham Royal Ballet went on As time went by, the media’s probing London embassy, gives a first-hand its tour of Japan as scheduled, only two became much more critical. We were account of what it was like for a diplomat months later. asked why the evacuation advice to deal with such a catastrophe in one of given by the Japanese government was the world’s media hubs. There was also a mid- to long-term task different from that given by some foreign at hand: how to minimize any damage governments. Some questioned whether to the country’s reputation. the Japanese government was releasing We needed to ensure that false all the information it had. There were information did not put people off erroneous reports, such as those claiming visiting Japan or from buying Japanese that foreign companies were not being products. Many earthquake contingency allowed in for reconstruction. For us,

measures had worked, the recovery was the need for transparency and to correct REUTERS PHOTOGRAPH:

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BEWARE THE FEARMONGERS misinformation quickly in order to lessons learned minimize reputational damage was key. The specter of fear surrounding a One of the key communications Criticism of both TEPCO and the nuclear incident is hard to combat, lessons learned from this crisis was to government after an accident like that even in the face of hard evidence be forthcoming, even if you do not was inevitable. But I would absolutely In an op-ed piece in The New York immediately have all the answers. The refute the suggestion that there was a Times in October 2013, David Ropeik, a fear of appearing incompetent often leads conscious attempt to conceal information. journalist and consultant who teaches companies and governments to wait until Transparency was our bottom line. a course on risk communication for they have the full picture, but the patience public health issues at the Harvard of the public does not allow that anymore. Extension School, asked, “Why To ensure timely and accurate Today, someone somewhere will be does our fear of all things nuclear information was being provided, persist?” This came after he noted accurately or inaccurately disseminating we used multiple channels of alarmist reports about workers at information. Silence is perceived as a lack communication. the Fukushima plant being doused of transparency and can be damaging In the first week, the embassy set up a with radioactive water, even though rather than appearing inept. photo exhibition with the help of the the evidence from Fukushima and Another lesson was how the response Japanese media, showing scenes on Chernobyl shows there is relatively to a crisis can shape public sentiment for the ground, including British search little risk. the better. The international perception “The robust evidence that ionizing and rescue teams. Website content was of Japan actually improved in the wake radiation is a relatively low health risk updated constantly to stay current. dramatically contradicts common of the crisis. In a BBC World Service poll To communicate that Japan was up and fears,” Ropeik wrote. of people from 22 countries between running, ready to welcome visitors and It is a problem that is not confined December 2011 and February 2012, Japan to do business, the embassy held talks by just to nuclear but extends to other topped the table globally with 58 percent academics, invited journalists to Japan, complicated, science-based subjects. positive perception. and held a “Visit Japan” campaign event Introducing his Harvard course, I believe this can be attributed to the with local celebrities. Ropeik explained, “Our ideas about way the media widely covered the great complex environmental and public London correspondents for resolve and strength of those affected. health issues, such as climate change, Japanese media played a crucial role in industrial chemicals, and species communicating to the afflicted regions extinction are largely formed by the future the significant level of international simplistic and dramatized media Nearly three years later, the effects of the support – in our case, from the UK. coverage and distorting political spin disaster are not over. Reconstruction will There were charity events to raise funds from all sides.” take many years. The full containment for the victims everywhere: at churches, Ropeik told the Brunswick Review, and shutdown of the Fukushima plant is “It’s not just a question of who the shopping centers, even primary schools. something that Japan continues to deal media talk to, of course, but how they use that information. As with many with, while the damage and pain inflicted stories, the riskier aspects of radiation- on victims and their families will never “I would absolutely related stories get played up. Such go away. information comes more from anti- But Japan has a long history of crisis refute the suggestion that nuclear advocates, so they get quoted and reconstruction, and I believe the there was a conscious higher in the story, even if the reporter recovery of the afflicted regions will, in has talked to neutral sources as well.” time, be yet another chapter in the story attempt to conceal For more on communications about of the country’s resilience. public health, see following story information. Transparency daisuke tsuchiya is an Associate in Risk assessment: a worker checks for Brunswick’s London office. He specializes in radiation at the Fukushima Daiichi Japan-related work, from cross-border M&A was our bottom line” power plant in June 2013 (above) and crisis, to corporate reputation building.

19 Nobody knows a crisis better than dr ali s. khan, who leads the US government’s efforts to prepare the public for disease outbreaks and health emergencies, as Brunswick’s sarah lubman discovers

oon after the march 11 2011 Fukushima nuclear disaster, the US Centers for Disease Control and Prevention (CDC) sought to reassure a nervous American public that the trace amount of radiation wafting over from Japan posed no harm. The agency’s Office of Public Health Preparedness and Response, whichS pays close attention to online conversations, noticed some tongue-in-cheek chatter that radiation might reanimate the dead into zombies, the premise of George Romero’s classic 1968 black-and-white horror movie, Night of the Living Dead. The CDC picked up the zombie meme and ran with it. A member of the CDC’s communications team suggested doing a post on the agency’s blog about disaster-preparation tips to help readers survive a zombie apocalypse (for the record, they include a proper survival kit and emergency planning, including an agreed evacuation route. Baseball bats, a common weapon of choice against zombies, were not on the list). Former US Assistant Surgeon General Dr Ali S. Khan, now director of the CDC’s Office of Public Health Preparedness and Response, greenlit the idea. The result went viral, and the CDC’s website crashed under the onslaught of the virtual hordes. “We used this as a metaphor even though there were natural disasters already happening,” says Khan. “Somehow, embracing zombies allowed people to think more concretely about how they – and more importantly their family and households – were prepared.” The CDC also dispensed more conventional advice after Fukushima, dispelling fears over US radiation exposure and urging the public not to take potassium

The US Centers for Disease Control and Prevention’s award-winning campaign taps into the public’s love of zombies to get across a serious public safety message

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iodide after noticing a push for it on social media. But the zombie blog demonstrates more than a rare display of institutional creativity and humor by a government agency. It underscores the importance of flexibility and the ability to listen and respond appropriately, all essential qualities for an effective crisis response, whether it is directed at a disease outbreak or a product recall. Khan honed his skills in the field as an Epidemic Intelligence Service Officer, the virus hunters who travel around the world trying to determine why people in a particular community are getting sick. Khan’s work has taken him to remote regions in DR ALI S. KHAN search of clues about transmission of diseases, Dr Ali S. Khan has worked in the public ranging from Ebola to SARS to the mouse-borne sector for more than 20 years, becoming hantavirus. In an interview with Microbe World when Director of the Centers for Disease Control he was a “disease detective,” Khan described one of and Prevention’s Office of Public Health the more memorable hazards encountered on the job: Preparedness and Response in August 2010. taking blood samples from fanged monkeys in the Khan qualified as an MD at State University Philippines during an Ebola outbreak. of New York’s Downstate Medical Center in his hometown of Brooklyn, New York. In his current role, as responder-in-chief to public He earned a Master of Public Health degree health threats, Khan’s guiding principles are: “Be first from Emory University. His professional and be credible.” He acknowledges that it isn’t always career has focused on bioterrorism, global easy being both, and that the agency works hard to health, and emerging infectious diseases, walk a line between providing accurate, science-based and over the past decade he has led public information and not “over-reassuring” the public. As responses to high profile emergencies, he puts it, “You need to acknowledge people’s fears, including Ebola, avian flu, the Asian tsunami express what you do know, what they want to know, and Hurricane Katrina in New Orleans. what you can’t tell them – and when you’ll have more WATCHING THE DISEASE DETECTIVES information to tell them something.” The Centers for Disease Control and It helps that the agency can often talk with certainty Prevention (CDC) describes itself as “the about the biology of a disease outbreak, whether the nation’s health protection agency.” It has cause is a virus or food contamination. “We have 15,000 employees operating in all 50 of the some things that we can talk about that enhance our United States and 50 countries worldwide, credibility, that are science-based and accurate,” Khan commanding a budget of nearly $7 billion. says. “We can also then give somebody a point in the The CDC has a wide brief, but the single largest expenditure is on “preparedness” future to say, ‘You know what? Tomorrow at three I’m to protect Americans from natural and going to come back to you and I’m going to tell you bioterrorism threats ($1.3 billion). One how many additional cases there are.’” way the CDC does this is through public Pop culture depictions of health crises have education, an example of which came evolved. Khan regards the movie Contagion, which after the 2011 filmContagion , starring features both an epidemic intelligence officer and a Kate Winslet, when the CDC deployed its sophisticated understanding of incubation, as a “great “disease detectives,” who had advised on the film, to sort fact from fiction. “While the example” of Hollywood getting it right. As a witness movie is a work of fiction,” the CDC said, via to deserted African villages, shunned healthcare a live Twitter chat, “real-life stories of CDC’s workers, and patients left to fend for themselves, elite Epidemic Intelligence Service [where Khan thinks Hollywood has come to recognize Khan started his career] are just as exciting that outbreaks are scary enough in their own right as the story on the screen.” without requiring any added hype. What the popular imagination and movie cameras can’t capture is the day-in, day-out routine and rigor that the agency employs to stay on its toes. The CDC operates in a state of constant rehearsal and brunswick review · issue 8 · spring 2014 21 planning for any number of different crises, going so far as to hold mock press conferences where real members of the media are invited to attend and ask tough questions. “We take that part very seriously,” Khan says. “We’re a public health agency. We could have the brilliant diagnosis of what happens, and if we can’t communicate that, we’ll never get the control measures and preventions in place. We have to be able to communicate.” mapping the future The CDC has time-tested protocols in place for different events and disease outbreaks, with clear guidelines – or “critical information requirements” – for what needs to be flagged and how far up the chain it goes, including to Khan himself. The agency also gives training and classes around the world on emergency risk communications, working with the World Health Organization and various governments. Asked about the toughest crises he has managed, Khan picks two. The first was the 2001 anthrax attacks in Washington, DC, when letters containing deadly anthrax spores were mailed to several news media offices and two Democratic senators, killing five people and infecting 17 others. The second was during the aftermath of Hurricane Katrina, when the local public health workforce was displaced. During the anthrax attacks, “The defining teacher was uncertainty,” Khan says. “You don’t know what’s going to happen next. You have no way to map out what the future of the response is going to look like and what control strategies are going to look like ... it makes it very challenging to communicate.” The CDC already makes extensive use of social and digital media to listen to the public and tailor its response, as it did in the aftermath of Fukushima by warning that the health risks of taking potassium iodide far outweighed any benefit against minimal radiation detected by highly sensitive US monitoring. The agency wants to do far more, and is actively exploring new ways to harness the power of the internet to aid disaster relief and disease outbreak. “We’re currently in the process of developing a crowdsourcing/crowd analysis tool for public use around outbreaks and other disasters,” Khan says. Dubbed Project Dragon Fire, the CDC envisions it as a single online source or site, developed in partnership with other federal agencies and the American Red Cross, where citizens can go to report damage and share information. To illustrate the need for a better online disaster response tool, Khan recalls his experience in the hardest-hit areas of Indonesia, after the Indian Ocean

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earthquake and tsunami devastated the region. More than 280,000 people in 11 counties perished on December 26 2004, many at the mercy of waves that reached up to 98 feet in the wake of a massive earthquake. Khan went to Aceh, one of the hardest-hit areas of Indonesia, as a World Health Organization representative to help coordinate the response. He saw how one NGO after another was sent to the same refugee camp, even though there were others nearby in desperate need. “I think we can do a lot better at collating information and using that information to drive actions in our communities, either by our citizens or our response community,” Khan says.

listening and practicing Khan thinks a lot about performance measures and he admires the effective targeting of specific audiences that accompanies good marketing by companies. “My sense is that the corporate world has a better idea of how to segment their message so that they’re not wasting time and energy,” he says. The CDC has also learned some lessons from slow-moving crises, such as the rise of anti-vaccine advocates who have contributed to an increase in The CDC embraced the undead and went viral with disease outbreaks, such as whooping cough. “We are Preparedness 101: Zombie Pandemic, a graphic novella doing better by listening to social media to give us a more timely sense of the heartbeat of America, but When he made the first of his preparedness for emergencies. we need to be more aggressive in communicating the Living Dead films, director The media got the joke and the George A. Romero had a serious message behind it. CNN evidence for our recommendations. Being science- purpose larger than simply commented, “[Khan] and his based, emotionally neutral, and non-judgmental exploitation-horror in mind. communications team recently does not have to conflict with our duties to share our As both the Library of Congress noticed that what they’d want convictions and passion to protect our children.” and the American Film Institute you to do if the world really did What keeps Khan awake at night? “The next AIDS- recognized, Night of the Living suddenly go Night of the Living like epidemic,” he says. Also, terrorist threats, which Dead was a culturally significant Dead is pretty much the same can’t be predicted. Catastrophic natural disasters, film that held deeper messages thing they’d want you to do of social critique. in the case of a hurricane or a because “there’s nothing static about what Mother So it was natural, then, that major pandemic.” Nature will throw at us.” And last but not least, Dr Ali S. Khan, a fan of the The blog has received nearly continued budget cuts in public health. He estimates zombie genre, should embrace five million views, up from that there are 45,000 fewer public health practitioners the undead as a source of the few thousand that a CDC at the state and local level than five years ago. inspiration to improve the way posting usually receives. A crisis exercise cut the interview a few minutes the government’s Centers for Later in 2011, CDC launched short: the CDC was simulating an anthrax attack, Disease Control and Prevention a graphic novella, Preparedness and it was time for Khan to jump in. The scenario (CDC) got across its message 101: Zombie Pandemic (excerpts about public safety – specifically shown here) reaching an even included 1,600 spiked samples sent to the CDC to test in response to questions about wider audience. Included is how quickly the anthrax would be spotted. “We’ve put the Fukushima nuclear incident a “preparedness checklist” some ringers in there to see if they all get picked up or following the earthquake and for readers to get their family, not,” Khan says, clearly relishing the mock problem as tsunami in 2011. workplace or school ready good preparation for a real one. Khan posted a tongue-in- before disaster strikes. The cheek blog in May 2011 initially campaign was garlanded with sarah lubman is a Partner in Brunswick’s New York as a clever way to get across multiple awards and mentions, office. Before joining the firm she was a journalist for what might otherwise have including two Platinum Awards 17 years, working out of Japan, China and the US. been a mundane message about and a cover story in PR News. Additional reporting by gwynne oosterbaan, a Director

ALL IMAGES COURTESY OF THE US CENTERS FOR DISEASE CONTROL AND PREVENTION in Brunswick’s New York office.

23 The best defense sir richard olver tells Brunswick’s michael harrison that a crisis, such as the one BAE Systems faced over its Saudi arms deal in 2004, can be an opportunity to institute fundamental change

ir richard olver is sitting back, legs Busy as he is now, life at BAE was hardly dull. crossed, in his office in Stirling Square, an While there, Olver led the company through anonymous, modernist building tucked a number of perilous crises – from a six-year discreetly between two of London’s Serious Fraud Office (SFO) investigation into more iconic landmarks, The Mall and allegations of bribery and corruption in some the gentleman’s clubland of St. James’s. of BAE’s most important overseas markets, He is contemplating the nature of crisis. to the squalls that followed BAE’s failed attempt With his white hair, owlish features and in 2012 to merge with EADS, which would wire-rimmed glasses, Olver could quite have created a global defense and aerospace easily pass for an Oxford don. Indeed, leader – a project championed by Olver. Along S he has the requisite intellectual heft and gift for the way, he has had to deal with any number deconstructing an argument, though he has led of issues, ranging from the difficult decision in nothing like a sedate life among the groves of late 2013 to end naval ship-building in Portsmouth, academe. For the past decade he has held down one Britain’s Royal Navy hub on England’s south coast, of the toughest and most demanding corporate to the closure of armored vehicle and aircraft jobs: Chairman of BAE Systems, the world’s third production sites in the north. biggest defense contractor and Britain’s largest Though they can cause painful disruption, manufacturing company. especially for the people directly affected, Olver In February 2014, he retired from that post believes that some crises can be cathartic. This was to devote more time to his other commitments, especially true, he recalls, of the one that engulfed which include advising UK Prime Minister David BAE in 2004, when the company was accused of Cameron and a clutch of blue-chip companies, using a slush fund to pay millions of pounds in plus indulging his various passions: sailing, ballet, bribes to facilitate the Al-Yamamah arms-for-oil the fine arts, and five grandchildren. deal with Saudi Arabia.

24 the crisis issue brunswick review · issue 8 · spring 2014 RICHARD OLVER

Sir Richard Lake Olver (universally known as Dick), was born in Woodford Green, Essex, just outside London, in 1947, graduated from City University with a First Class Honors degree in Civil Engineering and joined BP in 1973. His 30-year career at BP culminated in his appointment as Deputy Group Chief Executive in 2003. In July 2004, he became Chairman of BAE Systems, retiring in February 2014. He has held a number of board and advisory positions at companies including Thomson Reuters and HSBC. He is also a member of UK Prime Minister David Cameron’s Business Advisory Group. PORTRAIT: SAM KERR, DEBUT ART DEBUT KERR, SAM PORTRAIT:

25 The Typhoon is a “If you know you need to make changes – maybe gut instinct was to authorize an external review multi-role aircraft that radical changes – then a crisis can help,” Olver says. of the company’s ethical policies and business goes from brakes off “It is very difficult to get people to change the way conduct by an independent figure, a “heavyweight,” to takeoff in less than eight seconds and they think and do things if it doesn’t appear to so he could communicate, both internally and to supersonic in under 30 them that there is any particular need. We didn’t the outside world, that BAE was alive to concerns have a financial crisis or one created by a massive about its behavior and determined to change. oil leak. We had a crisis of reputation and we He found the heavyweight to take on the needed to do a lot to fix it. Over the 10 years [since review in the shape of Lord Harry Woolf, a the crisis], we’ve changed everything.” former Master of the Rolls and Lord Chief Olver has no doubt that today BAE is a better, Justice (the top two judicial positions in England). more robust and more prosperous business thanks Over breakfast at the Athenaeum Club around to the company’s root-and-branch reform of its the corner from Olver’s office, Woolf agreed ethical codes and the sea change in corporate to take on the task but only after he had performed culture that followed. some due diligence. Olver recounts the story: Progress is not just a matter of doubling the “I said, ‘Well, OK, fine. Let me help you with share price under his tenure; it goes deeper and the due diligence.’ He said, ‘No, no, no, you further than that. “We have a company where there don’t understand. I’m going to do the due has been a real change in the way business is done. diligence on you. I’ll call you in a week.’” People glibly talk about culture change, but we have Olver not only gave Woolf a free hand to review had real change. This company today is thoughtful BAE’s existing ethics regime, but asked him to about what it does at every level, whether it’s develop an ethical policy that would serve as relationships with individuals, relationships with the gold standard for British industry, not just countries, or relationships with ministries and the defense sector. The review began in 2007 prime ministers. We clearly are only prepared to and crucially Olver committed in advance to do business our way. We may have to walk away publish all of Woolf’s recommendations and to from some business – and we have – but my implement them. view is that in the medium- and long-term it’s a The result, he believes, is an ethical standard competitive advantage. and a culture that compare favorably with any “Do we sometimes, with nearly 85,000 people, company anywhere in the world: “We have “If you know have somebody do something silly?” Olver rewritten every single policy and process. Our you need to continues. “Yes. But they don’t stay in the company code of business conduct is world class – the way for more than 10 minutes. We have zero tolerance in which we vet advisers is world class. I don’t make changes for anything like that – but what has happened is know any corporation that has actually changed – maybe radical that we’ve got more revenue, more profit, a higher as many things as we have changed.” stock price, and more overseas sales.” Isn’t it a bit ripe for a company that is changes – in the defense industry to now parade its then a crisis an ambush at dawn ethical standards? The SFO moved in just a few months after Olver Olver rejects that argument: “My view is the can help” took on the BAE chairmanship in July, 2004. His exact opposite. It’s precisely because we are in

26 the crisis issue brunswick review · issue 8 · spring 2014 the defense business that we have to make sure Take the decision, in November 2013, to cease that everything we do is to the highest possible warship-building in Portsmouth and consolidate it standards of business behavior.” in two shipyards in Clydeside, Scotland. Olver says Indeed, he argues that precisely because of its BAE had a solid commercial case for its actions – own experience, BAE lobbied for the introduction the bulk of the jobs and skills are in Scotland, while of the UK Bribery Act, helping to shape the Portsmouth had not built a complete large warship The Type 45 Destroyer legislation and getting workable guidelines in protects forces against “for probably a century or two.” place. “When the bill did come through, I think threats from enemy If that episode sparked political machinations, we were probably one of very few companies that aircraft and missiles. It is it was nothing compared to the uproar that greeted actually already met its requirements and more,” also used to counteract Olver when the news leaked in September 2012 that piracy and smuggling, he adds. and in disaster relief BAE was contemplating a merger with its European No need to take Olver’s word for it. BAE was and surveillance rival, EADS. This polarized politicians, pundits, ranked fourth out of the 129 defense companies in the latest anti-corruption index compiled by Transparency International, an independent organization that is a leading voice for openness in the fight against global corruption. The long SFO investigation, which the US Justice Department joined in 2007, was also a reminder to Olver that dealing with a crisis is not just about what you do but also about how you communicate those actions. In December 2006, a seminal event occurred that was to change the course of the SFO inquiry: the Blair government announced that the SFO had been instructed to drop its investigation of the Al-Yamamah deal on “national interest” grounds because it was threatening Britain’s security relationships in an important part of the Arab world, and hence its ability to fight BAE SYSTEMS international terrorism. Yet as Olver points out, the UK Attorney FINANCIAL PERFORMANCE EMPLOYEES General, Lord Goldsmith, had concluded that the year sales profit* investigation was doomed to failure and that there UK 33,300 2004 £13.2bn £1bn was no case to answer. In fact, a judicial review US 31,500 2005 £12.6bn £0.9bn that followed stated, “It would be unfair to BAE Other 19,800 2006 £13.8bn £1.2bn to assume that there was a realistic possibility, let 2007 £15.7bn £1.4bn alone probability, of proving that it was guilty of R&D SPEND 2008 £18.5bn £1.9bn any criminal offence.” 2009 £22bn £2.2bn 2013 £1.1bn Olver reflects, “With the SFO, a lot of the fallout 2010 £22.3bn £2.2bn that occurred did so because of the language used 2011 £19.2bn £2bn when the investigation was closed down. Now, 2012 £17.9bn £1.9bn * UNDERLYING EBITA had there been a case to answer, then there could SOURCE: BAE SYSTEMS 2013 £18.2bn £1.9bn easily have been a national security problem. There (FINANCIAL YEAR ENDS DECEMBER 31) wasn’t, and if only that had been made clear, then SHARE PRICE (UK PENCE) we wouldn’t have received the coverage that we did in the press – for what turned out to be years. So to 550 my mind, it just shows you that the language you use matters hugely.” 450 BAE is quite used to being treated as a political 350

football – there are undoubtedly still some in UK 250 political circles who regard it as a wholly-owned subsidiary of Her Majesty’s Government, some 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

ILLUSTRATIONS: © MATTHEW COOK, THE ARTWORKS THE COOK, MATTHEW © ILLUSTRATIONS: three decades after it was privatized.

brunswick review · issue 8 · spring 2014 27 financial analysts, the media – even whole nations – BAE was ranked strong balance sheet, hugely able people, fantastic in a way that few previous corporate mergers had. R&D, fantastic technology – it would have been It is safe to say that coverage of the story will not fourth out of an economic powerhouse which could have have pride of place in Olver’s scrapbook. the 129 defense been the best in the world.” In the UK, the populist Daily Mail and the sober He also points out that it would have been and serious Financial Times led the charge, pouring companies in a fabulous deal for BAE shareholders, who ordure on the merger day after day. Even when the the latest anti- would have owned 40 percent of the combined deal was abandoned, the attacks continued. Neil business. Given the relative performance of the Woodford of Invesco, BAE’s biggest shareholder corruption index two companies’ share price since, the split would and an uncompromising opponent of the merger, compiled by be more like 30/70 if the deal were to have been called for a change in leadership at the company, done at the end of 2013. So, could the deal ever be accusing Olver of having presided over a “lost Transparency resurrected? “It’s not on the agenda now,” he says. decade” for BAE investors. International The lessons Olver takes from the episode revolve Olver is unrepentant and dismisses the reaction around communications. the deal provoked in some quarters. “I think He reckons that the fact that the merger was it’s incredibly clear to everybody – and I mean leaked prematurely – in Paris, the FT reported – everybody – that it was actually the right thing to before the two companies had completed their do,” he says. “It would have created arguably the Named after the Celtic discussions with the British, French and German god of thunder, the world’s most capable and competent aerospace Taranis is an unmanned governments, helped scupper the deal. “Bound and defense company. You would have had a combat stealth aircraft by the City Code on Takeovers and Mergers, we could not tell anybody anything which was new information ... So, we were very hampered in what we could communicate to shareholders, which is a pity.” As a result, he says, shareholders were judging the deal on the basis of incomplete and inadequate knowledge. Indeed there is a growing debate in corporate and City circles about these rules which can shackle companies during offer periods.

BAE SYSTEMS The company traces its history back through two legacy lines that include many well-known industry names

BRITISH AEROSPACE BAE Systems was created in 1999 through the merger of Formed in 1977 as a nationalized corporation British Aerospace and Marconi Electronic Systems, in by the Labour government, it was privatized response to other defense and aerospace industry mergers in 1981 by the Thatcher government.

in Europe and the US. The company grew through a number Legacy companies include:

of acquisitions, notably of United Defense Industries, the l Bristol Aeroplane Company, which made American maker of the Bradley fighting vehicle, in 2005, the Bristol biplane (the Boxkite), Bristol Fighter and, during the Second World and Armor Holdings, another US defense firm, in 2007. War, the Bristol Beaufighter. Later, its BAE Systems sold its 20 percent stake in Airbus to EADS designs were used in the development in 2006 and in 2008 acquired Detica, a cybersecurity of the supersonic Concorde. and information intelligence business. Today, BAE l de Havilland Aircraft Company, maker of the famous Moth series of Systems focuses on defense, aerospace and security, with biplanes – including the Gipsy Moth, approximately 85,000 employees across six continents. Tiger Moth, Cirrus Moth – and the

28 the crisis issue brunswick review · issue 8 · spring 2014 out of the firing line More than 14,000 companies, or we want to attract the best As he retires from the corporate front line, Olver Hawker Hurricanes multinational people to lead our companies, reflects on how perceptions of BAE have changed. (below) were built getting too hair-shirt about the remuneration issue and it was the most At the November 2013 Confederation of British prolific fighter in the is probably not wise. What we need is strong clear Industry conference, he took part in a debate about Battle of Britain thinking, remuneration committees that set the trust and reputation alongside Sir Philip Hampton, tone and levels with rigor and discipline, but in Chairman of Royal Bank of Scotland, and Sam a way that’s appropriate for the corporation.” Laidlaw, CEO of energy company Centrica. “Had How does Olver see the covenant between it been three or four years ago, we’d have had business and the public? “I do think it’s very fragile everything thrown at us,” he says. and companies in all sectors are vulnerable. We As it turned out, his co-speakers took most of the all need to pay attention and make sure that we flak for banking failures and sky-high energy prices, not only rebuild trust but raise it to a higher culminating in Laidlaw publicly volunteering to level – I think we’ve got some way to go.” give up his bonus for the year. “Then a lady stood And so, what is Olver’s advice to all those up in the audience and started her question by companies now facing challenges to their saying, ‘I’d like to congratulate BAE Systems on its reputations, such as those he has confronted diversity policy’… So, instead of assertions about over the past decade? What would he say to his inappropriate behavior or bad reputation, she counterparts at, say, GlaxoSmithKline, or security was actually congratulating us on our attitude to firm G4S? “Crikey, that’s a big ask. The most women in business.” difficult thing to do, but the most important, Olver says it is part of “the leadership obligation” is to decide on your values and your standards for companies to take public positions on issues of business behavior and drive to embed them such as workforce diversity, climate change, and throughout the whole organization. And prepare supply chain labor practices, and to communicate for a long journey.” those positions effectively. But he argues, also, that it is important to take stands on positions that michael harrison is a Partner in Brunswick’s London office. A former business journalist, may be unpopular. For example, he says, “If we he specializes in media advice, corporate reputation want Britain to be a good home for multinational and crisis communications.

BAE SYSTEMS Comet, the first commercial jet airliner. related to GE of the US) and was known as The Bradley Fighting Vehicle is an integral GEC-Marconi until 1998, when it changed part of the US Army’s Armored Brigade l Hawker Siddeley, which produced its name and was merged the following Combat Team. It was designed to combine probably the most important aircraft year with British Aerospace to form BAE the weapons and equipment of an armored in the Battle of Britain, the Hawker personnel carrier, a tank destroyer and Systems. Hurricane, which accounted for more a fire support and scout vehicle The company’s history dates back to enemy aircraft strikes than all other the late 19th century and the invention fighters combined, including the Spitfire. of wireless telegraphy by physics Nobel l Scottish Aviation, which built aircraft Prize-winner Guglielmo Marconi. Among including the Bulldog training plane. the legacy companies’ most important contributions was the development of l Royal Ordnance, the UK munitions radar, which gave the RAF an enormous maker, bought from the taxpayer in 1987. advantage in the Battle of Britain. l Rover Group, bought in 1988 from As Marconi grew through acquisitions taxpayer, subsequently sold to BMW later in the century, its legacy companies of Germany in 1994. built or provided important components in a number of military and civilian systems, including the Astute Class submarines, MARCONI ELECTRONIC SYSTEMS the Boeing 777, the Royal Navy’s Type 23 The company was the defense arm of The Frigates and the Brimstone air-to-ground General Electric Company of the UK (not missile system.

brunswick review · issue 8 · spring 2014 29 y first week serving as counselor in President George W. Bush’s White IF YOU CAN KEEP House – during his second term, in 2007 – saw a number of issues flare up in quick succession: the President’s immigration reform bill YOUR HEAD… M collapsed in the United States Senate; a leading senator from his own Republican party Political veteran ed gillespie came out against the Iraq troops surge; and there was recalls that during his time as senior controversy when President Bush exercised executive authority to commute former top aide Lewis adviser in the White House, “crisis “Scooter” Libby’s prison sentence over the disclosure mode” was just part of the routine of an undercover CIA agent’s identity. “Surely,” I asked one of my new colleagues, “things will get easier, right?” They never did. Such is the nature of working in the White House, where being in crisis mode is part of the daily routine. In the final 20 months of President Bush’s time in office, we dealt with natural disasters, the wars in Iraq and Afghanistan, burgeoning Congressional investigations, and a financial crisis that loomed over the global economy. Without doubt, the near collapse of the financial markets in the autumn of 2008 was the most significant crisis of my time in the White House, and there are some informative lessons (both good and

30 the crisis issue brunswick review · issue 8 · spring 2014 WHAT WOULD “THE WEST WING’S” TOBY DO?

bad) in how President Bush, Treasury Secretary Hank l “First, let’s kill all the lawyers ...” with the relevant departments and Paulson, the White House staff, and Congressional It is a rare crisis that does not officers in theater to better coordinate leaders handled it. involve the lawyers – and even more the information flow. There’s no doubt I remember vividly the meeting in the White rare is one where the lawyers and the success of the “surge” strategy the communications team don’t changed perceptions of progress, but House’s Roosevelt Room, when Paulson, Federal butt heads. the tighter communications team was Reserve Board Chairman Ben Bernanke, and New I once counseled a Senator under able to better convey the information. York Federal Reserve Bank President Tim Geithner investigation by the Senate Ethics briefed the President on the state of the financial Committee. It was clear early on that l Tell me the bad news ... sector and its potential effects on the economy. his actions amounted to a lapse in I have rarely seen bad information look There was a danger that liquidity could just dry judgment, but that he hadn’t actually better when it came to light through a up and stall lending. In some instances, the value broken Senate rules or federal law. third-party source. There is no perfect of deposits were below what investors had paid in, I wanted him to tell his constituents time to release negative information, that, while he was confident he had but too often that serves as an excuse meaning some institutions were technically insolvent. not violated any laws, he was sorry for to do nothing. And that almost always Paulson, Bernanke and Geithner were urging fast the error in judgment and bringing results in responding to the bad and decisive action by the President, specifically an embarrassment to his state. This information on someone else’s terms. infusion of more than $500 billion into the system. was his instinct as well, but his legal A congressman I knew decided “What would happen without that?” the President team persuaded him it was not worth against seeking re-election after a asked. “We’d be looking at an economy worse than the risk. scandal rather than lose his seat in the the Great Depression,” Paulson replied. I was seated to His numbers tanked, and he election vote. “Why not fight it out?” announced that he would not seek I asked him. “Sometimes it’s better President Bush’s immediate right, his Chief of Staff, re-election the following year. Three to take the bullet than wait for the Josh Bolten, on his left; across the table were Paulson months after leaving office, it was bullet,” he said. and the others. I could not only see the President’s announced that no charges were reaction, but feel it as he literally recoiled. being brought. A relief, no doubt, but l Now, for the good news ... “Worse than the Great Depression,” he repeated one he enjoyed as a former Senator. One beneficial aspect of today’s media before turning to Bernanke. “Twenty-five percent Sometimes, attorneys need gentle environment is the constant demand unemployment. Ben, do you agree with that?” persuasion to allow a company in the for new stories and controversies. “Yes, Mr President. I do,” the Fed Chairman said. midst of a crisis to be more forward- If you can manage your crisis leaning in its statements and media properly, it won’t be long before This was the moment of conception for the now engagement. A clear understanding you’re reading about some other famous TARP (Troubled Assets Relief Program) and by the communications team of the poor communications specialist’s a vigorous effort to not only address the crisis in the legal risks helps in making that case. nightmare. capital markets but to quell the fear that had gripped millions of Americans by communicating why we l What’s the procedure? l Moving on ... were in the precarious position we found ourselves in, With an established process, properly Just as important as dealing with the and what we were doing to fix it. anticipated scenarios, a mindset pressing matter at hand is the ability Most crises don’t involve the possible loss of that recognizes the current media to move past it. environment, and a commitment Introducing a new product, trillions of dollars in GDP (or get addressed through a to moving forward, a company can announcing entry into another market, communications strategy that includes a nationwide survive just about any negative story. unveiling a new advertising campaign address on all major television networks), but they When I first joined the White – all of these can help convey that your can risk a huge loss in a company’s market value and House in June 2007, I was surprised company has not been debilitated by the possibility of long-term damage to its reputation. to learn that there wasn’t a core a crisis. The following are some pointers, informed by my communications team to handle all Getting the timing and messaging experience of crises in the political arena. the news developments coming out of right for such developments can help Iraq and Afghanistan. reassure investors, calm employees, The Pentagon, State Department and disarm competitors. ed gillespie served as Counselor to President George and White House each had It’s not surprising that in the wake W. Bush and as Chairman of the Republican National responsibilities, but it wasn’t as of the disastrous roll-out of the Committee. He has since worked as a political and corporate communications strategist, including for a time centralized as one might have Affordable Care Act (“Obamacare”), as Senior Counselor to Brunswick. He recently announced expected. We began holding meetings President Obama announced a new

ILLUSTRATION: GILLIAN BLEASE GILLIAN ILLUSTRATION: his intention to run for Senate in Virginia in 2014. every Monday, Wednesday and Friday push for immigration reform.

brunswick review · issue 8 · spring 2014 31 brunswick insight / corebrand POST CRISIS: ENGAGE – OR FLY LOW? by brunswick’s robert moran and corebrand’s james r. gregory

When a crisis strikes, do you hit back reputation was nearly four years. suggest that unless they want to wait with an aggressive plan to engage your Digging into CoreBrand’s extensive, out a two- to four-year slide, their critics and explain what you are doing 24-year database of business decision- decision is entirely logical. Companies better? Or do you hunker down and maker perceptions of more than 1,000 need to focus on values, morale and wait for the storm to pass? companies across 54 industries, we compensation as tools to retain high found that the average time to rebuild performers in a post-crisis environment. Would you change your answer if you perceptions of investment potential learned that it would take nearly four was nearly two years, an eternity in Does becoming more “familiar” mean years for your company to restore its the stock market. And the average time you fall out of “favor?” pre-crisis reputation – nearly as long as for return to pre-crisis brand equity From a perception standpoint, when the average tenure of today’s CEO? value was just over a year, not good a crisis hits, we see an increase in The approach to communicating news for the Chief Marketing Officer. “familiarity,” as measured in CoreBrand’s through a crisis is critically important. survey of business decision makers by the This presents three significant But there hasn’t been much data to level of awareness in the marketplace. This implications for management: show how these diametrically opposed may be affected by a media feeding frenzy strategies serve the corporate leaders Managing expectations: Prepare over a negative story, for example. who chose them. And in the midst of the board for a long, hard slog back Our data finds that a proactive response a crisis when emotions are running to pre-crisis levels of trust among to a crisis can further increase familiarity, high, objective analysis is even harder customers, employees, investors beyond the initial crisis level. And to come by. and other stakeholders. increasing familiarity can be accompanied Brunswick partnered with brand by lower “favorability,” measured by Rebuilding: Once news coverage of analytics and tracking firm CoreBrand quality of reputation across three key the crisis has subsided, management to analyze how quickly and effectively attributes: overall reputation, perception needs to pivot from firefighter mindset companies were able to emerge from a of management and investment potential. to a rebuilding mentality. A plan to crisis. The findings should be sobering for This analysis leads us to a definition restore reputation is needed in order all corporate leaders – primarily because of crisis: when familiarity increases and to reduce the duration of the post- it took so long to recover, no matter what favorability declines dramatically. crisis slide. strategy was adopted. Our research shows two distinct Looking at 16 well-known crises at Employee morale and attrition: Many approaches to how companies lead Fortune 500 companies, we found that high performers decide to jump ship in through crisis. Some choose a more the average time to restore corporate the aftermath of a crisis. Our findings demonstrative path (the “classic”

robert moran is a Partner in analyze perceptions about james r. gregory results. Founded 40 years Brunswick’s Washington, DC companies and issues, is the founder and CEO ago, it focuses on using office and leads Brunswick pinpoint messages that of CoreBrand. He has written quantitative research to help Insight in the Americas. resonate, and craft strategies extensively on creating senior corporate leaders brunswick insight is the to build support. value with brands. manage their corporate strategic research function corebrand helps brands by understanding of the Brunswick Group. organizations understand, the impact of various events, It uses opinion polling and define, express and leverage including crises. qualitative research to their brands for measurable

32 the crisis issue brunswick review · issue 8 · spring 2014 brunswick insight/corebrand

FAMILIARITY FAVORABILITY CRISIS DEFINED Defined by the level Measured by quality of When “familiarity” increases of awareness in the reputation across three key and “favorability” decreases marketplace, as measured attributes: overall reputation, dramatically. by CoreBrand’s survey of perception of management business decision makers. and investment potential.

case study 1

THE TEXACO EXPERIENCE In 1996 Texaco was embroiled in a racial discrimination lawsuit when some members of senior management made remarks that were recorded. 100 90.1 This made the national news 87.9 86.8 and the company was plunged 81.4 80.9 80.9 into crisis. It took five years to fully recover its reputation: the 80 company ended up being sold 67.7 64.2 64.8 to Chevron. Texaco represents 63.7 the “classic pattern” response 57.7 to crisis, with “familiarity” 60 51.6 growing, while “favorability” declines.

FAMILIARITY 40 FAVORABILITY

• both rated on a scale of poor, fair, good or excellent • base year is 1995 20

0 BASE YEAR YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

case study 2

AIG — THE LONG ROAD BACK The financial crisis of 2008 was extremely damaging to the “favorability”of many financial 70 institutions. AIG became the

CRISIS POINT poster child of excess in the first quarter of 2009, when management announced that despite government bail-outs to keep the company afloat, it 60 would pay executive bonuses that could reach as much as $1.2 billion. AIG became the focus of media and political outrage and it was some time before the company’s 50 favorability recovered.

FAVORABILITY, IN TERMS OF:

OVERALL REPUTATION

PERCEPTION OF MANAGEMENT

2009 2010 2011 2012 INVESTMENT POTENTIAL 40

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

brunswick review · issue 8 · spring 2014 33 brunswick insight / corebrand

pattern) while others choose to reduce of the headlines and begins to drop by CoreBrand, took longer to bounce their exposure (the “quiet” pattern). from the consciousness of business back. Whereas the engaged group actually These approaches represent two decision makers. began to repair their brand after one competing schools of thought among The correct course is not always year, the disengaged group were still those who have to deal with crisis obvious in the middle of a crisis, and stuck in negative territory with losses situations. One argues that it is best to choosing between these approaches in brand equity as a percentage of be the bearer of your own bad news and presents a high-level strategic decision market cap. that failure to engage the media and at a time when the public’s trust in The “fly low” strategy has other stakeholders in a transparent world will institutions and business could not be potential drawbacks. There are greater only cause long-term pain. lower. From the “Occupy” movement’s threats of government intervention as The other says that in an age of critiques to the recently coined term stakeholders demand more accountability, hyperactive distraction, in which “bankster,” the current zeitgeist is anything and there are the quiet and negative consumers are drowning in messages but business-friendly. impacts of corporate silence on that they constantly scan but seldom internal morale. engage deeply with, it is best to deprive Which crisis response behavior is more Even in the age of transparency, the crisis of additional oxygen and “let effective? Should a company fly low – or disengagement may be a valid short-term it blow over.” engage aggressively? survival strategy, but it appears to pose Seven of the 16 companies in the The low flyer (quiet pattern) companies greater challenges to the health of the study exhibited the classic pattern: actually suffered slightly fewer hits to brand. Silence is not always golden. the company is initially knocked back their favorability and overall reputation. And, given the average length of time on its heels but soon begins engaging And perceptions of management took that it takes to repair corporate reputation stakeholders to either explain its side of only half the hit that they took among the (almost four years), rebuild perceptions the story or to show how it is mending engaged ones (classic pattern). of investment potential (nearly two years) its ways. At first blush – and ethical and return to pre-crisis brand equity But nine of the 16 had a response that considerations aside – it appears that value (more than a year), engagement surprised us: the quiet pattern. These flying low is a stronger strategy. and repair seem to be the wiser, long- companies exhibited similar declines But, there’s a catch. The low flyers term approach. in their reputations, but became less appear to suffer a longer downturn in When the fire is over and the “familiar.” The crisis takes its toll, the their brand equity. The brand strength firefighters have extinguished the blaze, company keeps a low profile, falls out of those hunkering down, as measured the builders need to begin their work.

TIME TO RECOVERY A detailed analysis of 16 well- known corporate crises found that while perceptions of management and brand equity value took just over a year (4.7 quarters) to rebuild, CRISIS POINT RECOVERY POINT investment potential took 4.7 7.8 15 nearly two years, and overall corporate reputation almost four years to recover. 0

FAVORABILITY, BROKEN DOWN INTO:

PERCEPTIONS OF MANAGEMENT

INVESTMENT POTENTIAL

OVERALL REPUTATION

BRAND EQUITY, $ VALUE

Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 Q13 Q14 Q15 Q16

34 the crisis issue brunswick review · issue 8 · spring 2014 PLASTIC SNOW How one of China’s largest state energy companies turned the tide on a Hong Kong beach spill, by Brunswick’s tong zhao and crystal chan brunswick review · issue 8 · spring 2014 35 t’s a rare event when a large energy company and a non-governmental organization see eye to eye over an environmental crisis. It’s even rarer when the company is a Chinese state-owned enterprise, given the perception that they are typically opaque and slow-moving. So, when Typhoon Vicente struck Hong Kong in July 2012, Sinopec, one of China’s largest integrated energy and chemical groups, had the opportunity to demonstrate a different kind of crisis leadership in action. Until the typhoon hit that summer, most people in Hong Kong had probably never heard the word “nurdle.” That all changed when the once-in-a-decade storm slammed into a ship, causing six containers carrying a total of 150 tons of plastic pellets – the aforementioned nurdles – to spill into the sea off the city-state. Within days, the pea-sized pellets, which had been packed into plastic bags and placed in the containers, were washing up on to more than 60 beaches and outlying islands in Hong Kong, what is a nurdle? coating the sand with a blanket of plastic snow. Nurdles are a type of pre-production plastic that melt quickly and evenly and are used to make many common objects. Tiny plastic beads, they are easy to transport in bulk TYRONE SIU, CORBIS TYRONE SIU, REUTERS + © PHOTOGRAPHS:

36 the crisis issue brunswick review · issue 8 · spring 2014 the pellets, which are used as the When Typhoon Vicente hit, six containers accountability for the incident, even raw material to make plastic objects, carrying 150 tons of “nurdles” (plastic though in reality there were many parties belonged to Sinopec, whose name pellets) spilled into the sea off Hong Kong involved, including the shipping agent and and logo was printed on the bags, so its subcontractor. ownership of the cargo was clear and Sinopec set up a special fund of public from the outset. The company was HK$10 million ($1.3 million) for the quickly alerted. cleanup efforts. Taking the lead in the Tracey Read from DB Green, an activist crisis also entailed consulting various group concerned with environmental stakeholders, including NGOs and issues in Hong Kong’s Discovery Bay, government authorities. was one of the earliest on the scene of the Gary Stokes of Sea Shepherd pollution. Read, who lives in Discovery Conservation Society, a US-based Bay, a popular ex-pat enclave on the international marine wildlife conservation northeastern coast of Lantau Island, was advocacy group, worked closely with DB stunned to see the blanket of nurdles Green to spearhead the cleanup effort. coating her local beach. “Regardless of accountability, He still remembers Sinopec executives “Seeing full bags scattered all over the asking him, “What do you need, how beach and knee-deep piles of pellets made we needed to prevent the can we help?” when they first visited the me feel sick to my stomach,” she told The crisis from getting worse” affected beach on the second day. He says, New York Times a few weeks after the spill. “Sinopec set an outstanding example that She contacted Sinopec immediately Fu Chengyu, Chairman, Sinopec Group many other large corporations should and the company sent a team to inspect take note of.” the scene. It was clear, Fu says, that rather than How did that differ from what Stokes Sinopec Chairman Fu Chengyu, a fritter away time apportioning liabilities was used to? He says there was “genuine 30-year veteran of the energy industry, has and responsibilities for the crisis, Sinopec and sincere concern” from Sinopec: “This encountered many different challenges in should devote most of its energies to the sincerity carried all the way up to Fu, his career, but this incident was a new one. cleanup. “Regardless of accountability, we who flew down personally to assess the Fu thought the priority was to clean up needed to prevent the crisis from getting progress and help out on the beach.” the spill quickly. But who to call for such worse. So we knew we needed to be at the Regular meetings with stakeholders an unprecedented task? Was there center of the cleanup efforts,” says Fu. and exchange of information helped align a relevant government authority? Sinopec set up a crisis management objectives and build rapport among the What information should the company team to assess the situation and provide parties. The NGO representatives also put out as the incident was rapidly senior management with first-hand shared intelligence on cleaning techniques becoming public? information from site visits and regular and agreed on guidance for volunteers. There was little time to waste. Media monitoring. The company quickly Since the spill was constantly moving coverage, including pictures of the decided to commit its own manpower and with the tide and changing weather “snowfall” on Hong Kong’s beaches, were resources to the project, as well as contact conditions, these regular meetings became causing public consternation. At its peak, and support the many parties involved in critical in pinpointing where additional more than 160 news articles a day were collective cleanup efforts in Hong Kong. resources were needed. “Sinopec was

TYRONE SIU, CORBIS + REUTERS + CORBIS TYRONE SIU, appearing, posing questions such as the honest enough to say it didn’t have all the © potential dangers to people and wildlife. it proved to be a good judgment. solutions, but it was open enough to listen The pellets weren’t toxic but were clearly Sinopec’s name was clearly marked on and work with the NGOs,” Stokes recalls. a blight on numerous beaches on Hong the cargo, and many observers believed After the first stage, Sinopec hired

PHOTOGRAPHS: Kong’s outlying islands. that the company should take full scuba diving experts to salvage missing

brunswick review · issue 8 · spring 2014 37 危机 “In the Chinese language, the word containers, rented a helicopter to survey positive editorial in praise of a state- ‘crisis’ is composed affected beaches, arranged for professional owned enterprise: “The three parties cleaning crews and ordered industrial directly involved in the incident – the of two characters, equipment to support the cleanup. The owner of the pellets, the shipping one representing company also arranged for transportation company, and the ship owner – none but for volunteers to access remote beaches Sinopec, which owned the pellets, have danger and the while providing them with medical actively responded to the cleanup support. Sinopec employees were on call ... Sinopec’s position on the other, opportunity” the front line – company employees matter is both practical and reasonable ... john f. kennedy, 1959 committed a total of 2,478 days over four This is a good example of corporate months. This included top executives: social responsibility...” For decades this trope has been Chairman Fu, President Wang Tianpu used across the political aisles and Chief Financial Officer Wang Xinhua and in boardrooms to motivate and encourage in times of crisis. among them. nother positive outcome from As inspirational as it may sound, the crisis was the increased this silver-lined outlook occupies for cleanup volunteer Tracey Read, awareness among the public more of a gray area than its the personal commitment made an that Hong Kong’s beaches need to be frequent use might indicate. impact. “Working with the people that better maintained. Translations are interpretations, made up the company of Sinopec The mass cleanup galvanized Hong and over time this favored was a positive experience and certainly Kong’s “Adopt a Beach” initiative piloted rhetorical device has come under gave the corporation a ‘human face,’” by the government and environmental some scrutiny. The Chinese word 危机 she says. groups, which aims to broaden the for crisis is - wéijī - and the first character does indeed mean Continuing to provide information public’s focus on protecting and danger, but the second does not was also critical. Sinopec spokesman Lu preserving Hong Kong’s beaches. necessarily mean opportunity. Dapeng was among those on cleanup duty For Fu, the incident strengthened his The character 机 - jī - has in addition to being bombarded by media commitment to Sinopec’s sustainability several meanings, but when and other external inquiries. mission. He has committed $3.8 billion placed after the 危 - wéi character, Reflecting on those hectic weeks, he in a “Blue Sky and Clean Water Project” the compound means critical says, “It was really tough to keep on top to support initiatives to enhance air and point or precarious moment. While this is not far from “crisis” of the hundreds of calls and emails we water quality. as we know it, the meaning received from the media, the public and For a state-owned company like doesn’t necessarily support others. We knew that while we were Sinopec, the communications message the paradox that the word has cleaning the spill, we also had to keep the that resounded from the experience become known for. channels of communication open and to was that assuming responsibility and The ambiguity has persisted continue answering as many questions as dealing with issues openly is a far cry because it usefully presents a we could.” from assuming liability, but enables potential upside of a damaging The company also worked with more effective engagement with local event. And as with any pivot point, with preparedness, skillful NGOs to set up a website to inform the communities and all stakeholders. management and a dash of public about the cleanup progress and wisdom, there is a possibility that Additional reporting by christina pantin, allow more volunteers to sign up. Being you can end up better off than Brunswick, Hong Kong. communicative, transparent and proactive you were before. But just because tong zhao is a Partner in Brunswick’s paid off. The media, general public and Hong Kong office. She advises in Greater there is a possibility, it does not the government were generally supportive China on capital market practices, M&A necessarily mean that a crisis is of Sinopec’s role in Hong Kong during the and crisis communications. always an opportunity. That’s up incident. crystal chan is a Director in Brunswick’s for grabs. Hong Kong office, specializing in crisis Ming Pao Daily, one of Hong Kong’s communications, media and investor relations, cindy zheng, Brunswick, leading newspapers, even ran a rare IPOs, the luxury sector and family businesses. New York

38 the crisis issue Employees are valuable brand ambassadors during periods of crisis, writes Brunswick’s keith burton

it was one of those days. Communicators at a communications and a professor at the Nicholson global medical technology company had done their School of Communication at the University of Central best to plan for every contingency in announcing a Florida, reminds us that employees feel real pressure wave of layoffs. No one, however, had considered the during a crisis. “First, the crisis is an unknown. They one errant stone in their proverbial Hadrian’s Wall need to know what has happened and what the that could unleash the barbarians. When layoffs were organization is doing to address the situation,” says announced, word leaked among 25 affected employees Coombs, author of Ongoing Crisis Communication, connected on Facebook. It then quickly spread to the Code Red in the Boardroom. “Second, never forget larger workforce, the media, and other stakeholders, that any crisis will have a personal impact on your shaping perceptions before the company could release employees. You are all in it together.” any official communication. Toyota and Navistar are two global brands that have How should companies factor employees into crisis weathered major crisis threats. During their greatest communications planning? Can they count on them to periods of challenge, both started with a simple remain loyal to the corporate brand during a crisis even question: “How will this crisis affect our employees when they are directly affected by it? Or might they and what do we want them to say and do to support become “terrorists,” as one pharmaceutical executive our reputation – or at least not sabotage it?” Their put it, and work against the company? experience can offer insights for other companies W. Timothy Coombs, an authority on crisis facing the unfamiliarity and uncertainty of a crisis. brunswick review · issue 8 · spring 2014 39 toyota: ron kirkpatrick “THE DARKEST DAYS OF MY CAREER …”

R on kirkpatrick remembers the communication with customers – its employees day in 2009 when the US Secretary (known as associates) and dealers – were quickly of Transportation, Ray LaHood, informed of details and given direction on how they exhorted consumers to “park your could help tell the company’s story. Kirkpatrick says Toyotas” during a major recall associates and dealers are “fiercely loyal, and they had a targeting the Camry line and other hard time dealing with all the negative stuff. We knew vehicles for possible “unintended that they were our best advocates. We knew that they acceleration” that allegedly led to crashes resulting in had their own networks, and we wanted to tap into injuries and deaths. that, so we considered them extremely important.” “It bordered on being hysterical at one point,” says In times of crisis, the simplest things are often the Kirkpatrick, National Manager, Executive/Internal most effective. One of Toyota’s most successful tools Communications and Social Media at Toyota Motor was Fast Facts, a regular short email for dealers and Sales in Torrance, California. “Those were the darkest employees that provided a headline and three to five days of my career.” sentences to give an overview of the story and then a He participated in the first meetings executives link to an article or directly to Toyota’s news releases. convened to address the crisis, and was responsible To streamline the process, the review chain for Fast for making sure Toyota’s all-important first line of Facts was deliberately short: “It was just me and our

navistar : lisa hartenberger “WE REALLY NEEDED TO DRIVE BELIEF ...”

“ W e have people working here who More recently, Navistar took bold steps to leapfrog still remember what happened competitors and meet more stringent US emission to us in the 1980s and say, ‘I’ve standards – and failed dramatically. In less than a year, seen much worse at this company the company cycled through three CEOs. Massive and we’ve survived,’ says Lisa warranty costs tied to quality issues plagued the brand. Hartenberger, Director of Corporate Add to the mix a restructuring program that cut Communications at Navistar. The 10 percent of 18,000 jobs worldwide, and you have company’s employees have proved themselves resilient the full bleak picture. in the face of crisis. “Our people are survivors,” she says. Hartenberger says the company worked hard to keep Navistar is the proverbial plow that broke the plains. its people motivated amid its most recent crisis. “We The 180-year-old Illinois-based company evolved needed every employee to focus urgently on what was from International Harvester, the iconic brand that required – and at a level of detail. It wasn’t enough to modernized American agriculture under its founder, get people to do the right things,” she says, “we needed Cyrus McCormick. But tough times led it to sell to drive belief and help people understand exactly what off its agricultural business to Tenneco Case in the stakes were and that our work would pay off.” the 1980s and rebrand as Navistar, a truck and Navistar focused on key leadership segments – the engine company. top 250 executives and 1,000 senior managers –

40 the crisis issue brunswick review · issue 8 · spring 2014 “WE REALLY NEEDEDTO DRIVEBELIEF...” navistar :lisa hartenberger DARKEST“THE DAYS OFMYCAREER …” toyota: ron kirkpatrick

ILLUSTRATIONS: JESSE LEFKOWITZ that this is a fight worth fighting.” worth that thisisafight 180-year-old company ... them helping understand and working hard, thatwe are saving aniconic, the emotional to appeal aboutworking people fast lostfaithinus.”that had stakeholders critical our customers –thepopulation of Navistarthe face of to ourdealers, oursuppliers, and acrisis, ambassadorsbrand during “Our employees are front andcenter.”and metrics Employees are crucial one inourtrucks,” shesays. “It wasaboutkeeping goals tools.“We created adashboard thatliterally looked like including CEOTroy Clarke. smaller-scale, leaders, open andwebcasts forums with Employee ambassadors, inturn, were from drawn them togetting drive teams. smaller engagement with family thatToyota feel of has,” says Kirkpatrick. thecompanystrength of anditgoes back to thesort but thatdidn’t happen atToyota. “It wasthereal company,” hesays. company throughout therecall. the stood with They employees consistently expressed for the support employees stayed loyal through thecrisis. “Toyota news aboutToyota, heknows how to answer it.” overbarbecuing there, andaskshimaboutsome bit of goes home andhe’s inhisbackyard is andhisneighbor the thing Icall test.’‘backyard barbecue anassociate If usesalitmustest.Kirkpatrick “I go back to asimple has succeeded incommunicating employees, with he soondropped out.” To judge thecompany whether lawyer. At one point, my manager wasalsoinvolved, but brunswick review · issue 8 · spring 2014 2014 spring · issue 8 · brunswick review Hartenberger says CEOClarke to“tries make visual Hartenberger emphasizes of theimportance Losing inacrisis, employees thebig risks isone of Professor Coombs theway wasimpressed with

RULES OFTHEROAD internal communications practice. practice. internal communications the firm’sand leads global employee engagement and keith burton isaPartner inBrunswick’s New York office

channels they usetochannels they keep employees informed. “dashboard,” teams shouldhave crisis dedicated employees inacrisis: There are some basic rules tomobilizing Don’t thatcompany. be transparency or anews vacuum. alack of of for aboutwhat’s information going on because thantheir company themedia of trusting more are misinformation. Regrettably, some employees your efforts. And don’t forget retirees. key stakeholders with interact to andprioritize shape your employees work, andhow their job types, they youlimit what cansay, as upfront be asyou can. Where confidentiality or disclosure requirements you caninclear,everything language. straightforward to your employees to interpret thefacts. Tell them a powerful army of brand ambassadors.a powerful brand army of andyou engaged feel could will people wellmobilize you thispolicy, behind explain therationale if anddamagerumors to thebrand. Not only that, prevent canhelp they and ampleinformation providing valuable support. Given clear guidance apositive,be authentic, voice trusted inacrisis, counterproductive. canbe media Employees can crisis. Simply employees forbidding from usingsocial Emotions run high during acrisis. during Don’t high Emotions run leave it Consider thecompany’s a during policy media social Toyota’sAs with Monitor andquickly themedia correct One size does notfitall.Think carefully where about Fast Facts andNavistar’s

41 The hardest word When it’s time to apologize make sure you mean it, advises Brunswick’s eric savitz

archie: All right, all right, here comes a time in the factor in keeping control of events and I apologize. lifecycle of every company, retaining trust. In short, when you need otto: You’re really sorry? government agency, corporate to apologize, you need to be sincere or it archie: I’m really, really sorry, executive, celebrity, athlete, will show. I apologize unreservedly. T official and 12-year-old, when the Of course, your lawyers will weigh in, otto: You take it back? only rational option is to issue a sincere, and the balance between an apology and archie: I do, I offer a heartfelt apology. admitting liability will always be difficult complete and utter retraction. It happens to the best of us – we screw to resolve. But bear in mind that the The imputation was totally up. The fact is, here on Planet Earth lawyer you need is one who will help you without basis in fact, and things often go wrong. Your software communicate openly and effectively with was in no way fair comment, goes kaflooey and shuts down your your stakeholders. and was motivated purely by website. Your CEO is photographed Now, let us be clear what an apology malice, and I deeply regret any canoodling with someone other than his accomplishes – and what it does not. It is distress that my comments or her spouse. Your oil wells leak. Your not a magical cure-all. It doesn’t negate may have caused you, or your drugs sicken patients rather than cure inappropriate or inopportune behavior. It family, and I hereby undertake them. You’ve lost client data, cost them will not prevent lawsuits from being filed not to repeat any such slander money, or otherwise failed to live up to against you. It won’t necessarily save your at any time in the future. commitments to your customers, clients, job, or keep you out of the clink, or scrub otto: OK. employees, partners or fans. You’ve been your reputation clean. But a clear, specific, thoughtless, or selfish, or irresponsible, genuine apology can go a long way toward Kevin Kline (Otto) wrenching or sloppy, or simply stupid. In one way or softening the public’s harsh indictment of an apology from John Cleese another, you have screwed up royally. your misdeeds. It can be the crucial first (Archie) by holding him outside Time to apologize. step in turning a crisis around. a window upside down, But apologies are not a form of in the 1988 film, communications to take lightly. In eric savitz is a Partner in Brunswick’s San A Fish Called Wanda any corporate crisis, the ability to Francisco office. A former editor and reporter for Forbes, Barron’s, Smart Money, The Industry emotionally connect with the public Standard and other publications, he serves a

through communications will be a key range of clients in the technology sector. ART SYNERGY NICKEL, ADAM ILLUSTRATION:

42 the crisis issue brunswick review · issue 8 · spring 2014 COMING CLEAN Just in case you ever find yourself dealing with a corporate snafu, here are some pointers:

1. Avoid being defensive. 4. Concede that people got 7. Vow to take corrective of whatever triggered the issue Want to dig yourself an hurt. This is obviously true action. Do what you need to in the first place. even bigger hole than you’ve in the case of actual death do to prevent your misdeeds 10. Be aware of corporate already dug for yourself? or injury, but it also applies from being repeated. Fire apology fatigue. This makes Start making excuses. The to breaches of trust or other those who need firing. Fix it all the more imperative that dog ate my homework. It was disappointing behavior. Own systems that need fixing. your apology is not contrived. the hurricane’s fault. We just up to the consequences of your Revamp procedures that ”Bad apologies drive out good,” got here, the decisions were actions. need revamping. If the issues says Dov Seidman of LRN, a made under the previous involved personal peccadillos, 5. Take responsibility. Now, consultancy that advises on administration ... Don’t go vow to seek professional you might get some pushback corporate culture. “The mea there. Before you can start counseling – and then actually from lawyers here, but you culpas have kept on coming apologizing, you have to take get some. can’t expect to have an apology to the point where they are responsibility. taken seriously unless you 8. Make it right. Apologizing reaching the level of parody. 2. Lay out the facts. Resist stand up and acknowledge that is an empty exercise in many It is because I mourn the loss the temptation to engage your actions were wrong. Find situations unless you can make of the genuine apology that I in spin control. Give people a legal team that understands an effort to right your wrong. propose an apology cease-fire.” the unvarnished truth. Don’t the communications “Oops!” is not a sufficient His speech on this theme at engage in cover-ups. Simply imperative and value of what response. Provide restitution Davos was recently picked up tell people what actually you are trying to do. to your customers. Where by The New York Times, which happened and you will be you have caused financial or has launched “Apology Watch” halfway home. 6. Express regret, seek property losses, find a way to on the DealBook website to forgiveness. This is an apology. pay people back. Putting your track this trend and check on 3. The buck stops at the top. You are sorry, you have regrets, money where your mouth is who keeps their word. You have Apologies are going to be far you made mistakes – say it any should be part of the equation. been warned. more meaningful if they come way you like, but at the end of from the CEO, rather than the 9. And vow that the violations the good news is that the the day, you need to express general counsel, or someone in won’t be repeated. This world is a forgiving place. sorrow and seek forgiveness. the corporate communications requires more than simply a But to be forgiven, you need And mean it. department. promise. You want to give your to come clean and you need audience reason to believe to show true regret. Perhaps that the bad behavior will not that’s tough to swallow, but happen again – that you have that’s just the way it is. taken steps to prevent a repeat

43 WHAT ARE THE ODDS? Getting caught unprepared by events such as the Asian financial crisis and SARS convinced Singapore’s government of the value of futurist thinking, write Brunswick’s will carnwath and christina pantin others. Such complex, high impact and alone to outsiders. Kwa Chin Lum, the seemingly unforeseeable crises – “Black current head of the CSF, has found Swan” events – called for an updated himself struggling sometimes to approach. Singapore convened a group explain its work. “My usual line – ‘We of international experts to develop a suite think about the future and help the ew will be surprised that of computer-based tools to help model Singapore government avoid surprises’ – Singapore places great emphasis on possible “future shocks.” oversimplifies,” he confesses. forward planning, vital preparation for Ho, drawing on former US Secretary any kind of crisis. The tiny city-state of Defense Donald Rumsfeld’s famous some of the csf’s latest trend scenarios has built long-term planning into its phraseology, says, “Scenario planning is a show the type of unconventional national psyche since the 1960s, when linear tool and can only describe a future direction they can take. They include it was suddenly independent with no based on what you know of the present. the “if mayors ruled the world” concept, natural resources or established industries It’s about what you know you know, and considering the increasing power of to fall back on. Rigorous mapping of it’s of no use – or very little use – for what cities and the strong ties between them, its economy has propelled the republic you don’t know you don’t know, or the and whether these could become more of 5 million – less than a third the unknown unknowns.” important than traditional nation-state population of Greater Los Angeles – into The result was the Risk Assessment structures. This raises the possibility of a prosperous, envied model of efficiency. and Horizon Scanning system, set up in the end of globalization as a concept, with In the late 1980s, however, Singapore’s 2004, which canvasses a range of sources increasing decentralization and a louder technocrats began to realize that planning for what futurologists call “weak signals” voice for local activists bringing the focus needed to go further, employing more – clues to the type of scenarios that may back to regional issues. up-to-date tools that could simulate a arise in the future. “Many agencies came Another concept, “surveillance from variety of crisis scenarios over a longer together to consider whether there were below,” runs counter to well-publicized term. Companies had pioneered this kind new ways of thinking more systematically concerns about state surveillance of formal scenario planning, with people about the future,” says Ho. “A future that impinging on civil freedoms. Instead, like Peter Schwartz at Royal Dutch Shell was much more complex, and a future in it looks at the growth of surveillance in leading the way. Schwartz went on to which we were going to be surprised time which the targets are elites, with smaller, co-found the futurist consultancy, Global and again.” cheaper and more discreet monitoring Business Network, in Berkeley, California devices allowing the public to record the in 1987. Singapore’s leaders sensed early in 2009, Ho founded the Centre actions of authorities and other leading on that the city-state could learn from this for Strategic Futures (CSF), which is figures and broadcast them globally. kind of thinking – it was the first country part of the Public Service Division For governments and companies, this to join this network of companies. in the Prime Minister’s Office, with a presents a new risk as outraged citizens An early spur for this futurist work was mission to evangelize futurist thinking or disgruntled employees with mobile Singapore’s concern about the complex, throughout the government. Housed in devices can easily become whistleblowers multi-billion dollar projects it was the nondescript Treasury Building near or seek retribution. With the emergence initiating. These huge undertakings – such the business district of Singapore, the of such “Wicked Problems” (in the as land reclamation – could take a decade CSF is staffed eclectically, with a dozen parlance, those which are hard to prevent to complete, so early scenario planning or so people from various backgrounds, or solve because it is hard to identify their had obvious benefits. including a social worker and a chemist. cause – see page 47), Singapore has found “That was when I started thinking Describing itself as a “cryptic” think it even more necessary to pursue a “whole about the kinds of tools that we could tank within the government, the CSF government” approach to preparation. use to improve our way of thinking,” says is known to few Singaporeans, let Effective forward planning is Peter Ho, who was at that time Singapore’s Head of Civil Service. “One of the tools “Scenario planning is a linear tool which emerged was scenario planning.” Events such as the Asian financial and can only describe a future based crisis in 1997, the terrorist attacks of September 11 2001, and the SARS on what you know of the present” outbreak in 2003 were wholly unexpected and unplanned for by Singapore and Peter Ho, founder and Senior Adviser, Centre for Strategic Futures brunswick review · issue 8 · spring 2014 45 something for which smaller, stable “Leadership is about what you have governments are best suited, Ho reckons. “If you look around at other governments, been doing pre-crisis. You can’t build there are pockets of excellence. But the Singapore government is probably the trust and confidence during a crisis” only one I’m aware of that does this as comprehensively, or as systematically, Eugene Tan, Singapore Management University’s School of Law as we do. “Many governments are so caught up luxury stores awash with muddy water policy thinking and an apparent lack of in the election cycle, they’re not going to and expensive cars floating in basement empathy, especially over the real concerns invest too much of their political capital car parks were met with shock. The Singaporeans had over immigration, and other financial resources in worrying recurrence of haze from burning forests national identity, property prices, about a future which may or may not in Indonesia has also unleashed citizen infrastructure and transport adequacy.” happen under their watch.” outrage and cast doubt on Singapore’s Quality of life issues have become Observers and academics say that preparedness for what has become a paramount in a country that has enjoyed the role of futurists may not be fully nearly annual environmental crisis. a world-class lifestyle and become a haven appreciated by a populace worried about Likewise, the release of a white paper for well-heeled expats. Meticulous long- day-to-day issues, such as high property (government report) forecasting that term planning may well be a valuable prices, crowded trains, a declining native Singapore’s population will grow to policy orientation, but governments also population and rising immigration – as is 6.9 million by 2030 caused a torrent of need to be nimble. If they don’t explain the case in Singapore. dismay and fear from Singaporeans, and how planning and being adaptive are kept The government is still dominated raised questions about the government’s in balance, the public will be quick to by a single party, but recent elections understanding of grassroots concerns. criticize them when the gaps appear. indicate growing dissatisfaction with “The government never briefed Members “People ask, ‘How is it that you didn’t the status quo. Citizens have become of Parliament” about the white paper’s plan ahead?’” says Dr Gillian Koh, Senior less tolerant of mistakes and are quicker contents and potential impact, says Research Fellow, Institute of Policy to demand answers to crises, big and Eugene Tan, Associate Professor at the Studies, at the Lee Kuan Yew School small. When Singapore’s iconic shopping Singapore Management University’s of Public Policy. “There’s a shortfall in district, Orchard Road, was swamped School of Law.“The government ended housing units, health clinics are stuffed by floodwaters in 2010, pictures of up backpedaling. There were gaps in full of people, there’s severe congestion on IT’S NOT ROCKET SCIENCE The difference between complicated and complex is more complicated than it sounds

People tend to use the words By contrast, change, systems is about relationship complex and complicated conflict, and unplanned building, influencing, and interchangeably these days, deviation happen all the time looking out for emergent but they are in fact distinct in in complex systems, such trends. science. A multi-stage space that cause and effect are A military example of the rocket or a brain surgery almost impossible to predict. difference is the contrast protocol are examples of Complex systems typically between the “shock and awe” complicated systems; the have hundreds of moving campaign in Iraq in 2003 – stock market or the immune parts, each of varying power which was most certainly system are complex. and independence, and no complicated – and the Managing a complicated overall command and control. efforts to build a democratic system requires detailed Key characteristics Iraq thereafter – which was plans put together by of a complex system without doubt complex. experts, the delegation of are self-organization, So next time someone tells tasks to specialists, and interconnectedness, and you that managing an issue strong rational leadership. evolution. In such a system such as a corporate crisis Experience helps to build expertise is certainly helpful, is “not rocket science” you certainty about outcomes, but it is neither necessary can explain that they are right and learning can be applied nor sufficient to guarantee – it is a lot more complex to similar systems. success. Managing complex than that.

46 the crisis issue brunswick review · issue 8 · spring 2014

the MRT [transit network]. These are the hard questions that people ask.” Communication is key. Singapore embarked on one of the largest feedback exercises ever conducted when it launched “Our Singapore Conversation,” in which more than 47,000 Singaporeans were asked in August 2012 to say what they want in the future.

having a platform to set aside immediate concerns and envision the future can be liberating. “It allows people to see their future and to ask questions about what they have to do differently,” says Koh. Leadership is also important. “You need leaders who can communicate well, who can lead from the front,” says Tan. “Leadership is about what you have been doing pre-crisis. You can’t build trust and confidence during a crisis.” Ho sees good leadership in a crisis BLACK SWANS & WICKED PROBLEMS as showing the confidence to admit you don’t have all the answers. During The most difficult problems are often the result of cognitive dissonance the early days of the SARS epidemic, he phrase “Black Swan” to one group may be observed and acted “Singapore didn’t try to pretend that they was common in 16th century on by others with a different viewpoint. knew everything about the problem.” But London as an expression The equally vivid term “Wicked authorities took firm action despite some of impossibility. So when Problem” was formulated in 1973 loud objections, and closed down schools black swans were eventually by management scientists Horst and introduced home quarantines. spotted in Australia by an Rittel and Melvin Webber to describe The past can help shape the future, too, T explorer in 1697, the meaning problems that are difficult or impossible says Ho. “You go back and see those things changed to be something thought to be to solve because of “incomplete, impossible, but later observed. contradictory and changing which didn’t work, and why they didn’t Futurist John Peterson chose the term requirements that are often difficult work. You have to learn from experience. “wild cards” to describe low probability, to recognize.” The trouble is that people often forget to high impact events in his book, Out Because such problems are truly learn from experience.” of the Blue – How to Anticipate Big complex (see opposite page), efforts to Futurists acknowledge that the public Future Surprises in 2000. The following solve one aspect of a Wicked Problem will often focus on immediate concerns. year, Lebanese-American statistician tend to reveal or create other problems. But they say that good governance also Nassim Nicholas Taleb used the Any problem whose solution requires requires states to look beyond. “There’s no term Black Swan to characterize the a large number of people to change disproportionate impact of rare, hard- their mindset or behavior is likely to be point in saying I fight the fire in front of to-predict events on history, science, a Wicked Problem. Thus, rather than me,” says Ho. “As a government, it’s also finance and technology in his book of attempting to solve them, they are important to think about the kinds of the same name. normally managed with a collaborative, challenges we face down the road.” Taleb was fascinated by the networked approach. psychological biases that make us Climate change is a commonly used individually and collectively unaware example. In 2012, some academics will carnwath is a Director in Brunswick’s of the huge role of rare events in proposed that it be upgraded to a Singapore office. He focuses on capital history, and drive us to rationalize such “Super Wicked Problem,” the additional markets, corporate reputation and surprises after the event as having been defining characteristics being: time crisis communications. christina pantin is a Director in Brunswick’s predictable. His main point was that running out; no central authority; Hong Kong office. She specializes in financial Black Swan events are by their nature those seeking to solve the problem media, crisis communications and executive observer-specific. “Weak signals,” or also causing it; and current policies

ILLUSTRATIONS: ZARA PICKEN ILLUSTRATIONS: communications coaching. clues, of an impending shock not visible discounting the future irrationally. watertight and producing case studies that influence opinion from the boardroom to the international political stage. It doesn’t work to talk about a global issue such as corruption in broad terms. So we start with a country or the actions of a particular company that can exemplify and amplify the issue that we are trying to draw attention to. We measure success by changes to, or the introduction of, laws or policies which translate into meaningful benefits for citizens. We are skeptical about voluntary codes of practice, or statements of intent or corporate social responsibility programs BREAKING as an alternative to legal and regulatory requirements. Often, it takes a change in the law to bring about a change in attitude. THE CYCLE So we campaign for law and policy change. For example? We have been looking at Global Witness Director patrick alley tells corruption in the extractive sector in Brunswick’s Richard Meredith that companies Angola since the 1990s, and its role in and NGOs can work together, even in a crisis funding the civil war. Fifteen years ago we exposed the “blood diamonds” issue, and it seems incredible that knowing this, business and governments still felt it was NGOs play an influential role What do you see as your mission, as OK to buy diamonds that funded the in shaping the public’s view of your social role? Global Witness’s work armed groups engaged in these wars. This companies. Their work can be stems from a recognition that the majority hugely damaged the diamond industry’s the catalyst for corporate crisis, of the world’s most resource-rich image and only then did it join with and often they use such events countries are among the most corrupt, governments to create a certification to amplify their campaigns. NGOs’ unstable, poor, unequal and conflict- mechanism to keep conflict diamonds engagement does not always ridden on the planet. Our role is to make out of the trade. But certification hasn’t need to be adversarial. Many see sure that citizens in these countries can succeeded in stamping it out. Diamond the potential for constructive benefit from what they have and build purchases continue to finance violence relationships with business as stable, peaceful and well-governed and tyranny, as we know from Zimbabwe fundamental to their role. Patrick countries. There remain those in the today. We are turning our attention now Alley, Director and co-founder of business community who continue to to regulation to eliminate this brutal trade. Global Witness, the well-known operate on the false premise that progress Angola is also one of the two top advocacy and campaigning group, on legal and moral issues acts against their oil-producing countries in sub-Saharan explains their approach to issues, bottom line. I don’t think ours is a radical Africa. The wealth created has produced campaigns and interactions with agenda. It is one shared by many an unaccountable super-rich elite and the corporate sector. governments, and a reality accepted by money that should be invested in social many companies, and by the people they infrastructure has gone into corrupt employ, and want to employ. pockets. We try to communicate to companies and governments that How do you decide what you campaign transparency is key. The Angolan for? Our strengths lie in our government, like others, wouldn’t publish

investigations – getting our facts how much oil companies were paying BAR NOMA ILLUSTRATION:

48 the crisis issue brunswick review · issue 8 · spring 2014 them for oil, and the companies wouldn’t “We only sit down with a but where their sole objective is just to tell us either. The companies’ argument calm the crisis and make us go away. is that if one of them discloses this company if we are clear Unfortunately, many large companies information, it puts them at a have a strategy of engaging with NGOs for disadvantage to their competitors. This ... that there is a genuine a very long period without any action that is the problem with voluntary codes and delivers real change. This approach might why our strategy is to use legislation to willingness to tackle be a small blip in their budget, but could make sure all companies have to comply. paralyze an NGO in terms of their limited the problem at hand” resources. Other companies use What practical steps have you taken to engagement with an NGO for public promote transparency? We conceived relations purposes, which can weaken and co-launched “Publish What You Pay,” our influence with governments to get that organization’s ability to maintain a network of organizations that calls on industry around the table. We also liaise their credibility. companies in the extractive sector to with institutional investors who support We only sit down with a company if we publish the payments they make to the business case for transparency. Given are clear we are talking to someone with foreign governments. We helped set it they actually own large chunks of the influence, that our engagement is based up in 2002 with George Soros of the companies concerned, they can exert real on good faith from both sides, that we are Open Society Foundation, and NGO influence for greater transparency and both acting with discretion and that there partners, including CAFOD, Transparency make the case that it creates a more stable is a genuine willingness to tackle the International, Save the Children and and fair investment environment. problem at hand. Oxfam. The network has now turned into a global campaigning coalition How should companies engage with RICHARD MEREDITH is a Partner in Brunswick’s London office. A former British of more than 750 NGOs in over you when they are in crisis? We will diplomat, he co-heads the Brunswick crisis 50 countries. always engage in a dialogue if a company advisory group and is a leader in the Brunswick The policy change that this campaign says “let’s meet,” unless we think it is family business practice. achieved is the Extractive Industries simply trying to be seen to engage without Transparency Initiative. In 2010, Section any real intention of changing its policy or 1504 of the Dodd-Frank Wall Street practice. We present recommendations, Reform and Consumer Protection Act in based on information gathered from the US finally made the publication of on-the-ground investigative work, which these payments mandatory for extractive demonstrate how companies can reduce companies wanting to list in that market. any harmful impact they may be having. Alongside similar rules in the EU, we now We fully expect that any responsible have the basis of the global standard we company will listen because, and let’s be PATRICK ALLEY are campaigning for. clear, at a broad level the issues we raise are simple: reduce corruption, reduce Patrick Alley is a Director of Global How do you get companies to engage conflict, reduce poverty. Witness and co-founded the organization in 1993. He focuses on with you? When we began, there were We are ultimately pragmatists. We take the NGO’s work on conflict minerals some sympathetic companies, but we also what business says to us seriously and and forests, especially challenging encountered a lot of resistance – many of consider changes to our position if industrial logging in the tropics. the key players continue to invest huge necessary. But we don’t believe in the resources to resist change. People in value of dialogue or conversation for its GLOBAL WITNESS governments and companies told us there own sake. The NGO runs pioneering was no way we would be able to change investigations, advocacy and these practices but we have definitely When you’re at the table with a campaigns against natural resource-related conflict and made significant progress. company in the middle of a crisis or corruption, together with associated campaign, what do you look out for? Media campaigns can be effective, environmental and human rights especially if they are focused, hard-hitting We are looking for authentic engagement. abuses. It was jointly nominated and consistent. We engage with companies We are well used to the pattern in which for the Nobel Peace Prize for its if they are willing, throughout, and use companies can sound helpful and polite, work on conflict diamonds. brunswick review · issue 8 · spring 2014 49 CALLING ON MR FIX-IT

“Nobody ever calls me when things are obert s. “steve” miller has been called many going well,” says steve miller, one of things. The Wall Street America’s best-known corporate rescue Journal dubbed him “Mr Fix-it for American gurus. In conversation with Brunswick’s industry.” In his memoir, jennifer lowney and justin dini, the title has him as The Turnaround Kid, and Miller talks about the lessons learned he writes that when Rdealing with organizations on the brink from a life of corporate firefighting of collapse he is “like a surgeon, faced with a desperate patient who waited too long to seek treatment, I would feel the pressure, hear the second-guessing, and receive much of the blame.” Indeed, Miller has had to take flak from many of the people he has dealt with over the years,

50 the crisis issue brunswick review · issue 8 · spring 2014 estate, aircraft manufacturing, insurance, Stanford and then rising through the steel – and the Detroit Symphony ranks of corporate America. He became Orchestra (“which may have been my best a nationally-known business leader in turnaround ever,” he says). 1979 when he was tapped by Lee Iacocca As this interview and his memoir to lead financial negotiations during the make clear, Miller believes that leading government-backed rescue of Chrysler an organization through a crisis requires Corporation, where he stayed on as CFO those hard-to-define personal qualities: until the early 1990s when he lost an character and leadership. That is why he acrimonious CEO succession battle. so often refers to the fundamental values In the subsequent two decades, Miller has with which he was raised. He spends been called upon to rescue a string of large much of the early part of his book dealing companies facing crisis, from real estate with his roots, discussing his family behemoth Olympia & York to Delphi to support system, especially his wife Maggie, the financial services giant AIG. who died of cancer while he was in the Legendary car marketer Bob Lutz midst of a bitter battle to steer Delphi out summed up what he thought about his of financial crisis, and upon whom he former Chrysler colleague’s abilities in relied as a confidante and consultant in a crisis: “When times are good, nearly his most difficult business dealings. anyone can lead. When times are bad, As Miller recounts, a central part of you need someone like Steve.” his foundation was his grandfather, a man who never finished high school always prepared but worked his way up from the logging What is a crisis? “A management challenge camps of the Pacific Northwest to become confronted by a leadership that is both owner of his own lumber mill in small- unprepared for it and panicked by it. town Oregon. This provided Miller not What makes one more serious than such as union organizer Ron Gettelfinger, only with a set of values to live by but also another? Whether you anticipated it, President of the United Automobile the financial security to allow him to act whether you were prepared,” says Miller. Workers, who accused Miller and his with confidence (and often with politically By definition, most of the big rescue management colleagues of being, among perilous bluntness) in his corporate life. projects Miller has taken on have involved other things, “all about corporate greed,” “While he was the boss, my grandfather companies that were sideswiped by and the populist television pundit Lou was never a bully,” Miller writes. His events – and AIG certainly fits that bill. Dobbs, who castigated Miller & Co as sense of responsibility for the mill, its The giant insurance company was caught “disgusting” for actions they took to save workers, and the community left a lasting unawares by the financial crisis in 2008 auto parts maker Delphi in the mid 2000s. impression. “The important stuff about when huge bets made by just a handful But it is all part of the game when you human character, values, and leadership of AIG traders on the housing market take on a corporate rescue mission, I learned in Oregon,” he says. proved to be a key component of the crisis Miller reckons. In classic American fashion, Miller’s that threatened not only AIG and other Miller has developed a set of general father joined the professional classes, Wall Street institutions but the entire principles for dealing with corporate becoming a successful corporate lawyer world financial system. crises from his decades-long career, which in Portland, Oregon, and Miller, himself, AIG was the largest single recipient of has spanned a number of America’s reached even further, gaining a law government bailout money (to the tune

ILLUSTRATIONS: © ROB BALL, THE ARTWORKS ARTWORKS THE BALL, ROB © ILLUSTRATIONS: great industries – automobiles, real degree from Harvard and an MBA from of $182 billion) at the end of 2008,

brunswick review · issue 8 · spring 2014 51 and a few months later Robert “In a number of the situations Benmosche was brought in I’ve been in we’ve had to file as CEO, with Miller joining a Chapter 11 bankruptcy the board and later becoming and that is terrorizing to the Chairman. Both men have people who work in the firm. said that they thought at the The thing is won or lost on time the company could not the day you file. Everybody is be saved, that it would likely be going to pounce and wonder, liquidated. But five years down ‘What is this all about? What the road, AIG has paid the does it mean?’ You just have government back the full to say, ‘We have got to take at $182 billion bailout plus least one whole day for senior another $23 billion in profit management to focus only on to the taxpayer. communication, to say what In the process of saving this means, why we are here, the company, Benmosche and what we’re going to do and Miller halved it in size, about it.’” both in terms of assets and In the turnarounds with employees, and refocused it which Miller has been involved on the core insurance business. since the early 1990s, it was As the leadership oversaw the unwinding STEVE MILLER important to avoid panic by providing of massive toxic trades and took other clear leadership, something he learned Brought up in America’s Pacific measures to save the company, it faced a Northwest in a family steeped in from his front row seat at what is still “crisis within a crisis” when AIG came traditional values of self-reliance, seen as the seminal US corporate rescue: under heavy fire from politicians and Steve Miller went on to earn a law Lee Iococca’s turnaround of Chrysler. the media for paying bonuses to get the degree at Harvard and an MBA Leadership is only partly about job done. Both men vigorously defended at Stanford before embarking on authority and confidence; it is also about the payment of bonuses to staff who, a career at Ford Motor Company. honesty and accessibility, says Miller. As a mid-level financial executive they argued, had nothing to do with the “Accessibility is a style point of mine – to at Ford in Caracas, Venezuela, he original trading sins. It was irrational, was recruited to help Lee Iacocca be accessible not only to your customers as Miller told The Wall Street Journal: and the management team at and all that, but to the employees.” “If I had just put $182 billion [into a Chrysler Corporation carry out an When Miller went in to rescue US company], I would not aim to go hire unprecedented corporate rescue airplane maker Hawker Beechcraft, for the cheapest management.” mission in the late 1970s. He stayed example, he made a point of giving out Nonetheless, it was typical of the kind on as CFO of Chrysler until 1992 his email address to all employees, even of political flak that rescue managers when he began a second career as if it meant working nights and weekends corporate turnaround specialist, face in high profile cases, where public to respond to everyone individually. taking on missions to save a number money may be involved and many jobs of high-profile companies, from He also went straight to the cafeteria to are at stake. Miller praises Benmosche’s Waste Management to AIG. mingle with the workforce. “You learn the leadership in the situation, pointing out damnedest things that otherwise wouldn’t how he faced down the politicians on get through the filters up to the executive the issue of bonuses and compensation “In Chapter 11, you’ve suite,” he says. and won kudos – and support – from beleaguered AIG staff who were crucial got to take at least hold the line for the company to dig itself out of a hole. Is it better to stand firm or compromise? one whole day It depends on the situation, of course, but be accessible sometimes it is essential to stick to your How does leadership work in a crisis? to focus only on guns in order to save a company. In one of Miller says it is about acting quickly and his most difficult turnarounds – autoparts decisively, and reflecting that publicly: communication” maker Delphi – Miller had to withstand

52 the crisis issue brunswick review · issue 8 · spring 2014 incredible pressure from unions, politicians and even from then-CEO of OVER TO YOU MAESTRO GARBAGE GM, Rick Wagoner, who was worried a Steve Miller says his most When asked about the biggest strike at Delphi, a major supplier, could satisfying rescue may have been mistake in his life, Miller says threaten his production. the Detroit Symphony Orchestra unequivocally: “Garbage.” He is “In the Delphi case, I strongly felt (DSO), whose fortunes had suffered referring to the Waste Management that we could not continue to operate along with those of Motown merger with USA Waste. and to lose money with the totally itself. There was also a personal As a board member, it was bad uncompetitive labor contracts – we were connection for Miller as it brought enough finding out that Waste him closer to his son Alexander, Management, a fast-rising corporate paying $75 an hour for 35,000 people who had studied oboe at the Juilliard star of the 1980s, was built on a while I was there, competing with people School in New York and whose foundation of sand. in the US with the same unions paying advice he sought about the project “It was a great company. But in $20 an hour. How could I win any work? in 1988. the 1990s, to keep the stock price We were going out of business sooner There were a number of supported, they really cooked the or later, so we might as well confront it,” challenges besides the need to books. I went on the board [in May Miller recalls. fill a financial gap, including the 1997] and a few months later, the Slashing his salary to a symbolic $1 a politically charged one of making an CEO that we had just hired [Ronald almost exclusively white institution LeMay] said, ‘Steve, I got some bad year and refusing to speak to the press more inclusive in a city which had news for you, the accounting here didn’t really work. But speaking to the so many non-white citizens. This is totally screwed up ... and the CFO press hadn’t worked either. Eventually, was critically important for the DSO just quit this morning.’” I said, ‘That’s a hard-fought “labor transformation because part of its funding came pretty ugly. What else?’ He said, deal” was achieved that helped change from the public purse. ‘Well, I’m quitting, too.’” direction for Detroit. Miller says his The thorniest problem was After looking at various options, favorite response was not from creditors finding a way to be more inclusive Miller said he thought he had found or shareholders, but a letter offering in selecting orchestra members a good fix by arranging a merger without compromising the rigors with much smaller upstart USA begrudging praise from a union engineer of the selection process. In the end, Waste, which then imposed its who initially was ready to hate him. it required fairly deft negotiations highly decentralized management between Miller, politicians, orchestra system. Things seemed to go well at make a decision representatives, board members first but “a year later I got a call from In Miller’s experience, troubled and others. They came up with an management saying, ‘Looks like we companies have gotten that way in innovative solution that included missed our earnings by a mile here.’ part because “they’re all bogged down an apprenticeship program that On the day earnings came out, half allowed the DSO to attract talented the market value of the company just in internal politics and having endless minority musicians. “I had learned a disappeared,” he says. debates about, ‘Should we do it this way few things in my business life” that or that way?’” After spending a few weeks worked for the DSO, Miller says. THE WARNING SIGNS listening to employees and customers “One of the most important was that It led Miller to develop a list for board and assessing the situation, he makes a creative solutions can often be found members of warning signs that a outside the non-negotiables.” judgment about the strategic direction crisis may be looming: and priorities of the company. “We’re going that way. Bang. And I don’t think l Repeatedly missed earnings. l Lack of candor. it matters whether it’s a right decision or l Firing the bearers of bad news. not – who will ever know. You just do it by l Lack of healthy internal debate. gut instinct. The important thing is you created a direction. Making the decision is Acting early on these signs means “there’s always a chance that a what matters.” CEO needs some help and you can provide it before a problem becomes jennifer lowney is a Partner and a crisis.” justin dini a Director in Brunswick’s New York office. They both specialize in M&A, restructurings, IPOs, internal communications, and crisis and litigation. brunswick review · issue 8 · spring 2014 53 As a long-serving commercial pilot and airline executive, possible before making a decision. That steve forte, Virgin America COO, tells Brunswick’s means you have to actively seek input, ask brandon borrman that intensive preparation is the key to questions, and rely on the experts around dealing with crises on the flight deck – and in the boardroom you. You will dig a much deeper hole for yourself if you start making decisions in a vacuum.” ew professionals train to deal leading a team Furthermore, the role of a leader in a with crises more rigorously and Forte learned as a flight captain to set a crisis goes beyond just making decisions. regularly than commercial airline high bar for the responsibilities of senior A key responsibility for a captain is to be a pilots. The lengthy qualification leaders during a crisis. Perhaps less beacon of calm in order to help your team F process, endless training, and expected is his insistence that a company’s remain focused. Business leaders should compulsory “check rides” with inspectors leaders understand that they will function share that goal. “Remember, people may instill a level of discipline and preparation more effectively as part of a team rather not be physically injured but you need that other professions rarely approach. than as dictators. to supply psychological support to the Yet for all the complexity in the He draws a parallel to the Cockpit people around you. You need to keep your pilot training process, the goal is Resource Management (CRM) training cool and help those working with you do straightforward: to be able to resolve that pilots undergo to ensure that the same.” issues that could arise suddenly and potential roadblocks, such as seniority, unexpectedly, that jeopardize the safety do not slow down problem-solving. training and checklists of pilots, crew, passengers and cargo. “The whole point of CRM is that you The importance of training and practice In more than 20 years as a captain, need to train and convince senior leaders is often underestimated. A once-a-year Steve Forte has seen more than his – captains – that they will make better “tabletop drill” – simply discussing duties share of challenging situations while in decisions by gathering information and in case of crisis – will likely leave people command of an airplane. As a former listening to those around them than by scrambling in the face of a real crisis. senior executive at United Airlines, and simply taking a ‘command and control’ Forte is a staunch advocate of proper now as Chief Operating Officer of Virgin approach. There are two elements to good crisis training. “Pilots undergo detailed America, he has also seen first-hand how decision making, neither of which work if specific training on almost every valuable the discipline he learned as a you try to isolate yourself as a leader. First, conceivable emergency. The value on the pilot can be when it comes to leadership don’t make a decision until you need to. flight deck is obvious, but I have found during a crisis in the corporate world. Second, gather as much information as the same value in business. The better you THIS IS YOUR CAPTAIN SPEAKING ...

54 the crisis issue brunswick review · issue 8 · spring 2014 plan for possible scenarios, the better your covered by a checklist,” Forte says. “Things “Companies results will be.” like multiple system failures or a total The goal of such training, whether in loss of normal flight controls. Or, to be rarely, if ever, the flight simulator or the office, should more specific, when something happens deal with be to eliminate time wasted considering like the DHL aircraft that was hit by a options and making decisions that could missile in Iraq in 2003. Events like these crises that are be reached more efficiently through don’t have a specific procedure because contained within practice, or managed through tools, such they are impossible to anticipate. In as playbooks and checklists. these cases, pilots take whatever checklist the neat boxes “A few critical problems are routinely guidance they have and then rely on their and timelines practiced by pilots because the motor experience to figure out what to do. Crew skills and procedures involved require cooperation and teamwork are essential in of a playbook” recurrent training if the pilot is to remain these situations.” sharp. There is a very extensive list of Similarly, the kinds of crises companies other problems that can occur that are deal with are rarely, if ever, contained handled using checklists. These are within the neat boxes and timelines of a basically ‘read and do’ lists, covering things playbook. Companies need flexibility and such as hydraulic, electrical, fuel, and speed in their response too. pneumatic problems.” Forte reckons the “On September 11, we had to throw the same principles work for businesses. book out the window,” says Forte, who STEVE FORTE was running flight operations at United Forte joined Virgin America in 2013 as the tyranny of the playbook Airlines that day. “Our emergency manual carrier’s first Chief Operating Officer, with There is a caveat to working from anticipated that we would be able to travel responsibilities that include safety, flight a playbook or checklist. Inevitably, to the crash site, and that didn’t happen operations and aircraft maintenance. He began his 30-year career in the industry at United companies encounter a crisis that is not for two days. We never planned to have Airlines, where he started as a pilot and moved covered, and when that happens crisis more than one accident at a time. In New to management, including serving as Director leaders have to manage the unexpected by York there really wasn’t a ‘traditional’ of Operations from 1999 to 2006. Forte drawing on the principles of the playbook. crash site. Our crisis center, which would was also Chairman of the International Air Transport Association (IATA) Operations “There will always be problems that normally open for a few days, was open Council. He is on the board of the Los Angeles

ILLUSTRATION: DENIS CARRIER, SYNERGY ART SYNERGY CARRIER, DENIS ILLUSTRATION: occur in flight that are not specifically for weeks. And there were multiple new Chamber of Commerce. safety directives, sometimes several in one day, which required immediate communication and implementation.”

the bottom line Whether a crisis is handled from a flight deck or a crisis center, the stakes can be very high. Forte credits his pilot training with giving him a sound foundation to

lead an organization through a crisis, but NAVIGATING A CORPORATE CRISIS not everyone has that advantage. The lesson he shares is that a captain doesn’t 1. Work the problem logically and keep your cool. just issue orders; leaders make better 2. Use all the resources at your disposal. decisions if they are not isolated. What is a 3. Focus on what you can do right now – captain without a crew? Seniority alone is what is the next step? not enough. According to Forte, effective 4. Document everything so you can improve leadership comes down to a simple in the future. philosophy: “It is all about what is right, 5. Don’t underestimate the importance of not who is right.” feeding the people you are asking to work around the clock. brandon borrman is a Partner in Brunswick’s San Francisco office, where he advises on a range of communications issues, including crisis.

55 in april 2013, with tensions on the Korean peninsula once again simmering, 40,000 residents of the coastal Japanese city of Yokohama received a worrying message via Twitter from the city’s crisis control room, which read: “North Korea has launched a missile,” the clear implication being that it was headed straight for the city. Thankfully, the tweet proved to be a false alarm. Having removed the message from Twitter, a red- faced city official later told journalists: “We had the tweet ready and waiting [for such a situation], but for an unknown reason it was dispatched erroneously.” Better the message than the missile, but it is easy to imagine how the reaction could have been a lot worse. The Yokohama tweet was just one of a string of recent instances of “digital misinformation,” the unintentional spread of false or inaccurate information on the internet. As with Yokohama, many were caused by trigger-happy tweeters. In the past two years, such internet bloopers and propaganda have caused a stir in many countries, including the US, the UK, China, Russia, Mexico and India. With the global online population predicted to increase from 2.4 billion to 3.6 billion by 2017 (almost half the world’s population), such instances will inevitably become commonplace. The risks from this trend are worrying for governments and businesses. In its Global Risks 2013 report, the World Economic Forum flagged digital misinformation for the first time, warning that “a false rumor spreading virally through social networks could have a devastating impact before being effectively corrected.” Businesses are equally alarmed, as a 2013 Deloitte report (Exploring Strategic Risk) showed, with most of the senior executives surveyed TRUTH AND UNTRUTH The internet has supercharged the spread of misinformation, Brunswick’s barney southin and louise ward explain. What’s next?

56 the crisis issue brunswick review · issue 8 · spring 2014 citing the risk of damage to reputation as the biggest immediate threat to their businesses, rising from the third-biggest concern in a similar survey in 2010. FIRST, DO NO HARM Prevention is the best policy in managing the risk of misinformation how serious a risk is the spread of false information via the internet, and here are essentially two done effectively it gives a company the what can be done to mitigate it? scenarios for companies facing ability to detect misinformation early. The threat of mass hysteria from the threat of misinformation Human involvement is key to this, for via the internet: internal and while digital monitoring tools are good misinformation is, of course, nothing new. T external. Within a company, the at collecting data they remain poor at One famous example dates from 1938, threat may come from a disgruntled analyzing it. when Orson Welles’s radio adaptation of employee or technical failure. External Companies need to watch their H.G. Wells’s novel The War of The Worlds threats can come from anywhere and online “influencers:” the people and started so convincingly that it caused strike at any time. organizations with the power to shape widespread panic among Americans Prevention is best, of course, their reputation on the internet. Once tricked into believing their country was because the damage – especially from misinformation starts to spread, and actually being invaded by Martians. misinformation put out via an official is picked up and repeated by these channel, such as a company Twitter influencers, it can be very difficult to The worry now is that the internet has account – can be extremely hard to change the narrative. supercharged the threat because of the contain and correct. On the other hand, these influencers speed of communication and increased Establishing good internal social can be powerful allies in stopping the global connectivity. A recent warning of media governance and training spread of misinformation if companies the potential for damage came in spring can do much to reduce the risk. have invested time and resources 2013, when a false tweet claiming that This includes having defined roles in identifying and strengthening the White House had been attacked and and responsibilities; guidance on relationships with them. For example, appropriate content, tone, and language; issuing a company statement or President Obama injured, was sent out and a clearly defined purpose for each correction won’t gain traction unless it from the Associated Press Twitter account channel, including a social media task is validated by third parties with loud (see chart, right). It temporarily wiped force in times of crisis. megaphones. billions of dollars off the value of shares Companies have found that a blanket If that wasn’t enough to worry about, before a correction could be made. The ban on personal use of social media there is a further threat to companies, hacking group The Syria Electronic Army in office hours or on work devices is not of false information being spread with later claimed responsibility. a good idea. Not only are bans onerous malicious intent through digital media The “prophet of mass media,” to enforce, but in some countries, – “disinformation,” which includes including the US, they can violate hacking and hoaxes. philosopher Marshall McLuhan, wrote employment law. Companies, like sailors, can forecast in the 1960s about how the nature of For external misinformation stormy weather or take heed of the tides modern mass media meant that the way scenarios, monitoring conversations to prepare for a safe journey. But at the people interact with it had become more across social media – not confined to end of the day, social media will ebb and important than the content itself – “the Twitter and Facebook – is important: flow at its own pace. medium is the message,” as he said. With the internet and social media, WHITE HOUSE DOWN? where information is transmitted and re-transmitted almost perpetually in real- 1 MINUTE INTRADAY, DJ INDUSTRIAL AVERAGE The damage that time, McLuhan’s concept has become even 14,720 disinformation can wreak 14,700 was starkly illustrated more apt and interest in his ideas has been by the sharp plunge in 14,680 rekindled. Furthermore, digital media the stock market after has exacerbated the human instinct to 14,660 computer hackers, The Syria believe bad news over good news, or false 14,640 Electronic Army, infiltrated 14,620 the Associated Press’s information that reinforces prejudices Twitter account on 14,600 over true information that contradicts April 23 2013 to tweet that them. This can be seen at work in a the White House had been number of recent examples. attacked and President -$136.5 bn Obama injured. For a At a Harvard University conference moment, $136.5 billion in 2012 (“Truthiness in Digital Media”), was wiped off the market.

Gilad Lotan, Chief Data Scientist at SOURCE: DOW JONES brunswick review · issue 8 · spring 2014 57 tech incubator Betaworks, presented a acknowledgment that he was completely compelling case study of the stickiness of innocent, together with apologies and false information when it fits the zeitgeist. damages, this example shows that deleting He tracked an erroneous tweet by the New even demonstrably false information York bureau of NBC News that claimed from the internet is extremely difficult, that the New York Police Department “People are much more if not impossible. (NYPD) moved NBC’s helicopter away from Occupy Wall Street (OWS) protests likely to retweet what one result of this supercharged and were “closing air space” in the area. misinformation flow has been a backlash, The tweet was broadcast on November they want to be true” with some ironic twists. Even though it 17 2011, the “global day of action” is the newer, unfettered media that have organized by OWS, when tension Gilad Lotan, Chief Data Scientist, Betaworks facilitated the spread of misinformation, between the police and protestors was the public trust in traditional media running high after police evictions from misinformation always spread further continues to decline. A Pew report in 2012 a downtown park. “The environment was than the correction? Not necessarily found that only 56 percent of Americans incredibly heated and everyone expected ... But I can safely say that the more believe what they read in “legacy” media violence to erupt,” Lotan recalled. sensationalized a story, the more likely – the highest level of distrust since the Within five minutes of NBC’s tweet, it is to travel far.” survey began in 2002. Sorting online it was reposted by a number of reporters A false report that resists correction truth from fiction is getting harder as from other news organizations, including is bad enough for a government or satirical news sites such as The Onion The New York Times, and these in turn company, but it can have long-lasting have absurdist “news” items (“Consumers were retweeted multiple times, with angry consequences for an individual. One Required to Seek Treasury Department messages appended such as “this is what high-profile victim was the late British Approval For Purchases Over $50”) taken democracy looks like.” politician Lord McAlpine who, following as genuine by some gullible readers, and Within five minutes, the NYPD tweeted a BBC television program in November even serious news outlets. “NYPD has never closed airspace and it 2012, was mistakenly accused of In China, spreading “false rumors” can is not our authority to do so,” and NBC wrongdoing in around 10,000 speculative now result in up to three years in prison, quickly issued a correction. But the tweets and retweets. He won substantial though the West has mostly resisted original false story had already taken on damages from the media, including the efforts to curb free speech through the a life of its own and the correction never BBC, which paid £185,000 ($300,000), courts. There are some signs of self- got anything like the traction that the false and high-profile tweeters such as the correction. LazyTruth and Truthy, which report did (see graph below). House of Commons Speaker’s wife, Sally are websites specifically designed to “People are much more likely to Bercow, who later tweeted: “I hope others help internet users assess the credibility retweet what they want to be true, their have learned tweeting can inflict real of online information, join a bevy of aspirations and values,” Lotan says. “Does harm on people’s lives.” Despite public well-established debunking sites, such as Factcheck.org and Snopes.com. A recent hoax suggests the public is NEVER LET THE TRUTH GET IN THE WAY OF A GOOD STORY becoming more skeptical. A fake tweet claiming the ex-director of the National Security Agency had been shot dead at Los TWEETS PER 10 MINUTES, NOVEMBER 17 2011 Gilad Lotan, a researcher and blogger who Angeles International Airport was widely 250 tracks online media, followed a tweet by NBC News that said the New York Police circulated, but unlike the earlier example Department was “clearing air space” over of the NBC New York tweet, the number 200 an Occupy Wall Street protest in November of online corrections quickly surpassed 2011. The tweet wasn’t true and was 150 subsequently corrected, but Lotan’s the initial piece of misinformation. research shows the false report got much It will be interesting to see whether

100 more traction (measured by retweets) “truthiness” continues to gain ground on than the correction. rumor and disinformation. MISINFORMATION CORRECTION 50 barney southin is an Associate in Brunswick’s London office. He specializes 0 in digital and social media communication. 7PM 8PM 9PM 10PM 11PM louise ward is an Account Director

SOURCE: GILAD LOTAN in Brunswick’s New York office. CARVALHO-MONAGHAN EDWARD ILLUSTRATIONS:

58 the crisis issue brunswick review · issue 8 · spring 2014 Why deal calmly with a situation when you could instead fumble around until you’ve created a proper crisis? jeremy palmer, Chairman of MerchantCantos, ponders How to dig a deeper hole

a crisis is a terrible thing to waste, that they happen organically – all it takes is a we are told – a turning point, an opportunity combination of inertia and an uncoordinated as well as a risk, a moment for innovation and response, which everyone knows is satisfyingly easy creativity to spring to life, a chance to look at to achieve. Basically, do nothing and let everybody fresh ways of doing things and solve intractable involved, and ideally lots of people who are not problems that have arisen out of unthinking involved, respond to the situation in whatever way adherence to old practices – so let us not miss they see fit. Once the molehill has been identified, the moment. Let’s make sure we don’t miss an stand back with Olympian detachment as mole- opportunity to turn an innocuous reputational catchers, landscape gardeners, earth removers, molehill into an existential mountain, and gardening columnists, and bandwagon-loads of transform and re-energize ourselves by neighbors and passers-by all enjoy themselves with climbing it. We need a plan. opinionated enthusiasm. As to the carefully chosen words, all the hot air first make sure nobody fails to notice it. from the commentariat is an excellent source of We must avoid the risk that people might be lulled oxygen to feed the fire, but at the same time it is into a false sense of security by the thought that we, always a good idea to have a little extra fuel ready the leaders, are in control and on top of things. It for when the momentum of events seems to be would be such a waste if a potential crisis actually slowing. Just in case people have missed the fast- ran out of steam all by itself. What we need now is growing molehill, a judicious “Crisis! What crisis?” a masterly combination of random bad actions and deftly fed into a carefully chosen ear should be just carefully chosen bad words. enough to ensure it is brought to public attention. The best thing about random bad actions is The next phase requires real judgment and

brunswick review · issue 8 · spring 2014 59 “It would be such a waste forethought. A short delay will ensure if a potential and congratulate ourselves. The that benign neglect takes its course existential mountain of opportunity and that things will get visibly worse crisis actually stands before us, the blazing bonfire – then our next intervention. It has ran out of steam on top standing as dramatic evidence been asserted that confidence is what that the Old Order yields to the you have before you understand all by itself” New, and we could never be accused the problem. It will be axiomatic of wasting this crisis. Perhaps a to the audience we care about, that if we display hilariously inappropriate quote from Mark Twain unshakable confidence in our ability to understand or Sun Tzu, or the latest airport-bought guide to and deal with the situation, we are in fact secrets of leadership, just as the wailing dies away, incompetent and stupid. Now we are really and the schadenfreude of the commentariat is on our way. finally silenced by our brilliant plan. Note that real commitment is required here Alternatively, we might discover the truth in the – any facts or judgment, any evidence of careful old warning against arrogance and complacency: analysis of cause and effect, or genuine empathy, “If you want to make God laugh, tell him your plans.” could seriously damage our chances of elevating the situation into a real crisis. So it is essential to how confusing it all is. Maybe we should restrict ourselves to something facile – “Everything have remembered that we are, by default, part of is under control. I am completely confident that the Old Order. A crisis is indeed a terrible thing to everything will be back to normal once we have waste. The challenge for leadership is to approach finished rearranging the deckchairs” should suffice. it with alertness, humility, and responsiveness – At this point, momentum should be building the essential qualities to harness the energy it can nicely. The molehill is now a decent-sized hillock release; but we must never forget that the very and on it flames are starting to flicker around the essence of a crisis is that it represents a transition, a funeral pyre of the Old Order. But we cannot afford pivot, a moment which divides two different states to relax now. We need a lot more energy and fuel to of reality. If we want to play a role after, as well build a really satisfying blaze of glory. as before, that moment we have to demonstrate What we need now is a carefully timed one-two, our own understanding of the need for different a double whammy knock-out, after which we really behavior once we find ourselves on the other side can stand back and warm ourselves beside the of the divide. conflagration. The two vital ingredients at this stage And a sense of perspective always helps. As the are blame avoidance and insouciance, ideally mixed great playwright and optimist Anton Chekhov said, with a dash of inappropriate humor. “Any idiot can face a crisis – it’s day-to-day living Experienced practitioners will have their own that wears you out.” preferred techniques and tropes, from the sarcastic aside to the journalist (“I am sure you are better jeremy palmer is Senior Adviser to Brunswick equipped than I am to run this multinational and Chairman of MerchantCantos, the firm's creative corporation”) to the blatant mea ex culpa (“How agency. He has experienced at first hand several crises am I possibly supposed to read the thoughts of all in his career, including the Salomon Brothers Treasury bond scandal in 1990, the bankruptcy of Barings the thousands of minions under me?”). in 1995, and the financial crisis of 2008. He also

At this point we should be able to stand back loses his car keys regularly. ZUKAUSKAITE KOTRYNA ILLUSTRATIONS:

60 the crisis issue brunswick review · issue 8 · spring 2014 P.76 T. Boone Pickens: arguably the first SECOND SECTION shareholder activist

P.68 Christie’s: the art of sales

P.80 The handbag can be the message, says designer Anya Hindmarch P.86 Richard III,

COASTER, ALAMY / ROB BAILEY ROB / ALAMY COASTER, early victim of a political © smear campaign

Public art with purpose on New York’s rooftops

IMAGES: BLOOMBERG VIA GETTY / CHRISTIE’S / / GETTY CHRISTIE’S VIA / BLOOMBERG IMAGES: P.84 Finding India’s shine Veteran banker k.v. kamath has been credited with leading India’s banking sector into the modern age. Here he talks to brunswick’s khozem merchant about the country’s enduring challenges

62 brunswick review · issue 8 · spring 2014 uirky clashes abound now, we were relaxed, our comfort coming He returned to ICICI in 1996 as CEO, in India, where the new from knowing that our balance sheet was ready to introduce modern banking bumps into the old each strong after a large capital-raising exercise products, processes, and organizational day. Kundapur Vaman a year before the Lehman collapse. But our models. He understood the strategic Q Kamath recalls the discomfort was in not knowing what to importance of communications and, unprecedented launch a do. This was a new dynamic. So we learned crucially, technology. It was, in fact, decade ago of 1,000 cash by trial and error.” Kamath’s use of technology to both dispensers by ICICI, India’s largest private ICICI Bank was a child of the Industrial deliver products and as the catalyst to run sector bank, where he was CEO at the Credit and Investment Corporation of the bank more efficiently, that created a time. It was pay day and the shiny new India, which itself was jointly set up by the buzz around ICICI as it broke free from machines drew lines of blue-collar workers government and the World Bank in the India’s banking pack. Kamath is quick in Mumbai’s textile mill-land. Most were mid-1950s to fund infrastructure projects. to point out that this was done at Indian puzzled by the technology in the wall; The original umbrella development prices. “At a time when global banks were and when some ran out of cash, many institution and the commercial bank – introducing technology wholesale, we had reckoned the bank itself was out of cash. which came into being in the first wave of something exciting to communicate, and Word spread fast through the community banking reform in 1994 and went on to list we were implementing it at a tenth of the and then to brokers and investors. The on the New York Stock Exchange six years global banks’ costs,” he says. rumors of a run on ICICI Bank even spun later – eventually merged in 2002. This on to the next day’s newspaper headlines. created the first genuinely home-grown he reform of the financial “We were not equipped to handle the full service universal bank – a key strategic services sector was among communications challenge,” says Kamath, objective for Kamath. the bolder faces of “India a candid admission from a banker credited Kamath joined ICICI in the early Shining” – the political with leading India’s banking sector out of 1970s as a management trainee after T slogan that came to its statist era and into the modern age. Nor an education at prestigious Indian symbolize the heady was ICICI, where he is now Chairman, engineering and management institutes (and unsustainable) any better equipped five years later when far from his native Mangalore, a port mid-2000s, when India’s GDP growth it was again hit by rumors, this time about city in India’s western state of Karnataka. was cantering along at 8 percent a year, exposure to the sinking Lehman Brothers Banking lore has it that as a young project with new tech-based banks, such as ICICI, in the US. Kamath says it was “no more financier, he took a call on a raw but feeding the consumerism unleashed by than a rounding error on our balance dynamic entrepreneur from Gujarat. economic reforms. sheet,” but ICICI was in a spin, and for a The bond between banker and borrower For sure, the opportunity for banks few days local financial commentators got deepened over the next three decades as during this period was immense, as excited about India’s leading bank being the entrepreneur’s business grew into a multiple product lines were launched into caught up in Wall Street’s meltdown. petrochemicals powerhouse. When the a ripe and fast-growing market. Kamath’s “These were reputational crises and our entrepreneur died, in 2002, his widow approach to business development has challenge was that we did not know what asked Kamath to secretly manage a been described as “South Korean,” after would happen next. Bizarre as it may seem division of assets between her two sons, the industrial conglomerates – known as who had become estranged. The elder son, chaebols – that focused on rapid build-up Mukesh Ambani, is today among India’s of market share at high capital cost. K.V. KAMATH (and the world’s) richest individuals, When Kamath sat down for his Kundapur Vaman Kamath is one of India’s most presiding over the divided Reliance interview with the Review, the bouncy experienced bankers, having served as a senior Industries, the country’s largest private- optimism of earlier years had given way executive of ICICI, India’s largest private sector sector company. to a more measured tone on issues that he bank, for more than three decades, including a spell as CEO and latterly as Chairman. He is also If such gilded tales have given Kamath a now addresses with the perspective of an Lead Independent Director of Infosys, one of certain mystique in the banking world, his elder statesman. India’s leading technology services companies, eight-year stint at the Asian Development He stepped down as CEO at ICICI in and on the board of oil services company Bank, starting in 1988, equipped him 2009. In a shrewd move, he then took on Schlumberger. He is Chairman of the Society and Board of Governors of the Indian Institute with the practical tools to run a modern the Chairman’s role at Infosys, India’s

PORTRAIT: SAM KERR, DEBUT ART DEBUT KERR, SAM PORTRAIT: of Management in Indore, Madhya Pradesh. financial services group. leading technology services company,

brunswick review · issue 8 · spring 2014 63 from 2009 to 2013 (where his role has “I would state that most then it’s OK.” India’s Finance Minister, been redesignated as Lead Independent Palaniappan Chidambaram, has been Director following a reshuffle). Infosys family-owned and getting similar advice from other business needed a heavyweight to fill the void leaders, some of whom have recently left by the retirement of its two past controlled companies committed to large-scale investment in Chairmen, both, like Kamath, gifted the country, no doubt persuaded that communicators. Kamath has emerged as a are still a good 10 years India’s emerging middle class – already respected voice on corporate governance hundreds of millions strong – will with his berth at two of India’s most away from a culture of continue to grow. compliant and best-run companies an In November 2013, PepsiCo chairman appropriate platform for quiet advocacy. giving up stakes” and CEO Indra Nooyi announced the India’s corporate sector has historically company would invest $5.5 billion by been dominated by family-owned 2020, saying it was “a vote of confidence conglomerates. In the more mature in India’s future.” Vodafone made a economies of the West, family-owned similar statement, unveiling a $1.7 billion structures typically evolve to become investment for India that same month, publicly listed companies, and that is despite having had a long-standing beginning to happen in India. dispute over tax on a share sale the Having run the country’s biggest when they realize they don’t need such company made in 2009. bank, Kamath has had a particularly large stakes for control. I would state Even with these and other significant good vantage point from which to view that most family-owned and controlled investments, Kamath says India must India’s business plutocracy. He thinks the companies are still a good 10 years away work even harder to make the business evolution in India will take longer, partly from a culture of giving up stakes.” environment friendlier. That means, because of the country’s complex family above all, predictability about policy and inheritance laws. regular speaker across the regulatory environment. “Many family companies are now India, Kamath tells the The politics that underlie India’s debate joint-stock, listed entities but control is new generation of CEOs about how to reform and develop must firmly in the family. They have changed to think globally, be aware be concerned mostly with bringing more dramatically over the past decade but A of what is going on, and and more people out of poverty, Kamath there’s a long way to go,” he says. not to get stuck in a “rent- acknowledges. “Inclusive growth must In the wake of the 2008 banking crisis seeking” mindset. be delivered, but if people think it will and the subsequent debate on Western- Kamath’s greatest current concern be done by redistributing wealth then style capitalism, there has even been talk is about the impediments to India’s they are wrong. It can only be done in of an “Indian model” that sees control development: regulatory, civil and judicial a sustainable way by the incremental and ownership as a form of trusteeship, activism stalks executive leadership; creation of wealth.” to be handed down to the next generation bureaucracy is scared to sanction projects, A quintessential banker’s approach, of professional managers within the freezing the investment cycle; a currency perhaps, and one that might put Kamath family. Does Kamath think this approach, is discounted amid talk of capital controls; at odds with a government that favors typified by the Tata group, offers a viable GDP growth has shrunk and political handouts on food and guarantees alternative? leadership paralyzed. His hope for the employment (inflating the public debt “I don’t think so,” he says firmly. Two business community is that the logjam burden along the way) in its search for factors may force the pace of change: first, will be broken after elections to be held by inclusive growth. But Kamath’s journey family-owners’ appetite for growth may May 2014, offering the very real prospect from banker to elder statesman has mean they will have to sell down stakes of new government with new ideas. been mostly about looking for new and in order to raise capital. Second, the next The priority, Kamath argues, should better ways of doing things. generation simply may not be up to or be to focus on economic fundamentals. interested in doing the job. “We must concentrate on the real khozem merchant was formerly President of Pearson India, and previously Financial Times “The issue is really over control,” problem and that is a virtual standstill correspondent in Mumbai. Now a Brunswick Kamath says. Change will come “only on infrastructure. If we get that right, Partner, he leads the firm’s India practice.

64 brunswick review · issue 8 · spring 2014 Big business can be a powerful engine for social change, as jon miller and lucy parker report

EVERYBODY’S BUSINESS

rom oil spills to sweatshop The answer, we believe, is that big companies want horrors, tax evasion to corporate to be – and must be – part of the solution. fraud, big business these days is rarely While researching and writing our book, far from negative headlines. As companies Everybody’s Business: The Unlikely Story of How Big are hit by one crisis after another, the Business Can Fix the World, we found that making F standing of the corporate community that happen cannot be just a case of business as in broader society may seem stuck on a relentless usual. Sure, global businesses all have corporate and downward slide. social responsibility departments. But progressive Big business is now often branded as evil and businesses are not content with simply minimizing faceless, unaccountable and out of control. From that harm and avoiding big headline-making disasters, perspective, the only question would seem to be the or with being philanthropic. Their aim is to deliver extent to which companies should be prevented from financial value and social value, and they want to do causing further harm. so through their core activities. We want to turn that argument on its head. Many companies are asking a powerful question, Today’s big companies are integral to society, “How can we help?” not separate from it. They are powerful, huge “Fifty years ago, as a mining business, you didn’t concentrations of skills and resources. We need to have to worry about your impact,” says Jon Samuel, mobilize their power, not try to take them down. Head of Social Performance at mining giant Anglo- While many businesses have acted unacceptably, American. “Twenty years ago, you had to minimize the debate should not be a cartoonish “good versus impact. Ten years ago, you were expected to have no evil,” but one about whether big business is going to impact. And now we are working towards having a

ILLUSTRATION: YOSSI LEMEL YOSSI ILLUSTRATION: be part of the solution. positive impact.” ≥ brunswick review · issue 8 · spring 2014 65 Operationally, these companies are developing says the strategy has plugged IBM into society in a more socially aware ways of making decisions new way: “The company practically lived in its data throughout the organization: where to source centers. The wonderful thing about Smarter Planet is raw materials, how to manufacture and transport that it has reconnected us to society, simply by asking, goods, pay employees, cut costs, and invest in local ‘What are the problems that a company like IBM communities. Forging strong links between those ought to focus on?’’’ decisions and their impact on the world outside is what builds trust between the organizations and the utting business to work on the world’s environment in which they operate. problems makes sense – after all, Traditionally, a big corporation has acted like a companies are large problem-solving citadel: a well-defended fortress built to keep the machines. But how can they best world out. The view inside the citadel has often determine how and where to engage? been that the problems plaguing the outside world In studying companies that were should remain out there. If they threaten to approach, successful in doing positive things the drawbridge goes up and the archers come out. in the world, we found it useful to Increasingly, companies are stepping out over Paddress this question under five headings: Purpose, the drawbridge. Products, Practices, Philanthropy and Point of View. This “prism” provides a framework to evaluate the

Business in society intentions and actions of business in society. Many of the companies we met are motivated by Purpose much more than the blind pursuit of profit. They Products want to maximize profit, of course, but they also want Practices to align their business goals with social goals. MTN is a good example, becoming Africa’s largest telecoms Philanthropy company by pursuing its conviction that mobile Point of View technology would change people’s lives (see right). Companies have an increasingly sophisticated the prism is a way of seeing more clearly awareness of the influence they have in the world. In the intentions and behavior of businesses in terms of the prism, leading companies have a Point of society, played out in each of these distinct View about issues that matter to them and how to use strands. Taken as a whole they describe how their influence to enhance their contribution. Their businesses can create social value. Purpose then defines the practical ways in which they interact with the world around them: through the “We need people with more open ways of doing Products and services they sell; through the Practices business, people who understand that our success they adopt in getting those products to market; and depends on the success of society around us,” says through any Philanthropy they choose to engage in. Andy Wales, Head of Sustainability at SABMiller, These five strands describe how business can create one of the world’s biggest brewers. The efforts of value for society. Thinking like this can help us move companies such as SABMiller have come to resemble on the debate: whether you are inside or outside of a some aspects of what development agencies do, with business, it is not about whether big business is good a sharp focus on issues such as clean water, healthcare, or bad, or who is to blame, or how we got here. It is and education. Companies need those elements about focusing on what needs to be done to improve of society to operate effectively, so their approach society. Ultimately, the questions are simple for a marries self-interest with positive outcomes for the company: are we trying to be part of the solution? communities in which they operate. Why should people believe in this business? This mindset is good for business, as IBM found when it launched “Smarter Planet,” a jon miller and lucy parker are Brunswick corporate initiative that uses the company’s Partners, and help businesses promote the intellectual firepower to tackle some of the positive contribution they can make in society. world’s big challenges: thus, Smarter Energy, Their book, Everybody’s Business: The Unlikely Story of How Big Business Can Fix the World, Smarter Food, Smarter Traffic, and so on. is published by Biteback Publishing. Colin Harrison, who runs Smarter Cities, www.everybodys-business.com

66 brunswick review · issue 8 · spring 2014 A BUSINESS CASE For some of the world’s top companies, making a positive impact is good business

MTN is promoting entrepreneurship by Unilever decided to sync its marketing using unemployed people, hawkers and strategy in India with a social goal using street vendors as distribution agents Lifebuoy soap, a long-trusted brand MTN UNILEVER

he story of MTN, Africa’s leading telecoms ne of Unilever’s earliest products, Lifebuoy company, brings to mind the tale of the two soap, was thus named because it was literally salesmen sent to Africa to assess the market for a lifesaver, helping to prevent the spread shoes. One returns saying, “Bad news, people of diseases such as typhoid in Victorian T in Africa don’t wear shoes.” The other is joyous: O Britain. The soap’s slogan made this clear: “Great news! Everyone is barefoot.” Two decades ago, “For the preservation of health and the prevention no one saw Africa as a telecoms investment opportunity. of sickness.” Today, after MTN’s success, the transformational From early on, Lifebuoy was sold in India and became power of mobile technology is taken for granted. As the product upon which Unilever’s Indian business was one of MTN’s founders, Karel Pienaar, says, “We always built. It is still the leading soap brand there by volume, believed in the catalyst that cellular infrastructure brings despite competition from brands that lay claim to more to a country.” luxurious, less medicinal virtues. The company had to overcome skepticism from the “Everybody in India has grown up with the Lifebuoy industry about the viability of the market, as well as jingle, it’s instantly recognizable,” says Sudhir Sitapati, hostility from some people who saw it as a threat, or head of Hindustan Unilever’s skin-cleansing business, thought the technology would benefit only the wealthy. which has sales of $1 billion a year. “The brand has MTN’s belief in the transformational possibilities of always been about health. Lifebuoy is very well-loved telecoms motivated both the company and its employees in India and that gives it permission to do a lot of when the going got tough, as their success was seen to good things.” be aligned with the interests of society as a whole. The company decided to sync its marketing strategy It also made them rethink their business model, with a social goal, via Lifebuoy soap. Globally, 3,000 putting affordability at the heart of the search for children die each day from diarrhea, 1,000 of them in potential customers who lacked a credit history or the India alone. The illness is the world’s second leading means to take on a monthly phone contract. MTN, based killer of children under five. The Lifebuoy team came in Johannesburg, became a pioneer of the “pay as you up with a demonstration to help educate children about go” model that has since become the global standard hygiene by using “glo-germ” powder which shows, under for low-income markets. The company also sells time in ultraviolet light, how germs remain on hands washed tiny increments via an army of street hawkers who have only with water and without soap. become a massive and motivated sales force. Sitapati says the program combined Unilever’s push Building on that success, a new wave of innovation is into India’s untapped rural markets with meeting a changing the way Africans work, learn, and do business: pressing social need. “We were making a big impact on from mobile banking to advice for farmers. MTN’s health and as a by-product of that, soap consumption next goal is to make internet connectivity available to was going up,” he says. “As we continued on the journey, everyone on the continent. It’s a perfect example of a we realized what we were doing was more than just positive force for change coming from a business acting selling soap.” purposefully and understanding how it can grow by The company was discovering that it was possible to improving the world around it. do well and do good at the same time. PHOTOGRAPHS: MTN/ UNILEVER

brunswick review · issue 8 · spring 2014 67 he lots on view at christie’s salerooms in St. James’s, London, speak reassuringly of provenance and affluence. The world’s most famous auction house has sold material like this for almost 250 years. A few floors up, in the office of Steven Murphy, CEO, there’s evidence of a new philosophy. Here, period plays happily with modern, an antique table looking perfectly at home with a flat screen television, an early Apple computer providing an unusual conversation piece. A Warhol Mao looks out from one wall, a large Stanley Spencer illuminates another. Both are for sale, if you are interested – privately, rather than at auction. Murphy, elegant in handsome tailoring, evidently tempers American patrician sensibility with keen commercial drive. He arrived towards the end of 2010, bringing experience of the music industry and book publishing rather than art. Christie’s – founded in 1766 and owned since 1998 by the French businessman François Pinault’s holding company, Artemis – has traditionally traded neck and neck with the auction world’s other big name, Sotheby’s, and reported £3.3 billion ($5 billion) of auction sales the year he arrived: “I came into a company that was broadly sound. However, it was a company that had historically bobbed like a cork on the seas of the market. So 2007, amazing year; 2005, good year; 2004, not so good. As the market was purported to move, so the company moved.” He spent his first 100 days watching and learning before developing a three-year plan that was signed off by the board at the end of 2011: strengthen the traditional auction business, develop private sales, build e-commerce – all while expanding into new territories. Put like that, it sounds straightforward, but in a world built on tradition it is not. In Murphy’s words: “We’ve taken on the toughest of all challenges, transforming a company while keeping the culture consistent and keeping the people here.” It’s a work in progress that, once we look behind the glamorous theater of fine art auctions, offers insight into business leadership, THE management of change, and the nature of brand. Murphy’s plan sheds light particularly on that difficult task of extending a brand without damaging its values. First on Murphy’s agenda was a more fundamental task: to equip Christie’s IT infrastructure for the new world. “It was a ART drag on the operating model and had not been invested in for some time. The good news was it gave us the opportunity to build a state-of-the-art system, with online interaction.” Murphy, a natural communicator with an understanding of OF the need for a clear narrative, had learned an important lesson in his previous worlds: “I arrived after 10 years in music and 10 years in publishing, two industries where some of the great houses had sadly missed opportunities to connect with customers and been swept over by the wave of change. It had not happened yet in the SALES art world, but why would this industry be any different? We set steven murphy, Christie’s CEO, out as a team to figure out how to design Christie’s to become the tells Brunswick Partner kim fletcher innovator other people would fear. My concern was how fast how the venerable auction house is learning we could be the ‘new’ Christie’s. I was afraid of there being a

to love commerce in a digital world Chinese auction house in a joint venture with a start-up in HALLAM ROSIE PHOTOGRAPH:

68 brunswick review · issue 8 · spring 2014 STEVEN MURPHY

Steven Murphy, CEO of Christie’s International since September 2010, says his first love was books, which led him to a degree in literature at Georgetown University in Washington, DC, then into publishing, where he rose to President of a division at Simon & Schuster. A detour into music meant a spell heading one of EMI’s labels (Angel Records), where he learned, among other things, about the futility of fighting the tide of technology. Later, he was COO and then CEO of Rodale, a US-based publishing company, where he oversaw the most profitable period in the company’s 69-year history.

CHRISTIE’S Christie’s was founded in London in 1766 by James Christie, whose first sale included two chamber pots and two pillowcases. The salerooms at 8 King Street, in St. James’s, London, were opened in 1823.

brunswick review · issue 8 · spring 2014 69 Austin, Texas, and we would all wake up thinking: ‘What?’ “There are very few people here who don’t want to be involved “In the music business I’d been in the room with five label in art. The experts, the warehouse manager, the porter in the heads from the industry choosing the sticky tape to fit on the CD basement, they all have an interest and a knowledge.” boxes so you couldn’t steal the music. Meanwhile there were two And how does that translate to selling? “I’ve been really taken kids in baseball hats creating Napster. So my anxiety was about by the ubiquitous quality of intellectual rigor about the art – timing: can we build e-commerce, can we build private sales, love of art – and, without apology, a very mischievous, at times and can we build Christie’s online to be the equivalent convenor twinkly, love of commerce. So the perfect Christie’s executive is of attention that the St. James’s salerooms have been for almost someone who knows the art, loves the art, but is absolutely going 250 years?” to make this a commercial experience. With a Burberry dress or a Gucci bag, the brand is clear. But “The greatest specialist in Old Masters who really knows why what is Christie’s brand? The auction house is an intermediary, that drawing is special is thrilled if it makes a big number, as a a service business rather than a product. Surely, the brand is in way of describing its importance as a piece of art and as a service the art rather than the place they buy it? Murphy says, “Actually to the client, who’s been a friend for 20 years. At Christie’s I’ve that is not true in a country like China. People say: ‘I got it at seen that this is not a dichotomy – it’s not commerce versus love Christie’s.’ The fact that something came from Christie’s means of art – and not something we have to apologize for.” it’s authentic, it’s been vetted and you purchased it in one of the Although he is introducing much change, he is skilled also three or four best places in the world to purchase something at playing the heritage card: “We are all here as custodians of like this. The brand means trust, authenticity, authentication. Christie’s just for the 10 or 20 years we get to be here. It carries The brand should represent that this is the most trusted place on. So, the Stubbs landscape of Newmarket which we sold in to convene and interact with the commerce of art.” 2011, with the horse Gimcrack in the corner – so it’s actually a The biggest component of the brand resides in Christie’s landscape, with the horse in the corner, unusually for him – was people, a group whose expertise the house is celebrating in an commissioned in 1765 and sold four times in its life: all four elaborately photographed international advertising campaign. times at Christie’s. “And on the stretcher of that picture is a number that was stencilled there by someone who worked for James Christie when it was first brought to the house. So that picture has come through the house four times in its life and for someone who might say: ‘Oh my gosh, it’s been bought by the Americans’ – which they probably said around 1910, when some robber baron took it out of the country and it went to Newport never to be back on the shores of England again – well, it came back. Now it’s gone someplace else. And in 50 years it will be back again.” Given his easy way with a story, one might infer that all has gone smoothly. Yet we know that those who celebrate great heritage can find it hard to embrace change. Some believe it is unseemly for an auction house to engage in private sales, an area where Christie’s now eagerly matches buyers and sellers: “The question of what is unseemly is interesting, and it all depends on who you ask. There are some who conduct private sales who

Francis Bacon’s triptych of his friend and fellow artist Lucian Freud was painted in 1969 and rarely exhibited. It sold in New York in November 2013 for $142 million, making it the most expensive sale of a painting in an auction to date Gimcrack on Newmarket Heath with a Trainer, a Stable- Lad, and a Jockey (detail) by George Stubbs (1724-1806). The painting has been sold four times, on each occasion at Christie’s, most recently in 2011 when it realized £22.4 million ($35.9 million) – the highest- ever price for an Old Master sold at the auction house. “On the stretcher of that picture is a number that was stencilled there by someone who worked for James Christie when it was first brought to the house,” says Murphy

might say auction is vulgar – and vice versa. One of the fun things about being new was that I found this attitude and these lines amusing and bemusing. Our role is to connect art and clients, and always has been. Private sales are in our historic DNA as well as auction, so it’s coming around again, full circle. “As a leader, you need to push ahead anyway if you believe you are right and hope that people will be honest in their appreciation of what happens when it works. You have to have the courage to push these initiatives forward and then if the chips fall, they fall. “We are a year-and-a-half into private sales being a major part of our reality and now it has already been experienced as, ‘I got this consignment for my auction because I sold for this person privately.’ We know from our research that our current best clients spend 47 percent of their wallet outside of auction altogether, doing private deals. So we are just extending our action with the client base, it’s not cannibalized at all. Private sales have been accepted.” TOM POWEL IMAGING

© There was also muttering about online auctions, territory Murphy was determined to conquer. Christie’s encourages online Overshadowed by the record price achieved by the Bacon bidding at regular auctions and runs some online only: “We had a triptych, Jeff Koons’ 10-foot fabulous moment when Philippe Garner, one of the most elegant, long stainless steel sculpture, erudite and respected specialists in our company, a photography Balloon Dog (Orange) sold for genius, spoke to the entire team and in his mellifluous voice said: the “staggering” price of $58.4 million at the November ‘I was asked to do a Diane Arbus online auction and I must say 2013 New York sale, “a crowning I was dubious. I’m here to say that I was wrong.’ And he told the moment in Koons’ long and story of what happened: these were less popular subjects and yet extraordinary career,” wrote we were sold out, above our highest estimates, with 45 percent of The Independent

ARTWORK IMAGES COURTESY OF CHRISTIE’S / the buyers never before customers of Christie’s. The consigner

brunswick review · issue 8 · spring 2014 71 was thrilled, the department was thrilled, and they “The brand ... fraction of the clients we should be speaking to acquired the names and email addresses of 21 new who are already quite sophisticated. The potential potential clients. The experience wasn’t eBay, it should represent of China is to go from hundreds of clients to was very Christie’s.” that this is the thousands of clients who are already interested in The commercial detail about email addresses is Chinese contemporary, Chinese antiquities and telling. Murphy is fluent not only in “creative” but most trusted western art. We knew the audience. The same is also in the bottom line. “I don’t have experience place to convene true in India. and training in classic American corporate mode. “The overriding learning of the last two years So I didn’t bring PowerPoint meetings and a and interact with – not just about the Chinese client potential, but whole series of processes and forums, quite the the commerce the client potential generally – is that the two big opposite. I did add discipline in terms of numbers auction houses were succeeding in competing and clarity and accountability, which makes of art” with each other for many years while serving a people happier. Most people want to know where closed circle of clients. Meanwhile, dealers, art we are going, what is expected, will it be appreciated?” fairs, and everything else were growing rapidly. So the number With a wry smile, he acknowledges that it has not all been of clients available to Christie’s to add to its client roster in plain sailing: “Having had this narrative experience before, I have America, in Europe, and in China is enormous. These are learned that there will be resistance from a certain percentage of clients already buying art, but not from auction.” people, and when I leave a decade from now there will be some Those additional potential buyers, whether in existing who still say I was wrong. There’s always a percentage of well- or new markets, will be key to Christie’s growth as the meaning people who find change hard, if not impossible. The three-year plan enters its third year. Murphy is quick to people here are creative, and while I don’t say it’s been easy – still point out just how inexpensive art can be at the firm’s isn’t – I haven’t found resistance, only enthusiasm to be more South Kensington saleroom and eager to describe the creative.” crowds who filled Christie’s galleries during the Frieze More surprising has been the nature of external opposition. London art fair. Whatever the price, he explains, the “One doesn’t see in other industries the intensity of a certain impulse is not investment but a human passion for flavor of competition between the auction houses, and between art. Inevitably, in proof of that, we go to the higher them and the dealers. I find it astonishing. Random House does end: “The hedge fund billionaire who buys the not talk down the Philip Roth novel when Houghton Mifflin is Rothko for $35 million dollars is not storing it in publishing it. ” a Geneva vault. She wants to have it. Why do I But he is not one to dwell on the negative. It’s time to talk know this? Because her private office manager about China, where Christie’s has become the first foreign is on the phone the morning after the sale auction house to be given an independent license, holding its first saying we want it in Greenwich, Connecticut, sale in Shanghai in September 2013. “I knew that China was an tomorrow night for a dinner party.” important market, but also an important idea. What does it mean And suddenly there is a glimpse of the old to be in China? The main thing to say is that we have succeeded music industry boss: “It’s on the wall, man. as Christie’s. Christie’s operates in a certain way in Mayfair and at They want it. They want Rothko.” the Rockefeller Center and in Amsterdam. They all have the same structures, laws, rules – it’s exactly the same in Shanghai. So if you kim fletcher is a Partner in Brunswick’s London office, before which he had a long and distinguished career as a are a European purchasing something in Shanghai, it’s the same journalist, including spells as Editor of The Independent experience as if you are purchasing it in on Sunday and Editorial Director of the Telegraph Group. Amsterdam and also online as well. “One makes a huge mistake if you are Sui Jianguo is one of China’s American or European with any colonial best known contemporary artists. His Clothes Veins Study filter on your thinking as in, ‘We need Series of sculptures, including to teach that market how to appreciate The Dying Slave (1988, right), the joys of collecting and of art.’ Not borrows from classical Greek necessary. The Chinese woman or man art here combined with the Mao suit which has Western who has two degrees and is the son of origins, despite its iconic an oligarch and is collecting – they’re as symbolism during Mao’s sophisticated about art as anybody you are Cultural Revolution. going to have lunch with at The Wolseley. The sculptures fetched $1.9 million at Christie’s The number of clients that Christie’s inaugural auction Shanghai is talking to is just a small in Shanghai in 2013

72 ART WITH CHINESE CHARACTERISTICS

Christie’s China Managing Director, jinqing cai, What was Christie’s involvement in the Chinese art says the auction house’s debut auction in mainland market before 2013? We have been in China for almost 20 years. We set up China signals a milestone for the global art market our first representative office in Shanghai in 1994, the first international auction house to do so. Over the years we developed long-term relationships with Chinese artists and with clients who were buying from Hong Kong. We were also quite innovative in promoting Chinese art globally. Starting in 2002, we developed n september 26 2013, christie’s a whole contemporary offering – in addition to our held its inaugural sale in mainland traditional areas of expertise such as Chinese painting China after becoming the first fine art and ancient artworks. We did a lot of promotion of auction company to gain a license to Chinese contemporary artists on this platform and operate independently in the country. it has become an important way to be recognized O At a showroom in Shanghai’s Shangri-La hotel, sales internationally. Their value has been growing totaled $24.9 million, from objects including paintings, quite significantly. sculpture, jewelry, watches and wine. A ruby and Why is it important to have a fully operational diamond necklace fetched the highest price of the saleroom when people are increasingly buying night for a single item, $3.4 million, while contemporary virtually, by telephone or online? Chinese art also proved very popular, with Clothes Veins For us, putting an auction together is very much like Study Series, a set of 14 plaster and bronze sculptures by putting on a theater production. There is a certain drama Sui Jianguo, fetching $1.9 million (see left). – the prices, the high impact of a live event – it’s unique. Brunswick’s ben rawlingson plant talked It is the fullest way for people to experience Christie’s. to Christie’s Jinqing Cai about what the breakthrough Of course you have online and telephone bidding. But means for the company and about the burgeoning however you participate, taking part in an auction is interest in fine arts in China. more than just doing a transaction. You really have a What was it like on the night of the first auction? special moment to observe the market. Everyone was very, very excited. There was a lot of buzz In emerging markets, is there a learning process too? created in China and around the world. We brought over The auction sector in China is very young – only about about 80 global clients to witness this historic moment. 20 years old. For the Chinese, having a leading brand Christie’s is the first international fine art auction house to conduct auctions provides their first chance to come that has been able to conduct its auctions completely and see it. For us, there is a learning process too: new independently in China, under the Christie’s name, in laws, how we interact with local clients, their pace and Christie’s style, with Christie’s auctioneers. It was preference, their price range and tolerance. Now, we are really a defining moment for the art market here. convening people not only for sales, but also for lectures, This is a fascinating time to see this market really as part of our education program. It all promotes art. become globally connected and Chinese collectors as well as artists are becoming a driving and powerful ben rawlingson plant is Managing Partner of force in the world. Brunswick Arts, supporting arts and not-for-profit clients and advising on engagement with the cultural sector. Why Shanghai? Really it came down to a mutual interest – for Christie’s and for the city. Shanghai said it would support us in getting a license and creating an environment where more and more international art companies could not only start but also sustain their businesses there. For us, it was about being able to create a complete Christie’s experience as Shanghai develops an international position for the city’s art market. When we started this conversation, we immediately clicked. JINQING CAI Jinqing Cai is Managing Director of Christie’s China, having joined in summer 2012 from Brunswick Group, where she had been a Partner since 2005. Born in Beijing and educated at Wellesley College and Princeton University in the US, Cai heads Christie’s activities in China and leads their educational and cultural projects.

73 The success of the European Central Bank's policies depends heavily on being understood by a wide audience, says christine graeff, its Director General of Communications CLEAR TALKING

onetary policy? interest rates? LTROs? OMTs? Full allotment? When the decision-making bodies of the European Central Bank (ECB) meet, many technical M terms are used. But listening carefully you would discover that the single word most often used is simply communication. Indeed, the success of a central bank’s policies – both in terms of transmission to the markets and being understood by the general public – is more than ever dependent on how a bank communicates. The times when central bank communication was based on secrecy and market surprise are over. And the aim of policymakers is no longer to have their own “dialect,” such as “Fed speak.” Alan Greenspan’s remark, “I know you think you understand what you thought I said, but I’m not sure you realize that what GAME THEORY you heard is not what I meant” is a line from the past. The key to trust is building Your chance to play the role of ECB President Mario Draghi relationships and using clear language. It’s not Grand Theft Auto, but you do learn a lot. That was the verdict of But while central bank communication a review on American National Public Radio recently by Jason Karaian was previously aimed at very specific of Quartz, Atlantic Media’s business website, of the European Central audiences, such as the financial markets, Bank’s educational games, including €conomia, Inflation Island and Top Floor. Marcello Di Pietro of the ECB says the games are designed specialized financial players, economists to educate 18- to 25-year-olds about economics. “We hope to entertain and other key academic circles, there is players, who can have fun while learning about the benefits of price now a much wider audience interested stability, the risks of inflation or deflation and the workings of central in the policies of central banks. And this banks.” The ECB tools seem to gauge their audience better than similar games offered by the Fed, which Karaian thought were rather explicitly includes the general public and unsophisticated and perhaps “wouldn’t entice future central bankers.” political decision makers. This may reveal the ECB's real goal: to beat the Fed at recruiting talent.

74 brunswick review · issue 8 · spring 2014 However, a message that may be helpful various national and regional newspapers. in steering a democratic and political The importance of communication The times when bank process may lead, for example, to extreme was again highlighted in the summer nervousness in capital markets. So the of 2013, when the ECB’s Governing communication was ECB must be sensitive to the way its Council introduced “forward guidance,” communication can be interpreted by assuring the markets that interest rates based on secrecy and various audiences. would stay low for an “extended period of time.” This statement helped to ease market surprise are over added to that, there is the challenge concerns – reflected in the market – that of cultural bias. While German interest rates would rise after talk in the of the discussion are. Some people are commentators, influenced by the savings US of “tapering” [scaling back stimulus concerned, however, that too much banks and life insurers, complain about measures]. Forward guidance in the transparency may be counterproductive low interest rates, southern Europeans case of the ECB is to be understood as a to a healthy discussion, given the political argue that they are still too high if you way of increasing transparency. Market sensitivities involved. measure the real rates local companies participants know our guidelines – The ECB is also well aware that have to pay. For some, the exchange though this did not stop the latest rate the hierarchy of information has rate is too high; for others, too low. cut taking some of them by surprise. fundamentally changed: the top-down For some, ECB experts in the “Troika” Another aspect of communication is approach of one-way communication – the European Commission and currently being discussed: the publication through established channels is no International Monetary Fund in liaison of an account of the Governing longer working. Instead, social media with the ECB, which organizes loans to Council’s deliberations, both to increase users are increasingly shaping policy the beleaguered governments of Europe – transparency and to help the various or seeking to influence how policy is are the “men in black.” Meanwhile, bond audiences understand how decisions made. New coalitions and networks purchases by the ECB are sometimes come about and what the key elements need to be engaged on their terms seen as the sell-off of people’s assets. through central bank communication. What Germans call the “euro rescue” Audiences are participating in the debate (Euro-Rettung) is for the Greeks “the and, in many instances, are co-creating memorandum,” the paper the Greek and collaborating with us. Establishing government had to sign to receive a dialogue rather than one-way European loans. It is all about language communication via the different tools and images and historic associations. available is what the ECB is aiming at. The key to success will therefore be to explain how every single policy decision as companies and governments know advances the public interest. In the case all too well, just having better arguments of the ECB, this means the public interest CHRISTINE GRAEFF is not enough. of millions of citizens, from the eurozone The key is that we maintain, or even bailout program countries to the core Graeff is Director General, increase, the confidence of the euro area’s Communications & Language Services European nations. for the European Central Bank, based 330 million citizens in our ability to keep To achieve this, beyond the monthly in Frankfurt. A former Brunswick the value of money stable. press conference geared towards the Partner, she started her career in “A secure and stable currency in an markets – a feature invented by the ECB the corporate finance department of insecure world” would be our motto, if Dresdner Kleinwort Benson. Graeff – its board members reach out to wider joined the ECB in 2013 and reports to we had one. And given that the ECB has audiences. In addition to speaking at its President, Mario Draghi. The ECB’s delivered this for 15 years now, it is high academic conferences, they also explain main task is to maintain the euro’s time that we make citizens aware of it and, the policies of the ECB at local chambers purchasing power and price stability in more to the point, that we help everyone the euro area. The euro area comprises of commerce, regional gatherings and the 18 European Union countries that better understand the opportunities

ILLUSTRATION: FRANCESCO BONGIORNI, EASTWING BONGIORNI, FRANCESCO ILLUSTRATION: universities, and by giving interviews to have introduced the euro since 1999. created by the euro and Europe.

brunswick review · issue 8 · spring 2014 75 t. boone pickens, legendary oilman and dealmaker, tells Brunswick’s steve lipin and chrysta castañeda that the seeds of his career were sown in the risk-taking culture in which he was raised, where the status quo was rarely acceptable FINDING THE LAGNIAPPE

“That’s a term folks in my part of the country use for a bonus or a fringe benefit”

76 brunswick review · issue 8 · spring 2014 n the life and times of a financial oil on Wall Street than by drilling holes in the Gulf of swashbuckler, there is often a seminal Mexico – take a run at them, and either force existing moment that defined the direction his management to enhance the value of the company for career would take. In the case of T. Boone shareholders or take them over and do it themselves. Pickens, Texas-Oklahoma oilman and Pickens helped to define the era of the activist life-long dealmaker, there was a series of shareholder (or “corporate raider,” as they were usually such moments on the road to becoming depicted), investors who take strategic stakes in a risk-taker extraordinaire. An essential companies and then appeal directly to the shareholder part of his foundation was clearly his base to force change or a company’s sale. He gained parents: “I got the best traits of both of national prominence taking on “Big Oil” – Gulf, my parents,” he wrote in Forbes magazine Phillips, Unocal – in a series of groundbreaking “raids” in 2012. “My dad was a risk-taker ... My that netted Mesa billions. mother was the opposite. She was very Pickens says that it was never his intention to analyticalI and an excellent bridge player. She didn’t shake up the industry, but rather to make money for believe in sticking her neck out for anything.” Mesa shareholders. Nonetheless, he is still committed In his autobiography, The First Billion is the to the idea that shareholders of public companies Hardest, Pickens wrote of another turning point. After should have a strong voice and influence over their qualifying as a geologist and getting a job in the 1950s strategic direction. at Phillips Petroleum, where his father had worked later on in his career, Pickens was married with a child and “the master plan was simply to get everybody fed.” However, the bureaucracy at the Bartlesville, Oklahoma We met Pickens for coffee in his BP Capital office in headquarters of Phillips, then one of the largest oil north Dallas, Texas, which is festooned with portraits of companies in the world, was stifling. (“Things were former Presidents and images of his beloved Mesa Vista pretty rigid,” he wrote. “They rang a bell to dismiss us Ranch. Various aides and assistants (and at least one all for lunch, then rang another to get us back to work. dog) ran in and out. Then they rang a bell at 5pm to tell us to go home.”) Lively, sharp, and throwing out questions about Pickens just couldn’t accept the status quo, so instead who coached which college football team in the 1960s, he rolled the dice and became a wildcatter, founding recollections of CEOs he had frightened, and deals the company that would later become Mesa Petroleum, struck on duck hunts, Pickens exudes Texas charm. an innovative deal-making machine that helped to A one-hour meeting became almost two hours as define American finance in the 1980s. we were regaled with tales from arguably the first Yet another key point was an encounter with shareholder activist. W. Dow Hamm, a highly respected geologist and board “You must come down to the ranch,” he said at the member of oil company ARCO. Pickens wrote in The end of the meeting. First Billion that Hamm told him at a crucial moment, “Boone, you will spend just as much time on a big deal Some of the things you were saying in the early as on a little deal. In big deals, there’s always serendipity. 1980s, you see a lot of these young activists saying You’ll find a lot of lagniappe,” which, Pickens explains, the same things today. Do you think there is a crisis is “a term folks in my part of the country use for a in corporate America? bonus or a fringe benefit. ‘There’s so much in a big deal The irony of activism is that you’re actually working that nobody can evaluate,’ Dow told me. ‘Once you get for the owners. The owners are the stockholders. It in there you’ll find out what I’m talking about.’” used to drive them crazy at the business roundtables Pickens took that lesson to heart and put his career when I’d ask management if they were doing a good into overdrive in the late 1960s by launching a bid for job for the owners when the stock was worth $50 but a company, Hugoton, that was 30 times the size of selling for $25. I’d ask them whether they were serving Mesa. The basic premise and strategy for Mesa was to the true owners, and it would just about kill them to find companies that were substantially undervalued acknowledge that they were only employees and the – and as Pickens recalls, it was easier back then to find shareholders were the true owners.

77 “They used to file lawsuits Do you think that has changed much – that we’re seeing? in the intervening decades? against me Well, you’ve got people who believe I was asked by The New York Times, these assets are worth more than they’re I think it was in 1987, “What would and I’d say, selling for. So, they come in, do the same you do if you could change corporate thing that I did and the same thing that America – change one thing – what ‘With my money Carl [Icahn] has done. Hell, I was doing would it be?” And I said: have a board you’re suing it back in the 1980s; Carl’s still doing it. of directors elected by the stockholders. He came in behind me at Phillips, called They said, “Well, that’s the way it is now.” me? I’m just a me on the phone and said, “I think you I said, no, actually the management should have stayed in there.” He was picks their bosses and board and there shareholder exactly right. We were closer than we is something that’s not right about that. thought. There was so much we didn’t In some cases, I’d get up and say, ‘Now, trying to know about what we were trying to do. where did this guy come from? He’s got get value’” 100 shares of stock. Do you think he’s Do you think companies are more looking after shareholders? Hell no, willing to engage with activist he’s doing whatever the management investors now? Do you think some wants him to do.’ But you’ve got a lot of of the stigma has gone away? directors today that are better qualified than they were They used to file lawsuits against me and I’d say, “With back at that time. Yeah, I think it’s a lot better today my money you’re suing me? I’m just a shareholder than it was then. trying to get value.” What I said made sense but I couldn’t get the media to buy in. They So, you think that some boards are more sensitive were convinced I was some kind of a raider. Well, to shareholders’ rights and shareholders’ issues? that certainly has changed. I would like to see a board of directors that is staggered. Let’s say you have nine seats on the board and you have Turning to energy policy, you have been outspoken three that are coming up – now, if the management of about the policies followed by both recent the company wanted to submit a person or two for the administrations, haven’t you? board, that would actually go to the headhunters, and Right. They have been afraid to embrace the oil and the proposed board members have to be qualified, meet gas industries. Why? “You’ve made enough.” What does certain parameters – ownership would be one of them, that mean? “You’re not paying your fair share.” What say 20,000 shares. But that is the only place I see you does that mean? What’s enough? When does the next can fix anything further in corporate America. Then industry, whether it be tech or anything else, when will you just have to let the market work. it have made enough? What you are missing right now is the same What do you think of all the newer shareholder component that was missing in corporate America

activists – what they used to call “corporate raiders” back in the 1980s: leadership. Here we sit with more PHOTOGRAPHS: JEFF RIEDEL, CONTOUR BY GETTY BLOOMBERG/ VIA GETTY

T. BOONE PICKENS

STRATEGY OF A DEALMAKER she made me stick with it.’” Grandma was a big influence: Pickens also wrote in his l In a 10-step outline entitled “How autobiography how she taught him the T. Boone Pickens Built His Empire” in value of inventory management with a The Wall Street Journal in December 2013, toothpaste anecdote. the first step was, “At the age of 10 in The final step reflected on Pickens’ Oklahoma, agrees to mow his grandma’s ill-fated venture into wind farms. The hugely lawns but grossly underestimates their ambitious “Pickens Plan” envisioned massive size. ‘It was a very bad deal,’ he says, ‘but wind power investment and conversion

78 brunswick review · issue 8 · spring 2014 “‘The guy’s a goddamn natural gas than anybody else in the Has there been some benefit for the world – and coming up very fast on oil change US in keeping the world oil trade [in December 2013, the government’s flowing? Energy Information Agency projected advocate is You know how much oil comes through US oil production to rise by more the Strait of Hormuz every day? than 800,000 barrels a day through what he is.’ Seventeen million barrels, okay. Who 2016, to reach 9.6 million barrels a day, That’s exactly is it that protects that? That’s right, the nearly equivalent to the country’s peak Fifth Fleet, based in Bahrain. And how production in the early 1970s]. What what I am much of the 17 million barrels comes you need is a leadership that says, “Hey, to us in the United States? Ten percent. do we really have to be in the Middle – change will We’re protecting the Chinese and East?” We’ve spent more than $2 trillion Europe. Does anybody ask them to pay in Iraq and Afghanistan, 8,000 dead, do more good for anything? Hell, we’re the people that 40,000 injured and we don’t have a than bad” keep the oil moving. damn thing to show for it. I want off OPEC; I want to make that break. See, I want to change things The Canadian “tar sands” oil and and if you get down to it, if you knew the Keystone pipeline to run it me from policy, you’d say, “The guy’s a south to US markets have been controversial goddamn change advocate is what he is.” That’s exactly on environmental grounds, but you’re a strong what I am. Change will do more good than bad – change advocate for it, aren’t you? corporate America, change what we do. Here you have 250 billion barrels that they’re asking you to take [that is, Canada’s estimated tar oil reserves], And your passion for change hasn’t diminished? and another 250 billion barrels you’re getting 10 I still want to change things. Older people tend not percent of [estimated Saudi reserves] and providing to like change because they think they’re going to get all the protection and everything else. What is the cost changed out of the picture. Young people love change of that? On those kind of things I say, well, hell, we’re because they think, “Change will get the old guys out the best operator. The United States is the best. You say, and I got an opening.” They like change, but the man well, you can be better. Okay. We’ll be better. Can you on the street thinks it’s a little scary. He doesn’t know be 100 percent? No. Hell, no, you can’t. You’re always what you’re going to change. He may say, “I don’t going to have something that’ll spring a leak sometime, like where I am now, but it could get worse.” But I’m but, man, we don’t mess up the environment in this convinced things get better with change. country. You go to other countries and it’s unbelievable. You don’t want the Keystone pipeline to ever turn steve lipin is Senior Partner for Brunswick’s US practice. west out of Fort McMurray [where Canada’s tar sands chrysta castañeda is a Partner in Brunswick’s Dallas office. She specializes in communications arising from are concentrated]. Then it is headed to China is where legal matters such as litigation, government investigations it is going to go. You’d be a fool to give up that oil. and crises.

T. BOONE PICKENS

to natural gas in transport, but Wall Street’s dealmaking style in the 1980s, “His favored financial crisis stalled the scheme. strategy was the leveraged buyout, wherein As he recently tweeted, while wind costs one company buys another with little cash are coming down fast, wind is “still and lots of debt. This is a high-risk investment challenged by damn cheap natural gas.” that has the ability to produce huge gains twitter.com/boonepickens in a bull market and huge losses in a bear. Either way, the core of Pickens’ investment l An online industry membership group, philosophy was on display: knowing when PrivateEquity.com, wrote of Pickens’ to strike and when to play big.”

brunswick review · issue 8 · spring 2014 79 anya hindmarch talks to heather mcgregor about craftsmanship, celebrity HANDBAGSand her admiration for the woman who turned “handbagging” into a verb FOREVER

ANYA HINDMARCH

Anya Hindmarch founded her eponymous brand in London in 1987 and now has 58 stores globally. The brand is known for its craftsmanship, personalized pieces, Britishness – and sense of humor. A UK Trade Ambassador, Non-Executive Director of the British Fashion Council and Trustee of both The Royal Academy and The Design Museum, Hindmarch was awarded an MBE in recognition of her contribution to the British fashion industry in 2009. She was named Veuve Clicquot Business Woman of the Year and Harper’s Bazaar Woman of the Year in 2012.

“A handbag is a piece of engineering. And interesting in a way that a beautiful handmade car is interesting. It has still got to work.”

heather mcgregor is a headhunter and Financial Times columnist whose favorite handbag is her bespoke Anya Hindmarch Ebury, featuring embossed messages from her three sons and long-suffering husband.

80 brunswick review · issue 8 · spring 2014 “In terms of “There is so much talk in the luxury world about communication, the cult of celebrity – we always talk who is wearing what, this bag named after that about taut ropes celebrity, and so on, – the connection which is fine. But for me, between, say, me it’s the craftsmen who and our store in LA. should be celebrated.”

Do they feel they HANDBAGGING verb: to verbally attack or crush (a person or idea) can pick up the ruthlessly and forcefully [1980s: coined by Julian Critchley, phone? Do they Conservative MP, with reference to Margaret Thatcher’s ministerial feel connected? style in cabinet meetings] Source: Oxford Dictionary Says Hindmarch, “What Margaret If they needed Thatcher represented to me was that period of cut-the-red-tape, get out to go the extra mile, there, start your own business. It was a very exciting time. It was a time would they?” when many brands were formed … Of course, she also made the word ‘handbag’ into a verb – you’ve got to look up to anyone who does that.” “We’re 80 people

here now Having the unsolicited backing of [at head office] and it’s the most famous fashion icon in the very collaborative, world was a coup for Hindmarch, who recounted to The Sunday Telegraph cooperative, and – I like the patronage of Diana, Princess to think – a really of Wales. “She would pop into our first shop on Walton Street, without nice place to work. any bodyguards, and she was very We certainly lovely, very low key. She always used attract a lot of talent to refer to [the Hindmarch clutch] as her ‘cleavage bag’ because she because of that.” would use it when she got out of the car to protect her modesty.”

heather mcgregor “I don’t design is a headhunter and Financial Times columnist specifically for different whose favorite handbag markets. It’s a global is her bespoke Anya Hindmarch Ebury, featuring marketplace these embossed messages days – everyone is from her three sons and long-suffering husband. pretty much in sync.”

brunswick review · issue 8 · spring 2014 PHOTOGRAPHS: MARC LILIUS / ANYA HINDMARCH / GETTY / MARTYN THOMPSON / © COASTER, ALAMY you want to keep it.” Seeing acraftsman A growing of part her business Hindmarch’s Madison Avenue to have craftsmen is bespoke, where customers from how things appreciate why why something you really value is special–and “My dream was at work makes disconnected flagship store inNew York. People are so in thestore. Pictured istheinterior of are made. can personalizecan items

“The commercial team “I didn’t thrive in an want to do what sold academic environment. really well last year. FASHION… I was, shall we say, They want it safe and impatient in the …speaks volumes about all in black. And of classroom. I just your personality in a course the design team wanted to get going. way that words don’t. want to break new I think that’s quite an It is very much ground. Both are savvy entrepreneurial trait.” a coloring in enough to know that of people’s characters. they want to achieve the — same thing. But there’s …is quite tribal. I’ve always a natural tension that “I was keen to build been interested in the should be there.” psychology behind it a business that “I’m very lucky because because it has a very soft set was authentic I get to play with all of unspoken rules. this creative madness.” — and came from …is very mood altering my passion about and, more importantly, craftsmanship very confidence boosting. “It would be — and design. very dry if you Confidence is hugely And combining important. It is about ran a business saying, ‘This is what that with humor.” purely to make I love,’ and getting people money. It has to to follow you. — “The way my brain have a life to it. You can carry people works is good for Fashion is a with you on all sorts remembering form of journeys if you – shape – texture – color. combination of can do that. I have a very good visual art and business.” memory.”

“Sometimes a creative The response to Hindmarch’s 2007 project to persuade decision is actually people to use less plastic was explosive. Cloth bags emblazoned with “I’m not a plastic bag” (£5 in the UK, $15 smart for the business. in the US) attracted queues of enthusiastic buyers. As the It’s not a case of BBC said at the time, “The bag’s must-have credentials were secured when it was chosen as the goodie bag for one or the other.” guests at the 2007 Vanity Fair Oscar party.” Hindmarch says, “Someone told me once, ‘When you throw something away, there is actually no away. It ends up in landfill.’ … [the bag’s popularity] just went around the world like sort of a wave. It can be a bit distracting, I suppose, from day to day business, but it was important to do and made a difference.” brunswick review · issue 8 · spring 2014 83 “The average water tank holds 10,000 gallons. The average New Yorker wastes 10,000 gallons a year. That same amount would provide for a whole family in a water-scarce area for five years” Mary Jordan, The Water Tank Project, at Mashable’s Social Good Summit 2013 PHOTOGRAPHS: ADRIAN WILSON / ICY AND SOT AND ICY / WILSON ADRIAN PHOTOGRAPHS:

84 brunswick review · issue 8 · spring 2014 WATER COLOR

he water tanks that form a quintessential part of the New York skyline could be the perfect medium for a message about water T conservation, writes Brunswick’s Laura Dudley. So thought artist, film-maker, and activist Mary Jordan. In June 2014, Jordan’s non-profit organization, Word Above the Street, will launch The Water Tank Project. Prominent artists, including Jeff Koons and Ed Ruscha, will transform 100 tanks across the city into a public art project – and campaign. Jordan’s team – with permission – will scale the rooftops and wrap the tanks in fabric printed with the artists’ designs. “The tanks have a huge presence,” she says, “and we believe this unique combination of an awareness campaign with stunning art will have a big impact too. It is up to the public to make the personal changes necessary to make bigger changes happen. We hope to capture people’s imagination, to change their habits – and spread the word about responsible water use.” Many of the artists involved are providing their designs for free, while funding for the project has come from foundations and corporate sponsors. “The next tanks to carry the message will be in Mexico City in 2015,” says Jordan. “As the project ripples worldwide, so will the message that we must all care about how much water we use to protect our most precious resource. We need to activate every single one of us to become a water steward. A water warrior.”

mary jordan has produced award-winning documentaries in Burma, Africa, Indonesia and India, and worked with Médecins sans Frontières and the International Center for Human Rights. brunswick review · issue 8 · spring 2014 85 s soon as i heard the news, More importantly, the skeleton itself upon the young upstart pretender to I rushed up to the city of gave clues to wounds suffered in battle, his throne. Leicester in the English its skull having suffered some kind Delving deeper into the original sources Midlands, and found myself of massive trauma. Perhaps the most and contemporary records, it also became A standing in a long queue that alluring clue as to the identity of the body clear that Richard was never the evil wrapped around the block, patiently came from news that the skeleton had a monster of legend. For most of his life, he waiting my turn to enter the car park. noticeable curvature of the spine. Were had been regarded as a paragon of virtue, At the front of the line, marshals wearing these really the long-lost remains of one of a brilliant military general who had been luminous jackets ushered the next group the most reviled kings in English history, lauded for his successes in the battle of through, as if funneling the crowd at a pop the crook-backed Richard III? Tewkesbury and in military campaigns on concert. Yet this was no ordinary car park, The news of this remarkable discovery the Scottish border. During his early years, and the celebrity of sorts had been dead broke just as I was putting the finishing Richard had worked loyally for his brother for more than 500 years. touches to a book on the Battle of Edward IV, earning praise for his straight Just a few weeks earlier, a team of Bosworth, which felt at times like covering living (unlike Edward, whose debauchery archaeologists from the University of a breaking news story. The book was to was unrivaled) and concern for the Leicester made an announcement that chart the rise of the Tudors, focusing on plight of the common man, especially hit the headlines globally. Beneath a Henry Tudor’s phoenix-like ascent from his devotion to his put-upon northern council car park, they had discovered the the ashes of forced exile at the unripe age followers. It seemed that Richard’s bones of a man believed to be Richard of 14. However, I began to realize that meteoric rise was indeed well-founded III, maligned in William Shakespeare’s Bosworth was not so much a story of how on hard work and sensible judgments. eponymous play. All signs pointed to Henry Tudor won the battle, but more the body being Richard. It had been about how Richard III lost his kingdom. a bloody deed dispatch’d unearthed in the nave of the buried ruins In fact, Henry Tudor’s success owed all Where, then, did it all go wrong, and why of Greyfriars Church, destroyed during to the downfall of Richard, right down is Richard regarded as one of the most the Dissolution of the Monasteries, where to the final moments of the battle when maligned monarchs in English history? Richard had been buried in a pauper’s Richard found himself deserted by his There can be little doubt that the seeds grave after his death at the Battle of supporters and chose to throw all caution of Richard’s downfall were sown in his Bosworth in August 1485. to the wind and launch a suicidal attack decision to usurp the throne from his THE ONLY WAY IS UP England’s King Richard III may have been an early victim of the “dark arts” of political spin, says historian and Member of Parliament chris skidmore

86 brunswick review · issue 8 · spring 2014 brunswick review · issue 8 · spring 2014 87 12-year-old nephew Edward V, whom he of men from his inherited homeland in was charged with protecting, followed by North Yorkshire. Such devotion earned the suspicious disappearance of Edward him a strong following in the north. and his nine-year-old brother, Richard, Duke of York, from the Tower of London. he doth deny to come An Italian visitor to England, Dominic As Henry Tudor grew ever stronger, Mancini, who left a detailed eyewitness Richard knew that confrontation was report of the events of 1483, wrote how inevitable. He should never have lost the after Richard had managed to seize battle. His force of 15,000 men was twice power, Edward V and his brother “were the size of Henry’s army. Yet on the day, withdrawn into the inner apartments half of Richard’s army refused to fight. of the Tower” and “day by day began to In particular, it was the decision of the be seen more and more rarely behind Stanleys that led to defeat – Thomas Lord the bars and windows, till at length they Stanley was married to Henry Tudor’s ceased to appear altogether.” mother. When Richard saw the treachery Rumors of their death began to unfolding around him, he was urged to circulate, while Mancini wrote that he had flee but, according to a Spaniard who was seen men burst into tears at the mention present on Richard’s side, the king flatly of the young king’s name, since “already refused. “God forbid I yield one step,” he there was a suspicion that he had been is reported to have stated. “This day I will done away with.” By September 1483, it die as a king or win.” was clear to everyone, the contemporary Having spied his rival and charged, Crowland Chronicler wrote, that “the Richard came within touching distance princes, by some unknown manner of of Henry Tudor when Sir William Stanley, destruction, had met their fate.” who had sat out the battle, charged against It seems undeniable that while there is him and swept Richard into a marsh no evidence to prove the exact date of the where he was hacked down and killed, princes’ death, they certainly went missing the last English king to be killed on a under their uncle’s watch. Yet if Richard battlefield, reportedly by a Welshman was guilty of killing the princes, then we who beat Richard’s helmet into his are faced with the enigma of why he acted brains. His final words were apparently so ruthlessly, suddenly turning against his “Treason! Treason!” brother’s children, especially after years of loyal service to his brother. orators of miseries Without condoning infanticide, it During his reign, the Bishop of St David’s, The first description of Richard as being is worth considering the dilemma that Thomas Langton, wrote that “many a physically deformed comes from an Richard faced. Edward V was so young poor man” had been “relieved and helped account by the Warwickshire chronicler and barely knew his uncle, having been by him and his commands.” Much later, John Rous, who might be considered the brought up surrounded by his mother’s in 1525, the City of London protested to first author of Richard’s “black legend.” family, whose hostility to Richard was the powerful Lord Chancellor, Thomas While Richard was still alive, Rous an open secret. Believing that his own Wolsey, that in contrast to Henry VIII, had praised the king as being “a mighty position was possibly about to be fatally Richard had made “good acts” of prince and especial good lord.” It was undermined, Richard may have taken the parliament, concerned with achieving only after Richard’s death that his account only option available to him to protect the justice for ordinary citizens. Richard was dramatically altered. Rous pulled Yorkist dynasty. The accession of a child understood that in politics, loyalty above no punches, declaring – somewhat ruler was a potentially destabilizing and all else mattered. His motto was “loyalty implausibly – that Richard had been disastrous development. binds me.” He remembered men who had “retained within his mother’s womb Even allowing that Richard did away fought and died by his side at the battles of for two years, emerging with teeth with the princes, there is evidence that Barnet and Tewkesbury in the 1470s, and and hair to his shoulders.” For Rous, he was a much-loved and popular king. surrounded himself with a loyal group Richard had died “like the Antichrist

88 brunswick review · issue 8 · spring 2014 Found beneath a Leicester car park, Richard’s bones had identifying wounds – and a noticeably curved spine to come ... confounded at his moment “little of stature, ill-featured of limbs, of greatest pride.” crook-backed, his left shoulder much Nor was Rous the only commentator higher than his right.” to change his tune. The praise the king The Tudors were the first dynasty to had received in life soon turned to fully understand not only that history is condemnation in death, as poets and written by the winners, but that it can be writers realized how to curry favor with just as effective as the weapons of war in the new regime. The Italian poet and winning the battle of hearts and minds. In courtier, Pietro Carmeliano, who had many ways, the campaign was a massive come to England in 1480, wrote fondly of success. The familiar image of Richard Richard the year before Bosworth as being reinforce his kingship than to destroy the III as a bloodthirsty, crook-backed tyrant one of the greatest princes in the world. reputation of the man he had conquered? has been handed down to us by one of the Two years later, with Henry Tudor on the The Tudor version of events was first set greatest men of the Tudor era, William throne, Carmeliano suddenly reversed down by Henry VII’s official historian, the Shakespeare. He was not interested in his opinion, turning his pen against “the Italian Polydore Vergil. It was Vergil who, portraying the historical truth; rather he murderous tyrant.” Artists of the age despite not arriving in England until 1502, essentially bought into the Tudor version joined in. The earliest surviving portrait spoke with members of Henry’s court to of events. of Richard shows no sign of a hunchback, write his one-sided history, helping to spin But slowly, as sources are discovered but x-rays of later portraits show that a a political narrative blackening Richard’s in the archives, and archaeological digs hunch was deliberately added to fit the name. Richard was deliberately portrayed uncover yet more evidence, Richard’s popular image of the king. as bad, while Henry could do no wrong. reputation is being restored. The Richard Richard became the target of what Around the same time, Thomas More III Society was founded in 1924 “in the might be considered one of the first wrote The History of King Richard III, a belief that many features of the traditional political smear campaigns, as the new polemical tale of how evil will always have accounts of the character and career Tudor dynasty sought to tarnish his its comeuppance. More presented the of Richard III are neither supported reputation, condemning him as an evil image of Richard that is still very much by sufficient evidence nor reasonably monster. In his first proclamation, Henry with us today, describing the king as being tenable.” The society helped fund the dig accused Richard of the “shedding of in the Leicester car park. innocents’ blood” – without naming Richard reigned for only two years and them, surely he meant the Princes in two months, yet his legacy remains hugely the Tower, but the very fact that Henry THE LOST BOYS significant for English history. Without refused to name them reveals much about him, there would certainly have been no

BETTMANN, CORBIS the new king’s own insecurities. The “Princes in the Tower,” Edward V and Tudor dynasty, no Henry VIII or Elizabeth © Despite his trumped up assertion to be Richard, Duke of York, were 12 and nine I. England would have remained part the true inheritor to the English throne – respectively, when they disappeared from of the Roman Catholic Church and the his was an illegitimate line – Henry knew the Tower of London. There is a poignancy very fabric of the nation would have been in reality that his own claim to the throne about their fate that echoes down the woven with an entirely different thread. centuries, especially given the many was extremely fragile. To acknowledge Richard’s supporters will no doubt images of innocence we have of them, from even the names of Edward IV’s male Shakespeare’s play to the 19th Century hope that when competing legal claims children might jeopardize his legitimacy, Millais painting (left). However, their to his remains are settled, and he is especially when there were others still fate has never been settled – were granted a final resting place, we can alive with stronger claims, such as they murdered by their uncle also put to rest the Tudor myth of this Richard, Earl of Warwick (whom Richard to usurp succession? monstrous tyrant king. Henry eventually had killed in the Edward was set to succeed to the throne on the death of his father, Tower). Henry’s first decades in chris skidmore is a Edward IV. Or, were they spirited power were fraught with danger and historian and MP for away to safety on the European Kingswood in the west of insecurity. Plots to overthrow him continent, as one of many other abounded – even Sir William Stanley, England. His book Bosworth: theories suggest? It may take The Birth of the Tudors who had placed him on the throne, was another fortuitous archeological is published by

ILLUSTRATIONS: ROB BAILEY / PHOTOGRAPHS: © UNIVERSITY OF LEICESTER / / LEICESTER OF UNIVERSITY © PHOTOGRAPHS: / BAILEY ROB ILLUSTRATIONS: executed for treason. How better to find to resolve the mystery. Weidenfeld & Nicolson

brunswick review · issue 8 · spring 2014 89 CRITICAL MOMENT snapshot of a communications turning point PHOTOGRAPH: © BOB ADELMAN BOB © PHOTOGRAPH: august 28 1963 So King took the podium without a dream.’ And I just felt that I wanted to them, opening with that rhetorical echo of use it here … I used it, and at that point “Normalcy, Never Again” is not the the Gettysburg Address: “Five score years I just turned aside from the manuscript snappiest title for a speech, but if Dr ago …” There was applause for sure, but altogether. I didn’t come back to it.” Martin Luther King Jr had listened to his the crowd had heard many speeches that King’s words began to sing: “I say to you advisers, we would never have heard the day. It was hot. They were tired. After a today, my friends, though, even though one that replaced it: “I have a dream.” while the gospel singer Mahalia Jackson, we face the difficulties of today and The four words that secured King standing on the platform, intervened. tomorrow … I have a dream.” his place in history on that August She’d heard King “dream out loud” The great civil rights leader chose not afternoon in Washington, DC in 1963 in Detroit. “Tell ’em about the dream, just to speak words on a page. Rather, he weren’t meant to be. He had used them in Martin. Tell ’em about the dream.” conveyed a dream. It is a reminder to us previous speeches. His team didn’t want There was a pause … and the direction all that spreading a message in which we to hear them again. Clarence B. Jones, of the speech shifted. King said later that truly believe is more effective than merely adviser and friend, recalls the words of year: “I started out reading the speech, and sharing a script. the speechwriter Wyatt Walker the night I read it down to a point … the audience before: “Don’t use the lines about ‘I have a response was wonderful that day … And dream.’ It’s trite. It’s cliché. You’ve used it all of a sudden this thing came to me that daniel o’donnell too many times already.” … I’d used many times before … ‘I have Associate, Brunswick, New York

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