Spin Country

Why has the rise of the Web coincided so precisely with a decline in organizational candor? Obviously I don’t blame the web, but I wonder at the coincidence. By organizational candor, I’m thinking of the alignment of what is said by corporations and religions and companies, compared to their actions. Whether it’s a company, a government or a religion, it seems that a marketing mentality has co-opted the organizational agenda.

This disconnect is what the Cluetrain guys were describing:

“Corporations do not speak in the same voice as these new networked conversations. To their intended online audiences, companies sound hollow, flat, literally inhuman.”

Have you heard the old saw that a man’s blood supply is insufficient to support his brain and penis simultaneously? Likewise, perhaps, there’s just not enough energy in an organization to talk the talk and walk the walk.

Our Future Economy

Not the economy of the future, but an economy obsessed with future outcomes. That is to say, outcomes which have not yet occurred. That is to say, outcomes which are not in place, as in nonexistent. We think it’s great to be forward-looking, working on emerging technologies and inventing the future. But organizations seem to spend so much effort describing their impending triumphs that they just can’t match their projected image or meet the inflated expectations that they so casually broadcast.

Perhaps it is the Internet’s fault. Perhaps it’s always been like this and the Internet has exposed a traditional disconnect which was not obvious before. However, there’s another suspect. Some time in the 1990’s, the quintessential corporate obsession became stock price rather than intrinsic company value. And stock price is all about unexpected good news which the SEC calls “Forward-looking statements”. These statements have even perverted formerly reliable statements like “the company will“:

“The Company and its representatives may from time to time make written or oral forward-looking statements, including statements contained in the Company’s filings with the SEC and in its reports to shareholders. One can identify these forward-looking statements by use of words such as “strategy,” “expects,” “plans,” “anticipates,” “believes,” “will,” “continues,” “estimates,” “intends,” “projects,” “goals,” “targets” and other words of similar meaning.”*

Aha! Now we’re on to something. Corporations must maximize their stock market valuation so employees who do the things that raise the stock price are valued above all others. Now let’s consider what really drives stock prices. Do we think it’s by doing the right things that build a solid company and better social values? No, that’s just the spin. The market discounts all the information it already has, whether it’s product news or war news, as Mitch Ratcliffe observed on April 9th in Wreakonomic Reality:

Saddam’s statue topples and the Dow closes down 100.98 points, off 1.72 percent for the year. The predicted rally on the heels of a rapid “victory” in Iraq hasn’t materialized (now we’re in for months of internecine conflict and a slow dissolution of the “new Iraq” as the U.S. moves on to the next crisis — see Afghanistan for details). The long run-up to war kept growth subdued and now we’re seeing the impact in lowered guidance from companies and rising national debt and trade deficit s. In other words, war isn’t a magic elixir for the economy and we still have to face reality, that a lot of basic block-and-tackling of fundamentals needs doing. This from the New York Times :

” The market has been absolutely thrilled about an imminent end for arguably (these) first three weeks of the war. We started the stock rally before the war started,” said Arthur Hogan, chief market analyst at Jefferies & Co. “Unfortunately, when investors stop celebrating they will have to focus on corporate profits, which may not be so jubilant,” he said.

Profits. Those often ugly realities which, we know, companies will attempt to counter with marketing to the stock market, spinning the analysts, pre-announcing products not ready for prime time and all the other insubstantial maneuvers meant to divert the world from that pesky challenge called profits.

The Hard Work of Holding a Job

The obsession with brightly painted futures is not confined to the executive suite, it permeates organizations. The brightest, most ambitious employees can’t afford to work for a living. They need to hold jobs for a living. Sure, they’d like to work for a living, but they need to do what best secures their families’ futures: their careers. And what builds careers? Expectations build careers. Track records don’t build careers, mentoring doesn’t build careers, innovation doesn’t build careers.

What builds careers is the constant expectation that you will make things dramatically better, with the emphasis on the dramatic part. And that’s the problem.  Practical, workmanlike solutions are not dramatic enough for a spin-based economy. No, if you want a meteoric career, you’d better come up with whopper ideas, transformative re-structurings, mega deals and impossibly complex global initiatives that are never proposed by the conventional, unimaginative people whose horizons are limited by the realities of operations and the fact that there’s no such thing as a resourceless task.

What if things don’t work as planned? It really won’t matter to your career, because you’ll have moved on to your next grand vision. The disconnect between the grand plan and the sad reality won’t be apparent until you’ve applied your magic to an even bigger opportunity in some other division or subsidiary or, more likely, moved up to corporate where your positive attitude and strong convictions give hope to an even higher level of credulous cheerleaders.

Nope, none of has met a bubble we didn’t love, in a company or in the market. For those with the best backgrounds, prospects and handshakes, bold initiatives are the path to corporate stardom, with a remarkable strain of company amnesia about what happens to the grand plans 3 years later, when the shooting star of your career is riddling another operational illusion.

What Doesn’t Work

There’s a lot of ritual in business. We do things because it’s unthinkable to not do them, even if there’s no evidence that they make much difference. Consider Marketing and sales. When we consider the billions of dollars spent on advertising, we glimpse a naked emperor.  Maybe there’s some huge cohort of the population that we’ve never met that is highly impacted by ads, but I haven’t met anyone whose buying decisions are actually impacted by most advertising. If my premise is correct, it’s because there are three kinds of purchases, habitual, important and trivial.

  1. Habitual buys, like detergent, cereal and corporate OS decisions.
    (A kind of dogma that Mitch described in his important article, The Invisible Dogma.)
  2. Important buys, so crucial we blow right past the ads and do our own research.
    (which, thanks to the web, is easier than ever)
  3. Trivial buys, based more on shelf position and coincidence than ad awareness.

I know, there are far smarter people than I who have proved time again that advertising is effective and crucial. I’m just reflecting my experience and that of people I know. Do you suppose those studies were done by people with a vested interest? Maybe they’re just more spin, since a lot of careers are counting on advertising. Don’t pay attention to the detail that the only ads with measurable effectiveness, Web and email ads, are so ineffective as to be laughable.

The other thing that doesn’t work as advertised is selling. Don’t take my word for it, ask Jerry Vass, author of Soft Selling in a Hard World. Jerry is paid a lot of money to teach highly paid account execs to string together the right words to close sales. He will tell you that only 52% of sales are the result of selling. The remaining 48% involve salespeople, but may be subject to the same three limiting factors as advertising. Here’s Jerry’s assessment of most experienced salespeople:

Company Secrets

Experienced salespeople lack the skills to present at the boardroom level because they are unable to explain:

• your firm’s sustainable competitive advantage
• your unique selling proposition
• what business you are really in from your Client’s point of view
• how your service fits the Client’s business
• how your service is different from the competition
• the results your service delivers in the Client’s terms
• why your service is worth your asking price
• why you are defenseless in a price negotiation
• why you are surprisingly difficult to buy from

And here is the kicker: Your salespeople don’t know that they don’t know and leave half their business undiscovered and unsold.

So if marketing doesn’t work and selling doesn’t work, how do we explain all the business that gets done? We are, after all, running a robust economy here, even when times are slow. Maybe it’s because we’re all in the habit of buying stuff from each other, and we make our peace with whatever level of quality our research leaves us with. Maybe competitors spend about the same amount on marketing and sales and so it looks like it’s as necessary as sponsoring a tennis star or golf tournament. But I think it’s because top executives like to hobnob with celebrities.

What we do know is that if a company quotes a study, we assume it’s been rigged in ways we can’t analyze. If the government says a new law is good for us, we assume it’s beneficiaries have prepaid its sponsors. If the Catholic Church or the Air Force Academy says that sexual abuse is rare, you know that a lot of innocents are being taken advantage of.

Spin gives you motion sickness and our society is looking a little green around the gills.

12:16:39 AM    

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