Global marketing officer Karin Timpone recently participated in the NACD Capital Area Chapter’s season kick-off program on social media. Timpone, who leads the integrated global marketing and consumer relationship management strategy for Marriott International, suggests that in the long term, boards must consider the broader impact of companies like Facebook, with its two billion users, and Amazon.com, with an estimated number of customers at well over 200 million, having digital empires with deep customer data. “Consider how your company will fit into the new digital world order,” said Timpone.
In the meantime, boards should be asking the right question about the status of current efforts in the digital realm. Specifically, Timpone recommends that they ask five key questions:
1. What is the company’s content strategy?
Social media has disrupted business as we know it. “The upside of this disruption is the opportunity to have a two-way conversation with your audience,” said Timpone. “You can also amplify your marketing efforts, allowing the social graph to carry your message.” However, the downside is that a company cannot expect its messages to follow a company calendar. Instead, the company has to be constantly vigilant about being a part of the conversation.
The board should be informed about what the company is planning to talk about, why, and with what voice. Also, ask about the media mix—that is, what has modeling shown in terms of where money should be spent? Is “brand safety” (where the brand appears and what is near it) being considered?
2. How are crisis management and customer care intersecting in the social world?
Timpone emphasizes the need for processes in social media crisis management. “The board should know how crisis management and customer care intersect,” she said. “Social media should be governed in a multi-faceted way; it’s part of an ecosystem that has the customer at the center.”
Marriott has set up newsrooms around the world in order to stay abreast of news and social media. “We have to make sure we aren’t publishing something that is tone deaf and that we are dialing up our communication when needed.” Software helps power these newsrooms, using geofencing technology to pick up company-related tweets, for example.
3. How do employees fit into the company’s social strategy?
Companies must have clear policies about employees’ use of social media. Timpone said, “Be clear whether it’s a person’s job to post on social medial for the company.” Also, human resources departments—along with other key stakeholders—should be part of management’s internal communications governance group.
4. Is the company keeping up with quickly changing technology?
The risk of not keeping up with the latest technologies must be mitigated. For example, Facebook is now emphasizing video and live features. “The social media program metrics have to change with the technology,” said Timpone.
5. What are the business outcomes of the social media strategy and how is the program being measured?
Metrics for a social media strategy may be counterintuitive compared to traditional media. For example, not doing anything can sometimes have more impact than doing something. In one instance, a company got extensive press and positive social media results for not buying a Super Bowl advertisement. Whatever the company’s strategy, “the board should ask about the program’s key performance indicators,” said Timpone. “What is measured gets done.”
NACD Capital Area would like to thank sponsor WilmerHale for hosting the program and Timpone’s fellow panelist, William Bethune, for also sharing his views.
Kimberly Simpson is an NACD regional director, providing strategic support to NACD chapters in the Capital Area, Atlanta, Florida, the Carolinas, North Texas and the Research Triangle. Simpson, a former general counsel, was a U.S. Marshall Memorial Fellow to Europe in 2005.
The rapid pace of technological advancements is causing tectonic shifts in the business risk landscape. Social media and artificial intelligence (AI) in particular are causing directors to reconsider how they think and talk about risk. Consequently, these topics were the focus of the first part of a roundtable discussion on the next generation of risk hosted by EisnerAmper LLP and the National Association of Corporate Directors (NACD) in New York last week.
There is an abundance of examples of companies that sustained severe reputational damage after being caught in the center of a social media storm. Most recently, credit reporting company Equifax made headlines after the company disclosed that it was the subject of a major data breach that compromised the information of roughly half of the U.S. population. The company’s offering of free credit monitoring to affected customers only made matters worse: several print and digital news outlets, including The New York Times, analyzed the terms of the offer, which suggested that by signing up for the service, a person relinquished his or her right to take legal action against Equifax. While the company later changed the legal language in another effort to assuage public concern, reestablishing its trustworthiness may be more of an uphill battle.
“Some of these things would have always been in the news, but the amount of time and the quickness with which news reaches an audience is unbelievable,” EisnerAmper Audit Partner Steven Kreit observed. “Boards need to make sure there’s a social media strategy throughout the company. Boards need to ask management what it has planned for and make sure they can react to those issues as they come up. It’s also important to have policies around social media. What is the CEO allowed to say? Are they allowed to have personal accounts and use that to disseminate company information?”
When attendees were asked if they knew their company’s social media policy backwards and forwards, few indicated that they did—but there was some debate as to how necessary this is. “I don’t think it’s appropriate for a board member to know the details of what the policy is,” one director opined. “What the board needs to know is that there’s a policy and that employees know what they can and cannot say about the company.”
Kreit agreed. “You don’t want to get too far into the weeds,” he said, “but a CEO may react to something in the middle of the night and that response may harm the company. And board members need to make sure the company doesn’t get hurt.”
While most of the discussion focused on preparing for the worst, one attendee observed that a company response plan that is effectively used to respond to negative feedback on social media can not only curb a damaging situation, but help to restore trust in the company.
Discussion then turned to AI. Here, some companies are ahead of the curve in applying technology that has the power to parse through massive amounts of data to make a determination about something. Take for example, IBM’s Watson, the supercomputer that famously competed on the game show Jeopardy!, facial recognition software and self-driving cars. Here, the risk is that AI is advancing so rapidly as a disruptor across nearly every industry. If a company isn’t paying attention now, the competition will leave it in the dust later. But AI is a broad subject area and identifying the elements that are most relevant to a board agenda—namely the risks—can initially seem daunting.
“These are conversations I rarely hear discussed around the boardroom table,” Kreit remarked. “And these are risks that keep changing.”
“An interesting exercise is to look at risk factors in public disclosures,” one attendee said. “We look at competitors and it’s easy to see what risks they are identifying in the same industry.”
“In the conversations I’ve had, it isn’t so much about whether the machine will do its own thing and crush humans as much as asking what fundamental technology are we not using to help us be more competitive and customer-focused,” one attendee offered. “The other thing is, technologists sometimes rely too much on technology. At some point, a human being has to put subjectivity in the mix to make sure the automated methodology you employed doesn’t come back and bite you. This conversation comes through the CISO [chief information security officer] on my board as well as the CTO [chief technology officer] together.” Another director remarked that these discussions take place on the audit committee level.
“It’s important to not think about technology and risk without it being an integral part of the strategy discussion,” another director piped in. “If it isn’t, I think it becomes an academic conversation and you’re walking ahead with one eye open and one eye closed.”
To this end, and in closing this portion of the roundtable, another attendee remarked on how board composition it critical in positioning the board to oversee this issue in the years ahead. “If you don’t have enough forward-looking people with experience from other industries, you’re doomed. Look at who you’re working with and have some sense of what you are [as an organization], what you want to be, and how you’re going to get there.”
Next week, the NACD Board Leaders’ Blog will feature roundtable discussion highlights that explore geopolitical and regulatory risks.
What would you recommend if you were on the board of Ford Motor Co., Boeing Co., or Lockheed Martin Corp., all of which have had tête-à-têtes with the incoming leader of the free world? Welcome to the age of the suddenly very bully pulpit. The most powerful thumbs in the world belong to Donald J. Trump, who will soon become the 45th President of the United States.
In mid-December, when Trump despaired that Lockheed Martin’s cost overruns on the F-35 joint strike fighter “were tremendous,” the company’s stock lost $4 billion in market capitalization in a matter of hours. Even though the company quickly recovered those losses when its stock price stabilized, Trump’s tweet triggered some discomfiting moments.
No one understands better how to wield the powers of Twitter, the 24/7 news cycle, and a cult of personality than Donald J. Trump quite like the man himself. To one extent or another, Lockheed Martin Corp., Toyota Motor Corp., Carrier, Mondelez International (parent of Nabisco), Ford Motor Co. , and Boeing Co., have all been caught in Trump’s Twitter maelstrom. Fiat Chrysler Automobiles, in a proactive move to get the target off its back before the opening salvo, wisely announced that it would invest $1 billion and create 2,000 U.S. jobs. A smart play, but as all newlyweds ask, “Will it last?”
We’re in unchartered waters here—and by “we,” I include C-suite executives, corporate directors, and communications counselors like me who advise corporations on how to enhance their brand equity, engage with decision makers, and weather inevitable storms that come with doing business. Social media, fake news, and a new president have changed the rules of engagement.
So what is the new rubric? For most publicly traded companies over the near term, the right response is the easy one: for your shareholders’ sake, meet Trump more than halfway if his demand isn’t too outrageous, and give him the early victory lap. But at some point, after Trump’s modus operandi on these matters inevitably hits some turbulence, that dynamic is likely to change. Watch this space closely, particularly the business-to-consumer tech companies who have millions of customers conditioned to social engagement.
In the meantime, how can a company prepare for presidential squalls or getting caught in the crosswinds of a Twitter-induced tsunami?
There are scores of precautions a publicly traded company should consider, but they can be boiled down to four imperatives.
Engage employees. Trump’s “Make America Great Again” mantra proved enormously popular in America’s industrial heartland. His administration’s public positioning will be devoted to job preservation, reinvigorating the manufacturing base, and sticking up for the little guy. In such a climate, relations with national and local union leaders and heads of employee groups will be doubly important. If a company is suddenly the subject of public scrutiny, its labor and management will want to present a united front. Politics, it is said, makes strange bedfellows. So does business in tough situations.
Enlist allies. Empowering third-party champions has always been an important part of any corporation’s public affairs and communications arsenal, but now it’s absolutely vital. The press and public in today’s environment are inherently suspicious of big corporations and paid spokespeople. In the clutch, customers, vendors, suppliers, community leaders, local environmental advocates, philanthropic heads, Chambers of Commerce, et al., will have far more credibility. The more social media-savvy—and more genuinely connected to grassroots movements—these champions are, the better allies they are for your company.
Prepare now. Companies should use “peacetime” wisely by distilling facts and messages into 140 characters; creating photos and videos for other social channels (e.g., Facebook, Snapchat, YouTube, etc.) that make emotionally appealing messages; track media socially in a sophisticated way that predicts trends; and build a social army now to articulate track records in U.S. job creation and economic growth.
Emphasize speed. Virtually every crisis communications plan in corporate America can be rendered obsolete by the proliferation of Donald J. Trump’s use of social media. If a company is being attacked via social media, it cannot rely on conventional communications to respond. Corporations need to put in place ultra-quick turnaround systems that tap leading-edge media. Build your arsenal of information, army of activists, and strengthen your reflexes now. Have the leader of the company’s digital media team report directly to the board. Integrate your silos so that legal, investor relations, government relations, public relations, digital, and brand practices all know and trust each other. Board members and senior teams need to be put through their paces via scenario drills and full-scale rehearsals.
The most effective way for a company to combat thumb power is through thumb power of its own.
Richard Levick, Esq., @richardlevick, is chair and CEO of Levick, a global communications and public affairs agency specializing in risk, crisis, and reputation management.