Chris Nelson 3 May 2012

© 2012 Christopher Nelson

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Understand how issues work Get your company to integrate its approach Know your critic and what they really want Recognize your credibility deficit Stick to your knitting Look at the issue in the context of your business: what’s the real impact?
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Financial impact Audience perceptions Ability to create customers over time

© 2012 Christopher Nelson

© 2012 Christopher Nelson

Business

Government

People

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© 2012 Christopher Nelson

Consumers Voters Employees / Workforce NGOs / Activists

When stakeholder expectations diverge from organizational reality …

… it can generate indignation that gains traction as people with similar feelings come together
© 2012 Christopher Nelson

In any democracy, business exists only with a mandate from the public Economic democracy is effective

© 2012 Christopher Nelson

Public Company

© 2012 Christopher Nelson

Competition Chases Customers

Activists Boycott Banks

Activists Pressure Partners, Business Customers, And Consumers Activists Buy Shares / Introduce Resolutions

Public Company

Plaintiffs Attack Company

Voters Push Congress

© 2012 Christopher Nelson

“Social / political forces that grow to undermine a company’s public mandate and ability to do business.”

© 2012 Christopher Nelson

© 2012 Christopher Nelson

Many forces influence the relationship business has with its stakeholders

Political

Social

Economic

Trends take root and change perceptions over time

© 2012 Christopher Nelson

Monitor Trends & Stakeholder Perceptions
• • • • • • • • • Sales data Business metrics Customer service data Competitive intelligence Analyst reports (esp. industry reports) Consumer research Internet, news media, opinion leaders Legislative, regulatory, and legal developments Activist priorities

© 2012 Christopher Nelson

Monitor Trends & Stakeholder Perceptions
• • • • • • • • • Sales data Business metrics Customer service data Competitive intelligence Analyst reports (esp. industry reports) Consumer research Internet, news media, opinion leaders Legislative, regulatory, and legal developments Activist priorities

Constantly Review Business Operations
• Omnipresent business risks (ERM analysis) • Corporate strategy shifts • Esoterics

Plan Against Scenarios
• State of the business in three to five years • Potential shifts in mindsets • Multiple outcomes of key initiatives

© 2012 Christopher Nelson

Create a multidisciplinary team
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Sensitize leaders to importance of issues management – develop anticipatory mindset Gather information from every corner of company Push information on sensitivities, issues, and allegations

© 2012 Christopher Nelson

© 2012 Christopher Nelson

Create a multidisciplinary team
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IM Task Force Agenda
• News: big issues stories this month • Developments on top-tier issues • Revise impact scenarios • Assign to dos • New corporate policies / policy updates • Strategy discussion (if necessary) • Sensitive business developments • Report from all departments • New issues identified • Discuss scenarios • Prioritize / Assign to dos • New info from ally groups & GR • Issue preparedness needs • What does our CEO need to know?

Regularly review state of issues Establish corporate policies Create “leadership positioning” Create strategies to close gaps Drive stakeholder understanding Report quarterly to CEO

© 2012 Christopher Nelson

Critic Group Action Issue Escalation Critic Group Organization

Legislative Resolution

Industry Compliance

Growing Stakeholder Adoption Some Stakeholder Action Issue Begins to Develop

Broad Stakeholder Consensus

© 2012 Christopher Nelson

Now issues can gain national prominence and political power almost immediately

Legislative Resolution

Issue Begins to Develop

This used to take 12 years

© 2012 Christopher Nelson

Critic Group Action Issue Escalation Critic Group Organization

Legislative Resolution

Industry Compliance

Growing Stakeholder Adoption Some Stakeholder Action Issue Begins to Develop

Broad Stakeholder Consensus

© 2012 Christopher Nelson

Some stakeholder expectations not met by organizational reality …

© 2012 Christopher Nelson

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Catalyzing events New issue champion self appointed Shift in advocate/NGO group focus Customer complaints
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Customer service Independent websites, blogs, Twitter

Trend data suggest shift in direction

© 2012 Christopher Nelson

Begin initial analysis

Identify scenarios for business impact Potential for escalation / speed Potential for impact

Assign a priority level
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Determine next steps Begin issue tracking

© 2012 Christopher Nelson

Critic Group Action Issue Escalation Critic Group Organization

Legislative Resolution

Industry Compliance

Growing Stakeholder Adoption Some Stakeholder Action Issue Begins to Develop

Broad Stakeholder Consensus

© 2012 Christopher Nelson

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Several people arrive at similar dissatisfaction Information sharing leads to unity A leader steps forward
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Community organizer Citizen journalist/crusader Professional activist Lawyer Politician

© 2012 Christopher Nelson

Determine nature of the organization
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Review past tactics and campaigns Forecast potential issue scenarios Identify opportunities for dialogue and/or compromise

Concerned citizens Moderate special interest Dyed-in-the-wool attacker

© 2012 Christopher Nelson

Critic Group Action Issue Escalation Critic Group Organization

Legislative Resolution

Industry Compliance

Growing Stakeholder Adoption Some Stakeholder Action Issue Begins to Develop

Broad Stakeholder Consensus

© 2012 Christopher Nelson

Immediate Corporate Response “That’s not true.”

Negative Media Inquiry

Stakeholders/ Advocates Find News Hook

 Victims  Villains  Visuals  Drama
© 2010 Ketchum Issues & Crisis Management

Profit Motive Business As Usual

Superficial Corporate Denial No Real Concern

Hidden Practices Exposed

Verdict: Guilty!

Victimized Stakeholders

© 2010 Ketchum Issues & Crisis Management

Immediate Response “We’re concerned. But, look what we’re doing to be leaders”

Negative Media Inquiry

Stakeholders/ Advocates Find News Hook

 Customer Service  Consumer Education  High Workplace Standards  Science/Tech and Safety Leadership  Risk Management / Continuous Improvement  Positive Media Coverage  Third-party Allies
© 2010 Ketchum Issues & Crisis Management

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Maintain the high ground Commit company resources
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Identify mutually workable resolution, where possible Preempt flashpoints Play your game, not theirs

Shape trends, understanding Build consensus and commitment

© 2012 Christopher Nelson

Critic Group Action Issue Escalation Critic Group Organization

Legislative Resolution

Industry Compliance

Growing Stakeholder Adoption Some Stakeholder Action Issue Begins to Develop

Broad Stakeholder Consensus

© 2012 Christopher Nelson

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Driven by legislative or regulatory body Resolution will benefit key constituents (not often the company)
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Diminished opportunity for gains Forces company into defensive posture

Often very high profile

© 2012 Christopher Nelson

With any luck:
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Ongoing work to build consensus around corporate policies among pols and regs Reinforcement of leadership positioning of the company

You never get to this point – or – You’re driving strategically beneficial legislation

© 2012 Christopher Nelson

Critic Group Action Issue Escalation Critic Group Organization

Legislative Resolution

Industry Compliance

Growing Stakeholder Adoption Some Stakeholder Action Issue Begins to Develop

Broad Stakeholder Consensus

© 2012 Christopher Nelson

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The game is over… Only one remaining option
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Live with the law/regulation Produce goods or services to meet dictated standards rather than company standards Endure financial burden: skinnier margins Evaluate overall damage to reputation

© 2012 Christopher Nelson

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Re-evaluate trends Review initial scenarios Measure stakeholder perceptions Determine new options for issue action programming

© 2012 Christopher Nelson

     

Understand how issues work Get your company to integrate its approach Know your critic and what they really want Recognize your credibility deficit Stick to your knitting Look at the issue in the context of your business: what’s the real impact?
  

Financial impact Audience perceptions Ability to create customers over time

© 2012 Christopher Nelson

© 2012 Christopher Nelson

Shareholder Activism

Poor Demand / Consumer Uncertainty
© 2011 Christopher Nelson

All company actions…
Executive Compensation Force Reductions Capital Raises Labor Negotiations Lobbying Litigation Proxy Contests M&A Bankruptcy

…are being judged against a new standard by:
Congress The Administration Regulators Shareholders/Activists Employees/Unions NGOs/Special Interests Media Plaintiffs Bar

© 2012 Christopher Nelson

Some Influences
Regulatory uncertainty Deadlocked government (Tea Party effect) Presidential elections Slow NGO donations Focus on: Hard economic issues Local, tangible issues Frustration

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People severely disenfranchised Massive distrust of those in power Consumers feel bad NGOs fighting to regain traction on big priorities of last decade Environmental issues: now focused on local and tangible goals Emergence of corruption issues  Support for dictators  Bribery / FCPA  Workers’ rights  Child labor  Land grabbing Rise of populist movements

© 2012 Christopher Nelson

© 2012 Christopher Nelson

VW: EU carbon emissions standards

Mattel: Asia Pulp & Paper

Toxic chemical release in manufacture of clothing
Nike, Adidas, Puma, and H&M have folded

© 2012 Christopher Nelson

Critical
• Economic issues • Jobs / stimulus • Taxation / tax dodging / tax abatement / cash repatriation • Entitlement costs / austerity • Currency fluctuations • Financial stability / systemic risk and interdependence • Cost cutting on activists’ priority programs • Populism • Privacy / data security • Energy • Deep-water oil exploration • Fracking, oil sands • Nuclear safety • Immigration • Workers’ rights / unions • Public sector • Private sector • Child labor • • • •

Sustained
Homeland security Healthcare financing Housing finance Energy • Fossil fuel dependence • Climate change / carbon emissions • Wind farms Corporate governance / executive compensation Intellectual property • Int’l legal framework • Piracy (esp. developing world) GMOs – crops, animals, labeling Environment • Biodiversity loss • Deforestation, palm oil prod. • Facility sites – dams, plants, etc. Corruption / FCPA Diversity / multiculturalism Corporate political involvement Health issues Drug research ethics Drug access / shortages Drug marketing Commercial education Gambling – social impact Endocrine disruptors Animal welfare • Humane agriculture • Animal research Marketing to children

Emerging
• Water security • Human rights • Arab awakening • Business’ social contract • Nanotechnology • Synthetic organisms • Geoengineering • Land grabbing / rights of indigenous peoples • Socially responsible tourism • Food pricing, availability • Sustainable food production • Fishing / Cocoa / Coffee • Energy consumption in food production • Use of cooling agents • Plasticizers Obesity / soda / HFCS Asthma / allergic diseases Multiple-chemical syndrome Microbial resistance Pesticides Preservatives Phthalates • • • • • • • • • • •

Trends
Rising entitlement costs Deficit spending Aging populations Increasing preference for locally grown food; shift away from factory farming Fragmentation of journalism Evolution of social media Societal impact of video games Increasing conflict between open source and proprietary technology Global migration to cities Increasing religious tension Increasing skills gap – not enough well trained workers available and too many structurally unemployed Increasing prominence and power of multinational corporations Increase in transnational crime

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• • • • • • • • • • • •

• •

© 2012 Christopher Nelson

Some Influences
Regulatory uncertainty Deadlocked government (Tea Party effect) Presidential elections Slow NGO donations Focus on: Hard economic issues Local, tangible issues Frustration

What’s To Come?
Populists: frustrated, fragmented, and then focused Activists adapt to austerity 2012 elections Social media evolution Recession will end & NGO donations will rebound The Giving Pledge

© 2012 Christopher Nelson

Chris Nelson 3 May 2012

© 2012 Christopher Nelson

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