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Today, public approval is central to business: Richard Edelman

Interview with President & CEO, Edelman

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Independence is a word that is not usually associated with public relations (PR). But Richard Edelman, president and chief executive officer, Edelman, is very conscious of the credo. Edelman, the world’s largest independent PR firm, recently expanded in India by bagging the account after Vaishnavi, Tata’s former PR firm, was embroiled in a involving its chief executive. In an interview with Arijit Barman and Viveat Susan Pinto, spoke about his annual credibility roster of business, and governments and, of course, about the Tata mandate. Edited excerpts:

What are the India-specific findings of the Trust Barometer?
The big change in India data this year is the stunning rise in trust in the media. India is the only country in the world where trust in the media is higher than trust in business, government or NGOs. It is a 20-point jump. Our assessment is that the media did a perfect job this year in covering corruption, whether the telecom licence scandal or the Commonwealth Games or Anna Hazare’s movement. By media here I mean not just traditional media, but social networks too. Social media such as and reinforced what was happening out there.

What is the role of the image manager when there is a clear trust deficit concerning business?
I differ with the traditional view of public relations as image and message manager. Smart PR is sitting at a table in the C-Suite advising a company what the policy for the firm should be. When you have the appropriate policy, the communication follows. There has too often been a divide between what you do and say. And it is not good enough any more to say smart words. You have to have smart deeds. The big difference in the post-2008 world is that trust in business has fallen substantially. Not so much in India because you didn’t have the Wall Street scandal or the General Motors issue. There is certainly a new expectation from business, however, that it should be good for shareholders and for society. In the data this year you will see that trust in business is relatively high in India — almost 61 per cent. When you look at the factors that convey trust, India is unique in having not just operational aspects, but also social objectives — listening to customers, employees, etc. That results in the high 61-point score for business here in India versus 47, the global score for business. So whatever the reasons, there is a better heritage here of business acting in a smarter way than across the world. Maybe this is because you have entrepreneurial companies and family-run businesses such as the Tatas.

But in the last year, companies in India have been perceived as active participants in crony capitalism — from natural resources to mining to telecom. Would you then still put that trust premium on Indian corporations?
The rise in trust for the media and the decline in trust for CEOs this year — both are warning signals for business. The gap between expectation and what is delivered is still there. It is not so much on new product launches. But putting customers before profit, there is an 18-point gap. That is a warning signal for business to pay attention to. On treating employees well, there is a 15-point gap. Again, a warning signal.

You spoke about the Tatas. They were reprimanded by the highest court in our land recently for the first time in their history and were fined. This is telecom. Do these factors add up to the warning signals you were talking about?
To me it is less the warning signal and more the opportunity. I think this concerns the playing field that government lays out and business plays upon. The problem is that when government gets into paralysis, business still has to go on. And that’s why I am arguing for this new standard which is licence to lead. Business is always focused on licence to operate. And licence to operate means that you have the flexibility to do what you have to do. But licence to lead is a bigger standard because it means you have social acceptance. Not just legal acceptance, but social acceptance. Not just regulatory approval, but social approval. You can’t do that in the backrooms. In the US, we would call it the smoke-filled rooms with politicians. You can’t do that anymore.

So you are saying there has to be a public-private partnership vis-a-vis policy-making?
Yes. Community meetings, feedback

But isn’t that the job of legislators? We are electing them. They make policy or else policy will never get made if we are trying to seek consensus from a billion people.
I don’t need consensus from a billion people. What you need is for the public to buy into your direction. It is a false choice that making money and doing good for society are separate agendas. As Unilever CEO said, “Our version of capitalism has reached its sell-by-date. Never has the opportunity for business to help shape a more equitable future been so great.” I believe that. The bigger risk for business is waiting for government to act. It seems to me that government in India or even where I come from (the US) is in a paralysed state. It is divided, seen as not competent, having real issues of performance. Business can’t wait for that to change.

But doesn’t this inability of the government to act hamper the risk profile of a country in terms of attracting dollars?
I was at a dinner in Brussels about four or five months ago. And the executives concluded that the risk from government in developing countries is a lot less than the risk from government in developed countries. For the first time they said that they knew where the Chinese or the Indonesians or even the Indians were going to be. It may not be optimal, but it is predictable. But in the US, Germany and France, governments are simply unpredictable.

But how much more unpredictable can you get than what is visible in telecom in India, where after five years, the court cancels 122 licences. You have $14 billion pumped into the country. What do you do?
That’s what I was saying earlier. You don’t have to work in Delhi any longer. You have to work on the ground, in the community, persuading people that what you are doing is positive. You can’t do it behind their backs. You can’t do it in a way that appears you have persuaded only the government. The idea of public approval is central to business today. Our job in PR has changed fundamentally from being handed the facts and told go sell it to what’s the right strategy and action.

Are CEOs in India sensitive to sustainability or is it only about bottomline?
I heard Sunil Mittal of Bharti speak very eloquently about a year or two ago in Davos on what putting a cell tower in rural Rajasthan did to the people there. So if farmers have price discovery or access to credit, it was a result of the cell tower and its ability to facilitate mobile banking or access to the internet. It’s helped in the economic development of that region. I don’t think Indian CEOs are as Anglo-Saxon in their approach as the Americans. I think American CEOs are learning, since 2008.

The Tata mandate is an inflection point for Edelman in India, coming on the back of tapes, telecom, Nano and so on. Are you up for challenges?
If you look at our clients, they are American or British, so this is a paradigm shift for us, where we have an Indian group, one which is family-owned. We are a family-owned company too. This is where we have wanted to be. It is our hope that we can have India as a base where business is going out. Our business model for the developing world has been imported, where you get a foreign company into the country. That has been the bulk of the PR here. The next generation is going to be heading the opposite way. Tata in the UK or any other country. That is the next phase for Edelman.

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