Citation
Goodman, M.B. (2014), "Guest editorial", Corporate Communications: An International Journal, Vol. 19 No. 1. https://doi.org/10.1108/CCIJ-10-2013-0084
Publisher
:Emerald Group Publishing Limited
Guest editorial
Article Type: Guest editorial From: Corporate Communications: An International Journal, Volume 19, Issue 1
Communication and transformation in the global corporation: the changing role of the global corporation
The world of business in the twenty-first century has generated nearly impossible demands on corporations. The role of the corporation has been transformed by the global business environment and by the effects of globalization itself. These enterprises are adapting to the forces of change at differing rates, creating a two or even three speed world of organizations defined more accurately by their behavior than by geographical region, political action and affiliation, or by nation state.
In the first-speed world, the behavior of business in advanced economies depends heavily on safe, reliable, and secure digital networks. This networked enterprise business model can leverage technology to produce goods and services more cheaply, more rapidly, and with higher quality as a result of a trust benefit. Such businesses – GE, IBM, Siemens, Toyota, J&J, and Mercedes Benz – take pride in their efficient and transparent business practices.
They also are able to act as good corporate citizens as a result of their corporate responsibility. They not only "do the right thing," but they make money as well. They benefit from the equity of trust they have established among their constituents inside and outside the company. The result is a strong reputation that establishes a culture of risk awareness for the corporation as a buffer against the destructive forces of uncertainty.
A second-speed world can be described as newly advanced, or soon to be advanced, economies with business enterprises that look and act like the ones just described, but they happen to be located in surprising geographical locations that had until recently not been thought of or associated with such successful and global business models. Embraer in Brazil, Tata in India, Hairer in China, De Beers in South Africa of the so called BRICS come to mind, as do Turkey, Indonesia, Mexico, South Korea, and The Philippines, – part of the group of rapidly developing economies sometimes called "The Next 11." These advancing economies and business enterprises have a shorter history than those in the advanced category.
And the third-speed is a world of business laggards. These are businesses that pay a "trust penalty" as a direct result of an environment of underdeveloped infrastructure, an under- or uneducated population, and gross economic disparities between the haves and the have-nots in their communities. Walmarts Foreign Corrupt Practices Act (FCPA) troubles in Mexico come to mind. Corruption is rampant and a major contributor to high business costs and extraordinary uncertainty – mining, the oil and gas industry in Russia, and Nigeria. Often these businesses are in conflict zones. Or if there is not a high level of conflict, there is often political repression, a dictatorship, or even the tolerance or open encouragement of slave or forced labor, or of human trafficking.
The purpose of the corporation in the twenty-first century
In this uncertain business environment, successful enterprises work diligently to meet the challenges created for them by rapidly changing business events. The purpose then of the twenty-first century corporation is to survive as a viable enterprise – socially, financially, and environmentally.
Meeting and exceeding the demands of this triple bottom line is a core strategy for any sustainable business. And sustainability, tied to growth, is not easy in this complex and often volatile environment.
In addition to the forces of globalization, add the opportunities of a digital network that focuses on speed, performance, mobility, social networks, and enormous amounts of data. A report, "Big Data, Big Impact: New Possibilities for International Development," presented at the 2012 World Economic Forum described the positive impact of analyzing:
[…] the interactions of billions of people using computers, GPS devices, cell phones, and medical devices.
[…] Researchers and policymakers are beginning to realize the potential for channeling these torrents of data into actionable information that can be used to identify needs, provide services, and predict and prevent crises for the benefit of low-income populations […] (World Economic Forum, 2012, p. 2).
With so much information about the habits of individual people, some unintended consequences are inevitable. To put the possibilities of this situation in perspective, consider this anecdote by Dennis Overbye:
Not long ago, a woman in Tacoma, Wash., received a suggestion from Facebook that she "friend" another woman. She didnt know the other woman, but she followed through, as many of us have, innocently laying our cookie-crumb trails through cyberspace, only to get a surprise.
On the other womans profile page was a wedding picture – of her and the first womans husband, now exposed for all the cyber world to see as a bigamist.
The essence of the corporation has changed in response to a breathtaking acceleration in the speed of communication and an explosion in the number of new communication technologies. And add to these the global networks within organizations, which have fundamentally transformed the communication role in corporations.
Communication is more complex, strategic, and vital to the health of the organization than it was previously, and will only gain in its importance in the information driven economy. It is tied to the messages created for all audiences – internal and external, paying and non-paying.
Challenges of globalization, the web, the networked enterprise, and uncertainty
Corporate communication is not only a strategic management function, but it is also an indispensable process used by successful corporations to manage a number of crucial relationships (see Goodman and Hirsch, 2010, p. 15 for a definition).
To understand more deeply how radical changes in business and the media have influenced the practice of corporate communication, it is important to analyze the changes themselves – globalization, the web, the networked enterprise, and uncertainty:
1. Globalization – the relationship between the behavior of multi-national corporations and the political world order following World War II.
2. The web – the nature of the far-reaching technology changes which have transformed communication media in the last decade.
3. The networked enterprise – the ways in which changes in the global economic system have combined with technological change to alter the role and structure of the multi-national corporation.
4. Uncertainty – planning for the future filled with high levels of risk as a result of the volatility in global financial and commercial markets; and political turmoil in Western democracies and the developing world.
The impact of these four forces suggests a framework that enables us to understand the role of corporate communication and how it should be defined so that organizations can address how the forces have shifted the context and purpose of communication.
Globalization
In OtherWise, Dick Martin (2012) reviews the three waves of globalization. The first was trade, generally the exchange of merchandise–manufactured goods, mining products, and agricultural goods. It was a result of a combination of the discovery and access to regions of the world once unknown or considered too remote, and of advances in transportation that literally made the world seem smaller.
The second was the globalization of capital – money. The world integration of capital markets means that capital can move much more freely across borders. Companies and individuals can purchase or sell a portfolio of short-term investments in a foreign country. Or they could buy a portfolio of longer-term securities or bonds issued by foreign firms or governments. And then there is foreign direct investment, buying an interest in a foreign firm or property, or establishing a subsidiary in a foreign market.
As powerful and transformational as the movement of goods and capital are, it is the third (Globalization 3.0) – the global movement of people – that Martin argues is a critical understanding for success. Not only increasingly dependent on a global marketplace, the US is fast becoming a predominantly multiracial, multicultural, multigenerational society. Non-Hispanic white people accounted for less than 10 percent of Americas population growth over the last decade. Four states and dozens of the countrys largest metropolitan areas – including the New York metro area – already have minority-majority populations.
Implicit is the ability to work with others not like yourself. According to The Organization for Economic Cooperation and Development (OECD)s International Migration Outlook 2012:
Over the past decade, new immigrants accounted for 70 percent of the increase in the labor force in Europe, and 47 percent in the United States. This role of migration in maintaining the size of the labor force in many countries is expected to become more important as more baby-boomers retire.
Martin (2012) counsels that a corporation can successfully adapt to the new multiracial, multinational, multigenerational, traditional and non-traditional workforce by becoming "otherwise." By:
* understanding yourself and your organization;
* understanding people unlike yourself;
* expanding the organizations worldview;
* increasing cultural literacy;
* increasing religious literacy;
* engaging with others;
* educating the emotions of individuals and the organization; and
* not tolerating "otherizing."
In this way the corporation can look like its stakeholders, feel comfortable with differences, and attractive to others as an organization that they respect, want to do business with, and would desire to work with and for.
Speed, the web, and the corporation
It has become a cliché to assert that the Internet has changed "everything." It has certainly made the work of professionals in organizations faster, more efficient, and less costly. To perform "better, faster, cheaper" has driven the strategic planning of businesses and organizations for generations. But as every anthropologist knows, placing a new "tool" in a culture, alters that culture. And there are risks, particularly in communication, as a result of increasing speed.
As the speed of communication becomes instantaneous, the temptation to react instantaneously to comments can, and often does, lead to misunderstandings that can create crises when none need to have happened. Such a response is an
[…] example of a troubling increase in the speed of our reactions. E-mail, social media and the 24-hour news cycle are informational amphetamines, a cocktail of pills that we pop at an increasingly fast pace – and that lead us to make mistaken split-second decisions. Economists label the problem "present bias": we are vulnerable to fast, salient stimulation.
Fortunately, there is an antidote: the conscious pause. Scientists have found that although we are prone to snap overreactions, if we take a moment and think about how we are likely to react, we can reduce or even eliminate the negative effects of our quick, hard-wired responses (Partnoy, 2012, p. SR5).
In a less frenetic environment, this conscious pause was called reflection – a time to think. Reflection was built into the pace of life that was, by comparison, much slower. Now it has to be inserted into our thinking, a form of meta-awareness – time set aside to consider our actions, words, and emotions, as well as their consequences.
The networked enterprise
The modern corporation had its beginnings in nineteenth century Britain with the passage of the Companies Act of 1862. The law provided the template for the modern company "… that it could be an ’artificial person,’ with the same ability to do business as a real person; that it could issue tradable shares to any number of investors; and that those investors could have limited liability (so could only lose the money they had committed to the firm)". (Micklethwait and Wooldridge, 2003, p. xvii).
The model spread rapidly to other countries. It soon became clear that the main reason to have such a structure, in contrast to individual buyers and sellers, was that the corporation was able to dramatically reduce the transaction costs involved in the coordination of any economic activity. Mass production and mass distribution made enormous gains possible, but it took a great deal of capital to become a viable player. (For a definition of the modern corporation see, for instance, Britannica (2013).
And in the twenty-first century costs of a hierarchy of managers were partially overcome by the parallel impact of globalization and new technologies enabling much flatter organizational structures. Digital technologies enabled the networked enterprise. This new organizational model was driven by access to vast quantities of information about the company and its environment, and that depth of access was previously impossible, or prohibitively expensive. McKinsey and Companys annual surveys of The Web use in enterprises indicated three categories that benefit from their use of The Web: internally networked organizations; externally networked organizations and fully networked enterprises (Bughin and Chui, 2010, pp. 5-7).
And now corporations can also be virtual. A bank can have no branch offices, USAA for example. An airline can own no planes. Corporations can exist as a network of capabilities and contracts. What a company does, why do people work for them, and how do they make money remain the questions, the answers to which define the corporation in the twenty-first century.
Uncertainty
Volatility in global financial and commercial markets; political turmoil in Western democracies and the developing world – combine to make planning for the future filled with high levels of risk. Daniel Kahneman (2011) sheds light on this when he observes that "illusions of validity and skill are supported by a powerful professional culture… Given the professional culture of the financial community, it is not surprising that large numbers of individuals in that world believe themselves to be among the chosen few who can do what they believe others cannot" (Kahneman, 2011, p. 217). And he notes a 20-year study on so-called expert predictions by Philip Tetlock (2005) that, according to Kahneman, concluded that "people who spend their time, and earn their living, studying a particular topic produce poorer predictions than dart-throwing monkeys" Even in the region they know best, experts were not significantly better than non-specialists. It is not what they believe, it is how they think. They "know one big thing," have a theory about the world, and use a coherent framework to explain events, intolerant of those who disagree, and are confident about their forecasts. "They are opinionated and clear, which is exactly what television producers love to see on programs … by contrast, are complex thinkers... [who] do not believe that one big thing drives the march of history… [They] recognize that reality emerges from the interactions of many different agents and forces, including blind luck, often producing large and unpredictable outcomes" (Kahneman, 2011, pp. 219-220). These are usually not invited on Sunday morning television talk shows, or Cable TV.
Catherine Mathis, Senior VP, Marketing and Communications, Standard and Poors, in her keynote address, "Meeting the Challenge of Uncertainty: The Mindset for Tomorrow," (Mathis, 2012) articulated the mindset corporations and their leaders need to adapt to a more globalized and more interconnected world. An organizational attitude that determines how you will interpret and respond to new situations defines a successful corporate mindset. Mathis identifies three main actions or characteristics of this:
1. Learning agility is "the ability to learn quickly from a wide variety of experiences, applying lessons successfully in ambiguous, new, first-time, complex and challenging situations."
2. Emotional bandwidth is being connected to work constantly, coupled with the expectation to respond to email and social media, and the reality of an instantaneous, always on news cycle, it is no wonder that stress characterizes role of the corporate communication officer.
3. Courage. Corporate communication professionals counsel the CEO, the Board, and the Corporation. Implicit in such counsel is the ability to say "no" to the boss. Just as in the "Emperors New Clothes" courage is required to tell the emperor that he is naked.
The corporate communication function works when its professionals know the business and how it makes money. In depth knowledge of the company, its products and services, and the issues that it faces, as well as the industry sector and its competitors is essential for effective communication. The ability to measure the effectiveness of the corporate communication function provides a strategic advantage for the company in the allocation of resources, both financial and intellectual.
Overcoming the skepticism and trust deficit
What is trust in the first place? According the Oxford Dictionaries (2013) it is the "belief in the reliability, truth, ability, or strength of someone or something; the acceptance of the truth of a statement without evidence or investigation, or the state of being responsible for someone or something" And as a legal term it is "confidence placed in a person by making that person the nominal owner of property to be held or used for the benefit of one or more others; an arrangement whereby property is held in a trust; a body of trustees – an organization or company managed by trustees" (Oxford Dictionary, 2013).
Year after year corporations in the US and the EU struggle with a skeptical public. Since 2001 The Edelman Trust Barometer has been tracking that skepticism by measuring trust in business.
Driven by steep drops in countries in the heart of the Eurozone economic crisis, trust in business fell three points globally to 53 percent. Spain, France, and Germany, down by 21, 20, and 18 points respectively (Edelman, 2013).
What can corporate communication as a business asset accomplish to mitigate that skepticism? As a first step it can be the driver of a change in the mindset and corporate culture. Many corporations, particularly those based in the US, have a decision making process driven by accounting and law. This essentially rules based approach as a corporate strategy can constrain innovation, collaboration, and creative decision-making.
A much more robust and adaptive approach would be a leadership strategy based on principle. In practice, the principle-based approach recognizes that actions that may be perfectly legal and clearly permissible, may nevertheless be antithetical to the mission, values, and beliefs of the corporation, as well as perceived negatively by shareholders and the society at large. Principle-based actions are the foundation of a clear commitment to enhance a positive corporate reputation and mitigate reputational risk.
Also key to winning trust is the realization of the fundamental purposes of a corporation: to show positive financial performance, to create innovative products and services, and to be lead by professional managers. In the contemporary business environment of uncertainty and the media democratization, building trust demands strategic and active engagement of customers, employees, investors, and vendors; in short – all constituents.
A commitment to transparency with employees about the business and its operations not only enables them to work more knowledgeably, but also transforms them into ambassadors of the company when they interact with family, friends, customers, and the society at large. Such a realistic and honest relationship provides another corporate behavior that contributes to a positive reputation.
And as a good corporate citizen, a clear, reasoned, and public voice on issues important to everyone represents the corporation as a responsible member of the community, becoming a trusted partner in a shared future.
Corporate communication as strategic business asset
Scandals scream at us in headlines and mass media sound bites – from David Lettermans infidelity to Tiger Woods to David Patraeus, to Toyotas brake recall, to Goldman Sachs rogue employee; the BP oil spill, Greece, Spain, Italy, Portugal, Cyprus, Apples supply chain issues with Foxconn, JP Morgan Chases "London Whale," and maybe the Enron of the second decade of the 21st Century, SAC Capital.
The immediacy of the media underscores the need for organizations to anticipate the unthinkable; while maintaining focus on what the corporation does and how it behaves; and develop internal and external bonds.
So, corporate communication through its understanding and use of the four forces presented here, can lead the transformation necessary to remain viable in the short term, and to become sustainable for the foreseeable future.
The CCI conference on corporate communication 2012
The papers that follow in this Special Issue of CCIJ reflect some of the presentations and discussions of essential issues facing corporate communication.
Grazia Murtarelli and Stefania Romenti in "Dialogue strategies via social networks and organizational performance" examine social media dialogue strategies employed by 30 of the largest international companies, and evaluate the relationship between dialogue strategies and organizational financial performances.
"Organizational blogging: an explorative case study of a corporate weblog from an employees perspective" by Annette Agerdal-Hjermind discusses the implications of blog usage in a corporate communication context from an employees perspective by analyzing the local context and the underlying motivations of corporate bloggers.
For Jesper Falkheimer the purpose of "Crisis communication and terrorism: the Norway Attacks on 22 July 2011" is to present a review of terrorism and strategic communication.
In her "Do internal communication efforts aimed to generate trust always produce employee engagement commitment: a research study at Micron Technology Italy" Gianluca Togna investigates the relationship between employee trust towards the company and their commitment to it.
Alessandra Mazzei analyzes how, internal communication strategies can promote strategic employee communicative in her "Internal communication strategies for employee communicative actions: a qualitative analysis in American and Italian companies."
Crises are triggered online when stakeholders are empowered by new media platforms that allow user-generated content to be posted online without any filtering. Facebook, YouTube and Twitter emerge as top crises breeding grounds due to their large user base and the lack of gatekeeping. In "Negotiating crisis in the new media environment: evolution of crises online, gaining legitimacy offline," Augustine Pang, Nasrath Begam Binte Abul Hassan, and Aaron Chong examine how crises originate online, how different new media platforms escalate crises, and how issues become legitimized offline when they transit onto mainstream media.
The papers published here first appeared in the Proceedings of the CCI Conference on Corporate Communication 2012 edited by Christina Genest, Annie Keller, Samantha Gouy, and Susanne Hoelzlwimmer, and Roslyn Petelin.
We are grateful to the members of the CCI Conference on Corporate Communication 2012 Program Committee for their insight and expertise in making this conference a success.
Michael B. Goodman
Conference General Chair and Guest Editor
References
Britannica (2013), "Definition of corporation", available at: http://www.britannica.com/EBchecked/topic/138409/corporation\ (accessed June 28, 2013)
Bughin, J. and Chui, M. (2010), "The Rise of the Networked Enterprise: Web 2.0 Finds its Payday", McKinsey & Company, London, pp. 5–7
Edelman (2013), The Edelman Trust Barometer, available at: http://http://trust.edelman.com/trust-download/executive-summary (accessed June 28, 2013)
Goodman, M. and Hirsch, P. (2010), Corporate Communication: Strategic Adaptation for Global Practice, Peter Lang, New York, NY
Kahneman, D. (2011), "Thinking Fast and Slow", Farrar, Straus and Giroux, New York, NY, pp. 217–220
Martin, D. (2012), OtherWise: The Wisdom You Need to Succeed in a Diverse World, AMACOM, New York, NY
Mathis, C. (2012), "Meeting the challenge of uncertainty: the mindset for tomorrow", presented at CCI Conference on Corporate Communication 2012, Baruch College/CUNY, 6 June 2012
Micklethwait, J. and Wooldridge, A. (2003), The Company: A Short History of a Revolutionary Idea, The Modern Library, New York, NY
Oxford Dictionary (2013), "Trust", available at: http://http://oxforddictionaries.com/definition/american_english/trust (accessed June 28, 2013)
Partnoy, F. (2012), "Beyond the blink", The New York Times, July 8, p. SR5
Tetlock, P. (2005), Political Judgment: How Good Is It? How Can We Know?, Princeton University Press, Princeton, NJ
World Economic Forum (2012), "Big data, big impact: new possibilities for international development", presented at the 2012 World Economic Forum, Davos
Further Reading
OECD (2012), International Migration Outlook 2012, The Organization for Economic Co-operation and Development (OECD), Paris
Overby, D. (2012), "Mystery of big datas parallel universe brings fear, and a thrill", The New York Times, June 5, p. D3
About the Guest Editor
Michael B. Goodman, Ph.D – Professor and Director of the MA in Corporate Communication at Baruch College, The City University of New York; and Director of CCI Corporate Communication International. He is Visiting Professor at Aarhus University (Denmark), Hong Kong Polytechnic University, and Universita IULM (Italy). He has published widely, including: Corporate Communication: Strategic Adaptation for Global Practice.