Numbers Count -- The Magic of Cross-Checking

I saw a headline today in an online publication cautioning PR practitioners not to embarrass themselves by making mathematical statements that didn't make sense. I believe the article was focusing on talking about equations like ROI or ROE. I agree that one's credibility with management will suffer immediately if you misuse such expressions.

However, a more common way to sacrifice your credibility in communications is to do a mathematical analysis of some kind and make mistakes. I see this regularly because I do survey research, which has lots of numbers in it. Sometimes you might want to combine two different respondent sets -- for example those who have graduated college and those with advanced degrees, or those 18-24 and those 25-34 so you can describe those 18-34. These are not difficult calculations to make, especially if you know your way around a spreadsheet. But it pays to check and recheck, because if, during your presentation, someone questions your number in one instance and demonstrates you have miscalculated, it throws all of your data into question and everything else you or your team says.

I have been hired a number of times by agencies and communications departments of corporations, that have been called on relatively simple mistakes, to go through all their data and make sure it was air-tight before they presented it again.

One very useful trick I use is the idea of cross-checking. For example, let's take the case in which we combined those 18-24 with those 25-34. Let's assume the survey polled adults 18 and over. So if we take our new combined number of those 18-34 and subtract it from the total number or percentage of respondents, that should equal the sum of all the other age categories. If it doesn't, you need to find out why. It might be you made a mistake with your original calculation, it might be a rounding error, or something else. But you need to know why there is that difference so you can defend the numbers, should someone call you on them.

Helping Your Organization Survive the Recession, While You Do the Same

A couple of weeks ago I attended a presentation by Professor Lakshman Krishnamurthi, who is the A. Montgomery Ward Professor of Marketing and chair of the Marketing Department of the Kellogg Graduate School of Management. His presentation was on competing in a down economy. He made a number of provocative points, which I'll go into presently.

Professor Krishnamurthi spoke about managing large organizations, but it struck me that his suggestions work as well for individuals as for corporations. So, as you review what I share below, step back occasionally to think of yourself as the corporation and your bosses, clients and coworkers as your customers and collaborators. Hopefully, you will not only find ideas that will help you add value at work, but also to help you manage your career through the recession and beyond.

Professor Krishnamurthi's Presentation
Dr. Krishnamurthi listed three things an organization can manage to gain advantage during a recession:

• Costs
• Deep customer, collaborator and competitive insight
• Ways to change the rules of the game

I'm not going to review managing costs. We all are aware of what our organizations are doing to manage costs, and we may or may not play a role in that management. However, as communicators and managers, we all can and should be involved in gaining insight.

Comprehensive SWOT
The first kind of research Dr. Krishnamurthi suggested doing is a comprehenive SWOT analysis of your:

• Current product or service lines -- revenue, expenses, projected growth or decline
  
• Your key customers -- their P&Ls and their contribution to yours, your share of their business, forecast growth or decline, forecast effect on your business
• Your top three competitors -- market shares, their share of your customers' sales, financial position, expected behavior during the recession, expected R&D and marketing spending
  

Deep Customer Insight
He then went into developing deep customer insight. This was a central concept in his presentation. He argued the companies that tend to come out of recessions in strong positions are those that stay close to their customers. He suggests you find the answers to:

• How do customers use our products?
• How would they like to use our products?
• How do they learn about our products?
• How would they like to learn about our products?
• How do customers acquire our products?
• How would they like to acquire our products?

He recommended completely rethinking the contract your organization has with customers and asking:

• If we are to start from scratch with these products [to create the most value for our clients and the most profitable business model for our organization], what will we do?
• If we are to start from scratch with our customer relationships, how will they be different [what do our customers need and want from us, and how can we better provide it]?

As you ask these questions keep in mind that the business environment is such that your customers, partners and collaborators are hurting. So also ask how can you help them survive and thrive.

Marketing Spend
Another key point Dr. Krishnamurthi made is that while it is easy to cut marketing spending, because it is discretionary, this generally is not a good idea. He cites research from McGraw Hill that indicates B2B firms that maintained or increased their advertising spending during the 1981-1982 recession averaged higher growth during the recession and for the following three years compared to those that eliminated or decreased their advertising. He notes that maintaining your marketing signals to your customers you are a strong player and will outlast the recession. He also argues it is easier and cheaper to attain a given share of voice in a recession, because prices tend to be lower and competitors are cutting back.

Changing the Rules of the Game
Moving to changing the rules of the game, Dr. Krishnamurthi suggested thinking about:

• Will there be a permanent change in the price-value equation for your products and services?
• Will consumption habits change?
• Do you need to rethink your business model to be able to compete?

And I suggest asking:

• What technological, regulatory, social and environmental trends could affect your business model and how?
  

Based on the earlier question about how, if you were to start your business completely anew, would you set it up to provide in three to five years the most value to your customers and the most profit to your organization ...

• What is keeping you from making these changes?
  
• Will the issues inhibiting you inhibit your competitors?
  
• Are your competitors making these changes?
• Are there organizations that might enter your business with a new model if and when they figure it out?
• What are you going to do about all of this?

And Now To Cheer You Up
Dr. Krishnamurthi closed with a list of powerhouse companies that began during tough times. These include:

• P&G founded during the panic of 1837
• GE during the next panic of 1873
• IBM during the depression of 1873-1896 (formed from three companies that merged in 1911)
• Motorola in 1928 (as Galvin Manufacturing Company renamed in 1930)
• Geophysical Services in 1930 (later renamed Texas Instruments)
  
• United Technologies during the great depression
• DuPont and HP during the 1930s
• FedEx during the oil crisis of 1973
  
• And more

Something for Your Organizations ... and You
I apologize that this article is a bit "listy," but I hope you find the information from the presentation as useful as I did. The ideas regarding how we can help our organizations succeed in this challenging environment provide opportunities for us to be of more value to these organizations and in doing so be more secure ourselves. Moreover, thinking of ourselves as our own individual corporations and our network of colleagues as our customers and collaborators provides strategies we can apply to our own personal corporations to ensure we, too, survive the recession and come out stronger than ever.

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Thanks very much for reading. If you have questions you'd like me to address, or other topics you'd like me to write about, please let me know. And if you know anyone who might be interested, please pass this e-Zine along.

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If you'd like updates on developing messages, strengthening relationships and other communications topics once a month, please subscribe to this e-Zine. You can do so here:

http://www.forrestwanderson.com/free.htm

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If you would like to make any comments regarding this e-Zine, please visit my blog at http://forrestwanderson.blogspot.com/ and comment there. I'd love to hear from you.

# # #

I work with organizations going through a change in strategic direction (merger, acquisition, building program, new product launch, change program, etc.) and that are concerned about what will happen with their relationships with key stakeholders (customers, employees, investors) if they send out the wrong, or confusing, messages. After working with me, my clients have a clear understanding of what their messages should be. I also provide them recommendations on other actions they can take to enhance their relationships with stakeholders.

I also work as a PR and communications research director for hire for agencies and other organizations.

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*The Institute for Public Relations, (IPR) is dedicated to the "science beneath the art" of PR. It focuses on PR research and education. If you are interested in the topics I write about, you will almost certainly be interested in IPR. You can find it at http://www.instituteforpr.org/. While you're there, check out the Essential Knowledge Project at http://www.instituteforpr.org/essential_knowledge/.

Best wishes,

Forrest

Forrest W. Anderson
Founding Member
Institute for Public Relations
Commission on PR Measurement and Evaluation

Creating CEO Crib Sheets

Here is a research idea you might be able to use to make yourself more valuable to your boss and your position more secure.

In virtually every selling situation, the seller has an advantage if he or she knows as much as possible about the person to whom he or she is selling. Since one of the primary functions of most senior managers is sales, at one point or another almost all of us have been asked to pull together research for our bosses or their bosses.

I've done this working for not-for-profit and for-profit organizations as well as for PR agencies. When I was in senior research positions at GolinHarris International and Burson-Marsteller, it frequently was my department's job to prepare the agency to pitch new business.

However, what I enjoyed most was putting together crib sheets for senior executives at these agencies. Typically, these included the chairman, CEO or regional heads, as they prepared for one-on-one meetings with similar senior executives at other companies that might become customers or partners.

Research Level I
The obvious PR thing to do is to pull together a report on recent media coverage of the company. However, to most senior executives, this is of limited value.

Research Level II
A more comprehensive report, and one of more value to your senior executives might include the following:

• The target company's long- and short-term strategies, especially those that might pertain to your company (such as purchasing strategies)
• Company organization
• Management profiles
  
• Division profiles
  
• The company's recent successes and failures
• What management sees as the organization's strengths and weaknesses
• What management sees as threats and opportunities
• What business and investment analysts see as strengths and weaknesses
• What business and investment analysts see as threats and opportunities for that company as well as the industry

You usually can find the information above in the target company's web site, annual report and filings with the SEC and in reports by investment and business analysts.

Research Level III
One of my first independent consulting assignments was to draft backgrounders for the head of a Fortune 100 company to prepare him to meet his counterparts at companies with which he wanted to create alliances. These alliances would include not only purchasing products from each other, but also doing research together to meet environmental and other regulatory goals.

My report included all of the Level II topics above. But what made the assignment particularly fun was the client wanted to know what questions kept the target CEOs awake at night. It usually is difficult, if not impossible, to find secondary research on this topic. This is probably because CEOs do not want to talk about these topics to the media and analysts. So this part of the report required thinking out of the standard research box a bit.

To do this, I tried to put myself inside the mind of the target CEO. I pulled out my general management text books from business school. I ran through checklists for the main functional areas of accounting, finance, engineering and R&D, production, HR and marketing. I also reviewed the sections on analyzing large international firms, which these target companies were. Then I combined that with what I'd learned through the rest of my research regarding the business environment the target companies were in, the year they had just had and the challenges they faced.

Some of the questions I thought might be keeping these CEOs awake at night were:

• How can I quickly expand our presence in Asia, Africa and Latin America?
• How can I maintain an environmentally positive image around the world?
• How can I get investors to see my company as non-cyclical and increase my P/E ratio?
• What can I do now to cushion the impact of the coming economic downturn? (At the time, the economy was booming, and the year they were coming off of was the best they'd ever had.)
• With the strong returns we've been showing, how can we continue to show improvements? How can we improve our profit margins? How can we demonstrate to Wall Street that we haven't hit the ceiling?
• How can we increase our capacity and throughput, so we can take full advantage of the [then booming] economy and not end up with excess capacity when the economy turns down?
• How can we maintain competitive prices as raw material and fuel costs rise?

I also put in a number of questions I thought the target executive was likely to ask my client executive, considering the businesses each of them were in.

I was uneasy with the section on what kept the CEOs awake at night, because I guessed about them. I didn't know for sure these were their issues. But, based on my understanding of their companies, their recent histories, their current and expected business environments and my general understanding of business, these were the things I thought they'd be worried about.

Results
My client was very happy with these reports. And the part they liked best was the section on what was keeping the CEOs awake at night.

# # #

If you'd like updates on developing messages, strengthening relationships and communications research topics once a month, please subscribe to this e-Zine. You can do so here:

http://www.forrestwanderson.com/free.htm

# # #

If you would like to make any comments regarding this e-Letter, please visit my blog at http://forrestwanderson.blogspot.com/ and comment there. I'd love to hear from you.

# # #

I work with organizations that are going through a change in strategic direction (merger, acquisition, building program, new product launch, change program) and that are concerned about what will happen with their relationships with key stakeholders (customers, employees, investors) if they send out the wrong, or confusing, messages. After working with me they have a clear understanding of what their messages should be. I also provide them recommendations on other actions they can take to enhance their relationships with their stakeholders.

# # #

The Institute for Public Relations (IPR) is dedicated to the "science beneath the art" of PR. It focuses on PR research and education. If you are interested in the topics I write about, you will almost certainly be interested in IPR. You can find it at http://www.instituteforpr.org/. While you're there, check out the Essential Knowledge Project at http://www.instituteforpr.org/essential_knowledge/.

Best wishes,

Forrest

Forrest W. Anderson
Founding Member
Institute for Public Relations
Commission on PR Measurement and Evaluation