Online Social Media Principles: Coca Cola shows the way with corporate guidelines

I have posted a couple of times comments about the need that organizations must draft a set of rules about the use of social media by employees; incidents of improper (ie. irresponsible, stupid, or abusive) use of social media are countless. Many have lead not only to corporate problems but also have damaged those involved.
With pleasure I found that Coca Cola, one of the companies with official presence in the social media, drafted a set of rules as corporate guidelines for the use of social media by employees. In the introduction the document states that the purpose is "to help empower our associates to participate in this new frontier of marketing and communications, represent our Company, and share the optimistic and positive spirits of our brands".  Hopefully more will follow.

Umair Haque's Generation M Manifesto

Although I belong to the generation that Umair Haque targets in his article I completely agree with the aphorisms in his Generation M Manifesto in the Harvard Business Publishing blog. Some of his points (like shareholder value) have been often subject of this blog.

Hippocratic Oath for MBA students: antidote to immoral (or incompetent) management

Something is moving in the horizon: according to the CNN a group of Harvard Business School MBA students, sensitive to "accusations leveled at business schools that they are failing to produce ethically accountable graduates" (CNN June 9, 2009) will give an oath underlying their ethical and societal responsibilities as managers. Readers of this blog know that there were a few occasions that I discussed the nature of the business education today as a possible cause for the corporate lack of responsibility and greediness that has lead to the well known corporate scandals of the last ten years and to the latest financial and economic meltdown. Let's hope that the initiative of the Harvard MBA students and the article of Rakesh Khurana and Nitin Nohria in the HBR, proposing the Hippocratic Oath for managers will be the beginning of change and improvement in corporate management ethics.

Jack Welch: "Shareholder value is the dumbest idea in the world"

Faithful readers of this blog know that I am one of those who detest Shareholder Value maximization as a management mantra; not only because it has corrupted corporate ethics and contributed to the short- termism characterizing the modern “Strategic” management but has even lead to the relentless hunt for share valuation in bubble stock markets that have lead to the current economic crisis. In that respect I was glad to read in the Financial Times about the interview of the former CEO of General Electric Jack Welch who “ushered in the reign of shareholder value maximization a quarter-century ago” to say that “shareholder value is the dumbest idea in the world”. Good that Welch woke up almost 28 years after his 1981 speech and I sincerely hope that some people will take notice of this statement. Enjoy the FT article

Monkey Banking

With the financial and real world in turmoil it's hard to find many amusing things in the news. However I enjoyed reading about the World's Worst Banker award of Daniel Gross in the Newsweek and Slate. "Fred the Shred" as Sir Fred Goodwin, ex CEO of the Royal Bank of Scotland (or what is left from it) got the price. The justification of the award is perfect and could apply to many of the contemporary top managers who have made the Shareholder Value (see my post from last) their management mantra. Some of the shareholder value-increasing activities attributed to Goodwin are:
1. "Carrying off mergers and acquisitions and calling them growth" since growth is the basis of stock price growth (and the value of management stock options of course)
2. "Ill-advised, history-making, massive merger precisely at the top" with exactly the same effects as 1. Victims of this "strategy" the Fortis group and of course the ABNAMRO (and the Dutch taxpayer) . The rest of the story in the article!

Congratulations to the many candidates for the award this year! As a teacher I am thankful to them. They care that the supply of fine examples of Corporate Governance for our Business students will continue for another year.
I sincerely hope that some of our vocal colleagues who signed the September petition to the Congress will take the initiative to circulate a new such petition arguing that it is time that something must change with the modern management (or us who teach it). A recent article of Rakesh Khurana and Nitin Nohria in the October 2008 edition of the HBR titled "It's Time to Make Management a True Profession" offers a good basis for the petition.

Paul Krugman: Congratulations

Paul Krugman won this year’s Nobel Memorial Prize in Economic Science on Monday. This without doubt will make happy all of us who have followed Krugman’s course as a critical Liberal of the Bush administration. To be honest I am not so much aware of his scientific work but I regularly read his blog (The Conscience of a Liberal) and column in the New York Times where he very brightly yet simply presents his views (that by and large I share). His analysis two weeks ago of the causes of the financial crisis is a piece that must be read by everyone wondering how we reached the recent financial meltdown but more importantly by everyone wondering what must be done to prevent it from happening again. His suggestion to regulate the shadow banking system will be hopefully followed as part of a bigger campaign to restore managerial ethics and standards.
The Novel award and Krugman’s stand confirms my opinion that academics must let their voice heard more frequently when things go wrong.

New AMA Marketing Definition: Back to Basics

Searching some familiar sites I was surprised to see that the American Marketing Association without much fanfare adopted again a new definition of the term Marketing, only three years after the previous revision. Since some of my readers are possibly not aware of this development I copy the text presenting the new and old definitions and the raison d'être for the change as one can find it in the web site of the AMA:

“New Definition of Marketing (est. in 2007)

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

Previous Definition (est. in 2004)

Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

The new definition takes into account input from a broad cross-section of the Association membership. Marketing is regarded as an 'activity' instead of a 'function' and positions marketing as a broader activity in a company/organization, and not just a department. The new definition also positions marketing as providing long term value rather than narrowly as an exchange of money (short-term) for the benefit of the shareholder/organization.”

Source: http://www.marketingpower.com/Community/ARC/Pages/Additional/Definition/default.aspx

I am glad with the new definition if only for one reason: The new focus of the on “providing long term value rather than (positioning marketing) narrowly as an exchange of money (short-term) for the benefit of the shareholder/organization”, as AMA explains.
As you possibly remember sometime ago I criticized the almost religious emphasis of the contemporary management on short-term results and “shareholder value” as a strategy mantra that has caused and keeps causing substantial damage to corporations, the economy and the society in general. The colleagues of the AMA seem to worry also about the impact of the short-termism and “shareholder value” and decided to take action by pronouncing the “transparency, broad participation and continuity” as the basic tenets of the new definition while restating the client/customer and the society as beneficiaries of the marketing.
Interestingly the new definition came about with feedback provided by the industry that clearly was in favor of a new definition rather than a revision of the old one. Possibly the endless stream of corporate scandals and several examples of top (mis)managers often rewarded with hundreds of millions of dollars in stock options have contributed in this attitude. I also suspect that the increasing recognition by marketers of the new role of the customer and the customer empowerment have played also some role here.
I hope that the new definition of the Marketing will help the corporate management to correct its course and re-focus to their customers than the shareholders. It should also help marketers to better understand their mission and give to the marketing the position it deserves as corporate activity.

Shareholder Value vs. Customer Value: could a bit of marketing theory have prevented the Sub-Prime meltdown?

The relentless corporate chase of the new strategy mantra, the "Shareholder Value" (i.e. strategy is anything that will raise the stock price and the value of the management stock options) reached its apotheosis during the recent months when one of its upshots, the infamous Sub-Prime Mortgages market, collapsed. Sub-Prime Mortgage is a populist social policy in the US: sub-prime mortgages so everyone can buy a house, even those without any income to pay back. In fact sub-prime is nothing than a euphemism for customer acquisition i.e. more production by entering a new market segment, more profit and more “Shareholder Value”. The meltdown of this market sent the international financial markets in a tailspin and has brought the world economy at the edge of recession.
The quality of corporate governance and the strategic choices of important institutions should become again an issue of political scrutiny and hopefully an issue of research. Like most crises of the last 15 years financial institutions, the shadow banking system of speculative traders and some rating agencies (rating bonds of questionable quality with AAA) seem to have played also a decisive role here; in a funny way though financial institutions were again the first victims of the crisis.
With the equity markets in a state of paranoia, big caliber players in the red, hedge funds evaporating, property prices crushing and the world economy in crisis the 7 G officials decided finally to “call for more bank regulation to prevent global slump”. No one would disagree that more regulation is necessary so that some financial institutions stop behaving like gamblers out of control. What would help also would be if bankers – and other financial institutions - were reminded from time to time that since it is their customer’s money they risk with their speculations and irresponsible “investments” (who could imagine that so many brains would invest so much in sub-prime) it is maybe the Customer Value they have to rediscover again as their new business paradigm. If they do not know what the term means I would advice them to open the Marketing textbook they have kept from their student years.