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A J O U R NA L O F C O M M U N I C AT I O N S A N D C O R P O R AT E R E L AT I O N S I S S U E 1 5 2 0 1 8 The WORDS Issue MARK PALMER, former Enron spokesman, on telling the truth MARY BEARD talks about Women & Power The man behind the HASHTAG The Shakespeare of SILICON VALLEY Plus Christopher Dodd and Dambisa Moyo
Brunswick is an advisory firm specializing in business critical issues and stakeholder relations To download and share Brunswick Review stories go to www.brunswickgroup.com/review You can follow us on Twitter @BrunswickGroup Highlights from this and previous issues are also available on LinkedIn editor-in-chief Kevin Helliker managing editor Carlton Wilkinson art director Frank Tagariello deputy editor Edward Stephens content production manager Laura Templer The Brunswick Review is printed on Cocoon print production MerchantCantos Offset 100% recycled, made using post-consumer printed by CPI Colour waste fibers and manufactured without the use of cover illustration Edmon De Haro any secondary bleaching feedback feedbackreview@brunswickgroup.com Copyright © Brunswick Group LLP 2018
T he talent and gift of communications and language is obviously one of the great differentiators between us and other animals. We have been able to talk in complex ways for tens of thousands of years, if not more, but it is easy to forget that the written word is a quite recent phenomenon. Only just over 5,000 years ago, the Sumerians made written words come to life, pressing cuneiform characters into clay tablets. We have come a long way in 5,000 years. Today, an average of 23 billion text messages are sent per day, and 350,000 tweets per minute. With such volumes on multiple channels and visual content powering up everywhere, one might expect written or spoken words to have a diminished importance. Actually, we believe the opposite. One of the many great opportunities of the digital world is that we can all become publishers. The power and reach of effective content, written or spoken, has never been greater. In their book, Everybody’s Business, Brunswick SIR ALAN PARKER Partners Lucy Parker and Jon Miller defined us as being in the CHAIRMAN, Age of Conversation. We cannot control the conversations going BRUNSWICK GROUP on around us inside or outside our organizations, but we can contribute to, and sometimes shape, those conversations with the power of great and powerful content and how we use our words. It feels like sound bites, bumper stickers and tweets have the greatest impact. They are more easily shared and re-shared, such as “Make America Great Again.” But most glance off of us. Headlines and sound bites catch our eyes, but well-crafted and thoughtful words can capture our hearts and minds and, in a digital age, they can go further and last longer. As we have exponentially increased our consumption of words and media, it seems we have also sharpened the mental and critical faculties for greater editorial competence. We can discard more of what comes at us as we pick out what we want to fully engage with. The paradigm has moved to pulling content, not pushing it. The challenge for the corporate world is that we start from a low THE BEST level of trust – corporate speak, legalese and spin not only fail to deliver, but can even be hugely damaging. Humanity, authenticity WORDS ARE ABLE and honesty always rule the day. Our CEO and my colleague Neal NOT ONLY TO Wolin, in this edition, quotes Ernest Hemingway, reminding us COMMUNICATE that the way to approach the task of writing is to “start with one true sentence”– everything else comes from that. A POINT OF VIEW, The best words are able not only to communicate a point of BUT TO CONNECT AND SHOW PHOTOGRAPH: DAVID REES view, but to connect and show you see the world the way others see it. Helping clients make their case and make those connections has always been at the heart of what we do at Brunswick. YOU SEE THE I hope you enjoy this edition as we celebrate the extraordinary, WORLD THE WAY wonderful and potentially magical power of words. OTHERS SEE IT b ru n s w i c k rev i ew · i s s u e 1 5 · 2 0 1 8 3
10,000 SPEECHES 22 Former US Senator Christopher Dodd talks to Brunswick’s Casey Becker about the power of words and stories 6 QUOTES FROM THE ISSUE “You can’t spin your way out of LESSONS FROM THE FRONT Brunswick’s Mark Palmer offers 12 trouble you acted your way into” lessons from his traumatic days at – Mark Palmer Enron, where he proved that a corporate spokesman can emerge from scandal with his integrity 7 SPOTLIGHT SECTION Insights from Brunswick colleagues around the world and reputation intact 12 7C HURCHILL LESSON The master’s words sometimes YES COMMENT “No comment” is no longer a safe way for companies to dodge 19 overplayed the occasion 8H ONESTY IS POLICY tough questions Corporations have an obligation to tell the truth, not to entertain 9 AFRICA SURPRISES M&A and #SORRYNOTSORRY Apologizing on Twitter isn’t as easy 20 democratic reforms are on the rise as it may seem BREXIT is messy business, says 10 Brunswick’s Pascal Lamy, a former WTO Director ”FOR PERSONAL REASONS” The old euphemisms for executive 21 departures no longer suffice 9 WELCOME TO THE WORDS ISSUE 11 Brunswick CEO Neal Wolin writes: “Best to lead by this credo: ALL TOO FAMILIAR Germans are conflicted about the 27 8 Words matter, always” spread of US-style informality 20 4 b ru n s w i c k rev i ew · i s s u e 1 5 · 2 0 1 8
THE WORDS ISSUE SINGAPORE SLANG 28 The fledgling city-state’s economic miracle began with its unlikely EUROGLISH Brussels English is shot through with slang and words from other 54 choice of an official language European languages, and is evolving into a new lingua franca for the EU 30 MARY BEARD The celebrated author, classicist and feminist tells Brunswick’s Edward Stephens that it will THE BIRTH OF THE ADVERTORIAL The pugilistic style of legendary 56 Mobil executive Herb Schmertz take more than a hashtag to remade corporate communications overcome thousands of years of the silencing of women 35 THE POWER OF AUTHENTICITY A word-for-word translation isn’t the 58 33 FROM THE TOP Four CEOs reveal particular words best way to reach your audience that helped define their styles CHINESE IN YOUR POCKET Computers are using a more 59 35 STRATEGY OVERLOAD Seemingly everything today is described as “strategic,” rendering human approach to translation, with results that are greatly improved that word all but meaningless INTERVIEW: QUID FOUNDER A student of literature uses 60 37 DUKE OF DEVONSHIRE A small bookshop in London’s words to find overlooked patterns in the chaos of cyberspace Mayfair has a history rich in literary – and literal – nobility 30 CYBER RESILIENCE DarkMatter guards the Middle East’s 64 40 INTERVIEW: DAMBISA MOYO The author, economist and Chevron board member talks about the explosive growth of connectivity future of democracy, and her love of her native Zambia BUILD A BETTER PASSWORD A good password doesn’t have to be 67 impossible to remember HE CREATED THE HASHTAG 44 Chris Messina talks about the practicalities and politics behind INTERVIEW: AVIV OVADYA The leading prophet of a looming 68 the symbol “infocalypse” warns that businesses must act now to be prepared 47 PHILOSOPHY’S ODD TURN This tongue-in-cheek essay argues Stories on art, business, and politics beyond our main theme 71 that modern corporate 67 communications can be traced to Wittgenstein BOARDS IN BRAZIL 71 WIDE ANGLE The nation emerges from the expansive “Lava Jato” probes with a THE POETRY-WRITING CEO 50 Jaithirth Rao, founder of India’s MphasiS, talks about his love for clearer definition of transparency INTERVIEW: MIGUEL MADURO 73 plain speaking and W.H. Auden The head of a new EU school talks about governance beyond the state INTERVIEW: CARLA KRIWET 76 52 MAKING “LOVE” The iconic sculpture by Robert How Philips competes with Silicon Valley for talent Indiana grew out of his fascination with words – and old wooden beams INTERVIEW: WES MOORE 80 The CEO of Robin Hood tells of its role as Wall Street’s favorite charity 53 BREAKING THE RULES The Economist’s language CRITICAL MOMENT 82 columnist notes that even Jane Physicist Stephen Hawking’s Austen broke the rules of grammar 40 triumphs over chaos were ours b ru n s w i c k rev i ew · i s s u e 1 5 · 2 0 1 8 5
“The solution is a combination “I happened to contribute “Of all the headwinds of bravery and the ability to this interesting, small little democracies are facing, the recognize the words you hear hack on language.” overarching one is myopia.” yourself speaking as your own.” CHRIS MESSINA DAMBISA MOYO MARY BEARD Creator of the hashtag Best-selling author, economist, Best-selling author, classics 44 and Chevron Board Member professor at Cambridge 40 30 “Occasionally, you might speak a phrase that people “Probably the worst and the “You can’t spin your will recall. But what best things that will happen way out of trouble you acted they remember is how you we can’t quite predict. But that your way into.” made them feel.” doesn’t absolve us from doing MARK PALMER our best to predict them.” CHRISTOPHER DODD Brunswick US Managing Partner AVIV OVADYA Former US Senator and former Enron spokesman Chief Technologist, 22 12 University of Michigan’s Center for Social Media Responsibility “The world is awash in data – “Honesty about why executives 68 most of it numbers. But leave has a powerful effect floating along in the sea of data on those who stay.” “He mobilized the English is language, arguably SHAHED LARSON language and sent it into battle.” Brunswick Partner US President JOHN F. KENNEDY the most important way in 21 Speaking of former British which humans make sense Prime Minister Winston Churchill of the world.” 7 BOB GOODSON CEO, Quid “A room without books in it is 60 quite a depressing place.” DUKE OF DEVONSHIRE Owner of Heywood Hill bookshop 37 QUOTES from the issue ILLUSTRATION: EDMON DE HARO 6
SP TLIGHT Sharing insights from Brunswick colleagues around the world on a medley of topics I n 1899, a parliamentary candidate from Oldham stood to address a local church gathering. “Never before in the history of Oldham have so many people had so much to Of TIME&PLACE eat,” he declared. As a junior minister nine years later, the same politician stood beside an irrigation project in Africa and said, “Never before in the history of Africa has so much water been held up by so little masonry.” Before he became the greatest orator in British history, before he won the Nobel Prize in Literature, Sir Winston Churchill gave speeches that surely generated some mirth. “He was renowned throughout his career for lavishing verbosity on issues that simply didn’t warrant it,” said Philip Collins, the author and speechwriter for former British Prime Minister Tony Blair. Appearing on an Intelligence Squared panel called “Words that Changed the World,” Mr. Collins argued that the perfect context PHOTOGRAPH: MILITARY HISTORY COLLECTION / ALAMY STOCK PHOTO for Mr. Churchill’s grave tone and tenor arose only when he was in his 60s, and serving as British Prime Minister amid the Nazi invasion of western Europe. Of Mr. Churchill’s speeches in 1940, Mr. Collins said, “What gives them their real gravity is the fact that the peril is real.” For me and for others who work with words and who love the Churchill legacy, Mr. Collins’ lesson is worth remembering. If we try to emulate the great orator on behalf of a brand or product, we could succeed – and sound as cartoonish as Mr. Churchill did at that Oldham event. b ru n s w i c k rev i ew · i s s u e 1 5 · 2 0 1 8 7
SPOTLIGHT That isn’t to say Mr. Churchill isn’t worth studying for routine tips about words and writing. “Short words are the best, and the old words best of all,” he said. In an unpublished 1897 piece called “The Scaffolding The point of corporate tell it as often as needs be – but of Rhetoric,” Mr. Churchill communications is repeat the same message on the identified what he thought not to entertain, but to same facts. There is no need to were the principal elements of tell the truth improvise, nor to elaborate. As pressure rises, the same truth Exacting HONESTY a great speech: correctness of diction, rhythm, accumulation of can be repeated. This is now argument and analogy. commonly done, for example, in T Deliberate writers will also take he leader of a public corruption cases. particular comfort in knowing company has a duty to “The Board will not allow that Churchill was slow. He inform the public of material corrupt behavior in this company estimated one hour of work for events that an investor, actual and will sort it out at once,” is a every minute of a speech. or prospective, would consider typical example. This statement Obviously, those traits alone significant in deciding whether is fact. It tells the market what don’t account for his brilliant flair to buy or sell the shares. He or the view of its Board is, and with words and thankfully he she must tell the truth – and shows their determination to offers other hints. As a film-maker, tell it as soon as is reasonably deal with it. I’m especially interested in how practicable. He has no duty It is tempting to shift from he described his writing style as to spin, nor to comment, nor the provision of necessary a “rapid succession of waves of entertain, although in the information material and sound and vivid pictures.” pressure of the moment, many useful to the market and, under go down this path. pressure, stray into the realms “Short words are The audience, in the form of the media, have much more of entertainment – “feeding the beast” may be the function of the the best, and the old freedom. They can comment, they can entertain, they can media, but it is not the function of the company. words best of all” write, or broadcast, from a point of view: left or right, capitalist or The CEO is concerned with what the public needs to know. Winston Churchill communist, young or old. Some He may wish to elaborate One hopes that circumstances public-service broadcasters have and expand, according to his never arise to emulate Prime duties imposed by the state; the temperament, but he would do Minister Churchill in his BBC, for example, has a duty to well to always bear in mind the moments of greatness. The most be “impartial” in its coverage. But questions, “Am I informing or eminent Churchill historian, Dr. while many in the private media am I entertaining?” and “If I Andrew Roberts, says, “An awful strive mightily for accuracy and comment, why do I comment?” lot of people thought that it was have strong ethical standards, One last word – on apologies: impossible to beat the Nazis, yet what Winston Churchill did, by they are entitled to select what It can be hard to When disaster strikes, an apology is often necessary and usually they report, and decide upon constantly putting Britain’s peril which particular facets in the stick to the mantra welcome. It shows ownership, in the greater historical context courage and sympathy. It need of other times that Britain had diamond of truth they wish to shine their light. of “FACTS ONLY” not become an admission of legal nearly been invaded, but had been ultimately successful, he A chief executive has no such luxury. He has to tell it like it in a fast-developing, liability; lawyers’ fears in this area are overdone. managed to tell the British people that this could happen again.” is, and dangers surround him if he launches into the areas of unexpected One can be very sorry that something has happened, Or, as US President John F. Kennedy said of Mr. Churchill: comment or entertainment. “A storm in a teacup,” “a minor and unwanted whether an explosion or a share price collapse; saying sorry “He mobilized the English language and sent it into battle.” incident,” “a forgivable error” can be claimed by the commentators, situation and expressing sympathy with the victims is a proper human Churchill’s greatest legacy may but less easily by the miscreant. instinct. Sympathy and sorrow ILLUSTRATION: SERGE BLOCH be his assurance that victory can It can be hard to stick to the straightforward. First, find and a determination to put be achieved against all odds. As mantra of “facts only” in a fast- the truth. (This is not easy in things right are not the same as Churchill himself once put it, developing, unexpected and complex organizations that have professing guilt. Apologies need “Never flinch, never weary, unwanted situation. lost their way.) When the truth not be about fault or liability – never despair.” Viewed this way, however, has been found, if it is materially they are about empathy. Sonal R. Patel is an Executive communication becomes different from market knowledge Rob Webb QC is a Brunswick Senior Producer for MerchantCantos. much simpler; the rules are or perception, tell it; tell it all and Adviser based in London. 8 b ru n s w i c k rev i ew · i s s u e 1 5 · 2 0 1 8
global economic alignment. Between 2004 and 2014, Sub- Saharan Africa became the world’s second-fastest-growing region after Asia Pacific, driven in large part by the voracious demand for natural resources created by China’s rapid industrialization. However, structural changes – the direct result of political shifts toward democratic accountability and good governance – played a critical role. Applying these trends across broad sections of the continent would be an oversimplification. Among the Eurasia Group’s top 10 global risks for 2018 is rising terrorism in Africa, with the Western powers increasingly Cape Town’s Table Mountain distracted by their own domestic carries its “table cloth” of clouds – a sign, legend has it, politics. Among the best of a smoking contest between performing economies on the a local pirate and the Devil. continent, Ethiopia and Rwanda aren’t exactly model democracies. But they are predictably governed AFRICA bucks of defense. Yet early evidence suggests that João Lourenço, risk for inbound mergers last year was almost exclusively due to the and focused on trying to prioritize economic development the political technocratic general and newly elected president, deserves his most sophisticated democracy on the continent: South Africa. over political squabbling. However, in key economies, risk trend corruption-free reputation – South Africa accounts for private markets are growing almost immediately he pushed nearly two-thirds of Africa’s M&A and thriving. While the decade back against military cronyism activity by value and about half of growth was not driven by S ociologist daniel bell, and nepotism. by volume. Political uncertainty manufacturing, early signs show writing in the 1950s about In Liberia, the winner in brought inbound deals by it may be on the rise, aided mid-20th century ideologies, the country’s first democratic volume down 45 percent in the again by China’s expanding observed, “the old passions presidential election invited first quarter of 2017 – though appetite. Combined with are spent.” That turns out to members of the losing party to measured by value, that activity Africa’s technology leapfrogging be wrong, as recent political join him in a unity cabinet. Africa was up significantly. in areas such as fintech and contests for the souls of major is full of surprises. The hype about South Africa’s communications, this might just western societies shows. The Political risk, once considered institutional arrangements sustain the continent’s promise as brutal rebellion against liberal purged everywhere but in Africa, is proving warranted. This is the world’s next major market. values and globalization in major is for the third year the primary encouraging and should help the Itumeleng Mahabane is a PHOTOGRAPHS: DAN ROWLANDS / TOP, ROBERT MUCKLEY/GETTY IMAGES Western democracies is a potent threat to global trade. But across region be more resilient to inward Partner and Head of Brunswick’s reminder that societal change is Africa, the significant political investment at a key moment of South Africa office. a predictable force – constructive change is not. African countries are doing HIGH-TECH MARKETING their own up-ending of the world SANDWICH SIGN goes viral has been humbled recently view, but landing in a surprisingly by the good old-fashioned sandwich board. Propped on a more positive posture. Last year, sidewalk or hung from a human being, the classic ad form hit Zimbabwe saw something as close peak popularity in the 19th century, then faded into irrelevance. to a legal coup as you can get – Until early this year, that is, when a lowly sandwich board and suddenly, a place that pretty outside a Denver coffee shop made national headlines, including much everyone had written off on the front page of The New York Times. Shared widely on social media, the board’s message – “Happily gentrifying the is on an all-out charm offensive neighborhood since 2014” – drew hundreds of gentrification with Western investors. opponents to the coffee shop, temporarily forcing its closure. In Angola, many were cynical In Manchester, England, meanwhile, a sandwich board outside about elections and the transition a café noted that an online reviewer had criticized its porridge. of political power from a colonial The board made national news by inviting passers-by to give the revolutionary leader to his disparaged porridge a try. Lesson: A punchy message can break comrade in arms and minister through the limits of any medium. b ru n s w i c k rev i ew · i s s u e 1 5 · 2 0 1 8 9
SPOTLIGHT Brexit remains messy at Depending on the manner best and its costs, of its departure, Britain faces an unclear, says Brunswick economic or a political price. Geopolitical’s Pascal Lamy The more the UK leaves the EU, W e’re approaching the the steeper the economic price two-year anniversary of tag. A softer withdrawal reduces the Brexit vote. economic costs, but increases And still the mechanics of how political ones. Britain can, of the UK will leave the EU, and at course, leave and negotiate new what cost, are unclear and hotly trade agreements. But can they debated. I expect we’ll see more do better with a market of 60 talk than progress for a long while. million consumers than they I’ve compared the UK trying did in a market of 500 million to leave the EU to a chef trying to consumers? I’m not so sure. In remove an egg from an omelette trade negotiations, you gauge that’s been stirred since 1973 – A painful SEPARATION difficult, frustrating and almost certainly messy. As someone who has been in trade negotiations for more than three decades, it is difficult the weight of a market – making to overstate the technical and more concessions for a large regulatory challenges that market than a small one. Brexit poses – challenges that Exiting enough to satisfy are further complicated by Brexit supporters, but not political calculations. so much that it damages the Take financial services. How British economy – that’s a they’ll be regulated between the delicate compromise, and one UK and EU is a key part of the that doesn’t appear to be on the Brexit discussion, but I doubt table in London. It might take will be part of any trade something akin to a political negotiation. So even if a trade spasm in the UK before such a “more complicated,” he said. scenario that should keep CEOs negotiation is reached – an compromise gains real traction. Neither metaphor is perfect, but awake at night on both sides of ambitious goal in and of itself Rather than a decades-old at least the professor’s offers the the Channel. – how banks can operate and omelette, a German professor hope of a smooth landing. Pascal Lamy is a Principal at firms will be regulated remains a equated the complexity of the A hard one, which Brunswick Geopolitical, and former separate issue to be resolved and UK leaving the EU with the first unfortunately cannot be totally Director General of the World then implemented. Moon landing – only Brexit was excluded at this stage, is the Trade Organization. SWEARING system that broke global banking, but for bad language. Despite the aversion to Are curse words an swearing, evidence suggests it can unforgivable scourge or a help teams bond. Far from artless healthy way to build trust? and vulgar, research shows that I n her book swearing is good swearing in small groups demands for You, Dr. Emma Byrne argues social skills to express differences between teams and nuances ILLUSTRATIONS: LEFT, SERGE BLOCH; TOP, FABIO CONSOLI that new research reveals how we might be better off to invite specific to each member’s role. profanity into the office. But In addition, Dr. Byrne’s she’s also clear that trying to research shows swearing reflects implement a pro-swearing policy on credibility: The greater the will be an uphill battle. rate of swearing, the less likely the Dr. Byrne tells how during person was to be dishonest. the 2008 crash a Goldman Sachs Ultimately, there’s no simple senior manager described a sub- answer. Though it risks giving prime mortgage transaction in offense, it seems that at the right an email as “one shitty deal.” moment, a well-turned expletive When the emails were released can work wonders. to the public, Goldman Sachs Laura Templer is Content apologized – not for supporting a Production Manager in London. 10 b ru n s w i c k rev i ew · i s s u e 1 5 · 2 0 1 8
WORDS INTRODUCTION revival of Western economic prowess. And our researchers at Brunswick Insight reveal what people really hear when a company says, “No comment.” We also show how even great writers like Winston Churchill or Ernest Hemingway found it hard to choose the right words. Churchill, winner of the Nobel Prize in Welcome to the Words edition of the Brunswick Review, Literature, put one hour of work into every minute of a in which we illustrate the power of words to promote speech. Hemingway rewrote the last page of “A Farewell economic and social progress. to Arms” 47 times. The secret behind virtually every great In these pages we trace Singapore’s status as an writer and speaker is a team of brilliant editors. economic star to its decision in 1965 to make its official For anyone preparing a spoken or written language English – even though few residents back then communication, a basic recommendation is to identify spoke it. We show how one man started a linguistic the target audience. But Mark Palmer, Brunswick’s US ILLUSTRATION: EDMON DE HARO revolution by inventing the hashtag. We offer tips from Managing Partner, adds a chilling coda. It comes from his former US Senator Christopher Dodd on how to prepare experience as the former spokesman for Enron: Never forget and deliver a great speech. Cambridge’s best-selling that your audience may include the Department of Justice. classicist Mary Beard talks to us about lingering restraints Best to lead by this credo: Words matter, always. on the voices of professional women. Economist Dambisa Moyo explains why words – her fourth book is currently on best-seller lists – offer the best hope for starting a NEAL WOLIN, CHIEF EXECUTIVE OFFICER
O n october 25, 2001, the phone rang on the desk of mark palmer, MARK Vice President of Communications for Enron. The caller was a Wall Street Journal reporter inquiring about an Enron special-purpose entity called Chewco. • “Never heard of it,” said Mr. Palmer. Promising to look into Chewco, he said he would get back to the reporter. • During his first five years as Enron spokesman, Mr. Palmer had scrambled to accommodate ever- mounting interview requests from journalists enthralled with the innovation, the boldness and the incredible growth of Enron. During that time, the value of Enron stock more than quadrupled to $90 a share. • But 2001 brought a series of setbacks: Short sellers planted skepticism in the media, the company’s charismatic CEO abruptly resigned and Enron took an unexpected $1.2 billion charge against equity. The stock sank to below $20 a share. • As he set out to gather information about Chewco, Mr. Palmer still believed PALMER in Enron’s capacity to recover. He still believed in the leadership of Kenneth Lay, the company’s long-time chairman who had recently re-assumed the title of CEO. As for Chewco, Mr. Palmer expected to get a quick answer and move on to his next task. • But within moments, he learned from an Enron executive that Chewco might be a deeply flawed entity. Enron executives investigating the files of Andy Fastow, the company’s recently departed CFO, were finding that Fastow might have improperly structured Chewco to circumvent accounting rules and enrich himself. If this suspicion were true, Chewco’s obligations would turn into Enron debt, further destabilizing the company’s finances and destroying what was left of its reputation. The news floored Mr. Palmer. • Exercising an authority that he arguably didn’t wield, Mr. Palmer called for an immediate gathering of top management, including Mr. Lay. So distraught was he that on the way to that meeting Mr. Palmer FORMER ENRON SPOKESMAN ON TELLING THE TRUTH ILLUSTRATION: NIGEL BUCHANAN 12
MARK PALMER made a detour to the bathroom to vomit, a delay During the company’s fall, Mr. Eichenwald that cost him a seat at the meeting he had called. covered Enron for The New York Times. “Mark So Mr. Palmer sat on the floor of a small crowded Palmer never even approached the line of being conference room. During the meeting, when Mr. Lay deceptive to me or I think to any reporter,” says failed to immediately grasp the Chewco implications, Mr. Eichenwald. While covering Enron for the Mr. Palmer took charge by loudly slapping his hand Times, Mr. Eichenwald said that “If Mark told me on the floor. “I’ll tell you what’s going on, Ken,” Mr. I was going down a wrong path with my reporting, Palmer shouted at the Chairman and CEO. “The I would immediately stop. He had that kind of AFTER Wall Street Journal knows more about what’s going credibility because, conversely, when I was right, GOVERNMENT on at your company than you do!” Then Mr. Palmer demanded, as he had before, he never told me I was wrong. Mark understands that credibility is something you have to build and INVESTIGATORS that Enron hire an independent investigator. This that the only way to build it is by being honest. He’d SWARMED ENRON, time Enron followed his advice. Seventeen years later, Mr. Palmer serves as the always do his best to get an answer and if the answer was ugly he’d give it to you.” MR. PALMER LAY US Managing Partner for Brunswick Group, where The Wall Street Journal’s Rebecca Smith and John AWAKE NIGHTS he offers advice on a range of topics, most notably how to navigate a corporate crisis. To that discussion Emshwiller played a significant role in uncovering Mr. Fastow’s secrets. In their 2003 book, 24 Days, REPLAYING EVERY he brings a degree of firsthand experience that he they said they “didn’t think Palmer had ever COMMUNICATION wouldn’t wish upon anyone. The son of a Vietnam War Navy attack pilot, Mr. Palmer grew up believing knowingly given them false information.” It seemed obvious “that (Palmer) had been trying to be helpful HE EVER ISSUED that hardship should be embraced, tackled and and honest.” ON BEHALF OF internalized, rather than just talked about. But the trial he endured as chief Enron spokesman during A University of Missouri journalism graduate, Mr. Palmer worked as a broadcast journalist before THE COMPANY its spectacular rise and scandalous fall convinced joining Fina, an oil-and-gas company, as its all- him that Post-Traumatic Stress Disorder is a around spokesman and marketing guru. He was 35 real affliction. Ever since that episode of nausea in 1996 when a headhunter recruited him to Enron, in the Enron bathroom, his gag reflex has been a natural-gas pipeline company that was disrupting oversensitive. “Before Enron, I could have been a the industry by creating a market for trading natural sword swallower. Ever since Enron, if I get just a little gas. This innovation not only was proving to be bit stressed my gag reflex is hypersensitive,” he says. profitable but also good for consumers. “Enron The lessons he gleaned from Enron underscore a had this idea of a gas bank, and it really improved type of risk not always appreciated on the front lines the natural gas market in the US. It solved the of corporate communications. After government problem of there being shortages in one market and investigators swarmed Enron, Mr. Palmer lay awake surpluses in another,” says Mr. Palmer. nights replaying every communication he ever issued Now, a brilliant Enron executive named Jeffrey on behalf of the company, aware of the potentially Skilling – instrumental in the gas bank concept criminal implications of a corporate spokesman – was pushing for deregulation of the electricity knowingly saying anything wrong or misleading. market, an effort that required approval of both Mr. Palmer passed that test, in the view of the federal and state regulators. “You had this patchwork media as well as government investigators. quilt of crazy regulation where someone in Long It’s not that every communication he ever made Island might be paying 22 cents a kilowatt-hour for on behalf of the company was accurate. He says, “It’s power while someone in New Hampshire might be awful to look back on statements that I made based paying 8. We felt like we could do the same thing on getting an answer from (an Enron executive) and with electricity that we had done with natural gas – having it end up being wrong.” It’s that the fraud even out supply and generally lower the price.” at Enron was known to only a few of the energy As Enron’s stock rose steadily, Mr. Palmer and his giant’s tens of thousands of employees. “If corporate team fielded an ever-growing number of interview fraud weren’t limited to particular individuals requests initially from trade journalists, then from with a particular level of power, then it wouldn’t the world’s top business publications. “We became be a secret,” says Kurt Eichenwald, whose 700-page a Wall Street darling, and a media darling. That the masterpiece on Enron, Conspiracy of Fools, conveys most innovative company in America was a former the shock awaiting those at the company charged natural gas pipeline company – that was just a great with investigating Mr. Fastow’s deals. story,” says Mr. Palmer. 14 b ru n s w i c k rev i ew · i s s u e 1 5 · 2 0 1 8
80 70 60 50 40 30 20 10 0 2015 2016 2017 Mark Palmer (bottom right) and his much- reduced staff following the Enron bankruptcy in December 2001. Their good humor here belies the difficult times they were negotiating. An admirer of both Mr. Skilling and Mr. Lay, From $90 to $0 ENRON’S STOCK PRICE and a believer in their mission, Mr. Palmer said he from August 2000 to January 2002 “bought into the mission, and became like a lawyer Trust more who zealously defends his client.” 16% As Enron became more a trading company than Unsure an energy concern, its accounting grew increasingly 3% complex, puzzling some analysts and investors. $100 But Enron’s deals and books had the blessing of 90 white-shoe lawyers and a blue-chip accounting 80 firm, Arthur Anderson. Meanwhile, Enron’s critics 70 often had their own agendas, as short sellers or foes 60 of deregulation, and Mr. Palmer pushed back hard. 50 “As spokesperson, I zealously Management communicatedBudget our Technolo message,” he says. 40 “When you’re the spokesman of 36%a company70% 52% 30 whose success played out on the free and open 20 market, a company that’s the darling of WallCiteStreet Of cybersecurity inadequate Of threat ale 10 and of the media, you develop aprofessionals level funding for of confidence are imprope have a direct cybersecurity prioritized b reporting technology systems an 0 that becomes arrogance,” he says.line “Looking back, it’s must to the or security be manu 8.23.00 10.23.00 12.23.00 2.23.01 4.23.01 6.23.01 8.23.01 10.23.01 12.23.01 CEO talent reprioritize shocking how full we were of ourselves.” Visibility Investment Accurac Data is compiled from Enron Securities Litigation Web Site The beginning of the end came in the spring As short sellers became unexpected resignation when CFO Andrew Fastow of 2001 when Fortune ran a story asking whether suspicious about how of CEO Jeffrey Skilling in resigned under pressure Enron was overpriced. The story pointed out that Enron made its profits, August of that year, shook one day after CEO Ken few analysts understood how Enron actually made CHART: PETER HOEY the stock of the much- investors, whose fears Lay expressed confidence money. The stock began to fall. In August, the stock admired company seemed vindicated when in him. The end came began to fall. A Fortune Enron took a $1.2 billion when lenders lost faith, took a steep dive when Mr. Skilling, CEO only since article in the spring of charge against equity ultimately forcing Enron February, resigned, citing personal reasons. Then 2001, followed by the in October. It didn't help into bankruptcy. The Wall Street Journal began questioning the b ru n s w i c k rev i ew · i s s u e 1 5 · 2 0 1 8 15
MARK PALMER accounting behind certain limited partnerships set turned up ever-grimmer details about its slipshod up by Mr. Fastow. financial structures and in many cases improper 40 “KEN, As the stock continued to slide, Mr. Palmer felt responsible. Many of his superiors told him that accounting, Mr. Lay kept exhorting Mr. Palmer to somehow improve media coverage. That prompted Enron was suffering only a perception problem, the financial team that had replaced Mr. Fastow initiated by short sellers and perpetuated by to sit Mr. Palmer down and show him what they journalists who did not understand the company’s had discovered to be the true state of affairs: The complex accounting methods. company had little in the way of cash flow and the When the WSJ persisted, raising questions value of its equity paled beside a potentially $40 about the limited partnerships, Mr. Palmer asked billion load of debt triggered by its falling stock Mr. Fastow to provide an interview about them. price and lowered credit ratings. For Mr. Palmer, BILLION DOLLARS Mr. Fastow refused, yelling on the phone that the that horrible news brought relief. IN OBLIGATIONS idea was idiotic and questioning Mr. Palmer’s competence as a spokesman. “Looking back, I realize “I had thought this was my fault. I had thought that all of our 401(k)s were going to zero because I AND NO that Andy Fastow screaming at me should have been couldn’t convince the media that they were wrong,” CASH FLOW IS A a tell-tale sign,” says Mr. Palmer. “I know that dogs don’t bark because they’re going to bite you. They he says. Later that evening when Mr. Lay again beseeched Mr. Palmer to silence the WSJ, Mr. Palmer PR PROBLEM, bark because they’re afraid.” replied, “Ken, $40 billion in obligations and no cash BUT BAD PR To make matters worse, Mr. Palmer recalls, Mr. Lay told him, “Mark, what are you doing to get flow is a PR problem, but bad PR didn’t cause it and good PR can’t fix it.” As Mr. Palmer puts it now, “You DIDN'T CAUSE IT the Journal to quit writing these stories? They’re can’t spin your way out of trouble you acted your AND GOOD killing us.” Even as the SEC announced an investigation way into.” Enron’s falling stock price was creating havoc PR CAN’T FIX IT” into Enron, and as the company’s own executives at a company that had heavily used its shares as KURT EICHENWALD ON WRITING “CONSPIRACY OF FOOLS” Enron’s demise inspired more than Every document and every a dozen books. The best of them is description of an event from those arguably the best business book records is then listed in a timeline, ever written: Kurt Eichenwald’s which usually runs between 500 Conspiracy of Fools. Mr. and 1,000 pages long. Each entry Eichenwald, who had covered Enron describes which document in for The New York Times, describes which binder contains the cited here his book-writing process. information and on which page. His fifth book, A Mind Unraveled, But documents aren’t a story will be published in October by – that comes from people who Ballantine Books. experience the events. For each In the 12th hour of our interview, of my books I have interviewed the former Enron executive at least 100 people, often for an described the morning he climbed exhausting number of hours. My out of bed and drove to the office sessions with Ken Lay, the late to face the unraveling of the energy Enron chairman, lasted more than giant. Responding to my question, 70 hours. Then the information is he said a digital alarm clock entered into the timeline, with each awakened him. that reads like a novel, but interview subject listed under a “What color were the clock’s the details that can simply be code name. digits?” I asked. imagined by a fiction author Ultimately, I stitch all of the He threw up his hands. “Why do all have to come from either an information in the timeline into you need to know that?” interview or a document. a first draft that can run to 2,000 To portray the kind of visual The main story emerges pages. Once that is finished, I image common in fiction, I often from hundreds of thousands of read it and often, for the first time, have to ask questions that can documents I obtain. An assistant discover what the book is about. seem absurdly detailed. What type I call “the document wrangler” Then I cut hundreds of pages to of sandwich did you eat? In which places all of the records in produce a final product that is rich pocket did you carry your wallet? chronological order, then sorts in detail, such as the color of alarm My goal is to write nonfiction them into hundreds of binders. clock digits. 16 b ru n s w i c k rev i ew · i s s u e 1 5 · 2 0 1 8
Former Enron chairman and CEO Ken Lay, center, and his attorney Mike Ramsey in 2006, about to enter a courthouse in Houston, Texas, for the second day of a trial on fraud and conspiracy charges against Mr. Lay. collateral, and rising doubts about the company’s accounting firm Arthur Anderson collapsed under financial integrity prompted its trading partners to the weight of an Enron-related obstruction-of- insist upon more and more onerous terms. Growing justice conviction that was reversed years after the counterparty distrust of Enron and its CFO forced closing of the firm. Mr. Lay to fire Mr. Fastow. Because that action came All the while, Mr. Palmer and his team continued only a day after Mr. Lay had publicly expressed running the Enron communications department. confidence in his CFO, the firing hardly calmed After Enron filed for bankruptcy protection in nerves, inside or outside the company. late 2001, Mr. Palmer’s communications staff got Then came the Wall Street Journal call asking Mr. slashed to seven from 27. Since August, that team Palmer about a partnership called Chewco. It turned had handled the resignations of the CEO and out that some of the structures Mr. Fastow and CFO, new president and CEO announcements, his co-conspirators had set up were being used to Sept. 11-related announcements, a $1.2 billion- disguise bad business decisions, create phony income charge against equity, news about Enron credit and funnel money to Mr. Fastow and other cronies. crunches and now bankruptcy, among other In the days, weeks and months that followed, big announcements. The remaining seven team Enron filed for bankruptcy protection, Mr. Lay members worked around the clock often without left both the board and then the company under going home, fielding as many as 400 calls a day. pressure from creditors, Congress ran rote show Mr. Palmer slept on a boardroom couch while hearings, and federal prosecutors investigated and another member of his team slept under her desk. PHOTOGRAPH: DAVE EINSEL/GETTY IMAGES then brought criminal charges against Messrs. He showered in the company gym and saw his wife, Fastow, Skilling and Lay, in addition to dozens Cozy, when she arrived to bring him fresh clothes. In of other Enron executives forced to plead guilty the last three months of that year, he lost 35 pounds. to crimes rather than risk defending themselves. Recruited to take charge of Enron a month How much Mr. Lay and Mr. Skilling knew about after its bankruptcy, turnaround specialist Steve Mr. Fastow’s crimes remains unclear, but both had Cooper encountered “the most catastrophic, most sold massive amounts of Enron stock ahead of the investigated, most chaotic scene you could imagine. company’s downfall, leading to zero objectivity Enron was being investigated by virtually every among potential jurors in the Houston area. The arm of the US government – the DOJ, SEC, FTC, b ru n s w i c k rev i ew · i s s u e 1 5 · 2 0 1 8 17
MARK PALMER Department of Energy – and sued by dozens of in Vietnam, describe the ways he and his fellow states’ attorneys general. It had all the elements that prisoners had stayed positive – by seeing how attracted massive scrutiny by the press.” long they could stay conscious during torture, by Fielding all that was Mr. Palmer. “He brought communicating with each other via a kind of Morse order and thoughtfulness and transparency to what Code, by memorizing the name and capture date of was a massive shitstorm,” says Mr. Cooper. every other prisoner, and honoring a system wherein The psychological toll on Mr. Palmer and his staff the longest held would be the first released. was tremendous. In a matter of weeks, the company In that way, Mr. Palmer turned the months-long they represented had gone from admired to reviled. slog into a kind of contest. He began to pride himself A typical experience for them was when Mr. Palmer on making sound decisions despite fatigue and learned that his daughter’s high-school journalism anxiety. Long accustomed to feeling pressure from teacher stood at the front of class and referred both his superiors and the media, he saw clearly now to all Enron executives as “criminals.” For years what he had known all along, that his only duty was accustomed to fielding requests from journalists to the truth, even if the truth was, “I don’t know.” competing to write front-page features, the team Tackling one phone call at a time, one day at a time, now faced a prosecutorial press that felt betrayed. he began to feel more than equal to the task. “In a As requests for information intensified, Mr. crisis like that, what matters is mindset – somehow Palmer and his team had little of it to give. Their maintaining a productive, positive mindset,” he says. first priority was to avoid giving bad information, Recalling his insistence that the company hire an which increasingly meant they had no information outside investigator, Mr. Palmer wishes he’d also to give at all. At one point, Securities and Exchange demanded that it hire a psychological consultant Commission Chairman Harvey Pitt became irate – ideally one with crisis expertise – to help his when he read in a news story that Mr. Palmer staff and others at Enron headquarters through declined to answer reporters’ questions on grounds the tumultuous weeks before and after Enron’s that Enron was being investigated by the SEC. bankruptcy. “Companies in a crisis hire workout “Harvey Pitt was furious, saying an SEC specialists, and they hire financial advisers, and all investigation should never be used as an excuse for of that’s vital, but the mindset of those advisers not telling the truth,” Mr. Palmer recalls. “But I wasn’t is action, action, action. That doesn’t address the hiding the truth. We simply didn’t know the truth.” problem of shame and anxiety and fatigue in a At times, Mr. Palmer wondered how long he and culture that used to feel proud, and wants to feel his staff could go on. Issuing one bad bit of news proud again,” he says. after another, amid a government investigation Mr. Palmer believes that a serious crisis can’t be that would put all of their previous work under a managed according to any pre-conceived playbook. spotlight, the communications staff was plagued But he believes it offers an enormous opportunity by fatigue, depression and anxiety. It didn’t help for leaders to negotiate the unforeseen in a way that that their retirement funds were stuffed with now- inspires and encourages employees, investors and worthless Enron stock. the media. Never is a leader more closely watched or Once, Mr. Palmer called his father to ask if he more widely heard than during a crisis, Mr. Palmer should quit. His father, the stalwart Naval aviator notes, adding that what all stakeholders seek from and former TWA captain, noted that no one was a leader at such moments is competence, diligence MARK PALMER shooting at him. “My father said, ‘I think you’re and honesty, especially honesty. Brunswick’s US Managing really good at what you do. If you stick it out, you’ll Mr. Palmer believes that his experience leading Partner, Mark Palmer probably learn a lot. You’ll probably be even better.’” during crisis gave him extraordinary insight into leads the firm's Dallas office. He has 30 years of For Mr. Palmer, a turning point came one day how to avoid or limit such debacles, and the key global experience in when his boss, Steve Kean, said, “You know what? At factor is honesty. Given the very human desire to corporate, crisis and litigation, and financial the end of the day, what we have to do is be proud please one’s boss, and given the boss’s very human transactions. Previously, of the way we conducted ourselves. We’ve got to be desire for positive reports, how can leaders create he was VP of corporate able to tell our grandchildren that we did the right a culture where their workforce isn’t afraid to tell communications and organizational things.” Inherent in that thought was the promise even the most unpleasant truths? “I got my Ph.D. in effectiveness at Sysco that this crisis would end. It wouldn’t last forever. that at Enron,” says Mr. Palmer. Corporation. From 1996 to Nothing does. Mr. Palmer remembered listening 2004, he served as kevin helliker is Editor-in-Chief of the Brunswick Enron’s managing director to a former squadron-mate of his father’s, a man Review. He is a Pulitzer Prize-winning journalist, who and senior vice president who had spent seven years as a prisoner of war spent nearly three decades at The Wall Street Journal. of global communications. 18 b ru n s w i c k rev i ew · i s s u e 1 5 · 2 0 1 8
YES Comment L itigants entering a courtroom, where their case will unfold before a judge or jury, are often accompanied by armies of lawyers wielding reams of briefs, boxes of exhibits, and sophisticated legal arguments. But outside the courtroom, these same litigants have traditionally been armed with nothing more than a terse “no comment.” (Research from Brunswick Insight, below, shows what stakeholders think of that response.) Certainly the stakes are high in both arenas. But while thousands of hours go into preparing for the outcome of a court case, the impact of that case on reputation has historically been an afterthought – or a matter on which litigants and their lawyers simply put their heads in the sand. Supporting a legal strategy with a communications plan targeting key stakeholders helps create a narrative that connects with them and frames the issues in a way that makes the legal arguments understandable, and perhaps even appealing. Communications outside the courtroom can be tricky, particularly when a company is fighting on multiple fronts and anything said in one forum can have implications in another. But time and again, we’ve seen that litigants who prioritize the outside world – with its echo chamber of 24-hour news and digital, user-led discussions – better weather the litigation storm. ellen moskowitz, a Partner, leads Brunswick’s US Litigation Practice. She is based in New York. PERCENT 75 When a company say “no comment” means a company is BRUNSWICK INSIGHT 59 says “no comment,” “more concerned with the bottom line on what people actually than doing what’s right” hear when you say 82 say “no comment” means a company “NO COMMENT” knows that answering the question will “damage the company’s reputation” 77 say “no comment” makes them PERCENT of “trust a company less” Americans hear that company 73 say “no comment” means a ILLUSTRATION: FRANZISKA BARCZYK saying they don’t company is “deliberately trying to hide have a legal This data was collected by brunswick something” insight in early March 2018 from a leg to stand on, nationally representative survey of 715 59 US adults. Brunswick Insight provides and are just critical-issues research for market- say “no comment” means a avoiding admitting moving decisions, and combines data- driven counsel with an emphasis on company “lacks strong leadership” guilt in public research and analysis. b ru n s w i c k rev i ew · i s s u e 1 5 · 2 0 1 8 19
S ince the start of his presidential campaign in June 2015, President Trump used apologetic language 20 times on Twitter. Thirteen of his tweets (65 percent) included terms that qualified the apology, like “if,” “however,” or “on the other hand.” The President isn’t alone in his approach. According to data analyzed by our team, over a 30-day period in early 2018, “sorry” or similarly apologetic words appeared 20.4 million times on Twitter – and in one out of every five instances, “sorry” was followed, either immediately or shortly afterward, by a single word that completely undermined it: “but.” Harriet Lerner, a best-selling author and clinical psychologist at Columbia University, believes there may be no worse word for apologizing. “‘But’ automatically cancels out an apology,” she wrote, “and nearly always introduces a criticism or excuse.” Its widespread use in tweeted apologies – more than 4 million times in that 30-day span – may explain why a Brunswick Insight survey found that while 80 percent of Americans expect the CEO to apologize for a company’s mistake, only 13 percent #SorryNotSorry contributed to actors being dropped from movies, CEOs departing the C-suite and politicians resigning their offices. Organizations endure, but often with a different leader at the helm. So what does a good apology on Twitter look like? believe that apology is entirely genuine. Even though It may seem easy Platitudes and legal jargon suggest a tweet was Twitter’s reach is small compared to its social for an executive written by a team rather than a leader, which makes media peers (Twitter has 330 million active users; or company to audiences understandably skeptical. The passive voice Facebook has 2.1 billion), the platform is designed tweet “I’m sorry.” – “mistakes were made” – or qualifying the apology for real-time conversation and is heavily weighted implies a leader is more interested in avoiding blame What to say with with influencers, policymakers and journalists, than fixing the problem. Plain writing, with a lot of making it the channel of choice for most corporate the remaining “I” and “me” pronouns, is a good place to start. communications in the aftermath of a mistake. But 271 characters Words matter, but behavior and authenticity with all of the trolls and traffic on Twitter, and with is the hard part. matter more. Like a good golf swing, there must be companies mishandling apologies and still reporting Brunswick’s follow-through. In 2015, Taylor Swift announced a strong earnings the following quarter, how much zack condry boycott of Apple Music over a one-month trial that does a well-worded apology on Twitter really matter? and sparky neglected to compensate the artists for that time Many of the benefits of a well-coordinated apology zivin report period. Eddy Cue, Apple’s SVP of Internet Software seem obvious but difficult to quantify: a stronger and Services, responded quickly in two tweets: The reputation, more credibility with stakeholders, or first said Apple would fix the problem, the second preventing a bad situation from being much worse. was to Taylor Swift directly, saying “we hear you.” sparky zivin, a Partner, A 2015 study conducted by the Korea Advanced Taylor Swift ended her boycott and, at the time of oversees Brunswick Institute of Science and Technology found timely, Insight’s Washington, DC this article, is still with Apple Music. ILLUSTRATION: MARK SMITH well-worded apologies on Twitter “reduced the level group, which provides Ms. Lerner writes that any apology should look critical issues research for of negative sentiment” surrounding a mistake – market-moving decisions. to convey: “Yeah, I get it; I screwed up. Your feelings better than the alternative, but not exactly inspiring. zack condry is a Director make sense, and I’m taking this seriously.” That’s a If large organizations seem to be able to weather on the digital team, and good template for executives to start with the next also based in Washington, an apologetic misstep, it’s often a different story DC. Additional reporting by time they need to tweet “I’m sorry.” Those two words for individuals. Couched, toothless apologies have riley back, an Executive. matter, but what comes after makes all the difference. 20 b ru n s w i c k rev i ew · i s s u e 1 5 · 2 0 1 8
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