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Wielding Influence
By Michael Alan Hamlin
October 11,2004
When Microsoft came under scrutiny
of the Justice Department and Congressional investigators in the
late 1990s, it demonstrated just how dangerous it is to ignore the
role of corporate communications in building goodwill for corporate
brands. With virtually no lobby influence on Capital Hill, one of
the world's most important companies - and the wealthiest man in
the United States - was left virtually "voiceless." This
quickly proved to be a very serious predicament on several levels.
As one Microsoft employee, Jacob Weisberg wrote, "A few months
ago, everyone I met seemed to think that working for Microsoft was
a pretty cool thing to do. Now, strangers treat us like we work
for Philip Morris.
"Ironically," he moaned,
"one of the charges leveled against Microsoft of late is that
the company has sinned by not playing the Washington influence game
forcefully enough. Only now, the analysis goes, is Bill G. realizing
the mistake in neglecting to hire lobbyists, dole out huge campaign
contributions, and so on. The theme of a recent front-page story
in the New York Times was that the failure to flex political muscle
demonstrates an arrogance and stubbornness for which Microsoft is
now paying the price."
Weisberg went on to note that at
the time Microsoft had just three lobbyists in Washington D.C. compared
to 50 full-time representatives for troubled AT&T. AT&T
gave US$1.25 million in political contributions in the "last
election cycle" compared to US$43,500 for Microsoft. And Weisberg
felt that was something to be proud of: "You haven't tried
to corrupt the democratic process by handing out wads of cash,"
he said naively. Unfortunately, not playing the spin game made the
company an easy target for seasoned PR operatives representing Microsoft
competitors. Microsoft eventually caught on and "increased
its contributions to federal candidates more than five fold."
Given that a then-Democratic Justice Department was the manifestation
of Microsoft's travails, it was not surprising that the targets
of the company's new-found generosity were almost exclusively in
the Republican fold. "In the 1991-92 election cycle, 79 percent
of Microsoft's money went to Democrats; in the current cycle, 67
percent has gone to the GOP." That ratio has strengthened in
favor of Republicans in the 2004 elections, according to sources.
According to CIO magazine, Microsoft
spent $11.1 million in 2003 on political lobbying last year. It's
not alone. "IBM spent $6.7 million, Oracle $2.1 million, Sun
$1.6 million and Cisco $645,200. Recently, The Hill, a Washington
insider publication, named Jack Krumholtz, Microsoft's managing
director of federal government affairs and associate general counsel,
one of the top corporate lobbyists in the country, and called Microsoft
"a lobbying powerhouse."
Companies in the Philippines and
Asia in general likewise need to rethink often tired, traditional
ideas of PR. Failure to build goodwill among political and consumer
constituencies can leave a corporation helpless in a crisis. On
the other hand, investing in goodwill today can help assure support,
and influence, when it's most important. Is there a difference,
though, in political lobbying and political influence peddling?
The cynical view is that the difference
between the crony capitalism of the Asian miracle years and the
democratic capitalism of The New Asia is that political bribery
will increasingly be not just legal, but transparent. It will be
legal because constituents are increasingly unforgiving of covert
political corruption, yet politicians still have to run expensive
communications campaigns themselves to be elected. This is just
one of the many prices of democracy. The less cynical perspective
is that lobbyists seek to legitimately influence the thinking of
legislators on behalf of corporate taxpayers, which also generate
employment. And then they work to publicize the work of these legislators,
and its impact on corporations, their growth, and the jobs they
create.
Practitioners - lobbyists, agencies,
consultants - often prefer the term corporate communications to
describe their work, although the terminology is less well understood,
over public relations for two reasons. First, public relations is
a narrow definition of corporate communicating. It is an important
but relatively small, in most cases, part of the corporate communications
function: getting good press. Second, corporate communications is
a professional undertaking: there are ethical standards, best practices,
and credentials.
Ultimately, corporate communications
should reconcile distinctions between corporate identity and reputation.
Corporate identity is an internal perception: what the company's
internal stakeholders think of their organization. A company in
which obvious distinctions exist between what top management and
employees, for example, think of the organization means that the
organization is schizophrenic.
Reputation is how external publics
view the company. Problems arise when there are differences in how
the company and the public view the organization. If a company doesn't
understand how it is perceived, it may misread the extent of frustration
or anger key constituencies feel toward the company. That's what
happened to Microsoft. While it is one of America's most widely
admired corporations, it was vulnerable among a key constituency:
A Congress heavily lobbied by its most serious competitors. But
it won't make that mistake twice.
(Michael Alan Hamlin is the managing director
of consultancy TeamAsia and the author of three books on Asian economies
and companies. His latest book is Marketing Asian Places,
of which he is a co-author (Wiley, 2001), and he is currently
at work on High Visibility: The Making and Marketing of Asian
Professionals into Celebrities. Write him at mahamlin@teamasia.com.).
Copyright © 2004 Michael Alan Hamlin. All Rights
Reserved.
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