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Judith Cushman & Associates Retained Executive Search in Communications Judy Cushman's Blog |
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The Cushman Report To subscribe to the email version of The Cushman Report, please send a note to info@jc-a.com with "subscribe" in the Subject line. Click here to view past editions. The Cushman Report Breaking News, Trends and Information about the Communications Marketplace September/October 2001
This newsletter
is being distributed as we return to our jobs and begin to resume normal
work schedules. The tragedy of September 11th is of a proportion and
scale that is almost beyond our grasp. My sympathies go out to those who
have been personally touched by this horrific act of terrorism.
This issue is
about the impact that the economic downturn has had on our industry. I
talk about the reasons why so many agencies were caught in a storm that
overwhelmed them. There is also a trend, just happening, for major
companies to seek communications leadership that can address the issue
of how to maintain credibility in a down market.
Also, the
biotech/pharmaceutical industry is at a critical time as policy debates
require thoughtful and clear responses to national concerns. It is a
moment for strategic communications initiatives.
The other topics relate to the Tech 2002 Conference in Seattle
next March 3rd and 4th and COMDEX.
For our Pacific
Northwest subscribers, Judith Cushman & Associates has been retained
by a respected financial services corporation, based in the Puget Sound
region, to fill a media relations manager post.
Details are
posted at the end of this newsletter, along with a list of job
opportunities. Judy BIOTECH/PHARMA -- A CRITICAL TIME I am writing this newsletter as concern about the economy escalates to a story the national media is covering almost daily. We have been experiencing the downturn since the year began. For economic as well as psychological reasons (in my opinion) the fall months, especially October are sluggish. The biggest market downslides seem to occur during this time. It does not mean there won’t be a recovery as we move on from reports about corporate retrenchments and a decline in consumer confidence. However, the volume of reporting reaching the consumer now is about what will happen if spending in this sector declines and pushes us into recession. That by itself has a negative impact. I am setting my expectations for continuing adjustments and a slow and hopefully realistic rebound as we move into the first quarter of 2002. Here’s how I see the impact on our business. As the technology sector (start-ups and young companies first and then major players) was caught by surprise early in the year by the market decline, PR counseling firms took a beating. While diversified agencies with consumer product, issues, crisis communications as well as tech clients were better positioned to remain on an even keel, the specialized firms have been severely impacted. The change in market dynamics was too dramatic, too swift and too overpowering to allow for planning and redirection. I attended a presentation where the head of a venture firm, an executive who once led a start-up that rose to a valuation of over $500 million dollars and then fell back to just over $25 million, talked about how the company was doomed. His investors and market forces pushed for growth and market share at the expense of moderate growth and profitability. The company was being propelled by a tidal wave that was impossible to fight. When the market cooled and the influx of cash declined precipitously, the company could not sustain itself on the revenue stream generated by operations. It was simply a model that was not viable. Had traditional business practices prevailed, the company could have survived but on a much smaller scale. Moderate growth was unacceptable behavior in those times. That is my point about the impact the market turn has had on firms specialized in meeting the needs of an overheated market. The pressure was too great to resist. Even knowing the inherent dangers of focusing on providing narrowly defined services to a specific category, the siren song of big fees and new business opportunities was too beguiling. For young high tech firms, marketing support PR was all they had known since the only battle to fight was helping clients win a growing slice of their market. Their world was, in retrospect, too narrow to prosper (and in some cases survive) when the need drastically diminished or shifted away from product PR. These firms lacked the experience and world view to understand their vulnerability as the market took them down what appeared to be a never-ending path of prosperity. Hopefully, as the economy recovers, this expertise will be needed in healthy doses (with significant budgets allocated to programs) as companies again seek creative solutions to winning market share. After all, supporting marketing initiatives has been the bread and butter of the PR business. If those needs do not materialize at a sufficiently strong level, we will see the demise of firms that once occupied industry-leading positions. During boom times there was not a moment-- when coping with the challenges of growth, staffing and meeting client expectations (while chronically lacking adequate headcount)-- to anticipate a downturn. It was impossible to think strategically about investing in new practice areas or new corporate functions. Moreover, senior managers controlling the allocation of resources simply wouldn’t support those initiatives when there seemed to be no immediate reason for expertise beyond supporting marketing campaigns. These dynamics put an entire segment of PR professionals at risk—forces that many could not anticipate or even conceive of happening. It is too soon to know if a category of previously overpaid, agency or corporate communicators with 5-years or (or less) experience will find themselves virtually unwanted at their current compensation levels. Considering that the last 24-months have seen severe turnover and that career tracks lack both substance and a record of achievement, these “juniors” can point to perhaps three valuable years out of five. Recognizing these issues and being realistic about their worth on the market are critical if a PR Manager, an agency Senior/AE or Supervisor wish to find work. In the midst of this market scramble, I am watching an important trend develop. Focusing on the challenges of communicating during a down market requires a different category of professional than is traditionally hired in a young, technology (or start-up) company. In a growing economy, highly energized, smart young (with 15-years experience or less) Directors and Vice Presidents can, practically speaking, pick and choose their employers.
Heads of both large (one Billion +) and young,
smaller companies (100 million +) seek drive, raw intelligence, energy
and enthusiasm to lead the communications department. Surrounded by
forward thinking and aggressive officers, the communications manager
lives and breathes deadlines, windows of market opportunity and
competitive pressure. Doing is better than not doing. Tactics and
planning around “winning” are what is meant by “strategic.”
Everyone in a senior leadership role can consider him/herself qualified
to contribute to the PR/Marcom program. This is not an environment for careful contemplation nor is there a need to examine the ramifications of difficult “no win” announcements. In short, in prosperous times it is far easier to make good decisions where raw intelligence overcomes a lack of experience and only a sketchy understanding of the long-term consequences of corporate behavior. In difficult times preserving the brand and reputation of a company—maintaining trust—become extremely important. These are actually company assets which require looking at “investment” decisions, versus near term gain. Making decisions about positioning a company become far more painful and difficult. Brilliant PR and marketing competitors who know how to “win” during good times, can find themselves unprepared to help chief executives make critical decisions during downturns. Ironically, this is the time when those senior officers will listen to strategic advice since they are constitutionally not prepared to deliver disappointing news. Their instincts have been honed on success, not damage control and they need advice. It is their head on the chopping block. When the Wall Street Journal calls, that story can make or break the reputation of the CEO with the board, investors, customers and employees. The senior leadership team may be equally at a loss, in many cases, to deal with issues the media, investors, employees and customers want addressed.
The trend I am beginning to see is that
corporations occupying industry-leading positions are hiring in a new
level of communications professional. They are not seeking the
fair-haired up and comer. Instead, the ideal candidate has significant
experience--25+ years in a “major league” company. The position is
at the Vice President level above the team that is in place. The veteran
the CEO wishes to bring on board must be someone s/he trusts to lead him
through a time when instinct does not tell him how to work with the
media (his external constituencies, including investors) and employees.
This is not a time for a misstep since the margin
for correction is so slim. Nor is this the moment for senior management
to second guess the communications leader who has been through this
cycle more than once and had a series of trials by fire to draw upon. A
full range of experience in all the communications disciplines is
critical.
Unlike good times when the main focus is marketing
PR (including Investor Relations), the job is now far more complex.
Coordinating messages with employees, the community, customers,
the media, shareholders, legislators/elected officials to report losses,
layoffs and plans for restructuring becomes a management challenge. The
head of communications must be experienced in orchestrating an array of
corporate resources and bringing consensus to teams. The CEO requires a
seasoned communications leader with the strength of his/her convictions
to participate as key policy decisions are being made. This talent can
be found in mature companies that have survived these economic
jolts—more a Northeast phenomenon.
Since this is a new development, it is too soon to
know what impact these hires will have on corporate departments. It will
probably result in finding staff to meet new initiatives, with broader
experience in a variety of disciplines. Since headcounts are being
scrutinized, this does not mean departments will grow, but I expect
departments will be reorganized.
From an agency perspective, firms offering counsel
in crisis communications, Public Affairs and reputation/brand building
are now more relevant to senior leadership and may be in an excellent
position to win business. High tech firms, with resources within the
family of companies owned by its parent, may find partnering with sister
companies a viable strategy. For agencies with a marketing PR focus, I
expect there is always work in this category, but the playing field has
shifted. The most significant game, for the time being, is in the area
of crisis communication and issues management for companies that are
struggling. BIOTECH/PHARMA - A CRITICAL TIME From the late, lamented “Industry Standard” of July 9-18th in a brief article titled, “Mining the Genome” comes this commentary.
“While hundreds of demonstrators outside the
annual Biotechnology Industry Organization conference protested cloning
and genetically engineered crops, the talk inside focused on making
sense of the 3 billion chemical bases that form the genome. The sheer
volume of genetic data and its variability – from three-dimensional
protein structures to one-dimensional gene sequences – has left
scientists struggling to transform the wealth of information into
marketable products. While conference-goers focused on outpacing
competitors and pleasing investors, the protests on the streets of San
Diego served as reminder that exploiting advances in biotechnology may
depend as much on overcoming public concerns as on building
bio-supercomputers.”
Cloning, stem cell research, genetically engineered
food, privacy issues (DNA testing for health and insurance risks) are on
the national agenda. Activists are now stepping forward to seize media
attention. We are at a
critical moment in setting national policy that touches all of our
lives. This is a seminal time for the biotech/pharmaceutical industry
and if the response is reactive and unfocused, its agenda and viewpoint
may be drowned out by the
din of protesters.
The parallel is chillingly close to the
environmental protests that took the natural resources industry by
surprise. The industry underestimated national concerns and felt the
accusations against forest products companies were unfounded. The
industry is living with the consequences of not taking the movement
seriously. I have heard so many Public Affairs executives with forest
products companies say that when the movement began it was critical to
put forth the industry viewpoint and not let the opposition set the
agenda. Once lost, the industry could never gain the offensive and has
suffered the consequences.
The biotech/pharma industry provides a wealth of
opportunities for strategic communications. How can the industry find an
effective voice to present a reasoned, well thought-out viewpoint? Where
are the resources? What companies/institutions are in a position to step
forward.
Meanwhile for biotech startups or newly public
companies, the questions are about survival--taking the company public,
raising sufficient capital and maintaining the relationships with
analysts and investors. These companies are in no position to devote
scarce resources to national policy questions, yet they must be drawn
into the debate. I can see protesters claiming the “big
corporations” are in it for the profits. However, that image vanishes
if small, scrappy companies with committed leadership and life-saving
products in development become spokespersons for specific issues.
Please send me your comments on this issue and what
you believe the implications are for IR/Communications professionals. TECH 2002 CONFERENCE, MARCH 3rd AND 4th
As I have written in my last newsletter, the Tech
2002 Conference sponsored by the National Technology Section of PRSA
(the Public Relations Society of America) will be held at the downtown
Seattle Sheraton. It is scheduled to begin noon on Sunday, March 3rd
and continue with a late (optional) evening out on Monday the 4th.
We are working out details and should have them within just a few weeks.
They will be posted on the Tech Section Web site and I will post a page
on my site as well.
We have formed a programming committee and are
soliciting ideas for each of four tracks on Monday and two (perhaps a
third seminar) on Sunday. Here is the direction we are taking.
In addition we are working with
Seattle Public Schools to look at forming alliances with School Public
Affairs professionals to enhance learning, to examine how technology
creates new communications challenges, and to present a case study
about the role of Public Affairs as a strategic contributor in public
education.
As you know, this economy has
impacted the executive search business and we are on hold with most of
our technology clients. Every
year I create a COMDEX party list listing social and special events of
interest to the media and the PR community. I bring thousands of
copies to the show and post it on my site in a special COMDEX section.
The cost to produce the list in all previous years has been absorbed
by my clients. I am hoping create the list and attend the show. In
order to continue this effort, I wonder if there are companies who
wish to become sponsors and reach 6500 newsletter subscribers (with a
pre-COMDEX report), be listed on the web site as well as on the party
list which is picked up by thousands of press.
I’ll look forward to hearing from any interested potential
sponsors. |
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Judith Cushman & Associates 15600 NE 8th St., Suite B1, PMB 178, Bellevue, WA 98008 s (425) 392-8660 Fax (425) 746-8629jcushman@jc-a.com s www.jc-a.com The Judith Cushman & Associates web team would appreciate feedback concerning this site. Please e-mail your comments, questions and suggestions to heathers@jc-a.com. |
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