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Is it possible to find a national media outlet that doesn’t feature at least one article about how generative AI is changing an industry, company work processes, or all of humanity?

Even if you read a specific trade publication you will find gen AI coverage: I’ve reviewed trades ranging from HR Brew to Mass Transit, Processing magazine (covers industrial processes), Publishers Weekly, Variety and Waste Management World—each is writing about industry companies racing to adapt ChatGPT, Copilot or a competitor chatbot.

I wondered how much of this tsunami of coverage was due to the hype driven by OpenAI, Nvidia, Microsoft, Google and other gen AI leaders. So I consulted one of the tech industry’s most reliable hype experts, Gartner Inc., which originated its Hype Cycle analysis back in 1995 and still deploys the tool. In August 2024 Gartner published its Hype Cycle for 2024 Emerging Technologies, including generative AI.

In a press release, Gartner noted that “Gen AI is over the Peak of Inflated Expectations, as business focus continues to shift from excitement around foundation models to use cases that drive ROI.” Gartner defines Peak of Inflated Expectations as: “Early publicity produces a number of success stories—often accompanied by scores of failures. Some companies take action; many do not.”

It is possible that gen AI will move into the next Hype Cycle category, which is the Trough of Disillusionment: “Interest wanes as experiments and implementations fail to deliver. Producers of the technology shake out or fail. Investments continue only if the surviving providers improve their products to the satisfaction of early adopters.”

Other IT industry leaders have recently commented on the hype surrounding gen AI. Andrew Ng, a pioneer in machine learning and AI (and co-founder of Coursera), was quoted by the fastforward tech newsletter, saying the following at an April AI conference where he was a speaker: “There’s a certain set of views that have been disproportionately amplified, such as how technology is so dangerous you could wipe out humanity, which I don’t think is true, but it makes them look more powerful.” He added: “The PR hype is disconnected from the business reality of progress. We frankly need to ignore most of the hype and just keep doing the work that creates value.”

So how much of the coverage about gen AI is hype as opposed to truly accurate reporting? That question becomes moot when you consider how much capital is being invested to develop gen AI and its infrastructure as companies expand product offerings via AI agents and other new capabilities. Microsoft, Meta Platforms, Amazon and Alphabet alone are expected by Wall Street to invest up to $340 billion (combined) in capital spending this year, much of that tied to AI investment (chips, software, building data centers, acquiring energy to run the centers). McKinsey recently projected that by 2030, data centers will require $6.7 trillion worldwide to keep pace with the demand for compute power.

Rarely in history has there been a technology/economic trend with this much impact across society. “Hype” inevitably has to be part of it. As Bill Gates said shortly after ChatGPT was launched in November 2022, “AI is as revolutionary as mobile phones and the Internet.”

Some PR jobs will surely be lost to gen AI chatbots, since chatbots can write pretty well (and create first-draft strategy plans, media lists, etc.), but far more jobs will be created to promote and differentiate the technology’s many products and benefits for nearly every industry. That can’t be bad for the PR industry.

Is anyone tired of the daily drumbeat of media coverage about ChatGPT and generative AI (685 million Google Search results as of this writing)? Just after the product launch late last year, Bill Gates declared this technology to be potentially more important than the creation of the Internet and smart phones. PR firms are, appropriately, racing to use the technology and burnish their AI credentials in this rapidly changing new world.

Generative AI may change the world, but what about saving it? For that, we will have to depend on “unexciting” electric utilities, described for decades in the investment world as “widow and orphan” stocks (meaning their shares offer slow, predictable growth with dividends and little risk).

In March, the Intergovernmental Panel on Climate Change issued its sobering sixth report that found at our current rate of carbon emissions, the planet could surpass the critical 1.5 degree Celsius temperature increase above pre-industrial levels by 2035, triggering more floods, heat waves and droughts, as well as causing more crop failures and wildfires. It was largely a one-day story. Who is going to save us from this potential catastrophe? Electric utilities.

We know all about electric cars (EVs); soon everyone will be plugging their cars, SUVs and small trucks into the utility grid. EVs represent only ten percent of cars sold in the U.S. so far, so their growth will require vastly more electricity from utilities. And what about buildings, which generate about eight percent of carbon emissions? Buildings, including homes, are turning to electricity to replace fossil fuels for heating and cooking. New York just banned all new buildings, starting in 2026, from being powered by fossil fuels, the first state to do so. Electric air taxis are coming soon (probably 2025) to transport people across and between cities. The electrification of everything is underway.

Utilities are rushing to transition from burning coal and natural gas to using renewable energy, but they can’t plug in every solar or wind farm immediately. Traditional utility grids were built to be powered by fossil fuels which provide steady power output. Renewable energy sources provide fluctuating power—which in some cases, causes grid destabilization and can lead to supply interruptions if not managed properly.

So here’s the surprise: The electric utility industry is innovating in multiple ways. New, smaller companies are providing advanced software and cloud services to help utilities better manage the power flow from renewable energy sources, which are expected to become the leading source of the world’s electricity by 2025.

Utility innovation is happening across borders. Quebec, for example, produces a huge amount of clean hydropower. Industry attempts were made in the 2010-2014 period to import some of that excess electricity to New England, but the plan for building massive transmission towers and lines was vetoed by New Hampshire residents, who understandably did not want to see their landscape tarnished. Late last year, a similar project started construction to bring Quebec hydropower to New York City but it will use underwater (Lake Champlain) and underground cables to bring the power south. That’s innovation.

Sure, it’s cool to promote AI chatbots that will change everything. But if you want to help save the planet, promote electric utilities. Saving the world is as important as changing it.

Andy Tannen

Salesforce is eliminating 8,000 employees; Google 12,000; Amazon 18,000; Goldman Sachs up to 3,200. Capital One is eliminating 1,100 people and asset manager/ESG leader BlackRock is cutting 500 jobs. Most economy and investment experts are predicting some level of recession later this year. For employees, 2023 may be a tense year, despite very low unemployment overall.

Where does stakeholder capitalism align with job cuts? In 2019, the Business Roundtable released its seminal Statement on the Purpose of a Corporation, which argued that key stakeholder groups including employees, customers, suppliers and communities were as important as shareholders and that the long-term interests of all stakeholders are inseparable.

Early last year, a study conducted by academics at Harvard Law School and Tel Aviv University seemed to contest that the stakeholder approach has truly been adopted by many companies. Called Stakeholder Capitalism in the Time of Covid, the study reviewed 100 public company acquisitions with $700 billion in value during the pandemic’s first 20 months. The study found that these deals “provided large gains for target shareholders and corporate leaders themselves. However, even though the pandemic heightened risks for stakeholders, corporate leaders negotiated little or no stakeholder protections.”

In conducting the study, the professors reviewed press releases, conference call transcripts, investor and analyst presentations and media coverage of the deals and found that the acquisitions “were often expected to be followed by cost-cutting, closing or relocations of facilities and offices, and risks to continued employment of some employees.” Despite that, the study found that “corporate leaders generally didn’t bargain for employee protections, including any compensation to employees that would be fired after the acquisition. And corporate leaders also didn’t negotiate for any protections to customers, suppliers, communities, the environment or other stakeholders.”

In summarizing their study, the professors wrote: “Those who are concerned about the effect of corporations on, say, climate change or employees should not harbor illusory hopes that corporate leaders will address such effects on their own; they should instead focus on obtaining government interventions (such as a carbon tax or employee-protecting policies.)”

From my perspective working with CEOs, that conclusion is too harsh. Many CEOs are doing everything they can to improve their company’s sustainability performance in the wake of climate change, and they are working with their boards and C-suites to improve their company cultures, including providing more flexibility, more paid time off for employee maternity/paternity leaves and other benefits. And many corporate leaders are working to ensure that diversity, equity and inclusion is “built in” as an ongoing critical company priority.

But at the end of the day (well, year), public company CEO jobs and compensation depend on delivering earnings and share price growth. And while the stakeholder capitalism “movement” arguably provides benefits to multiple stakeholders and the broader society, shareholders, especially in tough economic times, take priority over the other stakeholders. As CEO Satya Nadella wrote to Microsoft employees when announcing that 10,000 employees were losing their jobs, this action was needed “to align our cost structure with our revenue and where we see customer demand.”

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Andy Tannen is president of Tannen Corporate Communications, a corporate reputation consultancy. Previously, he worked in corporate communications at Publicis Groupe’s MSL for 28 years, with clients such as IBM, United Technologies, Roche, Honeywell, BP and many other companies.

https://www.odwyerpr.com/story/public/19076/2023-01-24/stakeholder-capitalism-vs-job-cuts.html

Andy Tannen

While digitization may have changed almost everything in the PR industry since the popularization of the World Wide Web in the 1990s, there’s one exception: the op-ed.

The op-ed column, which first appeared on its own page under that name in the New York Times on September 21, 1970, has, if anything, become more important than ever—largely by staying the same (even if the Times replaced the term op-ed with “guest essay” last year in its online Opinion section).

Digitization has brought such changes as allowing many op-eds to display posted comments in real-time. It also enables 600 million blogs to express opinions on the web and in millions of daily LinkedIn posts. Yet the prestige of thought leadership that comes with writing an op-ed for a major news outlet has not been diminished by the digital world.

How many times does an influential electronic media outlet base an interview on a just-published op-ed? I have heard reporters on CNBC’s Squawk Box and multiple reporters on Bloomberg Radio and TV promote an upcoming executive interview because a guest penned an op-ed in a major daily that morning. The op-ed is, at times, the news hook.

Former president Trump turned an op-ed into front-page news when, in 2018, someone reportedly in his administration anonymously published a critical column in the New York Times that called Mr. Trump “impetuous, adversarial, petty and ineffective.” The President angrily demanded to know who wrote it but could not find out until 2020, when his Homeland Security chief of staff, Miles Taylor, took credit after resigning.

Also, in 2018, researchers at Yale University conducted a study which determined that op-ed columns result in long-lasting impact on people’s views among both the general public and policy experts. That study, published in the Quarterly Journal of Political Science, found that op-eds swayed the opinions of both Republicans and Democrats in roughly equal percentages. According to Alexander Coppock, assistant professor of political science at Yale and the study’s lead author, “We found that op-ed pieces have a lasting effect on people’s views regardless of their political affiliation or their initial stance on an issue.”

Since 1970, op-eds have always been important to clients working to build or sustain their corporate reputation. Nearly every new client I have talked to throughout my 44-year PR career has asked about developing an op-ed for their CEO aimed at the Wall Street Journal, New York Times, Washington Post or Financial Times. I always tell them the reality is that very few op-eds in those top-tier news outlets are from CEOs, but rather from elected representatives (even the president), government officials, professors, economists, money managers or think tank leaders. It also helps to have a well-reviewed new book just published. And many published op-eds are commissioned by the opinion editors, not pitched over the transom by a PR person.

It’s hopeful to see that after all these decades, the op-ed is more than holding its own. It remains a major part of the foundation of the print/online news media and shows no signs of getting “old.” Keep them in your media plan.

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Andy Tannen is president of Tannen Corporate Communications, a corporate reputation consultancy. Previously, he worked in corporate communications at Publicis Groupe’s MSL for 28 years, with clients such as IBM, United Technologies, Roche, Honeywell, BP and many other companies.

Article written by Andy Tannen, subscription may be required.

Many aspects of business changed in 2020; I am not wise enough to know how long these changes will last, especially given the possibility that the pandemic will be sharply reduced by the end of 2021 due to the vaccines. In terms of corporate reputation management, here’s what I think will be significant in 2021:

First, some drivers of reputation won’t change. Despite the Business Roundtable’s 2019 pivot to a stakeholder model, shareholders will remain a critically important audience in 2021 and well beyond. Consider how the financial performance of Zoom and Tesla in 2020 impacted their reputation (and yes, it’s arguable that both add a lot of social and business value via their products). In early September, Zoom’s valuation surpassed that of GM, Ford and Boeing.

Or look at what the impact of developing the first Covid vaccines did for Pfizer and Moderna’s share price and reputation. My guess is the success of the vaccines has also resulted in a flood of younger job candidates who want to join companies that are having such a positive impact on global healthcare. That’s one of the powers of a strong reputation.

It’s way too early to come to a conclusion about how the “rise” of the Reddit investors will play out, especially versus hedge fund and other institutional investors (at least for me to draw conclusions, beyond that they will be players generating media attention).

Shareholders will continue to be a, if not the, major audience for building corporate reputation in our economic system, at least for public companies.

Second, companies will need to pay more attention to the health of their employees, and that includes mental health. This was a growing trend even before the pandemic, but now, companies must make providing support and services to employees under pandemic/WFH stress or just normal business stress (post-pandemic) a top priority, if they want to build a strong reputation and win the war for top talent.

An emphasis on health is much more than having a meditation day once a month; it will include retraining of senior managers to be able to see the importance of and help provide a balanced and flexible work environment for their employees. How companies treat working mothers/fathers (and all employees) will be a significant KPI that will factor into corporate reputation rankings.

Third is the increasing importance of inclusion: Besides the pandemic itself, the widespread and emotional reaction to the killing of George Floyd and other Blacks has put DEI (diversity, equity and inclusion) front and center in the evaluation of corporate reputation. Following the killings, hundreds of companies issued statements about their support for DEI, and many made donations to Black Lives Matter, the NAACP and other organizations that fight racism and its economic and societal impact (Fortune 1000 companies pledged $66 billion for racial equity initiatives, according to McKinsey).

Big banks made the largest public commitments of funds, and more important, are using their economic connections to communities to support organizations that will help strengthen minority-owned small businesses with new loan programs and fund organizations that help increase health services and improve schools and housing. With more than $1 billion each from Bank of America and Citibank, and more than $30 billion from JP Morgan Chase, over time, these investments should make real economic progress in the recipient communities.

For large companies, there is more pressure than ever before to be able to measure DEI progress, and that will be based on increasing the numbers of diverse employees, including in top management and at the board of directors levels (a version of the California law mandating women on boards may be adopted by other states).

Fourth, purpose will continue its growth in importance as more consumer purchasing decisions are made based upon choosing the more responsible product and/or company among options (one factor in Tesla’s rapid growth and GM’s commitment to electric vehicles).

A major “component” of purpose obviously will continue to be climate change. Investors are using various ESG screens to make decisions about companies as investments based on their strategies for combatting climate change, including reviewing the risk involved in their business models if they don’t make changes to reduce their carbon footprints. With the Biden administration’s focus on fighting climate change, expect to see more companies communicating to stakeholders the steps they are taking to move in the direction of carbon neutrality.

In 2021, intangible assets like purpose (including inclusion and ESG actions), will continue to grow in importance as factors impacting corporate reputation. But, for public companies and companies considering going public, financial performance will remain at or near the top of the list of corporate reputation drivers. However, who could have predicted the attack on the Capitol on Jan. 6 or the February deep freeze across Texas that left millions without power and water? The only thing I am certain of is that no one can predict how this year will evolve. But, it’s got to be better than 2020.

For at least four decades, American business media outlets have worshipped billionaires, especially tech geniuses who make it big with their companies and disrupt older, traditional industries (but, also non-tech billionaires like Warren Buffett).  And they have also highlighted top performing sports and movies stars earning huge amounts of income (Billionaire lists, Most Powerful lists, Top CEO lists, top paid entertainers/sports stars abound in business media).

No public worship of health care workers/nurses, doctors (unless they created a company that is successful) teachers, people who work at industrial plants that process food, delivery service workers, restaurant workers, grocery store workers, subway and bus workers, sanitation workers, nursing home workers and so on.  All largely ignored by business (and general) media because there was no interest in reading their stories among readers/viewers.

Covid-19 has unmasked this “star” focus and shifted the media spotlight to forgotten groups of workers who have all along contributed greatly to our economy and society, but have been ignored because they don’t generate clicks/ad campaigns, high stock prices or large attendance at stadiums, or large audiences on TV/digital streaming services. I never thought I would see a story in the New York Times business section about soup and can manufacturers, but there it was in early May, mentioning places like Hannibal, Missouri, Rolling Meadows, IL and Nichols, NY, hardly bastions of technology start-ups (but I’d bet you they are using some very advanced technologies to make those products).  Why the story? Because average people are stocking up on soup and other canned foods during the pandemic.

In a tragedy that will probably end up with close to 100,000 deaths in 4-5 months, more than all the Americans who died in Vietnam over a decade of war, it’s a positive development that the media and public are reconsidering who is important in American society.  I don’t foresee business media, post-Covid, creating lists of the top hospital workers in the U.S., or top restaurant workers, or top teachers.  Or top mothers and fathers taking on home schooling of their kids, for that matter.  That’s not really the media’s job (especially not the business media).  But it’s sure nice to think that maybe there is a great reconsideration of how these long-ignored people do contribute mightily to our economy and society.

So, on Fridays at 7 p.m., keep banging those pots and pans for our healthcare workers.  They more than deserve it.  And maybe we should add other nights for other long-ignored employee groups that play a key role in the economy and our lives.

 

 

To coincide with its 50^th anniversary, the World Economic Forum posted in December 2019 its Davos Manifesto 2020, a set of ethical principles to guide companies in the age of the Fourth Industrial Revolution (the digital age).  The Manifesto holds that “the purpose of a company is to engage all its stakeholders in shared and sustained value creation.  In creating such value, a company serves not only its shareholders, but all of its stakeholders – employees, customers, suppliers, local communities and society at large.”  Sound familiar?

Back in August 2019, the Business Roundtable announced its revised “Statement on the Purpose of a Corporation.”  By broadening the stakeholder priorities from a shareholder-only focus (the 1997 BR Statement) to include employees, customers and communities, something many large companies were already doing, BRT generated a torrent of publicity, some positive (Andrew Ross Sorkin), some pretty skeptical (The Economist cover story, several Harvard Business Review articles, a Wall Street Journal op-ed, etc.)

The gist of the Statement is five commitments, signed by CEOs of 181 companies, including GM, IBM, J&J, JP Morgan and the other 177 (including Boeing):

• Delivering value to our customers
• Investing in our employees
• Dealing fairly and ethically with our suppliers
• Supporting the communities in which we work
• Generating long-term value for shareholders

The Statement included this sentence: “We believe the free-market system is the best means of generating good jobs, a strong and sustainable economy, innovation, a healthy environment, and economic opportunity for all.”  Who could argue with that?

In the media coverage, the question often raised was:  Will this really change anything in terms of corporate behavior? It’s a good question.

So, when public companies hit a rough financial performance patch, might they tell shareholders they are holding off on staff reductions because they have made a commitment to employees?

It’s also curious that shareholders were listed last in the Statement’s list of stakeholders. 

From the Business Roundtable’s August press release:

“This new statement better reflects the way corporations can and should operate today,” added Alex Gorsky, Chairman of the Board and Chief Executive Officer of Johnson & Johnson and Chair of the Business Roundtable Corporate Governance Committee. “It affirms the essential role corporations can play in improving our society when CEOs are truly committed to meeting the needs of all stakeholders.”

We shall see if anything’s changed, especially during earnings seasons, in the coming years. 

The process of corporate reputation management continues to change rapidly, driven by digital technology, economics, politics and values of newer generations in the workforce.  One of the largest shifts in managing corporate reputation has been the increased focus on so-called intangible corporate assets (those that can’t be quantified on a balance sheet), especially talent and corporate social responsibility, now described as “purpose.”

If you were around the business, as I was, in the 1980s and 1990s, you know that among the components of corporate reputation, financial performance functioned as the primary factor in determining how public companies were evaluated and ranked.  Companies that generated consistent growth and profits were ranked highest in most reputational rankings.  When they hit the financial skids, they quickly dropped in the rankings.

In those days, talent/quality of workforce, and citizenship/corporate responsibility were considered “soft” reputational components.  Then the Great Recession struck.  Beyond massive layoffs generating an unemployment rate of more than 10 percent at its peak, the Great Recession forced boards and C-suites to recognize that their employees actually were critical to business success.   Hence, employee communications emerged as a key component of corporate communications (to keep employees “engaged” with their jobs and management’s business strategy).

The other mega-change following the recession, was the rise of the Millennial generation in the workforce (now about 35 percent), which brought into play different values that were, in my view, influenced by two factors:  The recession’s impact, and their experience with critical environmental and societal issues like climate change and inequality in how racial minorities and gender majorities are treated (attitudes fueled by social media discussions).  Their trust in institutions was eroded and their collective viewpoint (to the extent there is one) evolved to one where companies must not only generate profits, but, more important, should deliver a purpose beneficial to society at large.  Millennials would select the companies they worked for at least partially based on the social purpose the companies represent.

In terms of recognition of its impact on corporate reputation, purpose took a giant step forward when Larry Fink, the CEO of Blackrock, the world’s largest asset management company, singled it out in his 2018 annual letter to the CEOs of companies Blackrock invests in (his viewpoint became a cover story in Barron’s, for example).

He elaborated on purpose in his 2019 letter: “Profits are in no way inconsistent with purpose – in fact, profits and purpose are inextricably linked.”  He noted: “Purpose unifies management, employees and communities.  It drives ethical behavior and creates an essential check on actions that go against the best interests of stakeholders.  Purpose guides culture, provides a framework for consistent decision-making, and, ultimately, helps sustain long-term financial returns for the shareholders of your company.”

Or, as Mark Benioff, founder of cloud giant Salesforce has stated: “The business of business is to improve the state of the world.”

So, purpose has a business function that is increasingly recognized by the broader investment community.  The next step in the investment community is to develop a common methodology to measure the “impact” in so-called “impact investments” (investments with a socially beneficial purpose beyond making money).  Among others, U2’s Bono (as the investor!) and private equity giant TPG are attempting to do that through their Y Analytics venture, while hedge fund manager Paul Tudor Jones previously launched nonprofit Just Capital to rank U.S. companies based on the social value they provide in the JUST 500 index.  S&P Dow Jones Indices recently announced the launch of The S&P 500 ESG (Environmental, Social, Governance) Index to integrate those criteria into the performance of the S&P 500 companies.

Welcome to the new world of corporate reputation management, where change is part of the oxygen we breath each day!  More on this in the future.