Failure to Communicate
I was walking in Central Park yesterday as part of my rehabilitation from surgery when the news flashed across WSJ.com that the US House of Representatives had rejected the proposed $700 billion fund to provide liquidity to the struggling capital markets. Quoting the prison warden in Cool Hand Luke as he stands over defiant inmate Paul Newman, there has been a massive failure to communicate. Here are some of the shortcomings in PR on the part of the Federal Government:
1) Supporting Cast of Spokespeople — It is no longer possible for a single voice, such as Secretary of Treasury Paulson, to carry the day. Nor is it sufficient to have behind the scenes lobbying to make the case (now the outside game and the inside game).Where were the important figures in the business community (Warren Buffett, Steve Jobs) who could provide necessary backing for the plan? How about using trusted figures from government who have provided distinguished service in the past (Paul Volcker, Bill Clinton), to offset the broadsides of former Speaker Newt Gingrich?
2) Terminology—The very word bailout connotes an unseemly subsidy for the beneficiary. It became too easy to make this about saving the Wall Street millionaires who had abused the system.
3) Message Dissonance—-From Optimism to Precipice—CEOs of major financial institutions, such as Bob Steel of Wachovia, were telling a very positive story while President Bush warned of the apocalypse. Which is it, folks? Can we rely solely on private sector solutions, such as the shotgun marriages of WaMu with JP Morgan Chase or Wachovia with Citigroup?
4) Person Like Me—There was no story line for the Little Guy. Why not put forward the Dean of Admissions at University of Michigan who can talk about availability of student loans? Or the car dealer in Alabama who can again offer attractive financing on new vehicle sales? Or the small retailer from Texas who is able to find financing for her inventory for Christmas, courtesy of this liquidity package?
5) Acknowledgement of Error—When asking for the money, it would have been helpful to have a study from a credible third party (university, think tank, consulting firm) identifying shortcomings in regulatory format and proposed improvements. Similarly the financial industry must acknowledge its own part in the meltdown, suggesting improvements in self-regulation such hiring of an ombudsman or strengthening industry trade group standards.
6) Specificity—The initial plan proposed by Secretary Paulson did not have sufficient details on how mortgages were to be acquired (price, auction or other mechanism, which tranches, special treatment of low-income groups). Though some of this was remedied in conference, the perception left with the general public was that Secretary Paulson was getting a giant blank check.
7) Authority Figures as Stewards—There needed to be a bi-partisan board of overseers established for the proper disbursement of funds, so that the public could have confidence in the process. Examples of members could be former Treasury Secretary Larry Summers or former Secretary of State James Baker. One relies on individuals, not bureaucracies, to deliver results.
8) Context—Not enough time was spent on the positive precedent of the Resolution Trust Corporation (RTC), created to mitigate the problems caused by the savings and loan implosion. Nor was the Chrysler emergency financing of the mid-80s sufficiently explored.
9) People are being talking at, not engaged—The approach to communications to date, such as the prime time address by President Bush, or the press conferences on the steps of the Capitol, and the Sunday morning talking heads TV shows, is traditional one-way communications that doesn’t afford people the opportunity to really understand, ask questions and be part of the discussion and solution.
In the end, there will likely be a piece of legislation passed by the Congress. The single-minded focus on the amount necessary to restore liquidity to the markets, without due recognition of the education process necessary to ensure acceptance, indicates that professional communications advisors were not sufficiently involved from the inception of the process. In the present environment of distrust and despair, this commitment to the discussion must be a top consideration for both business and government.