July 27, 2010
WikiLeaks Creates a Need for Issue Management

We’ve all been engaged in discussions about the importance of “transparency.” Apparently, deciding whether or not to be transparent is no longer a question.

From a quick Google search: “let the genie out of the bottle (mainly American) to allow something bad to happen which cannot then be stopped Usage notes: In old Arabian stories, a genie was a magic spirit that would do whatever the person who controlled it wanted. With the Internet, we really let the genie out of the bottle. People now have unlimited access to all manner of material.”

If the Internet let the genie out, WikiLeaks has taken the phrase “let the genie out of the bottle” to a whole new level.

People and companies and organizations have two choices:

1) Don’t say or e-mail anything you don’t want to see shared globally on the internet. (that won’t happen)

2) Have a rigorous, ongoing issue management practice in your organization to stay on top of potential issues. (this must happen)

Everyone in an organization must understand that continuing to believe that potentially embarrassing information can be kept quiet is untenable.

For their own survival and the survival of their organization they must take steps to identify their problems before someone else with an interest in seeing the organization exposed does and work to correct the situation.

My simple promise to clients is, “I can save you time and save you money by helping you find and deal with difficult issues that can affect the reputation of your organization.” This can be done with the help of a proven three step process consisting of Product/Service Stewardship, Issue Management and Crisis Communication.

If you don’t do the first, you’ll wind up doing the second, unless you end up directly in the third.

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June 22, 2010
Great Media Training Reminder - Have A Clear Message

According to the story in Rolling Stone, General McChrystal has a highly qualified staff including a lawyer. Apparently he does not have a communication professional. And hopefully for him, he’s spent some time on the message he will deliver to the President about his Rolling Stone interview. There’s “being frank” and then there’s “talking too much.” He’s made one apology already. He confessed to “bad judgement.” Only time will tell what the real story was behind the interview.

The real problem the article points out, when you take into account what may be exaggerated or slanted and who is settling scores, is that there is evidently no clear strategy for the military action underway. The one part of the story that rang true is the voice of the soldiers in the field, as in many wars in history, questioning what they’re accomplishing. 

Whether on a battlefield, in the marketplace or in your home, if you don’t have a clear message about what you’re trying to achieve, you won’t be happy with the outcome. 

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April 20, 2010
Butler U. Coach Stevens well trained for media interviews…. or, just a natural?

Coach Stevens in an interview with David Letterman refuses to go negative and scores high points. Check out this short clip.

http://rivals.yahoo.com/ncaa/basketball/blog/the_dagger/post/Letterman-offers-Brad-Stevens-his-salary-to-coac?urn=ncaab,232644

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April 20, 2010
Great release. No Whining. Short and factual.

 Goldman Sachs Makes Further Comments on SEC Complaint

April 16, 2010 New York, April 16, 2010 - The Goldman Sachs Group, Inc. (NYSE: GS) said today: We are disappointed that the SEC would bring this action related to a single transaction in the face of an extensive record which establishes that the accusations are unfounded in law and fact.

We want to emphasize the following four critical points which were missing from the SEC’s complaint.

• Goldman Sachs Lost Money On The Transaction. Goldman Sachs, itself, lost more than $90 million. Our fee was $15 million. We were subject to losses and we did not structure a portfolio that was designed to lose money.

• Extensive Disclosure Was Provided. IKB, a large German Bank and sophisticated CDO market participant and ACA Capital Management, the two investors, were provided extensive information about the underlying mortgage securities. The risk associated with the securities was known to these investors, who were among the most sophisticated mortgage investors in the world. These investors also understood that a synthetic CDO transaction necessarily included both a long and short side.

• ACA, the Largest Investor, Selected The Portfolio. The portfolio of mortgage backed securities in this investment was selected by an independent and experienced portfolio selection agent after a series of discussions, including with Paulson & Co., which were entirely typical of these types of transactions. ACA had the largest exposure to the transaction, investing $951 million. It had an obligation and every incentive to select appropriate securities.

• Goldman Sachs Never Represented to ACA That Paulson Was Going To Be A Long Investor. The SEC’s complaint accuses the firm of fraud because it didn’t disclose to one party of the transaction who was on the other side of that transaction. As normal business practice, market makers do not disclose the identities of a buyer to a seller and vice versa. Goldman Sachs never represented to ACA that Paulson was going to be a long investor.

Background

In 2006, Paulson & Co. indicated its interest in positioning itself for a decline in housing prices. The firm structured a synthetic CDO through which Paulson benefitted from a decline in the value of the underlying securities. Those on the other side of the transaction, IKB and ACA Capital Management, the portfolio selection agent, would benefit from an increase in the value of the securities. ACA had a long established track record as a CDO manager, having 26 separate transactions before the transaction. Goldman Sachs retained a significant residual long risk position in the transaction.

IKB, ACA and Paulson all provided their input regarding the composition of the underlying securities. ACA ultimately and independently approved the selection of 90 Residential Mortgage Backed Securities, which it stood behind as the portfolio selection agent and the largest investor in the transaction.

The offering documents for the transaction included every underlying mortgage security. The offering documents for each of these RMBS in turn disclosed the various categories of information required by the SEC, including detailed information concerning the mortgages held by the trust that issued the RMBS.

Any investor losses result from the overall negative performance of the entire sector, not because of which particular securities ended in the reference portfolio or how they were selected.

The transaction was not created as a way for Goldman Sachs to short the subprime market. To the contrary, Goldman Sachs’s substantial long position in the transaction lost money for the firm.

The Goldman Sachs Group, Inc. is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major financial centers around the world.

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March 18, 2010
“You make good choices, you get more choices. You make bad choices, you get fewer choices.”

I said that in 2002 based on many years providing issue management and crisis communications counsel. It’s a simple statement, but an important thing to keep in mind whether making decisions in your work or your life. 

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January 27, 2010
Toyota’s Halts Sales Over Safety Issue - WSJ 1/27/10

See the story on the Wall Street Journal website: http://online.wsj.com/article/SB10001424052748704905604575027671658649384.html?mod=WSJ-business-LeadStoryCollection

First, full disclosure - I’m on my 2nd Toyota RAV4. First one, a 2001 went 250,000+ miles. I now own a “pre-owned 2003” that I bought because I didn’t want to pay the full price for the new model that was part of the recall.

Taking a stand

I’ll go on record in opposition to the auto analyst quoted in this article who called Toyota’s action “a disaster.” All I know is what I read in the papers, but based on that I believe that Toyota’s decision will put it in the ranks of companies like Tylenol’s parent, Johnson & Johnson, who recalled all Extra-Strength Tylenol nationwide following several deaths in the Chicago area. Interestingly, Tylenol’s current parent, McNeil Consumer Healthcare, took a less active stand in a product problem related situation last year and suffered for it.

A teachable moment

Toyota followed my first rule of issue management – A resolved issue is an asset. An unresolved issue is a liability. They identified their issue, analyzed their alternatives and took action.

Their action was a bold one that followed the military practice of “Standing Down”, a method used to correct an issue that has been identified as a serious problem.

We’ll have to stand by to evaluate the result. My guess is that their action will become a new “Tylenol” standard for responding in a crisis.

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January 10, 2010
An Issue Management lesson from a boatbuilder.

A two-week course at the Northwest School of Wooden Boat Building made me realize that I might learn about something beyond boats by building them. Our instructor, Joe Greenley, was a superb craftsman — his cedar-strip kayaks are seagoing sculptures — but it wasn’t his skill with tools that I absorbed. It was the way his mind flowed directly from problem to solution without allowing any emotional muck — irritation, frustration, anger — in between.

Mr. Greenley was never perturbed about a mistake; he simply set about finding the most efficient fix. He understood intuitively that surges of negative emotion not only interfere with problem-solving; they also get built into the object you’re working on.

by Lawrence W. Cheek, a writer living on Whidbey Island, Wash.

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(Notes: 1)
  
December 16, 2009
Congress Travels More, Public Pays

What were they thinking? Unfortunately, the usual answer seems to be, “I guess they weren’t.”

Could these be the same people who tore into the auto execs for flying their corporate jets to DC to ask for a bailout? That was a bad idea too….. but, not a reason to go them one, two or five better.

The article linked below gives some details. Much of the trip is likely well justified. Still, there should be one standard for business and goverenment, or there’s no standard at all. The amazing thing is, why do these stories keep coming?

A tip from your Issue Management counsel – Any major expense event should be subjected to a quick and simple Issue Audit. What are the major components of the event, what is the purpose and what is the rationale for major cost items of the event? This is a great place to  apply my favorite Issue Management Rule – “If you can’t explain it to your mother, it might not be a good idea.”

I’m not criticizing any of the individual actions. I’m simply saying, “Make sure you can explain it…. BEFORE you do it. Before your reputation is under attack.”

http://online.wsj.com/article/SB126092430041092995.html?mod=WSJ_hps_MIDDLEThirdNews

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December 11, 2009
Harvard Construction Project Gets an Incomplete+

Just noticed that my past few posts are all “bad” examples. Here’s a “good” one.

My Free Advice:

1) Tell your own bad news - Harvard’s building plan hit by funding drop-off.

2) Provide a brief overview - The Prez went on too long - see Community Letter http://www.president.harvard.edu/speeches/faust/091210_allston.php

3) Use Q&A to follow-up - http://news.harvard.edu/gazette/story/2009/12/qa-allston-plan/ It’s short and to the point.

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December 10, 2009
Goldman Sachs Y/E Bonus Becomes a 2014 Event - Bonuses paid out in 5 years.

After a firestorm of protest over the $2B+ bonus package for their 31,000 employees, Goldman had a new message today. My question is - If they had the idea about a more responsible compensation plan in May, why wait until the damage is done in December to revise the actual plan? Another example of the importance of Issue Management. By carrying the decision through to the end-game back in May or June they could have taken credit for good governance then and avoided the negative stories of the past week that prompted today’s action.

“The measures that we are announcing today reflect the compensation principles that we articulated at our shareholders’ meeting in May. We believe our compensation policies are the strongest in our industry and ensure that compensation accurately reflects the firm’s performance and incentivize behavior that is in the public’s and our shareholders’ best interests,” Mr. Blankfein said.

http://online.wsj.com/article/SB10001424052748703514404574587983288950014.html?mod=djemalertMARKET

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