David Jones of Havas: Why social media makes business better but life harder for CEOs

I was recently party to a conversation where one business leader was explaining to another how social media wouldn’t impact their business. To me, this was like going back in time and listening to someone saying: ‘We won’t be using telephones at our company’ or ‘This internet thing isn’t relevant to our business; it won’t affect us.’

While these statements may appear ridiculous today, there was a time when that’s what many of the then successful business leaders were saying. And it’s what many leaders are still saying today about social media.

Now, the very fact that you are reading this means it’s unlikely that you are one of them. But for those who think this social media ‘thing’ won’t affect them, it’s time to think again.

Social media is here to stay, and with it both the amazing challenges and opportunities that it presents for businesses and leaders. In this new open world, disgruntled employees and consumers have a tremendous voice. Private conversations become public at the post of a tweet.

There is an ever-increasing overlap between public and private lives, with substantial consequences on relations between bosses and employees. This also affects HR policies, with the dramatic increase in public information about employees, candidates and ex-employees that is now available.

If Sarbanes-Oxley (the 2002 US law enacted in the wake of accounting scandals such as Enron) was one step to ensuring business was more transparent and accountable, then social media will be a giant leap. The new world of management is all about coping with a climate that for many is as exciting as it is scary.

The ability of people today to find out so much about companies and individuals makes it very hard to say one thing and do another. The world for leaders has dramatically changed. Everything is now completely open; it’s an always-on world with no separation between public and private or between internal and external.

Social media will make business better

This transparent new world might sound daunting but the great thing about it is that it will make the business better: more authentic and more honest. After the greed-driven financial crisis with its Madoffs and Lehman Brothers, that can only be a good thing.

The most successful companies of the future will be those whose leaders make sure their internal reality matches their external appearance and that put doing the right thing at the core of the business. Consumers insistent that business does its part to improve the world are not totally unrealistic; nor do they expect miracles to be performed overnight. What they want to see from business leaders is commitment, effort, progress and honesty about that progress.

As Paul Myners (pictured), former chairman of Marks & Spencer put it: “Corporate social responsibility helps us to attract shoppers to our stores, recruit and retain the best people, form better partnerships with our suppliers and create greater value for our shareholders.”

As a moral compass for decision-making, we used to say that you should run your business imagining that every decision you made was being printed as the headline on the front page of a newspaper and ask yourself how comfortable you would feel about that.

In today’s world, social media is that moral compass, but it is actually no longer a theoretical exercise. You will be reading about your decisions in social media on a weekly, daily, hourly or even minute-by-minute basis.

Reputations take years to build but can now be destroyed in seconds. And we have seen numerous cases of this happening – from the inevitable consequences of BP-style corner-cutting to the careless comment or tweet of a CEO or founder – as in the case of designer Kenneth Cole’s tweets about Egypt, which I describe later.

It isn’t just social media that has dramatically changed the operating environment for today’s business leader. The social consumer is looking for businesses and leaders to be much more socially responsible and is forcing it in a better direction. The 21st century manager must align this consumer demand with the sometimes conflicting views of other significant stakeholders.

Social responsibility and sustainability are both inherently a mid- to long-term proposition, with impacts sometimes taking years to be seen. For the financial markets, long term is often viewed as a year, mid term as this quarter and short term as this week.

Business leaders are increasingly caught in the middle of a tug of war between consumers pushing the business to be more socially responsible on the one hand, and the board and shareholders pushing for greater and greater returns at any cost on the other hand.

This is compounded by the fact that many boards today are still composed of people who grew up in a different era with different values. I have had several conversations with progressive CEOs who have added sustainability to the bonus criteria of their key direct reports, but whose board had little or no interest in making it part of their own CEO compensation.

Further complexity is added by the fact that several of the quick wins that do have an immediate impact on the business are one-offs. Major progress on reducing transport and fuel costs or on reducing packaging tends to have a significant impact in year one, but the benefit of that is lost after a year when the new comparatives kick in.

Finally, there are challenges of marrying social responsibility with competition. Even when a leader has a free hand to implement change to create a more sustainable business, drive efficiencies, cut down on waste and so on, the most efficient thing to do might be to replace people with technology or machines. If you do this, it clearly has a human cost and could hardly be described as being socially responsible. If you don’t do it, the negative impact on the business may be so great that many more people lose their jobs or the business might not even survive.

There is no easy answer, and the new social management world presents the social boss with many of these unenviable dilemmas.

Despite these challenges, we are seeing a new breed of socially responsible CEOs who are leading their companies on the path to being better businesses. Some, who are in positions of great power and responsibility, really understand the social, commercial and environmental shifts that are happening. They are spearheading the move to doing business better from within the corporate sector – leading from the front. These include Paul Polman at Unilever, Jeff Immelt at GE, Mike Duke at Walmart, Jeff Schwarz at Timberland, Tex Gunning at Dulux, Indra Nooyi at PepsiCo and many more I could name.

What they generally have in common is the following:

• They have made social responsibility core to their business strategy rather than leaving it in a silo or treating it as a marketing tactic.
• They make very apparent that they have done this in order to both do good and do well.
• They are united by a belief that you can both do well and feel better about yourself and your company that you can deliver better corporate performance and be a better corporate citizen.

As Reckitt Benckiser’s outgoing global CEO Bart Becht put it: “Saving money and saving the environment need not be mutually exclusive.”

Unilever CEO Paul Polman (pictured) surprised many in 2010, by committing the company to halving its environmental impact while aiming to double its sales over the subsequent ten years. He sent further ripples of surprise through the City when he announced in November 2010 how these targets were going to be reached and some detail of what changes were going to be implemented. He said that they were a long-term value creation model and more or less told short-term investors that their money was not wanted at Unilever. This kind of leadership is committed and fearless because despite doing the right thing, Unilever’s share price fell when he made this announcement.

When Polman, a One Young World counsellor, made these commitments, it was a very clear signal for the entire company and all its stakeholders of just how serious he was about this subject. He said: “it is the right way to do business.” Polman has since changed Unilever’s financial reporting practice: it will no longer publish full earnings statements quarterly but instead will switch to a six-monthly cycle and issue a short trading statement in the intervening quarters (Qs 1 and 3) in an effort to move investors away from judging the company on a 90-day basis.

It is only through the responsible actions of companies of this scale that social responsibility will become a mainstream philosophy rather than a siloed activity or marketing tactic. But it is not easy, there will be resistance and it requires steadfast leadership.

All major companies will face a crisis at some point – maybe not of the epic proportions BP faced, but some crisis is unavoidable. The key thing is to be prepared for it.

When the crisis happens, old-world corporate communications systems, which seek to batten down the hatches and issue ‘safe’ impersonal statements, at their own pace, will simply no longer do. It’s about being fast, authentic and transparent. Or else people will feel, as they did with BP, that the company and the people behind it just do not care.

As a boss, if you say something you must consider that it will probably be taken out of context, predictions will come back to haunt you and, as well as your words, your actions will be scrutinised – BP’s Tony Hayward discovered this when he decided to go sailing with his son on the shining waters around the Isle of Wight while the Gulf of Mexico was choking on black sludge. It was totally irrelevant that it was his first day off in months and that he hadn’t seen his son for a lengthy period. No one cared. All people saw were pictures of him enjoying a day out near a pristine beach. He was accused of abandoning his post, and the location served only to rub salt in the wound.

I witnessed a small example from the oil industry that demonstrated that being transparent, open and honest does work. We organised an event in London in 2010 all about the future of the caring corporation. One of the guest speakers was James Smith, the UK chairman of Shell. The event was being live-streamed on the internet. It was taking place the week of the BP oil spill. I said to my team that we could forget Smith’s attendance as his PR people would never let him come and speak at a live-streamed event, on socially responsible business, the week of Deepwater Horizon.

Smith did, however, attend. He gave a short presentation and then took about 30 minutes of very hostile and angry questioning. He answered every question head-on, explained what the issues and problems were and what they were trying to do about it. He was open and honest and genuine. And at the end of the session we all sat there thinking that this was nowhere near as simple as it seemed and we had an enhanced respect for Smith and a greater understanding of the complexity of the task facing Shell.

People now demand transparency. Toyota CEO Akio Toyoda made the mistake of trying to keep a lid on the safety problems that emerged with some vehicles in late 2009. Toyota was accused of failing to inform the proper authorities of the issues and, as the situation unfolded, with recall after recall, the company looked like it was trying to conceal issues that might have an impact on people’s safety. In the early days of the recalls, Toyoda himself was invisible and earned the nickname ‘No-Show Akio’.

The ill-feeling was fuelled by the US media, which probably relished the chance to attack the Japanese car industry. Nevertheless, it demonstrates that among the biggest mistakes people can make is to believe they can control an issue or that they’ve got time. In the social media world, you need to assume that little issues will become major global crises instantaneously.

In another era, no-one would have known about star designer John Galliano’s anti-semitic rant. But in the new world, what is said in a late-night private, drunken rant can go around the world and be seen by thousands of people in a matter of seconds. This was the case for Galliano when a video surfaced showing him declaring his love for Hitler. It is hard to imagine a more damaging statement. Dior’s response was immediate and unequivocal: Galliano was out, no matter how brilliant a designer; Dior’s policy towards anti-Semitism was ‘zero tolerance’.

Dior boss Sidney Toledano (pictured) then made a sombre, dignified but short speech at Dior’s Paris show, which coincidentally took place only a few days after the scandal blew up. He denounced Galliano’s outburst, firmly restated the company’s values, and, with these acts of decisive leadership, extinguished the crisis.

But we need to be prepared – social media is always on the record.

This is a further challenge for business leaders today: it has become impossible to say different things to different audiences. Everything you say will be seen, read and heard by all of your audiences.

Where once it was possible to target different audiences discretely, today your shareholders, your employees, your consumers and the media can all see everything you say and do. We are living in an open world with free access for everybody to everything. And we all need to behave like that.

At a private dinner in July 2010, General Electric CEO Jeff Immelt made critical comments about the Chinese government that sparked a global furore and ended up appearing on the front page of the Financial Times – Immelt’s explanation that his comments were made in private and taken out of context was true, but to no avail. Anything you say can now be broadcast globally to everybody and taken totally out of context.

I experienced a minor version of this myself when I was named as the CEO of Havas. A journalist from Advertising Age wrote an article on my nomination. In order to make the point that I was of a different generation from my peers running the other holding companies and that I was the first digitally savvy CEO, the journalist shared some of my recent Facebook posts. These included a post from the TED conference – ‘Sitting five seats down from Cameron Diaz at TED – I wish she’d stop staring at me’ – and another one on landing after one too many flights: ‘The joys of jetlag, 2am here and so wide awake there’s no chance of sleeping, yet tomorrow at 7am when the alarm goes off I will want to die … #fuckihatetravelling’.

While hardly likely to cause an international furore on the scale of Immelt’s, I felt pretty uncomfortable about the article for a day or so – having been brought up by my parents not to swear. And it was a good reminder for me of my own point that personal and private lives are now the same. And that posts written with my friends in mind are also being seen by colleagues, clients, journalists and employees.

The other key issue is that digital doesn’t die. Things said years ago can be found easily and can come back to haunt you. Stuart McLennan, a UK Labour Party election candidate, was forced to resign over posts he had made on Twitter, some of them when he was still a student. What might have been funny banter among college mates became a lot less funny later when he was standing for Parliament. ‘In the queue at the Post Office. Absolutely massive. Must be pension day. Bloody coffin dodgers’ is not so amusing when the ‘coffin dodgers’ have become elderly voters. The same goes for ‘Johnnie Walker Red Label is so awful they can’t sell it in Scotland’, when the whisky industry is a major employer in one’s potential constituency. In digital and social media, comments can live forever.

People are people and we will continue to make errors and gaffes. Probably the most important advice is that if you make a mistake, you need to own up to it straight away. Clothes and shoe designer Kenneth Cole (pictured) made an extremely inappropriate tweet, suggesting the unrest in Egypt was due to people trying to get their hands on his new spring fashion line. This sparked an immediate furious reaction initially on Twitter and then across all of the main news media. But Cole, to his credit, immediately scotched speculation that an employee had been responsible, admitted he had done it himself and apologised. The world moved on.

If today you have a small, local issue, you should assume it will become massive and global, instantly. The scout’s motto of ‘be prepared’ is great advice for today’s business leader. You should assume you have got no time to formulate plans of how to address issues after they arise. Anticipate what issues may arise and plan how you will respond when they do. And if something occurs that you weren’t expecting, try and pre-empt things. Say something yourself first. At least the conversation can then begin on your terms and you will get credit for being open and honest.