The Translucent Company 8

The plastic curtain protecting corporate secrecy has melted.

In the olden days, corporations and governments could depend on a completely compliant media staffed by professional journalists and editors.

These professionals were inculcated into a priesthood designed to distribute information in an orderly fashion. The corporation issues press releases – many of them mandated by the Securities and Exchange Commission (SEC) – and the press machine dutifully weaves the press release into something resembling a coherent narrative to engage the readers.

This process is enshrined in journalism schools and through official style manuals dictating grammar, sentence structure, and political orientation. Certain sources are privileged over others. Sources from governments, corporations, and academia receive privilege over ordinary people.

On occasion, the “man on the street” – most often a taxi cab driver or some other person of little consequence – will be solicited for an opinion. Just to give color to the story. Often, journalists just make those quotes up, because they’re so meaningless and clichéd.

The primary goal of the journalist is to avoid upsetting any advertisers or sources and to keep eyeballs engaged in the constructed narrative long enough for a proximate advertising message to be delivered.

Stories are artificially extended beyond a single page to force the reader to turn pages and garner further exposure to advertising messages.

Traditional Press Relations Gives Way to Psyops

I dislike watching sports, but I went out to a Mexican bar this year during the Super Bowl.

By chance, I met with a PR agent representing a major technology firm.  One amusing anecdote he shared was how this company budgeted $3 million so that his firm could “influence” three female bloggers whom he described as “pajama-wearing.” He might have been lying to me about everything, but I doubt it.

I suggested that he either bribe them or hire gigolos, only half in jest. He told me that he had no idea how he could possibly affect their opinions by traditional means or justify his massive budget. I told him that bloggers generally ignore press releases because it alienates readers and clogs their inboxes.

Journalists are simple animals. It’s usually easy to feed a story to a journalist and to engender a positive response. You just throw a party or take them out to a meal. If it’s something related to consumer goods, you send them “samples” of the product and give them and lavish them with special attention.

Another method is to feed them privileged information that will give them an advantage over their competitors.

All of these things can work with bloggers – but due to higher competition, a lack of censorship, and the rapid spread of information online, overt corruption becomes a riskier strategy than ever before.

The Honest Alternative

Many companies are ill-equipped for the integrity the hyper-connected world expects from organizations. In the past, it was sufficient to merely project the image of integrity. What happened within an organization could be kept relatively quiet thanks to the bonds of Non-Disclosure Agreements, a compliant press, and weak communications technology.

Now, the loose lips of a single employee can generate a powerful rumor or narrative that can gain traction in the media landscape far faster than ever before.

In 2004, a woman created an anonymous LiveJournal post about working conditions at Electronic Arts that ultimately lead to a successful lawsuit for unpaid overtime. I worked for a blog at the time that covered the story. That blog post altered the way that the public perceived EA – and gave the company a shocking introduction to the power of social media before the buzzword even existed.

As a result, EA changed the way it structures development studios and how it relates to the press. The controversy also spurred dialog about labor practices in the wider gaming industry and how companies can prevent similar blow-ups from occurring.

A similar controversy erupted recently at Rockstar Games – so the issue is obviously continues to resonate.

Check that comment thread. You can see more insiders leaking rumors about managers and executive s wasting hundreds of thousands of dollars – and competitors (brazenly salivating at the poaching opportunities) telling employees to quit.

Widespread labor unrest in China in the headlines can be partly attributed to the organizational power of social media.

This is partly why I stress the importance of engendering a positive corporate culture of respect for both employees, customers, shareholders, and the public at large. When companies allow corporate culture to deteriorate, morale declines, and the company’s fortunes usually follow closely.

If the CEO of the company cheats on his wife, you can expect every other wife in the entire company to become upset about it. You can expect them to complain about the brazen affair every night at dinner. They’ll blog about it and leak embarrassing secrets to the press. Both the jilted CEO spouse and the “other woman” will also probably blog about it, which will wind up in the court case.

The entire fracas will be collected and used as a basis for shareholder lawsuits.

As you can imagine, the web undermines any attempts to control information.

Loyal, satisfied employees tend to remain mum to the jackals of the press. Angry ones yap and organize – or leak inside information to hedge funds or investment banking analysts.

Integrity and Authenticity

If your company lies to the press, you can expect someone to pick up on it eventually. If you try to gag someone, you can expect someone to find out about it somewhere. If you abuse employees, someone will out you on it. If you defraud shareholders, someone will discover the truth, and it will be spread around the web and translated into a dozen languages ten minutes after it gets out.

Even Goldman Sachs – once the most trusted institutional brand in the world – can’t release an analyst report anymore without Zero Hedge eviscerating it. Blogs used to be relatively unimportant, but now mainstream news editors and television producers rely on blogs to drive coverage.

What might’ve died as a fringe conspiracy theory in the past can be validated, fact-checked, and spread around the web immediately.

The web has matured into a social mechanism for burning away secrecy, fraud, and deception. And most companies are unprepared for the implications.

About JC Hewitt

JC Hewitt is an independent copywriter and marketing consultant based in New York City. He loves innovative companies of all sizes.

  • Fascinating analysis of the different media universe we now live in, but still, for some reason, have a hard time fully imagining. I think the average corporation doesn't have much more imagination than the average consumer.

    We free enterprise to be more forward-thinking about technology and strategy sometime than they actually have the motivations, on a personal level, to be. Every great company has behind it a driving individual will, and we forget that when the founder fans out the authority and recuses himself from participation.

    Disasters are, like in human evolution, what motivated corporations in the past to either evolve or die, and I think corporate PR disasters are arriving to fulfill that evolutionary task now. Some of these disasters, like Mark Zuckerberg's and that of Facebook, are mere foul winds–dirty secrets and impure attitudes disclosed in unwise personal emails–while others are world-shifting in multiple dimensions simultaneously.

    It's hard to imagine a time more evolutionary than right here, right now. On the macro-level, these are just forces of nature and nurture (also nature?) in play. On the corporate level, they are mortal plays that will either kill the organism, or make it a thousand times stronger and more transparent.

    We truth is that we will probably need corps for a long time to come. We'll need the massive degree of jobs-management they provide for a large section of the population. We'll need their automated modes of handling industry. We'll also need their leadership to come back into play, as it must do now and then, to get us to the next step. And if they don't lead, government, leaner new startups and popular movements will lead them to follow other models they can learn something from. In the end, everybody teaches, and everybody learns.

  • It's not just jobs management – corporations are a legal construct that makes labor intelligible and taxable to investors, governments, and court systems around the world.

    It's actually life and death. Google ignores copyright in most of its services by creating content-agnostic platforms like Youtube. They recently successfully defended a $1B lawsuit from Viacom on Youtube copyright infringement – at about the same time as they have developed new content-provider friendly licensing platform. It seems that that has coincided with Youtube's recent growth into profitability.

    The crazy tangle of anti-trust law also puts many companies at risk due to social media. An inopportune tweet from an employee could result in an FTC suit.

    In China, a QQ message can be wiretapped, and might result in mass executions – literally.

    So, needless to say, I think many are only beginning to wake up to the social, legal, cultural, and financial implications of the web. Overall, there are more opportunities than potential pratfalls, but we have to align ourselves to the reality of the full implications of the maturity of this technology.

    At some point, a majority of the global population will be connected to this network!

    I believe that transparent, honest institutions are more resilient to risk. Enron was a timebomb due to fraudulent accounting and a culture of corruption. Eventually, the bailouts will cease – globally and in the US – and companies and investors must adjust to the new social arrangement enabled by the increasingly intelligent and socially aware web.

  • Thoughtful post!

    As a former journalist with many friends who remain journalists, I'd take issue with a lot of your description, but perhaps I'll save that for another post. For now I'll just say I worked for a newspaper that won a Pulitzer in 1993 for uncovering secret government radiation experiments. Its circulation was declining when the paper won it, and the circulation continued to decline steadily for 15 years (and through another Pulitzer nomination and countless awards for serious journalism) until it finally had to fold.

    People have to be committed to this kind of society for it to work. When a measurable percentage of the population doesn't know who the current president is, it's clear that we don't have a base of literacy, media or otherwise, to build on. And as you note with the Chinese example, the technology also makes it easier for the nefarious to control information. Even today, with theoretically “equal” access to the net, we have to worry about questions like net neutrality and the fact that money still does equal impact to some degree.

    Case in point: Wall Street. More or less nothing about this debacle has been secret. It's just so dull and complex that no one will ever read it. Derivatives? We can't do long division by hand anymore, let alone ponder questions like these. Journalism has had major flaws, but a free marketeer might say that supply rises to meet demand. There's a reason we have lots of American Idols and not so many investigative reporters.

    That said, I do think now is the time to protect the “commons,” so to speak. Facebook in particular is threatening to own all the public highways, with our willing consent. We're in danger of letting the social infrastructure and all of its potential slip away.

  • Being rather passionate about journalism myself, I agree that not all journalism is mere parroting.

    I prefer the “new journalists” like Tom Wolfe, Hunter Thompson, Gay Talese, Matt Taibbi, Upton Sinclair, Michael Herr, and Michael Lewis. I'm also friends with journalists, and I think that overall it's an important service – when practiced properly.

    I actually find Wall Street exotica enjoyable to read about, probably *because* it's complex. That, and I've been paid to research and write about it. It's also important relative to American Idol type stuff, because it determines how our society runs and which companies live and die.

    If you're curious, Lewis' “The Big Short” weaves the derivatives mess into a coherent narrative with compelling characters.

    I agree that people have to be committed to an open society, but I doubt that it really requires a majority to keep it that way. Wikileaks is more or less run and inspired by one man and a small band of adherents. Even China's vast censorship efforts have been undermined and overwhelmed by common software programs, hardware add-ons, and easy to use darknets.

    While literacy is extremely poor in the US, I think that the spread of the internet has ameliorated some of that that. I also believe that e-readers, the web, and the spread of learning technology will help to heal some of the damage done by our (public and private) miseducation system.

    So, color me an extreme optimist – at least in the long run! I'm unconcerned about Facebook dominating – I'd be more worried about their ability to go public and repay their investors. I've heard good things recently about the improvements in their ad system. But their business model reminds me way too much of the original AOL (minus the ISP part) to make me optimistic. It could be a fad.

    Or not. I wish I could see the future, but I can't.

    The Gutenberg printing press : Medieval Catholic Church as Internet : Corporatism analogy has popped up more and more lately, and I have to go with the Shirky-esque herd and agree with it.

    I've been using the internet since age 8. Kids are being born today that use some kind of web-connected device from toddler ages onwards. It changes a lot. And this is happening all over the world. I'm confident that even goat-herders in rural areas under repressive dictatorships will enjoy hand-held web connectivity by the end of this decade.

  • True, we need solid corps for many reasons beyond those I listed. It's part of thge fabric of our civilization and any jumps need to be as gradual as possible to be palatable and minimize the socio-economic fallout.

  • Interesting perspective and points, as always, Will. I agree with much of what you're saying here naturally). I also think JC's genius may lay in his resistance to leaning to a side in order to take in more data and process more of that data, whereas many of us (me included) prefer to give emphasis to the under-represented side of an equation (like championing the user, as opposed to what will ultimately work best for FB). When I worked for a independent little bookstore chain for a short time in my 20's, I was suddenly surrounded by left-leaning coworkers who religiously listend to Rush Limbaugh and were eager to find point of agreement. When I asked about it, one of them replied “It pays to understand the competition if you want to fight their objectives”.

    From my perspective, I think we're seeing why unsociable (read: aggressively hegemonic) tactics are NOT being rewarded due top the growing public discourse on everything via social media, and how big social media players themselves ARE in the midst of feeling the push-back of the end-user via their very own tools.

    As I mentioned in a post once, Twitter users openly critique Evan Williams when he “deserved” it, Facebook users openly criticize both Facebook and Mark Zuckerberg, their public face (for good or, more likely, for ill), even while retaining their accounts. I'm interested in how all the sides come together to form a complete picture and help form the discourse in progress. To me that is the exciting part of the discourse: seeing the total evolution patterns unfold.

    Great points on both sides of this one, guys. I'm glad to know people who think in-depth about serious issues and value another person's input.

  • Thanks, Mark, and thanks, JC. It really is a pleasure to see serious discussion on the topic. It's incredibly important!

    JC, Sinclair was someone I was going to mention myself as an example of how journalism can work. I'll definitely check out the Big Short. I'm a big fan of the stories behind the stories (a la The Smartest Guys in the Room).

    I do think the internet potentially puts power into the hands of individuals, but if the analogy held, then why are we in the situation we're in? Just to play devil's advocate, why haven't books, newspapers, TV, etc., served that role and, if it's because they've been bought and sold, what's to stop the same thing from happening to the internet? In the early days of the internet (think Howard Rheingold-era), networks were going to change everything. In fact, we now have more media consolidation than ever before. Perhaps it's my anthropology training, but I'm just always skeptical of answers that place the locus of control outside the realm of the individual. I.e., I think we all play our part in the system.

    Mark, that's a great point about social networks allowing self-criticism. I wrote a post on Technoagita one day about some of the ways Schrage had flubbed a response to Scoble, but one of the things he did well was to make clear that censorship isn't something that's part of the Facebook “culture.” That's not to say it won't happen–just that they don't intend to do that (which is great). When you contrast that with Apple, which doesn't brook the slightest self-criticism, it really is a noticeable difference.

    It's almost more argument for the “public commons” model. When we studied journalism in high school, it was explained to us that freedom of the press arises in part because we view it as a public forum–that is to say, a commonly maintained platform, much like airwaves. Personally, especially as I work my way through The Wealth of Networks, I increasingly think these need to be public goods. I don't think that makes me a communist. It's infrastructure for doing business (and I'm all for making money).

    Fun discussion, guys. Bodes well for Marcana!

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