Gilded and Gelded: The HBR article in Indian Context

1. Gilded and Gelded
Hard-Won Lessons from the PR Wars
By
Dick Martin
A summary by Promotional Strategy Group 1
Rishi Singh | Shilpa Hembrom | Vartika Jaiswal | Divya Teegal

2. In the 1980s AT&T decided
to move up-town from 195
Broadway to Madison
Avenues
Golden Boy, a 24 feet statue
of AT&T became a metaphor
its history since it was re-
gilded and gelded

3. Stock boosters, image
consultants and
executives work to gild a
company’s image while
special interest group,
politicians and business
media can end up
gelding it

4. • AT&T was known as the icon
of American business
• But the firm took a beating
after disintegrating its
traditional business and as
new competitors starting
emerging
• Competitors with slashed
prices and fabricated
financials succeeded in
winning customers
• Besides competition AT&T
also ended up making some
strategic blunders

5. • In 1997, CEO, Robert E. Allen’s
heir apparent left the firm to
join a startup with $25 million
richer in 9 months
The New CEO
• The CEO was then eased aside
and C. Michael Armstrong was
appointed as the new CEO
• Armstrong, the earlier CEO of
Hughes Electronics, started his
journey with AT&T by focusing on
slashing costs

6. • Even before Armstrong‘s 5 year
term could finish, the company got
hammered as the usually slow-
changing AT&T failed to convince
the stakeholders that it was
changing fast
• The company kept a low profile to
avoid raising unrealistic short-term
expectations but this eventually hit
them back and was one of their
blunders
AT&T under Armstrong

7. • Armstrong was
criticized for moving
too fast and being
bold, the very thing for
which he was lauded
earlier
• There is need at time
to burnish to highlight
company’s attractive
features but it also
entails risks
Don’t Fall in Love with your own Story

8. • Late 1997 was a turning point
for AT&T. It had been 13 years
since it was broken up and
one year since it spun off its
equipment arm and its
troubled computer unit
• The break up or Trivestiture
was meant to allow AT&T to
focus on its communication
services business
The Trivestiture

9. • Post the passage of Telecommunications
Act, 1996, lots of strong long distance
carriers and regional bell competitors
came in like MCI and Sprint
• The Act had enabled the competitors to
enter into the long distance business
that comprised of 100% of AT&T’s profit
• In comparison to competitors’
packaging with local services and suit to
strike down leasing their networks,
AT&T failed to offer competing service.
Telecommunications Act, 1996

10. • After 3 months of being media
shy, Armstrong on Jan 25, 1998
came up with a successful
analysts conference on cost
reduction measures and laying
off of 18,000 jobs via early
retirement
• Armstrong was impressive in
media and was succeeding in
winning them but also raised
expectations
The Turnaround

11. • Series of quick acquisitions by
AT&T made it the largest
owner of cable TV systems in
the country. Its revenue
growth rate doubled.
• The attempt was to establish
AT&T as a one-stop solution for
both wired and wireless voice,
data communications and
cable TV
The Acquisitions Saga

12. The Time Warner Agreement
• In Jan 1999, AT&T publicized a prospective agreement with
Time Warner, but the unsuccessful deal led to a disaster for it
• The aggression created a damage beyond repair. Many deals
failed or fell apart
Revenues from
voice long
distance
$32 billion debt in
acquisitions Liquidity Crisis

13. WorldCom Fraud
A major long
distance competitor,
WorldCom
meanwhile in order
to maintain its
growth rates
engaged in the US’
biggest fraud of $11
billion

14. The Restructuring Plan
Armstrong in 2000 decided to again restructure the company
by spinning off to shareowners the wireless and cable
businesses
Purpose: To unlock hidden value for holders of AT&T
Fortune that in 1999 Fortune that in 2000
Finally AT&T
has an
Operator
Say Goodbye
to AT&T

15. Understand the Business Media ‘s Mindset
TOP EXECUTIVES
Where do today’s media Coverage
Focus on to “personalize” their
story??

16. Business media Characteristic
Focus on winners take
it all Conflicts !!

17. TODAY TOMORROW
Quick Change in
assessment of
winner

18. What does media look for ??
Could AT&T Rule
the world ??
(Fortune)
CEO Bob Allen
Has transformed
AT&T as risk taker
“Business week”
Why Allen's latest
plan wont work?
“Fortune”
When will the Bad
news end ?
“Business week”
Conflict Drama
SetbacksMean-spirited
Feedbacks

19. Media exposure : Burning Sessions

20. Public Relation Strategy

21. Identify media's performance against competitors in
media outlets

22. Selective about Interviews

23. No exclusive Interviews!

24. PR review Q&A

25. Creating competitions among media for
scooped News

26. Symbolism in the facts

27. • Allen elimination of 40,000 jobs & failure to understand the symbolism in the facts
• Offered no voluntary retirements scheme
• Allen as Corporate Killer
• Armstrong’s elimination of 18,000 jobs
• Armstrong's failure to understand the symbolism
Golden Boy StatueMedia Coverage Employees emotions
Wall Street, in keeping with its cheerful attitude
about layoffs, sent AT&T;’s shares up 2-5/8 to close
at 67-3/8 on the New York Stock Exchange
Robert E. Allen said the move was necessary to
sustain the company’s long-term competiveness.
The spokesman Review
At At&t: `This Isn't Going To Be Easy’
Chicago Tribune
“Perhaps one of the greatest public relations challenges is
getting CEOs to address stakeholder’s emotional concerns. We
failed at this more than once”
Symbolism of Facts

28. • Unions of Honda Motorcycles & Scooters and Hero
Motocorp assembled at Jantar Mantar to protest against
Maruti sacking off 543 workers in August’2012
• Termination notices to 500 regular workers, 1,500
contract workers laid off, no hiring of contract workers
Maruti Suzuki's market share slips to a new low.
Maruti's market share to 37.76% in calendar 2012, down from 44.64%
in 2010
The Economic Times, Jan’13
The domestic sales of Maruti Suzuki went down l 7.8% to 77,002 units
in June 2013 as compared to last year.
Delhidailynews
Video
Symbolism of Facts

30. Pay More Than Lip Service to Your
Stakeholders
“Public relations is not about polishing an
image or creating buzz; it’s about building
long-term relationships between an
institution and its stakeholders.”

31. The Focus Controversy
• A cartoon was printed in a
publication for employees, Focus
• A drawing intended to depict
telephone calling around the world
• Stereotypical figures: a man in a
beret in Europe and a monkey on
the phone in Africa

32. Reaction and Damage
control
Realised its mistake early and
issued an apology letter
“The cartoon became a lightning
rod for every diversity grievance
employees were harboring.
These grievances were shared
with outsiders ranging from the
NAACP to Jesse Jackson.”

33. Reality of the situation
• AT&T - most generous
corporate donors to
African-American
organizations
• Spends >$1 billion a year
with firms owned by
women or people of
color

34. Learning the Lessons
• Don’t become hypnotized by
your own buzz
• Understand the way the
business media think
• Be sensitive to the emotional
resonance of what seem to be
straightforward facts
• Address, simultaneously and
sincerely, the needs of all your
stakeholders

35. Pay More Than
Lip Service to
Your
Stakeholders

36. Reaction and Damage
control

37. Another Goof up

38. Learning the Lessons
• Understand the way the media
think
• Be sensitive to the emotional
resonance of what seem to be
straightforward facts
• Address, simultaneously and
sincerely, the needs of all your
stakeholders