Tuesday, October 28, 2008

Professional Pundits & Prognosticators

Cognito commenting in AM New York this morning on the rise of the financial punditocracy. Our position: consumers and investors need quality information now more than ever. This presents a fantastic opportunity for financial institutions to position themselves as calmer heads in a crisis, on-hand to offer advice and support to investors battered by the recent turbulence. Charles Schwab actually captured this approach quite well before the recent market meltdown. Unfortunately FIs are equal, if not disproportional, victims of the current uncertainty and have become gun-shy and introverted, leaving a communications vacuum which is currently filled by what I'm trademarking the 'professional pundit and prognostication industry'. This is bad news for FI's and even worse news for their clients.

By the way: the irony (or hypocrisy) of blogging about being quoted in article complaining about the rise of financial pundits is not lost on me.

Saturday, October 25, 2008

He's at it again...

I think looking back we're going to have to acknowledge that in as much as this crisis has been a financial one it has also been a crisis of communication. A failure to successfully project control has wreaked havoc for weeks across the world's financial system. President Bush was not only wrong about normality returning but, even as he seeks to reassure us, we get to glimpse one of the fundamental problems underpinning the crisis: Nobody should let this man speak. From 'wall street got drunk' to 'a state of near panic', an unscripted Bush is like a loaded gun pointed at the head of the American financial system. The President, even as the lamest of lame ducks, is a natural focal point and as such needs to work hard to instill calm. For the Sarah Palin’s of the world who argue words don’t matter – we’re watching precisely why they matter right now. The road to recovery begins as soon as this administration hands over the world’s microphone to the next.

Monday, October 20, 2008

Lessons Learned

The aftermath of the financial crisis will bring many lessons. As communications practitioners, we will be encouraging our clients to use the experience to improve their business through better communication.

We would encourage the governments of the major economies in the world to look at the way the communication of their thinking and activity has impacted the global markets and draw their conclusions for future eras to learn from.

As we continue to reiterate through this blog, the ultimate issue is confidence and good communication lies at the heart of building it.

Sunday, October 19, 2008

WWAHD?

Passing, on my way to work, by the grave of America's first Treasury Secretary, I'm minded to ask: What would Alexander Hamilton Do? I have just finished reading Ron Chernow's excellent 850-page biography of Hamilton and I highly recommend it to all Chicken Littles out there. Hamilton also had to supervise a massive government intervention to prop up a broken financial system but at the same time fought off intense political opposition, lived under the faint but permanent threat of renewed war, and eventually died in a duel. Something tells me that - were he able - he would look at some of today's world-ending 'crises' as preferable problems to have.

Tuesday, October 14, 2008

The Media's Role...













Bloomberg .com tonight:
6:00pm - US Stocks Drop on Concerns About Corporate Profits
6:01pm - Intel Profit Increases 12%

There are many guilty parties, and certainly right now bigger fish to fry - but hopefully when things have calmed down a little we will be able to look back and make a dispassionate assessment of the media's role in this 'crisis'. 

Sunday, October 12, 2008

Becoming Indispensable...


At Cognito we have only two types of client: financial firms and those that deliver solutions to financial firms. We've talked in this blog about how asset managers and banks need to better communicate with their investors but what about those companies which offer goods and services to the financial industry?

For some, such as financial consultants and analysts, the current crisis could present an opportunity, particularly around cost reduction, outsourcing or post-merger integration (PMI) programs. Others, such as the data and infrastructure providers, may be so operationally integral within financial institutions that they find themselves sheltered, at least from any short term panic response. No-one, however, will be immune to the inevitable shrinking of the financial universe (Morgan may be the next shoe to drop this week) and all will need to find new ways to become more valuable to this diminishing customer base. There is too little time at this point to dramatically change the nature of their solutions. Firms now need to focus on communicating their purpose with renewed clarity, selling their value, and convincing clients of their indispensability. Below are four recommendations to this effect:

1) Stop Panicking - Most decisions made around 9:15 on Friday were the wrong decisions. An effective response strategy needn't take a long time to put together but similarly it can't be a formulated with one eye permanently glued to the Bloomberg terminal.

2) Get Closer to your Clients - Whether personally, through their sales teams or with marketing initiatives, business heads now need to get as close to their clients as possible. While undoubtedly a brave move given the market volatility, a number of Cognito's clients have held successful and well attended user-group meetings this week and will be stronger for it in the coming months. Firms that shut down proprietary events, marketing efforts, and trade show attendance will not only project instability but will lose invaluable communication channels to their customers.

3) Have a Story - This is not the market to be without a clear story and a strong message yet it surprises me just how many firms still have neither. In an environment of fear and uncertainty, clients look for stable partners whose value is demonstrative. An interesting point several of our clients have made recently is that their direct contacts within the FIs are also looking for a clear message to sell internally - so when they are asked why the firm should keep solution x, they can clearly explain its value to the whole organization. We can't begin to equip our clients with these messages if we have not formulated them for ourselves. In addition, having this story articulated and validated by third parties such as the media and analyst communities is obviously an excellent way to enforce your message.

4) Sell Value - Value is relative and your messages may need to change to reflect this. 12 months ago a car dealer whose models were 10% more fuel efficient and 5% faster than his competitor's may still have led his pitch with a message about speed. Today there is no question which message would take priority. So it is with solutions for the financial industry. Some industry providers are lucky enough to have been talking about risk and cost reduction for some time now but others are not so lucky. Listen to what your clients are telling you they need today and be prepared to redraft your value proposition to meet this short term need. For some firms this effort will prove just too difficult but for those nimble and well equipped enough to redraft and successfully pitch this new value message there is opportunity to be found in even the direst of circumstances.

Friday, October 10, 2008

Multi-Skilled Journalists

Media consumption in the financial sector must be at an all time high as people try to work out what is going on and how it will affect them.

In times like these journalists can make or break their name and become the trusted sources they aspire to be. In some cases the calibre and reputation of a particular journalist will transcend that of the media they work for. It is claimed, for instance, that the BBC's Robert Peston can move markets with his comments alone.

Another interesting observation is how, as the Internet combines the need for good print and TV reporting, we see why some journalists will always write and never present and vice versa. FT TV , for instance, requires reporters to present to camera.

Sunday, October 5, 2008

Philantrocapitalism

A quick plug for friend of Cognito and US Business Editor for the Economist, Matthew Bishop, whose book: "Philanthrocapitalism: How The Rich Can Save The World" has just come out. Matthew spoke about the issues raised in the book at Cognito's summer drinks party this year and it is certainly worth reading.
At the New York launch event last week some waggishly commented that title of the book would soon be meaningless as the 'capitalism' part of 'philanthrocapitalism' may have ceased to exist by the time the book hit the shelves. They were joking of course but one does have to wonder, in a post bailout world (and now in Germany a post Hypo rescue world), whether we are not seeing a resurgence of governments as the force for dealing with the world's problems as opposed to corporations and the super wealthy.

Hedge Fund Communications 2 - Redemption Season




Hedge funds are facing a truly unprecedented confluence of events, and when they need it the most, communications seems to be the skill that too few have an adequate store of right now. To date the success of the hedge fund industry has grown largely on the back of its ability to deliver uncorrelated alpha - i.e. performance. As such, many funds simply haven't felt the need to leverage the power of PR. For years performance remained high and when a particular fund was down it didn't matter: overall market confidence in the sector remained strong. Even uniquely spectacular blow ups like Long Term Capital Management and Amaranth were seen as just that: isolated incidents, worth examining from an intellectual standpoint but hardly denting the exponential investment in the hedge fund market.

Today several things are happening at once: 1. Performance is the worst in many of these funds' histories and shows no sign of improving soon 2. knee-jerk regulation like the short-selling ban is complicating hedge funds' business in ways they could not anticipate and, most importantly, 3. for the first time ever there is endemic fear and uncertainty in the market. These are confusing times in which institutional investors will inevitably fly to safety and poor performing hedge funds are having to explain to a panicked investor base not just why performance is down this quarter but why this string of poor performance does not mean that they are going out of business. Suddenly communication has become very important and too few fund managers have these skills available on hand...

With redemption season upon us - now, more than ever before, is the time for funds to seek professional support.

Saturday, October 4, 2008

Messaging Session please


If the bailout/credit crunch crisis is a confidence issue then by default it is a communication issue too. As all good PR people know, good communication builds understanding and, thereby, support and confidence. Congress and governments should allocate more time to considering and addressing the messages their actions give out. The vast majority do not fully understand the issues involved and no one knows how this situation will play out. However we are receiving multiple messages and it is hampering confidence building.

As things stand, people will inevitably reach their own conclusions about the wisdom of the bail out. Governments should lay their thoughts on the table more clearly to ensure their public is included and involved in their rationale. If things don't work out as planned, they will at least have more chance of support.

The extreme action they are taking in the banking market is alienating people who feel market forces should be left to sort this problem out and that the heart of the problem, culturally driven irresponsible borrowing and lending, isn't being addressed.

Wednesday, October 1, 2008

Wall Street's Mayor

Last week, while taking a cab up First Avenue, I got to hear part of Mayor Bloomberg’s weekly radio address. It was the most sane, soothing thing I had heard all week. The mayor focused on cooling tempers around the financial crisis, rather then inflaming them.

There is no question that the mayor’s straight talking strategy is a success. Many people hardly remember when Hizzoner was being beaten up by the Tabloids practically every day and communications genius William Cunningham came on board and helped turn the tide by running the fight on issues, rather than partisan politics.

If you need a respite from the hysteria, give the broadcast a listen.