Financial crises: when communication and the economy let you down

It was the summer of 2007 and I was reading a copy of the Financial Times. My interest was combined with apprehension and expectancy.

Interest in the reactions of the world’s financial leaders; apprehension about what was to be the start of one of the biggest ever economic and financial crises; expectancy with regard to the major players in the western world: how would they announce what was going on? Which signals, which strategies (as much in relation to business as communications) would be implemented by governments, the financial world and the press to counter the imminent impact and consequent media, economic and financial carnage?

I didn’t know it at the time, but I was reading the first chapters of a disaster that had been on the cards for some time.

Ben Bernanke, the then chairman of the Federal Reserve, the US central bank, confirmed that the subprime mortgage crisis would be contained. Bush was giving out confused signals and the world was witnessing a gargantuan but clumsy effort to save the American financial system from collapse.

Europe looked on with growing apprehension. Not long after, its own economy would find itself in the middle of one of the worst recessions since 1930, with GDP forecasts of minus 4% in two years, the sharpest contraction in the history of the European Union.

“In the UK, the Northern Rock bank was forced to apply to the Bank of England for an emergency loan and ended up being nationalised to protect its solvency (and the deposits of its customers). Those panicking customers queuing up outside branches of the bank hoping to withdraw their savings became one of the lasting images associated with the financial crisis in Europe.

September 15, 2008, the day the 150-year-old Lehman Brothers declared bankruptcy. (CNBC)

In America, in the summer of 2008, the investment bank Lehman Brothers went into receivership (Chapter 11) after 150 years of business and following the credit crunch caused by the largest mortgage bubble in the history of the world economy. The mortgage institutions Fannie Mae and Freddie Mac, and the insurance company AIG, were saved by the government the week before, with tens of billions of public dollars.

Collapsing share prices, bankruptcies, mergers and restructurings caused the loss of millions of jobs, and a severe loss of confidence in the system, triggering a fundamental change in the banking sector. They also highlighted serious errors, shortcomings and gaps in the Western world’s information and communication system, which had failed.” (source: Laura Prina Cerai, Senior Investment Advisor, Altrafin AG).

The pre-Brexit beating European financial heart.

Throughout all this, during the summer leading up to the credit crunch, I accepted a role in the financial sector in London, taking the opportunity to learn all about the developing dynamics from the then beating European financial heart. This experience lasted over four years and was extremely instructive, strong and positive from many points of view.

Much can be said about those years in relation to governments, banks, the financial sector, the general public and the world of journalism.

A lot can also be said about the failure of the communication models of the time and the political and business dynamics still in place today.

Psychology and thought-leadership.

(Credits: frames from the film “The big short”)

Strategic communication is vital for industry and governments. It has to aim to convey not only their goals, intentions and strategies to stakeholders and society, but also to educate the general public. Acting as unbiased thought-leaders to the extent possible on certain topics and movements and working to reduce false information, fake news, speculation: governments and industry have a moral duty to provide context and clarity. By working together and keeping communication channels open with the media and with influencers, creating information channels of mutual trust.

The financial crisis didn’t just have disastrous economic consequences, it also negatively impacted the public's faith in the financial world, tarnishing its reputation, and in the media.

(Credits: frames from the film “The big short”)

Many critics at the time wondered whether financial journalists had done enough to dig down to the roots of the impending crisis beforehand, and at the same time, whether they had perhaps contributed to increasing public mistrust and anger. What went wrong?

Recently, in an interview given on the 10th anniversary of the peak of the crisis, Bill Emmott, editor of The Economist from 1993 to 2006, confirmed in a subsequent interview with the panel "Follow the money: how the crash of 2008 changed journalism worldwide”:

“The press had given alarm signals, but those signals were drowned by the media, which had increasingly turned into cheerleaders of the boom. In other words, they had strongly believed, as former IMF chief economist Ken Rogoff commented, "This time it will be different", deluding himself. And, unfortunately, the press is always part of this process. So I think the press was partly but not solely responsible for the crisis. It was part of the atmosphere of the times.” (ref. Journalism Festival)

The ability that was most tragically and dramatically lacking during the 2008 crisis was the ability to communicate - specifically, communicate the nature of the problem, what was at stake in terms of risks, and so why, in America alone, it was necessary to spend $700 billion of taxpayers' money to solve the problem.

Franklin D. Roosevelt

Franklin Roosevelt, among few others, had been a genius of public psychology. He knew when and how to use the presidential media. His first 100 days of government were dotted with the release of timely updates to his exultant public, explanations of what he was doing and why, in clear, simple and collaborative terms. Do today's historians still debate the importance of Roosevelt, a saint, a skilled communicator or a manipulator? A combination of all this? The impact of the man that history remembers as a " Great Communicator " still has effects on America today.

And today?

The lack of strategic communication experts, and the often little understood need to create clear, open and trustworthy communication channels between the public, stakeholders, experts and the media, seems to be increasingly evident as one of the causes of the current crises in governments and industry.

From lack of trust to fake news to populism.

How else can we explain why, after the pro Brexit vote, the two most popular questions on Google UK were "What is Brexit" and "What is the EU"? How can we explain the failure of a "European Union" that passes through culture, passports, and the joining of forces? How can we explain informative speculation, the success of certain populist campaigns and fake news? The damage to the reputation of certain companies and the image of entire sectors?

How can current information and communication models be adapted to meet the growing needs of a public - citizens, professionals, politicians and academia - that has access to ever increasing amounts of information and of stimuli but little light, clarity and perspective on many issues?

Genuine EQ and AQ for increased agile awareness.

In the light of digital transformation, the communication models that will be more easily adaptable and implemented on a large scale will be based on social skills and emotional intelligence. We will be increasingly open to what experts call "AQ", adaptability quotient, which will allow us to understand scenarios and dynamics, and will make the most successful leaders masters of communication and relations, allowing them to better understand the public, engaging its involvement and, in some cases, even complicity.

In this context, stability will increasingly lose importance, being replaced by leverage on agility. Today's business world requires communication models that are increasingly shifting from a top-down approach to one which fluctuates between top-to-bottom and bottom-to-top. Motivated, talented, highly communicative, high EQ and AQ individuals in key positions in companies are now essential to the new face of business.

Modern businesses are increasingly globalised and they drive change through different platforms. This is a key aspect from various points of view, not least that of reputation management, a factor largely neglected by the major financial and governmental players during the last financial crisis.

It will no longer be possible to implement global and efficient communication systems using conventional communication methods, and they will require careful planning.

Reputation management is an essential part of business. Everything a company says, does, or neglects to do contributes to its reputation and brand equity. We must always remember that an essential component is listening and that communication is not a one-way process, but a multi-directional one, remembering that listening to all stakeholders, including the media, is key to all-round strategic communication, from branding to reputational impact.

After all, as the famous executive consultant and author Peter Drucker says, the most important thing in communication is hearing what isn’t said.

Manuela Andaloro

(info@smartbizhub.com)

 (As published in Focus ON’s cover story, article by Manuela Andaloro for Focus ON, 29th October 2018, download article in Italian here)

One thing to bet on? Yourself. #FearlessFridays

Making an impact, raising awareness on topics that are driving our society forward, connecting great minds and smart ideas, investing in human capital and core skills.  I worked on my passions and turned them into a business. 

Over the past 18 years, I’ve had quite the career journey: 12 different business cards and titles, 5 companies, 3 countries. My most recent addition is the business card I cherish the most: my 6th company, my own.

In each of those positions, I was amazed by the many great people who surrounded me and the power that came from our personal and professional relationships with each other. The most simple yet powerful leadership lesson I learned over my career was that success in life comes as much from what you know and from how you nourish your relationships.

Yet, many career-oriented colleagues continued to focus solely on the one most advertised pathway: the steep career ladder. No matter what the cost was, and what values it clashed with. Somehow considerably less time, energy, thought, and effort went into harnessing their networks and nourishing relationships with key stakeholders around them and outside of their immediate professional world, and even less went into improving vital skills such as self-awareness, emotional intelligence, charisma, self-brand, strengths awareness, to name a few. A pattern began to form for some of those colleagues: at some point, inevitably, their careers stalled, or stopped. Or they simply grew tired, less passionate, they found less purpose in what they had been doing. And the landscape outside did not look comforting. How many had invested in well-rounded networks and had efficiently mapped their strengths, skills and passions, had worked on their core "soft skills", or were clear on what drove them beyond their job, benchmarking them with reality and feasibility? Very few. 

I knew other colleagues who understood the importance of networks but didn’t know how to approach building them strategically. Or did not think they had the ‘social skills’ to maintain strong relationships, or sometimes they were lacking the time and the structure. So many fell back on emails and virtual relationships via social media, exchanges that were never of the same quality as relationships built in-person and over the years. A network built by chance, convenience, social media platforms, and the goodwill of friends, colleagues and business partners is also a bit haphazard.

What if?

What if there was a network where successful professionals could meet in-person and strategically build and strengthen their relationships? What if someone helped them to prioritize? What if a network offered high-impact training and in-person content normally meant for C-Suite executives, but it was made available for those who believe in making an impact and in the power of a strategic community and cross-industry exchanges?

#SmartPlan was born from the belief that our professional lives are based on three key pillars: education, experience and network. While we dedicate an incredible amount of time to the first two pillars, we often leave the strength of our networks to chance, luck, spare moments and digital platforms. Yet, research suggests that almost 90% of roles and business partnerships leverage personal relationships. And relationships need genuine interest and skills to be nourished and grow.

This is where #SmartPlan comes in. 

Our community brings together an elite group of diverse, successful professionals to increase the value we bring to each other and increase the impact we have on the world.

#SmartPlan’s mission is to accelerate the success of impact-makers by cultivating an inspiring and valuable in-person network while providing high-impact training on the latest sought-after skills, such as charisma, self awareness, self-brand, emotional intelligence in business, and much more.

The future of business and of work does no longer necessarily involve a straight-line 20 years career within the same corporation or even industry. 

“One of the paradoxes of the future will be that to succeed one will need to stand out from the crowd while at the same time being part of the crowd or, at least, the wise crowd. So, you will need to both stand out with your mastery and skills and simultaneously become part of a collection of other masters who together create value.

That’s because, in a future increasingly defined by innovation, the capacity to combine and connect know-how, competencies and networks will be key. It’s in this synthesis or combination that real innovative possibilities lie. So, whom you choose to connect with, and to whom they are connected, will be one of the defining aspects of future working life.

High-value networks will consist of a combination of strong relationships with a few knowledgeable people and a larger number of less-connected relationships with a more extensive network. Your high-value networks will connect you with people who are similarly specialised as well as those with very different competencies and outlooks. It is in the diversity of these broader networks, that the possibility of innovation lays.

I believe there is an opportunity over the coming decades to shape work and life in a manner that enables people to reconnect with what makes them happy and creates a high quality of experience. The breakdown of automated work, the rise of home-based working and the increase in the possibility of choice provide the foundation for a shift in focus, away from quantity consumed as the only measure of success.” (Source: The Future of Work, Lynda Gratton, organizational theorist, Professor of Management Practice,  London Business School).

Are you ready for the shifting balance of power? Visit #SmartPlan. 

M. 

(info@smart-plan.org)

Relationships matter. #FearlessFridays

What is the most important asset in your business? Your product or service? Your infrastructure? Capital? Not really.

Your most important asset is the relationships you build along the way. Whether with customers, suppliers or others in your supply chain, these are more important than any other element. I have been establishing two businesses on the same core asset: healthy relationships with like-minded, smart, competent people.

A few years ago I was assigned a project on one of the fastest growing core business segments of my then employer, a large Swiss financial services institution. I was asked to go and build relationships with a large portion of the company that covered interesting markets, and to position my team's products. To build bridges and create distribution platforms where none existed before. I had just joined the company and I had two challenges. I knew little of that particular niche financial product just yet, but this being 2011 I knew a lot about the financial crisis that had just swept across our world, I knew of its roots, as I had been fighting against them from my London based firm for over 4 years, and was only too familiar with high financial exposure, creative risk assessments and margin calls (yes, the film came later). On the downside, I knew nobody in that area of the company, had just arrived from London and was new to Switzerland. 

However what we offered was high quality and I was good at relationships. Within 10 months I had mastered the ins and outs of the products and implemented successful product distribution strategies for all global teams, creating new links and networks. This resulted in strong relationships with internal stakeholders, repeated sales of complex structures, and strong mutual trust. My then boss defined me as "outstanding at relationships", at what I did overall and he even went on to organize sessions where I was asked to explain my colleagues and peers how I had built such good bridges and nurtured such beneficial relationships. That was interesting to see. The answer was easy, I did not need powerpoint slides. I care and I listen. I seek real competence. I give before thinking of what's in it for me.

There is no secret, only the habit of committing to give value, to someone else, without asking for something in return. Gary Vaynerchuk calls this 51–49. Jesus called it the Golden Rule. (Read on here)

Most of my corporate life stakeholders are now a vital part of my businesses.

Fast forward of 7 years, I have made successful investments, invested in myself, left the corporate world after 17 years of fun and started successful businesses that were profitable in a matter of weeks. That is however not to say the road has been bump-free, that I have not made mistakes, that life is a fairy-tale or that I ever work less than an average of 12-14 hours a day.

If you want to put it into business terms, what I nourish is my - and my firm`s - social capital. Studies have shown that close to 90% of business decisions increasingly leverage personal relationships. Business relationships can be taken to a deeper level, to a level where trust and understanding, and even empathy come into play. I have always been a "people`s person", a listener and have consistently connected people and joined dots over the years. Whether I should take any real credit for this habit, or whether it is a result of family background, a strong interest in real genuine people that makes me stay clear from loud-mouthed incompetence, or an innate sense of business, is not something I know with certainty.

Trust plays a massive role in building business relationships. The late, famous salesman and public speaker, Zig Ziglar’s quote says it all.

“If they like you, they will listen to you. If they trust you, they will do business with you.”

Trust is built over time and is built on empathy. Understanding where your clients are coming from and understanding their challenges in dealing with a topic, can work wonders for building that relationship.

The best investment you can make in your business and your future is to spend time and build relationships that go deep. Take time to get to know people. People are the lowest common denominator in our businesses. People make, buy, deliver, sell and consume our products and services. Yet, in our current digital age, we will sacrifice relationships by depending solely on email or text to communicate.

Understand Needs

'It is in conversation that you discover people’s wants, needs, fears, suspicions, problems and perspective. Conversation takes a commitment of time and it is not a one-time event.

Make it a priority to develop deeper relationships with people. It will pay huge dividends in the quality of the relationships and the opportunities to help and serve one another. Focus on the other person and learning about them. Find ways to help them and they will find ways to help you.

Building strong relationships requires a commitment of time and effort. In my world, nothing happens unless it is on the calendar. Commit it to the calendar and then intentionally focus on relationship building.’ (Source: Forbes)

In the past few months I have met a good amount of very interesting and inspiring entrepreneurs, each with great stories, most working hard to bring and drive impact into our world, into people`s lives and businesses. 

It was during an exchange with lovely Katherina G. of Impact Hub, that Flurin`s story came up, and once concepts such as "measuring relationships" were mentioned, I knew I had to go and find out more. 

I met Flurin Capaul over tea a few weeks ago, he is the CEO and Founder of Boonea, and helps firms to leverage their relationships, improving significantly their B2B outreach. 

Q. Flurin, can you tell us a bit about you and your work?

A. Hi Manuela, of course. I am a 39 year old Swiss software engineer turned entrepreneur. I discovered an interest and love for programming in my late teens and even kicked off my own open source projects early on. After the army I started my career in the IT department of a large Swiss bank and attended night school while working full-time. Over the years I worked in New York, Singapore and Switzerland and noticed how important relationships are professionally as the basis for collaboration.

Q. How did you go from witnessing the importance of solid relationships to making a business out of it?

A. I believed that relationships could be measured, scientifically. I pitched a small test project internally to my then employer, developing an algorithm, running tests and gathering results. I did not have a specific focus at the beginning, I wanted to have solid research to build business cases on. Soon I knew that if we wanted to develop our project to the next level, I had to leave the company and iterate the idea outside of a corporate environment. I have always deeply enjoyed to organize, collaborate and turn ideas efficiently into reality and now I am able to put all this to full use. 

Q. So what does Boonea do?

A. Boonea builds AI for B2B sales. Relationships are key in sales and our technology understands relationships automatically. With our network we can boost sales funnels and drive business development goals ahead faster. From detecting warm leads to automated relationship building advice to alerting weak key account coverage. 

Q. Who are your clients?

A. Our clients are companies with at least 500 employees and a B2B business division. We measure relationships based on the communication data of the firm. Communicating is investing into relationships. Boonea has an approach to model the firm`s complete network. 

Q. What inspires you?

A. My biggest inspiration is Roger Schawinski, a Swiss media pioneer. He has an incredible can-do attitude, inspires confidence and has a strong bubbly personality. He likes to quote Jimmy Cliff “You can get it if you really want, but you must try and try”. This sums up running start up scenarios pretty accurately. 

Q. How do you get things done?

A. (Smiles) What helps me to get things done is a burn rate that depletes our liquidity... But more seriously - at the core lies the knowledge that we are on the absolute right track. Research as well as businesses confirm our belief: relationships are key in business development. Our approach of using artificial intelligence to help sales and business development teams focus on what they do best - developing relationships - puts a focus on collaboration.

Q. What drives you?

A. At a personal level my goal is to build a strong business, where every employee, customer and partner truly understands how real and genuine collaboration benefits everyone. 

Q. Any advice for our readers?

A. My personal mantra is that if the going get’s tough, we must keep our head up and persevere. Any tough situation will eventually blow over, you just don’t know when. This might not be very helpful in the moment, but the strong belief that there is light at the end of the tunnel always helps. Focusing on the bigger picture always helps - in life and business. 

Q. What would you practically change if you could to improve productivity?

A. If I’d have to reduce it to a single thing - don’t answer all your emails.  Not everything needs immediate attention, there is much more value in staying focused on a few key activities without letting disrupting notifications distract you. 

M.

(info@smartbizhub.com)