To sell effectively stay on message. That's the advice of communications expert Carmine Gallo:
“Every product, idea, or initiative should have a single, key message that is delivered consistently, word for word, across all of your marketing and branding platforms. [... ] Every single person in your company believes in those messages and has them memorized, ready to tell them to anyone who asks about your product; consistency is the key"
Whether by design or accident, the investment industry is a case study in how to market and promote the interests of an industry by staying on message.
The strategy is straightforward.
First draw four bubbles on a blank page. In the center write "maximize shareholder value". A neat, simple and memorable idea. In the remaining bubbles write "Shareholders are owners", "Directors are agents" and "Good for society". These supporting messages reinforce the central soundbite of shareholder primacy:
Next, repeat the message over and over, word for word.
Sovereign wealth fund, Oslo-based Norges Bank Investment Management (NBIM) got the memo. It describes the "universal" role for the board in this note:
- The board must act as a representative of the owners of equity capital;
- The board is responsible for establishing a corporate governance system that alleviates agency costs; and
- The board must ensure adequate and honest information to the market and the shareholders.
So did business leaders like Yahoo who released a statement this week that it "remains focused on creating shareholder value through its world-class internet assets", and politicians like Sir Vince Cable who recently asserted that shareholders “own” banks and media outlets like the Economist that report:
Shareholders own companies. Managers and directors should serve them. If the owners do not like the way their servants are performing, they have a right to do something about it.
It seems all but a vocal minority of journalists are keeping to the script.
That business leaders and politicians stay on message is perhaps understandable. After all, that's what many have been taught. But how did the independent-minded media get caught up as the mouthpiece for the investment industry? One answer is that reducing commercial decisions to a shareholder value equation makes reporting easier. Another is the way journalists are instructed to report on corporate governance.
In 2012, the International Finance Corporation published Who's Running the Company - A guide to Reporting on Corporate Governance. This Guide is designed for reporters and editors to help journalists develop stories that examine how a company is governed. While the guide reflects the importance of stakeholders throughout its many pages, in a number of key areas it clearly keeps on message:
The board’s responsibilities broadly are to protect the company’s interests and the shareholders’ assets and ensure a return on their investment.
Yet another perfect strategy in marketing MSV.
If the investment industry promotes the message of maximizing our (shareholder) value it's self-serving. If the media does it it enough times it must be true.
About the Marketing MSV Series. In the lead up to this year's Annual Global Drucker Forum, November 13-14 in Vienna, I'm posting a series of unofficial perspectives on the way maximizing shareholder value is marketed. My point is not that shareholder primacy is wrong (it doesn't have to be), but that if we don't address the ways MSV is marketed, we'll never know if there's something better.