Business and social environments are always in a state of change, but early in this new century we’ve begun to witness radical transformation. Throughout my public relations career, which began in the 1970s and involved helping two U.S. startups by the names of Intel and Apple enter the Japan market, as well as government organizations in the telecommunication, semi-conductor and auto-parts industries, I’ve developed my own methodology. It’s a “relationship management” concept of PR, guided by ethics, two-way communication and self-correction, as opposed to simply communications management. This approach is even more relevant today with the advent of what I call hyper-globalization.
What is hyper-globalization?
In 2016, Harvard University economist Dani Rodrik wrote about the current high level of international trade as “simply put, we have pushed economic globalization too far — toward an impractical version that we might call ‘hyperglobalization.’” In addition to world trade, there’s another dimension of globalization created by the Internet and social media, which has interconnected almost all of humanity digitally. Geographical distance is no longer a barrier. While many don’t understand big data, they’re relying on creating it each time they use the Internet. Our lives are becoming increasingly integrated with our smart-phones. I use “hyper-globalization” to describe this radical new environment we’re living in.
The three forces
Once you understand the forces driving all this economic and social change, you’ll realize that the critical skill to survive and thrive today is PR as stakeholder relationship management, along with a process of ethical self-correction. Economists describe globalization in terms of economic activity, but limiting it to “trade-flows” keeps us from seeing clearly the new environment of hyper-globalization, which can be simply understood as:
Economic force of expansive growth in global trade and cross-border economic integration.
Human communication via the Internet force, in which instant global communication via social media and the Internet is changing norms of human communication and blurring sociocultural barriers.
Technological disruptive force of new innovations in technology driven by the Internet of things, big data, and artificial intelligence are bringing massive economic and rapid social change.
Moreover, we face rapid technological advancements in this new environment to such a degree that great advances in technology will not take centuries to materialize, but will occur much faster. It’s critical for PR professionals to see this rapid and disruptive technological change as the new norm.
Coping with disruptive change
Back in 1990, when international trade had just started to rapidly accelerate, General Motors and Ford where number one and two by revenues in the Fortune 500. In that same list for 2018 these companies have fallen to positions 10 and 11, respectively. Moreover, due to technological advances in electric batteries, motors and the advent of autonomous driving, auto manufactures now face competition from Tesla and Alphabet. The auto industry also faces massive disruption from Mobility as a Service, where drivers no longer need to own cars. In October 2018, Toyota and Softbank announced a collaboration to create their own MAAS, but in a “David and Goliath” twist, vacuum cleaner company Dyson announced its own plans to build electric vehicles. Dyson’s 2017 profits were $1.1 billion, compared to $22.7 billion for Toyota. In hyper-globalization, such challenges by newcomers will likely become common.
Besides such competitive challenges, companies in this new environment are more likely to face a crisis. In September 2018, a German court heard claims from some 4,000 Volkswagen AG shareholders, claiming nine billion euros for its failure to timely warn them of a U.S. regulatory investigation that resulted in the collapse of its share price. This could bring the total cost of its diesel emissions cheating scandal to $35 billion. These kinds of things have happened in the past, but in hyper-globalization a crisis is more likely to occur due to a rapid dissemination of information as well as the advent of “fake-news.”
Self-Correction Model of relationship management
While the VW crisis may be a result to events happening too quickly, it also reflects a lack of ethics. I’ve helped a number of large companies survive a crisis. From this experience, I developed what I call the Self-Correction Model of relationship management. The SCM is a process that successful companies will imbed in one form or another into the organization’s DNA. It’s founded on a commitment to ethics in a conscious effort to maintain two-way communications, and a determination to take continuous “self-corrective action” needed for the benefit of its many stakeholders. More importantly, when there’s little or no time to think out the best response to a challenge from disruptive change or a scandal, leaders need to take quick and effective action for which the SCM, when functioning within the organization, can give them the essential confidence that they’re taking self-corrective action and not just following their own narrow self-interest.
Companies press employees and executives to increase sales, lower costs and develop new products. While necessary to achieve results, this can exist at times in conflict with acting ethically. Moreover, we have free-will, in which to choose to act ethically or follow narrow self-interest. Because of this, the SCM uses “self-correction” rather than “adjustment” in recognition of human nature. Humans are not one-cell organisms automatically making “adjustments”; they make changes based on a sense of right and wrong. And they use what’s known in philosophy and physiology as “meta-cognition,” whereby a person is conscious of awareness and is able to apply a higher-order of thinking skills. Although for a company the objective is to change a product, service or business policy, it all begins with an individual changing the self. The SCM is about the individuals that form a company correcting it through a process of self-correction of the individuals within it.
Today, the three forces of hyper-globalization will multiply the external challenges that can threaten an organization’s existence and allow very little time to react. Leaders that can apply the relationship management of PR, and which can embed the Self-Correction Model, will be more likely to survive the new environment and to actively contribute to a better world.
Dr. Takashi Inoue, Ph.D., is Chairman and CEO of Inoue Public Relations Inc. in Tokyo. He is also a visiting professor at Kyoto University, Akita International University, and Communications University of China. The author of several books in Japanese on public relations, his latest book, “Public Relations in Hyper-globalization: Essential Relationship Management — A Japan Perspective, which is in English, takes on the challenges of globalization and new disruptive technologies.