Larry Ellison's much-touted concept of the Network Computer ( NC) went into
hibernation and Oracle also lost its top executive for that division. Several
other vendors have quietly dropped their products. Similarly, Apple's Newton
has been abandoned by the company, six years after then-chairman John Scully's
much-touted technology was introduced. About a decade ago, the artificial
intelligence industry (expected at the time to be the next major technology
growth area) fragmented into a dozen players, and never reached their lofty
revenue or market projections. In fact, the stigma is still so bad that you
would be hard pressed to see the term 'artificial intelligence' used today,
even in actual applications. (The term 'expert systems' is preferred.)
All of these events are warnings for emerging growth companies on the use
(or more accurately, misuse) of public relations as a tool to help them attain
their business and industry goals. The irony is that public relations, if
properly understood and utilized by emerging growth companies, is perhaps
the most effective tool to rapidly establish a foothold in a technology market
and then to expand that beachhead into market share. However, any tool, if
misused, can cut both ways, which often results in self-inflicted wounds.
How can an emerging growth company effectively utilize public relations to
support its continued growth, yet avoid the dangers of misuse? Here are some
guidelines for the management team:
Keep Your Predictions Within the Zone of Credibility
Enthusiasm and vision are two important characteristics for emerging growth
companies. However, this adrenalin has to be tempered with the concept of
credibility - that at some point in the not-to-distant future, you will have
your remarks compared to reality. Everyone is familiar with the venture capital
yardstick that your business plan better show you to be a $50 million company
in five years, and suitable to go public with a 40% annual return on the
VC money, or they won't even talk to you. But how many companies reach that
goal? Not many - which is why the VC companies need to have such high rates
of return - to be able to write off all the turkeys. (Notice that VC companies
never release figures on how much they write off each year? That yardstick
would show which ones are better at spotting the real opportunities.)
That being said, you still have to make projections and forecasts. Better
to keep the forecasts reasonable such that you can meet or hopefully beat
them. The tempered approach today will pay off in increased credibility in
another 12 to 18 months. There's another side to that - when will your company
have a higher value (and you will correspondingly know how much it is worth)
- at the forecasting stage, or once you have reached your initial targets?
Today's temperance can pay off in tomorrow's dollars.
Use Technology or Business-Case Analogies, Not Specific Company
Analogies
One of the most powerful public relations communication tools is the analogy
- a comparison to some set of facts or circumstances that your audience already
knows. How many times have you heard the cliches batted around that a certain
company will be the next Yahoo, eBay or Microsoft? How often do you think
that comparison is taken at face value? (Hence resulting in an instant lack
of credibility - just when credibility is desperately needed.) The big danger
there is that the use of those comparisons provide specific, historical
benchmarks that you will be compared to. Isn't it much better to say "This
will do for our technology market what the graphical browsers did for the
text-based Internet." You are still biting off a lot with that remark, but
at least you haven't pinned yourself down to a specific performance that
you may regret later. For example, if you tout yourself as the next Microsoft,
you may find that you are being held up for some substantial stock options
packages when trying to recruit key employees. After all - you created the
impression of the next Microsoft' and everyone knows how much money the initial
employees of Microsoft made on their stock options (all of the inital founders
are billionaires.) If you set the expectation, by design or default - you
had better be able to meet it.
Explain Your Analogy- Don't Leave it Open to Interpretation
Even though the correct selection of analogies for your company, products
or market potential can allow you a lot of wiggle room, those analogies are
best tempered by an explanation of why you selected that analogy, and why
you think it is appropriate. Otherwise, the audience for your remarks (the
media, potential customers, investors, current and future employees) will
draw their own conclusions - which may not be what you had in mind. Consider
using a broad-bush analogy to get attention, then narrow that comparison
by further clarification so that you wind up in a space where you can fulfill
the expectation. For example, if you say that you software will do for your
market what secure encryption did for e-commerce - then quickly explain by
that you mean it will help customers to accept the new process and complete
the transaction - that still leaves a lot of room for the realistic expectation
of what your product will do.
Provide Periodic Updates to Your Forecast
Credibility is critical in sales, marketing and public relations. The more
you can demonstrate the ability to forecast accurately and hit your targets,
the more credibility and leverage you will gain. Conversely, do you notice
what happens to the stock prices of publicly-traded companies that do not
meet their earnings or revenue forecasts (and especially to those who did
not provide a head's up to the analysts?) The stock price takes a pounding
- often dramatically and immediately. Similarly, your use of public relations
to disseminate your forecasts and projections should be followed by periodic
updates that key back to those forecasts. If you want your company to be
a company to watch' - then you had better expect that you are being watched
- and your projections are not necessarily forgotten. If certain members
of the management team are aggressively pushing for dramatic (and questionable)
projections - you might just want to ask them - "Will you be around to explain
this forecast"?
Public relations is a powerful and viable tool for the emerging growth company
to gain attention both for itself, its products and markets. Like any tool,
it can be used correctly or incorrectly. Using public relations to set realistic
expectations for your company's performance can pay significant dividends
when you meet, or hopefully exceed, those expectations. Also, management's
understanding of the need to establish and maintain accurate and open
communications with the various publics' in its industry can establish early-on
credibility and positioning as a company to watch'.
Public relations, in a nutshell, is the management of the communications
process between a company and its publics'. A public' is simply a group of
individuals that have a common characteristic or interest which make them
of value to the company. Customers, potential staff, investors, third party
developers, strategic allies, venture capitalists, stockholders, etc., -
each is a public'- with a specific communication need (e.g., of specific
interest to the company for a specific reason) and that should be kept in
mind when developing a public relations program to reach that specific public'.
A more thorough definition of public relations would be that it is the management
of the two-way communication process between a company and its publics, for
the purpose of gaining understanding and acceptance of the company's corporate
goals, products and market objectives.
Copyright Jeffrey Geibel All Rights Reserved.
Public Relations for Emerging Growth Companies - A Definition
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