Barack Obama as CEO of USA Inc.

In these truly challenging global economic times, many CEOs and managers of public companies may think a “duck and hide” approach to communications may be attractive until better days arrive. Here we aim to provide recommendations on how to manage communications in the current economic downturn.

As I write this, every major western market was down at least 30 percent in 2008. The Dow Jones Industrial Average dropped 34 percent while the Nasdaq Composite plummeted 40 percent for the year. In 2008, the BRIC countries, which represented some of the highest growth economies plunged, including: Russia down 67 percent, Brazil down 41 percent, India down 52 percent and China down 61 percent. Layoffs and write-offs are a common occurrence. And while we can all hope for 2009 to be a better year for the world economy and stock markets, there are no guarantees. A CEO, whether the leader of a publicly-traded company, a non-profit or even the President of the United States, have to operate effectively in a time of crisis. As we approach the upcoming U.S. presidential inauguration, we look to draw communications parallels to the political arena as President-elect Barack Obama continues to face the same daunting economic environment.

Regardless of your political affiliation, the numbers make it difficult to deny that Obama has been successful, first in getting elected and second, in making the transition to the presidency. According to an early December 2008 poll, Americans approve of Obama’s conduct and decisions in the transition of power. Almost 80 percent of Americans surveyed in a CNN/Opinion Research Corporation survey say they approve of how Barack Obama is handling the transition.[1]

We believe that certain lessons from President-elect Obama’s ascent to the Presidency and his success in garnering the public support and perceptions will serve CEOs, CFOs and senior managers well from an investor relations standpoint.

The lessons discussed below do not represent an argument that Obama’s policies are positive, that he will be a well-regarded President, or that the fortunes of the United States will appreciably improve during Mr. Obama’s administration.

Raise Visiblity - Obama’s Successful Marketing
Crain’s Chicago Business noted in a November 17, 2008 article that Obama’s campaign team “achieved unprecedented success in their use of direct and database marketing for a politician.” Obama’s three million strong database was basically created in-house. Paul Price, CEO of the direct marketing agency Rapp, pointed out that Obama’s utilization of database marketing and social networking helped develop a deeply loyal voting bloc.[2]

Investor relations lessons:
• Determine whether your investor relations function is fully capitalizing on the intelligence on current investors as well as potential investors. Companies should seek to combine the leverage of information from such sources as current shareholder lists, email communications lists, investment conference contacts, road show meeting contacts, event and online webcast participants, investor databases and your investor relations agency’s knowledge and contacts. The larger the qualified audience is, the more your audience will respond to your messages.
• Closely monitor and analyze changes to your current holders by examining public institutional and fund filings and possibly, initiating shareholder identification studies.
• Assess or develop a list of potential targets, recognizing that given intense stock market weakness, value or special situation investors may now be interested in your stock.

Manage Public Perception - Obama Cancels Fireworks Obama cancelled the fireworks planned for his election evening victory because he believed it set the wrong tone.[3]

Investor Relations lessons:
• Take into account appearances in view of these difficult economic times.
• Be careful of making flippant or careless comments to investors and think about how specific actions/activities will appear not only to equity investors, but fixed income holders, employees, politicians and the media. If only the U.S. automobile executives had understood this before they appeared before Congress requesting tax dollars to save their companies.

Read Your Audience - Obama’s Early Appointments
Gerald Seib of The Wall Street Journal stated in “Not Right or Left, but Forward” that Obama correctly read the results of the Presidential election as a demonstration that Americans are more focused on competency than ideology. (Seib contends that other elections were more about ideology, notably Ronald Reagan’s election in 1980). Obama’s early appointments have been both experienced and moderate. Certainly, Obama, with his initial choices of advisors and appointments is taking a chance of disappointing the far-left of his party, but he seems willing to take that risk.[4]

Investor Relations lessons:
• Obama’s early choices demonstrate the importance of understanding your audience and monitoring changes in investor perception. Is your investor audience more interested now in hearing about moves to strengthen your balance sheet than high reward/high risk growth initiatives?
• Has your audience fundamentally changed because of shifts in your shareholder base and therefore, do you need to address and possibly adjust the corporate messages to account for the new shareholders’ needs from a communications standpoint?
• Perception and feedback studies are crucial in knowing and helping you understand your audience and identify where change is warranted.

Keep Communicating - Obama Sets Record in News Conferences
In the initial 22 days following his victory on November 4th, Obama fielded 22 questions from reporters and conducted two sit-down television interviews. His overall press conference activity level surpassed the last four Presidents-elect.[5]

Investor Relations lessons:
• In these difficult times, being visible and accessible to investors is extremely important.
• Going into “hiding” and canceling meetings are lost opportunities for imparting your messages and addressing investor concerns.
• Disappearing CEOs and CFOs can magnify the negative impact of rumors and speculation.
• Taking control of the process and being proactive, even if it involves some short-term discomfort, will make you more effective in the long run.

Identifying Appropriate Goals and Measures - Obama’s Top Advisors Emphasize Long-term Economic Goals
The President-Elect’s top advisors rejected an emphasis on “short-term policies that generate consumer spending,” instead stressing the need to invest in long-term growth. The economic situation, they noted, will worsen more than previously forecast in the short-term with double-digit unemployment by the end of 2009.[6]

Investor Relations lessons:
• Don’t over promise short-term results.
• Help define for investors what “success” should mean for them.
• Stress actions and decisions to significantly improve the intermediate or long-term situation if your short-term outlook is bleak.
• Create messages that help investors focus on where the solutions lie, rather than where the problems came from.

To Do’s for 2009:
• Evaluate and possibly enhance your investor targeting and identification of shareholders
• Always remember appearances count, especially in these tough times
• Raise your understanding of your investor audience and be on the alert for changes to investor perceptions
• Be Visible. Don’t hide/cancel investor meetings
• Stress solutions as well as identify and define appropriate metrics for investors to evaluate performance

We hope for all that the year ahead brings peace, stability and greater confidence and access to capital. To the extent we can assist you, please be in touch.

Anne McBride
Chairman
Grayling Investor Relations

Todd Gerlough
Director of Research
Grayling Investor Relations

[1] Paul Steinhauser, “Poll: 79% approve of the way Obama is handling transition,” CNN.com, December 9, 2008
[2] Michael Bush, “Another first for Obama; Success in utilizing database marketing unparalleled for a pol,” Crain’s Chicago Business, November 17, 2008
[3] Richard Simon and Jill Zuckman, “Flashy is out for ‘hard times’ inauguration,” South Florida Sun-Sentinel, December 14, 2008
[4] Gerald Seib, “Not Right or Left, but Forward,” The Wall Street Journal, December 5, 2008
[5] Christina Bellantoni, “Obama sets record in news conferences,” The Washington Times, November 27, 2008
[6] Michael Kitchen, “Obama aides stress long-term goals,” Marketwatch, December 28.2008