Blogs and the Corporate Machine

A couple weeks ago I told you about an Economist.com article on the increasing role of public relations in corporate communications. Today, the Economist has an article about what blogging is doing to the corporate environment:

The spread of “social media” across the internet—such as online discussion groups, e-mailing lists and blogs—has brought forth a new breed of brand assassin, who can materialise from nowhere and savage a firm's reputation. Often the assault is warranted; sometimes it is not. But accuracy is not necessarily the issue. One of the main reasons that executives find bloggers so very challenging is because, unlike other “stakeholders”, they rarely belong to well-organised groups. That makes them harder to identify, appease and control.

The article also points out the importance of listening to what the blogosphere is saying about your company.

One firm that could have saved itself a lot of trouble is Diebold, an Ohio-based firm that makes automated cash machines. After America's presidential election in 2000, which featured a vote-counting fiasco in Florida, the firm decided to expand a part of its business that made electronic voting machines by acquiring Global Election Systems (GES) in early 2002. The deal turned into a disaster when computer scientists and voting-rights groups educated the public about problems with machines such as those made by GES. The critics complained that GES's voting devices could not leave an audit trail because, among other flaws, they did not print paper ballots. By 2004 the mainstream print and broadcast media were also hammering away on this issue, leading several states, including Ohio, to reject GES's machines.

Evolve24, a consultancy which analyses corporate reputations and watches online trends closely, has used its blog-sniffing software to find out what was available on the internet before Diebold bought GES. It discovered that not only were a couple of voting-rights activists calling attention to the machines' drawbacks on their blogs well before the acquisition, but also that research papers highlighting the problems were available on technical websites. Diebold did traditional forms of due diligence before buying GES, such as verifying its financial health. But by ignoring the blogosphere, it failed to spot some crucial risks.

Get the full article from Economist.com here.

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