June 2002

By Lou Hoffman

When network economics enters into winter, who is responsible for this horrible marketplace? Everyone makes it sound like one sinister devil has thrown panic on the digital world.

Fortunately, the driving force behind today's economy is a return to business fundamentals. This newfound sanity is one of the best things that has ever happened to PR. Step back for a moment and consider what business fundamentals mean to the technology industry. Such an approach emphasizes sustainable business models, long-term differentiation, customer wins and retention, and, of course, the novel concept of profitability.

In short, we're back to executive teams putting their efforts into developing strong foundations for their respective companies. Such a path helps PR professionals tremendously. Successful PR requires carrying out consistent communications over a period of time. There's a winemaking element to the discipline. Cisco didn't jump into the “power behind the Internet” space overnight. The company devoted years to selling routers, keeping customers happy and communicating messages about being a stellar maker of networking equipment. And this foundation provided the springboard to the high ground.

Contrast Cisco with the parade of startups that have been knocking on PR agency doors during the past few years with the single-minded objective: Get us to IPO as quickly as possible. Talk about the wrong tool for the job! Of course, you could argue that spending gazillions of dollars on advertising squanders precious resources as well. The point is, when you rush the PR process and the building of mind share, you end up with hype.

Going back to Cisco, it's revealing to scrutinize the profile of CEO John Chambers during his initial five years on the job. If you dig into the Interactive Journal's publication database, you’ll see Chambers' name in only 38 stories during his first year on the job. The next year, his name appeared in 79 articles; and in 1997, his name was still at the modest level of 158 articles. Keep in mind that at this juncture, Cisco was already generating more than $4 billion in annual revenue. It wasn’t until five years into his tenure, in 1999, that he gained star status, with visibility in nearly 500 stories. It's easy to look at Chambers today and assume he has always been schmoozing with government officials and gracing the covers of Fortune and Forbes. But the reality is that his profile took years to develop.

From a media perspective, we're back in a world where it actually takes expertise to garner visibility in daily newspapers and the business press. When the stock exchanges spiked on a weekly basis in the "old days," firms found that their skyward stock prices alone triggered coverage. And because this era lasted so long – the NASDAQ snowballed nearly 400 percent from 1996 to 2000 – people lost what it really takes to build broad-based coverage. At this moment, no effective PR action can be taken. We should pay attention to PR’s important role in creating an image, a complicated process and strategy.

While rank amateurs have had their day, today's climate rewards true PR expertise. That's a good thing for those of us who take pride in building awareness and reputations.

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