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The Market Is Down · Communication Breakdown

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Welcome back to Communication Breakdown, a new podcast from the Observatory on Corporate
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Reputation.
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Thanks for joining us.
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I'm Steve Dowling in Silicon Valley.
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And I'm Craig Carroll in New York City.
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Each week Steve and I take a look at strategies companies are using to shape headlines and
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sometimes save their skins.
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It's a post game show for PR Pros.
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This week, how to talk about tariffs as the market takes a tumble?
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After soaring to record levels in the post election, Trump bump, the S&P 500 and other
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major indices have been plummeting.
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The S&P at one point this week was off nearly 10% from its all time high, set just three
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weeks prior.
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And market forecasters have been furiously revising their growth targets downward, talking
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more and more about the chances of an economic recession this year.
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It's all a reaction to President Trump's aggressive and unpredictable trade policy, plus
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nagging inflation and consumers getting jittery, the Dow's 478 point drop on Tuesday coincided
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with a meeting at the White House where Trump came face to face with more than 100 CEOs
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in town for the business round table.
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And did they give them an air fill?
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Apparently not.
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Steve, there was plenty of reporting this week that CEOs are privately appalled by the
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whipsaltair policies, but in public, they're still keeping them.
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Will the sharp market declines, prompt any change in behavior?
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This is one of the persistent questions we've been asking on this podcast since November,
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which is what will it take, at what point does some policy become too much for business
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to stay quiet?
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And we've found out this week we're not the only ones asking that question.
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Alongside the business round table, Yale School of Management this week had a similar
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gathering of CEOs in Washington and as a Wall Street Journal reported, they took a straw
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poll, would they ask, how much more do stock markets need to collapse before CEOs need to
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speak out collectively?
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And a 20% decline got the strongest result, 24%, 22%, it would take a 30% decline, 10%
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set of 50% decline.
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And 24% of CEOs said it's not our role, which I took to mean never.
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I think I understand two of these answers a little bit.
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The 44% saying it would take a 20% decline and 24% saying it's not our role.
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I ignore the 30% and 50% options because there are kind of variations on a theme.
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But if it takes a 20% further decline in the stock markets for CEOs to speak out, I think
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that's really representing the first hypothetical opportunity they're being given.
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And that's a pretty healthy response, 44%.
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I think it reflects that CEOs recognize what trajectory we're on is not good and their
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patience is being tested because they see very clearly what's causing this volatility.
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You know, CEOs know that they're going to have to speak up eventually.
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The question is when, not if, they're watching the volatility and they see the impact on
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their companies.
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And I mentioned they're just calculating the right moment to step in.
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The straw poll tells us that for nearly half of them, a 20% mark is the tipping point.
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That's not just theoretical.
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That's a signal.
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It tells us that they recognize that silence is a shelf life.
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But here's the bigger issue by the time the market drops 20% the stories are to have been
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written.
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So business leaders wait until the damage is fully visible.
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The words won't shape the debate.
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They're just going to be a reaction to it.
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And the absence of clear credible voices, I'd say, you know, people are going to fill
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the gaps with whatever explanations fit the worldview.
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Yeah, I think that's why the 30 and 50% decline answers don't really matter.
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Yeah, it's that it needs to be a drop that people recognize is significant and then, you
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know, for them to weigh in the, the not our role answers, though, I think are almost as
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interesting.
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That was one in four CEOs at this straw poll.
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And while I disagree, I think I know where it comes from.
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It's a pretty basic and, you know, safe and useful corporate communications policy, which
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is we don't comment on day to day movements of the stock or the stock market.
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And executives have been sticking to that with the exception of some financial services CEOs
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because, you know, that's their business.
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And I think that's fine.
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You know, why borrow trouble?
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But if the market volatility continues, if the indices keep dropping or they start swinging
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wildly up and down, I think there is a role for business leaders to play here.
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And that's as educators.
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Yeah.
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You don't really need to sound the alarm anymore.
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People already hear it, especially, you know, if you get down to the 20, 30% drop.
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And people are going to be seeing it in their 401Ks to your point.
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But so far, all they're hearing by way of explanation is these sort of euphemistic language
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from the administration like there's going to be a period of transition or, you know, Trump
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famously said a little disruption we talked about last week.
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Businesses can be specific about the impact on pricing, on their supply chains.
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And they've got the data on customer behavior, which we've been seeing.
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So it's a very authoritative position to be in and in a period of economic uncertainty,
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I've got to believe that people are going to be looking for reliable information like
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that.
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Yeah.
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You know, you're absolutely right.
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You know, this isn't just about seeing a setting, the alarm, the alarm started gone
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off in real time on earnings calls and board meetings.
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And just about every 401K statement, you know, the, I think the real role for business
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leaders now is it to warn, it's to translate.
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Yeah.
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Then it moved beyond vague economic abstractions and give people some clear practical understanding
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of what's happening.
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Yeah.
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Yeah.
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Yeah.
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Because let's, let's be honest, the message right now is weak.
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You mentioned a little disruption, a little, you know, a transition period.
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Yeah.
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You know, the thing is that's not an explanation.
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That's an evasion.
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What does that, what does that even mean?
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Yeah.
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I mean, it's, it's almost worse than saying nothing because you're saying something
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vague that people can interpret in their own ways.
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And people's imaginations can be a lot worse than reality if they, if they're worried.
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Consumers don't need to hear it's going to be bumpy.
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They need to know how high the toll is going to be at the next exit.
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Yeah.
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Employees don't need reassurance about long term resilience.
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They need to know if their jobs are going to be at risk between now and the next quarter.
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Business leaders sit at an incredible wealth of data, pricing, supply chains, consumer
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behavior.
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And when people don't get straight talk from the folks who actually have the numbers,
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don't get explanations from political spin, social media rumors and get reactions.
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And that's how volatility turns into panic.
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So, you know, if CEOs wants stability, they're going to have to start providing a little
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bit of clarity here.
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Yeah.
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I think I'll take it a step further.
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The public concern about the markets gives more weight and urgency to what business says.
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I noticed on, on other networks, we started seeing more clips from CNBC and Fox business.
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The volatility if it persists or becomes a crisis.
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That's a long term opportunity for business to reassert some leadership.
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And I say opportunity because the business leaders are not the ones causing it.
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Right.
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They don't need to point fingers, but I don't think they need to wait for another 20%
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here to start speaking up.
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And we're seeing some of that starting to happen because it has to because it's unavoidable.
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We talked last week about the spate of retail earnings, target and best buy, talking about
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prices going up because of tariffs.
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This week it was Delta's CEO who revised their guidance downward saying both corporate
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and consumer spending started to stall in February.
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My point is that this is going to become unavoidable.
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So, corporate leaders have an opportunity to get ahead of it and they don't have to put
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their thumb in Trump's eye.
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Just give people a straightforward explanation of what's going on.
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Yeah.
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Look, you know, for the past two months, our audience has been noting that chaos may
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be a crisis management, but it may be very soon.
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Right.
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If we don't get this right, that this could have turned into crisis management.
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But here's the challenge.
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CEOs have got to generate clarity without overstepping their bounds.
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They have to say something that's still going to be true six weeks from now and still quite
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relevant next quarter.
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They're not policy makers.
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They're not traders calling daily market swings.
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What they are is the connective tissue between what's happening in Washington and what's
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happening in the economy.
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They can't afford to be reckless, but they also can't afford to be absent.
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So, I think the job is that it isn't just explaining what's happening now.
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It's helping people understand what signals actually matter.
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You know, what's temporary noise and what's a real shift?
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And that's, I think, where business leaders can add some real value.
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They don't have to pick political fights and they don't have to make predictions.
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But if they don't start shaping the conversation somewhat, they're always going to be reacting
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to someone else's version of the reality.
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Yeah.
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You said a minute ago that employees want to know if they're still going to have jobs.
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That's a tough position for a business leader to be in because they can't make promises.
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Nobody knows what the next twist in this saga will be.
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But to your point, business leaders can talk about the factors, the impact that these
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wild swings have, the triggers, you know, perhaps.
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And I think that Ford's CEO, we've talked about his comments a lot, Jim Farley, when he said
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I think was a month ago, that, you know, these jobs will be at risk if the policy continues
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in this direction.
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And it's not a threat.
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It's really just playing out, you know, what he's seeing from these policies.
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And I think people took that seriously, you know, to his credit.
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Yeah.
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You know, one of the things we always talked about in crisis is how crisis creates opportunities
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and you fit on that a little bit here.
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Yeah.
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I'll say a couple things.
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One, the crisis is always going to create some type of opening.
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The question is who's driving the narrative inside of that opening because, you know, business
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isn't speaking up.
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Someone else is going to take the wheel.
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Politicians will certainly seize the moment to push longstanding agendas.
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Regulators are going to tighten their grip.
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Activists are going to mobilize.
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But right now it just seems like business is stuck playing defensive.
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Yeah.
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So I would say, you know, to your point about opportunity, companies have a choice right
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now.
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They can either treat this as a crisis that they're just trying to survive or they can use
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it as an opportunity to lead.
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That doesn't mean exploiting uncertainty.
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It means defining what stability actually looks like.
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It means providing a roadmap for what's next rather than waiting for washing to impose one
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because if they don't step up, they're just going to let a crisis go to waste.
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They're going to let somebody else decide what comes after them.
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I have some sympathy for the corporate spokespeople and the business leaders in this episode.
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With you have these on again, off again, tariffs.
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I think it's hard to know what you're even commenting on.
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So like, your instinct is why, why wait in are the tariffs about long term job creation?
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Sometimes apparently, and who would argue, you know, with that, other times they're about
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border security or stopping traffic like that's the messaging that's coming from the White
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House.
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And changing every time Trump has a photo op.
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Yeah, but I think there's a mindset shift here that could also help with this, right?
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When you don't know what direction things are going to go.
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You know, in any crisis, there's going to be a fundamental shift in how people think about
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freedom.
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At first, it's all about freedom from instability, freedom from market chaos or freedom from
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bad policy decisions.
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And that, I think, right now, so a lot of business leaders are stuck right now.
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They're focused on escaping the turbulence, minimizing risk and keeping their heads down.
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But I think the real opportunity, the leadership moment is about shifting from freedom from
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to freedom to, and what I mean by that is the freedom to define the next stage of economic
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growth, the freedom to reset industry norms or the freedom to lead the conversation rather
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than reacting to it.
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And if businesses don't make that shift, they're not just letting a crisis go to waste.
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They're letting somebody else define what the post-crisis world is going to look like.
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And if history tells us anything, it's that the people who shape what comes next aren't
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always going to understand how the economy actually works.
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The question for CEOs, isn't just how do we survive this?
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It's, what do we want to build on on the other side?
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And tied to that, it's, how can we do it in a way that's still true six days from now?
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Six weeks from now.
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I mean, we can certainly think about next quarter, next year, but right now we just need
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the clarity and confidence so we can say something that is still true six days from now.
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Well, and that's why the White House, I think, is making the situation all the more complicated
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for business leaders.
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If you took one day this week, it was six hours between when Trump was doubling whatever
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tariffs and then walked that back.
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So I think when you talk about the freedom from as you outlined earlier, I think that's
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where these market gyrations are really sort of forcing the issue of making it and so urgent
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that CEOs don't have the luxury of avoiding this topic.
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Is there an opportunity?
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I think so.
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But yeah, it's really hard to weigh in when you don't know, you know, if there is, if there
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is actually a consistent policy to position yourself against or for or at least commenting
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in a relevant way, if the ground is always shifting beneath you.
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I think that one good example this week was after the business round table meeting, we heard
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David Solomon, CEO of Goldman Sachs, and he said the business community understands
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what the president is trying to do with tariffs.
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I think understands and trying the operative words there, but he also said that business
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will always want lower tariffs and certainty on the policy agenda, right?
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And I thought it was a good bit of messaging on his part, hopefully telegraphing to the
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White House, what business community needs to hear.
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Steve Schwarzman of the Blackstone Group had similar comments that were picked up.
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And we see some of the White House surrogates, notably I think the Treasury Secretary on
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Thursday trying to focus the message on that long term goal.
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And again, if your long term goal is job creation, who's going to argue against that?
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How they're doing it, how they seem to be getting there is really all over the chart right
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now.
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And importantly, I think when you're talking about that as a message, getting that kind
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of message disciplined from Trump that just feels like too tall of an order.
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Exactly, right?
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You can't counter policy when the policy itself is a moving target.
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And certainly that's what makes it so tougher CEOs right now.
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Because if they push back too hard, they risk looking like they're attacking an initiative
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that might shift again tomorrow.
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But if they stay silent, they look weak, they look complicit.
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And yet if they try to engage constructively, they're negotiating against the policy that
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hasn't even settled on its own justification yet.
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That's what I think Solomon did a good job with these comments because the two points that
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he made, unfortunately, they were generally lower down in the coverage.
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But when he talks about always wanting lower tariffs and always wanting certainty,
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those are things that are not going to change.
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And that's the safe zone for commentary on a policy that's whipsawing all over the place.
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I agree, right?
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That's where we're seeing the careful head statements that David Solomon is making where
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CEOs acknowledge understanding without endorsing a policy.
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That's the only safe putting right now.
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They can't attack the tear of directly because tomorrow they might be about something else
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entirely.
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So instead, they've got to find a way to anchor the conversation around certainty, consistency,
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lower tariffs as a principle.
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It's not about arguing the specifics of today's tariff announcement.
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It's about reinforcing the idea that stability and policy is what business actually needs.
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And I think that's the real challenge.
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How do you push back on economic chaos without making yourself the target?
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The best approach isn't to simply argue about why tariffs are bad today.
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It's to keep emphasizing that the one thing market date more than bad policy is uncertainty.
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Right?
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So, you know, business can't plan when the goalposts are moving every 24 hours.
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And that's the message that is needed to keep hammering.
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And frankly, it's a little message that holds up no matter what the White House decides
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to call the tariffs tomorrow.
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All right.
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Well, Craig, as we move towards wrapping up, let's talk about, you know, we certainly
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don't know what the next week or month, the next six hours, days, weeks hold as far as
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a tariff policy such as it is.
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But how can communications leaders be preparing and applying, you know, what we've been talking
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about as far as navigating this period of uncertainty, especially as the market is
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whipsawing around?
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I've got to say that I look at this calendar and I see earnings season for most companies
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on the horizon.
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And that has got to be a forcing function or it will be really soon because I can't think
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of a company of any size that's not going to get asked about the tariff policy or the,
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you know, the macroeconomic situation.
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And I'm sure they've each got their own point of view on how it's affecting their own company.
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Yeah.
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But being prepared for that, and I think applying some of the ideas that we've been talking
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about this week is a is a good thing now that we're, you know, halfway through March
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and April's right around the corner.
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Yeah.
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I would say, you know, it's we looked towards wrapping up and you know, just being very clear,
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the real challenge here is that clarity isn't something that you wait for.
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It's something you generate.
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Correct.
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And in times of uncertainty, too many leaders right now are currently thinking that their
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job is to interpret the chaos.
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But the ones who actually shape outcomes don't just interpret the imposed clarity where
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there is none.
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The real challenge there because it's generating clarity in a way that is still true six days
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from now, six weeks from now and that that certainly I think the idea to keep in mind is,
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you know, what, what has to be true.
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I think, you know, the shift that business leaders need to make is understanding that this
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isn't crisis management.
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It's chaos management.
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Crisis have clear beginnings and endings and chaos doesn't, you know, chaos is overlapping.
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It's evolving.
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It's constant and it's a kind of environment where hesitation is a liability.
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So if you're waiting for certain, you're already behind.
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So what's the counter move?
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Stabilization.
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And if Washington's introducing chaos, business has to be the one to generate clarity.
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And that means leaning into what we've talked about before the chaos triangle of principles,
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priorities and perspective here, principles, meaning stick to the fundamentals, your supply
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chain pricing, workforce stability.
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These are the non-negotiables, your priorities.
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Don't be chasing every headline, anchor decisions in terms of long term business needs,
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not policy whiplash.
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And perspective respond, but respond with something that's still going to be true six days
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from now, six weeks from now, and if it won't hold up, it's probably not worth saying.
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Well put, that's our show for this week.
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We want to thank Shawn P. Neal and the People Forward Network for making our podcast possible.
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If you would like to tell us what you think or if you have a topic you'd like to suggest
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for our show, we'd love to hear from you.
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Our email address is podcast@ocrnetwork.com.
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Communication breakdown is a production of the observatory on corporate reputation,
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I'm Steve Dowling.
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And that's great, Carol.
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Thanks for listening.
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We'll be back next week.
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[MUSIC]
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