Wednesday, December 9, 2009

Learning from Dubai's Poor PR

Define a PR crisis for your organization....

For 'Dubai inc', it could be defined as causing major money markets to fall, having international media 'ridicule' fiscal policy/investments or having your ruler cartooned as drowning in a sea of debt on the front page of perhaps one the world's most respected newspapers.

Such is the past 10 days for Dubai.

What happened and what can we learn from this?

I think it went down something like this.... Picture a boardroom 50 stories high with all glass windows, over looking sun, sand, the beautiful crystal clear coast and major development including infrastructure that will soon be appearing in the Guinness Book of Records. Imagine the smell of coffee, and the obligatory three facial tissue boxes on the large, modern board room table, surrounded by black, ergonomic, modern mesh chairs.

Someone mentions in passing that there is a loan for something like $3.5-billion that needs to be paid by next month, but it's questionable whether money is in the right place to make that happen. "No problem," someone says, "everyone wants a piece of Dubai, we'll just ask our debtors to hold out for another 30 days". Someone more senior replies, "Interesting idea, but seeing as we're asking for 30 days, lets just ask for 6 months - I mean, why not?". Several nods of heads, because that's what you do when someone more senior suggests something.

A couple of faces look to the person who has to think about publicity. "No problem here. Next week is Eid so we'll all be taking it easy for a week and isn't the U.S. celebrating something along the lines of Thanks Giving so Wall Street will be closing early? We'll sent out a note to a couple of the media who always write exactly what we ask them, most media outlets will be on vacation - no one will remember a thing".

Nice idea... except... while that might of worked 2 or 3 years ago, in the dusk of 2009 there have been changes that have even permeated as far as Dubai...

1 - Media is less of a puppet. Days are gone when they simply 'cut and paste' from a release just because it comes from someone important. Many reasons for this - all of them good.

2 - Media never sleeps. Social media resonates 24/7 and the more advanced media groups have reorganized so they can work cross-globe 24/7, irrespective of cultural holidays.

3 - Never, ever, ever create a media vacuum. It's PR101, but if you do not provide the facts and all the facts to the media in a timely manner, the media will get the facts from somewhere else. That somewhere may be less than gracious. That somewhere may include so called experts that known nothing about what they talk. That somewhere might have a grudge to bare. In short - not good.

4 - It all comes out in the wash. Organizations that play it less than 100% clean risk dirty washing falling out of the hamper every now and again... and in tough financial times it can be like someone turned the hamper upside-down. Was always this way, but today's ultra-connected and social society means that no one is exempt and news travels fast.

The lessons are pretty simple really. It's not rocket science and someone should of seen this coming. Maybe they need a new PR agency...

Wow, did Dubai just get a beating in the international press!

It was felt around the world, but perhaps the most punishing in the ever-cynical British press.

Unfortunately the 'Dubai Machine' was not at its tip-top performance, and whomever was in charge of media on that day must of been out of the office celebrating Eid Al Adha, because they created a media vacuum that the press love as they can make things up and call on non-experienced 'experts' who really have no idea.

Lets set the story straight.

1 - Dubai World is NOT the country. Saying that 'Dubai World' has a $59b financial problem is not the same as saying that Dubai (or the United Arab Emirates) is bust! Dubai World is an investment company that manages and supervises a portfolio of businesses and projects for the Dubai government across a wide range of industry segments and projects that promote Dubai as a hub for commerce and trading. It is not, however, guaranteed by the Dubai Government.

2 - Some might argue that $59b is not a huge sum when compared with some other corporate bailouts (e.g. when Lehman Brothers went into bankruptcy protection, it owed more than $600 billion). In reality, Dubai World still has a lot of valuable divested assets, so their only shortfall is a US$3.5-billion loan, which the company is unable to repay by its December deadline.

3 - Concerns over the fallout from Dubai's debt problems contributed to the main European stock indexes falling over 3% on 26 November. This was followed by drops in Asian stocks on 27 November. However the European stock markets rebounded as investors' fears subsequently subsided as they decided the estimated debt wasn't big enough to trigger a systemic failure in global financial markets.

4 - And pretty much anything else you've heard around this subject is just false. Dubai is as bankrupt as 1920s Germany (The Guardian) - not true. India may take over Dubai as Russian oligarchs shoot at each other on the Burj Dubai (The Independent) - certainly not true. "There are not that many people when you go out shopping, and there are almost no Westerners in the bars and clubs," according to Sarah, speaking to the BBC - we don't know where she's going - certainly not the places this office socialize at! It's not a fiscal Armageddon. It's just not, in global terms, actually that significant.

But what sells newspapers?