Thursday, November 20, 2008

On The Small Matter of Optics (Stephanie Fierman)

"Optics," in Wall Street parlance, means how something looks or appears on its face (without a lot of detail).

It's ironic that the phrase originates in the investment community - because said community seems particularly blind to the topic and its power.

I submit to you the following:

1. AIG used taxpayer money on sales retreats, replete with spa treatments. After getting pilloried in the press for such profligacy, the firm went ahead and used more taxpayer money on deferred comp for the top 5% of its executives. Earth to AIG, come in AIG...

2. The CEOs of GM, Chrysler and Ford flew to Washington DC in private jets this week to plead for a bailout. The Washington Post labeled this a case of "stone-cold tone-deafness."

3. James Cayne, the former CEO of Bear Stearns, was busy playing bridge in Tennessee without a cell phone or Blackberry while the financial community struggled to save (or sell) his firm.

On the flip side - with good optics - is The Nielsen Company who recently cancelled its 2009 client meeting, citing economic concerns. Does it matter why Nielsen may have actually cancelled the event? Not for a minute.

The importance of optics can be a hard lesson for executives to learn. As a marketing executive, I have counseled many on discontinuing or deferring activities not just because said actions may be truly inappropriate, but also because of how they will be interpreted by stakeholders. And in times of heavy oversight the result of such activities is exponentially devastating.

Remaining in tune with the effect of optics on an organization's reputation and perceived integrity is the job of every leader.

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