Why won't corporates say what they mean?

By Peter V O'Brien

Friday 2nd April 2004

The use of the internet for "open briefings" from Australian companies has had bizarre results.

Briefings this year with former National Australia Bank chief executive Frank Cicutto and AMP Financial Services managing director Craig Dunn dealt with tricky situations.

The NAB briefing was a spindoctor exercise and the AMP "discussion" was a weird combination of jargon, corporatespeak, clichés and misplaced similes.

Open briefings seem to be set up between companies and an organisation known as corporatefile.com.au.

They ask all the questions you would never want to ask and receive answers of doubtful use to anyone.

The technique could give people the idea that the information flow captivated a substantial audience of analysts (an "assessment" of analysts might be an appropriate collective), whereas it can be banal.

NAB's briefing was lodged with the ASX on January 23.

It dealt with the rogue trading in foreign exchange options and is welldated. Mr Cicutto has gone (with many others), various reports belted the bank, there have been official sanctions and life goes on.

Mr Cicutto's answers to corporatefile's questions were an insight to a chief executive's mind when facing big problems.

Sir Humphrey Appleby of Yes Minister would have approved at least one answer.

Mr Cicutto was asked to explain the investigation process and who was doing what.

He referred to four separate investigations, including the Australian Federal Police and then went into Sir Humphrey mode.

"Through these reviews and investigations, I'm confident that no stone will be left unturned and shareholders, customers and employees can have full confidence that all necessary actions will be taken to ensure that unauthorised trading does not happen again.

"I can assure you that the management team and the board of directors are extremely disappointed by what's happened and will take whatever action is necessary to ensure that everyone has full confidence in the National."

There would be full responsibility "right up the chain of command" for the breaches of internal procedures.

That comment could have been unintentionally prophetic, given later events, including the departure of Mr Cicutto and former chairman Charles Allen.

Mr Cicutto said a "more aggressive approach to proprietary trading activity" was not typical of the broader culture within the bank, the behaviour was totally unacceptable and would not be condoned.

AMP Financial Services' (AFS) Mr Dunn had an easier job with his briefing, because the main issue was distinguishing between AFS' performance and prospects and the troubles of the greater AMP.

He still managed to blow it.

The first two paragraphs of his comments referred to "corporate issues around the brand," "key drivers of the result," "the benefits of the tick-up in markets," "our advice-based distribution force" (agents?) and "our low-cost manufacturing capability."

Mr Dunn was big on "drivers." Apart from key drivers, there would be "three drivers going forward," profitability of one part of the business was "really driven by three things," the company had "drivers of competitive strength" and its competitive advantage was "driven by our strength in distribution."

There was also a lot of "going forward." Perhaps Mr Dunn would make an All Black coach or former coach John Mitchell an international fund manager.

It might seem an easy and superficial exercise to mock such clichéd verbiage but communication is surely the only reason companies have "open briefings."

It is impossible to have effective communication if communicators fail to use plain language.

There is a danger that people in specialised activities such as fund management will rely on "shop" jargon when they move outside the shop.

Fund managers are a minute proportion of the workforce, even with the addition of very junior employees.

People with financial knowledge work their way through jargon. They could be stumped when dealing with Mr Dunn's possible confusion about AFS' business sector.

It was presumably financial services but he referred to "low-cost manufacturing capability," "an open architecture model such as ours" and "our unmatched strength in distribution and manufacturing scale."

Tortuous language was used to describe one of the "drivers going forward." "The capital intensity of the mature book is much greater than that of the contemporary book. If you think of an industrial company, the changing mix of business toward contemporary product or lower capital strain is equivalent to a permanent reduction in maintenance capex.

"Whilst the mature book is declining, the growth in our contemporary book and strong cost management have more than offset the mature book run-off and its impact on operating margins."

Exactly, Mr Dunn.

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