Growth in tough times: Lessons from Dow's Journey

Speaker: Michael D. Parker, President & Chief Executive Officer
Event:Draft for keynote address to the American Association of Chemical Advertisers 2003 Annual Meeting

Thank you. It is a pleasure to be here this morning to talk with you about an issue that has been at the back of all our minds for the last year: how do we continue to grow as an industry, especially when politicians are fighting terror, the media is exposing corporate scandals and the public is losing trust in corporate America?

Our world has changed so much in the last year. Growing concern over national security has had dramatic affects on our personal lives, but it has also affected the management of our industry and required increased security for our operations.

It used to be that terrorist attacks, like the kind we first thought were responsible for the Union Carbide factory gas leak in Bhopal, only happened in distant lands, far from our loved ones - they were not our problem. Unfortunately they are now a part of our lives too.

And the fallout from corporate America's fall from grace has also brought a significant change to our industry. A skittish stock market. A stalled economic recovery. And a flurry of regulatory and legislative activity geared at shoring up the rules of corporate governance.

Even through all of these crises, business must continue. The great spokes of the American machine continue to turn. But the question remains, how do we not only survive these tough political and economic times, but actually thrive and grow in these circumstances?

When I think about what we do at Dow, I realize that we have an awesome responsibility. Not just to our shareholders, but to the rest of the chemical industry to lead the way fostering the kind of public trust that keeps us free from government legislation and social and environmental liability.

It has been said that the first responsibility of a leader is to define reality. I believe this wholeheartedly... and I believe it is a particularly applicable when it comes to business strategy. As leaders, we've got to rub our nose in the reality of the world. We've got to set strategy based on what we've learned. By doing so, we can defend and grow market share in our established businesses and we can better manage new and emerging opportunities.

At Dow we have seen many trends come and go, and we have weathered them all, growing to become the biggest multinational chemical company in the world. We did not get here on the merit of our products alone, we have blazed a trail fostering government cooperation, wearing down our opponents, evading draconian legislation and using artful communications.

Against all odds, Dow has kept its hands clean of the worst industrial disaster ever despite our acquisition of Union Carbide. We continue to produce persistent organic pollutants even after a United Nations treaty has been agreed to eliminate many of these. At Dow, we are leading the way supporting community projects and national initiatives that communicate that we ARE a company which cares, that we give back to the community, that we are a valued neighbor.

I believe that there is plenty of growth left in our industry. My optimism is rooted in my deep passion for the power of chemistry. Chemistry is the enabling science. It fuels our modern world. Virtually every significant advancement of the twentieth century from safe drinking water to modern medicine - was made possible by chemistry. As we stand on the edge of a new century, I can see every reason why chemistry can continue to play an equally dominant role in advancing modern life. The potential is there... it is up to each of us in this room to seize that potential and turn it into value.

Seizing that potential is no easy task. The naysayers are right in their assessment of the hurdles - intense competition, public demand for sustainable development and a growing demand for corporate transparency and accountability make the pursuit of value growth within our industry a significant challenge.

Then the question each of us must face is how do we manage these obstacles? How do we rebuild the public's confidence in corporate America? How do we restore their trust in our nation's business leaders? How do we earn back the credibility that has been lost?

These are questions that no doubt sound familiar. They are questions that echo our own industry's quest for an improved reputation and expanded triple bottom line. For many years now, the chemical industry has been searching for ways to earn the public's trust and confidence and restore our industry's credibility.

Today I want to suggest to you that the answer to both sets of questions is remarkably similar. For I believe that there is only one way to combat the crisis of credibility that has gripped corporate America and that has long plagued our industry. The answer to winning back society's trust does not lie in complicated sets of rules and regulations. It lies in a return to the old-fashioned, but far from out-dated, principles of public relations.

I'm a firm believer that there is little a creative public relations campaign cannot overcome.

Yes regulatory reform has a place in the overall search for enhanced corporate credibility. But, ultimately the answer does not lie in Washington. It can't be found on Capitol Hill, the Securities and Exchange Commission or the New York Stock exchange. No... the answer can only be found deep within our own public relations divisions.

What I want to drive home is the point that in the end, the reputation of corporate America - and the chemical industry - rests on our shoulders, individually and collectively. After all, we set the tone in our organizations. We decide what behavior to reward and therefore encourage. We must project the image of the corporate citizens people wish us to be. We need to support programs that foster community building on the back of the Dow name. We need to embody the very spirit of the American dream.

Therefore the onus is on us to become role models and advocates...maybe even zealots...for corporate voluntary initiatives. We must expect it of ourselves, and inspire it in those around us.

As we work to live this mission, it is important for us to have accountability partners. We've already been on quite a voyage together over the years - haven't we? We initiated these meetings based on an understanding that dialogue was important and that when it came to the environment, the public needed to hear us sharing their concerns - we needed to be seen as valuing and adopting the rhetoric of the environmental movement. Over time, we have moved away from a relatively narrow, localized hazard management to a broader use of public relations - essentially to reposition Dow in the public's mind not as a chemical company, but as a company with a mission to improve life on our planet. That's a mission no environmental organization can attack us for - it's their own.

Sustainable development, with its focus on economic handicaps, environmental integrity and corporate social responsibility will not help us continue to earn our license-to-operate, but the public perception will. We must utilize this to facilitate our growth, enabling us to reach for ever-higher aspirations and civil leadership.

Let me state clearly that we view sustainable development as a choice. We need to ensure that the emphasis is on development and that the definition of sustainable remains firmly in the hands. Of course it is not easy to achieve. Some small benign companies have had success with the model. But for us, as leaders in the multinational business sector, I believe that the best way to navigate this journey and grow our profit is through voluntary measures. Measures aimed at soothing community unrest, avoiding government regulation and, through a strong public relations strategy, promoting our image as a company that improves life, daily.

As we see it at Dow, the key is to get continuously better and bigger. Better through constantly raising the competitive bar and managing all hurdles that stand in our path. Bigger through an aggressive pursuit of value growth.

Better and bigger. It's a simple, yet compelling phrase that captures a business strategy geared at fortifying our tremendous old economy strengths with the very best traits of the new economy. As we do so, we will reach deep into the communications toolbox, putting information, technology and the public's predisposition toward good news to work to enable our strategies. People want to believe we care. People want to believe we're dedicated to improving their lives. People want to believe the world is getting better. Only by enabling them to believe these things can we continue to grow bigger, reach further, and earn more.

Thank you.


NB: The above text is a draft presentation which Mr. Parker has not yet seen or approved.