Q&A: Controlling Bad News

Robert Dilenschneider is a legendary corporate communications consultant. As CEO of Hill & Knowlton and, since 1991, principal of the Dilenschneider Group, he's been a confidant to and crisis manager for a wide variety of business leaders. In the latest of his series of interviews as part of the Kaplan-NEWSWEEK M.B.A. program, NEWSWEEK Editor-in-Chief Richard M. Smith spoke with Dilenschneider about managing corporate images—and about his new book, "Power and Influence: The Rules Have Changed." Excerpts:

Smith: How do you describe your work?
The court of public opinion is very important, and it creates a premium for a company's stock, for its employees, for its customers, for all its different constituents. My job is to try to make sure that premium is as good as it can be. For example, when a new chief executive takes office, the stock should go up several points. If it goes down several points, there's not much of a premium. So what I do is advise people, when they're in difficult situations, about how to get out of scrapes as quickly and elegantly as they possibly can. Oftentimes, they really don't know what to do and they do the wrong thing. I also try to talk to people about the concept of leadership.

When you're called in by a board to work with a CEO, how do you break it to someone who's risen so far that his personality may be hurting his performance?
What you really have to say is that you've got a topic that transcends the individual, goes beyond the company and has enormous impact on the valuation of the stock. You've got to discuss it with that person straight up. It's a little bit like taking castor oil. Sometimes I go to meetings like that and I keep some Excedrin in my pocket, and if I get a negative reaction, I'll oftentimes hand the individual some Excedrin and ask them if they'd like to take some and calm down before we go further. But it's important for all of us, me included, to represent and understand our flaws and to come to grips with them.

How do leaders make sure they have someone around to tell them what they don't want to hear?
The best person I ever saw do that was a man named Barney Clark. Barney used to be the CEO of the Columbia Gas System, which at the time was the largest natural-gas system in the United States. Barney was intellectually brilliant, and Barney used to say, "Tell me the worst. I want to know the absolute worst." And if you tried to give Barney a pill with sugar coating on it, he would reject it. He would think less of you. And he'd say, "Aren't you smart enough to think of things that are a lot worse than that?" Now once you gave Barney the worst, he'd accept it and he'd work out a solution with you.

Your new book is called "Power and Influence: The Rules Have Changed." So, what's changed?
Technology has changed everything. I can't imagine somebody watching or reading this that doesn't have a cell phone, doesn't use a BlackBerry, isn't part of YouTube or MySpace or Facebook. I can't imagine somebody doesn't have an iPod. So, technology has changed markedly. That's one thing. No. 2 is we all recognize the field wasn't a level playing field years ago. If you had money, you went to an Ivy League school; there were certain advantages you had. Now it doesn't make any difference. There is a level playing field, not just in the United States, but around the globe. That's changed markedly. Third, it's a huge, globalized world, and today we deal with China and India, Western Europe, Russia and many other places.

How does the speed of the Web change how managers deal with crisis?
The Web can put out all kinds of information, much of it disturbing. If you want to put out very negative information that perhaps isn't accurate, on a Wikipedia, it's fairly easy to do. A smart leader who understands technology and recognizes that many people under 35 aren't going to read The Wall Street Journal immediately floods all technological opportunities with information about the crisis and about how to solve the crisis and does it again and again.

Was it daunting to leave Hill & Knowlton to start your own group?
No. It was a very easy decision. When I started there in the 1960s, I was part of a group of 31 terrific people. We grew to be 4,000 people. Instead of actually doing the work and advising people, I was an administrator. That really didn't appeal to me. A lot of my clients and friends urged me to get back out and do what I really liked doing, which was advising top executives.

What advice would you offer when launching a start-up?
Sign every check yourself. Feel the pain when you pay the dollars out. Even today, after 18 years, I sign every check myself. Second, set a list of priorities every day, three or four priorities you must achieve. Make sure you do them—don't let the events of the day overtake you. The third thing is make sure you do the right thing. Oftentimes people will offer you things to advance their own interests. Money comes with it sometimes. It's the wrong thing. Don't do it. You've only got one reputation. It's important to hang on to it.