In today’s global economy, I would argue that the face of public diplomacy is changing from government leaders to the brands of corporations from specific nations that now seem to hold more power and leverage on their nation’s home image and reputation – for better or worse – than any diplomatic initiative. Where did this all begin?  A lot further back than one might think.

Let’s begin in the closing days of the Cold War, with what may be the single most effective episode of public diplomacy in the long history of the West’s attempt to shape global opinion.  Its effectiveness is even greater in contrast to the repeated failures that preceded it.  For decades, the United States spent millions of dollars and uncountable hours trying to persuade the people of the Soviet bloc that capitalism was superior—all to no, or at least very little, avail.  The Russian mind, it seemed, was immune to American propaganda.

But on January 31, 1990, the U.S. hit upon a message and a messenger so compelling that for weeks the Soviet people not only listened to it, but queued up and endured hours-long waits for the opportunity to be exposed to it.

The State Department did not run this operation.  The intelligence community was uninvolved.  It was a breakthrough achieved not with broadcasts, but with burgers—because the event of which I write was the opening of the first McDonald’s in Moscow.

It would be an exaggeration to say Russian opinions of capitalism changed in a single day or that the decades of public diplomacy that preceded it were wholly ineffective. But it is entirely accurate to say that what corporations do on foreign soil, how they behave and how they are perceived, may well have a greater bearing on their home nation’s image and reputation than any diplomatic initiative.

The McDonald’s example occurred in a country – the Soviet Union – and indeed in a world that no longer exists. What we could not have known 20 years ago, or even imagined, was a technological revolution that would create a new world in which the influence of individuals and businesses would rival, and in some cases overtake, the influence of nations and public diplomacy. It is that world that I want to discuss today.

The symbiotic relationship between commerce and diplomacy is not new.  Since Rome fought Carthage, countries have pursued their economic interests through diplomatic, and sometimes military, means.  Recently, corporations have served a diplomatic role themselves, with multinationals opening channels closed to political actors. But the impact of commerce on diplomacy—indeed, the behavior of corporations as an act of diplomacy—has accelerated dramatically, in both scale and substance.

It’s a phenomenon that will challenge governments, because it places many of the key elements of diplomacy beyond their control.  But as transnational corporations forge new relationships, open new markets and, most importantly, accept social responsibility as not only a moral imperative but also a business imperative, I believe they can be a force for understanding.

In that one small moment, McDonald’s showed us how corporations sell cultures, not just products, and help shape how societies are perceived.  There are three key lessons to take away from the McDonald’s experience, each of which is relevant to the challenges of public diplomacy today.

The first is the vanishing pre-eminence of the public sector partaking in what we typically consider “public diplomacy.” It’s true, of course, that political figures are the most visible spokespeople for their governments.  At moments of crisis, they often shape opinions overseas.

But public diplomacy is concerned with the opinion on the street, where the deepest, most enduring opinions aren’t the ones we form when bullets are flying and news cameras are rolling. Our impressions of countries, just like our perceptions of consumer brands, are rooted in daily experience.  And the most compelling and consistent experiences people encounter are with corporations.

I’ll grant that Barack Obama does more than any individual to shape impressions of the United States overseas. But I’d lay strong odds that Disney more strongly influences global opinion about American values than does the U.S. government.  Similarly, Google’s recent standoff with China did far more to shape global opinions of the U.S. commitment to free speech than any propaganda effort could.

My message is not that public diplomacy is defunct. It is far from it.  Nor is my message that corporations are the most effective messengers, but quite the opposite. Which brings us to the second observation we can make about McDonald’s: namely, that McDonald’s was not the messenger—its Moscow customers were. Opinion shifted not because McDonald’s put out a press release or even aired ads on TV. Opinion shifted when people went home from McDonald’s and marveled to their friends about how impressive it was. And since these messages were coming from friends and relatives and everyday people with no reason to endorse American propaganda, they were credible and persuasive.

Therein lies perhaps the most profound transformation of the communications landscape, that is most relevant to public diplomacy, and of which the pitfalls are deepest and opportunities are tallest: communication is no longer institution-to-individual.  It’s individual-to-individual, and from individuals upward to institutions.  Around the world, trust of all institutions—whether public or private—is plummeting.  Elites are no longer persuasive.  But individuals— Weber Shandwick calls them advocates—are.  Think of the difference between the movie review from an expert pontificating in the Sunday Times and the one posted online by the everyday moviegoer who just saw the same film. The advocate’s view is more compelling.  And it’s needless to say how technology has transformed advocates’ ability to communicate to one another and to the world.  Moreover, that technology means they not only talk to each other, but also talk back.  Successful communicators therefore think in terms of engagement and relationships—endeavors that require investment, cultivation and a ready ear.

Consider, for example, the aid flotilla incident off the Israeli coast that dominated diplomatic news in the summer of 2010.  One point is beyond dispute: The single most persuasive and pervasive source of information on this dispute—one that engaged the very highest levels of world leadership, from the U.N. Security Council to the Oval Office to Downing Street and beyond—was neither official statements nor diplomatic dispatches.  It wasn’t even CNN.  It was YouTube.  In a matter of days, Israeli Defense Forces’ video of the incident had been viewed no fewer than 3 million times.  Al-Jazeera’s video got more than 600,000 hits.

That fact illustrates a few points. One is that when the people aboard the flotilla—call them activists or agitators, depending on your point of view—disseminated images of the raid, they weren’t trying to influence the U.S. government, or the British government, or any other policymaking group.  They were trying to influence the public so that the public would then either drive or constrain government policy.  This bottom-up influence of individuals is going to precipitate a dramatic change in policy which years of negotiations and pressure and carrots and sticks have been unable to produce.

The second point is the source of the video: namely, the IDF.  Immediately after the incident, the IDF spokesperson’s office didn’t issue a statement, they didn’t call a press conference, they didn’t hold a briefing. They posted on YouTube.  No, the images of the event didn’t entirely work in their favor.  But they substantially confined the ability of the critics—whether you call them activists or agitators—to distort the facts, something that, again, regardless of one’s politics, Israel’s critics have been known to do.

This is the world we now occupy in public diplomacy.  Cell phone cameras can not only be as powerful as news cameras, they are news cameras.   Images taken on one boat in the Mediterranean can be in millions of homes on every continent within moments.  And public reaction to information disseminated in this way sets the parameters of policy.  This Web 2.0 environment both enables and encourages global citizenship.  Diplomacy is no longer top-down.  It is no longer about influencing elites so that they will influence policies or publics.  It is about individuals influencing other individuals so they will influence policymakers.

The good news is that advocates who are reached this way, and those that form powerful communities, online or in the streets, are remarkably persuasive.  They are also, by the way, highly loyal.  Their engagement is intense.  The challenge—I’d argue this is actually part of the good news—is that they cannot be fooled.  They are cynical, informed and impervious to what I call “baloney.”

That’s why the last lesson I want to point out from the McDonald’s example is the most important one: The message was action, not words.  There is an old adage in journalism—show, don’t tell.  In public relations, it’s now a mandate. The McDonald’s message was persuasive because the McDonald’s experience was compelling.  You could argue with the Voice of America broadcaster droning on about the efficiencies of capitalism.  But the ability to get a quality burger at McDonald’s consistently and efficiently when shelves across Moscow were bare, was impossible to refute.

I don’t mean to suggest that words and images—what skeptics deride as “spin”—don’t matter.  They do.  But they must reflect actual deeds and realities as the audience experiences them on the ground.  Otherwise, they are less than worthless. We need to invest in the traditional organs of public diplomacy—online, over the air, in print.  But above all, we need to act—and we need corporations to act—consistently with the values we mean to communicate.

That, in turn, requires a shift of mindset—and, perhaps, of management.  The best corporate communications outfits are not islands that merely convey to the outside world what the rest of the company is doing.  They are woven into the fabric of corporate operations so that everyone is a communicator, everyone “owns” the brand and communication is part of every decision.  Similarly, rather than talking to their audiences, they engage them.  They communicate through enduring relationships rather than merely at discrete moments.

They recognize, moreover, that the daily customer’s experience is far better PR than the most finely crafted press release.

Government public diplomacy must adopt a similar approach. It cannot be successfully run as merely one office in the State Department or Foreign Ministry.  It must pervade every government interaction with citizens of other countries.  A foreign national’s experience at customs at Heathrow or JFK will shape their impression of Great Britain or the U.S. far more than the most expensive PR campaign.  Similarly, the most effective propaganda tool at our disposal may be something like the Foreign Corrupt Practices Act, which ensures that corporations actually behave in accordance with the values we want to project.

Successful corporations understand these lessons. Let me share one striking example. In the late 1990s, Nike’s image was overwhelmed and all but defined by the working conditions at its Asian operations.  Nike’s initial response was to retrench saying little and then to assail its critics.  Neither worked, which is why Nike then shifted to meaningful action.  Nike’s founder and chairman, Phil Knight, apologized bluntly. The company made its manufacturing process more transparent and involved non-governmental organizations in monitoring it.  Rather than debating its critics, Nike engaged them.

The result is that Nike’s image today is not merely that it is a responsible company but it is one of the most responsible companies in the world.  The extraordinary fact is that the same individuals and organizations that were Nike’s fiercest critics are now among its most persuasive advocates.

The public sector can learn from experiences like that, and I certainly encourage corporations to share best communications practices with those in public diplomacy.  But the more fundamental point is that Nike’s transformation was itself an act of public diplomacy.  Nike’s renewal of responsibility has done more to rehabilitate America’s image than the VOA ever could.

Let me be clear—the growth in corporate influence does not mean the withering of public diplomacy.  It should mean the opposite.  It should mean closer public attention to corporate behavior.  Where regulation is appropriate, regulation should be treated as a tool of public diplomacy.  It should mean public-private partnerships where they make sense—especially since the problems that most require public diplomacy are multinational in scope and demand solutions that transcend both national borders as well as the line between the public and private sectors.

The growing influence of corporations should highlight the dangers of merely forfeiting the public diplomacy field to the private sector.  I’m a fan of corporations.  I work for them.  But they are not impartial national ambassadors.  Indeed, there are few corporations of any influence that fit within national boundaries at all.  Their mission is, and ought to be, to generate returns for shareholders.

So the lessons here do not suggest we should invest less in public diplomacy.  We should invest more.  We have made few mistakes more tragic than abandoning this endeavor at the precise time—the end of the Cold War—when global opinion was in such dramatic flux.

But we need to pose fundamental, challenging questions: In an era in which YouTube can be as influential as CNN, should we shift investments away from traditional, top-down organs like broadcasts and instead toward social media?  Does the rise of the individual communicator mean the fall of diplomacy, or its renewal?  Should governments be more rather than less aggressive about insisting that the corporations that shape their images also follow their values?

I believe we need a new breed of public diplomacy that both understands the importance of the private sphere and embraces its lessons.  It should be a public diplomacy of personal communication, not elite influence.  It should be a public diplomacy of actions as well as images. It should be a public diplomacy of partnership, not propaganda. And it should be one of engagement, not condescension.  Twenty years ago we showed the world that capitalism could flip an efficient burger. Today the criticisms are far deeper, the stakes far higher.  But the means of persuasion—delivering results that matter where people live—must be precisely the same.

Harris Diamond is CEO of Weber Shandwick, the world’s leading public relations firm, where he provides high-level strategic communications counsel to global clients dealing with public affairs, corporate and reputational issues.