Did Jamie Dimon blow it?

Did Jamie Dimon, the much vaunted and now disgraced CEO of JP Morgan Chase blow it in managing the $2bn trading bungle? Or, is this another situation of damned if you do, damned if you don’t? I’ve been fascinated to see the different takes on this crisis and varying analysis of Dimon’s performance.

This article in Fortune makes it clear that Dimon is another in a long line, of stupid, inept bungling CEOs that smart journalists like this one for Fortune can’t figure out how they could rise to such high pedestals.

On the other side is this analysis by crisis communication expert Bill Salvin that says while mistakes may have been made, Dimon’s performance is pretty much on target. He provides a good list of the things that Dimon did right.

Personally, I lean more toward Salvin’s view than Ehrenberg’s. Certainly, there is some 20/20 hindsight going on and like most of the rest of the world, I wasn’t paying any attention when Dimon was supposedly vigorously downplaying the trading problem. But what Ehrenberg misunderstands is that the “web afire” does not necessarily mean that Dimon created it, caused it or could have effectively prevented it. Like my previous post on this about the LA Times blog on it, there are a great many Wall Street haters out there (unfortunately for some very good reasons) who love to see the mighty fall and love to see more government regulations. A lot of these would love to see every Wall Street banker, and probably every banker for that matter, in striped suits, and I don’t mean pin stripes.

That’s the nature of our world, and it doesn’t have much of anything to do with Dimon’s performance. So it is misleading to look at situations like this and conclude that the CEO is a dummy and that all this could have been prevented by having a smart CEO. I’d like to think of this as the “Hayward” problem, as in Tony.

The truth is in our world there are some massive shifts in cultural values going on. Big, for a great many younger people particularly, is bad, small is good. Global is bad, local is good. Powerful is bad, me is good. Bankers are bad, Wall Street is hell bound. You get the picture. The media reflect and amplify these values to a considerable degree and they live in their full glory (or ugliness) in the Internet particularly on sites like Reddit. The media see these values at work and the digital lynchmobs forming and decide that this is a really big crisis and that therefore the spokesperson or CEO or whoever is visible is to blame and that the cause of it is their screwup. The logic is faulty.

The big lesson for crisis communicators and the CEO’s they work for is to understand the soup you are in. What is your environment like? How many enemies do you (your industry, your business type) have that are just waiting for an opportunity to say: See, this is why I hate these guys, this is why they should all go to jail or to hell. The challenge is, you don’t control the soup. But how you operate when things go badly will make a difference when you understand that environment. But just because the crowd jumps up and attacks does not mean the CEO is an idiot, despite what Fortune, LA Times and most other journalists and editors might think.

 

The best list of social media monitoring tools I’ve ever seen

Ah yes, everyone seems to know by now that if reputation matters, you gotta monitor. And everyday I see more and hear more about how the brightest minds are solving the dilemma of finding the needle of relevance in the haystack of cr–uh, irrelevance.

I am seeing more and more good lists of options for monitoring from the basic and free to the richly complex and very expensive. But, thanks to Kim Stephens’ idisaster 2.0 blog, here is the best list I’ve seen so far. I know I’ll be referring to this wiki when asked for good social media monitoring tools.

 

TED finds you’re damned if you do, damnder if you don’t: you’re just plain damned

TED is one of those Internet phenomenon that makes me glad I’m still alive to see this kind of thing. Some of the most interesting ideas and talks have emerged from this forum.

But, the controversy surrounding them today and particularly Chris Anderson, TED’s leader (and not the same person as the editor of Wired and author of Long Tail–at least not according to wikipedia) shows what today’s social discourse and media/social media environment is like.

They opted not to post a talk about inequality that was clearly very partisan. Even though the audience and orientation of TED seems a little leftish, when they opted not to air this one based on its partisanship, they got hammered. They were threatened by the PR firm the author hired that if they didn’t post they’d get blamed as being a tool of the Republican party. Sure enough, National Journal took the bait and TED got hammered by the lefties.

So, in this post explaining what happen, Anderson nicely gives the background, and then finally at the end explains why they are now publishing. Oops. Hammered again, this time from the right.

This is similar in many respects to the Komen Foundation issues, in that when something touches on political hot buttons, you are in a no-win situation. Someone is going to get ticked off and try to start a firestorm. The digital lynchmob is waiting, surrounded by dry tinder. That’s the environment we live and try to build and protect brands in. You’re right, I don’t like it much and wish it would change. But, that’s the world and learning how to maneuver in it, how to build companies, do our jobs and survive the brickbats and outrage, that is the challenge. It doesn’t seem to be getting easier.

 

Why declining views on YouTube is good news for you

I’ve become a bit of a video nut. After talking for a long time about the importance of video in today’s digital communication world including crisis communication, I’ve become quite deeply engaged. My new company is busy producing a series of training and education videos for crisis and emergency communication professionals, and I found myself in the process starting to help a number of other clients/friends/associates produce their own web videos.

So this headline about YouTube experiencing a rather sharp decline in views got my immediate attention. I’ve been talking a lot lately about the critical importance of video on organization’s websites, citing Cisco’s prediction that Internet content delivery will be 90% video in 2013 vs 30% in 2010. That’s an amazing stat. So what’s this about declining views on YouTube?

As the headline accurately portrays (unusual, isn’t it?) the decline in views is part of a plan by YouTube owner Google to reduce clicks while increasing the length of views. The merger of the Internet and broadcast/cable TV is well underway. After reading the book on Steve Jobs I’m waiting for the announcement of the the Apple TV which will likely mark the complete mixing of the two. YouTube clearly intends to become a major, if not the major, entertainment and information channel. More correctly, purveyor of a multiple host of channels operated by users.

YouTube’s vision, it appears to me, is to make full use of the social networking and interactive engagement elements of the Internet in transforming how we are entertained and informed. I do believe they are on the right track, even as competitors continue to chip away at their dominance. So, instead of a box with a screen on it that the family gathers around to watch Disney’s Wonderful World of Color (some of my favorite childhood memories), we will carry with us at all times the means to access our favorite entertainment/infotainment and we will interact with others as part of the viewing process. We will share the ones we like with our friends, families and associates. We’ll comment (if current comments are an example, with great rudeness, meanness and snarkiness). And we’ll create content ourselves.

I think the implications for crisis communications are quite obvious. Most larger organizations already know that video is an important part of the response to a reputation crisis, and particularly if that crisis is focused on social media and includes or is focused on video. But do these organizations, and particularly smaller ones, have the capability to produce in very short order (less than an hour) the video content they need when they need it?

No question the technology and processes that allow quick but quality production are becoming much more widely available. The videos we are producing for clients are typically around a minute in length and cost about $200-$300 to produce (and yes, we can make some pretty good money at that). That will come as a shock to many who believe based on experience that you can’t seem to start up a video without spending $20k or more.

Imagine doing crisis communications without a laptop and word processor. In the future (like tomorrow) you won’t be able to imagine doing crisis communication without a video camera and editor. And probably YouTube.

 

JP Morgan makes bloody big trading error, and the media sharks attack

The folks at Goldman Sachs are breathing just a little easier today. The media sharks have found another sad victim: JP Morgan.

$2 billion in trading losses is a lot. Certainly would be hard for me to swallow. And that’s part of the problem with this kind of story. It’s pretty hard for us common folks to understand the scale and scope of Wall Street Investment activity, and when you have politically motivated “reporters” doing all they can to make these bankers seem evil incarnate, it gets even more confusing.

The LA Times’ Michael Hiltzik tries to make JP Morgan CEO Jamie Dimon into a sneaky, lying, incompetent boob—or banker. The headline of his post on LA Times is “What Jamie Dimon didn’t tell you on ‘Meet the Press.’” I kept looking for the big disclosure.  Where is the bombshell that Hiltzik promises in the headline?

Hiltzik’s piece, other than a blatant and snarky attempt to discredit Dimon, is an outright plea for more banking regulations. His primary objection to Dimon and his communication about the trading fiasco is that Dimon is trying to avoid further regulation. Hiltzik says: Dimon’s theme was essentially as follows: “Hey, everybody makes mistakes — sure, we lost $2 billion, but we’ve still got billions more, and we’ll figure out this one ourselves without the need for any further regulations, thank you.”

 $2 billion in trading losses is a lot. And it would be quite right for the guy in London who made $100 million per year for the bank and who made these trades to reimburse the bank some of his huge salary. Also appropriate for the executive, Ina Drew who supervised the badly mistaken trader, to resign. But Dimon’s efforts on the conference call where this was revealed was right to try and put it in perspective. In fact, his effort at doing that is likely what really ignited Hiltzik’s ire.

That trader, called the London Whale because of his outsize portfolio he was playing with, was betting $350 billion of the bank’s money. The puts the $2 bn loss in a little bit of perspective. If I was playing around with $350,000 with the objective of making the highest return possible, I’d probably take some big risks with some of it and probably lose some of it. $2000 in losses out of $350,000 wouldn’t seem so awful to me. But why would one trader have such control over $350 billion? It helps a little to see that the bank’s assets are $2.3 trillion. That’s trillion, with a T. Sorry, my mind stops at about ,000.

I don’t mean to belittle this mistake. But from what I see Dimon handled it quite well from a communication standpoint. He communicated about it quickly. He apologized for not being able to communicate about it faster. He called it “stupid.” Over and over. He made clear (as much as he could given the arcane language of hedging, credit default swap derivatives and all that stuff) the underlying error that was made. The people involved experienced a career ending event, and it may be that his career may yet end over this. What is not so clear to me, in the very brief overview I gave this, is exactly why one trader was given so much to play with, with apparently so little supervision, and what exactly will be done to prevent this kind of error in trading judgment from happening again.

Hiltzik’s answer is more regulations. Someone needs to tell him that the government simply can’t regulate all risk away, as much as folks like him might want it. The stupidity demonstrate by JP Morgan in management that led to this disaster is one problem that I’m confident smart managers and the competitive market can fix. But what can’t be fixed so easily is the easy target that banks have become for the likes of Hiltzik, who like the politicians they seem to want to be, appeal to the fear and outrage of the people hurt in the financial crisis to promote their legislative agenda. And what really needs to be fixed, is the editorial staff of the LA Times to allow this kind of demagoguery to go on parading as reportage.

Unhappy? P-d off? Mad as hell? There’s an app for that.

I saw an item in a PR newsletter that a Walmart store manager started a petition to remove the CEO–and got 13,000 signatures. That’s how I found out about change.org. Maybe you are already familiar with this site. It is a tool for starting a petition and collecting signatures.

So, if you are unhappy about something, want to fight injustice or just cause trouble for someone you don’t like, apparently there’s an app for that.

Cool thing about this, from a p-d off person’s point of view, is that here is an online community of malcontents, fellow p-d off people and activist types who want to change the world simply by signing up. The site likes to tout its success such in suggesting that Secretary of State Hilary Clinton changed her position on Saudi women’s rights because of this site.

The implications for crisis management are quite clear. You don’t really want to end up on change.org. But, if you are big and powerful, no doubt sooner or later you will. Monitoring this site is probably a very good idea. Not just to see if you are there yet, but to see what is driving all the anger today.

I think I want to start a petition and put it on change.org. It will be something about protesting everyone’s bad attitudes and those people who prey off them and amplify their outrage. Uh, why can’t we all just get along?

Man bites dog: media doesn’t overhype BSE problem

Frequent crisisblogger readers know how tough I am on today’s media coverage that focuses on fear and outrage to compete for scarce readers and viewers. So, in a man bites dog sort of turn-around, I am sharing this story from Columbia Journalism Review that suggests the media took a fairly nuanced approach to the latest discovery of mad cow disease.

“Mad cow disease,” like “pink slime” by its very name screams for attention. I have a picture in my head of a cow running around, eyes rolling, bumping into trees and fences. I do believe there was some coverage that could qualify as fear mongering, but in general, I think the media did a good job of conveying important reassurance messages from USDA and putting this particular situation in proper perspective.

This is a far cry from the pink slime controversy. But, while the initial reaction of the beef industry to the pink slime and then the BSE problem was to say, Oh no, we are in for it now, it appears that there is minimal damage to the industry from these two situations. Here is a reassuring word sent to the ag industry from a leading weekly newspaper, Capital Press, serving the Western states.

Given the heighten concerns caused by pink slime and the slimey way it was treated in the press, it is an interesting comment to see that such kind of event may have minimal collateral damage. I suspect BPI, the company with shuttered plants, may not feel so good about it, however.

Spirit Airlines feeling veteran’s outrage after denying refund to dying vet

It sounds like a perfectly reasonable corporate policy. If you want to be able to get a refund on a flight you can’t take, you buy insurance. If you don’t buy insurance, you don’t get a refund. If you could, by begging and pleading and claiming special circumstance, there soon would be no takers for flight insurance. So, when a veteran who was planning a trip to see his daughter couldn’t make the flight because his doctor said his cancer was too advanced, he asked Spirit Airlines for a refund. They said nope.

Fox News picked up the story and from there it went to veteran’s groups around the nation. The response of Spirit to the hubbub: “We’re happy to look at [letters in support of Meekins]; however, we are standing by our decision not to provide the refund,” Spirit spokeswoman Misty Pinson told FoxNews.com.

So now veteran’s groups are trying to organize a boycott. No doubt the publicity and apparent callousness of the airline will hurt them.

No doubt most in crisis management would say to Spirit: don’t be ridiculous. Apologize. Tell the man you made a mistake and give him his money back. And that sounds reasonable. But from the CEO’s  chair, these things don’t look that black and white. What happens to our no refund policy. Forever after anyone looking for a ticket refund who has not purchased insurance will parade this story and the veteran outrage with a threat to cause the same problem for them. What does Spirit do? Change their refund policy? Make it easier for those not choosing insurance to get refunds? And how do they decide? Does a refund go to those who have the ability and will to raise a big online stink? Is that fair? Should decisions like this be made on a case by case basis?

The Fox News story was May 1. On May 4, this statement was published on the Spirit Airlines website (albeit, not easy to find):

Statement From Ben Baldanza, CEO of Spirit Airlines

 

 

MIRAMAR, Fla., May 4, 2012 (GLOBE NEWSWIRE) — “At a time of ever-rising airfares, Spirit Airlines makes commercial air travel affordable for many Americans. A very important part of keeping our airfares reasonably priced is our refund policy.

“Every day we seek to balance customer service with customers’ demands for the lowest airfare possible. But sometimes we make mistakes. 

“In my statements regarding Mr. Meekins’ request for a refund, I failed to explain why our policy on refunds makes Spirit Airlines the only affordable choice for so many travelers, and I did not demonstrate the respect or the compassion that I should have, given his medical condition and his service to our country.

“Therefore I have decided to personally refund Mr. Meekins’ airfare, and Spirit Airlines will make a $5,000 contribution, in his name, to the charity of his choice, Wounded Warriors.

“We have worked hard to build a great company that makes air travel affordable while making our employees proud and customers satisfied. All of us at Spirit Airlines extend our prayers and best wishes to Mr. Meekins.”


So the CEO is personally refunding the veteran. He explains why the policy exists and why it benefits the airlines customers. He apologizes for the lack of respect and compassion shown. He offers a $5000 charitable contribution.

This is all good and appropriate, but like most crises of this kind, will not undo the damage. Another sad example of too little, too late. I had to dig to get this part of the story. Most will not. They will only see the unfortunate quote from Misty Pinson in the Fox story, plus all the online anger. They will continue to see Spirit as heartless.

Spirit Airlines was clearly caught flat footed by this. They had one chance to get a message out and they blew it. There is no way Fox News is going to replay the story with their more considered response. And, by burying their statement in their press room which is actually their investor relations section of their website (that says something right there) they are getting very little bang for the bucks they committed to this. Here is one of the best reasons I’ve seen for anticipating this kind of crisis in advance and being ready with messages and responses the very moment something like this emerges.

Two books to commend: Jonathan Bernstein and Jim Moorhead

I’m an avid reader (mostly history, science and faith, biography) and even once in a while pick up a book on crisis communication. Over the past couple of months I’ve read a couple of good ones. “The Instant Survivor” by Jim Moorhead and “Manager’s Guide to Crisis Management” by Jonathan Bernstein. While both are solid books providing good advice, it is Bernstein’s book that will go on my top shelf for ready reference.

“Instant Survivor” takes a winsome approach to crisis management. Moorhead reveals his own personal crisis as well as stories of many others facing personal crises to bring home his four key lessons to crisis management: stay frosty (maintain cool control), secure support, stand tall and save your future.

All good advice and presented in a very warm, personal style. His experience shines through in solid advice: (page 31) “Practice extreme honesty. We need to be as honest with ourselves as we demand others to be with us. How do we like to be treated when things go sour–when we get laid off, hear bad health news, or have a relationship broken off? We want to be told the truth. We reject people who shade a story…”

The strength of Moorhead’s book is this kind of story telling and basic guidance helping executives examine their own values, morals and character and to see those items in relationship to how they will deal with truly major crises.

Jonathan Bernstein’s book is far more prescriptive and practical. It is also written in a comfortable, highly readable style. While including stories and examples, the focus is on guiding senior managers through the steps needed to prepare for, respond to and recover from crisis. As a very practical, very useful and spot-on guide, you can’t do much better than this.

I’ve been fortunate to work with Jonathan on a few projects in the past and have learned a lot from him. But I also learned a lot from this book, particularly in the area of crisis prevention and vulnerability assessments. I really appreciate the guidance he gives in how organizations can conduct their own assessments, while also making it clear that working with an experienced consultant in this area has many benefits. Jonathan’s focus on prevention is very clear in even his definition of crisis management: “the art of avoiding trouble when you can, and reacting appropriately when you can’t.” I doubt that many involved in crisis management include prevention as 50% of the equation–but they should.

While Jonathan is a true expert in media training and response, I also very much appreciate his oft-repeated theme of direct stakeholder communication. There are a great many crisis communication experts out there, but few who go beyond traditional media management to the degree that Jonathan does. In my view, this is probably the number one failing of many PR folks doing crisis communication.

Another strength of Jonathan’s book, clearly based on experience, is his extensive advice on online reputation management. He devotes an entire chapter and provides incredibly useful advice on key aspects including monitoring and the role of Search Engine Optimization.

There is much more to commend in this excellent book, but to steal a quote from Jonathan, I wish I could publish the entire book in this blog, but I can’t so you’ll have to go out and buy it.