Yesterday I posted about Microsoft’s global reputation at the top of the heap in two of the latest corporate reputation surveys–Edelman and Cision. I commented that Microsoft’s stunning improvement, compared to their serious trashing about five years ago–had more to do with Google’s ascendance than anything else. I suggested that it was the technical literati who understood how serious the Google threat was and this threat rapidly removed the monopoly fears and hatred of the software giant’s power, which resulted in rapidly improved reputation scores. Now Microsoft is trying to buy Yahoo–perhaps the only serious (somewhat) challenger to Google’s hegemony over search and ad related search. Story in NYTimes.
So, what do you think of that? Do Microsoft and Yahoo together make an overwhelming force–so much that Google is now in trouble and that therefore the shift of reputation follows? I doubt it. And that in itself is a credit to Google’s incredible position which is partly related to the founder’s vision of “organizing the world’s information.”
What worries me about Microsoft (as a longtime shareholder I might add) is that the vision was crystal clear before. I even had Bill himself explain it to me on a flight (in coach) to San Jose in 1983. It was to bring the power of computing to the masses. How does the Yahoo purchase help accomplish this mission? Not real clear to me. In fact, if I look at who is accomplishing the Microsoft mission more than Microsoft I would have to say Apple. And with the iphone perhaps even more than with the Macs.
OK, I broke down and bought an iphone. My main hesitation was AT&T and true to form, they were very slow in getting me up and running–unlike my iphone which synched to everything I wanted it synched to as easy as…well..Apple. The AT&T problems continued when I got a text message asking if I knew that someone had changed my account password and if I wanted to verify it to call this number. So I did. The worst case of telephone tree hell I have ever experienced. An hour later when I finally talked to someone, they had no idea what that text message meant and whether or not my account was messed with. If only Apple ran a phone company…
But, like others I was curious about how Apple could be selling so many iphones with so much disparity between the 3.75 million iphones Apple says they sold and the 2 million iphone accounts that AT&T has completed. Could it be that 1.75 million were waiting for AT&T to get around hooking them up? No, it turns out that hacking iphones is a lot more common than expected. Here’s the story from New York Times. The story also partly explains why Apple did the deal with AT&T since they are getting a pretty darn good piece of the action on the cell contract.
There is a game going on continually in the technology world–control it to maximize profits vs. those who would force the controls off and make it as open as possible. Certainly it seems smart from a business standpoint (ala music industry) to try to maintain control and maximize profits. Yet, those very efforts seem both doomed to failure in the world of hacking and work arounds as well as seeming out of touch with the way technology is seen today. We live in an open source world, increasingly it seems. Apple runs the risk of losing the cachet it holds among the technology elite when it participates in the kind of non-open source strategies that the iphone-AT&T deal look like. Certainly millions and billions are at stake. But also what is at stake is losing the respect and confidence of the Apple groupies, and ultimately reputation, and ultimate the shift of evangelistic fervor and loyalty to someone else who seems to “get it” better.
A few random comments.
It really sucks when a favorite toy gets recalled. Thomas and Friends wooden rail cars are being recalled. There’s a boat load of them, and no wonder, because they are made in China. Seems there was some lead paint used. The ABC News story is interesting. First, you can see the anger of parents in some of the comments and the immediate knee-jerk reaction to get a class action lawsuit going. Within the same news story you can see that while the trains with the bad paint are only about 4% of what they sell in the US and have been isolated to one rogue plant in China, the company RC2 is advising parents to take all Thomas Tanker toys away from their kids to be safe. The Consumer Products Commission is loudly proclaiming the danger–even though there are no reports of injuries or any impacts. Now, I am not downplaying the potential dangers of lead-based paint, but it is also possible that the real story here is hidden deep inside the news reports. It talks about the huge increase in recalls in products from China. A recent article in Economist strongly suggested that the US crackdown and China’s exports has to do with the ongoing dispute with that nation over intellectual property protection and other globalization issues. China is responding by starting to turn back US food imports at the border because they are not “safe.”
I’m only guess here, but what if a company like RC2 and an innocent and sweet little train like Thomas are actually caught up in a much bigger battle over fair and free trade on a global scale. What do you do about reputation management then? How can you possibly fight back. It sounds like the old saying, when the elephants dance, the ants had better run for cover.
Whole Foods has a growing reputation problem. It’s the same problem we’ve talked about here in relation to Microsoft. The reputation of the giant suffered hugely when it was viewed as an unstoppable giant with a near monopoly. My theory is the emergence of Google as not just a rival but a potential additional near-monopoly has taken the heat off Microsoft and made them also likeable again if not loveable. Now Whole Foods is loudly, according this article anyway, proclaiming its intention to be the only real player in the organic food retail business. Dangerous ground. Beware of what you ask for.
So, AT&T is gearing up for a huge rush of new business when the iphone is released next week. Apple has done a great job of hyping this including the front cover article in a recent issue of The Economist.
But of course, there is the danger of overhyping. What if the lines don’t materialize at the AT&T store? Is buying a phone really like buying a video game, or will many of us be willing to wait and see how things emerge? It will be interesting to watch, but one thing seems certain, by failing to manage expectations, unless it is an absolutely rip roaring success, Apple’s stock will go down and its reputation will be harmed. I think I would have opted for a little more caution.
The thing about blogging is that bloggers tend to have the last word. Lawyers don’t get that very well. And corporate leaders who let the legal brains take the lead on the blog world, are setting themselves up for some real nastiness in the blog world.
This is the message I tried to communicate about Disney as related to their legal attacks on Spocko. Apple has a history of protecting their intellectual property very aggressively–understandable given the fact their value is increasingly tied to their stunning innovations. But, you take this thinking into the blog world too far and you are going to get hammered. Blogging (and increasingly the internet) is about conversing. And when the reaction to conversation is to bring out the legal beagles, it tends to annoy those who just want to talk about things. If a conversation involves proprietary property, the polite thing to do is to make a request. Just say please. If there are competitive reasons, or the property in question can do substantial harm to the company if not protected, then say pretty please, or else. But to just jump up with the barking dogs isn’t polite, doesn’t make much sense, and will cause the kind of reaction that Apple is seeing in the blog world: see techcrunch article called Apple Bullies Bloggers Again.
Here’s the risk–Apple is riding high. Stock is skyrocketing. Innovations pile on innovations. Complete domination in key markets. And now comes the arrogance. We all like winners. We hate arrogant winners. Arrogant winners become losers. And we become glad. Pride goeth before the fall. And all this thinking just because they let loose some eager lawyers to beat up on bloggers. Apple, wise up.
Here’s a text book case in crisis management. The fact that it is not much of a reputation crisis is in my opinion is due to the rapid and effective management of the issue by Apple.
A few weeks ago a sensationalist UK Newspaper, The Mail, reported on harsh living and working conditions at a plant in China where Apple makes iPods. Apple responded by launching an audit of the factory to see if it met Apple’s standards for labor as published in its Supplier Code of Conduct. Apple then published the findings including a detailed record of what it found, including violations of the code related to how long some employees were working. It then aggressively distributed the findings via the mainstream media, and posted the findings prominently on its website under Hot News. I found the story via Newsvine, a news aggregator.
What did Apple do right?
– It moved fast
– It acted–initiating an audit
– It admitted problems even while discounting the exaggerations of the press report
– It identified how it is going to fix the problems
– It acted to use a respected third party (Veritas) to continue to audit and assure performance to standards
– It had a set of standards previously established and referenced those as the guide to evaluating performance
– It posted the results, even those admitting problems, very publicly and prominently on its website
– It distributed its findings via the MSM, discounting the worry that by doing so they may increase the visibility of the story
– Without stating directly in any way, they encouraged objective observers to make a judgment as to who was more credible: Apple or The Mail
For those seeking to learn how to deal with a potentially devastating but still smoldering reputation crisis, this example is hard to beat.
The Chicago Tribune reporter blew it. Doing a story on the ipod they quoted an Apple spokesperson as saying the ipod would last only four years. Actually, the spokesperson, Natalie Kerris, said it would last “for years.”
Now this is on the one hand and understandable mistake. On the other hand, potentially devastating. The reporter and editors have an obligation to get something like this right. The implications for Apple on share price, on views of the company by its customers and competitors can be enormous. Planned obsolescense is an idea that was never very popular and that’s exactly what it sounds like Apple’s plan was.
The question for crisis communicators is what do you do about it. This came to my attention via AppleInsider. Here’s the story.
In my view, here is one of those relatively rare occasions where crisis pr and traditional pr can come together. I would broadcast as far and wide as possible the mistake made by the Chicago Tribune reporter. Get as much coverage as possible. It helps the brand. It’s good advertising. It clarifies the misunderstanding. It makes reporters covering Apple in the future far more cautious because they know the company is not going to simply allow poor reporting and editing to go unnoticed. Get the word out there. Why is this known only to “insiders?”