Last night I watched the PBS Frontline documentary “The Tank Man.” It highlighted the story of the Communist government’s brutal ending of the pro-democracy protests in Beijing in 1989, focusing on the gripping image of the lone young man holding up an entire column of tanks. A sub-story within this documentary was the role that Google, Yahoo, Cisco and Microsoft are playing in helping the Chinese government work to limit the access to information of its people–including about the events in Tiananmen Square. More than that, Cisco and Yahoo in particular were accused of actually assisting the Chinese government in tracking down those who violate China’s rules about dissent and free flow of information.
The footage included testimony from the four companies at Congressional hearings. Cisco stands accused of selling equipment and systems used by the police force to track and prosecute enemies of the state. Yahoo turned over information to the government about the activities of one of its customers that resulted in his arrest and 10 year prison sentence.
When you look at it as presented by the Frontline producers and even more so in my brief explanation, it is chilling and creates an immediate visceral reaction of horror and anger against these companies. And I will tell you that when I saw Cisco’s written statement (they refused to participate in the documentary) I was reminded of I.G Farben. I am working on a book about an American fighter pilot sent to Buchenwald and the I. G. Farben plant was right next to this horrid concentration camp making full use of the slave labor-to-death of the inmates. So many prominent German companies played key roles in supporting a brutal regime including participating in its brutality. Cisco’s explanation and Yahoo’s as well focused on the need to follow the laws of each of the countries they operate in.
They are right of course. But here is one great challenge of globalization. To not participate in the massive opportunity that is China is to relinquish a position of leadership in global business. To participate, means that you have to violate the principles, laws and core values of the customers and regulators who mean the most to you. To say these companies are between a rock and a hard place is understating it.
This, I would consider a smoldering crisis. It could erupt at any time into a full blown flame. As it is, it exists in the blog world and once in a while it emerges into the mainstream media such as PBS. It would not take much for it to burst to a critical reputation crisis for these firms–and based on what was presented Cisco is most at risk. An entrepreneurial activist, the focused engagement of the Freedom Frontier folks, a politician looking for a good cause to run on, a high placed reporter seeing this as a Pulitzer prize opportunity–all very possible and I would guess worrisome to the communication leaders of these organizations.
This challenge also highlights the issues of managing a smoldering crisis. Direct, open conversation and engagement with those (such as me) who are deeply concerned about this and the role they are playing is vitally important. But how do you do that without fanning the flames and inadvertently help the issue burst from the smoke into a full blown crisis?
It will be interesting to watch.
I had the chance yesterday to talk to a fairly high level sales executive with Google. Someone who had earlier worked for the company that Microsoft just purchased for $6 billion–needless to say he was happy with the price paid. But as someone who sells Google’s ad services to some big accounts in this area, he is in the thick of the war brewing between the two giants for all our ad dollars. And it will be a war–with interesting twists and turns that we can’t even imagine now.
I asked him about Google’s strategy of the street level addition to Google Earth and he talked about the potential for stores to take people from the street level into tours of their stores, directing them via Google to find just what they are looking for. Google doesn’t seem terribly worried about monetizing the street level views as they don’t seem concerned about monetizing
Google Earth, but it all adds up to making advertising more direct, more powerful, more effective. The pay per click model is here to stay–more than that, it is rapidly coming to what all those who buy advertising long for and that is advertising as a fixed cost of the sale. I’ll pay for the ad if I sell the product but not if I don’t.
This has huge implications for all of us in communication and not just those buying advertising. How we connect with each other, how we provide messages, how we shape opinion, how we deliver facts are all related to how the commercial enterprise does its job. I can’t predict exactly how this clash of the monoliths will impact crisis communication or reputation management, but I’m pretty darn certain that it will have a huge impact. Repeat after me: Change is good, change is my friend.
Seems like Seattle is a great place to grow companies that come to dominate their markets–and then get viciously attacked for their success. Of course I’m talking about Microsoft and now Starbucks.
This story from the Daily Dog discusses a lawsuit filed against Starbucks from a Seattle coffee franchiser complaining about monopolistic and predatory practices. One quick side comment about the “Dog” story. It starts with”Starbucks isn’t called the Evil Empire for no reason…” Oh come on. I thought the evil empire dates to Reagan and the USSR. Not sure who is calling Starbucks the evil empire (suspect it is competitors) but for a PR-oriented publication to offer a lead like this is, well, a little yellow. Yes, I own Starbucks stock so perhaps I have a vested interest, but this rather obvious imitation of the mainstream media’s worst corporate-bashing tactics is surprising to me in a PR-industry publication that ought to be more critical of this kind of attention-grabbing writing.
But on to the main point–the monopoly claims. I can’t comment on the specifics, but in our town located just 80 miles north of Seattle there are lots and lots of competitive coffee places and even small franchises. The one owned by my neighbor has about 10 stores. Starbucks only has a few in town. We have a strong strong anti-corporate attitude in our university town and so when Starbucks opened a store downtown a few months ago, there was a real reaction against it. I usually go to the non-Starbucks places closest to my office. But I went to one the other day and the horrible music was up so loud that the barrista behind the counter, who insistently bent over the counter working on something for about 7 minutes, could not hear us even when we tried to get his attention. We walked out. Went to the next place. One person was in line ahead. The idiotic barrista dinked around with his single drink for so long, engaging in casual conversation with him, completely ignoring me and my guest in the process that after about 10 minutes of this we walked out. We went to Starbucks. They served their usual completely consistent Americano and actually did what I asked when I said I only wanted half a cup of water in it. That doesn’t often happen in a non-Starbucks store.
Microsoft was super aggressive and no doubt engaged in business tactics it later came to regret. And it was beat about for its dominance and success and made to pay for it, just to serve as a lesson in case anyone thinks that success is what they really want. But did this change the public’s opinion of Microsoft? No. Their reputation has improved dramatically but mostly I believe because of the emergence of a new giant–Google. Claims about King Bill and Microsoft’s complete dominance are now a memory. The new target to attack is someone who doesn’t even ask you to pay for all the functionality they offer–and how is innovating for profit charities.
So, lawsuit-happy failed franchisers, stop blaming Starbucks’ success for your failures. Get out there and Google them.
My guess is ebay is going to fold on this one soon. According to this story in auctionbytes.com, ebay won’t allow its users to use Google’s new pay system Google Checkout.
Well of course not, since Google Checkout seems pretty well aimed at ebay’s Paypal. But here is a clear example of where business strategy conflicts with internet culture and values. We are still in a time where openness will win the day almost every time in my view. So ebay is between a rock and a hard place and something is going to get squeezed.
What will be interesting to me is to see how they try to defend this position and the impact it will have on their reputation.