Category Archives: Reputation Crisis

Lowes and Chiquita show “social responsibility” a slippery slope

I think the focus on social responsibility by corporations is a very positive step. I have long believed that companies can be a force for good or ill in our world, and social responsibility helps them think through their actions. But, as Lowes and Chiquita are both showing “there be dragons there.”

Lowes ran into a firestorm when they first sponsored and then pulled their sponsorship from a TV show “All American Muslim.” Lowes pulled its sponsorship from the show and that led to a storm of protest. Many believe that the decision by Lowes was influenced or forced by a Christian group from Florida protesting the show. The online travel website Kayak also got into the controversy after it backed out of sponsoring the show, but said on its blog that the show “sucked,” and that TLC, the network airing and selling the show, misled them about the nature of the program. Lowe’s is facing a firestorm of controversy, boycotts and threats of boycotts and high profile celebrities looking to jump in front of any TV cameras who happen to show up around this issue.

Chiquita stepped on the proverbial banana peel by attempting to show its social conscience by boycotting Canadian oil based on environmental concerns about extraction from oil sands. It’s kind of a hot topic around here as our hyper-environmentalist city council locally decided some time ago to boycott Canadian oil as well–not a friendly gesture as we live on the US-Canada border and much local business comes from Canada.

Chiquita’s social statement resulted in efforts by Canadians and some Americans to organize a boycott of Chiquita bananas. Of course, the alternative to Canadian so-called “dirty oil” is more oil from the sands of the Mid-East, which, as the Canadian Huff Post article points out, is hardly free of ethical concerns.

The dragons of social conscience and social statements coming from corporate actions surround us. From a corporate standpoint, your damned if you sponsor a show and damned if you change your mind. Your damned if you support Arabian oil or Canadian oil and damned if you don’t. Sorry, but wind power is not safe either because if you say we support wind farms, those bird lovers who decry the occasional avian death will likely try to organize a boycott and perhaps even get Mia Farrow involved.

I find this very disheartening. For one thing, it will likely serve as a damper on enthusiasm for social responsibility. Second, it will likely further contribute to the deadening of our entertainment to the lowest common denominator because what corporate sponsor concerned about their brand will support something that may create a backlash? Third, it shows the power of social media but in my mind in a negative way. Networks of like minded can be quickly built and the pressure these groups and individuals can put on organizations is often way beyond their actual power. It’s a kind of false power, but, it is amplified by the kind of media reports we are seeing on these controversies. Media feed on such controversies so even a small protest, when aided by activist-celebrities, make any editor, publisher or producer slobber. What is particularly sad to me is how the public relations publishers jump on these things and fan the flames of controversy in many ways more irresponsibly even than mainstream media.

No doubt executives will think carefully about implications of sponsorship and their own social conscience-led decisions. That is a good thing. But I hope these flare-ups prove to be benign in terms of brand damage because too much of the kind of political correctness enforcement we are seeing is ultimately going to hurt all of us.



Is Toyota going the way of GM?

I was intrigued by a couple of major media stories about Toyota. Today there is this story from US Today saying that Toyota’s reputation may need an overhaul following the latest hit–a major safety recall. It identifies a string of problems that the world’s largest automaker has experienced in the recent past. This follows last week’s cover story in the Economist in which the major challenges Toyota faces are examined in some detail. The story starts with the chairman and grandson of the founder revealing that he has been reading Jm Collins’ book “How The Mighty Fall.”

No doubt Chairman Toyoda has plenty to worry about. But, as I commented here a long time ago, his biggest worry from a reputation standpoint comes from his success. Strange thing about this time and culture–we like winners, but we don’t really like big, gigantic winners who keep on winning. Certainly part of that is our media pattern of following the rise of someone or some organization as they battle the giants, but as soon as they get to the top and topple the giants, the deconstruction begins. In some cases, like Tiger, the deconstruction is aided mightily by their own misdeeds. It is not just media, however. Our cultural values tend to distrust and dislike anything too big and powerful. We don’t like monop0lies or anyone that smells like one. We don’t like teams or companies or celebrities who simply dominate. I said here before that Microsoft finally emerged from under the cloud of its success when it became clear that its dominance was no longer assured with Google coming on strong. Now Google faces the very real problem of their famous corporate slogan turning on them and biting them on the backside. As they get increasingly powerful, more and more will see evil in every move they make.

Toyota has its problems, no doubt. They’ve made mistakes. But having a big safety recall over floormats that slip over accelerators and having the media conclude that this is a sign they need a reputation makeover identifies their real problem. They are the big dog. They’ve got a target on their back. They have tens of thousands of journalists, bloggers, and others beside competitors, who would love to help lower them a notch or two.

Communicators and executives at Toyota have a tough challenge. Above all they need to “walk humbly” while the company continues to innovate, put their kaizen strategies to work, and strive harder than ever to lead.

Ryanair clearly doesn't get the world of us "idiot bloggers"

This story from The Guardian in UK is so astounding I kind of wonder if I am being hoaxed. I just got off a call with a student researching online crises and crisis management and one of the questions essentially was: do companies today “get it” when it comes to the online risks. I said I they were quickly moving in this direction, and then, literally moments later I come across this item about Ryanair’s exchange with a blogger.

I certainly understand that by linking this story, which recounts the interchange between a Ryanair very rude and obnoxious staff person with a blogger about a potential bug, I am adding to the social networking spread of this rather ugly story. But that is just the point. The blog conversation is like a quiet, interchange in a corner of a very busy room when suddenly the room goes quiet, the conversation is miked and the conversation goes on in multiple rooms around the world. Don’t these companies get it? Is that really so hard to understand?

It is quite remarkable that the training of people authorized as Ryanair staff to respond was so poor, but what completely blows me away is the official response of the company when it was pointed out on a travel website that their interchange with the blogger was less than positive:

“Ryanair can confirm that a Ryanair staff member did engage in a blog discussion. It is Ryanair policy not to waste time and energy corresponding with idiot bloggers and Ryanair can confirm that it won’t be happening again.

“Lunatic bloggers can have the blog sphere all to themselves as our people are far too busy driving down the cost of air travel.”

OK, so maybe there are some companies that don’t get it yet. Yes, more work for us consultants.

Mattel shows that reputation management is becoming routine

First, let me say that Mattel seems to be handling the potentially organization-threatening recalls and reputation damage very well. And their response seems like the well rehearsed response of messaging, key executive media training, and crisis management response that many of us in this business have been advocating for a long time. Get your CEO out there. Tell the truth, even when it hurts the worst. Be the bearer of bad news yourself. Accept responsibility. Personalize your pain. Tell what you are going to do about it so the problem doesn’t happen again.

Key highlights:

The letter from CEO Eckert starts: Dear Fellow Parents. That’s good. Make common cause with your most important customers and those most concerned–and personalize. Which is exactly how he starts the video.

Video–yes, with CEO Eckert carrying all the key messages.

Key message Q&A–short, precise, to the point.

Web site and search–I could quickly find (about 6 down) the important message from Mattel about safety with a web page that took me directly to the information–which means it doesn’t have to clutter their existing site, but also avoids them looking like they are oblivious or it doesn’t matter.

Pretty text book I say. We will see how it plays out longer term. What I am seeing though is that there have been an increasing number of companies and organizations in crisis that seem to have it figured out. So much that now there emerges another problem. When does it start to look like it is too practiced, too routine, too slick? Not sure, but I expect there to start to be snide comments from media commentators about this kind of schtick–in fact, I heard one comment about “the normal round of mea culpas,” so I think it is starting. The question is–if you can’t do this and protect your reputation, what do you do?

One more thing. Lead poisoning is no doubt a great concern and parents ought to be alarmed. But some of the expert doctors suggesting almost that if your child had any contact with a Mattel toy need to get in and get tested seems overkill. The media loves to scare, no doubt about that as John Stossel effectively pointed out a while back on 20/20. How about some useful information now about the level of lead necessary to trigger brain damage and just how much of one of those toys would someone have to suck down in order to accumulate that much lead. That would be useful and might work to relieve some worried minds–including those at Mattel, whose CEO is a parent too.

Thomas Tanker, Whole Foods, Apple iphone launch

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.

Do Reputations Matter? The Bausch and Lomb story…and Dell

I’ve been pondering lately the question of the real role of reputations in corporate and organizational success. It’s always good to evaluate the basic tenets of your beliefs once in a while. I think the questions emerged while boating through Prince William Sound and wondering how a company who had been so damaged or broken by a disaster of that magnitude could now be so successful and admired–if not in the public eye, then at least in the industry and the financial community.

This story about Bausch & Lomb being sold to a private equity firm helps re-establish my confidence in the idea that reputations do matter. The company had a problem of uncertain origins with their contact solution. The product was recalled but confidence in the company was not maintained during that event. Now, they are selling in part, according to this story to be able to deal with the consequences of their loss of consumer confidence without being under the scrutiny of investors.

And, if you opened up the link above you could not help see the headline and story about “Dell Hell” again. Poor Michael. He could not have realized that his perfectly simple and acceptable last name which seemed to work so well for a corporate giant has now been turned into a nightmare name by the fancy of headline writers–and bloggers. Here’s a good question for crisisblogger readers: how does a company like Dell get rid of the “Dell Hell” appellation when it is clearly so popular with headline writers. I mean it rhymes, it doesn’t take a lot of space, it grabs immediate attention, it says Oh boy, they are in trouble again. How do you get rid of that? Start a campaign that says “Dell is Well”? “Dell Haters go to Hell”? How about the Dell Smell? Or Dell Farewell?

The simple answer for companies like Dell or BP who have their reputations tarnished, fairly or unfairly, is to go about your business, do the best job you can, get better at operations than ever before and time heals all wounds. Again, Exxon may prove that point.  But something tells me that something a little more striking and dramatic needs to take place in order to overcome the frustrating tendency of reporters (including now citizen journalists) to fall into the old routines and traps and keep the negativity going.

When the regulators stab you in the back

I’m back from Mexico and found things pretty active while I was gone. Fortunately I unplugged pretty well, otherwise I would have gotten pulled into kind of a nasty one. I’m not going to be very specific here but this is a situation faced by a great many companies who are closely regulated by oversight organizations at the state, federal or local level. This could apply to financial regulators, utilities, industry for a variety of things including environmental, even tax issues.

In this situation the company was bending over backwards to address all the concerns that the regulatory agency was raising. They knew there was a problem and proactively discussed and brought all the relevant details to the agenct representatives attention. Everyone knew the seriousness. And the agency folks were highly complimentary about the company’s cooperativeness, transparency and proactive planning to address the concerns. But the governor needed to make some hay apparently. Or answer to critics about the toughness of the agency on industry.

So, while the nice talk continued in the conference room, the agency’s communication people went to work crafting a press release designed to make the company look like it wore horns and waved a forked tail. The old black hats white hats ploy was in full play and you know which color was on each side’s heads.  The word had come down apparently–make us look good by making them look really bad.

There was some cooperative work on the press release, a slight toning down of the hyper aggressive tone and implied name calling, but by the time it hit the media it was ugly. Of course, they buy into the “good guys-bad guys” story hook line and sinker. What is the company to do? Publicly call out the fact that they have been stabbed in the back by agency folks answering to a higher authority? There is nothing they can do except see all their hard work to be cooperative, to be proactive, to be responsible citizens go for nothing as it relates to their reputation.

Think this can’t happen to you? I’ve seen it over and over and over–with big companies and small companies. It is one of the most common reputation threats out there. And the threat is not you as a company making a mistake–but the politicians who control these agencies looking desperately for any opportunity to make themselves look good at your expense. After all, how can they be hurt in this environment by making some huge bank, powerful industry association, Fortune 100 industrial firm, large private utility or just about anybody big and powerful look bad?

I would love to hear from some of you experienced crisis managers out there discuss your approach to dealing with this. My sense is that it is one of the most common reputation hazards that we in crisis management have to deal with but one of the most intractable. Your thoughts?

Wal-Mart "Reputation Crisis" reported in BusinessWeek

Business Week Headline

Is Wal-Mart in a reputation crisis? I think so, and I expressed that opinion to a reporter working on a story for BusinessWeek. I guess I didn’t expect my judgment about that to appear in the title of the cover story of BusinessWeek online as it is right now. Read the article.

How did I get the opportunity to comment on Wal-Mart’s situation, given how many smart people in crisis and reputation management are either working on this or thinking about it? This blog. I commented on Edelman’s problems relating to the “flog” site “Wal-Marting Across America” and the BusinessWeek reporter, Pallavi Gogoi, who broke the story of Edelman’s sponsorship saw my comments and gave me a call.

I’ve blogged before about the connection between MSM (mainstream media) and the blog world and if this isn’t clear evidence of that connection I don’t know what is.

Of course, you are always a little nervous when a reporter from a publication like BusinessWeek gives you a call. But I was quoted accurately, thank you Ms Gogoi. It’s the gems that got cut you always grieve. Like the fact that what makes this a reputation crisis of significant proportions is that the public license to operate is very much at risk. Wal-Mart’s ability to enter new markets is very much at risk and whenever you have become a political football or pawn, with one party lining up against you and the other one either for you or remaining meekly silent, you have big problems. No company wants its brand to become so politicized, to become a symbol for what a segment of the public most hates about this country. And that is exactly what is happening.

We also discussed union involvement. Is organized labor behind the effort to damage or destroy the Wal-Mart brand? If so, how are they doing it? The connection between organized labor and the increasing opposition from the Democratic party is logical. How much does this play into Wal-Mart’s current distress.

Crisisblogger readers, please weigh in. I’d love to know what you think about Wal-Mart’s problems, potential solutions, and the reporting it is currently receiving.