Hack Hacks Shutter Rag

July 8, 2011

The New York Times barely concealed glee at the misfortunes of News Corp. shouldn’t distract us from this rare example of crisis over-reaction. The negative response to the decision to shut down The News of the World, which may well have had iron-clad operational logic, demonstrates that in every crisis there is an irreducible narrative arc that must not be violated. In the context of the ongoing uncertainties about whose cell phone was hacked by whom, shutting the newspaper was akin to knocking off the key government witness prior to the trial. The News Corp.’s explanation for the decision was also a textbook non-explanation explanation. The New York Times called James Murdoch’s statements “a striking example of self-critical apology” but if all the key players, James Murdoch and Rebekah Brooks, among others, remain in place, this is an odd sort of self-criticism. Rather like the exquisite torture of business executives appearing before a Congressional committee in order to provide headlines for politicians, it is sometimes most effective simply to stand out in the withering fire until public interest begins to fade. By attempting to bring down the curtain prematurely, to mix metaphors, News Corp. has robbed the public and the politicos of their moment of hypocritical self-righteousness and it will assuredly not smooth things out for the BSkyB deal. The only effective brand recovery has to include publicly acknowledged learnings. Riding out of town in the dead of night makes this hard to do. There will be more twists and turns before the public has had its fill of this story.

Jack Dorsey is not Johannes Gutenberg

June 16, 2011

Let’s call it The New York Times effect. Just as surely as buying the naming rights to a sports complex is the inflection point at which a corporation’s fortunes turn south, a phenomenon covered to saturation by The New York Times is doomed to disappear before very long. Yet another heavy breathing story about Twitter and opposition to non-democratic regimes around the world signals that its moment has come and gone. At first no-one “got it” and then it was adopted by people who spend a lot of time waiting in public while ignoring others — celebrity musicians and actors. In its final act, Twitter is home to everyone standing in line anywhere — airports, bus stops, grocery stores as well as social media mavens who are terminally bored at social media conferences. At some point, even The New York Times will stop writing the same story over and over again. And then, quietly but surely, everyone else will just stop. Good night, Tweet prince, and flights of angels sing thee to thy rest.

Privacy as Competitive Advantage

May 23, 2011

The Sony Playstation imbroglio and the stealth campaign attempted by Facebook on Google have once again pointed up the critical sensitivity towards the issue of privacy. The astonishing fact that Apple felt the need to respond to allegations about geo-location data it was collecting suggests an acute consciousness of the reputational toxicity of privacy. Or, perhaps, it is merely recognition of the fact that each of these competing eco-systems occupy very similar turf and privacy could be the wedge issue that pushes customers terminally towards one player and away from another.
There are many conspiracy theorists willing to explain in great detail all of the nefarious things that companies want to with the data they have, but we have always been adherents to the view that inertia explains more than malice. To us, it looks almost as if it’s the effort involved in getting rid of the data that is getting companies into trouble rather a secret master plan to exploit it.
So we’d like to make a modest proposal that there is at least a possibility that there’s a business to be made in being the wired company that cares enough to purge responsibly, with a patented and fully transparent data cleanse system ™. Certainly, the race to the top in data cleansing would lol a lot more edifying than the sheepish mumbling about enhanced data privacy settings that is today’s standard response to each succeeding data revelation.

First Stupid, now Evil

April 28, 2011

We were happy to see the board of Berkshire Hathaway reverse itself in the matter of David Sokol’s disclosure about his acquisition of shares in Lubrizol because it neatly illustrates one of our core crisis management precepts.  This is that in the fog of swirling facts, conjectures and opinions surrounding a crisis, it is often helpful for a company to ask itself — is our explanation going to be that we were stupid (mistakes were made) or evil (someone can be blamed)?  This can then lead to an unemotional discussion of whether procedures need to be changed (no more mistakes) or whether someone can be fired (noisely or quietly) or a business unit closed or sold.  What is compelling about the B-H decision is that its original explanation was a botched attempt at explanation #1 — everything was legally OK, but we probably would behave differently in the future.  This flew completely in the face of our baseline of expectations about Warren Buffett as a man of impeccable rectitude with an aversion to obfuscation.  The audit committee report outlines in excruciating detail a timeline and pattern of events that enables the firm to convincingly switch to explanation #2.  We offer no opinion on whether this version of events is correct, but this looks like a good save, and probably a bit of luck.  Most companies in crisis trying to make this switch simply make matters worse by destroying their credibility.  Note to Renault: it is usually easier to go from stupid to evil than evil to stupid.

Malus Domestica

April 22, 2011

Well, how fitting that we now know what kind of Apple Steve Jobs runs — Northern Spy.  It makes very good pies, but does it make good public relations?  We’re prompted to ask this question because once again Apple has stayed true to its practice of not commenting with regard to allegations about its retention of data about IPhone users’ locations.  This is consistent with its previous posture re Steve Job’s state of health and questions about stock options.  The almost universal admiration of the company (some might call it adulation) in spite of this habit occasionally causes corporate communications practitioners to ask — “opacity seems to work for Apple.  Why shouldn’t I try it?”  The answer is not as simple as it might seem.  Some might say this posture has worked well for Apple, causing  past critical storylines to wither for lack of the oxygen provided by a company response.  However, it seems to us, that it requires a level of intestinal fortitude, the willingness to put up with high levels of negative speculation, that is realistically only available to a company like Apple.  Steve Jobs is truly one of a kind and arguably even titans such as Jack Welch, Lou Gerstner and Bill Gates would have had trouble pulling off this consistent silence.  The  great Warren Buffett himself will be hard pressed to say nothing about the resignation of David Sokol at his upcoming annual meeting even though he is unlikely to go beyond what he has said previously. So the lesson here seems to be that, for most companies, consistent and reasonable transparency is the safest posture.  Once again, we will have to leave pregnant silence to the man in the black turtleneck.

Men in Crisp Suits

April 1, 2011

For many people, the day hasn’t really started until they’ve read The New York Times and this writer in particular owes most of his knowledge to reading the newspaper every day for 35 years.  The paper’s coverage is so uniformly credible and balanced that its intimate readers instantly recognize when a reporter is reaching — anonymous quotes, unsourced opinions and in portraits of  insufficiently villainous bad guys, cruelty to animals, anecdotes about high school arrogance and references to unrelated lawsuits, long dismissed.  This past Sunday’s paper carries variant number two of this technique used when it is deemed appropriate to paint a corporation in a poor light without any evidence for bad behavior.  In Walmart Tries a Refined Path into New York, reporter Elizabeth Harris delivers a gem of this particular genre.  The way to recognize this particular type of story is that there is always a reference to the PR people, inevitably wearing crisp suits.  Then there’s the obligatory Dr. Evil analogy (Walmart henchmen “furiously” tap Blackberry messages to company exec watching remotely).  We are also treated in these stories to power words that add little information —   “all out push,” “overwhelm,” “out manoeuver,” “aggressive” (and “aggressiveness”).  Note the sheepish dissonance between the headline descriptor (refined) and what the reporter appears to want to characterize as a brute force campaign to (OMG) influence public opinion in open forums.  The reporter is keeping all options open here, accusing the company of simultaneously saying too little (“would not speak to a reporter for this article”) and too much (“the e-mails kept popping up for nearly four hours”).  What exactly does one need to add to a campaign (“aggressive media strategy”) conducted so stridently in the open?

This is not to argue for a moment the merits of the issue.  For all we know Walmart does destroy small businesses and replace good jobs with bad ones.  We’d just like to “out” these veiled editorials, although we have little expectation that even “in your face aggressiveness” will cure the Times of this occasional vice.  In the mean time, we have a few recommendations for the good people of Walmart — ditch the “emblazoned” (Scarlet Letter) folders and hand out information on coffee stained napkins.  And we have two more words for the PR people: cargo pants.

Smoking Tweets

March 2, 2011

The Supreme Court’s ruling in the AT&T case ends for the moment the idea that corporations have any personal privacy protection of material provided to government agencies.  This has particular relevance in the burgeoning world of social media as practiced by companies, in which more and more internal and external traffic will not only be FOIA-ble but searchable.  In this environment, legal agreements in which companies pay fines without admitting to wrongdoing will provide little protection against out of context citation of awkward statements.  This is, of course, merely another reminder that the utmost care should be exercised in all forms of business communications, underlined by the ancient psychological truth that anything that can be misconstrued will be misconstrued.  We can understand why the U.S. Chamber of Commerce would  stand with AT&T on this.  Their statement cited in the Wall Street Journal that the ruling could have a chilling effect on corporations’ willingness to cooperate with law enforcement authorities somehow didn’t sound quite right, however.

Regardless of how the issue evolves, lawyers and communicators will now have to bid farewell to a tried and test cliché: “this statement has been taken out of context.”  How much context can there be in 140 characters?

Tempest in a Taco

February 1, 2011

With its highly public response to a lawsuit about the beef content of its fillings, Taco Bell has provided another opportunity for us to observe reputation management in action in today’s social media environment.  With its “Thank You for Suing Us” advertising campaign, Taco Bell has taken the offensive in both MSM and digital media to make the point that its beef fillings are more than 80 percent beef.  Both in tone of voice and proactive stance, Taco Bell is trying to find the sweet spot that represents confidence, transparency and intimacy in the digital age.

Taco Bell may or may not succeed in rallying its loyalists by this campaign but they are more likely to succeed than Nestle that initially reacted to the Green Peace Kit Kat campaign by scolding the NGO for copyright infringement.  Public outrage caused them to back down quickly, but we believe more and more companies will find the right tone of voice defending themselves in the social media era.  This is healthy experimentation that will provide insights for reputation management across the industry spectrum.

Marco? Polo!

January 14, 2011

For Marco Polo, his father and uncle, the meeting with Kublai Khan was the highlight of 1268.  As Venetian businessmen, they had risked a lot to get to the great man but it seemed that the financial rewards from future trading would be significant.  So, they didn’t hesitate to accept the Khan’s request to take a message to the Pope and return with numerous priests so Kublai could learn about Christian beliefs and potentially add Jesus of Nazareth to his pantheon.

The Polo family thought nothing of mixing geopolitics and religion with business but in our world, until recently, there has been a generally accepted belief that business and foreign policy should occupy different spheres.  There has, of course, been a widely understood exemption for big hardware (planes, guns) and energy, but corporations have generally left foreign affairs to the diplomats.

Several recent events suggest that in today’s increasingly volatile global environment, the world’s geopolitics and business affairs are once again completely intertwined.  What this means is that thoughtful corporate communicators need to be looking more deeply at business engagements from a geopolitical perspective and including “political risk” in business calculations in a seamless fashion once again.

There may or may not be a story behind suggestions that U.S. hedge funds which have received major investments from China could have violated the Foreign Corrupt Practices Act.  Certainly, companies that have extensive business dealings with the holdings of the Tunisian first wife’s family, the Trabelsis,  should be looking carefully at evolving events in Tunis.  Both GE and GM need to evaluate their entanglements with Chinese aviation and auto companies in the light of changing geopolitical scenarios.  As Orwell warned “four legs good, two legs bad” can become “four legs good, two legs better” in the blink of any eye.  Kublai Khan gave the Polo team a massive engraved golden tablet to guarantee their safe passage through his lands.  Their descendants may not be so fortunate.

Pawning the Family China

December 29, 2010

We’ve grown used to superlatives about the Chinese market, its billions of consumers, trillions in investments, the all-consuming maw of its energy needs.  Global companies have proved willing to do almost anything not to be left out of the competition to meet these needs, even when the costs and risks have been astonishingly high.  Now the Wall Street Journal reports on two massive deals in which GE agrees to combine its global avionics business with AVIC, the Chinese aviation company and GM expands its joint venture with SAIC, the Chinese automotive company, to sell its no frills Wuling mini-van throughout Southeast Asia.

We can leave to more competent analysts such issues as the intellectual property risk. There has already been pointed commentary on the joint venture that Kawasaki Heavy Industries and Siemens  created with a Chinese partner in high-speed railroads that has in short order produced a competitor for them all over the world.  What interests us is the increased reputation risk that GE, GM and other companies have taken on with these intense and intimate partnerships.

We make no allegations against any specific Chinese companies, but it is clear that a century or more of corporate reputation building by GE and GM is not matched by their fledgling (if giant) Chinese partners.  The ethical care and commitment to international standards across a broad swathe of business practices exemplified by companies such as these stand for respected corporate brands that have now been placed in the hands of their Chinese partners.  Having spent decades ensuring that their supply chains around the world are behaving in accordance with their own standards, these companies now arguably face reputation risk on an unprecedented scale.

In avionics henceforth, at least so it looks from the outside, GE is AVIC and AVIC is GE.  A manageable challenge, certainly, but  no-one should mistake the shift in the order of reputation risk magnitude that has taken place.