Archive for February, 2008

Seems like everyone knows that Starbucks shut its U.S. stores last night for several hours to retrain employees/barristers. Even my college-aged son e-mailed me to make sure I knew. The news traveled far and wide. One of the reasons I have been following the Starbucks Saga is that it’s a casebook study of reputation recovery and redemption. The CEO and founder returns as savior and instills a sense of urgency with a shot of humility. In my new book on reputation recovery, CEO Schultz is a text book case for following one of my recommended steps (Step #4) — Resetting the Company Clock. As I write in chapter four,

Instilling a sense of urgency often requires getting the senior team to focus more on what has to happen next and less on what went wrong in the first place. Internal politics and finger pointing distracts leadership from attending to those critical moments when moving toward recovery is essential. Wallowing in regret and recriminations is simply not helpful and keeps the company from moving forward. Even if the company is not frozen in time by recent calamities, business as usual is unacceptable. The pace of getting things done has to be accelerated. A good solution is shock therapy in the form of an overwhelmingly heavy dose of undeniable reality. One CEO, for example, summoned his senior team and displayed charts of its rapidly falling market share. To stun the team further into accepting the facts, he showed slides of competitors with quotes mocking the company. The shock value alone accelerated the team’s drive to rescue the company from their downward spiral.

By shutting down the stores and getting employees to focus on what the chain’s core competency used to be and now needs to be going forward, the CEO has essentially built a burning platform — acknowledge the flames of doom or else we all die. Return Starbucks back to what it once was or else lose out to complacency and sameness. Indeed, all the publicity surrounding the store closings for Expresso Excellence training dramatically underscores that Schultz means business. As someone said in my local Park Slope blog wrote, let’s see how the coffee tastes this morning on Seventh Avenue. To test Starbucks’ sincerity, I went to the Starbucks’ web site to see how they were communicating –if at all – their return to their roots and rebuilding trust. Right there on the home page are links to Schultz’s transformation agenda. Nos. 7 and 8 are clearly posted and I found these words in Communications #8 about last night’s training.

Tomorrow evening, we will come together in an unprecedented event in our company’s storied history.  We will close all of our U.S. company-operated stores to teach, educate and share our love of coffee, and the art of espresso.  And in doing so, we will begin to elevate the Starbucks Experience for our customers.  We are passionate about our coffee. And we will revisit our standards of quality that are the foundation for the trust that our customers have in our coffee and in all of us.But, as I think about it, there is another perhaps equally important reason why we have scheduled this training.  It’s to celebrate who we are. We are Starbucks.  We should be incredibly proud of what we have built. We are the worldwide leader of specialty coffee.  And, believe me when I tell you, we are just getting started.  We will overcome the difficult and humbling challenges we face, and will be stronger for it.  You have my word on that.

Schultz follows my book’s third step to reputation repair and protecting its brand for the long-term — Communicate Tirelessly. I will be watching and ordering a latte today.

We all know that there are dog years and human years. Then there are reputation years. An article in PRWeek (UK) has this quote from Dell’s EMEA communications head Kerry Bridge about its reputation emergence from Dell Hell: “We lost sight of the importance of conversations with customers. The ramifications could take us ten years to overcome.” Bridge was referring to Jeff Jarvis’ BuzzMachine Blog criticizing Dell’s customer service that attracted over-the-top media attention. I must applaud Bridge for being realistic about how long it takes to restore reputation. Although our research has shown that it takes about 3.5 years just to get back on your feet, it probably takes a good 7 to 10 years for a company to go from poor to good to great. Reputation years are tiresome because leaders feel every minute of pain and suffering. Ten years probably feels like 20 years when it comes to reputation calendars. However, reputations can be restored. That’s the good news.

My recent post was about the use of nautical terms (describing the economy) and health terms (describing reputation recovery) to describe events. In many Google alerts, I receive and articles I read,  I have noticed that when it comes to online reputation management (ORM), there has been a rise in harsh and sometimes fear-provoking language to describe the field of reputation defense on the Internet. I am trying to make sense of this language choice. Perhaps there is nothing to worry about but I find it interesting that there are no online reputation guardian angels, online reputation supporters and digital good Samaritans. Here are a few examples that have hit my radar screen recently.  

• Reputation assassins
• Reputation bandits
• Cybermobs
• Cyber KKK
• Cyber thuggery
• Masked digital thiefs 

I think that the personal and business environment surrounding online reputation management recognizes the perilous threats of rumor, gossip and anonymous posters to individual’s and company’s reputations. And the damage done can be long-term and easily accomplished in the shadows. Mostly, it is hard to control and identify who the hit men are which is why it is so troublesome.

The Wall Street Journal had a clever article this week about how companies are increasingly using navigational terms to explain the challenges they are facing in this uncertain economy. Company spokespeople are fast using terms such as headwinds, tacking, winds of change, tailwinds, rough seas and ill winds. I have been guilty of using these types of terms too.  In my reputation work, I prefer medical terms to describe reputation events. Here are a few I like to use. 

• Surgery is just one step on the road to recovery (Got this from the Economist)
• The company is out of the operating room—though not in the clear.
• The long-term prognosis remains uncertain.
• The company looks healthier.
• More surgery may be inevitable
• Must get the company off the ventilator and breathing back on its own.
• The company is out of intensive care.
• The company’s arteries are clogged.

However, my favorite health-related description which I use in my book is as follows:  

• The book is not merely about the initial emergency response.  Corporate Reputation: 12 Steps  to Safeguarding and Recovering Reputation is not just about what happens in the emergency room but more about what happens to the patient after the trauma has been diagnosed, life-saving intervention has been made, vital signs have stabilized, and the patient is out of immediate danger.  It is also about post-operative care and the long rehabilitation before a patient can cautiously begin life anew.

Reputation erodes in many ways. One sure-fire way is when employees spill the beans. A working paper from the National Bureau of Economic Research found that employees lead the list of corporate whistleblowers when it comes to fraud.  Companies often wonder how they get themselves into these jams. It is actually pretty simple. Perhaps if they kept the lines of communications wide open or just a little open, employees would not have to resort to tattle-telling. Remember Sharon Watkins and Enron’s Kenneth Lay. If he had only listened and acted sooner.  We continually see reputations dashed as negative things come to light. The worse is when it surfaces little by little.  I wait every day to hear the Societe Generale story continue to unfold. Now we hear that another person may have been involved with rogue trader Jerome Kerviel. This week we heard that there were early warning signals alerting Societe Generale officers about the fuzzy transactions. Employee fraud is usually suspected by other employees but no one says anything out of fear. The article in BusinessWeek (January 28, 2008) where I learned about the corporate whistleblowers reports that 82% of them are ostracized, fired or demoted. Not much incentive for telling the truth.  

Source: National Bureau of Economic Research

I was reading through the many reasons that Fortune gives for why it chooses its 100 Best Places to Work For in its recent issue (February 4, 2008). In addition to the company ranking, number of employees, job growth, job number of applicants, average annual pay, and 2008 revenues, Fortune has a box for “what makes this company so great?” They do this every year. The reasons cited include a litany of reasons such as best credit union, generous time off,  best 401k, best cafeteria, best child care site, rent breaks, on site health clubs, autism benefits, and so on. Then I came to company #70 — Mattel.* The toy manufacturer was cited for how its CEO handled the recent toy recall crisis. Fortune said ”…with CEO Bob Eckhert getting kudos for quick and responsible actions in recalling defective toys from China.” I thought that Fortune deserved a pat on the back for awarding a company as high an honor as Best Place to Work because of its CEO’s actions during crisis. Worth sharing with you. I always like when CEOs are recognized for rightdoing over wrongdoing.

* Full Disclosue: My company worked for Mattel during the recent toy crisis. I did not however.

I thought this was an insightful statement about online reputation. It was mentioned in a post by Chris Abraham who was quoting Forget Publicists, All the Cool Kids Have Online Reputation Managers. Abraham says that “online reputation management is apparently the new black.” Sure seems that way to me too.

Goes back to that wonderful article in Wired by Clive Thompson about Google being a reputation management system, not a search engine. 

To digress, I read in another article somewhere that corporate responsibility is the new India. I guess this phraseology is catchy. Perhaps I should say something clever like reputation recovery is the new green. Doesn’t have the same ring to it. Worth a try.