CEO apology

I have to say that the headline in today’s WSJ re the $2 billion trading loss at JPMorganChase strongly resonated with me. The title is “J.P. Morgan Trades in Its Crown.”  In our research on safeguarding reputation, we start out by summing up reputation failures among the world’s most admired this way:

 

“The last decade has seen many of the world’s most admired companies descend from their once lofty positions. They were in a class by themselves — corporate reputation royalty whose invincibility was universally accepted by business executives around the globe. No one could have predicted that these companies would ever part with their crowns. How the world has changed!”

 

It looks like we now have another major kingpin to add to our Weber Shandwick “stumble rate” analysis that we calculate every year. You can find more about it in an earlier post.  But…between 2011 and 2012, 49% of the world’s largest companies experienced a reputational stumble, up from last year’s 43% but exactly the same as 2010’s rate.  There seems to be no more untouchables among the Fortune 500 with this recent news.

 

I was also intrigued by Jamie Dimon’s remarks about what he could have done differently to have caught this $2 billion blunder earlier. Dimon’s deadpan answer was paying more attention to the “newspapers” among other things. He was referring to earlier reports in the papers about the trading problem. Have to hand it to him for taking the blame and being brutally honest in his response. He’s been true to his reputation on that count.

“In hindsight, the new strategy was flawed, complex, poorly reviewed, poorly executed and poorly monitored. The portfolio has proven to be riskier, more volatile and less effective an economic hedge than we thought.”

Another side note of interest is that this reputation crisis did not start in social media. It has certainly taken off online but as far as we know now, there's been no social media assault that instigated this crisis. No online cloak and dagger here.

Will be interesting to see how this pans out reputation-wise. Will this tarnish the bank’s reputation for the long-term or just be a stain? No doubt it will be headline news for a while. Dimon is eminently quotable --the WSJ has his most notable quotes already listed. I hate to have to say it but another one hits the dust.

Just was forwarded an interesting study out of Northwestern's Kellogg school. It found that the share price of a company that is being boycotted drops nearly one percent for EACH day of national print media coverage. Ever wondered what happens when those protesters zero in on your company and tell people not to buy your products? Often I will hear the response, "The boycott is not affecting our sales so let's not worry too much about this."  However, the research uncovered that perhaps your sales are not being affected, but watch out for your reputation and stock price. Assistant Professor Brayden King found that Day One may not be as much a problem (decline of one half of one percent in share price) but there is an average decline in share price of 0.7 percent for EACH day afterwards that the company remains in the national print media spotlight.  After looking at 177 firms who were boycotted over several years (1990 to 2005), King concludes that there is a clear link between reputation and media coverage. And when you think of today with the Internet, whoah. I liked this fact -- about 25% of those companies generated a concession from the targeted company.  What does that say about the other 75%? Perhaps there are some behind the scenes negotiations that we are not privy to. And clearly companies stuck to their position if they felt they were right. Also liked this fact. King used the Fortune Most Admired Companies ranking (one of my favorites) and found that boycotted firms with a high reputation ranking generated 4.4 times the coverage generated by boycotted firms that were unranked, three times the coverage of those in the lower quartile and six times those in the middle ranking group. Essentially, the bigger you are and the more admired, the greater the coverage when boycotts land on your door. Like I often say, when you make it to the top of your industry in the Most Admired, you might as well paint a bulls eye on your back (or logo).

Have Asia on my mind as I am soon airborn. A few facts and stories I just learned as I am preparing to go and talk about reputation trends. These are all China-based for now....

• In four years, more than 700 million people in China will be watching online video sites. Youku, similar to our YouTube, is one such leading site. (McKinsey Quarterly, 2011). Pretty dazzling if you ask me.
• Even during the global recession, sales of luxury goods in China rose by 16%. (McKinsey Quarterly, 2011).
• An interesting incident that caught my attention. Apparently the CEO of DangDang (China's Amazon) exploded at his bankers in a profanity-filled tirade blaming them for an IPO that undervalued his firm. The language was so profane that when reported there were alot of ****s. This all appeared on Sina Weibo, China's Twitter.  Apparently some employees of the bankers fired back on Weibo although now there are reports saying they were not employees. Whatever the story, what I found interesting is that we focus so much on social media guidelines for employees and perhaps its time to develop them for CEOs too! Not exactly a reputation-building story.

  The trading scandal at UBS brings to mind the long journey that companies undertake to recover and restore reputations. UBS is now back at square one as they deal with the recently revealed $2.3 billion rogue trading. This reputation disaster brought me back to the days of the Societe Generale SA rogue-trading incident three years ago. If you recall, Jerome Kerviel managed to lose $7.2 billion on his derivatives scheme. The reputation drag on SocGen's reputation today and on UBS tomorrow is quite real. The SocGen scandal has not entirely faded in the past three years. In fact, everytime one reads about what happened last week at UBS, the SocGen scandal gets replayed. This is unfortunate for those who go down the path of reputation recovery like SocGen. SocGen's recovery program was quite extensive when you look at it from a three year vantage point -- they dismissed Kerviel's bosses, demanded that the bank move slower as new security systems were put into place and launched an internal controls program called "Fighting Back."  In addition, other measures were set forth such as spending on new IT security, starting a newly independent accounting group, beginning a SAFE (Security and Anti-Fraud Expertise) program to oversee financial operations and training 7,800 employees about fraud. Ultimately the CEO and chairman stepped down one year later.  All these remedies for recovering reputation came from an article in yesterday's WSJ and I was glad to be able to list these steps for other companies contemplating what to do when faced with sky rocket type scandals. Yesterday morning started off with an email to me from Netflix's CEO Reed Hastings. I immediately went to the Netflix's CEO apology on the blog.   What confused me however was the tone of the video. Although I am a loyal customer and fierce advocate of what Netflix has done for delivering movies to my home, I thought that the video apology was abit too cheery (outdoors in sunny California. albeit a parking lot) and efficient.  Maybe too rehearsed is the right word. I did not get the sense that this was a very repentent CEO who had seen his stock value decline 52% since the change in pricing occurred. But what really threw me was that he did not share the stage alone. In the video, CEO Reed Hastings had the new head of the DVD spinoff, Qwikster, Andy Rendich, joining him.  I always say that CEOs get all the credit when things go right but all the blame when things go wrong. Why did Hastings deflect some of that blame on this poor soul. I cannot remember the last time (if ever) I witnessed a CEO apology tied to the announcement of a new spinoff. I sincerely doubt that was a good launch plan for Qwikster. My sense is that there's more apologizing to come. This poor guy Andy looked like he too was somehow responsible for the communciations debacle. Despite these ramblings, the article on the Netflix problem in today's New York Times made me smile. The authors wrote, "But in the short term, the risk to corporate reputations is palpable."  It is not often that I even see the words "corporate reputation" in a top tier publication. Usually it is referred to as brand health or brand reputation or positioning.  It is fairly rare to see corporate reputation used as a commonly understood concept.  My two cents is that short term feels like long term these days when you are in the spotlight. As someone said to me, it's like a nuclear assault whether it is 6 days, 6 weeks or 6 months. Ultimately, Netflix will be forgiven but like the SocGen example above, reputation damage takes its toll and lingers longer than most CEOs care to imagine.

    Twitterologies. Is there such a word? I doubt it.  The CEO of Vodacom, Pieter Uys, apologized for outages via Twitter (@uyspj). Despite the inconvenience to Vodacom subscribers, the CEO is getting good marks for his simple apology. While it was happening, Uys was tweeting to customers about what he could do for them and kept in continuous contact. He tweeted the following:

"I do care for every one of our customers. What happened today was not acceptable. I'll work hard to make you smile again." "Words can't express how sorry I am about today's problem. Flat out working at making sure all is 100%. Pieter." "At the network switch with the engineers. All looks OK now. If you still have a problem, please switch phone off and on."

Fairly simple way to tell your customers you care. And that you are there. Helps to keep your company reputation intact.

Buy Zithromax (Azithromycin) Without Prescription, When I visited Amsterdam, someone mentioned an incident of a sympathetic CEO.  A discussion arose about how CEOs could make a greater show of empathy for those affected by normal day-t0-day events such as delayed flights due to volcanic ash, safety incidents, food recalls, investment losses, etc.  When I first heard the word "sympathetic" in the same sentence as "CEO," I liked the ring of it. However, where can i find Zithromax (Azithromycin) online, Zithromax (Azithromycin) withdrawal, snort, alcohol iteraction, I immediately thought about how infrequently this topic has come up in all my years of following, studying and working with CEOs.  Why is that?  I think we all know why.  Empathy is not not what makes great CEO reputations, buy Zithromax (Azithromycin) without a prescription. Buy Zithromax (Azithromycin) no prescription, Nice to have but not necessary perhaps.

Along the same lines, købe Zithromax (Azithromycin) online, αγοράζουν online Zithromax (Azithromycin) , Buy cheap Zithromax (Azithromycin) , I was asked why CEOs do not apologize enough. I often get asked this question and frankly, Zithromax (Azithromycin) over the counter, 1000mg, 2000mg, I wonder if there are too many CEO apologies today.  My fear is that it is easy to apologize and the more there are, the more dilutive the effect might be.  The sense  in our Amsterdam meeting was that CEOs do not apologize enough when things go wrong.  I usually respond by saying, Zithromax (Azithromycin) for sale, 5mg, 50mg, 75mg, 100mg, "Name me one CEO who apologized that was sued."  I really can't think of any right now although there must be one, don't you think, Zithromax (Azithromycin) samples. 0.4mg, 0.5mg, 1mg, 2.5mg, Those are my thoughts for the day. The sun is out and I am going out to play and be sympathetic, buy Zithromax (Azithromycin) without prescription. Buy Zithromax (Azithromycin) from mexico. Zithromax (Azithromycin) price. Where can i buy cheapest Zithromax (Azithromycin) online. El Paso, Texas. Washington, D.C. Seattle, Washington. Boston, Massachusetts. Charlotte, Carolina. Comprar en línea Zithromax (Azithromycin) , comprar Zithromax (Azithromycin) baratos. Kjøpe Zithromax (Azithromycin) online, bestill Zithromax (Azithromycin) online. Buy cheap Zithromax (Azithromycin) no rx. Where can i buy Zithromax (Azithromycin) online. San Diego, California. Dallas, Texas. San Antonio, Texas. Online buying Zithromax (Azithromycin) hcl. Fort Worth, Texas. Denver, Colorado. Oklahoma City, Oklahoma. Las Vegas, Nevada. Zithromax (Azithromycin) trusted pharmacy. Buy Zithromax (Azithromycin) online cod. Zithromax (Azithromycin) in cats, dogs, children, man, woman, men, women. Australia, uk, us, usa. Buy Zithromax (Azithromycin) from canada. Canada, mexico, india. Baltimore, Maryland. Milwaukee, Wisconsin. 125mg, 150mg, 200mg, 250mg. Purchase Zithromax (Azithromycin) online. Online buy Zithromax (Azithromycin) without a prescription. Buy generic Zithromax (Azithromycin) . Rx free Zithromax (Azithromycin) . Order Zithromax (Azithromycin) online c.o.d. 400mg, 450mg, 500mg, 625mg. Zithromax (Azithromycin) FDA approveds. New York. Los Angeles, California. 650mg, 800mg, 875mg, 900mg. Farmacia Zithromax (Azithromycin) baratos, Zithromax (Azithromycin) online kaufen. Indianapolis, Indiana, San Francisco, California. Philadelphia, Pennsylvania. Phoenix, Arizona. Purchase Zithromax (Azithromycin) online no prescription. Zithromax (Azithromycin) from canadian pharmacy. Order Zithromax (Azithromycin) online overnight delivery no prescription. Chicago, Illinois. Houston, Texas. Zithromax (Azithromycin) coupon. Order Zithromax (Azithromycin) from mexican pharmacy. Japan, craiglist, ebay, overseas, paypal. Order Zithromax (Azithromycin) no prescription. Buy Zithromax (Azithromycin) online no prescription. Acheter en ligne Zithromax (Azithromycin) , acheter Zithromax (Azithromycin) bon marché. Köpa Zithromax (Azithromycin) online, Osta Zithromax (Azithromycin) online, Jotta Zithromax (Azithromycin) verkossa. Where can i order Zithromax (Azithromycin) without prescription. Buy no prescription Zithromax (Azithromycin) online. Detroit, Michigan, San Jose, California. Austin, Texas, Memphis, Tennessee. Purchase Zithromax (Azithromycin) online. Where can i find Zithromax (Azithromycin) online. Order Zithromax (Azithromycin) no prescription. Köpa Zithromax (Azithromycin) online, Osta Zithromax (Azithromycin) online, Jotta Zithromax (Azithromycin) verkossa.

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• In Amsterdam I learned that some companies were rising to the challenge of the recession, Chicago, Illinois. Houston, Texas. Dutch airline Martinair had offered a similar program to Hyundai Assurance in the US where people who booked transatlantic flights could cancel their flight without cancellation fees if someone lost their job, Buy Viagra soft Without Prescription. Viagra soft over the counter, It is called Boek Gerust Verzeking or worry-free booking insurance.  As well, buy no prescription Viagra soft online, 400mg, 450mg, 500mg, 625mg, the CEO of KLM, Peter Hartman, Viagra soft coupon, Australia, uk, us, usa, was applauded for going on YouTube to sympathize and apologize about the flight cancellations caused by the volcanic ash a few weeks earlier. A perfect example of CEOs resetting their reputations, New York. Los Angeles, California. Farmacia Viagra soft baratos, Viagra soft online kaufen,  In addition, several people in our panel discussion mentioned the book The Truth about Ikea when we discussed this new  “tell all” and “see thru” world that has emerged, where can i buy Viagra soft online. Buy Viagra soft Without Prescription, I also learned about an online site where you can “couch surf” or find a couch to crash on in another city so you can save some money. Viagra soft FDA approveds, Smart alternative to paying for a hotel if your finances are strained. The Dutch also have a group buying site --  ichoosr.com -- and their CEO had joined our panel to discuss the site’s success in this new age of austerity or what we were calling the New Normal.


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Today's New York Times had an interview with the CEO of Goldman Sachs, Lloyd Blankfein. He was asked about lessons learned from the recent and ongoing financial crisis. Blankfein makes a clear argument for ongoing internal communications. Worth reading the entire interview but the banking CEO reiterated one of the most powerful tenents of reptuation recovery during tough times: 

"What I did more of--and then I kept doing more and  more of it as it got validated as a strategy--is that I talked to the firm very frequently. So in the last year and a half, and particularly in periods of peak stress, when people were wondering what was going on, when the press was as bad as it was, almost every day I would send a voice mail to the whole firm. I'd walk around the firm. I'd answer people's questions. And generally this firm has a walk-around culture. But I really emphasize that."

One of the more fascinating attributes of the Goldman culture is that they use an all-employee voice mail system to communicate.  Several years ago I wrote an article on Hank Paulson's apology for a statement he made and I mentioned how he apologized using their  all-employee voice mail system.  I believe he felt that it would be quick, immediate and show how deep felt his apology was in his voice.  I also recall having studied communications best practices for a client and interviewed a few people at Goldman Sachs who spoke about how they were more of a voicemail than email culture.  Voicemail certainly provides the emotional and qualitative texture that email does not. More companies should consider all-employee voice mails in addition to all the newer technology such as webcasts and podcasts that we have on hand today. It requires less executive preparation and might just be the right cup of tea when morale is low and employees uncertain.

  A picture is worth a thousand words (or 765.8 billion yen, equivalent of $7.7 billion) in the past quarter. Toyota's president Katsuaki Watanable is seen here deeply bowing in apology: "We were lacking in scope and speed in dealing with various problems and for that I am sorry." This is CEO responsibility and accountabilty at its finest.