Huawei, Boeing and McKinsey – When Internal Cultures Cause Reputational Crises

How much are reputational crises related to internal cultures, and an ability (or inability) to take into account a variety of diverse viewpoints?

I’ve watched over the past couple of weeks as the crisis around the Boeing 737 MAX has grown. Before that, it was Huawei and the suspicion in many Western capitals that the Chinese telecommunications firm was in a position to either spy on or act in favor of the Chinese government through sharing data collected through its network equipment. Before that, there was the McKinsey sagas in South Africa and Saudi Arabia respectively.

As a communications professional, it’s been fascinating (and painful) to watch events unfold. But one thought is stuck in my mind – is there a common thread to all of these events? And is that common thread an internal culture which is neither diverse or inclusive enough to understand and tackle issues before they become crises?

Let’s take Huawei, whose story has been covered in depth by a number of exceptional writers and features (check out Arun Sudhaman’s 4,000 word piece on the Holmes Report website). Huawei is a typical Chinese-headquartered multinational, with senior management being predominantly Chinese nationals. This has proved problematic for Huawei’s understanding of markets such as the US.

“There was always a fundamental lack of trust in non-Chinese. You offer guidance, and are regularly second-guessed,” Huawei’s former US public and government relations department, William Plummer, told the Financial Times. Plummer published a book last September in which he explained how senior local staff in foreign markets were regularly excluded from key decisions whilst Chinese executives second-guessed senior management in local markets out of fear of the company’s founder, throwing into turmoil into the company’s handling of PR and lobbying outside of China.

While McKinsey’s management is more diverse in nature, it could be argued that a an over-aggressive culture and a lack of local understanding resulted in the consultancy giant making one of its biggest ever mistakes. To quote from the New York Times:

McKinsey admits errors in judgment while denying any illegality. Two senior partners, the firm says, bear most of the blame for what went wrong. But an investigation by The New York Times, including interviews with 16 current and former partners, found that the roots of the problem go deeper — to a changing corporate culture that opened the way for an aggressive push into more government consulting, as well as new methods of compensation. While the changes helped McKinsey nearly double in size over the last decade, they introduced more reputational risk.


The firm also missed warning signs about the possible involvement of the Guptas, and only belatedly realized the insufficiency of its risk management for state-owned companies. Supervisors who might have vetoed or modified the contract were not South African and lacked the local knowledge to sense trouble ahead. And having poorly vetted its subcontractor, McKinsey was less than forthcoming when asked to explain its role in the emerging scandal.

McKinsey’s former managing partner told the New York Times that the firm had a “bit of a tin ear” when it came to the initial response. David Lewis, executive director of Corruption Watch, a South African advocacy group, told the NYT that: “For the scale of the fee, they were prepared to throw caution to the wind, and maybe because they thought they couldn’t be touched.” For me, there’s the feeling that the internal culture led McKinsey to make the wrong decision and down a path that would become the biggest crisis in the firm’s history.

Finally, there’s Boeing. The airline manufacturer is struggling with a crisis that has grounded worldwide its latest jet, the 737 MAX, after two crashes which share a number of similarities. The first crash happened in Indonesia last October, with the loss of 189 passengers. Following the second crash, this time in Ethiopia in March, Boeing was asked why more wasn’t done to fix the faults found to be responsible for the first crash?

In crisis communications, the most important action is post-crisis, and communicators are told to work with the organization to ensure that lessons are learned, solutions are found, and trust is re-built. This didn’t happen with Boeing – the software fix for the plane’s flight system has yet to be completed, and relatives of those who died in the first accident have questioned Boeing’s response.

Vini Wulandari, sister of one of the ill-fated Lion Air flight’s co-pilots, said that the Ethiopian crash confirmed the suspicions that she and many of the victims’ relatives had about the MAX 8 being a “defective product”.

“The [Ethiopian] crash shows that 737 MAX 8 is a manufacturing fail from the beginning,” Vini Wulandari, sister of one of the ill-fated Indonesian airline Lion Air flight’s co-pilots, told the South China Morning Post. “When I first heard about [the Ethiopian crash] I was sad because I am familiar with the sadness that the victims’ families must feel and I was also sad because the 737 MAX 8 should have been grounded after the Lion Air crash. Maybe because it was only one accident, so a lot of people thought there was no need for immediate [action].”

Was Boeing’s internal culture to blame, in particular Boeing’s urgent desire to come up with a new airplane that would compete head on with rival Airbus’ new models? It’s hard not to be convinced that Boeing rushed the 737 MAX’s design after reading a bombshell report in the New York Times.

It’s hard not to be swayed by the argument that uncompromising internal cultures are to blame for poor decision-making; too many similar voices, too few diverse views and an inability to listen have been a cause in each of these crises. That’s why proper inclusion matters, at all levels, as well as an ability to seek out differing viewpoints, especially from outside the organization. As communicators, we have to play a role in promoting both in our workplaces.

I’d love to hear your views on these crises. What’s your view? Message me, or leave a comment.





My 2018 Predictions and Hopes for the PR & Communications Function (Part 2)

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Continuing from my predictions yesterday, here’s my top four list for how I hope the industry can improve in 2018 (image source: http://www.marketingland.com)

This is part two of my 2018 wish list (I’d rather not call it a resolution list, as we all know how resolutions end up). These points underline how I think we can move forward as a function and become better as an industry. Here we go.

My Hopes for 2018

  1. Gender Equality – 2017 was a defining year for gender equality, with campaigns such as #MeToo underlining how much still needs to be done for women to have parity with men in the workplace. Unsurprisingly, these campaigns passed over much of the Middle East, with little discussion of sexual discrimination. With others leading by example and not just words (Iceland is the first country in the world where companies with 25 or more employees now need to get government certification to prove that they offer equal pay for work of equal value), will 2018 be the year when the industry promotes gender equality? Some agencies have already begun; following her appointment as the new CEO for MEMAC Ogilvy in September, John Seifert, Ogilvy’s worldwide chief, said Patou Nuytemans would be “a real agent of change” for the company. “Patou is one of our boldest and bravest leaders,” Seifert said. “She will be a brilliant role model for a whole pipeline of young female talent who will become the leaders in our business.” I’m hoping for more positive change for all the women working in our industry.
  2. Merit-Based Hiring I’ve talked about merit-based hiring before, and the damage that is being done to the industry by unsustainable practices, especially hiring based on nationality. We’re already facing a hiring crisis in cities such as Abu Dhabi and Doha when it comes to government entities and communications roles; there’s not enough experienced nationals to fill these roles, and expats are often only offered one-year contracts, which just isn’t good enough to attract the right talent.  Both the private and the public sectors need to work together to understand how to create a long-term plan that encourages Arab nationals to join the industry/function. Governments also need to appreciate the importance of diversity in their communications function, especially when communicating with a diverse range of stakeholders (and communications leaders in the government sector, especially expats, need to start speaking truth to power). We’ve got to move away from quotas/filling roles with certain groups, and think differently to ensure that we have the right people in the right roles. Only then will communications be valued and used as much as it needs to be.
  3. Promotion of Arab talent – We’re facing a shortage of Arabic language natives in the industry. This has been exacerbated by challenges in bringing Syrians into the industry (Egyptians, Jordanians, Palestinians and Syrians make up the vast majority of talent in the industry who can read, speak and write Arabic fluently). With the Eastern Gulf facing its own issues due to a focus on English-language across education systems and at home, the PR industry has to address the Arab talent question. It needs to do more with universities across the region and prioritize promoting communications and public relations as a viable career option for Arab nationals. The industry also needs more Arab national role models who are willing to step up and act as role models for others (considering how many agencies and communications professionals there are in the region, there are simply not enough visible leaders and mentors, both from the wider Arab world and especially from the Gulf). Let’s hope 2018 is a good year for Arab talent.
  4. Better Government Engagement – The past couple of years have seen a transformation in terms of how governments in the region communicate with their stakeholders. Government leaders are online, on social media, and they’re actively pushing out communication. This year is transformational for two countries in the Gulf, namely Saudi Arabia and the United Arab Emirates, with the introduction of tax. As the American saying goes, taxation leads to representation. This may not be the case in the Gulf region with the expatriates, but now that we have a proper taxation system in place, there will be more questions from expats especially as to where the money is being used. More transparency and engagement from the region’s governments will go a long way to building trust with the public. If governments are going to continue improving how they communicate, they’ll need a more diverse set of communicators, both in-house and agency-side (see point 2).

There you have it, that’s my wish list for what I’d like to see the industry doing this year. Do you agree, and do you have any more you’d like to add? As always, I’d like to hear from you.

Trump’s CEOs: Why they felt having a dialogue was better than taking a moral stand

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The CEO of Merck, Kenneth Frazier, was the first executive to quit President Trump’s business councils after the events of last week (Photo: Evan Vucci, AP)

For a moment, you could hear the sighs of relief in boardrooms across America. The CEOs of blue chip firms such as General Motors, IBM, Johnson & Johnson and PepsiCo are no longer under the microscope for their response, or lack of, to the happenings in Charlottesville, Virginia last week. These executives were part of President Trump’s business advisory groups. To quote more on the story for those who haven’t been following the news, here’s the report from The Guardian:

Donald Trump was forced to disband two White House business councils that were disintegrating around him on Wednesday in the wake of his controversial remarks about the weekend violence in Charlottesville.

The Strategic and Policy Forum and the White House Manufacturing Jobs Initiative were both dissolved as corporate leaders continued to resign.

Trump claimed in a tweet that this was his decision, writing: “Rather than putting pressure on the businesspeople of the Manufacturing Council & Strategy & Policy Forum, I am ending both. Thank you all!”

The collapse of the advisory bodies follows seven different corporate leaders stepping down from the two councils in recent days including the CEOs of both Campbell’s Soup and 3M on Wednesday.

Trump had previously stated that resignations from both panels were of no consequence. “For every CEO that drops out of the Manufacturing Council, I have many to take their place. Grandstanders should not have gone on. JOBS!” he said on Twitter on Tuesday.

Wednesday’s abrupt decision came after Trump confidante Stephen Schwarzman, chief executive of the Blackstone Group, held a conference call for about a dozen members of the strategic and policy forum who decided to abandon it, the New York Times reported. Executives from the manufacturing council had been due to hold a similar call that afternoon, the paper added.

On Wednesday, corporate leaders who sat on the councils raced to denounce Trump’s comments about Charlottesville and to support the dissolution of the advisory bodies. Jamie Dimon, the CEO of JPMorgan and a member of Strategic and Policy Forum, said in a statement: “I strongly disagree with President Trump’s reaction to the events that took place in Charlottesville over the past several days.” He added that he agreed with the council’s decision to disband.

Jeffrey Immelt, the CEO of General Electric, who had previously said on Monday that he would not step down from the manufacturing advisory board, put out a statement on Wednesday afternoon announcing that he had resigned.

Three members of the manufacturing council resigned on Monday after Trump’s initial refusal to condemn the neo-Nazi and white supremacist protesters in Charlottesville by name. Two more followed on Tuesday after Trump defended some of the protestors in a press conference at Trump Tower. The president targeted one of the CEOs, Kenneth Frazier of Merck, in two tweetsincluding one where he mentioned Frazier, the lone African American CEO to step down, by name.

What is most striking about the events of last week was the slow reaction of these executives, particularly from firms who champion diversity and inclusion. Merck’s CEO, who was the first to act, felt compelled to leave the council due to a matter of personal conscience.

This was a minority opinion, and may CEOs were determined to remain, despite the President’s refusal to condemn extremist hate groups. To quote from the Washington Post, some, such as the four government contractors on the president’s advisory councils — Lockheed Martin, Boeing, Harris Corp. and United Technologies — waited until after the councils had disbanded to publicly weigh in, if they did at all. Even then, several stopped short of singling out the president for blaming “both sides” for the violence at a white supremacist rally this past weekend in Charlottesville.

One example was Lockheed Martin, which offered no public statement. The firm’s chief executive Marillyn A. Hewson sent a note to employees on Wednesday, hours before the councils were folded, explaining that she would remain a member because the group’s mission “remains critical to our business,” even as she insisted that “white supremists, neo-Nazis, and other hate groups have no place in our society.”

Other, such as PepsiCo’s Indra Nooyi, personally condemned the violence, but failed to act beyond that.

Michael Dell, chairman and CEO of Dell Technologies was unmoved, with his spokespeople telling the media that: “While we wouldn’t comment on any member’s personal decision, there’s no change in Dell engaging with the Trump administration and governments around the world to share our perspective on policy issues that affect our company, customers and employees.”

So, what was behind the inability to move? Did these executives believe that it was worth remaining to engage with a President whose position on the Charlottesville events has been condemned?

The best comment I read was shared by a communications colleague online (thank you Tim for this share). Corporate language consultant Michael Maslansky stated, “The era of the fence-sitter corporation is over. If you’re silent about an issue, then each side will assume you’re on the wrong side. You end up really having to choose.”

Corporate leaders have to choose; they can no longer sit on the fence. And they have to be prepared for the backlash, particularly from a President who takes anything and everything personally. Corporate leaders also need to act individually, as the CEO of Merck did – it’s telling that the CEOs who stuck it out decided to end the council via a conference call, preferring collective responsibility over personal ownership (which seems to be a habit of corporate life these days).

I hope those leaders who didn’t criticize what happened last week finally do so. Apple’s Tim Cook has been vocal about his position. It’s time to get off the fence people, and not only say what you believe in and advocate for as a company, but turn those words into actions.

Join me and pledge to work with and hire comms people on merit

On merit

Merit. I just love that word and what it means. To quote the Oxford Dictionary, the noun merit is understood to mean, “the quality of being particularly good or worthy, especially so as to deserve praise or reward.” Hence the phrase, to be deemed worthy of something on merit.

I was reminded of the notion this week, by a journalist who was Tweeting about being treated poorly by a brand. Her frustration was in part to her feeling that she was being mistreated by the brand’s agency due to her cultural heritage. I completely understood her frustration and her sense of injustice, hence why I’m writing this post.

In one sense, we’re lucky to work in the Gulf. It’s an up-and-coming region which has attracted some remarkable communications and media talent and experience from around the world. There’s a dynamic feel to working in such a multi-racial industry.

At the same time, I often get the feel of tribalism, of people in companies and institutions wanting to work with one of their own, not for any other reason than culture or nationality. It probably doesn’t surprise many of us that people stereotype (and if you don’t believe me, look at this research from Berkeley-Haas Asst. Prof. Ming Leung who analyzed 3.9 million applications), but there’s also official discrimination – the hiring of certain nationalities to fill quotas – as well as unconscious bias . Finding people on merit, who can do the best job, seems to be a challenge we employers often get wrong.

The question I then have to ask is what does bringing the wrong people do to our industry, or even people who are too junior or who don’t have the right understanding of the role or the audience? In my own view, it devalues the work of us all, pushes us farther away from the board room, and loses us respect from those we work with, be they colleagues internally, media professionals or other stakeholder groups.

We have to look beyond traits such as race, nationality, gender, and ask if the person you’re looking to hire and work with has the right attitude, understanding, skills and experience for the role. We need more diversity and inclusion in our industry which mirrors that of our audiences and communities, and that will happen by understanding our biases and looking beyond them to finding the best talent out there, who deserve and will succeed in a role based on their own merit. That includes working with representative bodies such as the CIPR, IABC, Global Alliance and MEPRA who promote skills-based learning and certification programs.

I’m willing to take a pledge now to work with and hire comms people on merit. I want you to join me in taking this pledge. Either share this article or leave a comment below. Together, we can and will change the comms industry for the better, to be a function that respects and promotes the notion of merit.