I’ve spoken previously about the issue of purpose marketing in the Middle East (mainly the lack of any local brand engagement on big issues such as gender equality and sustainability). One popped into my timelines this week. Sadly, it’s an example that will be long remembered for what went wrong, rather than right.
Nada Dairy is one of the largest manufacturers of dairy products in the Gulf. The company decided to create a video in the run up to Saudi National Day this week. The video attempts to draw a line between the Kingdom’s new cultural policies, and those which were promoted several years ago (this is putting it crudely). The video depicts traditional views as backwards.
The issue with this political stance is that you’re clearly alienating a significant number of consumers. The Kingdom isn’t a democracy, but consumers are free to choose whichever brands they want. And this video has demonstrably hurt Nada’s reputation. Boycotts of its products have been trending on Twitter all this week, and the news has even led to boycott calls in Kuwait.
Nada’s response was to “apologize” for the video (which has been pulled from its feeds). The company also states that it recognizes and respects all views. The statement (which is the first image in this post) may not be the end of the issue, given the strength of the online responses. What is clear is marketers must think long and hard as to what positions they take on societal issues and causes, if they want to both be a supporter of societal change as well as a company that builds a loyal consumer following. If Nada’s management believed in these principles, then the brand has to stick with them. No one will believe in a brand that flip-flops on a societal stance.
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”.
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.
It’s fair to say the corporate communications world is a fairly quiet place in the Gulf, but every now and then there’s a story that even manages to make me go agog. Last week, whilst sitting in the dentist’s clinic, I picked up a copy of the local publication Arabian Business. The front cover was a story on the Abu Dhabi-headquartered airline Etihad. The airline has had a lot of turbulence of late, with a loss of $4.8 billion over a three-year period as investments were pulled in failing airlines.
With this in mind, I was looking forward to a good read about how Etihad was turning things around, and getting back on track. Instead, it’s fair to say the introduction wasn’t what I was expecting, particularly the quotes from the CEO of the airline (who is presumably media-trained). Have a read below, or see the original piece here.
Any good media person (and, by extension, corporate executive) should know that the media won’t always get a story right. It’s our role to protect and build reputations. For the media, their job is to report the news as they find it. This is especially true of newswires, which both seek out business news that isn’t pushed out by the communications team and seek to verify their news reporting through multiple sources.
Why did Etihad’s CEO attack Bloomberg? I’d argue frustration with the reporting, which I understand. Here’s what he should have done.
Use Positive Language – What surprised me more than anything was the use of the language here, especially given who is being talked about. I have a great deal of time for newswire journalists, as they’re often the best in the industry. Negative language sticks in the reader’s mind, and makes everything else pale in comparison. I’ve forgotten everything else in the piece, which is much more positive, due to the negative language used here.
Focus on your Company’s Own Actions – It’s a simple rule of media work that you focus on what you’re doing and the vision behind it. There’ll always be opinions and views on your organization, both good and bad. Reputations are built on actions, and Etihad has been looking to turn around the business and trim losses. That’s the lead story. Instead, the CEO has gifted the journalist a major headline, and re-focused the issue on the story he didn’t like.
You’re always “On The Record” – Even the first comment, about being guarded, was strange. Every time I’ve given media training, I’ve always emphasized that anything an executive says is on the record, regardless of what is placed in front of them. In an interview, it’s good to build a rapport with the journalist, and put them at ease. A likeable executive is one of the best ways to do this (the best example from the aviation sector is the likes of Richard Branson, who always comes across as an interesting person you’d love to have a conversation with).
Ultimately, the media is one channel that communicators use to get information out to the public and other stakeholders. Nobody is right 100% of the time, including even the best journalists. If they’ve written a piece that’s incorrect, a communicator’s job is to get on the phone with them, point out the mistakes, and get on with telling their firm’s story positively.
Calling out the media publicly, through the CEO and in a derogatory fashion, only sours the relationship with both that outlet/journalist and also with the media in general. It also focuses the media on the negative issue, and ensures that the topic becomes front and center in any future media engagement. Any business which does this never gains any reputational value. It makes for a good read, however. So thank you Etihad from one reader for keeping my mind preoccupied whilst I waited to see my dentist.
It’s rare for brands to deal with a reputational crisis so openly in the Middle East. Last week, we had two issues happening at once. First up was Dubai’s JW Marriott Hotel, which took the decision to part ways with celebrity chef Atul Kochhar after he wrote a tweet that offended many Muslims (the offending tweet is below, and you can read the back story here at the Khaleej Times). The hotel terminated Kocchar’s deal with its well regarded Rang Mahal restaurant.
“Following the recent comments made by Chef Atul Kochhar, we have taken the decision to end our agreement with him for Rang Mahal. With the termination of our agreement, Chef Atul will no longer be associated with the restaurant,” Bill Keffer, general manager of the hotel, told Gulf News.
Atul’s tweet was highly criticized, both by individuals as well as the Marriott itself.
The second reputational issue was faced by Nike. Days before the beginning of the World Cup, Nike announced that it would not be providing equipment (think boots) to the Iranian football team.
“U.S. sanctions mean that, as a U.S. company, Nike cannot supply shoes to players in the Iranian national team at this time,” a company statement said. “Sanctions applicable to Nike have been in place for many years and are enforceable by law.”
Unsurprisingly, the decision hasn’t gone down well with fans of the Iranian football team, as well as the team’s coach, Carlos Queiroz, who criticized the timing of the announcement.
There are two basic lessons that we can take from the situations Nike and Marriott found themselves in.
1. Do/Continue your Due Diligence – While the Marriott moved quickly to tackle the crisis, the question must be asked of the due diligence undertaken on Atul Kochhar’s views. Every time an agreement is undertaken, the in-house team/agency must check the influencer’s/celebrity’s background, including their social media. And they must ensure that they’re on top of anything which may be perceived as being controversial. Many have pointed to Atul Kochhar’s social media posts prior to last week’s outburst, posts which could be seen as being Islamophobic (the below is just one example of this). While hindsight is a wonderful thing, the Marriott team could have developed an insight into Atul Kochhar’s views through monitoring his social media posts before he wrote something that would have caused the brand reputational damage. This month’s crisis may have been averted.
2. Foresee issues and tackle them proactively – Our role as communicators is to understand what is happening in the outside world, and bring those insights to senior management. We have to be social and political analysts, and we have to be able to monitor issues and foresee the outcomes that will impact our organizations, and work proactively to ensure that an issue doesn’t become a crisis. How Nike’s communications team didn’t foresee what could have happened re Iran and US sanctions is beyond me, as is the possibility for Nike to apply for a permission to be able to supply the team with equipment (boots). It was a major miss, and handed rival Adidas an open goal.
Do you have any additional insights from these two issues? What are your thoughts? As always, I’m happy to hear them. Till then, take care!
McKinsey’s reputation has been heavily impacted by its work in South Africa. Could the same happen in Saudi? (image credit: Ingram Pinn)
McKinsey is a household name, at least in Saudi and South Africa. And not for the right reasons either.
The firm, which consults for governments and businesses the world over, hasn’t had a good time of it lately in these two markets. In South Africa, McKinsey has been embroiled in the Gupta family scandals through its work with the state energy firm Eskom and Trillian, a local company linked to the Gupta family.
“The consulting company has employed, among others, at least two children of the man who serves as the Saudi energy minister and head of the state oil company, a son of the finance minister and a son of the CEO of government-controlled Saudi Arabian Mining Co.”
The Wall Street Journal piece describes in detail McKinsey’s company’s hiring practices in the Kingdom, and also notes that there is no allegation of wrongdoing by the firm.
The issue that McKinsey faces isn’t dissimilar to tens of thousands of other firms. It’s the choice between reputation and profit. However, few other firms are as prominent as the consultancy, partly owing to its clients (primarily government in emerging markets) and the quality of McKinsey’s people. To quote the response to the Wall Street Journal article, a McKinsey spokesperson explained that:
“McKinsey is a meritocracy. We hire exceptional people and are confident in the robust policies and practices that underpin our recruiting and development both globally and locally.”
How many exceptional people would it take to understand that working with the Gupta family in South Africa wouldn’t be good for business. Five minutes of due diligence would have thrown up the links between Eskom, Trillian and the Gupta family.
Last year I wrote about Caroline Sapriel’s masterclass on crisis communications. There’s one chart I want to re-share, which should be a guide for all of us.
CS&A’s crisis management culture ladder maps out where organizations are in terms of their ability to manage and learn from a crisis. At the bottom are organizations who essentially don’t care as long as they’re not caught; at the top are organizations who thrive on and grow with every crisis they encounter. Where are you at?
The question that I have for McKinsey (and every other business leader) is what price would you put on reputation? Even if the firm did work in a legally appropriate fashion, which McKinsey has claimed it did in South Africa, the spirit and the letter of the law are two different things. This question could also be asked of KPMG and SAP, who have also found themselves in the thick of it in South Africa.
If you’re unsure as to where you are on the culture ladder, here’s a stress test you can use to understand how your firm fares. Can your executives answer the following questions relating to any business engagement?
Have they done a due diligence test, including listening to the communications team on possible reputational risks and stakeholder reactions?
Are the executives able to clearly explain their actions? Is their reasoning believable and authentic?
When viewed from the outside, would an action seem to be ethically dubious at best, or illegal at worst?
What are you doing in general when it comes to corporate social responsibility? How do you engage others in conversation?
The firm has a brisk defence to accusations from South African politicians and Corruption Watch that it facilitated state capture by helping Trillian to gain money from Eskom. It says that its own inquiry into its behaviour has not uncovered wrongdoing, nor anything that would require it to report itself to the US authorities under anti-corruption laws. This seems to be setting the reputational bar rather low.
Being willing to charge an entrenched institution in a fractured country so much money looks awfully like rent seeking, especially when payments of up to $700m were to be split with what it should have known was a dubious consulting partner. McKinsey is full of superior intellects but sometimes you only need to open your eyes. None of this occurred in a vacuum.
The group Business Unity South Africa this month bemoaned the “scourge of corruption that is stifling the country” and called for an end to a “culture of immunity”. Each time that a consultant or accountant fails to take a decisive stand, the scourge worsens. KPMG has recognised it but McKinsey is still learning. It could start by confessing that it was wrong and promising not to repeat its failure.
The firm still maintains that it behaved correctly and is walking the tightrope of self-justification. I am intrigued to see how long it will take to fall off.
I wonder if the same will be said of McKinsey’s activities in Saudi Arabia. What price is McKinsey willing to put on its reputation? You tell me.
Companies will have two basic strategies to deal with this new type of political risk; they can either recycle old news, or they can resist Trump’s attacks, and fight back (yes, you read that right, brands will go up against Trump).
We’re already seeing firms come out with a raft of job announcements. This week General Motors said it would invest US$1 billion in its U.S. manufacturing operations, which will lead to the creation or retention of 1,500 jobs, adding that it would also add another 5,000 American jobs “over the next few years” in finance and advanced technology. Fulfilling another Trump pledge, GM announced that around 450 jobs will be returned to the US as GM transfers back parts production from Mexico.
Job creation in the US is a tactic that many firms will seek to copy over the coming months as Trump takes charge. How many of these announcements will stack up, who knows. We’ll only know for sure after the space of months or years. However, many brands will be tempted to win favor with Trump’s administration and stay out of his crosshairs by pushing job news. The questions many will ask are, is the news real (for example, will Alibaba really be able to create a million jobs for Americans?), and is the news old? It’s been alleged that the GM announcement was planned as far back as 2014.
“Other companies will realize that the king doesn’t have a lot of clothing here,” he said. “At some point in the not too -distant future, a company will realize that there is greater value in being courageous and standing up to the president.”
To date, the best example of a brand fighting back against Trump is Vanity Fair. The publication, whose editor Graydon Carter has long been a critic, ran a piece in December last year titled, “Trump Grill Could Be The Worst Restaurant In America”. Needless to say, it didn’t go down well with the President-Elect.
Has anyone looked at the really poor numbers of @VanityFair Magazine. Way down, big trouble, dead! Graydon Carter, no talent, will be out!
Firms will either have to proactively plan to put out information that will appeal to the new administration. Or they’ll have to plan on how to respond to a potential attach. Whatever they do, brands will have to move with speed, to counter Trump’s use of Twitter. Whichever route brands take, crisis comms experts (and the rest of us) are going to have an interesting four years. Unless someone turns off the WiFi in Trump Towers, that is.
As communicators, we’re often tasked with managing an organization’s reputation. While this may sound simple, the challenge is where do you start with an intangible concept? There are a number of frameworks around which one can begin measuring reputation. One is the RepTrak, a tool developed by the US-based Reputation Institute, which merges seven distinct organizational behaviours (called dimensions) with the behaviours that your stakeholders show towards your organization to create an emotional pulse. It’s an interesting look at how reputation is developed, which you can see below.
The RepTrak is a data-driven approach to understanding reputation based on a number of metrics
According to the Reputation Institute, organizational reputation is driven primarily by seven key rational dimensions of reputation: products and services, innovation, workplace, governance, citizenship, leadership, and performance. What this leads onto may be obvious; reputation matters in terms of business. And, the better the reputation, the more support an organization can count on.
Th Reputation Institute has also done a great deal of research here, including surveying hundred of thousands of different stakeholder groups in 40+ countries over a decade. Their studies underline why reputation matters when it comes to influencing stakeholder behaviour.
Reputation can both positively and negatively impact on stakeholder behaviour
In the video below, Dr. Charles Fombrun, founder & chairman, Reputation Institute, explains the seven dimensions of reputation as defined in the RepTrak model for reputation measurement
While I have questions around these seven dimensions (do they remain constant for example, across geographies and stakeholder groups?), as well as the Reputation Institute’s global reach (it doesn’t monitor in the MENA region for example), it’s good to see one scientific model for measuring reputation and its impact. There are others in use, including those developed by Carma’s Tom Vesey. I’ll share more insights into reputation management and measurement as I have it.