Month: October 2015

It is a constant lesson in business, often repeated here, that no organization or individual is safe in the marketplace.  In the last two days, we learned of two more examples of stumbles by major corporations — American Express and Wal-Mart.  This is why CEOs should exhibit a healthy paranoia about their businesses.  Some thing or some one really is out to get them.  The reputations of both companies are taking a beating and there is little either can do in the short run to stabilize them.  It is a major reason why PR practitioners when writing about their organizations should stick to facts and remain modest even when business is going well.  Always remember that everything can change tomorrow and the triumphalism of today can stick in the craw soon enough.  Even businesses with long-term track records of success like Amex and Wal-Mart have their day of reckoning.  No one is safe — ever.

It is hard to make a public apology.  One would rather hide or turn a situation over to lawyers to defend.  It is twice as hard to apologize when one’s institution is supposed to be above public scandal and a model for how to live.  Yet, here is the pope asking forgiveness for scandals in the Roman Catholic Church.  To skeptics, the pope has not gone far enough.  To believers, it is painful to watch a popular religious figure abase himself before the public.  Pope Francis wasn’t the cause of scandal, and some of it occurred before he was elevated, but he is taking responsibility by apologizing.  That is what a leader should do.  Still, there is damage to the relationship of the church with its members.  Some believers will ask why they persist in faith when churchmen can’t behave themselves.  Others will stop going to the Mass and sacraments.  It takes understanding to accept that the church is human and people err.  The pope is in a painful position, but he is taking positive steps to rebuild relationships with the faithful.

The soft drink industry has been under assault for sugar in its colas. There are now proposals to tax the beverages as a way to reduce consumption.  This is a long-term PR headache for Pepsi and Coke and the many regional drink makers, and it was made worse by Mexico’s example.  That country levied a tax on soft drinks and successfully reduced consumption, especially among the poor. There is no evidence yet that it has cut obesity and diabetes, but, it has demonstrated that price is a factor in soft drink sales.  As one would expect, the lobbying group for cola makers, the American Beverage Association, disputes the evidence and is working hard to keep taxes from driving up the price of drinks.  Time will tell whether the industry is successful.  Meanwhile the threat of taxation hangs over the heads of cola makers who are scrambling to introduce drinks without sugar.

A long-standing PR headache for pharmaceutical companies has been the price of drugs in the US by comparison to other countries.  It is a self-inflicted pain that the companies defend because they say it costs millions for them to discover and produce new cures for diseases and they have as many failures as successes.  That is true but it still doesn’t stop the drumbeat for lower pricing.  Sooner or later, pharmaceutical manufacturers will give in on the cost of their most popular remedies because the pressure will be too much to bear.  A combination of government and health insurers will force the issue.  Meanwhile, they charge exorbitant fees for some of their drugs and they are getting away with it despite criticism.  They know they are on borrowed time and the clock is running out. One would think that one or more of the companies would seize the PR initiative and voluntarily match the price of their drugs worldwide, but so far that doesn’t seem to be the case.

Hollywood is notorious for ignoring science in its drive to tell cinematic stories, so it was smart PR to contact NASA for help in filming the current release, The Martian. NASA saw and took the opportunity to help and coincidentally announced proof of water on Mars about the time of the film’s release.  Most science fiction, like Star Wars, makes no effort to restrain the creativity of the film maker, and that is good in its own way.  But, the effort to get the scientific details right adds credibility to a film.  So, kudos to the director and to the space agency for working together.

Volvo has publicly assumed the liability for accidents involving driverless cars.  This, of course, is restricted to accidents in which the car and its software are at fault and not accidents in which the driver or third-parties caused the collision.  This is smart PR on the part of Volvo to get regulators on board to certify driverless vehicles.  Although driverless cars have already traveled millions of miles in testing, they aren’t permitted on the roads except in a few states like California and Nevada.  The onerous nature of getting permits can retard technology and slow the process down.  By taking the burden of accident protection on itself, Volvo has in a single stroke made regulation easier to handle.  Look for the other auto manufacturers to do the same thing.

The National Rifle Association has much to answer for, not the least of which is this.  That we still don’t have good data on gun deaths is inexcusable.  Nothing in the constitution bars gathering information, but the NRA in its paranoia has blocked any such data collection.  I’m not adverse to guns just like I’m not against driving, but it is sick that we have more stats on auto deaths than from guns. Yet both are involved in the same number of deaths a year in the US.  I’ve long favored a national registry for weapons just like data collection for autos, but here again the NRA says no and Congress listens to it.  The NRA proves that an organization with a suspect or outright bad reputation can continue to do business as long as it has supporters somewhere.  The NRA speaks to gun owners and mobilizes them against anything that might constrict their free use of arms.  They are a minority of the American population but they are vocal.  Hence, nothing changes.

How costly is a bad reputation?   In the data world, post Snowden’s revelations about the National Security Administration, it means that data is frozen in the EU.  It might have been difficult in any event to continue data transfers between Europe and the US, but NSA’s bad reputation for snooping sealed the decision.  This means thousands of companies with European operations may have to find another way to transfer personnel data or simply work with it in Europe and not send it at all.  The process is bound to be cumbersome and open to legal challenge.  Had the NSA not been so aggressive in collecting data, there might have been a chance to convince the courts to allow the transfers.  We will never know and Europe has already instituted the “Right to be forgotten” rule, which is hamstringing Google.  Still, NSA’s reputation did not help.

Cue and queue lobbyists for and against this trade pact.  The Trans-Pacific Partnership is both detested and celebrated and will be full employment for lobbying and PR firms for months to come.  Unions hate the deal because to them it means lost jobs.  Businesses support it because it means less expensive and faster ways of engaging in commerce with Asia.  Expect to hear a lot from both sides until the crucial vote in Congress supporting or denouncing the deal.  And if the trade pact is upheld, the complaints won’t go away.  Some are still denouncing the North American Free Trade Agreement (NAFTA), which went into effect in 1994.  Will it help or harm the US?  We won’t know for 10 to 15 years after the deal is approved.  It will take that long for business investment cycles to be fully implemented. Meanwhile, brush up your foreign languages.

One way to tell whether an organization cares about its reputation is how it behaves.  The Islamic State wants to be feared, and it has reduced ancient sites to rubble to show its intent.  There is nothing about Palmyra that should offend IS.  The muslim terrorists blew up the Arch of Triumph because it was there.  Such behavior is an example of negative relations — power through intimidation.  One doesn’t set out to win public support but to rule through fear.  It works but at a cost to the leaders in time.  Eventually the populace will rise in revolt.  It might take years or decades but people will seek a way out of oppression through flight or force.  Consider North Korea.  It rules through its military and concentration camps and by shutting its borders so no one can leave.  It was the same strategy the Soviet Union and its satellite states used until their demise.  Negative relations work but at a cost.  That price is hatred from the citizens and pressure to change.