Monday, August 30, 2010

Wednesday, August 11, 2010

My Blog is Moving

I am moving my blog from this stie to my website-- I hope that you will continue to follow my thoughts and share your comments.

Tuesday, August 10, 2010

Rebranding Atlantic City--Good Luck!

The government of New Jersey plans to take over Atlantic City and run it as a "tourist zone". The city, according to Gov. Christie, "is dying". Having just been in Atlantic City for the first time in many years, I can attest to the governor's perception. This is a terrible city. Gambling has not helped.

Atlantic City was once called "America's Playground". It was where the World War II generation went on vacation. The boardwalk had grand hotels. People got dressed up to "walk the boards". Clubs boasted concerts by Frank Sinatra, Tony Bennet, and other great entertainers. The 1960s and later were not kind to Atlantic City. The "baby boomers" abandoned the resort for other, more attractive places. Political corruption was rampant. The city decayed and the poverty and crime levels increased.

When gambling was introduced to AC in 1978, it was designed to save a dying city. It also was expected to generate needed tax dollars for the state. At the time, AC and Nevada's cities were the only legalized gambling centers in the US. Slowly, gambling was introduced on American Indian lands. Next came slot machines, which many states introduced. Recently, a number of states, particularly Delaware and Pennsylvania, which border New Jersey passed legislation to allow table games. Even the slot machines were taking business from AC. Now, with table games, the competition is head-on and AC will likely be further hurt by those who no longer have to go to this awful city to gamble.

Now, from a brand perspective, let's understand what Atlantic City's primary attributes are: gambling, entertainment and the ocean. The boardwalk was a major attraction, but it is so seedy that few really want to walk it very far. Each of these attributes can easily be duplicated in other locations. Gov. Christie wants AC to attract families who want to come to the beach and also have the other things available. But, the entire coast of NJ is comprised of beach towns, most far more attractive for families than AC.

So, where does this leave Atlantic City? While Gov. Christie, a Republican, decries government run enterprises, he has put in place a government take over of a community--ergo the gaming business. This may be unavoidable given how far AC has fallen, but it likely will prove to be a major failure. To revive a dying brand requires a number of things to be in place: 1) that at least a few of the attributes that once made the brand attractive need to still resonate with the target; 2) that there is still a competitive space available; and 3) that the infrastructure is capable of handling the brand. I do not see where AC has the ability to be revived. The attributes of attraction have been lost on at least a generation. Those who recall AC fondly are those 60+years of age. They may be drawn once, but I cannot imagine regular returns. The infrastructure of the city is broken and corrupt. I cannot imagine the state offering better management. And, as noted, the competitive space has shrunk.

Brands are easier to build than they are to change. AC has gained a solid, negative reputation, long entrenched as a dirty, crime-filled community not attractive to most people. Getting people to change their views of AC would be one thing if there were few alternatives. With a growing number of alternatives, the attractiveness needs to be overwhelming. I can imagine lots of specials and a wonderful ad campaign--lots of money to be spent. All I can say is "good luck".

Thursday, August 5, 2010

Strategic Planning and Brand Management Must Align

I have always believed that brand management is an outgrowth of strategic planning. Too often, a so-called brand company--usually a firm focused primarily on design, or a PR or advertising agency--comes in to an organization and goes through a brand audit and proposal. Far too often, the recommendations of these firms have no connection with the overall strategy of the company. They do not look at the mission. They do not understand if the company has the internal culture to meet the brand promise. All they seem interested in is a creative solution in terms of design or messages. These activities are doomed to failure and are very costly to the organization in more ways than one.

The costs are not just monetary. Organizations that engage in superficial brand activities actually create a division between their brand promise and its actualization, both internal and external to the organization. Employees look at the brand as being disconnected to the reality they know, and customers learn that the organization makes promises it cannot keep. This creates additional cost in terms of diminished reputation. In one study by Majken Schultz and Mary Jo Hatch (the Expressive Organisation), it was found that some 70% of employees at companies the researchers studied, did not understand and were not committed to the brand strategy of the company. Considering that it is impossible to have a corporate brand if the organization cannot live it, what the authors found is a typical recipe for disaster.

Because of these problems, I developed a process called DIFFERS, which starts with strategy before getting organizations into branding, organizational engagement, and marketing communications activities. It forces companies to think strategically and not jump to the more creative aspects of branding.

Recently, I had the opportunity to work with a strategic planning company, Ambler Growth Strategy Consultants, on a brand process for an organization. While strategy should be done before branding, the organization had actually engaged my firm first. We had developed a great positioning, tagline and new name for the organization. It was based upon the best available information we had. Then, the organization began working on its strategy for the future and we realized that everything we had done had to be changed. We developed a new positioning and tagline for the organization. The strategy consultant expressed happy surprise that we were so willing to change our direction and admit that we needed a new positioning since the target markets had changed. She indicated that many brand and advertising firms she had worked with would have remained committed to their original work. While this was nice praise, it was a poor statement on the brand industry. Most branding firms I have worked with in the past are more committed to the "artistic" aspects of what they do rather than the strategy.

Most organizations are suffering from a "trust deficit". Is it any wonder trust is diminished? Stakeholders have come to expect that companies care more about what they say rather than what they do. This is the fault of bad management, but it also is the fault of a marketing and communications industry that is not doing its job correctly.

Sunday, August 1, 2010

The Association with AT&T Is Hurting Apple. So Why Would Blackberry Choose Them for the Blackberry Pad?

Talk to anyone who carries an I-Phone and one gets two reactions: 1) they love the phone, and 2) they hate AT&T, the telecom carrier that Apple chose as a partner for its phone. Verizon had been approached early on but would not accept the conditions that Apple imposed. AT&T, needing a major success, accepted Apple's conditions and gave itself significant revenue and prominence. A large portion of its customers are with AT&T only because it is the only carrier for the I-Phone.

If an when Apple gives the I-Phone to other carriers, AT&T will likely loose customers. They may not depart for T-Mobile, which may get the I-Phone, but if and when Verizon gets the I-Phone, the exodus of customers will be by the thousands, if not millions.

Brand associations are important. Partners are important. As our mother's always told us, "we will be known by the company we keep". The I-Phone is negatively impacted by its association with AT&T. It is a true testament to the brand strength of Apple and the quality of the I-Phone that customers are willing to put up with dropped calls and poor customer service to stay with Apple.

Now comes word that Research in Motion, the maker of Blackberry has a competitor to the I-Pad ready for shipment in the fall. To be known as Blackberry Pad ( or at least that is the name that Blackberry has licensed), the device is supposed to offer improvements over the I-Pad, including a front and rear camera to offer Skype conferencing. Obviously this is something that Apple can offer in its next generation I-Pad, but Blackberry has owned the corporate market and will further secure that position. So, why is Blackberry ready to give its "pad" to AT&T? Can the deal be that good from AT&T that it is worth damaging the Blackberry brand?

AT&T offers Blackberry, but so does Verizon. Those I know who have their Blackberry with Verizon seem much more pleased with the quality of calls and the lack of dropped calls compared with those who have their phones with AT&T.

Verizon may not be as willing to compromise and deal as is AT&T, but I hope that Blackberry's marketing team realizes that its brand will be partially associated with the carrier it chooses. If it really wants to establish clear differentiation from Apple, it should select Verizon and demonstrate the full value of its new product, and not allow the problems at AT&T to diminish its offering.

Thursday, July 29, 2010

What Has Happened to the Great J&J Culture?

For many, many years, Johnson & Johnson was the most admired company in the world on virtually every survey. It built its reputation as an honest, trusted maker of pharmaceuticals, diagnostics and consumer products. Its trusted position was secured in 1982 when it suffered a devastating crisis in which Tyleno, laced with cyanid killed 7 people in the Chicago area. The reaction from J&J, whose McNeil Labs makes Tylenol, is perhaps THE case study for both corporate values and crisis management.

J&J has had a Credo since 1948. It was written by General Johnson at that time to let potential investors know how he was running the company. If they agreed with his direction, they were welcomed to invest. He set expectations, which, as I have mentioned on many occasions, are the basis of reputation. There was to be no surprise for how the company would operate. The Credo has only four paragraphs which discuss J&J's "responsibilities". The responsibilities are, in the following order of importance: to customers, employees, communities and shareholders. J&J was clear that if it were true to meeting its responsibilities to customers, employees and society, shareholders would be well served. Its Credo is the inverse of the way most companies operate, putting shareholders #1 above all others.

When the Tylenol crisis hit, Jim Burke, the then Chairman of J&J asked his team to read the Credo and decide from it what course of action was appropriate. It was clear that J&J had to pull Tylenol from shelves. It also stopped all J&J advertising. Within two-weeks of the crisis, J&J introduced a new, triple-sealed Tylenol--an enormous R&D and manufacturing accomplishment. The company did not look at this as a crisis of one product, but rather a crisis for the entire company. Tylenol regained its previous market share within four-months, despite the predictions from many who said that the product was dead. J&J went on to be admired for its actions. Its trustworthy actions built trust amongst stakeholders.

J&J's culture, as captured in the Credo, was tested during that crisis and was reinforced as being its guiding set of values. Whenever something was in question, the company could return to the Credo.

So, it comes as a major shock to most observers that the same plant that made Tylenol--the Ft. Washington, PA--plant, is now shut down and is being investigated for the lack of adequate safety precautions. It was making Tylenol that exceeded proper dosage--a potentially deadly situation. The Federal Drug Administration has said that it was following the problems at the plant. J&J officials appear to have known about the lax safety and quality programs there and turned a "blind eye" to them.

This is not the same J&J company. This is not the company of the Credo. This is a company that seems to have focused so much on cost containment that the message got people moving in the wrong direction. The entire management team should be held to account for this. I can't even imagine what this has done to the "psychy" of former J&J executives who are looking at a company that is a far cry from the one they used to work for. J&J has slipped mightily and with that slip has tarnished one of the brightest stars in the corporate horizon. Let's hope that this shocks J&J management back to their senses and that they renew their faith in and focus on the Credo. It is even more important today than it was when written some 60-years ago.

Wednesday, July 28, 2010

Changing CEOs Will Not Improve BP's Reputation

BP announced that it was changing CEOs--not now though, but in October. The Board was supposed to show that it was fed up with the leadership or lack of it from its CEO and move the company forward. Why October? Why not now?

It seems clear that BP has a flawed culture. This is a company that does not seem to really get it. Even Dudley, the new CEO, suggested that he has never seen evidence of problems in his career with BP. He indicated that the Gulf accident was a total anomaly for the company. This assertion despite the fact that BP has more federal violations for its drilling operations than almost any other company. Something is wrong and replacing Hayworth--the seemingly arrogant CEO who never seemed to express anything other than the fact that this was just a big bother for him--with Dudley will not fix it.

The rest of the oil industry has now turned on BP. The others have indicated that they would never have run their drilling operations the way BP had done. Everything that has been learned shows that BP had little real regard for safety. The fire alarm on the platform had been turned off; it rejected warnings from those working on the platform that the drilling was not going well; it did not plan for a true disaster. All of these things add up to a company that has an internal culture with little regard for doing things right. The fact that Dudley has never seen this likely means that he is too blind to see things the way an outsider would. He is a BP "lifer". We can just expect more of the same--amazement that anything has gone wrong.

BPs disaster has impacted the entire oil industry and has put a moratorium on deep water drilling. Their cavalier attitude and denial of what went wrong just makes things worse for all. It is really time that shareholders change this board and get them serious about changing the culture at BP.

Saturday, July 24, 2010

Companies Should Avoid Political Advertising, Despite New Rules

I gave an interview to a reporter in Minneapolis yesterday about an advertising campaign in Minnesota by Target, Medtronic, and other companies that supported Republican-backed proposals. The U.S. Supreme Court gave its approval in the past year to company political advocacy. Critics have contended that this gives corporations too much influence over politics; supporters argue that companies enjoy free speech, as do individuals and should not be barred from exercising their rights to express their opinions. The Court agreed with the latter argument.

Just because someone is allowed by law to do something does not mean that they need to do it. Minnesota has had a long history of company involvement in the community. For many years, the Twin Cities companies pledged to contribute 5% of revenues to local community initiatives. Many communities around the country have had company involvement in the local community, including building of opera houses, public art displays, etc. Communities and companies have been intertwined for generations. Some applaud this, some are concerned. While many people may separate contributions to local causes from political advertising, they are very closely aligned in that they are aimed at integrating the company into the community. When it benefits the larger community (e.g., art, social needs, etc.), most people applaud it. When it is aimed at influencing the outcome of political debate in favor of the company, it becomes more problematic to the company's reputation.

Companies, in my opinion, should avoid politically-based advertising. There is a general distrust of corporations currently and too transparent an involvement in trying to influence the political dialog is not in the long-term best interests of the company. Companies deal with a multitude of stakeholders, all of whom have expectations of the company--that is what forms reputation. The relationship with stakeholders is a delicate one that requires balance. By getting too aggressive in a political debate, companies can throw this delicate balance off. While they may be within their rights, according to the Court, they should think long and hard before exercising that right.

Target in one company that has decided to get involved actively in advertising on behalf of Republican causes. Its CEO is a major supporter and donor to the Republican party. However, the corporation speaks for its stakeholders, including its employees, who likely are not so clearly in support of one party's view over another. It jeopardizes its relationships by these political actions.

Companies have incredible access to power and incredible influence. A major company can call on any member of Congress it wants. It represents a significant constituency for the member of Congress. Companies have more access and more power than the average person. This power should be used judiciously. It should avoid outright political advertising.

Monday, July 19, 2010

As Predicted, Jobs Gets "Smacked" for Comments

As predicted in my last post, the comments by Steve Jobs about other smart phones and their equally problematic design generated a lot of negative backlash from competitors. Blackberry and Samsung, among others, were quick to point out that their phones do not have the problem with the antenna and dropped calls that Jobs claimed to be common amongst smart phones. The others were likely irritated, but also delighted that Jobs gave them an opening to make comparisons against I-Phone.

This was a dumb statement by Jobs. Regardless of whether others have the same problem, it was tantamount to a kid coming home from school accused of cheating and who defends him/herself by saying that everyone does the same thing. Leaders are expected to live to higher standards and take responsibility for their actions and problems, not blame others. A quick news story has become a continuing investigation. Jobs stepped into this. He should not have and didn't have to. He acted like the class brain who when found to have made a mistake cannot take the criticism.

Apple is a leader and a leader should remain on the offense. It does not need to be defensive. Leaders have two moves; followers have just one. Apple had the ability to apologize, correct the problem, and stress the value of the I-Phone. Let competitors attempt to criticize the design. What Apple did was awful, because it "broke into jail" by allowing competitors an opening and a sense of parity. Apple simply needed to apologize, offer the casing to protect phones and eliminate the problem, and move on. Let competitors squeal about Apple's faults. Leaders move on.

Apple needs to mature. By that, I mean that Jobs needs to mature. He doesn't have to prove that he is the smartest kid in the class. He has shown that he is the most innovative and that customers love what he produces. All technology has problems. It is inevitable. Correct the problem and move on. Remain the leader. This is a far cry from what we would expect of a leading brand.

Saturday, July 17, 2010

Is the Sheen Coming off Apple?

Apple is in the midst of controversy concerning its I-Phone4. It seems that if someone holds the phone in a certain way, it drops calls. The problem is that the antenna is housed under a small fissure in the side of the case. It is fairly easy to inadvertently cover the antenna with ones hand.

Apple acknowledges that it knew about the problem before the I-Phone4 was released, but that Steve Jobs liked the design and authorized shipment. Following the controversy, Jobs said that it was not "big deal" because all smart phones have the same design flaw.

Regardless of whether or not other smart phones have a similar design flaw, we have come to expect more of Apple than the rest of the industry. Apple's products cost considerably more than comparable products. They sell at higher price because their are perceived to be of higher value. Apple diminished their perceived value by arguing that they are no different from others. If they are just like others, then their cost advantage disappears. Perceived value is a ceiling on price. If one were to plot a Kano Model analysis or perceptual map, it would show that Apple was--in Kano language--"a delighter", that constantly exceeds the expectations of its customers. Other phones would be fairly similar in their perceived qualities, and fall along a line of expectations--that is, they meet expected standards. Is Apple suggesting that it is no longer a "delighter"? Is it suggesting that it is now at parity rather than differentiated from others? I doubt that was what was meant. The argument by Jobs was a lousy one for any company, let alone Apple.

The solution Apple offered was admirable. They have offered a special casing to all I-Phone4 purchasers free. The casing will cover the fissure and eliminate the problem. That is a good solution, but it was not handled well at all. Apple should have apologized, noted that the design flaw was below the expectations of customers and not up to Apple standards, and then given the protective casing. There is nothing wrong with an apology. Those who apologize are forgiven and respected if they also offer a solution, which Apple did.

This incident shows that while Apple is an outstanding innovator--perhaps the very best--it remains arrogant and a bit immature. I have read articles suggesting that Apple's reputation has been tarnished. I don't think so. This was, as someone I used to work with called "a drop of water on a piece of granite". It doesn't cause much of a problem, unless the water drops continue and start to erode the granite.

There will be critics, fueled in part by a dislike for Apple or Jobs, or fueled by competitors who would love to knock Apple off its pinnacle. However, I doubt that customers will be bothered by the situation, considering that there was a quick solution. I was at an Apple store recently. The crowds were just as large and sales of the I-Phone4 seemed brisk.

This situation was a warning to Apple, though, that it needs to recognize and live up to the standards by which it expects to be judged. It has raised expectations of stakeholders above that of peers and competitors. It is now the most admired company, according to Fortune magazine. It must continue to meet or exceed the high expectations it has created, or it will risk damaging its brand and reputation.

Tuesday, July 13, 2010

Brand and Reputation are Critical for Non-Profits

Brand and reputation management are often focused on corporations, but there is tremendous upside for non-profits to focus on their brand and reputation.

Non-profits exist on the basis of support of their donors. Without public support, the non-profit ceases to exist. In the current economic downturn, non-profits have had particularly trouble in two areas: 1) fewer dollars from donors; and 2) fewer dollars from corporation. The two are interrelated. The latter--support from corporations--is more problematic for many non-profits since the dollars were larger and there was an expectation of continuing support, which has dwindled, if not gone away entirely.

Let's start with the idea that people have less disposable income. That means that there are fewer dollars for them to give to their favorite organizations, including universities, religious institutions, hospitals, etc. The "pie" is shrinking, but the same number of organizations are looking for support. Add to this, the added pressure that has come from disasters, including the Gulf Coast, Haiti, and others that have sought public and corporate donations. So, the market has become more competitive.

Whether or not they like to admit it, non-profits have historically operated on a principle of "noblesse oblige". That is, that those with wealth will feel an obligation to help those less fortunate. That underlying motivation may still be there, but people must choose more carefully than ever where the money should go. And, there have been a lot of abuses by non-profits of the money they have received and a lot of scams. So, trust is eroding as well, leading to some people simply unwilling to give for fear that their money will not reach its intended objective.

When competition heats up, brands predominate. Brands create the attributes and associations that cause people to see differentiation. If the pie is shrinking, non-profits need to get very serious about differentiating from other organizations and having a compelling value proposition for the donor, whether it be a person or a company.

The brand and reputation also are important for companies. Donations are changing from philanthropy to strategic social responsibility programs at many companies. This means that a non-profit needs to be very attuned to the objectives of corporations around them and match themselves to the strategy of the company. Gone are the days when they can simply expect a company to give them money with no expectations. Social responsibility programs should be tied to the company's strategy and toward the interests of the company's stakeholders. Non-profits need to understand the goals of the company and match themselves appropriately.

My last few consulting engagements have been with non-profits. They have been the most successful projects I have done in some time because we have enabled the organization to think more broadly and become more "corporate" in their thinking, which has benefited them in the way they have approached their sources of revenue and made themselves more competitive in the market.

Monday, July 12, 2010

Will North America Ever Understand Soccer?

I used to live in Toronto, the most multinational city on the planet according to the United Nations. Whenever the World Cup was played, the streets were filled with blaring horns and people running through the streets with the flags of their native countries, all of whom were represented in the World Cup. Very few native-vorn Canadians were amongst the crowds. They, like their souther neighbors in the U.S., seem to be two of the only countries that are not completely caught up in soccer fever.

I went to the 1994 World Cup opener in Chicago with my son, Adam, who was 10-years old at the time. We watched Germany defeat Bolivia. I must admit it was a great spectacle, but I sat there less than absorbed by the game. This year, however, I watched a lot of soccer. I have to admit that I started to realize what a great game this is. I also started to understand why the game has not caught on in North America.

Some analysts claim that Americans rejected soccer because it was played by the British soldiers during the Revolutionary War. That may be the case, but that would not explain why Canada is not a soccer country. Canada is still part of the British Commonwealth and the Queen is still Canada's official head of state.

I think the differences are in North American life style, which is faster than life in the rest of the world. As one of my former colleagues explained, "soccer is like chess; American sports are like checkers". Americans do not like the slow pace of chess, a game that is based upon ancient European war strategy. The favorite sports in the US are "in your face". They are about size and power. US football (and the Canadian version as well) is played by huge men who are smashing each other. Hockey is fast and furious and, once again, is about smashing ones opponents. Baseball was a slow game until it got "juiced" (players, ball and bats) and the game become one of "long ball". Baseball aficionados may love a 1-0 "pitchers dual", but most of the crowd yawns and wishes for a home-run derby.

Soccer requires patience--something we do not have. It requires thinking--something we do not like to do. It requires us to watch opponents out-finesse each other for nearly 2-hours to score, perhaps, only one goal. That may be "beautiful", but it can also appear boring to a society that is used to speed and smash. It is interesting that many countries (Netherlands, Brazil, etc.) were lamenting the change in the way soccer is being played. There is more emphasis on defense. There are more "yellow cards" being given for rough play. Soccer was to be beautiful--like a ballet.

One has to love the interviews with the Dutch today, however. They were admitting that Spain was a better team; that Spain deserved to win They did not curse the Spanish. They did not blame refs or their own team. They accepted defeat. One Dutch fan summed it up: "oh, well, we came in 2nd. That's better than most countries". Imagine that? Someone accepting defeat. Americans are used to seeing t-shirts that announce "second place is first loser". Everyone wants to be #1 or nothing.

The World Cup was a great example of great sport and great sportsmanship. It should be a great point to reflect on why we see things so differently in North America. It likely would explain a lot about why we are so different from the rest of the world.

Saturday, July 10, 2010

Is it the Media or We Who Are at Fault?

The LeBron James situation seems to have more people asking whether it is society or the media who are at fault in following the exploits of a 25-year old basketball phenom. There are many people who are blaming the media for following James' every move.

The media are reflections of society. I know that there are those who believe that the media shape the discourse of society; that they have an "agenda setting" function. They may have had at one time. I think we are giving them far too much credit today. The media, particularly the mass media and cable outlets, are struggling to attract viewers. They are also struggling to keep costs down. As a result, we have had a seemingly endless steam of "reality TV" shows. These are cheeper to produce and seem to attract large numbers of viewers. How many more "Bachelors", "Bachelorets", "Last Comic Standing", "America's Got Talent", etc, etc, can we possibly watch. Yet every time we think we've saturated the concepts, along comes "Biggest Loser", "Iron Chef", and more and more. Every conceivable interest is pursued by the media. And, yes, we keep watching. More people vote for candidates on "American Idol" than vote for candidates in real elections. We seem to care more about who has the best voice or best dance steps than who runs the country.

So, is there any wonder that the media saw the opportunity to follow every step LeBron James made? He was the latest reality TV star of the week. His exploits were discussed everywhere. The night of James' announcement on ESPN, I was walking by a high-end restaurant when a man came out of the restaurant on his cell phone asking his friend to watch ESPN and text him LeBron James' decision as soon as it was known. I could tell by his face that he was probably dismayed that he had to have dinner with his wife on such an important night and during prime time.

LeBron has learned to be a master marketer--or he has hired people around him who are good at marketing him. He knows how to milk our interests. But, it doesn't take a great marketer to get the media interested. This week there has been more coverage of what Lindsay Lohan had printed on her nail during her trial than about the debates in Congress over a new financial bill. The media don't care if you have talent; you just have to be of interest to large numbers of people.

There are many excuses for how bad the media have become. They have to contend with 24-hour headline news, the Internet, blogs, etc. The normal media are competing for attention. So, most have become entertainment services rather than news services. Watch local TV in most markets in the US and one wonders where the news is.

So, who is at fault? The media or society? Both are at fault. American society (and I keep this to US society because there still are good news services in many other countries like Canada and the UK in which there are deep discussions of important issues on the normal, nightly news shows, both local and national). American society has become dumbed down to a point that it is all sound-bites and personality. Following LeBron becomes no different from following Sarah Palin or Lindsay Lohan or the President's latest run to get a hamburger, or Bill Clinton at the World Cup. We loose sight of whose personality is important to us and whose is really unimportant in the grant scheme of things.

To quote Pogo: "we have met the enemy and they are us"

Friday, July 9, 2010

Misbranding By Progressives Leave Them Vulnerable

As I sweated through temperatures that approached 100 degrees Fahrenheit (40 degrees Celsius), I kept thinking about the debates over "Global Warming". Following the last winter when the east coast of the US got more snow than usual, the percentage of people believing that environmental change was man-made dropped by some 20 percentage points. I'm sure that after an early and very hot start to the summer, those numbers are changing again.

The term should have been "Climate Change", or "Man Made Climate Change", not "Global Warming". While the considerable snow this past winter was likely due to warming temperatures in the atmosphere, that is way too difficult a concept for many people. Warm is warm and cold is cold. The right wing used some errant e-mails from scientists to claim that all of the hoopla over "Global Warming" was trumped up, biased science. They actually claimed a conspiracy, imagining that most of the world's scientists would or could actually create a conspiracy. Anyone who has ever worked in academia or in a science-based company knows that it is difficult to get even a few scientists to agree to anything, let along create a conspiracy

It was the terminology, or branding of the problem that was wrong. People need to understand that the climate is changing and much of it is due to decisions we humans make or do not make.

Misbranding also can be found in the debate over abortion. Women's rights groups chose the slogan "Pro Choice", while the anti-abortion movement selected "Pro Life". Imagine two product--pro-life versus pro-choice. Which one would engender more emotional appeal? Clearly, pro-life is more emotional. How many people would claim to be anti-life, but that is what the brand "Pro-Life" suggests about those who appose them. On the other hand, the opposite of "Pro-Choice" is "anti-choice". This is hardly as problematic for people to accept. The bumper stickers that declare "it's a child, not a choice", become the nature advertising campaign, but it further obfuscates the real and honest differences amongst people about when life begins and the rights of women to choose for themselves.

We need healthy, open discussion and debate about such serious issues as climate change and abortion, but the branding puts everyone on the defensive. It would be wonderful if we could get all the branding and advertising hype out of these serious issues so that we can really discuss them as grown-ups.

Thursday, July 8, 2010

Don't Blame ESPN for Our Craziness over LeBron

I have been reading a number of sports commentators who are blaming ESPN for showcasing the LeBron James announcement of where he intends to play next year. If we can blame ESPN for this, let's blame the rest of the media for giving any attention to the Jersey group or Lindsay Lohan. They are providing the public with the coverage they covet. As the saying goes: "don't blame the player, blame the game".

ESPN is a network that has a brand promise that it covers all sports all the time. They have moved from TV to every conceivable form of media to meet that brand promise. So, when a legitimate sports story--where LeBron James will play--comes up, who can blame them for covering it fully. They must; it's their primary job and expressed responsibility.

Now, don't get me wrong. I think the whole LeBron situation is beyond over-hype. This is a ball player who is looking to find a new home and we all talk about it in every forum available. Even the Daily Show with John Stewart took up most of its conversation with Julliane Moore by talking about whether LeBron would join the Knicks. Both Stewart and Moore are Knick's fans. This is a show that usually focuses on important things. Moore was on the show to plug her new movie. Bet the movie studio was not too happy that she spent 90% of the time fretting about basketball. They never got time to show a clip from the movie, but they did spent about 60 seconds mentioning it.

Americans have developed an unbelievable interest in sports figures--even more than the sport itself. We focus on individuals. Perhaps we are all taken with their huge salaries and life styles that seem almost "other worldly". They live like movie stars, while fans are loosing jobs. Their salaries help push ticket prices to the breaking point for most fans. But, attendance and viewership keeps increasing, so we obviously do not object to already overpriced talent taking advantage of our support. Imagine what will happen to ticket prices in Miami to support the salaries of Dwayne Wade, Chris Bosh and LeBron James!

So, why would sports commentators complain that ESPN should not have given time to LeBron's "people" to air an hour-long show for him to announce his decision? Perhaps the writers are concerned that their purview is being undermined by ESPN. They should wake up and realize that it already has been The never ending talking heads on ESPN make reading sports commentators superfluous. The writer's only purpose now is to focus on local teams.

The media are whores to the athletes. I may not like ESPN's decision, but I think it was the right thing to do. If they refused to air the LeBron announcement, they would not have been true to their basic brand promise.

Tuesday, July 6, 2010

US Postal Service--Stranger than Fiction

The scenario is a typical one for many companies in the current economy: demand has fallen, people are using alternative products and services. The questions is what to do? For most companies, the answer would be to drop prices to stimulate demand and at the same time to reposition to attract customers back or create new ones. What about raising prices? That would defy all logic in business. What would be the sense of raising prices when customers already are not interested in the product? Wouldn't that just cut the demand still further?

Well, none of these scenarios make a bit of sense when we're talking about the government or agencies of the government. The demand for postal services has gone down, replaced by the Internet. The answer Postal Officials have come up with is to raise prices by 9%. Think about this increase--inflation is running flat, prices on everything are falling. But, the Postal Service raises prices by 9%. The Postmaster General estimated that this increase would cover the losses of the service and maintain service. The estimates are undoubtedly based on current demand, which will likely dip still further given the increases and further erosion of the traditional mail system by technology. So, there will clearly be another short fall due to continuing drop in demand with a call for more increases next year. This should not even be legal. It almost sounds like the Mafia: "we'll make you an offer you can't refuse".

We can be assured that when the USPS goes to Congress for permission, it will get the go-ahead. What would the alternatives be if they were turned down? My goodness, it would be to cut their costs to the bone; lay off workers, cut back on hours, cut prices of their products, etc. This is what one would expect from any business manager with a brain facing a similar situation. But, once again, this is the government. So, rather than cutting costs or laying off more workers or cutting hours or cutting the price of stamps to attempt to get more people to buy and use stamps, they will go in the opposite direction.

This is all stanger than fiction. It is beyond the logic of any first year business student. The whole country is suffering from the effects of the Great Recession, and the Postal Service decides to raise prices. Will this decision reverse the decline in demand for services? No. So, what will the Postal Service do next year when demand falls still farther? Well, it will raise prices again. This is the height of audacity--we'll do it because we can. If you don't like it, don't use the mail. Oh wait, you already don't use the mail? So what, then we'll raise prices again next year on those who do.

It will continue to work this way until the legal profession finally accepts documents as legal that are faxed or e-amiled. Companies are the ones forced to use the mail system. But, wait a minute, that would take a change of the law which means that it would entail governmental decisions made by lawyers to change things from which they benefit. Fat chance. So, the illogical and almost criminal decision by the USPS will impact businesses most, especially mid-sized and small businesses (who else usually suffers?).

To quote the wicked witch in the Wizard of Oz when she was melting: "what a world, what a world"!

Wednesday, June 30, 2010

Netflix is Ruining its Great Reputation

I have always admired Netflix. Who wouldn't? Here is a company that was created by Reed Hastings because he had a $40 late fee at Blockbuster. He created a company with a unique customer algorithm, similar to that used by Amazon, that matches customer preferences, and with the ability to source materials for the most niche of movie interests. At the same time, Blockbuster was focused on major hits and keeping an inventory in its many stores.

Netflix was able to see the future and adapt to video-on-demand and downloadable movies, even doing deals with video game makers and DVD player makers.

All of this was admirable. I use Netflix as a case study in my MBA and Executive MBA classes. Now, Netflix has decided that it makes sense to move into pop-up ads on websites. Instead of keeping awareness high, they are becoming a nuisance. Instead of remaining an admired brand, they are ruining their reputation. They are becoming the equivalent of being stuck in a room with a life insurance salesman who just won't stop talking.

I don't know who is advising Netflix, but I wish they would step back and remind themselves of what made them such a valuable brand and return to their roots. Stop the interruption, pop-up ads. Those are for lesser companies.

Tuesday, June 29, 2010

BP's Independent Gas Stations are Hurt by the Spill

Business is reported to be down about 20% at some BP stations. This is even more severe than after the Exxon Valdez accident when Exxon lost about 5% of its business, some of which it has never regained. As a result, reputation experts began to estimate that reputation was worth about 5% of revenues on an annualized basis. It actually could be worth more, depending on the severity of the reputation damage that is done.

Among the victims of the BP disaster are the owners of BP gas stations. In the US,virtually all of the dealers are independent owners and operators--they have no relationship to BP other than selling gas under the BP brand. They are suffering and taking flack from consumers. Gas stations are being picketed.

A consumer has only three ways to show their disgust with BP: 1) they can urge their member of Congress or Senator to punish the company, 2) they can boycott BP gas, or 3) they can divest themselves of BP stock, if they hold it or urge their company to divest the stock from its portfolio.

This is a situation in which there is no upside for the dealers. They have a business relationship with a bad actor. As a result, the diminished brand equity and reputation of BP will continue to hurt them. They can scream and explain themselves all they want, and we can all feel sorry for them, but they are collateral damage. If consumers continued to buy BP gas they would not only be supporting the gas station owner, but also directly benefiting BP. I feel sorry for the station owners, but there is no way I am going into a BP station.

We've seen this situation in other markets. Toyota dealers are independent of the company, yet they were suffered great damage during the Toyota recalls for acceleration and brake problems. Most car dealers are independent. What can they argue? "Buy a car from me because I have nothing to do with making this lousy car"? Sorry, but brand associations are what lead you to make your purchase of the dealership in the first place. You linked yourself to the brand, for good and for bad. You are now suffering the impact of that brand association. We need to remember that there is truth in what our Mother's always told us: "we will be judged by the company we keep".

So, we can feel sorry for the independent BP dealers, but they benefited from the great reputation that BP had for so long--I'm sure that is why many of them wanted to own BP stations. They chose wrong brand association. Life is not fair.

Endorsed Brands Take a New Twist

Endorsed brands have always been an important brand strategy. Endorsements take on different variations. We continue to see people with lab coats acting as doctors to endorse the efficacy of a product or demonstrate what a "talk with a doctor" might look like. There are Ralph Lauren and Eddie Bauer interior in cars. Reebok sponsors work-out rooms in hotels. Martha Stewart is an endorser of towels, pillow cases, dishes, and other home products. Her name provides a risk reduction for those who are not certain they know how to properly decorate their homes. Oprah's endorsements can drive book sales, generate traffic at stores, and create new celebrities (Dr. Phil, Dr. Oz, etc. were all created by Oprah and have now become their own celebrities and are now endorsers).

Endorsements are designed to lower fear, uncertainty and doubt in the purchase. Endorsements are not designed to attract everyone. They are designed to attract the target. They connect the target with people who are admired or looked up to. They are a reference group--someone we aspire to be like or be associated with. A Nike shoe is a brand, but an Air Jordan takes on a whole new dimension because Michael Jordan is behind it. His endorsement was so strong that LeBron James actually said one time that he thought he could jump higher when he was young because he was wearing Air Jordans.

As a result of social media, consumers have become even more skeptical or celebrity endorsements, so a new twist has occurred. Celebrities like Ashton Kutcher and Lady Gaga are now taking a piece of the company and taking on management roles within the company so that their endorsements are not only more believable, but so that they share in the success or failure of the company (actually, there is little downside for the celebrity from a monetary standpoint since they get paid as well as a getting equity). Kutcher, for example, is going to be the head of social media for Popchips, a line of potato chips that are baked rather than fried. He is considered a social media expert because he has more Twitter followers than almost anyone on earth. He may not really know social media, but his Tweats about Popchips will likely lead to increased sales--at least amongst people who like Kutcher.

We saw how intimately tied companies and products are to their endorsers during the Tiger Woods problems. Accenture dropped Tiger immediately because his endorsement was no longer appropriate for a consulting firm. At the same time, Nike continued to support Tiger since he was responsible for the rise of Nike Golf. His personal issues could be separated from his athletic prowess. Tiger may not have had a piece of the equity at Nike, but he has a lot to say about design, similar to the input and responsibilities that Michael Jordan had at Nike.

Nike better watch closely what is happening. If Tiger or Jordan wanted an equity stake in the company, they would command a lot a hefty amount of stock--more than shareholders might be willing to tolerate, but the negotiations and calculations would be very interesting.

Monday, June 28, 2010

Developing a Good Positioning is Critical

I have seen and read so many positioning statements that sound like wonderful features or wish lists from the organization. They are often written by people inside who want those on the outside to believe the fantasy--that they are what they claim in the positioning. Words like "best", "exclusive", etc., find their way into the positioning without any sense of internal challenge as to whether or not they can be defended or supported. Too often, outside firms that are brought in to help with the positioning only hurt the process further when they think of positioning as trying to influence the market rather than explaining choices form the market perspective.

Positioning solves a number of issues for an organization: it identifies the target, it establishes the point of differentiation, it frames a promise, and its offers a reason to buy, invest, join, etc. In other words, solving the positioning puzzle is one of the the most important steps in the strategic process.

There are a number of must haves in a positioning:

--First, it must have a target. The target can be stated in demographic terms, or psychological terms, or behavioral terms, or any other way that we normally segment a market and identify a target. It doesn't have to say that the product or service is intended for men or women or craftsmen or some other group, but it should say who the product or service is intended for.

--Second, the positioning must create a frame of reference. All brands create a promise of performance and positioning helps, as a major part of the branding process, to state the promise that the target will receive

--Third, the positioning needs to offer a point of differentiation

--Finally, the positioning should give a reason to buy. In other words, what does the target get out of this experience, investment, etc.?

Companies need to recognize that positioning is a competitive endeavor. In other words, one is not just positioning ones own company, but one is juxtaposing the company against competition. Everyone in an industry group has similar offerings. The question is why you are different? Why should I give you my time, money, etc. versus someone else? This is a zero-sum game. We need to assume that when one buys us they do not buy someone else, or the corollary, that when they buy our competition, they are excluding us. It is called positioning because we are trying to establish our position in the market. Our customers and other key stakeholders will determine where they position us. Hopefully, our desired position will resonate with stakeholders.

So, positioning is critical in marketing strategy and branding. Good positioning should create a bit of angst internally. It is a mirror to the company from the client or customer perspective. If it is universally liked it is, like works of art, probably not that good. Great brands are not universally liked, but they are absolutely loved by some-- enough people to make them valuable. We want to differentiate, not be universally loved in our positioning. If we are for everyone, we likely don't have much to offer. We need to figure out who really needs us and why and make that clear in our positioning.

Friday, June 25, 2010

There is a Huge Need to Integrate Strategy and Execution

The July-August issue of Harvard Business Review has another excellent article by Roger Martin, Dean of the Rotman School of Management at the University of Toronto. In the piece, he argues that strategy and execution must be linked, but that they are not in most strategy courses in business schools, nor by consulting firms. It should be noted that Martin used to be a partner in a consulting firm prior to becoming Dean at Rotman.

It is clear that most people separate strategy and execution. How many times have we heard about a company engaging a strategy firm and then finding it difficult to implement the strategy once the firm is finished. I used to have a CEO who was fond of saying: "strategy is fine, but 90% of success is in execution". As Martin notes, one cannot be successful in execution independent of a good strategy, and one cannot have a good strategy independent of good execution.

It is interesting that in the brand and reputation world, most of the firms operating are execution-type firms. The brand firms do brand audits and then develop a new logo and set of identity guidelines. The advertising firms do advertising; the PR firms do PR. On the strategy side, McKinsey, Boston Consulting Group, and others are doing some brand strategy, but this is a very small part of their overall offering. There is a gap where Martin sees one. And, it is a wide gap that needs to be bridged.

Execution is becoming more and more commoditized in the brand world. Strategy is where the money is. So, implementation firms are typically staffed with junior people who do not really understand strategy; and the strategy firms are staffed with senior people who do not want to be bothered with implementation. When the strategy is done, it is "handed off" to the company which typically hands it off to a PR or advertising firm. The latter are typically not involved in the strategy discussions so they often implement against a strategy that they do not fully understand, unless they are briefed directly by the strategy firm or unusually well by the client. Advertising and PR firms say they do strategy, but they don't. They do advertising or communications strategy, not the type of strategy taught in an MBA program.

The difficulty is often with billing. Strategy firms bill thousands of dollars per day for even middle-ranked people; execution firms bill a fraction of this. So, when strategy and execution firms have tried to talk about mergers or working together, they often get stymied with billing. Clients who hire advertising or PR firms are usually not willing to pay $5,000-$10,000 per day for strategy; an strategy firms do not see the need to have an implementation group on the pay-roll.

In my own consulting practice at Brand and Reputation Management, I focus on linking strategy, brand management with employee engagement. I try to lay out implementation plans for the client, but I do not do the execution. I usually ask the client if I can help them brief the implementation firm so that there is a smooth transition to execution. But, this request is not always accepted. So, I have not connected all the dots, as Martin has pointed out, and could be serving my clients better if I were to connect with an implementation firm.

I have said to many people that there is a huge need for a brand and reputation management firm that has business and marketing strategy people, brand experts, researchers and implementation staff. There is nothing like that right now. Perhaps a first step would be to connect a few good firms together in common practice.

Wednesday, June 23, 2010

The McChrystal Flap Shows a Problem with His Team's Value Set

President Obama is being forced to decide what to do with renegade General McChrystal. The General and his advisors gave an interview to Rolling Stone in which they ridiculed many of the officials in the "chain of command". Now, Obama is forced to decide whether to accept the resignation that McChrystal is certain to offer (military culture demands that he tender his resignation). This is a President with so many problems confronting him that one has to wonder whether the fates have aligned against him.

When I read about McChrystal and his band of merry, arrogant, men, I see a poisonous culture that is highly problematic. We have seen the same culture at Enron. I saw it first-hand at Nortel. It is a culture of personality in which the boss is so revered or feared (I'll leave it to psychologists to figure that one out) that they become an arrogant, totally self-confident group that feeds off of one another. Everyone who "gets it", in the language Enron executives used to use, is part of the team. Anyone who doesn't agree and live the same life "doesn't get it" and needs to be ridiculed and purged. It is a test of purity. This may build a strong team, but the team is more akin to what the Communists referred to as the "cult of personality" than to a culture of ideas and thought leadership that characterizes most great leaders.

Great leaders surround themselves with people who think and are encouraged to share their ideas, even if they conflict with the prevailing ideas. When thoughts are closed off, there is only one way of thinking. The team gets, what a former professor at West Point I knew called "the spirit of the opposition". That is, a single-minded passion; almost mindless. But, McChrystal is a person who sleeps only a few hours a night; eats only one meal a day; refuses to take water and food while walking around in the harsh climate and heat; and will not nap on the plane. He sees his wife of 33-years only 30-days a year and celebrated their anniversary at a pub in Paris, along with his inner circle. Think about that personality. He is a military guy and we want him to win the war, but he clearly has psychological problems and he has selected a team of advisors that share his problems.

The McChrystal group calls itself "Team America" and believes that they are the only ones who know how to fight the war. Others who disagree are ridiculed, as was on wide display in the Rolling Stone interview. Many of the worst comments were not made by General McChrystal, but rather by unnamed staff. He may not have been in the room when they made those comments, but he clearly gave his team the feeling that they had the right to ridicule the Vice President and others in the Administration.

The military has prided itself on becoming more entrepreneurial and more akin to a corporation than to the hierarchical structure of the past. The success of the military can be found in people like General Petraeus, who appears to be not only bright a brilliant military mind, but also a great leader. Great leaders gain their ideas by having others challenge them. This is what leadership is all about. Not about giving orders, but rather about inspiring a team to internalize the outcome and help the organization succeed.

I recall Jack Welch, former CEO of GE, noting that the most problematic leaders are those who are successful in making their financial numbers, but at the same time destroy the lives of those around them. They are poison to an organization and need to be coached for change or fired if they cannot change. They can too quickly become the "exemplars" of the organization--those others aspire to become. It seems that McChrystal is that kind of leader. He is successful on the one hand, but he also seems to be poison.

Tuesday, June 22, 2010

BP's Internal Communications Becomes Theatre of the Absurd

The following was reported by NBC News and the Wall Street Journal. Just when we thought that Tony Hayward's yachting trip was the height of absurdity, BP's internal PR people go off on a tangent that can only be dubbed "what the hell were they thinking...or smoking?"

In-house corporate magazines are supposed to make the company look good, but The Wall Street Journal is asking whether Planet BP, the oil company's organ, is smoking something:

[I]n Planet BP — a BP online, in-house magazine — a "BP reporter" dispatched to Louisiana managed to paint an even rosier picture of the disaster. "There is no reason to hate BP," one local seafood entrepreneur is quoted as saying, as the region relies on the oil industry for work.

Indeed, the April 20 spill on the Deepwater Horizon is being reinvented in Planet BP as a strike of luck.

"Much of the region's [nonfishing boat] businesses — particularly the hotels — have been prospering because so many people have come here from BP and other oil emergency response teams," another report says. Indeed, one tourist official in a local town makes it clear that "BP has always been a very great partner of ours here…We have always valued the business that BP sent us."


We know that BP has to try to maintain the internal morale of the company's employees, but this is beyond absurdity. One has to wonder whether BP has manufactured its own reality and cannot quite live in the real world that they have thrust us all into with their destructiveness.

Because it was BP, the Reputation Damage to the Rest of the Oil Industry is Even Worse

I have said before that reputation is the expectations that stakeholders have of a company vis-a-vis its peers and competitors. There is no better example of that than BP and the rest of the oil industry. BP spent a decade or more trying to convince us that they were "Beyond Petroleum". They redid their logo to make it look like a green flower--a symbol of its environmental commitment--and they invested in alternative energy sources. We all thought that they were the best of an otherwise bad industry. In fact, in an industry in reputation last year stood at about a -57%, according to Ipsos, (more people disliked the industry than liked the industry), BP had a positive reputation (about 11%). In other words, people thought that BP was vastly different from the rest of the industry. BP differentiated itself with a brand promise that enhanced expectations. Over the years, they seemed like the good actor. All along, they actually were like the nice neighbor who turns out to be a serial killer in waiting. BP lived one way publicly while having a very different culture internally.

So, is it any wonder that members of Congress were not impressed when the executives of the other oil companies came before them arguing that they would never have drilled the area the way BP had done. "You can trust us", they said. We would have done it better. The problem is that no one believed them. Why would they? As I noted before, they collectively are the -57% reputation of the oil industry. If the perceived best of the group did what BP did, then what would one expect of the others?

I know that there are many in the Gulf who make their living in the oil industry and that the moratorium on drilling that the President put into effect is of concern to them. There are those who claim that it is illogical to penalize an entire industry because one company made a mistake; or that others are following the rules and regulations in drilling. I can understand the angst of these folks who are connected with the oil industry. But, there is no trust. There was no trust before for anyone other than BP. That trust has been totally eroded and with that it has put the rest of the industry in even worse shape. If this had been another oil company other than BP with this accident, the impact on the others would not have been so severe. But, expectations were set by one major player. For better or worse, the rest of the industry is now living with that situation.

Monday, June 21, 2010

What's Wrong with BP's CEO Attending a Yacht Race? Nothing and Everything

Tony Hayward, the CEO of BP, was supposedly removed from his daily job overseeing the oil spill in the Gulf. I say supposedly, because after the announcement, BPs press office offered contradictory explanations for what was happening. An American executives was said to be taking over the front line control, but the timing of this was unsure. One suspects that BP did not really think this out. They had to remove Hayward, who gave an awful performance before Congress. They replaced him with an American CEO with a southern accent. The real removal was not to change things, but once again to make us think that things had changed. It seems that BP is very good at manufacturing an image, but not very good at living up to its desired image. They undoubtedly thought that having a fellow with a southern drawl in front of TV cameras was preferable to having one with a British accent. Probably right, but for all the wrong reasons.

Within a day after leaving Washington, Hayward was in England at a yacht race with his son. This was the same man who had declared a few weeks ago the "I will not leave the Gulf until the oil leak is stopped". I guess the leak just went on too long and he felt he needed a break.

Fury grew among both members of Congress, the general public and fisherman in the Gulf who likely will never see their livelihood return. BPs response was that Hayward was having a family day. "He deserves that. We would think everyone would agree", said the PR spokesperson. Problem is, that statement showed the same tone deafness that BP seems to have been suffering from all along. Most would agree he deserves time with his family. But, few would agree that a public outing at a yacht race is good for his or BPs image.

Hayward had said weeks ago that "I want my life back". Poor guy! He has to suffer, likely for several months, every night taken away by private jet or limo, returning to a luxury hotel or suite rented for him. He has truly suffered!! His multi-million pension will cushion his blow. Those who are damaged, including the so-called "little people" that BP said they are worried about (still sounds like a company run by British aristocrats worrying aloud about the poor little people who might go hungry--tsk, tsk. Where is that butler with my tea and biscuits?").

What is wrong with Hayward going off to the yacht race (his 50-foot yacht, I might add) with his son? Nothing and everything. It is nothing, because this is a good father-son bonding moment. Hayward is a hard working CEO who deserves time off to see his family. At the same time, however, there is everything wrong with this. This is a guy whose company has ruined the environment for generations to come. He has wiped out the livelihood of an entire group of people in the Gulf. He has further ruined the city of New Orleans and the rest of the Gulf Coast. He may not have designed the rig that exploded, but it was his company and he bears the burden. That's the responsibility of CEOs. As they used to say in my corporate days, "that's why you're paid the big bucks".

To go off and visit a yacht race is optically wrong. It shows a total lack of character and morale fiber on his part. He just doesn't get it. He has not fully internalized the real damage done. It further demonstrates that he is as out-of-the-loop on the way the real world lives as we feared. He looked and sounded like a member of the British House of Lords when he sat before Congress. His poor performance continued.

I know that there will be some who will argue that there is nothing more that he could do to clean up the Gulf, and that his day away at his yachting adventure did not detract from the clean-up. That is all true, but it also is mute. Until the leak is stopped, he does not deserve a life. He has to show that he cares, that he is damaged mentally by what his company has done. I really don't care if he doesn't feel that way, but his victims in the Gulf deserve to see him suffering a bit.

His lack of good sense has not only hurt his image, but it has further damaged the reputation of BP.

Thursday, June 17, 2010

French Laundry--Talk About Perceived Value!!

The French Laundry is a Yountville, CA restaurant that is widely regarded as the best restaurant in the United States. It is one of only a few restaurants in the U.S. that has received the prestigious Michelin 3-stars, the highest rating for a restaurant.

The French Laundry serves only a prix fixe menu with a price of $250 per person, exclusive of wines. When all is said and done, a meal for two people is about $900. The restaurant has 60 tables.

Reservations can be made 60-days in advance, to the date. It takes about 2-hours for the entire restaurant to be reserved on the day the reservations are open. In other words, this is a tough table to get. I have heard of people trying for over a year to get a reservation.

Now, let's consider that the world is in one of the worst economic downturns since the Great Depression. Still, there are enough people willing and able to spend $400+ on a meal to fill the restaurant. This, despite the fact that fine restaurants around the world have been failing at a record pace due the poor economy.

What is the secret to the French Laundry? It is all about perceived value of the brand. In this case there are two--the restaurant name and the chef's name, Thomas Keller. He is the endorsed brand. His name adds value. Witness his bakery, Bouchon, that has lines at all hours wanting to sample a bit of his magic.

What makes a Keller/French Laundry meal worth this much money? Well, it is damn good. But, at some point, most of us if we are not food critics or chefs (let's be honest here) cannot distinguish the quality of food. So, it is all about the perceived value, the prestige, the ego boost, etc. We are swept up in the brand. We fight to get the ability to give over a lot of money to eat a meal that few people can afford--it makes us feel special. What makes a Picasso painting worth so much? What makes an Apple computer worth so much more than a PC?

This is the thing about prestige brands. We spend because we believe it is worth it--we must have the experience. The brand becomes our mark of distinction. I have now eaten at the French Laundry. I now join a rare breed of people who can make the same claim. I have paid for one meal what it would take me to spend for 3-4 meals at what would be considered outstanding restaurants.

I mentioned to someone the other day that I had eaten at the French Laundry. They looked at me in amazement and asked how I was lucky enough to get a reservation. My perceived value seemed to grow as a result of having gotten a reservation--who ddid I know? Who was I anyway? Talk about the perceived value of a brand and what it does for those who are associated with it!!

USAirways Continue to Shock with Poor Service

Just returned from a trip to San Francisco on USAir. I continue to be shocked by how much this airline has just given up on the concept of service. I wrote a blog recently about one flight in which the attendants seemed to be mimicking Southwest. I thought that perhaps USAir was trying to be friendlier and more customer friendly. Sorry to say, I was mistaken. This was a one-time experience due to the individual attendant, not the airline.

On this most recent trip, my wife and I flew 1st class. We did it because we were celebrating our 40th wedding anniversary and wanted a great experience. What a waste of money!! First, the airplane on the flight out was in very bad need of refurbishing internally--seats were torn, the seat in front of us wouldn't stay up, and there was precious little leg room for a 1st class cabin. The flight attendant worked hard to make our experience as pleasurable as possible. On the way back from San Francisco, we were informed that we had two bags too many (one is allowed to check two bags per person free in 1st class). The price quoted was $200 to pay to check two bags. $200 dollars for bags--after paying more than $1500 per ticket for 1st class. Unbelievable!!

Anyone who understands airline pricing models recognizes that the airlines only make money when they fill seats. When an airplane takes off with an empty seat, it is no different than a super market that has broken eggs or spoiled milk. It is wasted inventory. As a result, the airline is willing to price seats at differentiated prices. So, there is tremendous variance amongst the passengers in terms of what each person paid. Most of the 1st class cabin is comprised of people with upgrade coupons, or they have paid about $100 at the last minute to upgrade because there was an empty 1st class seat. Few, if any in the 1st class cabin have paid full fare, as we did. Few corporations are allowing their executives to fly 1st class anymore, so the full fee passengers are few and far between.

Given this background, it was absolutely shocking that USAir wanted to charge us $200 for two extra bags after we paid full 1st class fare. It was not shocking, given how poorly this airline is run, that they would not bend their bag fee policy for full fare passengers. Our fee more than made up the cost of extra bags--the airline got its money.

In addition, this was a 5+-hour flight and there was no entertainment. We weren't even offered headsets to listen to music. Our kids just flew Air Canada across country--an airline that has gotten a lot of flack of late for poor service--and economy class had individual entertainment systems in the seat backs. Yet, USAir offers no entertainment, even in 1st class. The only other airline like that is Southwest, but that is expected and promised--one doesn't pay for bags and the airline has no first class. They make a promise and stick to it. Is USAir trying to be a no-frills airline and high priced fares? That would be an interesting play. Not wise, but interesting.

USAir is a damaged brand with little redeeming value other than a fairly decent safety record. Its planes are old, its attendants do not seem to care, its fees are high, particularly at airports where it has a commanding market share (e.g., Charlotte, Philadelphia, Pittsburgh).

Recently, USAir wanted to merge with United. Continental moved in a did the merger, knocking USAir out. The fact that United went quickly for a different suitor is good demonstration of the poor brand equity of USAir. Now, the question is who wants to merge with USAir, since the airline needs a partner. One analyst suggested JetBlue. I cannot even imagine that JetBlue would want to be tainted with the USAir brand. The only way they would consider a deal is if--a big if--they wanted the routes USAir has, and if JetBlue wanted to become a major airline.

The only way USAir is surviving is because it provides a needed service that right now cannot be duplicated--flying to cities from certain cities that no other airline serves. As other airlines, like Southwest, move in to challenge USAir, they take market share and further damage USAir. Instead of beefing itself up and improving its brand, USAir acts like a company run by accountants or hedge fund managers--cutting costs and with it further eroding perceived value.

Stick a fork in USAir already. The airline is cooked. Please someone put it out of its misery.

Tuesday, June 15, 2010

BP Nees Less PR and More Operational Correction

A recent USA Today article provided insight into the advise that a number of PR executives would give BP on ways to build back its reputation. Among the suggestions are: 1) to become a "green company"; 2) to highlight and celebrate the contributions of those who are cleaning the Gulf; 3) to be more transparent and honest in its communications; 4) to admit its mistakes; etc.

As one can see, all of the suggestions are superficial to the problem that BP created and the reasons for it. They are what one might consider the worst PR spin on a very bad and complex problem. The suggestions sound more like those from a group of undergrads rather than from those who profess to be corporate counselors.

BP got into this mess because it spun its reputation rather than really living it. It got into this mess because its former CEO, Lord Browne, wanted to establish BP as a leader in environmental activism, yet he cut costs to an extent that BP could not live up to its hype. BP did not put into practice what it preached. It lived one way and talked another.

What these PR executives are advocating is to talk more and not to really change. What BP does not need is more PR. It needs operational change. It needs to get back to basics and discover if its values are really environmental leadership, safety and sustainability, or are they to articulate these values because it helps them look different in the perspective of key stakeholders.

But, while we're talking about PR, let's try to get BP to at least get its PR activities in line with what it claims it is trying to do. BP claims it is being transparent, yet at the same time it blocks reporters from covering the spill. It is taking out advertisements touting its actions to correct the problem while at the same time short-changing the payments to Gulf residents.

Enough is enough. This is a disaster of unprecedented proportions. I understand that British investors are concerned with the future of BP and, as a result, the future of their pensions. Screw their pensions. An entire region has been destroyed for at least another generation. Why should we worry about pensions when a company does such damage? It would be akin to being asked to not send to jail a known killer because he/she gives such large amounts to charity and the good of society.

Thursday, June 10, 2010

David Gergen Shares His Views on Crisis Management

David Gergen, who has served several presidents, both Democrats and Republicans, has offered his advise to crisis managing the BP disaster in the Gulf. Gergen is now a Harvard professor and television commentator--one of the best in the business because his views are so balanced and intelligent.

The following comes from Gergen's own blog post.

1. Set up a daily command center in Washington where a presidentially appointed leader runs the show, calls the shots, coordinates the overall effort, briefs the president and briefs the country.
2. Have two deputies, one to direct the leak-stoppage and the other to direct the clean-up. Ex-CEOs and generals would be excellent candidates.
3. Summon all the major oil and drilling companies to the White House for emergency efforts to get the hole plugged.
4. Get BP out of the picture for clean-up; just send it the bill. If it is still needed for hole-plugging, okay, but ensure that it answers every day to directions from the government. If BP needs new internal leadership, figure out how to get that done.
5. Employ the U.S. military for organizational coordination and where needed, for anything else such as clean-up.
6. Make more aggressive efforts to tap the best minds in the world for help.
7. Provide the country with the kind of daily briefings that the military has mastered for wartime — bring in people who are smart, straight and tough.
8. Ensure that economic assistance is provided to families, small businesses and communities that need it with dispatch and generosity.
9. Call off the finger pointing until we get out of this mess.
10. And finally, very importantly, exercise the powers of leadership every day from the Oval Office.

Thursday, June 3, 2010

Is Reputation About Delivering on Expectations, or Just the Expectations?

I recently heard a presentation by Charles Fombrun, perhaps the most widely published academic in reputation management. He defined brand as the promise that sets expectations and reputation as the delivery on expectations.

I have the utmost respect for Fombrun, but I disagree with him. I believe that reputation is related to expectations, not to the delivery on expectations. Brands do indeed create expectations. Reputation, then, is related to the branding effort--does the promise meet the desired expectations of stakeholders? If it does, our reputation will rise; if not, it will lag. Expectations can come from the company's efforts, from touch points at which the stakeholder meets the company, from one's peers, or from 3rd party influentials, such as the media or others.

Expectations run on a continuum. One can have negative expectations of a company. What would it mean if we delivered on those expectations, as Fombrun argues? Would we build reputation? Of course not, we would simply reinforce the negative perceptions of value. For example, it could be argued that for many stakeholders the BP oil leak in the Gulf reinforced their negative expectations of the oil industry. BP, then, delivered on those expectations.

On the other hand, let's take the current situation of J&J's crises related to Tylenol for children in which there were quality problems in the plant. J&J had one of the best reputations in the world. Most people had high expectations of the company. Their actions were below expectations. In this case, J&J would suffer some reputation damage, although the high expectations prior to the crises would likely buffer it compared to a company with lower reputation (lower expectations of its value).

If a company with a bad reputation attempts to invest in social responsibility efforts to improve its reputation in order to meet stakeholder expectations, according to Fombrun, we would expect that the company's reputation would improve. However, research has found that the opposite can in fact occur. Companies with poor reputations that attempt to build their reputations too quickly run into stakeholder disbelief. The expectations of stakeholders is that the company is a bad actor. If it tries to do something that it thinks would deliver on the value stakeholders would like to see, it risks further alienating stakeholders. Its actions are questioned--stakeholders assume that the company must be trying to buy a good reputation.

Companies with poor reputations need to build an organizational culture that allows them to act reputably and do so for some time before trying to engage in a program to convince stakeholders that it is reputable. In other words, reset expectations.

So, reputation is the expectations of value perceived by stakeholders. We manage reputation against those expectations, we do not deliver on them.

Sunday, May 23, 2010

C.B. Bhattacharya Defines Good vs. Bad Corporate Social Responsibility

C.B. Bhattacharya is the foremost scholar in corporate social responsibility (CSR). He defines CSR is "a commitment by a company to maximize society or environmental well-being through business practices, policies and resources".

In other words, CSR is related as much to how one operates the company as it is to the programs one chooses to invest in.

C.B. notes that there is a process that consumers or stakeholders use in judging CSR. It involves three criteria:
1. Understanding: Many companies invest in CSR but do not do enough to make people aware of what they are doing.
2. Usefulness: The CSR program must be seen by stakeholders as being of benefit to them. Companies spend a lot of time talking about the money they spend in CSR. Stakeholders care about the usefulness, not the amount.
3. Unity: the CSR program must be integrated with the strategy of the company.

C.B. has said that philanthropy is not CSR and I completely agree with him. Philanthropy is giving away money or in-kind services to something of importance to society without regard for the value it creates for the company. CSR, on the other hand is not only related to doing good, but also to doing well. It should build the company's value as it builds value for others. It is symbiotic.

When companies contemplate CSR, they must make it part of their overall brand or reputation strategy. It is part of it, not an add-on program. If companies can relate the program to the needs and interests of the stakeholder the program is intended to serve, it will have a greater chance of success. Consider, for example, the great success of the J&J "Campaign for America's Nursing Future", and investment of J&J resources to build the image and attract people to the nursing profession--one of the key customer groups of J&J. The company did well by doing good. On the other hand, consider many of the pharmaceutical companies that report spending $25M on CSR, yet cannot build their reputations because the programs are often not related to the overall strategy of the company, they are not of importance to stakeholders, and few people know about the particular programs. The amount spent might as well be written off as philanthropy--all well and good, but do not expect anything in return.

Friday, May 21, 2010

A Proposal to Change Corporate Social Responsibility to Corporate Engagement

The entire aspect of corporate social responsibility (CSR) has always troubled me. I believe firmly that companies should do good as well as doing well. However, CSR has always been treated as a tactic rather than as part of the overall strategy of the firm. As such, it is more akin to philanthropy rather than a program that is part of the overall brand or reputation management of the company.

With the advent of social media, stakeholder engagement is becoming more prevalent. Stakeholders are gaining more and more knowledge which used to be contained only at the center of the corporation. This is changing the way we talk with, market to and interact with our employees, customers and others.

I think it is time that we change the name of CSR to Corporate Engagement or Stakeholder Engagement. This is not just a name change, but a reflection of what I would hope would be a different mindset. CSR is still about a company doing something to someone else--a community. Engagement is much more active. To engage, we must listen, respect and have a dialog with others. Engagement is a change of mindset and a better reflection, I believe, of where we should be with stakeholders.

I know that some companies think that they are making progress by calling CSR Corporate Citizenship. I still do not like that term. Citizenship is a term that is designed to make a company feel good. Citizens vote. They do not need to be involved in politics. Similarly, corporate citizenship is no more involving than CSR. Engagement, on the other hand suggests that the CEO and others must think about the outside and bring it in. They must be involved. They need to work with others, not do things to or for others.

Tuesday, May 18, 2010

Apple is the New Reputation Leader in Fortune Study

Apple is the new #1 in the Fortune Magazine study of "Most Admired Companies". It seems that Apple continues to delight us and operate above the line of expectations associated with most other electronics companies.

Consider that Apple has so much reservoir of reputation capital that it created lines waiting for the chance to plunk down US$500 to buy the new I-Pod, something few people really understood. In other words, lines were waiting for the chance to pay to see what this new product was. At the same time, no one bothered to pay far less to try out the much touted (by Palm; not by many others) Palm Pre.

Reputations are built by what others say, not what the company says. We are very immune to all the hype companies can generate. It's when other like us get excited that we get excited.

Apple has been so successful that it has managed to commoditize the entire PC industry. It is no longer Apple against HP or Lenovo or Dell. It is now Apple vs. PC. The others seem to lack differentiation. So much so that Apple is able to be priced at twice that of a PC.

Apple will likely disappoint us at some time, but as we have seen with other companies that have excessive amounts of reputation capital stored (J&J and Toyota come to mind), the damage from a mistake will not be as dire as it would be if the company were less admired.

Reputation capital matters. It can carry a company a long way. The I-Pod might not be Apple's finest hour, but go tell that to the consumer of electronics. They still see Apple as king.

Monday, May 17, 2010

Manage Expectations to Manage Reputation

My colleagues at Drexel, Dan Korschun and Trina Larsent Andras, and I are discovering that expectations are where reputations are built, maintained or destroyed. Stakeholders have expectations of both companies and industries that are shaped by their own experiences or by the experiences of others. We used to believe that expectations were related to brands and experience was related to reputation. However, social media has changed that. We are getting more and more of our perspective of companies and brands through social media (more than 85% according to a Razorfish study). "People like us" are our primary influencers. Their views not only shape expectations but can influence whether or not we allow ourselves to actually experience the company or brand directly.

The Kano Model is a good way of observing the influence of expectations. According to Kano, there are standards that customers expect to receive in order to be satisfied. These standards are constantly changing. Above the "line of expectation" are those products and services and companies that "delight" us. Those are the ones with outstanding reputations. Those falling below the line of expectations fall short of our expectations, as does their reputation.

The key to reputation management is to manage the line of expectations. We know that some company will attempt to differentiate. When it does, it could delight stakeholders. This will then change the line of expectations and shift the reputation standards for the category.

Consider that at one time a radio in a car was not expected. It was a delight factor. Now, all cars are expected to have radios. Think about the expectations we have for cell phones and other items we buy. Many of the things we expect were unusual and delighters in the past.

Reputation management, then, is similar to marketing and communications strategy and brand management in that it is competitive and category based. For example, Apple continues to operate above the line of expectations--it continues to delight. BP has fallen far short of expectations for envrionmental and safety issues, thereby dragging its reputation down. In doing this, it also likely has changed the slope of the line of expectations for the entire industry down. Some player in the industry has the ability to delight us by exceeding expectations. Hopefully, it will not need to be after another environmental disaster.

Saturday, May 15, 2010

Can BP Find More Ways to Ruin the Reputation of the Entire Oil Industry?

There is enough finger pointing going on following the Gulf Oil disaster to make everyone cringe. President Obama has finally had it; the public has had it. BP, which at first minimized the situation, has been pointing fingers at the company that operated the platform and at Halliburton, a company whose reputation can not possibly get much worse. No one is taking responsibility, likely because the lawyers have told them not to in an attempt to minimize the legal ramifications.

The problem is that BP is not following the standards of "Crisis 101". They continue to make promises they cannot keep, to talk as if this is not one of the greatest environmental disasters the world has seen, and to shirk responsibility. The CEO even said that BP would take responsibility for "all things that are proven to have been caused by BP". In other words, "read the fine print". The platform--someone else's problem; the pipe--someone else's problem. So, what exactly is BP taking responsibility for?

When a company outsources to others, it still owns the responsibility for the end product. It cannot shirk that. It's partners are its responsibility--perhaps not legally, put certainly in the court of public opinion.

BP is damaging not only itself but also the entire oil industry. The industry has been unbelievably silent during this crisis. When they have spoken it is to suggest that drilling still is needed. They have not seemed to take this disaster to heart and to understand the emotions. They are reinforcing the worst perceptions of the industry.

BP once wanted to be a shining star. Its star has not only dimmed but has gone out and perhaps turned the shine out of the entire sector.

Tuesday, May 11, 2010

Johnson and Johnson's McNeil Labs Tarnishes its Reputation

Johnson & Johnson has been my poster-child for a company with a solid reputation. Since 1982 when it managed itself out of the Tylenol crisis by using its Credo as a guide to doing the right thing, J&J has been my top pick for reputation leader. It lived by its values. Until now.

We are now learning that McNeil Labs, a J&J subsidiary based in Ft. Washington, PA, just outside of Philadelphia, has been under investigation for some time by the FDA for safety violations. Following complaints by customers, McNeil withdrew its consumer products. It has been disclosed that Children's Liquid Tylenol was improperly mixed at the manufacturing level and that kids could have receive more Tylenol than is legally and medically indicated.

Why did it take customers to bring McNeil to action? Why did the FDA not take stronger action sooner?

The second question is the interesting one. J&J has built such a deep reservoir of goodwill and trust over the years that almost no one who knew the company believed that it would do knowingly and willingly do anything wrong. The FDA probably thought that it was following a bad lead--J&J could not be knowingly violating safety regulations. But, it seems that they might have been. Even the stock market continued to vote for J&J. Despite the news, its stock increased in value.

The first question is the shocking one. The fact that McNeil did not alert customers, those who according to its Credo are their #1 responsibility, is absolutely shocking. J&J has let everyone down.

I spoke recently with an employee of J&J who expressed shock and disbelief that the company would not live up to the standards that it had always maintained. The calls to J&J are coming in at a rate of 3,000 per hour and the Internet contacts are just as heavy. All employees are being asked to pitch in to help "man" the phones to answer questions.

One can only wonder what has happened to J&J. Has the company joined those who have cut costs so deep that it has now impacted its ability to function at the level it once did? Has the economy made J&J less focused on the values that made it great and distinct from other healthcare companies in the first place?

As a great fan of J&J, I am thoroughly disappointed. I hope we will learn what went wrong and that we also will see the real J&J emerge. I fear, however, that the company that lived by its Credo in 1982 no longer has the same culture.

Thursday, May 6, 2010

Does GM Really Believe that their Main Problem is Marketing?

GM has been the subject of many business school cases focused on their inability to recognize market changes and adapt their company to meet the challenge of both a new consumer and foreign imports. But, it seems that the new CEO, Ed Whitacre thinks the problems can be fixed with a new marketing chief. He removed chief marketing officer Susan Docherty, who had been put in the position only 5-months ago, and hired Joel Ewanick, who lead a very clever marketing campaign for Hyundai.

GM has been increasing sales but losing market share and Whitacre seems intend to build share back for the company. A great goal. However, I am not sure that I have found anyone who has backed off of buying a GM car because someone else had a more clever ad campaign. Whitacre, who grew up in the telecom industry, seems to think that people choose cars the way they choose wireless plans. This is a guy who continues to live in Texas and has little or no knowledge or understanding of GM or the car industry. He is impatient. Impatience with a company like GM could be expected, but change at GM is hard--it's a huge "battleship" that has been built and reinforced over generations. Change is difficult.

One of the things we always warn students and clients is to not look at other companies and try to imitate their marketing efforts. Imitation is not a strategy. Differentiation is strategy. Ewanick did wonders with Hyundai, but he had a lot to work with. He will have far less to work with at GM. I don't know Docherty and do not know what she did or did not do to warrant this removal, but can you really expect marketing to help sell a car that few people really believe in?

Marketing and branding can do a lot, but the prerequisite is a good product with a value proposition that resonates with the needs and interests of customers. GM does not measure up on either of these counts. Good luck to the new head of marketing. My advice while working for Whitacre--rent, don't buy.

Tuesday, May 4, 2010

United-Continental:The Merger Might Not Be Great for Travelers, but they Got the Branding Right

The announced merger of Continental and United may or may not be great for travelers. Eliminating an airline will certainly not help to lower fares, but it makes good business sense for both airlines.

What I found interesting was the brand strategy employed and I think they got it right. The new airline will be called United, but the logo will be that of Continental. This is a smart move from a number of perspectives. First, it unites (no pun intended) the two organizations and shows everyone that they are united--take the name from one and the logo from the other. Second, the United name is better from a number of perspectives--it stands for unity, which is what the two airlines were after; it is the better known airlines with the more important hub (Chicago versus Newark), and finally, the logo (the Continental world) demonstrates the global nature of the new airline as well as reminding people that Continental was part of the deal. This is important as well, not only for employees but also for customers since Continental has had a better reputation than United.

It is interesting that the new airline has decided to move to be based in Chicago with the CEO of Continental and the new CEO and the CEO of United moving to Chairman. Again, a compromise that works well for both organizations.

About 60-70% of mergers do not work as intended due to culture conflicts between the parties. I am not sure if this will be the case for the new United. Their new ads suggest that things got better for travelers. That I doubt. However, from a branding perspective, I think they got it right.

Sunday, May 2, 2010

Arizona Hurts Brand USA

The United States had been building its reputation around the world during the past year that we were back to being a world leader and not a country that would go it alone without regard for the views of other countries. After years of thumbing our noses at what other countries wanted or thought, we returned to recognize the interconnectedness of the world and also the fact that countries like China, India and Brazil were becoming major players on the world stage and had to be given respect.

With the election of Barack Obama, much of the world stood in awe of the US again. We were a country that elected a black man as president. A country with a history of slavery and bigotry had elected someone who would not have been allowed to eat at a lunch counter or sit in a movie theater 50 years ago. Even in advanced democracies like the UK or Canada or France or Germany, it is virtually unthinkable that a visible minority would win the popular vote for leader. The US was back to being seen as "the shining city on the hill", as Ronald Reagan used to claim. Even our worst critics had to give the US its due. Perhaps the US was a welcoming, pluralistic society that all could admire.

That all came to a screeching halt with the move by Arizona to pass a draconian immigration law that will certainly lead to racial profiling--it is impossible for it not to lead to that since it was aimed exclusively at one group of immigrants--Mexicans. While the law could eventually be struck down by the courts for being unconstitutional on the grounds that it permits improper search and seizure, it has done its damage already.

The Arizona bill sealed the deal. The rest of the world is now convinced that our bout with sanity was an anomaly. We are once again being seen as a bit of a crazy, gun-wielding group of semi-literates. Everyone knew that parts of the US had this tendency, but we always seemed to rebound with people like Lincoln and Roosevelt and Kennedy and even Reagan to convince the world that we were really pretty decent. While I never liked Reagan's politics, I admired the fact that he sought friends on the other-side of the "aisle" and always liked compromise rather than ideology.

The Arizona vote reinforces the most negative views of the US. It breaks the positive brand image we had been creating and pushes us back to a point where much of the world now looks at us as being less democratic than other countries--we are not the leader; we are a "used to be". Our hatred and fear of outsiders could actually ruin this country. Already, Mayor Bloomberg of NY is warning that our immigration laws are not allowing foreign college grads to remain in the US. In the past, we educated foreigners and they remained to build some of the great companies of the world and to discover new scientific breakthroughs that benefit the US first. Now, we are denying visas to these grads, so they are returning to India and China to create great companies there.

America was always great for what it created, but it was even greater because of its intangibles. That's the way with all great brands; the promise of future performance seems unlimited. We want more of it.

We are now seeing stop signs put in front of large segments of the population. This was our history with blacks, but we had tried to put that behind us. This is not the way the modern US was supposed to develop. We were supposed to be the country that welcomed all those who wanted a better life. This was not and should not be our brand image. But, Arizona--and I'm sure a number of other states to follow--is showing the world that we are just as bad as our worst critics feared. I pray that we can find some good soon to trump the bad.