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.

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.

Will the Recall Damage Toyota's Brand?

I just did several interviews with news channels in the US and Canada on the Toyota recall. One reporter said that he had talked to several "experts" who suggested that the Toyota problems would "inexorably damage their reputation". I could not disagree more. He also said that this same "expert" thought that Lexus would be damaged by this.

First, I am questioning the use of the term "expert" with this person the reporter referenced. Does this person know anything about brand and reputation? Sounds to me like a PR "expert" working for a competitive brand.

If Toyota were a new product, fairly unknown to the public, then damage of this type might do in the brand. However, Toyota has been on the market for a long time and has built expectations amongst consumers that it makes cars with the highest quality and reliability. Certainly, the recall puts a dent in those claims, but it does not damage the brand completely.

When a company continues to exceed expectations, as Toyota has done over the years, it builds up inertia in its brand--what some people call a "halo effect". Problems are judged against this experience level. Usually, in such cases consumers are more forgiving because things like this are extraordinary, not the usual.

What would have inexorably damaged the brand would have been had Toyota refused to withdraw the cars, arguing that the problem was not a problem for most people. Think about what happened with the Bridgestone/Firestone tire problems. The company continued to argue that the problem was not real, despite evidence to the contrary. There was even a lot of finger pointing between Ford and the tire company, since many of the problems occurred on Ford cars, the heaviest user of the tires.

Toyota could have pulled a "Jacques Nasser" (the former CEO of Ford at the time of the Bridgestone/Firestone crisis) and blamed the supplier. It is taking the hit, both reputationally and financially. One must give them kudos for this.

They are taking the first major step toward protecting their brand longer-term. They are demonstrating their commitment to consumer confidence and trust. They also are doing what crisis experts always suggest--get out in front of the issue. I would suspect that they will rebuild their brand upon return to market. Will their entire market share return? Time will tell. Things like this damage the perceived value of claims of quality and reliability and allow competitors to close the gap in those attributes. But, Toyota is a smart company and I would hope that they will come back with something special for their installed base as well as incentives for new potential buyers.

Tiger's Death by a Thousand Cuts

So now the news is that Gillette has decided to stop its advertising with Tiger Woods. It seems that we are now seeing his death by a thousand cuts. My prediction is that others will hold on but start to back off if things continue to deteriorate. Gillette, a men's brand, spun it that they are giving him the time out of the spotlight he needs. It's the time out of the spotlight they need in association with him. You don't give a winning brand time off; that is reserved for question marks. As of this writing, Accenture just announced that they were ending the sponsorship with Woods saying that he no longer represents the type of person with whom they want to associate.

Let's keep in mind that Gillette is owned by Procter & Gamble. P&G has always been protective of its reputation and the primary focus on P&G, other than Gillette, is woman. They position themselves as a family company. It makes sense that they would back off Tiger until they better know where the "wind is blowing". The postured this as being on his side, but they are playing both sides in this one. They step aside from having Tiger associated with them, and for those who support Tiger they can say that it is done for him. Well played, sir!

Companies are very concerned with their reputations. This has not been a good year for corporate reputation, with all indicators of trust at record lows. Companies do not like controversy or to be caught in situations in which they have to defend the actions of another--they have enough problems defending their own actions. Woods now is a problem.

As I have said before, this did not have to be this way. Tiger still has not stepped in front of the cameras. He continues to speak through his website. Who the hell is giving him PR advice? Whoever it is should be ushered into the PR Hall of Shame. This is one of the worst example of handling a crisis I have seen. Tiger is allowing everyone to control this story other than himself. This is not an age when the news media take a quote from someone. This is an era of 24-hour news outlets that need to manufacture the news they cannot get otherwise to attract interest. They are sharks and Tiger is bleeding.

The first rule of a crisis is to take control of the situation, tell the truth, and take the offense rather than the defense. Admit your mistakes publicly, muster a few tears and look contrite. Do something, but stop hiding behind a manufactured, impersonal website. For those who think this is Tiger speaking to us directly through his site, let's get real. He has an entourage and they are hard at work. They are either terrible at their jobs, or he is the worst client they have ever had and refuses to listen to their advice.

While we're at it, can someone please tell David Letterman to stop with the Tiger jokes. He keeps referencing Tiger's problems and associating them with his own. He has a wife at home as well. Cool it, Dave. You came out of this looking like someone taking the high road. Don't go low road and ruin everything for a few laughs.