Monthly Archives: January 2014

Why we need to measure corporate forgivability

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One day before the explosion in 1984, Union Carbide were the friendly guys who brought you the Eveready brand and the Cat with 9 Lives. The NPS would have been pretty good. And pretty useless at measuring the forgivability, or lack of forgivability of the once proud Union Carbide name.

Most organisational and market research measures – the KPIs – are readings of static concepts rather than of processes.

The well trodden NPS measure is a measurement of hope, for example (how many of our customers would recommend us?) but it does little to indicate whether this score might be in danger of imploding.  It is like a measurement of speed, but without the other vital measure on your journey: how full is the tank?  The speedometer and fuel gauge  together measure a process and offer a predictive capability. “At this speed we’re using up too much gas to make it the the destination.”

Here’s another measure: Staff satisfaction. It may be high, it may be low, but the score itself says little of any predictive use.  Thus everybody might be deliriously happy at work (and I hope they are,) but we have no idea from the happiness Index whether they’ll stay happy once the take-over goes through, or when the job cuts are announced.  In fact the measure is pretty useless. It is a thermometer when really it might be more predictive to have some kind of staff barometer which hints at soft or deep changes immediately ahead.

Now brands are measured along similarly useless lines. They’re measured statically but not predictively. We measure the status of the brand, but that gives no feel for whether it is heading toward a cliff; or whether it would survive the fall, even if it did.

When we judge the people around us, we don’t just stop at “he’s a great guy” or “she’s 5 foot 11,” or “she’s a real leader,” we almost always add what I refer to as the moral dimension. “He’s a great guy…BUT I wouldn’t trust him with my money, or “She’s a real leader …AND did you see the way she showed so much respect, even to the people she had to make redundant.”  In other words we don’t just settle for today’s status update, we also tend to throw in the prognosis of how that person will act if they’re put in a conflicted, morally challenging position. We have a “Moral Vocab” with which we assess the likely behaviours of those we judge. Great guy – but morally iffy. Great leader, and puts people first no matter what.

The star term, I reckon, in this Moral Vocabulary is forgivability. It is a useful concept because it accepts that all people will fail at some point, or that all organisations will have their crisis and every brand will have its “New Coke”/”Ford Edsel” moment. They’re bound to. Forgivability measures how people will respond if and when that crisis occurs.

In terms of the resilience of the brand, or the company, the real test is not how you rate when everything goes according the plan – but how quickly you can bounce back if you falter.

To take an obvious case, Tiger Woods was the undisputed star of the golfing world (and still the highest paid athlete in 2013 despite not winning a major tournament.) A typical brand measure, up to the point of his personal and media scandal, would have given him stellar results on, say, an NPS scorecard, or on any other brand index I can think of.

But look how quickly that turned. The moment Woods fell to earth in December 2009 (or should I say, the moment he ran his SUV into a fire hydrant), everything changed. The tank of public goodwill suddenly showed “Less than half full” and sponsors started to walk away. Suddenly the values we valued in this amazing sportsman were reframed and seen in new light. Determination? Or simply arrogance?  Success? Or just runaway greed?  Perfection? Or just a sham facade? Everything that a brand measure might have rated as superb one day was shattered within 24 hours.

Four years later forgiveness has largely occurred. The gallery is generous once more when he makes a great shot, and descriptions of this golfer are laced more with qualifications about his pay check or his climb back to form, than they are about who he has a personal relationship with.

Organisations can rate well in terms of forgivability, or they can rate poorly.  It depends, as it did for Tiger Woods, on the seriousness of the sin and the forgiveability of the sinner.

In my view, Tiger Woods forgivability was undermined by the woeful stage-managed response by his sponsors. Remember those bleak Nike ads where a voice over (supposedly Tiger’s own dad) remonstrated mournfully with our hero? These attempted to package the redemption of Tiger Woods into the space of a 30 second TVC. The ads assumed that with a quick show of humility we’d be swift to forgive the golfing superstar.  Instead the ads gave us evidence that Woods  – he behaved not a man but as a marketing juggernaut – was attempting to media-manage his way out of his mess. It looked merely like insincere spin doctoring. Another sin! And so for weeks the Woods machine kept heaping more fuel onto the fire.

But what of your organisation? It may be sailing along – the speedomoter is reading high, the thermometer reading nice and warm, but what if it made a blunder? It will happen. How will your stakeholders or customers respond?

Apple, that golden child of the business media, has a string of business and product blunders a mile long. But was it forgivable?  Absolutely.  Why? Because the products are cool and because Steve Jobs never really deviated from his vision. The public understood his quest and knew that some failures will litter the pathway to success. No problem.

But post-Jobs, I think the forgivability factor is trending down. Steve’s quest is over and what we perceive is the hulking cash-cow of an organisation he built. The product may be designed in California, but the cash is domiciled wherever the company can avoid tax. Things like that start to reframe Apple not as “one man’s passion” but as just another bloody corporate.  In that light, every new launch looks less like Steve’s marvellous march of innovation, and more like the CFO’s latest plan to sucker the public. You can almost hear Mr Burns from the Simpsons. “A masterstroke Smithers! We’ll do what Microsoft used to do with Windows. Yet our fans will still think we’re the anti-Microsoft!”

Some sins are purely business as normal. Coke really did believe their New Coke formula was a better, more preferred option. They didn’t think things through.

But some sins are simply not forgivable. Union Carbide, that industrial fortress of a company that made Eveready Batteries, and Pesticides and Glad Wrap, was responsible for one of the worst industrial accidents in human history with the Bhopal disaster in India, back in December 1984.

Here was a company that was deliberately trading-off the cost of safety in order to boost profits from its poorly resourced pesticide plant located in a heavily populated area. As a result of an MIC gas explosion an estimated 40,000 individuals were either permanently disabled, maimed, or suffering from serious illness.

That was bad enough. But then after the disaster, Union Carbide tried overtly to avoid culpability or to pay any compensation to the families of the accidents thousands of victims. There was no mea culpa – instead the company fought a legal battle before finally being sued by the Indian Government for US$470 million, 5 years after the disaster. The guts of their defense was was that they weren’t responsible as a company for Bhopal – it was the fault of their employees in India. It was a massive squirm. The head of the company Warren Anderson was never brought to justice in India after the American fled India while on bail, and has since fought extradition from the USA. Today the company no longer owning its flagship brand (Eveready) and is part of the Dow Chemical company who have inherited the mess. In 2010 (25 years after the disaster) eight former executives of Union Carbide India Ltd. were finally found guilty of death by negligence. Dow, themselves burnished by the reputation of their own history with Napalm and Agent Orange are still assisting with the highly toxic Bhopal site cleanup.

Mistakes, blunders and sins can be made by any organisation. But how soon can these organisations recover – how soon can they be forgiven? In a dynamic world researchers need to measure these things. In my next blog I’m going to dissect the elements of forgivability. Get it wrong and your organisation will tread an unnecessarily risky path.

Marketers need to shed some skin in 2014

You are your own brand! Well, sadly, that’s what motivational experts are telling us.

People who know me will know that I feel some disdain for the concept of personal branding. “You are your own brand!” state dozens of personal branding experts, and in so doing they ignore both the inadequacies of branding to convey the rich complex story of who you really are, and they ignore the ugly human history in which slaves were literally branded.

The shallowness, the sheer glibness of the “you are a brand” thinking is revealed all over the place. Sports people after turning in a losing performance no longer kick themselves or admit they played poorly. No, these days they’ll only  admit the lopsided score was “bad for the brand.” Clearly it’s not whether you win or lose, that counts, it’s how you affected the business value of the franchise.

In corporations brand similar summaries are given when management has made a flawed set of decisions, the wrong widgets have been launched, the customers don’t buy them and 10,000 workers are given one month’s notice for a mistake they didn’t make. Up in HQ the conversation goes something like: “Those widgets, gentlemen, they did nothing for our brand.”

That’s one thing that rubs me the wrong way about elevating the importance of the brand so high that people will trade in their own identity in order to be packaged-up. The brand isn’t so important as many marketers think.

The hyper-valuation of company brand-equity began during the hectic years of the 1980s, shortly before the catastrophic 1987 Wall St collapse. Companies with ailing turnover figures and slack marketshare suddenly realised that despite everything, the brand itself had valuable equity. This is true, to an extent. If you measure something like “consideration”  (which brands of new car would you consider?) then brands explain part of the story. They help explain why Toyota might be forgiven the occasional safety recall, or why Skodas may be good cars but will never be even considered by a sizeable chunk of their markets. Not with their East-European legacy.  But the accountants and CFOs forgot something along the way.

The moment accountants started treating Brands as a tangible asset,  things got confusing. You have to treat assets according to certain rules – for example in terms of depreciation, or market value.  But the moment a brand gets given a dollar valuation, other questions such as fit or positioning play second fiddle when it comes to boardroom decisions. The only measure that has clout, really, is the bottom line dollar. So the brand, whatever it stood for, can easily get screwed around by financially focused directors.  When all you see are dollar signs, then any brand value looks like cash.

Reuters in 2010 when reporting the sale of Cadbury to Kraft quoted Felicity Loudon, a fourth-generation member of Cadbury’s founding family. She said she was appalled that the company looked destined to fall to Kraft, predicting jobs would be lost and its chocolate would never taste the same.

“We shouldn’t give up,” she told Reuters. “For a quintessentially, philanthropic iconic brand to sell out to a plastic cheese company — there’s no mix there.”

She has a point, though of course it fell on deaf ears.  Four years later, at least in my market, Cadbury product is still being discounted to hell, to undo some of the damage wrought by that sale. King Size block for block – it is routinely a dollar cheaper than its nearest rival. The problem was, the takeover was measured in dollars and not in any other values.

This seizure of brand valuation by the CFOs and accountants leads me to my main point.Branding itself has become commoditised.

I don’t think this rapid decline in the purpose and nature of brands has been particularly helped by Marketers (who all too often get little representation at boardroom level) or by my own profession Market Researchers who have watched on, with little reaction or understanding,  as the dynamics of corporate decision making have changed. The things we used to champion (brands, ideas, packaging, product concepts) have been grabbed and redefined by the finance boys. (And a few finance girls too.)

So they talk about things being good for the brand, or bad for the brand, yet they appoint underpowered Brand Managers who prescribe undercooked, old-fashioned brand research that belongs to the 1950s. Good for the brand?

Today’s market place, meanwhile, is being liberally peppered by stories of unknown start-ups that have taken on the big brands and are aggressively eating into the stalwart’s marketshare. The sticker-value on the old brands prove poor defense against products with better ideas.

If you accept that the concept of branding is under siege – and I’m sure a heap of readers will disagree – then the prescription is to get under the burned skin of branding, and start examining more closely the heart values that dwell below. These days my marketing language is more apt to be enriched with talk about “forgiveness” and “resilience” and other words that refer not to the bottom-line but to the human condition.

I also think modern history is on my side. Since 2008 there has been a rapid lift in the conversation about the wealth gap, about poverty, about massive corporate tax evasion, about 3rd world exploitation and about sustainability.  In my view the ice is getting mighty thin for organisations that measure shareholder return as if it’s the only thing matters.

As I tell the personal branding experts. I am not a brand: I am Spartacus.