A very interesting series of posts at Force For Good where Jon Harmon considers the implications of a US online initiated crisis involving companies Whole Foods and Wild Oats.
The back story is that the CEO of Whole Foods, John Mackey, has spent several years venomously slating his smaller competitor using an anonymous persona in Yahoo! financial bulletin boards, whilst stalking Wild Oats for a takeover.
[Apparently, this is known as “sock-puppetry”, ie creating a fake identity online and then using that alias to pump up yourself or your endeavors or your company, often while denigrating your rivals.]
Jon’s posts relate to how the seemingly lenient treatment, so far, of Mackey relates to media archetypes of such “ethical brands” as essentially good and so not subject to the same aggressive criticism as would be the case for more traditional “bad business”.
I’ve just finished reading Seth Godin‘s “All Marketers are Liars“, where he presents an argument that relates to the concept of cognitive dissonance, in that we seek harmony in our thinking processes and will lie to ourselves in the face of information that conflicts with our existing views.
Clearly this has resonance here, allowing those who felt positive about the Whole Foods brand to accept Mackey’s “defence” that he was just having fun, often playing “devil’s advocate”, not reflecting any official corporate line (despite being the CEO) and his comments need to be placed in context of discussion and the time they were written.
This has another public relations dimension in terms of the value of corporate reputation in a crisis situation. Building positive relationships and having people think the best of you does buy time to get your house in order and resolve a situation.
Yesterday it was fined £1m for causing a salmonella food poisoning crisis last Summer. It followed the standard crisis management procedure of recalling product and publicly apologising.
The judge in the case seemed to be influenced by the company’s positive reputation accepting that a “badly flawed” change to its testing system was at fault rather than believing claims this was a cost-cutting measure.
But there has invariably been an impact on reputation – a loss of brand equity – and more active publics (which Hitwise UK noticed at the time of last year’s recall).
Beyond the cost of directly managing the crisis, Cadbury has seen its profits fall, job cuts and threats of a private equity takeover. The sharks circle.
It seems amazing that companies fail to recognise the real strategic value of their reputation – stupid actions by CEOs and poor operational procedures are just two examples of self-inflicted wounds that public relations crisis managers are then expected to resolve.
But the old days of apologise and rely on relationships and goodwill seem over. People have more choices and are becoming cynical about see-through apologies or flippant responses.
Cognitive dissonance can easily shift – from denying incoming information that contrasts with our existing goodwill to believing the negative message and forcing a change in perceptions.
Long-established trust is destroyed. Then of course, the dissonance will see positive messages rejected or explained as being false and “spin”.