Archive for the ‘Crisis Management’ category

Tonight May Be A Turning Point in Television History

March 7, 2010

ABC-Disney followed through with its threat tonight by pulling the New York-area WABC-TV from Cablevision after it failed to reach a re-transmission agreement with the cable giant.  Some 3 million Cablevision customers in Long Island, Westchester, Brooklyn, and parts of Connecticut and New Jersey were affected.

The two corporate giants are playing a giant game of chicken on Oscar night. If no one blinks, several million people will not be able to see the Oscars tonight.

Regardless of who wins this battle, both companies may lose more than they ever considered. Let’s talk about the unintended consequences.

If people decide they really, really, really want to watch this very popular television event, they may turn to the web and seek the tens, perhaps hundreds of sites, who will be streaming the Oscars over the web. Several million people may learn tonight that they can watch their favorite shows just as easily over the Internet — without paying for it.

If that occurs, Cablevision and ABC-Disney may have educated millions that their companies are not required to deliver home entertainment. And if that happens, the two companies may learn about unintended consequences in a way that they have never intended.

I know I’ll be tuning in to see who is the real winner on Oscar night.

How NOT to Apologize

January 14, 2010

Earlier this week, Mark McGwire “came clean” on his use of steroids. Among the analyses that I read, one noted how major league baseball was getting quite good at learning how to apologize. It’s even become somewhat of a formula.

First, you issue a press release. Then you arrange a sitdown interview with a favorably inclined organization such as MLB Network – although you should have an accomplish journalist interview you. After that, make yourself available to some media outlets to answer questions. When that is all complete, have a couple of interested parties laud you for stepping forwrad. Presto! You’re done and everyone will allow you to move on with your life.

Only problem — the public is not responding favorably at all — which leads us to thinking about why this is so.

A closer examination of McGwire’s apology statement offers some lessons for all of us in how to apologize.

  1. “Now that I have become the hitting coach for the St. Louis Cardinals, I have the chance to do something that I wish I was able to do five years ago.” Apologize because it is the right thing to do not because you are afraid of the consequences. Try not to make your apology self serving. Sincerity and motivation are important.
  2. Looking back, I wish I had never played during the steroid era.” Got it…shame on the era for forcing me to take steroids. Take responsibility.
  3. “During the mid-90s, I went on the DL seven times and missed 228 games over five years. Don’t load up your apology with statistics. It makes it look like the statement was written by a third party and not you.
  4. I experienced a lot of injuries, including a rib cage strain, a torn left heel muscle, a stress fracture of the left heel, and a torn right heel muscle. It was definitely a miserable bunch of years and I told myself that steroids could help me recover faster. I thought they would help me heal and prevent injuries too.” Alot of other players were hurt and they chose to stay within the rules. Eliminate the rationalization. Don’t make excuses.
  5. I’m sure people will wonder if I could have hit all those home runs had I never taken steroids. I had good years when I didn’t take any and I had bad years when I didn’t take any. I had good years when I took steroids and I had bad years when I took steroids.” Still, Mark, everyone seems to think that steroids makes players better hitters. Don’t minimize or ignore the impact of your transgression.
  6. “Baseball is really different now – it’s been cleaned up. The Commissioner and the Players Association implemented testing and they cracked down, and I’m glad they did.” Hard to tell if you are glad they cleaned it up or glad that they waited until you left the game. Don’t kiss up.

Here’s perhaps a more effective apology built on acknowledging, apologizing and doing something constructive about it.

I cheated. I let you down. I was wrong. I’m really sorry.

And here’s what I’m going to do about it. I’m going to speak to high school and college kids and pour my own money into getting kids to know cheating is wrong and steroids are dangerous.

It’s the least I can do…and I’m open to any other suggestions you might have as to how I can make amends for what I have done.

Now that would be an apology…


Trends that You Should Worry About…

January 1, 2010

Lately, I have been “heads down” more than ever working with companies on redefining their strategies. In these conversations, I am often asked what surprises me the most. Here are a few observations.

The biggest surprise to me has been the pace at which whole industries have begun to disappear. As fast as one charts the list, another one needs to be added. The postal service, newspaper and magazine publishing, television, and retail stores are just a few.

Last week, I went into a high end department store to buy a present for a newly engaged couple. I went to the registry and met with the manager. She told me that 80% of the gifts for a couple is now purchased on line. This is good news for the retailer because it can pay less commission, as there is no sales rep involved in the purchasing transaction.

What was shocking to me was that manager told me that when an item is returned to the store, it gets applied as a negative sale to her commission. She is running harder just to stay in place. And the store is comfortable making her role obsolete.

Another recent trend that I find fascinating is the increasing need to create engines as opposed to creating businesses. Zappos is a great illustration of this process done well.

Zappos had become an Internet business legend, so to speak, for its ability to sell footwear. Its use of social media to promote and service its business is very well known.

In July, Amazon announced its intention to purchase Zappos. The deal closed in November.

Today, less than two months later, Zappos has transformed itself into a clothing site. The engine that it has designed and the practices that it has implemented are being used to allow it to enter a whole other segment of the clothing industry.

What does all this mean to you?

For starters, if you have been doing business in a traditional way, start rethinking your business model because your next competitor can come from anywhere.

The Real Risk in Risk Management

November 25, 2009

It’s not uncommon to find businesses all over this country talking about the impact the current economic environment is having on their operations.

Just yesterday, I was speaking with my good friend, John Fodera. John is a partner in Eisner, LLP’s audit and risk management services group. He spends his days discovering how to reduce risk and streamline operations, while making sure that his clients remain compliant with regulations a diverse as labor law to SEC requirements. Not surprisingly, he hears about the impact of the recession all of the time.

As our discussion progressed, it became apparent that John brings some fresh thinking to these conversations. One of the thoughts that we shared is that cutting staff is not always the best way to deal with a slowdown in business.

John explained that the “knee-jerk” reaction is always to reduce costs and sometimes this is truly appropriate. But, like any other challenge, there are always opportunities.

When companies are concerned about business, they are more apt to rethink the way that they approach the marketplace. Leadership will also find that staff will be more open to trying new approaches. This is typical when the risk of remaining with the status quo exceeds the risk of trying new things.

Reaching out to existing customers and discovering and sometimes re-discovering what is valued in one’s offerings – and what isn’t – can change what is being sold and how it is being presented to other potential clients.

When something is not valued, often, the cost associated with adding and delivering that capability can be stripped out. Suddenly, the product may actually be more valuable because a level of complexity is removed and the cost associated with developing, selling, delivering it and training others has been reduced. Out of such discussions, many competitive advantages and opportunities are born.

And in an age where technology is changing as rapidly as it is, an economic downturn can provide the impetus to create new ways to produce meaningful value.

As John would probably tell you, the real risk is when you are not rethinking your business.  But don’t take his word for it.

Just ask the people running the newspaper industry and the postal service.

Dealing with Unexpected Consequences and Seth Godin

October 2, 2009

So how does, one deal with unintended consequences?

Honestly and quickly.

As part of my explanation, I will begin by telling you that I am a fan of Seth Godin. He considers himself a marketer and entrepreneur and agent of change. What I love most about him is that he makes me think.

Godin recently launched Brands in Public. His company, Squidoo, was going to set up a place that would aggregate content from around the Web, highlighting the good and informing of the bad, while letting the companies respond to the feedback. Not a bad idea – and his business model for doing this would result in annual payments from each of these companies totaling about $5,000.

The criticism came due to Godin’s decision to actively set up 200 of these ‘Brands In Public’ lenses (consider a “lense” like a location or site) before launch without the consent of the companies involved. The companies would be locked out of the lenses until they decided to sign up and pay up for the almost $5,000 a year service. At which time the lens would be unlocked. Some called it brandjacking, with online branding effectively taken hostage with a price on its head for release.

Needless to say the reaction to the model and its implementation was harsh.

However, Godin’s response was swift.

In his daily blog post, two days after launch, he wrote:

The response from the brands we’ve shared it with has been terrific, but other people didn’t like elements of it. And they were direct in letting me know.

The goal of the program is to invite brands into the conversation that’s already going on around the web, to make it easy for them to do it on their terms. I talked with a brand manager yesterday who explained that this is exactly what he’s been trying to do for his company, but the corporate website systems make that difficult for him. We want to open the door and to permit large brands a way to get started without having to roll their own solution.

One way we tried to encourage that was to build 200 sample pages, pages brands could adopt. Alas, some people felt that this was inappropriate, so we’ve recalibrated and we’ll take those pages down before the end of the day.

When a brand wants a page, we’ll build it, they’ll run it and we’ll both have achieved our goals.

Part of the magic of the web is that you can adjust as you go, particularly if you’re willing to listen.

I apologize if anyone was confused by my original post, and we’re looking forward to having major brands and non-profits using this tool the way we intended–to join in to the conversation that’s already happening all around us. Thanks as always for reading.

Putting aside the questions of whether Godin’s idea and implementation were appropriate, he does get points for addressing the problem honestly and in a hurry and that, I think, earns him the right to try again.

* * * * *

As to my post the other day about my recent experience with Continental Airlines, I received this response from Continental’s Customer Service Manager, Denise Epstein.

Your letter has brought up several very valid points. These are consequences that I have pondered, however, you have put them in words in a thoughtful and straightforward manner.

I will include your letter with the original complaint that was filed on your behalf. This includes your contact information if our management team needs to contact you.

I’ll let you know if it goes any further…

Scarcity: For Marketers, Less is More

July 6, 2009

When Joni Mitchell wrote “Big Yellow Taxi” and the expressive lyric, “Don’t it always seem as though you don’t know what you’ve got ‘til it’s gone?” she may have been onto something.

The last of Prof. Cialdini’s weapons of influence centers on scarcity or, as he explains it, the increase in the appeal of an opportunity when it appears that it will soon become unavailable. This lure is evident in the actions of those who put a telephone conversation on hold when another phone line rings simply because of the fear that the chance to hear information might be lost or the possibility to speak to that person if that call is not taken.

In fact, the thought of “losing” something over winning something is typically more appealing and interesting. More people insulate homes because of the “money that they could lose” rather than the money that they could save.

Consider the language of marketers who tell us that “only a limited number” are available or that you should hurry because “a sale ends Sunday.” Scarcity has a tendency to make items more valuable in our eyes. This is because we understand that those items that are difficult to possess are typically better than those that are easy to possess. This concept is more often than not a true one. The second factor that weighs in that we hate to lose “freedoms” – that is whenever free choice is limited, the need to retain our freedoms makes us desire them more.

Cialdini engages the reader in a very interesting discussion of the behaviorists’ view of Romeo and Juliet. Was this a case of young and pure love or rather was the intensity of the love heightened because of the extraordinary obstacles that the Montague and Capulet families placed in the path of these young lovers and therefore infringed on their freedoms? Or to use a biblical example, did Adam and Eve desire the apple more because it offered enlightenment and knowledge or because it was “one of a kind” and prohibited?

The Iranian election and the management of its outcome by its supreme leader may be an additional event worth studying through the prism of scarcity. Did the current leadership fan the flames of revolt by making opposition information scarce (and more believable because exclusive information is more persuasive) and by reducing freedoms while creating obstacles? And conversely, can groups pretend that information is restricted so as to align others with their perspectives? If this interpretation of Cialdini’s thinking is correct – and he does acknowledge that this concept applies to information and censorship as well – there are tremendous implications for the way governments manage conflict and companies manage information flow.

There are a number of corollaries to our scarcity weapon of influence. The first is that scarcity has greater impact when people have a taste of abundance and then have that abundance replaced with scarcity. Cialdini cites the glasnost era led by Gorbachev followed by a crackdown. The Soviet people chafed at the loss of freedoms and fought more strenuously to keep the freedoms that were already experienced during the Gorbachev regime.

The second corollary is that scarcity is made more impactful when there is competition for a good or service. Imagine for a moment, those department store sales where certain goods are only available between certain hours and the panic that ensues within the store. These sales are designed to foment both scarcity and competition and force a buying decision.

So how does one control the strong emotional pull of scarcity? First, we need to recognize the heightened sense of arousal that comes with scarcity. Then, knowing that we are now engaged at this level, we must separate the use we have for the item from the desire to acquire it. By its very nature, scarcity is about possession and not utility. Distinguishing the two will allow us to behave more rationally.

It is important to recognize that all of the weapons highlighted in “Influence: The Psychology of Persuasion” will become more pervasive simple because of the overwhelming information available to and thrust upon us. We are truly information overloaded and it is imperative that we recognize when gut reactions cause our behaviors. Where Cialdini has done us a great service is by “pulling the curtain back” so that we may more effectively recognize manipulation, and combat it.


Follow

Get every new post delivered to your Inbox.

%d bloggers like this: