Monthly Archives: March 2011
Wal-Mart and Crises
March 28, 2011
This Tuesday, the Supreme Court will hear the case of Dukes v. Wal-Mart, a class action lawsuit regarding alleged discrimination by the world’s largest retailer against women in regard to pay and promotion.
The case has potentially huge ramifications for class action lawsuits, equality in the workplace and Wal-Mart’s reputation. As the Bentonville behemoth deals with the media blitz surrounding the case, one is reminded that on any given day, Wal-Mart is likely dealing with a crisis somewhere in the world. From citing its superstores to consistent issues about how it treats its people, suppliers and the small businesses in its communities, Wal-Mart bashing is a popular sport. And that doesn’t even take into account the usual lists of employees behaving badly, product/service troubles and legislative/regulatory matters, and the minor acts of God that any major multinational must deal with.
Perhaps it is having to be on an almost constant crisis footing that has helped Wal-Mart set the standard for dealing with a major natural disaster. Its comprehensive and well coordinated response to Hurricane Katrina made FEMA seem downright amateurish, leading many to conclude that the Federal and State governments could learn a lot from Wal-Mart on how to prepare and deal with the next big one. The Suburban Emergency Management Project provides an incisive review of the breadth and scope of Wal-Mart emergency preparedness resources, procedures and personnel along with the actions it took before, during and after Katrina.
The devastating earthquake and tsunami in Japan, showed that Wal-Mart can do crisis response on a global scale. As The Wall Street Journal points out in a fascinating article, Wal-Mart’s Arkansas-based emergency response team quickly sprang into action after the quake struck and coordinated with its operations in Hong Kong and leadership in Japan to issue alerts and updates to employees, seek accounts on the safety of all its employees and begin distributing relief supplies at its stores and myriad locations across Japan. The WSJ story also shows the diligence and creativity of Wal-Mart employees throughout Japan, the region and back in the US in delivering relief, disseminating information and ascertaining the well-being of its employees.
While few companies have the need or capabilities to build the crisis response infrastructure of Wal-Mart, all organizations should look at how the folks from Bentonville do it to understand the importance of being prepared with the right plan, tested procedures and dedicated people in place to manage a crisis. As Wal-Mart knows, your business and reputation depend on it.
Does a reputation for harassment sell T-shirts?
March 25, 2011
The CEO of American Apparel, the teen oriented retailer known for its affordable basics like T-shirts and leggings, has been named in a second sexual harassment suit. Over the course of my career, I’ve had the privilege of working with some of America’s top retailers – including several who target the teen market…and many of them have a culture that I would describe as “flirty” – they cater to high school kids, and want the cutest and coolest high school kids to work in their stores. In fact, an iconic founder of a now defunct teen retailer told me (back when I was in my 20s) that for a “pretty young girl” I dressed “very uptight.” He was a media training challenge, that’s for sure!
Based on Dov Charney’s own words, this is a case where a flirty culture crosses the line. He admits to dating his employees, has out of town employees sleep at his house, and was photographed on his bed with two female employees for an ad. The fact that every employee has to sign a waiver upon being hired seems like a red flag in my book.
I’m not sure if they think this contributes to their “mystique” – although that would be a tough case to make given their recent performance and their under a buck stock price. As a mom of a teenaged girl, I asked whether they thought this was “cool” — the answer: “Eeeeew, why would anyone want to date an old man?”
Seems like a flawed strategy.
Battle of the Bankruptcy Filing
March 24, 2011
The New York Times DealBook this week has an interesting piece about Congress looking anew at tightening the rules on where Companies can file for bankruptcy and how much, if at all, venue matters to the process and outcome of a Chapter 11 case.
As a team who has provided comprehensive communications strategies and execution for scores of debtors, MWW took a quick poll of some bankruptcy lawyers we know to understand their view about the perception issues of filing in one place versus another.
Here’s what they had to say:
While bankruptcy judges in “local” venues are often equally erudite on interpreting the U.S. Bankruptcy Code and are often former bankruptcy lawyers themselves, clients often feel that there is less risk to filing in New York or Delaware. Why? Because if a case filed in the company’s hometown doesn’t go as well as planned, there will be plenty of Monday-morning quarterbacking that questions the decision not to go to New York or Delaware. Defaulting to tried-and-true jurisdictions is an easy call. Taking what is perceived to be a risk is harder to justify if things go awry.
New York and Delaware are also used to handling mega cases, which means that whole cottage industries have developed to support these massive endeavors. Hotels, ready-to-rent office space, administrative support and catering, just to name a few. These are real dollars brought into the economy, especially in Delaware.
Delaware courts in particular also hear a great deal of “cutting-edge” litigation from the Wall Street financial avant-garde that may factor into bankruptcy cases. We’ve sat in on some very intellectual discussions of what does or does not constitute a “Material Adverse Effect” that goes to the very heart of M&A between sponsor companies and their targets.
On the flip side, of course, are perceptions that local judges feel compelled to support their hometown corporations, like those in say, Chicago or Detroit, especially when thousands of jobs are at stake. Judges are people, after all, who also read all the newspapers and see the broadcasts about how damaging the loss of another big-time employer will be to the very cities in which they live. Chapter 7 liquidations are relatively rare, although increasing in recent years due to scarce debtor-in-possession financing. But they can be ugly.
By the way, in case you’re wondering why so many companies incorporate in Delaware but have no operations there, here’s what the Chancery court has to say:
“Businesses choose Delaware not for one single reason, but because we provide a complete package of incorporations services. The Delaware General Corporation Law is the most advanced and flexible business formation statute in the nation. The Delaware Court of Chancery is a unique 215-year-old business court that has written most of the modern U.S. corporation case law. Delaware’s State Government is business-friendly and accessible. Our Division of Corporation is a model state-of-the-art efficiency and our staff provides prompt, friendly and professional service to clients, attorneys, registered agents and others. These factors have all contributed to making Delaware a premier legal home to companies around the world.”
Our friends in Delaware are betting, or perhaps just hoping, that this current legislative gambit fades away just like similar efforts in Congress over the last decade. But the consensus is that the proposal currently before Congress actually has a chance of passing this time around. The two Delaware Senators who weighed in on this before are no longer on the Judiciary Committee to block the measure, although the newly elected Democrat from Delaware is, along with a veteran from New York. Stay tuned for more developments.
March 22, 2011
Can Leadership be Google-ized?
March 18, 2011
Google is an organization at a crossroads. Like most tech darlings, they began with a game-changing outward focus, grew exponentially, and suddenly found the world had changed due to the rise of a new darling. No longer trendy, Google quickly found itself as the tech version of a pashmina – you still love ‘em, and use ‘em, but you sort of take them for granted.
Google’s solution? Look inward. Take Google’s famous, analytical, algorithmed expertise inward in an effort to grow better managers, and create a culture that will work for the larger, more mature organization. They’ve identified the 8 qualities they need in their leaders, ranked them and implemented quarterly reviews to see how their managers are performing.
One great take-away – we often give our employees a long list of what is important, with no prioritization….faced with too many things to think about, they become paralyzed. This is why so many culture initiatives suffer from “organ rejection” in the organization. At Google, they were placing the greatest value for leaders on the quality that employees valued the least – technical, code-writing expertise. The moral of that story – even engineers want someone who will talk to them.
But can people be algorithmed? In an engineering-centric organization full of analytical thinkers like Google, the answer may be yes. And I think all leaders appreciate clarity around how they will be judged, and a road map to success. And leadership transitions are a good time to look at culture – you are presented with an opportunity to refresh the organization’s priorities and common goals.
Will it be enough to get Google out-innovating the market again, providing growth in its mature business? If Google had the algorithm for that, we wouldn’t be reading about their leadership initiatives…we’d be reading about their new, game changing innovations.
Lady Gaga Puts Target Back in the Hot Seat
March 17, 2011
Just when they thought it was safe to go back into the water….the ramifications of their political donations are front and center for Target, everyone’s favorite frugalista destination. Target has followed all the rules – they’ve apologized, they’ve created a donation oversight committee. Yet they just can’t seem to shake this monkey off their back.
What should they do? This article from Diversity Inc. is full of the sort of pro-forma advice you’d expect. But scroll down into the comments section, and there is a great idea from a customer.
Target gives 5 percent of its profits to the community. If the Gay and Lesbian community is 10 percent of the population, he wants 10 percent of that 5 percent to go to gay and lesbian causes.
Now I am sure someone at the Minneapolis headquarters is concerned that doing this might alienate their conservative shoppers, particularly in certain markets. So the key is finding the right beneficiary. How about God’s Love We Deliver – a charity that delivers hot meals to AIDS patients? Or the Anti-Bullying Program “It Gets Better” which includes support for gay and lesbian teens subject to bullying at school and features Adam Lambert as their spokesperson? (And with Target’s focus on the Mom-sector, anti-bullying could be a great cause for them.)
Lady Gaga wants action, not words. And so do many of Target’s customers. Maybe it is time to write some new rules, rather than just follow the same old playbook.
HP Bets on Relevance vs. Leadership
March 15, 2011
I read this piece about the great unveiling of HP’s strategy with anticipation – and it turned out to be a pretty big yawn. In a nutshell, they plan to sell new services to their existing clients, enter the Cloud arena and create apps and websites to buy them.
Many have expected HP to move into software and services, based on the selection of a new CEO with that background, and driven by a need to improve margins. And the app store concept is a bit of an unexpected twist. But none of these things scream innovation, the way we expect a technology giant to scream innovation.
Which begs the question – can a reputational leader be a “fast follower” (or in this case, not so fast follower) and still be a leader? If they are comfortable with being “A” leader versus “THE” leader and they are relevant enough, the answer is yes. When I think about the heyday of HP, I think about relevance – not innovation. The world was rapidly migrating to digital photography, and HP printers were there. Were they the best photo printers? Who knows….but I associate them with photo printing…at a time when that was a super-relevant topic.
Dunkin’ Donuts let Starbucks innovate and build a market – and now they are selling lots of coffee. Barnes & Noble’s Nook sold 2 million units and has secured a 25 percent market share of e-readers. Aviation, automotive and beverage manufacturers are always following each other. These companies have built extremely successful businesses on the strategy of following the leader because they have made themselves highly relevant to their constituencies.
It’s great to be the leader. But the key to being a successful challenger is relevance.
NPR – Not Considering All Things
March 10, 2011
While Congressional Republicans are launching a full out assault on the $340 million in federal funding for the Corporation for Public Broadcasting, the folks over at National Public Radio (NPR) seem to be doing their best to help the GOP make its case. At a time when the conservative media furor over last fall’s firing of Juan Williams by NPR was becoming a distant memory, a new imbroglio erupted thanks to comments from the organization’s head fund raiser, Rob Schiller.
Mr. Schiller has famously joined the list of those punked by conservative prankster and videographer, James O’Keefe. In a meeting with faux Arab business leaders staged by O’Keefe, Schiller engages in a fund raising pitch diatribe which disparages Republicans, tea party members and Jews. Already a smash hit on the Internet and cable news, the video has cost Mr. Schiller his job as well as that of NPR President and CEO, Vivian Schiller.
This latest incident has not only caused the Schillers (not related) to lose their jobs, it has significantly damaged the reputation of NPR at a time the Corporation for Public Broadcasting’s federal funding lies in the balance. The video also has breathed new life into the Juan William’s saga and given NPR opponents a double barreled opportunity to blast the organization for a liberal bias in its outlook and reporting. For O’Keefe, it has provided another 15 minutes of fame and a rebound from some previous missteps.
The lessons here are that all of an organization’s people are brand ambassadors and that particularly in this interconnected digital age, everything they say and do can and will be held against them and their employers. Gotcha journalism has moved from the Mike Wallace/60 Minutes ambush interview and hidden camera exposures to citizen activists/journalists staging elaborate if not ingenious ploys to embarrass their targets and damage reputations and then take the evidence viral. Corporations, non-profits and others need to take into account this new dynamic and deliver the appropriate note of caution for both public and private conversations. It is also a non-partisan game as Wisconsin Governor Scott Walker recently got the treatment with a staged phone call he thought was with conservative patron David Koch, but instead was a liberal satirist.
NPR is now engaging in feverish damage control and doing many of the right things to mitigate the damage to its reputation. Yet, Mr. Schiller, who also speculated in the tape that the Corporation for Public Broadcasting didn’t need federal dollars, may see his words come true.
CSR’s Back to the Future
March 10, 2011
We’ve all heard the sound bites about the importance of CSR…that doing good is good for business. And the trend to align CSR with the core business and operations of your organization has become increasingly common. And while doing that good, Companies are creating jobs, sustaining communities, and sometimes, even solving major global problems. The most innovative organizations deploy their unique resources toward solving mega-problems…with Google.org’s original mission as an ultimate example. Toyota’s Ideas for Good campaign, which I’ve blogged about before, is a creative example of the use of intellectual property to do good things outside the business.
But maybe the future of CSR will be simpler, smaller and more “back to the future.” Take the example of Pepsi’s support of local farmers, purchasing corn for Central America manufacturing locally – eliminating the middle man and creating economic and operational efficiency for the company while having a dramatic positive impact on the local economies by guaranteeing farmers a price upfront.
This reminds me of the iconic business that built America. Milton Hershey chose his Pennsylvania location to be close to the dairy supply necessary to manufacture milk chocolate. He later built a hospital to provide jobs during the Depression, and serve the community’s healthcare needs. The Big Steel families located factories near the rivers of the Lehigh Valley because they needed water sources to operate. These were basic business decisions that built economies and communities.
When businesses can serve a basic need of a community – and in the process, create a market for their products, that is exactly the kind of sustainability that the CSR experts talk about as the holy grail. CSR? Or just smart business decisions? And does it even matter?