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Friday, April 30, 2010

CLASH OF SPONSORS IN MEMPHIS

You would think the Professional Golf Association (PGA) has had enough of controversy, what with Tiger this and Tiger that.

So making a tempest out of a teapot would seem to be against the PGA brand's interest. But that's just what happened when the St. Jude Classic in Memphis, TN initially barred British golfer Lee Westwood from participating in early June because he sports a small UPS logo on his shirt among several others. Westwood is currently the number 4 ranked golfer on the PGA tour.

Memphis is the headquarters home town of UPS rival FedEx, a tournament sponsor. The clash of rival sponsors apparently drove St. Jude tournament director Phil Cannon to un-invite Westwood, who planned to use the Classic as a tune-up for the upcoming US Open. Cannon's for-the-record explanation? "One of [Westwood's] sponsors gives us a little concern. Brown trucks [a reference to the UPS logo image] aren't welcome on-site."

Cannon’s decision brought a sharp retort from Chubby Chandler, the head of player rep colossus International Sports Management and Westwood's agent, who presumed Cannon was responding to pressure from FedEx: "It's a good job every sponsor doesn't behave like that. It’' irritating and quite pathetic," Chandler said. "All because of one little UPS on his shirt. It's not even on his head."

The British sports press had a field day with the controversy and the St. Jude Classic organizers have since backed down and issued Westwood a belated invitation.

We believe Cannons initial decision flies against communications and reputation management logic on several fronts:

• Either St. Jude's Classic officials didn't think through the consequences of the snub – dumb. Or they did think about it and came to the wrong conclusion - dumber.

• For FedEx, the brou-ha-ha unnecessarily draws more attention rather than less to Westwood's small UPS logo. We predict the golf press will bring the issue up in June when the tournament starts.

• Whether or not FedEx encouraged the initial decision, the company appears petty over what should be a minor concern. It's not as if the Washington Redskins sold UPS a display at the Redskins home stadium -- FedEx Field.

• It unnecessarily sullies the PGA by association with FedEx's creation of clash of sponsors controversy.

• St. Jude's is a renowned charitable organization and is now caught up as playing favorites in a corporate world. Donors don't like charities taking sides like this.

Protecting a brand and an investment in a sponsorship is an essential part of any organization's communications and crisis planning. But sometimes you score a double bogey by trying too hard when you should have settled for par.

What do you think? Did FedEx and the St. Jude Classic have the right to bar Westwood. Did they at least respond appropriately to protect their longstanding sponsor relationship? Does the initial decision to bar Westwood reflect on the St. Jude Classic, FedEx, the PGA, or all of them?

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Thursday, April 15, 2010

Toyota and Tiger - mid course Crisis updates

Tiger played golf and kept the focus on the links. Toyota hit another bump with another quality problem.

The crises for Tiger Woods and the Toyota brands are far from over. Both icons have slightly improved reputations in the past couple of weeks. But the path to return to a stellar reputation is never a straight shot and is only as successful as those involved keep their focus and commitment to improvement.

Tiger Woods is right now the easier story. He showed up at the Masters tournament. He did actually answer questions. Before the tournament he took a pretty strong broadside from a Masters official who decided he needed to lecture Tiger on his indiscretions. (Keep in mind this ethical discourse came from a club member that has had its own issues with not admitting people of color or women). Tiger played pretty good golf (very good for almost anyone else and actually pretty good for even his standards). More important for his reputation, the stories were mostly about his golf game, not his personal problems. By finishing among the leaders, he had a pretty good payday. And he didn't add any more ammunition to his detractors. Yet one tournament does not mean he will not stray down the path of bad behavior. I believe it will take several tournaments - whether he wins or not - to see if he is keeping his word and whether sponsors come back.

Toyota has been slowly coming restoring its business, but probably taking one step back for every 1.5 steps forward. Last week, the US Government announced it would seek the largest possible fine from the company related to its safety and reporting violations. And this week, the company decided to stop selling its Lexus GX 460 SUV because of a Consumer Reports article that pinned a "Don’t Buy" status on the vehicle due to a handling problem that road tests show increases the chances of a vehicle rollover.

On the plus side, Toyota sales have skyrocketed due to very, very aggressive pricing to regain market share. Toyota loyalists and bargain hunters and voting with their pocketbooks and suggesting that their new vehicles won't have safety or quality problems - or if so, the company will fix them right away.

Toyota has also stepped up advertising to demonstrate commitment to fixing the problems. And it is within its rights to challenge any and every claim that it believes can't be substantiated as a vehicle problem.

The Toyota issues have settled into a longer running crisis - somewhere between a simmer and a boil. It's not daily news, but two to three times a week. Expect attorney-fed stories in the press. Some will contain new facts, others will be efforts to recruit plaintiffs. Regulators who believe there were serious safety problems that might have been neglected or covered up, will continue their inquests. And the media will continue to probe for the "who knew what when…"

See the Wall St. Journal effort to get at the feud between Toyota family leaders and non-family executives WSJ.

It will be quite a while before either Tiger or Toyota will be able to let out the cathartic sigh of relief.

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Thursday, April 8, 2010

The West Virginia Mining Disaster: A CEO's Response

So far the responses from the Massey Energy Company related to the tragedy at the Upper Big Branch coal mine in West Virginia play right into the media's need for winners and losers/victims and villains and will keep the issue in play longer. Massey CEO Don Blankenship has been combative at the least:

- "Violations are unfortunately a normal part of the mining process," Mr. Blankenship recently told reporters. "There are violations at every coal mine in America, and U.B.B. was a mine that had violations," he added, referring to Upper Big Branch. "I think the fact that MSHA, the state and our fire bosses and the best engineers that you can find were all in and around this mine, and all believed it to be safe in the circumstances it was in, speaks for itself as far as any suspicion that the mine was improperly operated," Mr. Blankenship said.

- Blankenship's "shoot from the hip" style has previously created a strong perception that his and his firm's commitment to safety is secondary to profits. After a 2006 mine fire that killed two workers, Blankenship sent the following memo to his superintendents: "If any of you have been asked by your group presidents, your supervisors, engineers or anyone else to do anything other than run coal (i.e., build overcasts, do construction jobs, or whatever), you need to ignore them and run coal," said the memo. "This memo is necessary only because we seem not to understand that coal pays the bills." In a follow-up memo a week later, Mr. Blankenship backtracked, saying some superintendents might have interpreted his first memo as implying that safety was a secondary consideration; in the second memo he called safety the company's "first responsibility."

- Escorted by at least a dozen state and other police officers on Tuesday, according to several witnesses, Mr. Blankenship prepared to address a crowd of families and mineworkers, but people yelled at him for caring more about profits than miners' lives. After another Massey official informed the crowd of the new death toll, one miner threw a chair.

At CommCore Consulting Group we tell our clients that one of the first rules of crisis communications after a fatal or injurious incident is to quickly, publicly and visibly express sincere concern for the dead, injured, their families and their co-workers, and take concrete and substantive steps to alleviate their suffering. The business and legal aspects of the response will follow in due course. The CEO sets the tone through his or her external and internal communications. Media statements like Blankenship's are also bound to attract further scrutiny from regulators, prosecutors and plaintiff attorneys.

Former Exxon CEO Lawrence Rawl, a combative oilman with a tough, craggy physical presence, is often cited as a textbook case of how NOT to respond to a crisis after the Exxon Valdez oil spill in 1987; he waited six days to make his first public statement, did not visit the scene of the accident until three weeks after, and appeared unconcerned. The spill itself was not the world's worst, but took on the public dimensions of such largely because of the company's slow response to TV images of oil-covered birds and damaged fisheries.

What do you think of Blankenship's crisis response as reported by the media? Do you perceive him as pragmatic, standing up for his company and his industry during tough economic times when coal and the dirty work required to produce it are of paramount importance? Or do you perceive him as unnecessarily insensitive and ruthless, and causing himself, his company, his industry and his employees more harm than good by his combative stance?

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