Make us your home page

Companies provide lessons as Tiger Woods tries to restore image

The venerable Augusta National Golf Club has been playing host to the Masters Tournament since 1934. But this year it is also playing host to another great drama, the relaunching of the most valuable personal brand in the world. Tiger Woods' penchant for cocktail waitresses and porn actresses ended up costing an astonishing amount of money: Two economists at the University of California at Davis have calculated that his biggest corporate sponsors, such as Nike and Gatorade, saw as much as $12 billion wiped off the value of their shares in the wake of the scandal. But Woods' warm reception at Augusta suggests that he is well on his way to recovering his star power.

Brand Tiger is thus likely to join a long list of brands that have come back refreshed after a spell in rehab. These include not just the predictable roster of celebrity brands such as Martha Stewart and Kobe Bryant, but also a surprising number of solid corporate citizens such as Johnson & Johnson and Coca-Cola. Brand-threatening scandals are becoming a regular feature of the corporate landscape, thanks to a toxic mixture of globalization, which scatters corporate activities hither and yon, and the Internet, which allows bad news to spread like wildfire.

Oxford Metrica, a consultancy, estimates that executives have an 82 percent chance of facing a corporate disaster within any five-year period, up from 20 percent two decades ago. Indeed, just the day after Woods made his return to golf, the American government fined Toyota over $16 million for its tardiness in addressing safety concerns.

The key to a successful relaunch lies in making a cool-headed assessment of how much the scandal damages your company. Does it involve life and limb, rather than less consequential matters? Has it spread beyond particular products or particular divisions to afflict the corporate brand? If the answer to both questions is yes, then companies are well advised to go into collective overdrive; if it is no, then they can experiment with more nuanced responses, such as lopping off a tainted product or sacrificing a rogue division.

Marsh & McLennan and JetBlue provide good examples of companies that took a no-holds-barred approach to brand rehabilitation.

In 2004 Marsh & McLennan was accused of taking kickbacks to recommend insurance providers to its clients, an accusation that went to the very heart of its identity as one of the country's biggest insurance brokers. The firm was not content with issuing grovelling apologies and paying $850 million in compensation. It also appointed a new boss, Michael Cherkasky, who was the head of its financial-investigation division, Kroll. Cherkasky proceeded to de-emphasise the insurance business and boost other divisions, such as Mercer Consulting and Kroll.

In 2007, bad weather presented JetBlue with a nightmare of its own. Thousands of passengers were left stranded and one planeload of unfortunates spent eight hours sitting on the tarmac, with precious little food or drink to sustain them.

The company's founder and boss, David Neeleman, immediately recognized that this made a mockery of his promise to "bring humanity back to air travel." He threw himself into dealing with the problem, issuing public apologies, telling his employees to contact passengers personally by phone and e-mail, producing a retroactive passengers' "Bill of Rights" and ponying up around $25 million in compensation.

The JetBlue case underlines two of the most important rules of successful crisis management. First, the boss needs to take charge. This means sidelining corporate cluck-cluckers such as lawyers (who worry that any admission of guilt will lead to lawsuits) or financial officers (who obsess about the bottom line). It also means putting the survival of the company above personal considerations (Neeleman stepped down three months after the crisis). Many of the most damaging crises, by contrast, have resulted from foot-dragging at the top — as appears to be the case with Toyota today.

The second rule is that crisis-racked firms should redouble their focus on their customers. One former aide to former President George W. Bush, David Frum, tells the story of another, Karen Hughes, who sees a small plane towing a banner reading, "Jill, please come back. I am nothing without you. Jack." Her response is, "Wrong message. It's too much about you, not enough about her."

Companies have a habit of acting like Jack when their brands are in trouble — talking endlessly about how they are fixing this or reorganizing that. But most successful decontaminators look at the world from Jill's point of view. Johnson & Johnson's handling of the Tylenol crisis (when an unidentified attacker poisoned some bottles of the painkiller) is the gold standard of crisis management because the company simply recalled all Tylenol without hesitation or demur.

Similarly, Edward Breen, the boss of Tyco, rescued the conglomerate's reputation after his predecessor, Dennis Kozlowski, was imprisoned, by launching a public-relations campaign that focused on what the company's products do to improve people's lives.

Crises can even give brands a long-term boost, provided the rehabilitation is properly handled. Coca-Cola emerged stronger from its disastrous recipe change in 1985. In response to widespread outrage from customers, it reverted to the original formulation within three months. The whole episode reminded consumers of their fierce attachment to Coke, and thus ended up increasing sales. Woods, too, could well emerge with added luster from his own debacle. There is nothing Americans like more than a redemption story — particularly when the man being redeemed is supremely good at his job.

Companies provide lessons as Tiger Woods tries to restore image 04/10/10 [Last modified: Friday, April 9, 2010 10:23pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times


Join the discussion: Click to view comments, add yours

  1. Dragon ride in Harry Potter section of Universal closing for new themed ride


    Universal Orlando announced Monday that it will close Dragon Challenge for a new "highly themed" Harry Potter ride to open in 2019 — sending wizard fans into a guessing game with hopes for a Floo Powder Network or the maze from the Triwizard Tournament.

    Universal Orlando announced Monday that it will close Dragon Challenge on Sept. 5 for a new "highly themed" Harry Potter ride to open in 2019. The ride, originally the Dueling Dragons roller coaster, was renamed and incorporated into the Wizarding World of Harry Potter when the hugely popular area opened in 2010.
  2. Would you let your company implant a chip in you?

    Working Life

    Would you ask an employee to get a chip implanted in her hand? Sounds invasive and intrusive. But come Aug. 1, one company in Wisconsin will be giving it a try.

    Three Square Market - a developer of software used in vending machines - is offering all of its employees the option to get a microchip implanted between the thumb and forefinger. [Photo from video]
  3. Daniel Lipton resigns as artistic director of Opera Tampa


    TAMPA — Daniel Lipton has resigned as artistic director of Opera Tampa, the David A. Straz Jr. Center for the Performing Arts announced.

    Daniel Lipton became the artistic director and conductor of Opera Tampa in 2012. Lipton replaced the opera's only previous director, Anton Coppola, who retired. [Times file (2012)]
  4. Throwback Tampa Bay station 102.9 goes from R&B jams to WFLA-AM's conservative talk


    Talk radio station WFLA-AM (970) began simulcasting on 102.9 FM in the Tampa area this morning. 

    Tampa's 102.9 is going from Throwback Tampa Bay to WFLA-AM's news radio.
  5. Bank of Tampa expanding into Sarasota


    TAMPA — The Bank of Tampa is expanding to Sarasota County. It opened a loan office this month in downtown Sarasota at 1858 Ringling Blvd., which will be converted to a full-service branch within the year, the company said in a release Monday.

    The Bank of Tampa is expanding to Sarasota. Charles Murphy, pictured, will lead the Sarasota branch. | [Courtesy of The Bank of Tampa]