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You Messed Up- Admit it!

Posted on in Leadership Development.

A brand paradox: If organizations want reputations without tarnish, they need to acknowledge their mistakes

by William J. McEwen
Author of Married to the Brand (Gallup Press, 2005) and coauthor of the Harvard Business Review article “Inside the Mind of the Chinese Consumer”

We know that the foundation of any enduring relationship is confidence — trust that partners will always keep their promises. But we also know that maintaining a strong partnership is bit more complicated, involving something we’ve called integrity. Integrity is a reflection of how each partner behaves when hiccups and snags occur or when the partnership confronts unforeseen barriers.

Problems and pitfalls are the acid test of a relationship. They can never be completely eliminated, but mutual trust is bolstered when relationship-imperiling tribulations are expeditiously addressed in a manner that’s both fair and forthright.

CEOs can provide leadership by living the values of fairness, honesty, and authenticity.

One particularly important high-profile relationship involves an organization’s CEO and its employees. A Wall Street Journal article on the attributes of a vital business leader shares some valuable lessons about manager integrity and what it implies. In this article, the author champions a fundamental leadership characteristic that many CEOs might view with some alarm: vulnerability. The author argues that confidence in a leader is enhanced not just by competence but also by honesty and humility. In short: You can increase your leadership stature by acknowledging your limitations.

A related argument appears in a commentary by Stanford University Professor Robert Sutton, who maintains that CEOs have to balance the need to be assertive with the requirement that they demonstrate sensitivity. The latter implies flexibility and openness, which along with vulnerability, are traits that might not automatically be ascribed to hard-driving business leaders.

Starbucks CEO Howard Schultz appeared to subscribe to the philosophy of honesty and humility when he stated, “We had to admit to ourselves and to the people of this company that we owned the mistakes that were made.” Starbucks was accused of losing its way, overextending into too many locations and too many product areas while losing sight of the distinctive coffeehouse experience that was the core of the brand. Schultz contends that publicly admitting responsibility and making “an honest confession” about his company’s mistakes have been essential first steps for Starbucks to begin moving forward again. According to this view, the complete CEO is one who evidences humanity rather than infallibility.

The contention here is that CEOs can provide leadership not just by projecting strength to outline a mission but also by living the values of fairness, honesty, and authenticity. Those values help boost morale and employee buy-in in pursuit of the organization’s mission.

Confidence management

Maybe there’s a lesson here for more than just the CEO. After all, there are many types of relationships, both internal and external, that are important to an organization. One particular sphere that seems to cry out for smart relationship management is the activity surrounding an organization’s brand. The brand makes a statement to the world about what the organization stands for, what makes it different, and why it’s worthy. The brand promise provides the basis for a set of critical connections. For any given organization, this includes the bonds forged with customers, prospects, employees, shareholders, regulators, and analysts. Some of these relationships may be strong, vibrant, and enduring, but others may not. The overall strength and health of these connections comprise the brand’s equity.

At Gallup, we’ve learned a fair amount about brand bonds. We know that these connections are fundamentally rooted in human emotions, and they have a defined structure. As with personal relationships, an “engaged” brand relationship is grounded in Confidence in the brand’s commitment to always keep its promises. We also know that a fully engaged brand relationship requires an additional component of Integrity, one that’s very much akin to what is required of a CEO. Those who buy and use an organization’s branded products and services need to feel certain that they will always be treated fairly by a product or service provider that stands ready to remedy any problems that might occur.

In recognition of the importance of these two fundamental brand relationship requirements, marketers have invested heavily in programs specifically designed to bolster the feelings of Confidence and Integrity that key stakeholders ascribe to the organization. First, manufacturers have spent millions implementing Six Sigma solutions with the goal of dramatically reducing possible defects. But “dramatically reducing” doesn’t mean “eliminating.” Even with more aggressive corporate oversight of the sort some analysts have advocated, firms can’t possibly anticipate or eliminate all potentially disruptive hazards.

So these same organizations must invest in corporate structures and recovery programs that are designed to tackle defects when they occur. After all, customers don’t necessarily demand absolute perfection from the products and services they use. But they do fully expect that marketers will stand foursquare behind their promises and will always respond openly, honestly, and with respect for the intelligence of customers — whose continuing loyalty they hope to merit.

Self-serving plaudits that lack authenticity won’t resonate with customers or employees.

Organizations are understandably attentive to the need for quality control and problem recovery. But they’re also paying attention to how they might be viewed in the world, since consumer perceptions may not always sync with the objective reality of freedom from defects. Therefore, recognizing this crucial cornerstone of consumer confidence, many organizations allocate significant resources to initiatives designed to boost their brand image and enhance their brand’s esteem.

But just as defect reduction doesn’t mean elimination, perceptions of esteem don’t necessarily equate to images of perfection. Litanies proclaiming the good news about an organization’s good works may not generate high levels of esteem. High-profile advertising, public relations, and corporate responsibility campaigns won’t establish customer confidence and brand esteem if they overclaim corporate altruism. Trumpeting unachievable flawlessness in the organization’s operational performance doesn’t work either. Self-serving plaudits that lack authenticity won’t resonate with customers or with the firm’s own employees.

Sounds like preaching to the choir. Most businesses are already spending serious sums in pursuit of defect reduction, problem resolution, and effective corporate communications.

Enter the unexpected

Regardless of how much they may be spending to address their brand relationship management needs, many organizations are unprepared to tackle disruptive issues when they do arise. Maybe it’s because they aren’t predisposed to changing their established course when they encounter storms. Or perhaps their leaders fail to recognize the need to reveal a dollop of humility — the sort espoused by Starbucks’ CEO. Possibly it’s because leaders assume that the path to brand esteem is reached by proclaiming only their positive achievements while steadfastly ignoring their occasional imperfections.

Does it happen? Yes, even in organizations with brands as esteemed as Toyota and BP. Both companies have spent many years nurturing their brands and have achieved truly enviable levels of brand equity. They’ve ballyhooed their achievements and shared their impressive victories through well-managed corporate communications campaigns. Yet their response to unanticipated operational failures has come under severe criticism, in part for allegations that the companies evidenced a “bunker mentality” that lacked empathy with those affected by these failures.

“In the end, it’s the brands themselves that will suffer if they violate the trust they have built with consumers, businesses and the government,” stated one copywriter who formerly worked on BP advertising campaigns.

In fairness, Toyota and BP are hardly alone in being put to the test — and in being critiqued as falling short in the quality of their response. There are other noteworthy examples, even within the confines of petroleum and automobiles. Witness the problems that previously plagued Exxon (Valdez) and Ford (Explorer). Even the mighty can be taken sharply down a peg or two. The troubles encountered by these industry dominators may well stem from their propensity to act more like powerful corporate oligarchs and less like leaders who have embraced the lessons about what it takes to inspire the troops — and the stakeholders.

If employee enthusiasm for the organization’s leadership can be enhanced by CEOs who acknowledge their own foibles and imperfections, then the organization’s brand might be similarly enhanced if the organization acknowledges that it has some decidedly human attributes. Maybe brand esteem is bolstered better by demonstrating a touch of vulnerability than by proclaiming perfection. Perhaps, when confronted by crises, brand images need a bit more “We try harder” and a bit less “We’re #1.”

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Eight Keys to Rebuilding the Relationship

Gallup researchers have culled eight ways to restore engagement after a customer has encountered a severe problem:

  1. It’s not just about what you say. It’s about what you do. Alignment is key.
  2. “Own” the problem. Underscore your personal determination to

    aggressively and effectively respond. Apologize. Share the pain.

  3. Acknowledge your imperfections. Don’t deflect and deny.
  4. Responses must be clear, transparently honest, and straightforward.

    Eschew obfuscation.

  5. Responses must be thoughtful, meaningful, and relevant, but also timely.

    The clock is ticking. Failure to respond speaks loudly.

  1. Establish and maintain genuine dialogue with all stakeholders. Eagerly solicit their feedback.
  2. Establish clear points for contact. Create empowered structures that will ensure meaningful response and timely follow-up wherever and whenever it’s warranted.
  3. Show you care. Show you’re committed.

 

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