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Combatting the Crisis of Competition

Businesses should prepare for crisis involving an environmental spill, financial fraud, cyberattacks or sexual misconduct. They also should plan for an eventual crisis of competition, especially a disruptive idea that topple a business from a mountaintop to a scrap heap.

Businesses should prepare for crisis involving an environmental spill, financial fraud, cyberattacks or sexual misconduct. They also should plan for an eventual crisis of competition, especially a disruptive idea that topple a business from a mountaintop to a scrap heap.

Years ago, a Tektronix executive burst out of his office brandishing a report showing the company had achieved a 99 percent market share in analog oscilloscopes. He beamed at what he viewed as a sign of world domination.

However, the executive missed the subtle signal in the report that the market – and Tek’s competitors – had moved on to digital oscilloscopes. Tektronix had corralled the lion’s share of a vanishing market. It wasn’t world domination as much as a crisis of competition.

When we consider crisis in terms of business, our minds naturally think of environmental spills, financial fraud, cyberattacks and sexual misconduct. We forget about a crisis of competition, which can be an existential battle, not just a bad headline. People get fired and businesses pay fines in most crises, but in a crisis of competition a once-thriving company may cease to be relevant or even exist.

RCA was the biggest thing in vacuum tubes and actually did pioneering work on semiconductors, long before they made vacuum tubes obsolete. RCA executives apparently thought semiconductors never would amount to much, let alone replace their bread and butter. They failed to see their crisis of competition in the glare of their own success.

A crisis of competition deserves the same forethought, careful planning and strategic preparation as any other kind of crisis. Perhaps ironically, the best time to plan for a crisis of competition is when your business or organization is on the top of the mountain. Think of it as the most strategic view to see what everyone else is doing that may affect your standing – and eventually your bottom line.

Competition can take many forms – lower prices, better marketing, new technology or a wholly different approach. A competitor may be a business you know and watch, someone who comes out of left field or a galaxy like Amazon. Like RCA, the next bright idea could be shining in your own lab or workshop.

Unlike more common forms of crises, an apology or clever social media post won’t do much good in a crisis of competition.

Keep in mind success invites company and competition isn’t spontaneous. That means you know competitors are coming after you and you have a head start – not a bad position to begin crisis of competition planning, but also not a moment for complacency.

While market research is good for revealing what customers like, dislike and want, it isn’t the right tool to search the universe for innovative new competitors or disruptive emerging ideas. This takes a vastly different mindset to see the world of potential competition less like a vector and more like an erratic line.  

Market research for automakers didn’t stumble onto the idea of car-sharing. Market research for Folgers Coffee never anticipated Starbucks. Market research for multi-family housing developers left unexplored the idea of adult dormitory living. The strategic lens for crisis of competition planning isn’t looking for trends; it is looking for trendsetters.

Canvassing the arena of ideas to see which ones make economic sense, which ones could be disruptive and which ones are most likely duds is the business of crisis for competition planning. And just because an idea initially looks and behaves like a dud doesn’t mean it is permanently a non-starter. The investors on Shark Tank frequently wave off ideas that go on to be entrepreneurial successes, despite their misgivings.

Companies must realize they have a built-in bias for their product or way of doing things, which can result in their downfall. (Think of the progression of cameras from boxy things on a tripod to a button on a smartphone.) They need to fertilize their own thinking with outside views. Be curious. Follow some promising trails. Talk to people with unconventional viewpoints. Talk to you customers about what their next frontier looks like so you are better prepared to take the journey with them.

Back to Tektronix for a moment. There was an engineer who walked through the corporate cubicles carrying a small disk with wires sticking out both sides. For anyone willing to listen, the engineer would say what he held by his fingers could do everything that one of Tek’s large laboratory oscilloscopes could do – only cheaper, faster and anywhere. A lot of people thought he was crazy. What he was carrying around was, in actuality, a digital oscilloscope.

Make a point of listening to the contrarian in your midst. He or she might not be crazy. They may be on to something. They may show you how to avoid the crisis of competition by discovering the road to your own breakthrough. That breakthrough might eventually put you out of the business you’re in, only to set you up in the business you could be for years to come.

The Deep Web, Social Media and Malicious Misinformation

We only see a fraction of the internet. Hidden in the Deep Web are provocateurs and misery merchants that can disrupt a campaign with false information or punish a brand with weaponized memes.

We only see a fraction of the internet. Hidden in the Deep Web are provocateurs and misery merchants that can disrupt a campaign with false information or punish a brand with weaponized memes.

The underbelly of the internet is a puzzling and poisonous place, where illicit drugs are sold and malicious misinformation is peddled. Fake news and incendiary memes launched from the deep web can bedevil consumer brands as easily as political campaigns.

Traditional communication responses to social media laced with lies is a lot bringing a fingernail clipper to a knife fight. New techniques are needed to fight back.

Richard Edelman, CEO of his eponymous PR firm, wrote a recent blog titled, “Understanding the Deep Web.” In it he advised, “In the battle for truth, a company must make its voice heard as quickly as it can. It’s a necessity to get out in front of a situation rather than play from behind.”

However, even a quick response may not be an adequate defense. In his blog, Edelman shares observations about fake news from Sharb Farjami, CEO of Storyful, which bills itself as a “social media intelligence agency.”

Storyful’s website offers an apocalyptic vision of contemporary social media: 

“Social media is not what it was eight years ago. The landscape is more complex and volatile, the stakes are higher, and the needs of business and media increasingly diverse. The weaponization of bots and misinformation, the impact of disinformation on elections and businesses, the threat eyewitnesses face when they capture and share current events –these are only a few of the features of the modern social landscape.”

We can argue over how things got this bad, but it is more productive to consider how to cope in this treacherous environment. Here are some of Farjami’s suggestions, as shared by Edelman:

  • Fake news often reaches traditional media via “feeders” lurking in the Deep Web, including on “fringe networks such as Gab, 4Chan and 8Chan.” Farjami quotes Wired as noting there may be “480,000 alt-right provocateurs [just] on the Gab site.”

  • Online provocateurs like to newsjack high-profile events to use as conduits for misinformation or an excuse to bash a brand. Within 48 hours after Nike launched its campaign featuring Colin Kaepernick, “racially charged memes” appeared on 4Chan and later gravitated to Facebook.

  • A favorite technique of Deep Web denizens is to make up controversies, such as falsely linking the 5G network to cancer and vaccines to birth defects.

Edelman says active brands aren’t able to avoid controversy involving political, social or cultural issues. They don’t need to step out into the conversation; the conversation can find them through the Deep Web.

While this may seem like a problem affecting only big brands, it isn’t. Much misinformation is transmitted in words, but the ability to show out-of-context or doctored video is quickly evolving. What people see in picture or video can quickly transmogrify into mischievous misinformation. With virtually everyone possessing a smartphone, the threat extends well beyond the Nikes and Starbucks of the world.

A new dimension of social media engagement may be social media intelligence gathering so you know when a tsunami from the Deep Web is headed your way and you still have some time to react.

 

The Risk of Socially Responsible Marketing

Old Navy tweeted this photo of a multiracial family wearing Old Navy clothes last month, sparking a racist backlash online. The situation highlights the risk involved in socially responsible marketing. Even seemingly harmless ads can ignite a storm of criticism. 

Old Navy tweeted this photo of a multiracial family wearing Old Navy clothes last month, sparking a racist backlash online. The situation highlights the risk involved in socially responsible marketing. Even seemingly harmless ads can ignite a storm of criticism. 

Making a political statement is risky business for just about any company. Well, at least according to conventional wisdom.

Fearing the consequences of alienating clientele with a divisive political message has traditionally pushed many business leaders to the sidelines of our political discourse over the years. But as major shifts in demographics and consumer values are quickly reshaping the modern marketplace, sitting out of the discussion might actually do a company more harm than good, argues Hadas Streit from Allison+Partners PR.

“By making the decision not to take a stand on issues and not participate in the conversations that are core to their audience, companies risk having their brand become less relevant in today’s society and culture, which will ultimately hurt their bottom line,” Streit said last week in a post on the firm’s blog.

The greater emphasis on social responsibility in marketing is largely tied to the rise of Millennials, who recently overtook Baby Boomers as the largest generational group in the United States. Survey after survey show Millennials and the younger Generation Z heavily buy into brands that share their values.   

Streit honed in on the rising backlash to a recent string of controversial legislation surrounding LGBT communities in Georgia, Tennessee, Mississippi and North Carolina. In all, there are actually more than 100 active bills in 22 states addressing a range of LGBT issues – anything from which public restrooms transgender people can use to whether business owners can refuse to serve same-sex couples, citing religious beliefs.

So far the business community has been anything but silent on the bills, and for good reason. In a Pew Research Center study from 2015, 70 percent of Millennials said they supported same-sex marriage.    

“More than 60 leading CEOs and business leaders from companies like Dropbox, Hilton Worldwide, Facebook, Apple, Salesforce, REI and Yelp signed an open letter calling on Mississippi’s Governor to repeal the ‘Religious Liberty Accommodations Act,’” Streit said. “The economic impact of businesses backing out of these states has already been felt and will only grow.”

Based on what we know about where Millennials stand on same-sex marriage, speaking out against Mississippi’s Religious Liberty Accommodations Act is a low risk for business leaders. But here’s the truth: For any business interested in socially responsible marketing, even making what seems to be a relatively harmless political statement can still backfire.

Before making a decision to jump into a controversial arena, businesses should evaluate the risks and advantages. They also should weigh their motives and consider whether their engagement fits into a larger corporate strategy. Being intentional before acting is the best preparation for the praise and brickbats that will follow, regardless whether you jump or hang back.

With that in mind, here are a two examples of socially responsible marketing campaigns that have largely been well received and two others that have sparked a mixed bag of reactions from consumers and the business community.

Starbucks – Socially responsible marketing is a cornerstone of the Starbucks brand, and you could go on and on about the company’s successes and flops in that arena. One of Starbucks most praised efforts is its move toward using only “ethically sourced and sustainably produced coffee.” At its annual shareholders meeting in 2015, the company announced 99 percent of its coffee would fall under that category. What that means is nearly all of Starbucks coffee goes through a rigorous third-party verification process to ensure economic, environmental and social standards are met for the farmers who produce Starbucks coffee beans.

Ben & Jerry’s – Last year, the popular ice cream maker used its platform to raise awareness about climate change, releasing a new flavor called “Save Our Swirled.” The company promoted the flavor on its website and social networks. Meanwhile, Ben & Jerry’s worked with an activist group to encourage its customers to sign a petition calling for bold action on climate change at the United Nations Climate Change Conference in Paris.  

Target – Weighing in on where transgender people can go to the bathroom, the retailer recently announced that transgender customers are welcome to use whichever toilet they choose at Target. Now, conservative groups like the American Family Association are fighting back against Target. Petitioners are encouraging the consumers to boycott the store, and in an interesting new protest tactic, non-transgender male protesters have taken to using Target’s women’s restrooms.    

Old Navy – At the end of April, the clothing retailer tweeted a picture of a happy multi-racial family wearing Old Navy clothes in a promotion of a customer appreciation sale. Though it sounded harmless to many consumers, the picture sparked a racist uproar on Twitter, leading to yet another retailer boycott. That said, the majority of consumers and many in the business community have come out in support of Old Navy’s ad.  

Coping with a Power Outage

We talk a lot about mobile devices and even offices. But we have a lot to learn as we experienced when our downtown Portland office went off the grid for more than three days because of a major power outage.

Ironically at our annual staff retreat last Friday, we discussed what operating in a mobile office environment would involve. Little did we know that we would get an object lesson over the weekend and into the middle of this week.

Without power, our server was rendered useless, which meant we had no internal email. It took awhile for staff members enjoying their pre-holiday weekend to realize something more serious was going on than a server burp interrupting email service.

Our firm has used Yammer for several years as an enterprise-wide, closed group internal communication tool. It turned out to be invaluable as an alternate way to exchange information, initially about the status of the outage and our powerless building.

Yammer was augmented by text messaging, especially for staffers who tune out from company communication channels over the weekend. By Sunday night, everyone was paying attention to Yammer and we were able to alert everyone to Monday as a "work-in-your-virtual-office" day. It turned out we had to tell staff members to work at home Tuesday and Wednesday, too.

Stepping into Troubled Waters

Starbucks and Barilla pasta demonstrated once again the travails of plunging into the roiled waters of emotional social issues.

With a nudge from Moms Demand Action for Gun Sense in America, Starbucks CEO Howard Schultz asked his latte-sipping customers to leave their guns at home, which prompted gun-toters to rush to the nearest coffee shop and take a selfie of them toting. One Facebook posting showed a guy with an assault rifle sucking up a grande drink, accompanied by his girlfriend wearing a Starbucks T-shirt.

Without a nudge, Chairman Guido Barilla told a reporter he wouldn't use a gay family in his advertisements because "the concept of the sacred family remains one of the basic values of the company." His comments spread through social media and triggered threats of a #BoycottBarilla. One of the first calls Barilla may have received could have been from Dan Cathy, CEO of Chick-fil-A, who earned a similar boycott for a similar comment. 

Neither plunge into troubled waters will likely have a lasting effect on either consumer giant, but the episodes show what can happen when you enter those waters. You better know how to swim in rough currents.

Schultz is no stranger to the culture wars. He has taken positions in support of gay rights and led a business effort to hire more Americans to speed economic recovery. It wasn't a huge surprise he would enter the gun control minefield. After all, Starbucks says it sells an experience, not just coffee. A lot of people may not be comfortable reading the morning paper or working on their laptop next to someone packing heat.

Symbol of Support or Alienation

The red equal sign signifying support for gay marriage exploded onto social media just as the U.S. Supreme Court heard two major cases challenging a federal law and a California initiative banning same-sex unions. 

While the symbol, launched by the Human Rights Campaign, has been hailed as a brilliant tactic to rally supporters, sympathizers and politicians, questions have arisen about whether it was a smart PR move for many brands that also embraced the red equal sign.

The question seems pertinent because of the hub-bub over Chick-fil-A CEO Dan Cathy's foray into the same issue, which polarized its customer base.

Matt Wilson, writing for ragan.com, says there has been widespread support for same-sex marriage from brands ranging from Bud Light to Kimpton Hotels and Martha Stewart Living. The difference, Wilson suggests, is that these and other brands assessed their core customer constituencies and concluded it made sense to take a public stand.

That was an easy call for brands that overtly cater to gay customers. But for others, it had the character of jumping on the bandwagon of rapidly shifting views on an issue that not that long ago was discussed in the context of moral and spiritual terms.

Even Chick-fil-A seemed to follow the trend, according to Wilson, as its California outlets offered free meal coupons to gay marriage supporters.

While same-sex marriage appears to be rushing toward broad acceptance in the United States, certainly by younger generations, there is still the possibility that brands will alienate a chunk of customers for their support or opposition of the issue.

Wilson explored that in his blog, quoting Starbucks Chairman Howard Shultz reply to a shareholder who complained about its early support of gay marriage. Shultz reportedly told the shareholder if he could find another company generating a 38 percent return, he should invest his money elsewhere. Not every brand has such an unassailable financial perch to defend its action.

Sorry State of Saying "I'm Sorry"

"I'm sorry." Simple words with powerful impact. But many businesses seem tongue-tied when trying to utter the phrase.

Bad stuff happens. People can be forgiving — if your are forthright in admitting you screwed up.

Saying you are sorry shouldn't be that hard. An online order gets mixed up. A store clerk is rude. A public water source is contaminated. Own the problem. Fix the problem. Say you are sorry.

The more difficult exercise is actually being sorry. If people think your apology is mere lip service, they won't take it seriously. However, if you back up your apology with appropriate action, they will see your apology as sincere.

Like so many other forms of communication, the apology is best expressed by showing your are sorry. When faced with a botched order, many businesses follow Starbucks' example by giving customers a free drink card. But sometimes that's not enough.