Bravo Delta

I am 1,000,000 mile flyer on Delta Airlines and soon will be one on United once they complete their mergers. But last night, December 7, 2011, I saw something happen in an airport that is absolutely new and amazing.

It was a typical flying day, New York was all messed up, lots of cancellations and holds, and I, of course, had to be there that evening. I arrived at the airport 90 minutes early, made it through security, got to the gate and my cell phone rang. It was a happy androgynous voice from Delta Airlines telling me my flight would be delayed about two hours, no further explanations. That was my last contact with the Delta androgyny.

Two Delta reps showed up to stand at the boarding counter and provided absolutely no information whatever. The guy in the red coat, probably a supervisor, had an accent so dense, combined with practically swallowing the microphone, that no one could understand what he said even if you three feet away at the counter. He looked out the window with his back to customers and continued speaking. The woman gate agent was so nervous, due to growing customer agitation, that half the time she spoke, her voice dropped off even though her lips were moving.

Despite the delay the crowd seemed really quite docile, but concern was growing. Then Delta dropped the hammer. LaGuardia had called a ground stop, which tossed out every airplane’s schedule with absolutely no indication of when things might begin again. Now a buzz was really beginning. That’s when the miracle occurred.

The captain of the flight came off the plane up the ramp and came to the rostrum. He took the mic and calmly, adding a couple small jokes, explained what was happening. I have not seen this happen in 35 years of flying. Everyone quieted down, and many gathered around the rostrum to listen more carefully. In a couple minutes he explained the situation, told us that the ground stop was a very serious indication, but he was determined to get the plane and all of us out of there if it was at all possible.

Calmness reigned. But, the miracle continued. The Captain stayed in the boarding area visiting with customers, holding a couple babies for pictures, and even walked one or two older customers down to the Delta customer service desk. We were now more than two hours late.

After about 30 minutes the Captain, still in the gate area, got a phone call on his cell, went to the rostrum and told everyone his plan. It took 20 minutes to board the airplane; we sat on the tarmac for another 20 minutes or so and finally took off from New York. The flight was smooth but the weather in New York was really bad. It took two nerve-racking tries to land the plane.

I told the captain as the passengers debarked, that his performance in Minneapolis was amazing and enormously appreciated. Yeah, the landing was tough and scary, but this day this man earned his pay on both ends of the flight.

They didn't give his name, but it was daily Delta flight 2296, Minneapolis to LaGuardia, 5:14 PM (theoretically). I told the pilot I hoped somebody would remember how he handled this flight, the crucial role the captain played in calming concerned passengers, and that maybe this ought to be taught in Captain's school. It was pure, powerful leadership in action.

Bravo Delta Airlines.

Occupy America: It’s Radical But It’s Necessary

Am I the only one who has noticed that it takes catastrophe to force democracy forward: Black Friday; Pearl Harbor; 9/11; Hurricane Katrina; October 15, 2008? The incompetence, ignorance, and political paralysis of government, combined with the implacable gall of America’s Greed Team—real estate, banking, Wall Street, insurance, and the commercial credit industry—has created a fragile but powerful epiphanal moment when real change in America’s economic structure and destiny is possible. And there are people in the streets ready to take some action with some direction.

Here’s the plan:

We have a brief chance to recalibrate and reset crucial economic processes that will help us deter, detect, and prevent similar situations from occurring in the future.

How will we capture this moment? I believe that what will catalyze the opportunity for change is America’s growing revulsion toward Wall Street and the major economic and financial engines upon which we have relied for the last couple hundred years. Since an outbreak of business and leadership integrity is highly unlikely, and President Obama’s amorphous and nebulous quest for “change we can believe in” has failed completely. Americans now realize that those in charge of our economic institutions (even the new ones) are the same folks who brought us this catastrophic mess in the first place, and they are simply incapable of getting us out. We need a new strategy, a new roadmap, that demands changes and radically departs from the failed old formulas and arrogant, greedy perpetrators of yesterday, led by Senator Mitch McConnell.

Let me make some simple, sensible, constructive, and positive recommendations for change that can be implemented quickly and could force a cataclysmic shift in how the United States does business while allowing Americans to have much more confidence in and control over who the titans are and how they operate.

And if you—yes, you, reading these words right now—are one of those titans who has helped or is helping to squander the public trust in any business sector, take these proposals as powerful signals and warnings or at least suggestions, but do pay attention. There are changes ahead for your role as a corporate leader.

It’s Time For Real Accountability

First and foremost, financial industries need to become far better acquainted with words such as “oversight,” “control,” “regulation,” “tough new laws,” “rules,” “restrictions,” and “relentless accountability.” Rule number one: If you take one dollar of government money, you must become 100 percent transparent to the American people. All of these big muckety-mucks need to begin begging Congress and the states for more oversight, regulation, and restrictions. The principal reason for asking, even demanding, this level of intervention is that failure to do so means we are helping rather than preventing those in charge—the perpetrators who got us to this point—to do what they always do: train themselves on how to overcome whatever barriers are put in place and prepare to traumatize us again in a few years’ time.

The answer is not only more regulation, though. A change in mindset is essential to help redirect the energies of our commercial activity to what I call “community-directed capitalism.” Indeed, achieving significant change in commercial activity means fundamentally repositioning greed from its role as the primary motivator of business success. To re-paraphrase Ivan Boesky and Gordon Gekko, greed must come second.

Four Structural Realignments Are Necessary

Here are four potential realignments to consider that could alter the purpose of America’s commercial culture and moderate, somewhat, the power of greed:

First, re-prioritize and repurpose the role of corporations and business enterprises in our society. Re-differentiate the types of businesses we will allow by basing their missions first on meeting society’s needs and requirements. Business categories today are established mostly for tax-avoidance purposes. We have a federal tax law (about a million pages), mimicked by every state, that mostly authorizes various exceptions to paying taxes. Let’s consider replacing the current structure with four new classes of business organization based first on public wants, needs, and goals. Ultimately, I am proposing that corporate social responsibility actually become operationally meaningful and the primary objective and measure of business success. Greed would come in a lagging second.

The G Corporation: General businesses that would be private or publicly held, traded in public markets, and subject to the rules and laws of the marketplace. Although they would be far more transparent and heavily regulated than before, these businesses would remain competitive and fully taxable. By law, the priority of shareholder influence would be below national needs, state needs, and local needs—there would be executive-compensation restrictions and incentives to achieve public benefits, first. The charter of these businesses would include an obligation to society before any benefit for shareholders.

The F Corporation: Family businesses, which would also benefit from incorporation and liability limitations. They could not become public. There would be more focus on perfecting family succession, and social and community participation and stability.

The Q Corporation: Publicly held businesses, which could never be taken over or subjected to the various kinds of competitive Wall Street pressures that the G Corporations would have. The primary purpose of the Q Corporation would be longevity, stability, and community benefit. Shareholder benefit would be the secondary purpose, and there would be extreme transparency with restrictions on executive compensation and corporate investments. Public benefit and societal need would be the driving forces of all decisions and compensation.

The T Corporation: These are tax-subsidized organizations. The nomenclature “nonprofit” needs to disappear. The term nonprofit is used to discredit and demean legitimate for-profit businesses—those that actually pay the way for tax-subsidized organizations. Today, “nonprofits” of any size run for-profit subsidiaries that compete directly with profit-making organizations. There are no public-needs tests to determine whether such organizations are even needed. Somehow the sector has stayed under the radar in discussions of economic reconstitution, but it is crucial to reevaluate the tax subsidized organizations in our economy—and to shine light on how these organizations actually function, or fail to function.

Protect Our Economy

Second, prohibit esoteric financial transactions. Deal in real money. Eliminate or heavily regulate leveraging, hedging, and financial-packaging transactions—those that have been created to obscure where the real money is, where it is going, and even if the money really exists. This proscription includes destructive investing techniques such as short selling and blatant speculation, and strict scrutiny and regulation of any new investing technique or procedure, including economic impact analysis, prior to authorizing a new financial activity or method.
Third, construct a strong and unified independent regulatory institution and systems, run by knowledgeable, independent people who wield extraordinary powers to control and sanction the activities of the five perpetrators of economic catastrophe. This organization would be one that the rich, the arrogant, and the perpetrators would have reason to fear.

Fix Business Education

Fourth, return business schools to the control of businesspeople, and run them as professional schools rather than science-based institutions. Teach the public purposes for which businesses are created: that integrity is the highest goal of business leadership. Reduce or eliminate the obsessive emphasis on the notion that the only things that matter are the countable and measurable. The current philosophy and business strategy sets aside—or even denigrates—morality, humanity, integrity, and compassion as business-decision moderators and motivators. The purposes of these schools must be redefined and clarified, and the public-benefit philosophy strengthened. Changes like these will happen only through the legal reclassification, redefinition, and repurposing of corporate governance and operations.

The primary lesson in business has always been:

“What gets compensated gets done.” Let’s pick higher and more noble and powerful directions and goals for U.S. economic activity and for those who will lead our companies, organizations, and public institutions. If we want to avoid future economic disasters, we must compensate and regulate those behaviors we believe will achieve publicly desirable outcomes. Call me old-fashioned, but I believe the first obligation of American business and its investors is to bet on America’s success. If one can make as much or more money betting on the country’s failure as on its success, we are in for a long, long downturn, indeed.

A word for our friends in Europe and Asia, whom we have infected with this virus of greed and amoral management decision-making: Rather than visiting America to “express doubts” about the quality of our debt and our economic resolve, then simply wait for the United States to recover so you can pick right up again, be warned. There will be a different America coming out of this situation. The game is on. Fix your own problems now. If America has to do it, there will be different rules and harsher penalties. If the fate of the Obama administration rides on fixing the economy, so does the fate of every premier, president, prime minister, and potentate.

Let the wailing begin! These ideas—and others like them— will be dismissed as “socialism.” They will be denigrated as sophomoric and uncompetitive. The more people whine, the more you know the ideas may have real merit. The most important lesson of all, however, is that if we allow those in charge to simply modify the old rules, they are being allowed to set the stage for the next financial debacle in a very few years.

Stay angry. Make revulsion toward the current situation count for change. America and Americans—you and your family—must come first. Let the all-bias, all-bull bloviators begin, bust a blood vessel, and break a vocal cord.

It’s time for a big, but focused, change, and it just might be a spark of conductive fire for a new day.

Occupy Minneapolis, Chicago, Washington D.C., or Wall Street? How about America?

Cyber Criminals Outsourcing Money-Collecting to Mobile Operators

From Gail Reese, Security Intelligence Analyst at Cox Enterprises through ASIS International:

Cybercrime has come a long way since it was mostly a digital form of vandalism. It has developed into a criminal business operated for financial gain and is now worth billions.

In its Community Powered Threat Report for Q3 2011, AVG focuses on some of the most notable cybercrime developments in the last quarter.

Stealing Digital Currency
Digital Currency has become very popular in a short time. Facebook Credits, Xbox Points, Zynga coins and Bitcoin now play a vital role in a multibillion dollar global gaming economy. Far from being just of virtual value, many of these currencies are actively traded for real currency. This has not gone unnoticed by cyber criminals, now aiming to steal digital wallets from people’s computers. In June a digital wallet containing close to US $500,000 was stolen when someone broke into the victim’s computer and transferred most, but not all, of the money out of his wallet.

Outsourcing the Hard Part, Collecting the Money
In a bid to outsource the hassle and risks of collecting the money, cyber criminals are moving beyond credit cards details and are increasingly using mobile phone operators to do the collecting for them. A criminal might install a Trojan on to a victim’s Smartphone that sends premium SMS messages when the owner is asleep. They might use a Face book scam to get hold of people’s phone numbers and sign them up for an expensive monthly phone charge. A victim’s mobile operator will process the charges and transfer the money to the criminal organization, even if they reside on the other side of the world. If and when a victim notices the charge and the mobile operator is alerted to stop processing payments, considerable amounts may already have been stolen. If the amounts are small enough, many victims may not even notice for months.

Eavesdropping on Android
With Android taking almost 50 percent of the world’s Smartphone market share, it is no wonder that cyber criminals consider the platform an attractive target. Most Android malware focuses on making money from premium SMS. However, in July AVG investigated a Trojan that records a victim’s phone conversation and SMS messages and sends them to the attacker’s servers for analysis to identify potential confidential data. This clearly demonstrates the power of modern mobile operating systems but also the tremendous risks unprotected mobile users are open to.

Other key findings in the report:
· Rogue AV Scanner is currently the most active threat on the web
· Exploit Toolkits account for over 30% of all threat activity on malicious websites (‘Fragus’ is most popular, closely followed by ‘Blackhole’)
· Angry Birds Rio Unlocker is the most popular malicious Android application
· The USA is still the largest source of spam, followed by India and Brazil.

“In Q3 we started to see a clear trend in cybercriminals shifting their focus to simplifying money collection,” said Yuval Ben-Itzhak, Chief Technology Officer, AVG Technologies. “Well-organized criminal gangs are now letting mobile phone operators handle the money collecting part by focusing on mobile phones and setting victims up for charges that will appear on their phone bill some time later. Not only is it a lot easier, it also scales to tremendous volumes making money by stealing small amounts from very large groups of victims.”

A recent report authored by the research agency The Future Laboratory reveals that while cybercriminals and malicious programs are becoming increasingly sophisticated and difficult to detect, users are, alarmingly, becoming the weakest link as they are less vigilant about protecting their online devices. The combination of these two factors presents a potentially disastrous cybercrime scenario.

For more details about each of these threats, download the AVG report.

Obama’s Own Words Diminish His Leadership

He may have the most negative leadership style since Jimmy Carter.

Here’s how he talks (From his speech to the 93rd Annual Convention, American Legion, Minneapolis, Minnesota, August 30, 2011):

"Don’t give up!

We Americans have been through tough times before, much tougher times than these. And we didn't just get through them, we emerged stronger than before. Not by luck. Not by chance. But because in hard times, Americans don't quit. We don't give up. We summon the spirit that says, when we come together, we choose to move forward together, there's absolutely nothing we can't achieve."

68 words, 8 negatives. Mobilizing language is the most powerful tool any leader has. Obama has shown a consistent pattern of disabling his most significant ideas and constructive concepts with needless, negative, demotivational language.

Here’s what he should have said :

Americans have been through tough times before, much tougher times than these, and every time we emerged stronger than before. We made our own luck. We took some chances. That’s because in hard times, Americans always stay the course or choose a new one. We have always joined in a common spirit that when we choose to move forward together, we can overcome any obstacle, any barrier, any distraction to achieve whatever we set our minds and collective energies to accomplishing. It’s time for every American to ask themselves what they can do for America today, and just do it.

Abraham Lincoln knew how to use negative words as powerful image energizers and memorability enhancers.

Here’s the Gettysburg Address:

“Four score and seven years ago our fathers brought forth on this continent a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal. Now we are engaged in a great civil war, testing whether that nation, or any nation, so conceived and so dedicated, can long endure. We are met on a great battle-field of that war. We have come to dedicate a portion of that field, as a final resting place for those who here gave their lives that that nation might live. It is altogether fitting and proper that we should do this.

But, in a larger sense, we can not dedicate -- we can not consecrate -- we can not hallow -- this ground. The brave men, living and dead, who struggled here, have consecrated it, far above our poor power to add or detract. The world will little note, nor long remember what we say here, but it can never forget what they did here. It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us -- that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion -- that we here highly resolve that these dead shall not have died in vain -- that this nation, under God, shall have a new birth of freedom -- and that government of the people, by the people, for the people, shall not perish from the earth.”

277 words, 7 negative words or phrases, but what a difference.

To be fair, let’s look at what Lincoln could have said had I edited out his negatives:

But, in a larger sense, only the brave men, living and dead, who struggled here, can adequately consecrate this ground. The world will little note, nor long remember what we say here, but it must remember what they did here. It is for us the living, rather, to be dedicated here to the work that remains to be done which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us—that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion—that we here highly resolve that these dead shall have died so this nation, under God, shall have a new birth of freedom—and that government: of the people, by the people, for the people, shall last forever.

You can decide on these:

In the case of Richard Nixon’s famous, "I am not a crook.” If we remove the negative we get, "I am a crook.” The truth.

With President Clinton’s remark, “I did not have sex with that woman.” My edit would have changed history, “I had sex with that woman.” The truth, again.

The lesson: Negative language is always erroneous, error prone, confusing, unclear, wrong, and leads away from the truth. Negative language starts or prolongs all arguments, contentious situations, divorces, and wars. Test it yourself.

Leaders who lead avoid negative language or, like Lincoln, truly know how to use these flammable words correctly.

Customer Service is Dying in America, But It Can Be Revived.

When you hear companies mindlessly bloviate about their customer service, you really sense the fix is in and you’re interests, needs, concerns and problems are out . . . way out. The relentless and continuing degradation of “customer service” began accelerating about 10 years ago. Yet, there seems to be more talk about customers i.e. delighting them, surprising them, enchanting them, 110 percenting them., yet actual corporate, agency and organization behavior is delivering the opposite. Here are some of the goofiest example.

1. Comcast: If you subscribed to any of its services, you have learned that the primary way to communicate with this company is through an android voice on a toll free number that tries to probe you for information and determine how it can pass you on to the next android voice or phone tree. It is extremely hard to get a person on the phone at Comcast. It is hard to imagine how this company can continue to promote itself with self-glorifying and self-satisfied comments about customer service when its every move is away from customers and providing direct help. Don’t get me started about its “service guarantee,” hogwash.
2. JD Power Awards: I bet the last time you took your car to the repair service, as you paid the bill, there was a large sign there warning you about how to fill out the customer satisfaction form when it arrives by email, or by mail. There was undoubtedly also a note that if there was any category in which you couldn’t mark excellent, to talk to someone at the repair shop to get that fixed, so you could mark it excellent. These customer service excellence awards are institutional baloney, and total put-up jobs. If you purchase JD Power Services, you are guaranteed of getting a good result, because you bought it, you performed according to their specifications, and you will therefore own the result. It’s not about customer service; it’s about getting the customers to submit to a disingenuous process. Has JD Power ever published a list of those companies who failed? Any companies admitted it?
3. Smart Stuff: Whenever you see the adjective “smart” tied to something else, you can count on two things, whatever it is that supposed to be smart probably really isn’t all that smart, and the company providing it is still figuring out what they really mean. This concept is especially prevalent in the utility industry which is talking about all kinds of smart activities from meters that can control your appliances to helping (forcing?) you to manage your energy consumption. There will be bigger bills, sometimes much bigger. Seems the age old monitoring methods and the meters are inaccurate and generally favor the customer. Smart meters work perfectly, remember everything, and will catch every photon of energy you use . . . Many of these ‘smart” services have yet to be invented, even though they are being talked about as if they exist today.
4. Your local pharmacy: Whether you go to Target, Walgreens, CVS, or any of your major pharmacy, you find that you almost invariably make a second trip. Their inventories are so low, and so thin, probably forced on them by shareholder pressure that they too just assume that you will make a second trip, because, what else are you going to do? And yet, every one of them talks about being your family friendly pharmacy, being a member of your family, being your friend in need, protecting you against dosage error and conflicting medications. Is that how your pharmacy makes you feel? I thought family members bent over backwards to help.
5. The Email Avalanche: If you have given your email address to any outlet retail, service, or otherwise, you will see an immediate bolus of emails which seems to be unstoppable. Since when does customer service mean filling our e-mailboxes. We need a “do not send” law, with teeth.
6. My favorite this month is Wells Fargo Bank’s elimination of the deposit envelope. “Go Green” they say, but now, instead of just putting your deposit in a free envelope, then into the friendly 24/7 deposit slot, now you have to use your credit card, stand there and mess around with your deposit put it in the slot yourself in a certain way thus doing the bank’s job for it.. That’s the goal. Eliminate more people (the envelop tellers) and make the customer do the work. What gets greener are the bonuses of the bankers who find ways to fire more employees.
7. Call centers are fading away. Taking customer calls cost money. Turns out that off shoring call centers has caused other unintended problems. It’s pretty easy to recognize that you are talking to someone from say India or another country. Language problems have become a prime customer irritant. Seniors, who are generally hard of hearing, have difficulty hearing people with accents. The solution has become eliminating people altogether, make the customer go to a web site and figure everything out for themselves. You can “talk live” but it’s really a typing exercise that often ends with the machine telling you to call the 800 number. And the androids take over.

It’s about time someone developed a universal code of customer service so that if a company actually used it, and lived up to it, customers would know, and maybe recommend them.

Here is my attempt at a simple sensible Customer Service Manifesto.

1. Rather than interpose digital services and servants, genuinely move towards customers and personal contact. The other night my wife and I went to a local spaghetti place, which we do about every six weeks. The waitress came over, smiled and then simply repeated our usual order, then asked if we wanted to make any changes. She apologized for not remembering our drink order but that she probably would by the time we came in again. Holy cow, who cares? What a performance. She was having fun and so were we.
2. Employ truly independent monitors and service measurement techniques to give the customers an appropriate and accurate assessment of customer service by reliable outside sources. Stop brow beating customers with telephone, web, and other survey techniques.
3. Set a maximum of one email per week, the criteria being something that is genuinely a bargain, new information, or that customers truly must have to be safer, improve their living circumstances, or their quality of life.
4. Keep merchandise in Stock. Measure and report publically the number of times customers have to return because stocks were too low. Self penalize when customers don’t get what they ask for. Report this information visibly in store and on website dashboards. Monitor and report customer accountability.
5. Actually like customers, want them around, appreciate the relationship. Post examples of specific customer friendly, customer service-oriented actions, policies, outcomes and expectations. Show your customer what to expect of you.
6. Make “live” chats truly live. If they are cyber-chats, then call them cyber-chats. Publish comparison data contrasting true satisfaction and dissatisfaction levels as registered by participants, without prompting.
7. Be disclosive and candid. Provide lightly moderated forums where customers can freely and publically chat about their experiences.

What would be in your manifesto for customer service? What are your stories of customer abuse? Or obvious goofiness?

Netflix to Customers: Up Yours- Why Phony Corporate Apologies Backfire

As I read Reid Hastings’ letter to customers, in what appeared to be an apology for the price increase mess, my expectations were met immediately with disappointment, then disbelief.

Here’s a smart guy who shot a huge torpedo into the guts of his company, watched it blow up, and is still assessing the damages. So, he decides that what his departing customers need to hear, rather than an apology, is a bunch of management school gibberish that fails to answer two big questions: What were they thinking? And Do they really care anyway?

Instead of apologizing (although Hastings uses the word three times), working to mollify both the thousands who have left, and the thousands who will leave, he writes a letter that says essentially,” I love myself. I am really really smart and you should love me too. Let me count the ways for you.”

What follows is the mantra of American business today: never apologize, never, never, never. If you want to look like a sissy, apologize. If you want to look weak, apologize. If you want to look like a cave-in to the lesser mortals, apologize. Want to look utterly silly in front of your business school buddies (male or female), apologize. If you're a coward, apologize.

When will these business types begin to understand the two crucial ingredients of the relationship with any and all constituencies? Trust is based on providing information before the potential victims need it. Netflix failed here. And a sincere apology is actually the atomic energy of empathy, and can prevent or at least moderate the creation of critics and victims, while detoxifying bad news.

A credible apology has five principal components:

1. An admission that harm was done through the actions of the perpetrator.
2. The perpetrator explains and shows evidence of understanding the nature of the harm caused.
3. The perpetrator’s statement of profound regret, remorse, and recognition contains some of the lessons the perpetrator has learned that will help avoid similar harmful circumstances in the future.
4. The perpetrator humbly asks for forgiveness from all those affected.
5. The perpetrator voluntarily imposes some serious penance for the benefit of those adversely affected, and may even invite in outside oversight to ensure that appropriate measures have been taken to resolve the matter, and prevent future mistakes.

Instead, in what has become the classic style of business faux apology, Mr. Hastings does the following:

1. Attempt to explain what the company is doing and why. The question is: Why we should care?
2. He talks about what was “not their intent” by explaining that in fact all this turmoil was their intent “it wouldn't have changed the price increase, but it (telling you about it) would have been the right thing to do.” What on earth does this mean?
3. He talks about himself throughout the entire letter, which was supposed to be, one presumes, to help customers adjust to the company's screw-up. Mr. Hastings uses “I” a dozen times. What incredible arrogance.
4. He continues his devastating customer discussion by mentioning that there will be two websites and to make it more complicated for customers these sites will be separate and incompatible. Why doesn't he just say that they want their DVD customers to take a hike to the thousands of little red one dollar machines on every street corner?
5. He pulls the same stunt so many business perpetrators do by issuing, what amounts to a fourth phony apology at the end of the letter, “ . . . And to apologize again to those members, both current and former, who felt we treated them thoughtlessly”. Thoughtlessly? The company's action caused tens of thousands of families to sacrifice a small but crucial personal pleasure due to the yet to be plausibly explained greed of his company.

Failure to apologize effectively always leaves far more questions than answers. Yet, does Mr. Hastings respectfully invite additional inquiries and promise additional explanations?

His last sentence essentially says it all, “The Qwikster and Netflix teams will work hard to regain your trust. [How? By splitting the service in two and making everything more complicated and expensive?] We know it will not be overnight. [How many more arrogant screw-ups do you have in store?] Actions speak louder than words. [Tell us about it.] But words help people to understand actions.” [Maybe it’s time to take an empathy course, probably at a small school in Minnesota. You won’t find it in any business school curriculum.]

Translation: Up yours, strong message (We only care about ourselves.) to follow.

Rarely in the annals of a successful consumer franchise like Netflix can its legacy be so quickly and permanently stained. Yes, permanently . . . this goofy decision and its self- inflicted consequences will always be included in stories, discussions, and analyses of this company.

Bad news ripens badly. And this story and this product will still be decaying for a while.

Chief Integrity Officer is Tailor Made for PR

The PR profession suffers from schizophrenia. On the one hand, PR people want to be at the table making decisions and guiding strategy with the boss in good times and bad. On the other hand, many want to serve as the guiding conscience of their organizations.

So far, the record for the profession in either arena is mixed. There have been some successes, some strikeouts, some absolute no-hitters and some MIAs. That’s because business and other leaders have lost or ignored their responsibility to build and rebuild integrity as a workplace principle — a workplace guiding force.

Legislators continue to pass laws imposing extensive compliance requirements and an ever-increasing stack of regulations, restrictions and oversight requirements, in addition to internal and self-imposed monitoring. Virtually none of these can restore public, investor, employee, customer or individual trust. Restoration of trust begins by focusing and rebuilding the most essential element of an ethical reputation: integrity.

The foundation for integrity is organizational trust.

Need to Restore Trust

The PR profession — if it chooses to — can play a vital role in restoring and enhancing trust. Lawyers aggressively oversee the areas of compliance and codes of conduct. That’s where the monitoring is; that’s where the police are; and that’s where the detection, deterrence and disclosure of infractions occurs.

Restoring trust and maintaining an environment of integrity occurs in an organization along two powerful tracks: the principles that guide daily processes and decisions, and uncompromising vigilance.

Here are some examples of trust-building organizational principles:

• Our goal is integrity.
• We have constructive aspirations.
• We live a philosophy of integrity.
• We have a commitment to compliance and good conduct.
• We recognize those who achieve the best work in the best way.
• Our vigilance is driven by our principles, priorities, and our conscience.
• Everyone is committed to integrity.
• Everyone is a corporate conscience.

Uncompromising vigilance means to clearly define, dramatically emphasize and relentlessly enforce organizational values and beliefs. It is the organization’s unconditional commitment to prevent, detect, deter, or ultimately, expose and learn from those activities that run counter to the ethics of the organization.

Integrity is barely taught in business schools. It is something the boss is rarely compensated for. This is a perfect place for the PR practitioner to provide extraordinary counsel. Constructive leadership depends upon integrity. If there’s one thing public relations strives to provide, it is constructive counsel to leaders.

‘Sissy Stuff’

One problem is that many bosses think integrity is “sissy stuff.” They have a hard time seeing themselves at their country club having their buddies in the locker room kid them about how they caved in to those who would rather sell out than sell up.

Standing for integrity means standing up. Standing for integrity means helping an organization unlearn inappropriate behaviors. It means helping others learn how to handle ethical dilemmas and difficult issues. Integrity also teaches how to bring out the best in an organization — the best people, the best products, the best relationships, the best work and the best practices.

If there ever was a growth area for PR — one in which most of us absolutely, positively fit — it is guiding and inspiring the relentless quest for integrity: behaving with honor; expecting everyone else to do the same; and helping everyone become a corporate conscience.

Overcoming the Five Counterintuitive Effects of Explosive Visibility and Their Corollaries

Whenever a business interest, product, or person is suddenly forced into the limelight, a predictable set of counter-intuitive effects occurs. These effects can be prepared for, often pre-empted or mitigated. The limelight or public visibility can be caused by positive or negative events. Managing sensational visibility depends on anticipation, planning, and preemptive, sensible counteraction:

Effect 1. Inverse Credibility - Opinions of the lowest employee, neighbor, public official, or competitor will outrank and overcome the facts supplied by scientists, CEOs, acknowledged experts, sometimes even Nobel Prize winners.

Victim values define who is credible in adverse situations.

Corollary: Pick a strategy that ends and prevents the production of victims.

Effect 2. Inverse Intellectual Content - Complex, difficult to understand issues and nuances are reduced to abject simplicity.

The rule of the thirteen-year-old applies. If it can't be explained so that your mother, brother, sister, aunt, uncle, or an average thirteen-year-old can easily understand it, it will be misunderstood, misinterpreted, or misspoken, all of which will be considered your fault.

Corollary: Go for a strategy that focuses on what is simple, sensible, constructive, and positive.

Effect 3. Inverse Relationships - Those most negatively affected (victimized) by your actions will have irrationality on their side and be more powerful than common sense or the greatest-positive majority. People you may not respect, or like, will have great power over you and your decisions.

To paraphrase what Margaret Mead said early in the 20th century, "Never underestimate the power of a handful of dedicated individuals (or victims) to change everyone else's life." Believe it. They can and they will.

Corollary: Find your own core group whose passion, energy, and commitment is aligned with your goals and objectives, and turn them loose.

Effect 4. Inverse Compatibility - Getting to and staying at a table - no matter what - is crucial to controlling outcomes. Overcome your discontent, your distrust, and your disrespect for your opposition. Compatibility isn't necessarily essential to winning. What’s essential is engagement with trust. Be in the discussion, in the fight, in the dispute, in the debate - positively - until the situation is resolved. Make a superior argument.

Corollary: Drive the discussion in new directions. Focus on tomorrow. Yesterday will kill you if you go there. Everyone owns yesterday from their own perspective and will never change. Nobody owns tomorrow. That you can build together with many others.

Effect 5. Time vs. Healing - In high-profile disputes, discussions, and problems, time lags, delays, and unresponsiveness are always counterproductive. Delay is perceived as arrogance or incompetence; postponement is perceived as collusive; and being non-responsive is admission of guilt or negligence acts.

Corollary: Do it now; say it now; decide it now; ask it now; challenge it now. Act decisively; decide; control; energize with ideas and goals. Move toward tomorrow and toward victory.

The Lesson:

Explosive visibility remains sensational as long as you allow it to. Get ready for it, help it catapult your ideas forward towards the sensible, doable, positive victories and destinations you choose.

First Response Strategy: The Golden Hour, A Metaphor for a Successful Response

Most responses in crisis situations fail in the first hour or two. That’s because the most challenging aspect of readiness for urgent situations is the strategy for first response; literally, what you do first, second, third, etc. Problems become emergencies, crises, or disasters due to the hesitation, timidity, and confusion that occurs as the threatening nature of a situation rapidly unfolds is recognized, and management is overwhelmed.

When a crisis occurs, management has a crisis of its own.

A successful first response depends on the activation of appropriate counter measures and proactive decision making that were pre-authorized during the crisis response and readiness planning process.

Pre-Authorization
If we’re looking for the one word definition of readiness work, it is this concept of pre-authorization. If decisions can be programmed into a response scenario and executed instantly, the most successful response and the overall success of dealing with the challenges presented by crisis situations will be met.
The most powerful ingredient of scenario based readiness work is what happens when a specific threat is identified, hypothesized, and time lined. Many of the critical decisions that will have to be made in the sequence of events can be identified, brought to management, and decisions made well ahead of time.

The Golden Hour
Perhaps the most useful and appropriate model or metaphor for first response strategy is “The Golden Hour” concept, which comes to us from wartime battlefield medicine. It was probably the Korean War that taught us the benefit of bringing sophisticated medical care and facilities to the front lines rather than transporting the wounded miles behind the front lines for medical treatment. The lesson was that the severely wounded who received medical treatment within minutes of injury had a survival rate enormously higher than the soldier who was treated well beyond the first 60 minutes of injury, if they even survived the journey. Time and again, major problems turn into crises or worse due to lack of initial momentum to do something, to make decisions, and to begin grinding down on the problem. Speed of action beats smart action every time. Preauthorization enables more smart decisions earlier in the response.


The First Response Checklist
An appropriate, scenario-based first response checklist will help deal with the most urgent, crucial matters and decisions as early as possible. This is possible because crisis managers considered a wide variety of decision points during the planning and testing phases of readiness preparation, and pre-authorized many of those decisions to achieve a more prompt response.

Relax when you review this checklist. It is complex and comprehensive, and based on years of experience mostly learning from things we failed to do when we should have. One of the potential criticisms of this approach could be the “fear of overreacting.” This is a totally phony fear. In 30 years of crisis management, some involving enormous tragedy, not one single case of overreaction has ever been observed or documented. To the contrary, more common is indecision, timidity, hesitation, and confusion leading to far broader litigation exposure, larger clusters of victims, a longer public memory of less than appropriate behavior, and serious damage to an organization’s reputation.

Note that the First Response Checklist also includes monitoring your responses and dealing with the issues and collateral damage that responding always causes.

I have also included an After Action Analysis outline.

1. Recognize a crisis.
The situation is a people-stopper, product-stopper, and show-stopper with reputation-defining potential, victims, and/or the potential for explosive negative visibility.

2. Reaffirm communication policy in emergencies.
• Candor
• Openness
• Responsiveness
• Empathy/Apology
• Truthfulness
• Transparency
• Engagement
• Managing the Record

3. Activate response strategy.
• Begin resolving, reducing, or eliminating the problem.
• Deal with those who opt in: critics, competitors, regulators and overseers, and others who appoint themselves.
• Establish communication with employees.
• Manage the victim dimension.
• Notify those indirectly or involuntarily affected.

4. Implement first response infrastructure including incident response teams trained on a scenario specific basis.


5. Review your first response checklist.
• Act and speak promptly.
• Analyze constantly.
• Begin a log.
• Create an ongoing, detailed chronology with key events and decisions.
• Create a database of key contacts
• Establish response priorities that meet community expectations.
• Expedite communications..
• Identify the most likely collateral damage scenarios.
• Manage the record as it evolves.
• Prepare to back up your core response team.

6. Begin fact-finding.
• What happened?
• Who’s involved and responsible?
• When did events occur?
• Where does the problem exist and where might it expand?
• How could it have happened?
• How could something like this occur?

7. Forecast the potential for collateral damage.
• Bloggers, Bloviators, and Bellyachers
• Consultants − theirs/ours
• Critics, competitors, celebrities, and media promotion of negative events
• Disgruntled employees
• Lawyers − theirs/ours
• Victims’ families/survivors
• Well meaning employees

8. Activate your crisis Web site. Your crisis home page may include:
• About our work
• Advertisements
• Company history
• Company overview
• Contacting us
• Corrections and clarifications
• Dear so-and-so
• Ethical practices
• In the news
• Investor center
• Issues inventory
• Letters
• Media center
• Our purpose
• Policies that guide our business
• Special projects
• The global picture
• What we stand for
• Who we are

9. Activate the communications response process.
• Assist in victim management
• Develop a chronology/sequence of statements.
• Manage communication to all constituents.
• Monitor response progress.
• Monitor the status of settlements.

10. Manage the big issues.
• Victims:
− Identification
− Notification
− Acknowledgement
− Compensation/treatment/settlement
− Prevention/detection/deterrence
− Follow up
− Closure

• Gaps and lapses:
− What failed/who failed?
− How was it detected?
− Who’s responsible?
− Who’s at fault?
− Who’ll be punished?
− What changes will be made to prevent similar circumstances?

11. Avoid failure triggers.
• Minimize response effort. Always do more than is required.
• Underestimate the victim dimension. These individuals can change your life and your future.
• Blame the victims
• Shift Blame
• Fail to be empathetic (or apologize where possible)
• Let the media drive your response strategy: Keep the record straight, manage it or someone else will.


12. After Action Analysis: Learn from adverse events.
• Step One: Situation assessment
− What happened?
− What are the facts?

• Step Two: Strategic considerations
− What decisions did management need to make and when were they made?
− What are the implications of these decisions on those directly and indirectly affected?

• Step Three: Operation response/action steps
− What essential steps did the company take or need to take to get the situation
under control?

• Step Four: Communication response/action steps?
− Who spoke for the company?
− What immediate short-term and long-term communication issues were created?
− Who were directly and indirectly affected by those issues?

• Step Five: Holding statements and other communication
− What were the critical messages and the order in which they were delivered?
− What were the most important points made during this crisis situation and what
were the results?

• Step Six: Questions and answers
− What were the five or six most difficult, challenging, unanswerable questions raised?
− What were the most crucial messages gotten across during the process?

• Step Seven: Incident response
− Which organizational officials or representatives were crucial to resolving the situation?
− Were they members of the incident response team?

• Step Eight: Tools, vehicles, mechanisms
− What were the most effective techniques of communication for those directly affected?
Indirectly affected?

• Step Nine: Hindsight
− What would you do have done differently, how?
− What would you have avoided, why?
− What failed, misconnected, or caused substantial collateral problems?


When people or organizations fail to promptly address a problem and resolve it, the resulting crisis creates additional, victims all of whom are left untreated and situations left unresolved. In the minds of the public, the victims, and survivors, delay equals denial. Refusal to promptly commit to a constructive course of counteraction is viewed as arrogance, which says the perpetrator doesn’t care.

Murdoch "Apology" Will Only Expand His Crisis Management Problems

Mr. Murdoch is learning the most crucial axiom of crisis management: Bad news ripens badly. This decay continues with the so-called apology statement published and signed by Rupert Murdoch in British newspapers over the weekend, just in time to soften up members of Parliament, before whom he is testifying and being grilled, today.– It is vacuous, weak, evasive, insincere, incomplete and therefore very problematic. Here it is:

“I realize that simply apologizing is not enough," wrote Murdoch. "Our business was founded on the idea that a free and open press should be a positive force in society. We need to live up to this. In the coming days, as we take further concrete steps to resolve these issues and make amends for the damage they have caused, you will hear more from us.”

It is not even an apology. These are personally puffing remarks designed to continue his whining, self-centered, self forgiving, and “I am really the victim here-” approach to communication. Not one word about the victims and their suffering. Not one word about his co-conspirators and fellow perpetrators. No words of contrition. The word “sorry” doesn’t appear…because he isn’t.

This is a crisis management disaster and fits the pattern of most senior executive initial failures to take their situations seriously The time wasted avoiding what has to be done, and the additional critics and enemies these initial poor behaviors create can not be overcome.

Apology is a victim-focused, personal admission and responsibility taking process based on acknowledging specific damaging actions. The ingredients of a sincere and credible apology, one with integrity, arise from answers to the following questions for Mr. Murdoch, his fellow perpetrators and his growing army of image advisers:

1. Where is the true, unconditional admission and enumeration of specific destructive, illegal and unethical actions he knew about or should have known about that hurt thousands of people, damaged the reputation of journalism, his country, the British government, among others, and promises, that instant that he will subject himself to the most powerful outside scrutiny, letting the chips fall where they may?
2. Where is the list of specific wrongdoing, damaging behaviors, or the lists of specific individuals who were targets and victims, all of which is known by employees of Murdoch enterprises and Murdoch himself?
3. Where is the explanation, complete with specifics of what went wrong, who are the additional perpetrators, inside and outside News Corp., as well as those on the take who facilitated years of abuse, intimidation, privacy violations, reputation destruction and other human damage?
4. What specific steps does he plan to take, including stepping aside at least for a while, so this entire matter can be brought to light, exposed to public view, and the victims along with the public allowed to make up their own minds about the sincerity of Mr. Murdoch's contrition and future intentions? The public should have the opportunity to determine whether or not News Corp. deserves to retain any public permission to continue operations.
5. Where is his plan to seek forgiveness directly and specifically from those whose lives he has damaged or perhaps even ended?
6. How will he execute the heart of a true apology which involves extraordinary acts of restitution and the continuous verbalization of regret, contrition, plus other self-imposed but publically acknowledged acts of penance?

When Mr. Murdoch leaves News Corp, voluntarily or involuntarily, these events and the apology process begins and these words and actions start happening, you’ll know that Murdoch is offering real sincerity rather than mechanical, routine, PR crisis management activities designed to bore and numb the audience and the media into shifting their attention to other things and ignoring the victims and the suffering of so many.

Mr. Murdoch will only begin to regain his integrity, public trust, and successfully initiate the steps toward rebuilding whatever his future holds when he begins subjecting himself publicly to the same unyielding, relentless, ruthless and degrading public humiliations that he and his organizations inflicted on so many for so long.

It is said that there is no saint like a reformed sinner. Mr. Murdoch needs to publically get about the business of his own personal reformation. All the PR experts in the world will fail because this is a personal journey for Mr. Murdoch which can only begin after he leaves News Corp, rather than a crisis manager’s fantasy exercise.