Killing the Goose
What continues to puzzle me is the human compulsion to ruin a good thing by wanting too much, pushing too hard, poisoning wells and destroying resources. Among the root causes are recklessness, opportunism, arrogance, greed and folly. An unfortunate aspect of human nature is that, often, enough is not enough. On the bright side, this is what drives exploration and innovation. On the dark side, we tend to over-harvest and bet the farm on something silly, propelled by ego, profit, pride, power and pipe dreams. It’s a phenomenon that afflicts both private and corporate citizens.
In this era of social media and instant access to millions, organizations need to be more cautious than ever about the impact of practices that contradict their stated mission, vision and values. Building a business takes years, but one dumb move can sink it overnight. There are countless examples of companies taking an off-ramp from the high road, thinking they can coast on one good product, fudging numbers to boost stock prices and fiddling with formulas to maximize profits. The moment management thinks the consumer won’t care or notice, the company is in trouble.
A recent example of sales-uber-alles is the Volkswagen emissions scandal. Last September, VW admitted that it had installed software in 11 million of its cars that allowed it to cheat on emissions tests. In the immediate aftermath of this PR nightmare, the company set aside billions to deal with the fallout and its chief executive resigned, saying the company had ‘broken the trust of customers and the public’. A truly amazing aspect of this scandal is how executives could have possibly thought that they could keep this under wraps.
I used to work for an organization that merged with a competitor. Each partner had a General Manager and, post-merger, Manager A started reporting to Manager B. Manager A was competent and non-political. Manager B was the kind of neighbour that would lend you his lawnmower, but he wasn’t suited for leadership. Having realized his ambition to be boss-of-both, B enjoyed a package well north of 150k per year, plus a company car and complimentary golf balls.
Once in charge, B set out to meddle in every aspect of the operation and made a point of humiliating A at every single opportunity. After watching from the sidelines for several months and wondering what was going on, the board stepped in. The irony was that, had B recognized his own incompetence and just let everyone do their thing, he could have spent his days smoking cigars on the patio and lived happily ever after. However, driven by resentment and pushing too hard in his quest to quench his thirsty ego, he lost it all.
There are many examples of train wrecks in the hospitality industry. In the 1980s, a café in Amsterdam was famous for its hot chocolate. The owner built a loyal clientele and was making a great living. This could have continued until the next asteroid hit earth, were it not for another disastrous event: the man decided to cash out and retire. The new owner paid top dollar and was excited about having a money machine in the palm of his hand. Unfortunately, great wasn’t good enough for him. The café would become even more profitable, he figured, if he tweaked the formula a bit. He introduced smaller cups and surrogate ingredients and replaced the delicious whipped cream with the canned version. To his stunned surprise, customers voted with their feet and his cash cow died of blood loss.
We see this type of short-sightedness everywhere. Canada’s very own example of irresponsible exploitation is the cod industry. After sustaining communities on our east coast for hundreds of years with its bounty, by the late 1980s the Northern Cod had virtually disappeared. Fishing vessels using sonar and ever-larger nets had brought in bigger and bigger hauls until almost nothing was left. In 1992, the Canadian government imposed a moratorium to provide the ruined resource with a much-needed reprieve. Meanwhile, fishing villages on Newfoundland had turned into ghost towns overnight.
It used to be that people only cared about corporations they owned shares in, but the interests of modern consumers transcend the boundaries of formal ownership: they consider themselves stakeholders in any company that is part of the fabric of society. Whenever businesses cross the line from making a living to making a killing, the underlying message to their customers and the public is one of disrespect. This occurs as soon as management starts taking its customers for granted. The real message is, ‘Our customers aren’t smart enough to realize they’re being fleeced’. Consumers have an abundance of choices and they can take their business elsewhere or go on strike.
One of the first examples of a global consumer strike was the hit the French wine industry took as a result of the French government using the atoll of Moruroa in French Polynesia as a nuclear test site. After decades of scattered protests, the broader public revolted in 1995. What really hit France hard was that wine drinkers around the world imposed what amounted to an embargo on French wine. What years of protests from elsewhere didn’t accomplish, French winemakers achieved in a matter of months: getting the attention of the French government and forcing it to cease testing. The impact on the French wine sector has been permanent though, as consumers discovered that wines from Chile, Argentina, California, Canada, South Africa, New Zealand and Australia weren’t bad at all.
With the rise of social media, the consumer gained a powerful ally in countering negative or destructive conduct by corporate entities: companies pay a price when bad behaviour is exposed. Referring to the benefits of transparency, U.S. Supreme Court Justice Louis Brandeis said that ‘sunlight is the best disinfectant’. Cloak and dagger stuff only works when perpetrators are allowed to hover in darkness. This is the new reality that corporate citizens need to adjust to, or ignore at their brands’ peril.