PEPSI, UNITED, AND THE SPEED OF CORPORATE SHAME

United Airlines has leapt into a brand disaster of mythic proportions. In a scandal that’s still evolving quickly, the company’s employees had Chicago Department of Aviation officers forcefully remove a passenger — a paying customer sitting in his seat — from an overbooked flight. Around the world, people watched a video of the bloodied man being dragged down the aisle. The company’s stock lost hundreds of millions of market cap, but the damage to the brand (and future sales) may be far higher.

The incident, along with some other recent brand missteps, highlight some basic realities about the world companies operate in today. Three themes seem critical.

The speed of shame is as fast (and as ruthless) as the internet. When will companies realize that everyone now has a video camera on them, and that they can broadcast live on Facebook within minutes? People can now destroy brand trust at the speed of light, with consequences that are far-reaching. For example, in China, a critical growth market for the airlines, the disturbing passenger-shot video story has gone super-viral (likely in part because the passenger manhandled by United was Asian). It was the number one topic on Weibo, China’s version of Twitter, with 100 million views. And while it’s way too early to predict the financial damage in that country or more broadly, the brand will likely keep taking hits for a while — other stories about being mistreated by United are getting airtime and countless people are pledging to stop flying United.

Yet United is far from the only company to experience instantaneous negative reactions recently. Last week, PepsiCo ran — and then quickly pulled — an advertisement showing the model Kendall Jenner breaking through a line of protesters (who looked more like they were at a dance party) to hand a Pepsi to a police officer. Jenner’s offering of 12-ounces of peace and love seemingly solves all of society’s tensions. The backlash, especially from those who saw a jarringly off-note take on Black Lives Matter protests, was justified — and unbelievably fast. Has there ever been a major ad that debuted and was pulled in less than 24 hours?

In both cases, word spread partly though dark humor, which raced around Twitter, Facebook, and newscasts, including a map of a United plane with a section labeled “Fight Club.” And Saturday Night Live’s brilliant take on Pepsi captured the essence of what was likely a well-intentioned effort. SNL gave us an imagined conversation between the ad’s creator and his family (unseen on the other end of a phone call, like an old-school Bob Newhart routine). His dawning realization that he’s made a big mistake is comedy gold. Humor plays a big role in stories going viral and, in cases like these, it may help people cope with upsetting images. But it doesn’t do the brands any favors.

Everyone expects an apology — and a real one. Pepsi got this right. The company acted quickly and owned the error. As a spokesperson said, “Pepsi was trying to project a global message of unity, peace, and understanding. Clearly, we missed the mark, and we apologize.”

United, on the other hand, has had a rough couple of days. The first statement from Oscar Munoz, the United CEO, was just bizarre, focusing on his employees while also using an awful euphemism for violently pulling someone off a plane: “This is an upsetting event to all of us here at United. I apologize for having to re-accommodate these customers.”

What’s different today is that everyone can feel personally engaged in what your company does to anyone. In Munoz’ first statement, he went on to say, “we are reaching out to this passenger to talk directly to him and resolve this situation.” That’s fine, but CEOs today need to “reach out” to the public, too. At the very least every passenger on that plane deserves some direct contact, but now millions of others want an explanation as well. In our social media dominated world, everybody has an opinion and feels like they’re owed something.

Munoz tried to make up for his first statement with numerous public apologies since — and they’re much better – but the reality is that the first one sticks and is a very public window into your company’s priorities and soul.

Employees must feel safe and empowered to speak up. The biggest question I (and many others) have about these recent brand disasters is this: Why didn’t anyone in these companies say something before things got out of hand? At Pepsi, there must have been employees – in the marketing meetings, on the set, or even in the ad agency – who felt like the unseen family members in the SNL skit. Many knew the ad was tone-deaf. If they believed they were expected to go beyond following rules and maximizing performance, United employees would have stepped in to de-escalate the situation once they realized something was going horribly wrong on that flight.

Of course, intentions do matter. In Pepsi’s case, the ad was likely well-meaning, so chastised execs and the brand will probably recover. United is in a radically different situation. As with the Wells Fargo and VW scandals before it, the problem here is a systematic set of expectations and rules, set from the top, that lead to very bad (and now public) behavior.

Companies need to think carefully about their policies and their crisis communications, so they can quickly move from a defensive crouch to honest, heart-felt apologies — and to real changes in how they operate. But most importantly, they need to assess whether their cultures allow their own employees the power and safety to stand in front of the train of fast-moving stupidity and say, “You shall not pass!” And they need to have executives who will listen to them.

The big takeaway here is that expectations about how companies operate — and their very role in society — are rising fast. Pepsi clearly had some inkling of this; just think about why the company wanted to say something about justice and understanding, even if it did it poorly. United (and its airline peers) had better wake up fast to this new reality as well.

All companies now operate in a world that’s closely watching their policies, actions, and how they handle themselves when things go wrong. When literally anyone can simultaneously act as a customer, a protester, a critic, and a muckraking reporter with a video camera, executives have zero room for error.

SOURCE: HBR.ORG