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A Tale of Two Branding Disasters

Parsed_sentence.jpgIn our branding workshops for startups, I show a slide that expresses how branding requires a focus on three aspects of your business: strategy, marketing and operations. Strategy, to build a strong brand platform with a unique and differentiating brand promise. Marketing, to communicate that promise effectively. And operations, to consistently deliver on the promise. In effect, we show how true branding demands the efforts of the entire company. I go on to break down the three categories, detailing specific tasks and activities within each one. Under operations, the first thing listed is effective leadership. The last is accountability. Right now, the news is reporting on two branding calamities – one, in which leadership appears to be doing everything right and one, where leadership is doing everything wrong. I’m thinking, of course, of Samsung and Wells Fargo. Each is suffering through a branding disaster. Both brands will emerge from their respective ordeals with some wounds to lick. But one brand, if it continues to handle things well, will recover fairly quickly. The other may have dealt itself permanent damage.
It should first be noted that both Samsung and Wells Fargo depend on very close relationships with their customers. These days, there is hardly any kind of contact more intimate than a person’s dealings with his or her phone. It contains a person’s whole world. Every text, photo, email, app, contact, phone number and Instagram post is on that damn thing. People keep them as close as possible, in their pocket, in their hand bag, under their pillow. Banks are entrusted to keep a person’s hard-earned money in safe keeping. Most people, through banks, manage their personal affairs, keep their bills paid, manage their credit, plan for a secure and stress-free future. A bank represents one’s personal interface with the entire, Goliathian, world economy. People are at their most vulnerable when dealing with a bank because they have no choice but to take on trust that they’re being treated fairly.

Screen-Shot-2016-09-08-at-11.47.59-780x455.pngAfter putting millions of them on the market, it was discovered that Samsung’s Galaxy Note 7 smartphone is prone to spontaneous combustion. Talk about every CEO’s nightmare. After some initial confusion, they quickly recalled them all and put new, supposedly corrected devices on store shelves. When those also began catching fire, Samsung wasted no time announcing they would permanently end production of the device. All told, in just a matter of weeks, the company lost more than $17 billion in value. It’s a branding debacle of epic scale and one that may put serious competition with the Apple iPhone forever out of reach. But consider this: No finger pointing. No denial. No cover up. Just a painful acknowledgment that the product was defective and then – whoosh! – it’s off the market before it can injure another soul. I don’t know if they carry any responsibility for the fires in the first place, but you have to admire the way Samsung leadership handled the ensuing crisis. For the first time, I’ll be interested to learn about whatever new phone they may roll out in the future. And for that very reason, I think their brand will rebound in due time.

wells-fargo-720.jpgWells Fargo’s leadership, by contrast, not only happily led the company into a disaster of their own making, they compounded the damage by trying to cover up their own malfeasance. First, they set impossible-to-achieve goals for their branch-level, retail bankers. Under tremendous pressure to meet these goals, some cracked and began opening bogus accounts in the names of current customers, downgrading the credit ratings of many. Think about it. The pressure was so great that thousands of Wells Fargo employees, who were in a position to do so, did the wrong thing. They felt it was the only way to protect their jobs. That’s not a character failure. That’s a leadership failure.

Leadership failed again when the malpractice came to light. The bank was shocked – shocked – to learn that so many low-level retail bankers would stoop to such a criminal practice. They fired more than 5,000 employees. The executive who organized and oversaw the scam quickly retired with her $125 million severance. The CEO was not so quick to get out the door. After some more squirming and blaming of others, he was finally fired last week and did not get to claim any of his $200 million severance. It remains to be seen if anyone will go to jail. Wells Fargo’s new CEO has stated, with appropriate solemnity, that the bank’s first order of business, now, is to restore the public’s trust. No. Ya think? Thank you, Captain Obvious.

The lessons here, for brand leadership in any sort of business, are, first of all, don’t ever betray your brand promise. If you’re only selling point is trustworthiness, like Wells Fargo, you better damn well actually be worth your customer’s trust. Second, no business gets through life without having disaster strike at some point or another. When it does, own it. Fix it. Deal with it. There will be plenty of time to do a post mortem later. Move heaven and earth to restore your brand promise as quickly as possible. Samsung did and should recover fairly quickly. Wells Fargo didn’t – now says it will – but its recovery will take a long, long time.

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Brands Must Embrace Alternatives To Advertising
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