Goldman Sachs Debacle Reminds CMOs of Brand Breakdown by Greed

The ensuing Deluge of Public Attention, Scrutiny Will Prove That It’s Not About Being Dynamic; It’s All About Being Right

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By Dean Crutchfield. Published in Advertising Age

In financial markets, crisis is justified as the price of innovation. And it would seem as if Goldman Sachs CEO Lloyd Blankfein and his cabal are presently hurling stones as large as themselves at the government glass house, justifications of business moves for which there is no justification. So his arguments, that crash of glass, is falling on deaf ears: Neither government nor the American people care. All they care about is the fallout, and the effect of Goldman Sachs’ actions will be a series of deafening explosions in the form of lessons to all marketers about the futility of selfish, greedy moves for financial gain.

America’s insatiable appetite for everything has propelled global markets, but the world now nurtures a deep sense of insecurity; just as it’s biggest economy is recalibrating (and Europe is downgrading), Goldman Sachs, a critical part in the engine of the world’s economy, has now revealed they may have sought to bury it. The difference between a rut and a grave is the depth and we shall soon see how deep.

In the past, banks like Goldman Sachs used to focus on acquiring and protecting a clients assets, lending money and making profit out of the assets they had under management. This radically altered when banks transformed to trading their own ever more complex products and sacrificed the client. Overnight, the compensation model switched from the volume of clients managed to the money to be made by the volume of spurious bank products sold. This sleazy course of conduct’s outcome we know all too well, as Macduff complained in Shakespeare’s Macbeth:

Bleed, bleed, poor country!
Great tyranny! Lay thou thy basis sure,
For goodness dare not check thee: wear thou
thy wrongs…

Reputation cracks when a brand is stretched too far. You could just flip out the Toyota name and product recall debacle and the replace it with Goldman Sachs and its base alloy of hypocrisy. The tragic twist is that Goldman Sachs seems to have delivered an inverted approach to all 5 traits for handling crisis (to make a crisis) and there are key lessons to be learned for all CMOs!

Of utmost importance, the simplest answer is to act fast, learn rapidly. A company’s leadership should inspect the cause of crisis and raise alarm, not expect easy outcomes from it. In this case, the unconscionable intent of Goldman Sachs management demonstrates their scandalous approach to create (not avert) crisis with military precision. If in doubt, avoid deceit. When bedlam strikes, news and social media burst and the spectral battle begins, formal statements are rendered useless; it’s all about managing the mayhem with a can-do culture and strong values of trust. Something Goldman Sachs is burning through right now.

Secondly, hide nothing tell all. As the late President Regan said, “Facts are a stubborn thing,” so Goldman would be well advised to take heed. From stock options to outright plunder, recent years have left a train wreck of corporate brand disasters based on a simple realization that they covered up. As Tom Clancy would tell you, “the difference between truth and fiction is that fiction has to make sense”. For CMOs, marshalling a rapid response team and a crisis plan are critical, including weighing options for a centralized or a decentralized approach. The key to remember is that when the crisis is an ethically related issue it should be a centralized response and when it’s a physical crisis it should be decentralized.

Third, brands are compromised through fear and lack of action, in this case the latter:  could you be a little more vague Goldman Sachs? Their “too perfect to fail” reputation has just experienced blunt impact trauma (and no doubt so did their Net Promoter score). Any CMO knows that a brand’s reputation comes from what it possesses, which in turn derives from what it is and what it stands for. And don’t get it wrong. Most brands follow five distinct stages in their lifecycle: emerge, crash, transform, dominate and reinvent. This current debacle will show that Goldman Sachs is less a Gibraltar like fortress than a stool resting on three legs – as one gets kicked out they might need to reinvent for this next phase of their history. Lesson for CMOs: failing to prepare is preparing to fail and that includes fire drills and media training.

The fourth, a brand’s standing in the court of public opinion falls when it fails to analyze failure i.e. not selfishly predict it with the intention to capitalize on a tossed, mutilated, dismembered and decapitated market with monstrous greed. A trait that will receive the public ire and a righteous infliction of retribution, manifested by an appropriate agent, personified in this case by a disconsolate Congress. The key takeaway, know your audience. Just because you’re in a specific category does not mean you have license for a semblance to normal everyday business life, just ask Ford, J&J or PepsiCo, etc. All the people from main street to wall street are stakeholders.

And finally, prior to being coaxed from their somnolence, the intransigence of Goldman Sachs was heralded by the press last summer for its bold and virtuous actions, which proved no match for this must avoid final trait of arrogance. Brands are about who you are not what you do. Brands are undoubtedly a company’s greatest asset – as the balance sheet of the S&P 500 is testament to – with over 80% of the value made up of intangible assets of which a substantial part is goodwill. On the bright side, studies have empirically shown that companies who handled a catastrophe with high standards have recovered and even exceeded pre-catastrophe stock price, but that depends on whom you listen to:

Al meets his banker friend Lloyd, and exclaims, “Lloyd! I heard the market died!” “Hardly,” says Lloyd, laughing. “As you can see, it’s very much alive.” Impossible says Al, “the man who told me is much more reliable than you.”

Wit aside, matters have long moved on from enthusiastic to skeptical and are now at a division of deep regret. Failures of this proportion, even if it is a very specialist B2B operation, present an indication of that brands future performance – and the public has a memory recall button. Make no mistake, like many of the worlds leading brands, Goldman Sachs’ reach is global, its focus narrow and its impact colossal. The ensuing deluge of public attention and scrutiny will prove that in the world of brands whether B2B or B2C, it’s not about being dynamic; it’s all about being right. As Churchill once proclaimed “Play for more than you can afford to lose, and you will learn the game.”

Author: Dean Crutchfield

In an award-winning career spanning two decades, Dean Crutchfield has created, built and re-invigorated some of the world's most iconic brands.

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