CNBC Power Lunch – NBA will keep apologizing to China to protect its business interests

Houston Rockets general manager Daryl Morey apologized on Twitter over a now-deleted tweet that spoke in support of Hong Kong protesters. Dean Crutchfield, CEO of crisis advisory firm Crutchfield and Partners, and CNBC’s Eric Chemi join the “Power Lunch” team to discuss. Here’s the link.

AP – Amid rift with China, will the NBA be forced to apologize?

When major corporations have done something to anger Chinese authorities in recent years, the playbook has called for one thing: an apology…

“Dean Crutchfield, CEO of the crisis management firm Crutchfield + Partners, said Morey’s tweet, well-intentioned as it was, could cost the NBA billions. He wondered if a parting of the ways between Morey and the Rockets would appease China.

“You need to fire him and you need to fire him fast,” Crutchfield said. “China needs a statement, and for him to still be in his job is remarkable. I think Silver did a remarkable job with his statement, but this is a senior official, well aware of the importance of the Chinese market. One man, one tweet.” Here’s a link to the article.

PR Week – How the NBA made a no-win situation worse

“Agency experts, including a former communications executive with the league, say its initial public response inadvertently juiced the crisis….

With that in mind, Dean Crutchfield, CEO of Crutchfield + Partners, says the NBA should have exercised another option: dismiss Morey. Crutchfield says other employers would find rogue commentary of a sensitive geopolitical nature grounds for termination, especially if it was about a critical and growing geographic market, regardless of how well-meaning the message.

“If a senior executive and important representative of Apple came out with a remark like that about their most successful business unit, that executive wouldn’t be there anymore. It simply wouldn’t be tolerated in a corporate environment,” states Crutchfield. “It was one man, one tweet; they should have fired him and fired him fast.”

If they had, instead of making a statement about democracy and free speech, the NBA would have addressed business protocols and guidelines in relation to social media.

“The statement would read something like, ‘This is not how our people behave on social media, uncontrolled and with no regard for their professional responsibility. His personal opinion should have been kept to himself given the platform he has being part of this organization,’” says Crutchfield.

FT – Nike risks being dragged into China NBA dispute

Financial Times reports on a new perspective on NBA v. China spat…Few western companies have more at stake than Nike in the fallout from an American basketball executive’s tweet about Hong Kong.

Here’s a link to the article. My POV is that “despite demands from the likes of Mr Rubio, he would advise the company to stay quiet. “Nike didn’t create this war,” he said. “Any crisis manager would say the same: avoid, avoid, avoid.” The episode could yet work to the company’s advantage, he added. “If they play it right, they’re going to sell a lot more merchandise.”

Procter & Gamble Co. is striking back in the razor wars

screen-shot-2016-12-16-at-9-34-50-amCategory busters abound, P&G fires a salvo with a digital campaign taking aim at online rival Harry’s and Dollar Shave Club. Here’s what I shared with Sharon Terlep at The Wall Street Journal:

“Being less serious — and less ostentatious — is a smart move for Gillette, which turned consumers off with decades of marketing aimed at making men feel obligated to buy its razors. The category has been dominated by inadequacy marketing, with things like ‘The best a man can get,” Gillette’s tagline. The Dollar Shave Club and Harry’s come at it with something fun and innovative. The “Welcome Back” concept creates some curiosity, and that’s what it’s about. The question is: Is it too late?”

Brand USA?

screen-shot-2016-12-16-at-4-11-43-pmThe greatest brands in the world have a palpable sense of mission about them. The United States of America gave the world a chance to be different. Its soul is radical. It’s history full on. America has always been a lightening rod, a country that goes charging into the fray as a liberator, a savior, and a protector. Does a divisive country weaken Brand USAs image abroad?

From President-elect Trump and street protests to New Balance sneakers alight and a red-hot stock market is Brand USA facing a chronic and debilitating decline as pundits suggest? Will Trump’s bold, arrogant and cocksure rise to the top job, his rhetoric, and choice of cabinet magnify the issue of our international role and standing? Will it be a leg up, a close shave or a deep cut?

screen-shot-2016-11-12-at-1-34-40-pmInside Brand USA there’s a dysfunctional dynamic. Today the country’s divided it lacks cohesion and confuses the world. Right now there’s no one brand that America can rally behind because there is tension between the extreme poles of right and left. The self-denigration inside America, the frustration, lack of self-worth and self-esteem is seen by the world and affects people’s perception. For many onlookers Trump supporters were about making America white again, moving away from the “United Colors of America”. An America that embraces everyone to an America that’s isolationist is a starkly different place.

A country’s wealth is not measured by what it has, but whom it helps with it. Because of this, the world admires America, but many ask what will be the basis of America’s claim to moral superiority going forward. Our greatness has not come from winning, but from leadership with common values and shared responsibilities: power is not a right it’s a responsibility. America had a clear positionscreen-shot-2016-11-12-at-1-36-43-pm
in WW2, the cold war, Regan and Obama. As Tocqueville said when he traveled the country, “America is great because it is good and it is not great when it’s not good”.

A thought is as real as an IED. Might the world be concerned they’re going to see an imperial mission for America with Trump at the helm? A brand doesn’t live by itself so for Brand USA to assert that it has no interest other than self-interest is unsustainable in the modern world and our role within it. That’s the equivalent of Trump saying he has no interest other than being elected.

screen-shot-2016-11-12-at-1-31-44-pmThrough all the mud slinging, speech giving and handshakes the burning issue for Brand USA is what is America’s true motive going to be as it handles multiple, urgent and important short and long-term crises simultaneously while formulating coherent long-term strategies? For now, political hysteria reigns, befuddled, malevolent and irrational, but just as things never turn out as Presidents promise, they rarely turn out as badly as pundits warn. Keep flying high America.








How to Make M&As Work – 75% Are Failures

images-3“Merging and acquiring companies destroys shareholder value. It is as simple as that.”
Mark Sirower, Former Chairman, Goldman Sachs

What’s the Point? The overriding problem with the vast majority of M&As – even after thousands have been made – are that most M&As fail, by 50%, 65%, 73.374%…..whatever number it’s not a good batting average and it adds up to trillions of dollars in lost value. Yet the reasons for their failure are many, disastrously obvious and surprisingly easy to avoid.

The purpose of paper is to stimulate your thinking about the issues. Demonstrate how brand based transformation can drive top line growth & internal integration. Explore possibilities to ensure M&A success. Finally illustrate how the strengths of The Dean Crutchfield Company helps you achieve growth by tailoring brand-led techniques that are uniquely participant centered to guarantee results. Whether it’s a merger that requires a believable strategy that can translate across the business, or better internal understanding, encouragement, winning new mandates, ambition planning or a better communications platform, you will find our fee in your success within weeks.

images-11There are two key factors that preempt an M&A failure. First, lack of long term integration management tends to be the big killer that leads directly to losing momentum in the business.

Secondly, post deal communication is not handled well. This is often caused by the differences between the heady aspirations of the deal team on Friday afternoon and the fact there’s still business to be done on Monday morning.

The soft side is the most neglected as it’s ignorantly believed by so many not to be that vital in the deal making process and consequentally management find out to much to their chagrin that culture, problems of retaining key personnel and cross state M&As clashes as a result of pay conditions, pensions, become rife.

Remember – there are no mergers of equals. The obvious truth is that management’s in a hurry to grow and complete integration is necessary to typically:

  • Cut costs
  • Combine back office systems
  • Release synergies
  • Merge sales forces
  • Blend product lines, etc.

In these scenarios the enterprise that has the strongest culture & practice will dominate! It’s as simple as that and obvious examples like Coca-Cola, GE, IBM, Google reign supreme.

There are two determinates of value creation. The first is how tight the ship is run and typically the successful ‘acquirer’ are those with a history of cost control and productivity. In this scenario the ‘acquirers’ culture will be the more successful in directing and getting the most out of the deal. The second is the closeness of relationships inside and outside the business. In M&A, soft is hard and the closeness of relationships with employees, customers, suppliers, partners is crucial. The business that has the deepest rules wins and the challenge is to embed the benefits of their
knowledge/approach. Brand architecture plays a huge role here: is it to be logos, labels, layers and lawyers or worlds shared by employees and customers?

Bird1Reasons For Failure: Internal

1. Tough keeping business performing when everyone’s attention and concerns are projected on outcomes and the potential fall out at a personal and professional level whilst managing the acquisition.

2. Not addressing victor & vanquished attitudes. It’s surprising to learn that most companies end up spenting most of their energy on the vanquished. A natural reaction given the anguish that the process causes on scared employees.

3. Loss of momentum caused by the attention on the M&A and the fiefdoms mindful to button down the hatches

4. Leadership struggles (diverting/devisive). From the tea lady up, who is going to be the boss? These traumatic struggles are not just happening in unknown corporations. They have been made famous in major corporations like Gary Wendt and his abrupt departure from GE.

5. Inability of managers to lead the people through the transition. To be a leader you need to know how to follow, but if the guardrails aren’t there, you find your self staggering in the wrong direction. An email ain’t going to cut it. How can you leverage and orchestrate knowledge inside and across the business?

6. Do as I say, not as I do is a key part of the aforementioned. A lack of role models leads to confusion, distraction and poor performance and a lot of resumes spinning around!

7. Internal opposition to new ways of working is an obvious hurdle and there is no magic wand. That said, the more inclusive the communications can be on what’s the strategy and how it’s going to unveil itself over the coming weeks/months is critical. At these early stages it is recommended to create an interim brand for the integration that can act as a rallying cry.

8. Resistance to the new structure. Small company or large, any M&A activity attracts resistance from both outside and inside the company. New structure often means big changes at the senior management level.

9. Not engaging the workforce, fear of job losses. This is when the need to have senior contact program running across the enterprise is called for; identifying people in the merged busineses that need to share information in the hope you can build some bridges and discover new opportunities for the merged entity.

10. Not addressing conflict and culture issues. This is about separating appetites from the real requirements of what needs to be done and being clear in your communications how you expect the company to behave. That’s just the internal needs.

ImageReasons For Failure: External

1. Market share does not grow.

2. Confused brand identity. Working with GE’s Masterbrand architecture we found over 11000General Electric Automatic Iron Boxnames, brands, products, services and entities that encompassed it’s 12 divisions with a brand architecture that was up to 25 layers deep in some of its businesses – some you didn’t know were GE! That’s a lot of money being spent maintaining things that shouldn’t be. Time for open heart surgery and there will be a scar.

3. Publicized promise is difficult to match on the inside. At the turn of the century Coca-Cola realized it was speaking with two mouths. One to its analysts about the huge 20% savings it was looking to make in operational efficiency and staff reduction whilst simultaneously, HR was communicating to staff how important they were.

4. Regulators (can) both hinder and help process. Do we want two banks, two airlines, etc? No, so regulation is good. Then there’s the other side where regulation is an imbroglio.

5. Existing customers/suppliers no longer remain loyal. Druckers ‘Force 5’ explains this conundrum as rivalry dominates conversations, the power of customers in the category, suppliers, new entrants

6. Shareholders doubt acquisition strategy: shareholder return is an action not a strategy.

7. How do you manage the absorption of the acquired brand(s) with its own values – operationally and culturally into one ‘family’?….or not? And if so, how should you manage it?

8. What is the best transition strategy and how are both brand’s affinity and performance being calculated, e.g., how do you absorb the acquired business/brand into your house style? And if so, how should you manage it? Do you permit the business to keep its name under a new holding company ‘group’ concept?

9. Do you manage the M&A as a transitional process, with an initial focus on product marketing and brand rationalization?

10. Do you communicate other dimensions to the added value of the deal beyond simply increasing size, scope and resources?

ImageM&A The Right Way

A Profitable Capital Management Program: Internal

1. Do not over reassure internal audiences by saying there will not be significant changes

2. Ensure regular and frequent communication using both face to face methods (for effectiveness) and digital methods (for timeliness)

3. Focus on survivors not on leavers

4. Do not pretend it is business as usual

5. Explain the business rational for the transaction (and repeat)

6. Do not approach integration as a phase, but as an on-going process

MoneyA Profitable Capital Management Program: External

7. Be clear about the future and create a sense of direction (and brand it)

8. Do not be afraid to state that you do not have all the answers

9. Manage external and internal communications together

10. Have a communication (and integration) plan in place before signing the deal, which includes:

  • Audiences (including unions and work councils)
  • Key messages
  • Timetable
  • Activities and materials
  • Approvals process
  • Responsibilities

However, Transformation does not occur simply through somebody in a suit standing up announcing it. There must be a vision. Moreover, it has to amount to more than a few well chosen words. Here’s a check list that will assure you a more effective program:

  • Contact program between management
  • Key messages – internal and external
  • External consultants – who, why and what
  • Interim communication branding
  • Integration tools
  • Integration of communication terms
  • Identify new vision, mission and culture
  • Plan identity and communication strategy
  • Reporting news – internally and externally
  • Communication needs for transformation
  • Process for feedback

In summary, energy and focus should be placed in 5 key areas:

  • Planning
  • Announcements and pre completion
  • Early post completion
  • Integration
  • Transformation

Ikea in record 29m furniture recall in US after 3 deaths

Ikea’s very successful cabinet kills 3 kids in the US. Should Ikea recall the product just in the US or across the world? Here’s what I shared with Lindsay Whipp at the Financial Times:

Ikea has issued a recall of 29m chests of drawers in the US after three children died as a result of its furniture toppling on to them over the past two years.

The recall, which excludes 6.6m in Canada, of its Malm drawers and other designs comes amid a push by the US Consumer Protection Safety Commission to reduce the number of children being killed due to furniture and television tip-over accidents in the country, which now reaches one every two weeks.

Last year, Ikea offered free wall anchoring kits with many of its chests and dressers, after reports of two deaths. However, subsequently a 22-month-old child died in February this year after an Ikea chest fell on to him and crushed him. The chest had not been secured to the wall.

“We have no information of any tip-over incidents with a properly anchored chest of drawer,” Ikea said. “This is why we are committed to raise awareness among consumers of the tip-over risks and how to prevent them.”

Ikea added that there will be a financial impact, including the “significant investment” it is making in its campaign to educate consumers about preventing tip-overs, but not a lasting one.

The CPSC said that in addition to the deaths, there have been reports of 41 incidents of Ikea Malm chests tipping over resulting in 17 injuries, all children aged between 19 months and 10 years old. In addition, there have been reports of 41 incidents of other Ikea chests toppling over since 1989, with 19 injuries and three deaths, according to the CPSC.

Experts were divided about whether the recall — the biggest furniture recall in the US — could prove damaging to Ikea in North America, an important market for the company. The Swedish group has 3.8 per cent of the furniture retailing market, trailing Bed, Bath and Beyond, in an extremely fragmented market, according to Euromonitor data.

Neil Saunders, a retail analyst at Conlumino, said he did not expect long-term reputational damage as the issue had been going on for some time. He said that while the products could be made safer the company had indicated it had been trying to solve the problem and had not been negligent.

But Dean Crutchfield, an independent branding expert, said that while the deaths occurred in North America, the company should also recall the chests elsewhere in the world. He added that it was not enough that the manual in the UK, for example, advised customers to secure the chest against a wall.

“[What has happened is] an utter outrage for a brand that is about inclusion, warmth and is so widely recognised,” Mr Crutchfield said. “It can destroy a reputation. It says something about the management of Ikea that reflects on its brand.”

Elliot Kaye, chairman of the CPSC, said that Ikea had co-operated with the organisation and pledged to sell only dressers that comply with the most recent performance standards. He warned that other retailers should take heed.

“[Any company] failing to do so should pay close attention to the details of this recall, as they should expect to be hearing from us,” he said. “CPSC will seek recalls of other brands that pose an unreasonable tip-over risk to innocent children.”

Ikea had repeated a safety warning earlier this year about the accidents involving its Malm chests.

Programmatic, CMOs and Brands

wtfNo other moment in history has produced such remarkable times in a rapidly changing world and programmatic marketing is the future. That said CMOs don’t wish for their brand showing up against dicey or low quality content due to automated placement, but more CMOs and their agency partners need to take advantage of emergent programmatic.

Programmatic will enable CMOs to embolden their brand’s reputation with more effective targeting, increased brand association with relevant content and enhanced brand loyalty by being everywhere customers are. Just think about the average 18-34 year old views 15-17 2 minute videos a day!

The Opportunity
Programmatic’s focus is narrow and it’s reach is wide from research and strategy, pre¬production planning and production throughwhat's the_idea to trafficking, team communication, media, social monitoring influencer management, reporting and analysis are all integrated in programmaticto show the effect of offline, online, owned, paid and earned media. Programmatic is a factotum that’s more productive than people because there are just too many channels and sites for media planners to review simultaneously.

Harnessing programmatic has five key benefits:

Spend media dollars only when they will be most effective
Identify the true target audience in real time
Build effective cross-device campaigns
Automate mundane tasks
Increase marketing resources without increasing overhead
or agency budget

How It Works
To achieve these benefits programmatic needs to be understood as a greater opportunity for CMOs who currently see programmatic as real time bidding. It’s far more than that, it’s about selling car accessories to car owners. Programmatic is where ads are bought similar to how products are purchased on Amazon. Only this time RTB is buying targeted audiences using a ton of consumer data and analytics to calculate the best ad that’s on brand, on target and on time.

On The Front Foot
Programmatic’s real time capabilities are unique and can create efficiencies in planning and buying, but it’s only as good as the content and targeting that’s employed. The main hurdle for programmatic is that a lot of marketing folks perceive that it’s about buying cheap, second-rate inventory and hell has no fury than the second rate.

Everyone agrees more transparency into the quality of inventory is urgent, but this is a canard, as there already exists an increasing amount of premium programmatic that’s sold with higher CPMs.

SolutionsSignProgrammatic is the major disruptor in the media marketplace. In addition to providing more effective targeting and transparency when it comes to buying media programmatic enables CMOs and agencies to optimize operational efficiency and reduce headcount. That means more dollars can be reinvested into marketing; typically you need only a handful of people utilizing programmatic effectively as opposed to a small army working on non-programmatic.

Get With The Program
Planners and creative teams need to be comfortable with the complexity and must be willing to charter a new course in this programmatic world with an open mind, strategy and distinctive content. Instead of just targeting an ad, powerful creativity needs to generate content that’s relevant with the use of real time data to drive traffic. Nestle, McDonald’s and Starbucks are great examples of major brands that have effectively implemented creativity into their programmatic programs.

The Future
Programmatic’s growth is not imperceptible. It‘s bold, arrogant, Redpill1cocksure and portentously a game changer that’s going to be hard to avoid. CMOs and agencies need to focus on other priority areas like buying cross-platform and cross-device targeting.

Currently programmatic handles $15B of US digital media ($58B). By the end of next year programmatic could be managing $20B according to industry pundits.

Albert Einstein said, “Not everything that can be counted counts and not everything that counts can be counted”.

Ultimately, programmatic’s not just RTB, it’s about making advertising more affordable and effective for any brand that can implement it. Perceiving programmatic as having baleful consequences is a huge mistake. In the dark everything is possible and CMOs need to see the light and transform their outlook for a programmatic future or else.

Lies, Damn Lies and Morality: Brands Have Some Work to

shellReputation is trust and the sound of distant drums is challenging how big brands play their role in the world raising fundamental questions about the morality of the offering (McDonald’s), the ingredients (Coca-Cola), the business model (Nestle’s palm oil) and product safety (Toyota).

In many cases the reason for the looming challenge is obvious when you contemplate tobacco, but many other brands spanning auto, financial services, oil, mining, gas, CPG, tech and telecom are being challenged by an ever growing number of pundits, thought-leaders, politicians and consumers: are you morally correct?

The typical response from most leading brands and marketing practitioners is to strenuously deny the complaint with corporate statements about their integrity, honesty, responsibility and ethical business practices. Claims and counter claims, evidence and counter evidence run riot and with the dexterity of gook brands claim it’s unfair criticism countering that there’s enough legislation in place and contend that they have a key role helping the environment, growing the economy and generating jobs.

Knowing and doing are totally different and many of these leading brands have a dysfunctional dynamic when it comes to transparency and camouflage the smell of their inauthenticity. Many brands claiming their societal role have woken
up on 3rd base thinking they hit a triple. To shatter the complacency it requires a concert of action to counter the public’s growing concern and cold contempt for many big brands: if you don’t like change you’ll enjoy irrelevance even less.

Brand is not about power it’s about responsibility. To orchestrate, motivate and facilitate a change in perception requires big brands to demonstrate not assert their morality claims. Brand leaders must ensure that strong rhetoric is not left to stand on its own, without a strategy to translate words into action because morality is something you do not wait for.


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