Weekly Roundup - May 18

This is our latest installment in our weekly series on fear in the marketplace and specifically how to be Brave in business decision making. Each week we post a few reads along with a synopsis of a few current business stories and how executives and managers are letting fear play out in decision making.

1. Recently Bud Light ended up with a black eye and controversy on its hands with a beer label with the tag line 'The perfect beer for removing 'no' from your vocabulary for the night.'

Despite using possibly one of the worst ideas ever, (especially in light of recent high profile cases of domestic violence such as Ray Rice in the NFL) what was potentially even more startling was the fact that this label was green lit only after going through 5 approvals inside Anheuser-Busch including marketing, legal, corporate social responsibility division and an advertising code committee.

At Corporate Bravery we talk often about the role that hierarchy and internal compliance teams have on creating fear in corporate decision making and this is a classic example. Even when pressed on how it decided against a recall their response was that the bottles didn't 'pose a health or public-safety concern'. The response shows that the culture isn't strong enough to allow individuals to use their best judgement and instead it is easier to hide behind protocol and layers of bureaucracy.

The article goes on to mention how AB InBev 'spread the blame' first to its advertisers BBDO for writing the label and then to the US Alcohol Tobacco Tax & Trade Bureau. The latter is laughable since the government agency can't possibly regulate stupidity.


2. In the lead-up to the NFL Draft I ran across an interesting take on how teams draft quarterbacks that is an interesting corollary to what often-times happens in our business organizations.

The article in the Wall Street Journal talks specifically about the quarterback position and how the position has evolved tremendously in the past decade but NFL teams continue to want to force those being drafted into the position in the NFL into a certain type of quarterback. To summarize the NFL's track record on innovation the article says, "True aficionados of football strategy would roll their eyes at the NFL game. It was, for all its revenue and viewers, not the place for innovation."

A Fearless Cinnamon Roll?

 If you are like me you probably thought Cinnabon was sleepy little chain of mall stores that was tethered to the retailing past but recent articles I read have completely changed my impression of Cinnabon.  It doesn't hurt that its CEO is a great story and a good example of corporate bravery.

Part of this change of mind is because of Cinnabon's Kat Cole.  She has a really cool history which you can read more about in this Entrepreneur article.  She has been active on Twitter and engages customers regularly and has a good grasp on who Cinnabon is and its customers and has a business plan to provide even more for its customers.

I recently read this Q and A in Restaurant News entitled "Cinnabon's President Outlines Growth Strategy" that gives a couple of great insights into how they have resisted allowing fear lead their decision making in two important areas - product innovation and media or public relations.

One of the key areas for growth for Cinnabon is licensing arrangements with consumer brands.  They have 72 such arrangements including Kellogg cereals, Pillsbury, and International Delights to name a few.  Creating partnerships with that many companies for that many consumer products comes with a lot of risks and many brands would never dream of possibly diluting their brand positioning in that way but Kat has some thoughts on that indicating they are not afraid to make a few mistakes and have made smart decisions to limit the possible downsides:

Some people ask questions about all the licensing and co-branding, and certainly we’re not perfect; we’ve made our mistakes. But we’ve had more wins than we have losses, and one of the things we’ve learned is that as long as we pick a partner that is typically No. 1 or No. 2 in their space, and they have the demonstrated ability to deliver a quality that exceeds consumers’ expectations of their product and meets consumers’ expectations of our brand, then it’s a smart move.

The other big question that continues to come up with Cinnabon is the current climate around products with so many calories and the growing concerns around what are called 'indulgent brands' and their impact on waistlines in American culture.  I like how she doesn't shy away from the identity of the brand.  She knows exactly what the brand communicates and doesn't dance around the company's identity:

What’s the future of indulgent brands? How do you justify a brand that’s so indulgent? And I say, look, first of all, we have to have a few agreements. One is that people are going to want to treat themselves. I think most people would agree, whether it’s with burgers and fries or cocktails or doughnuts or whatever it is. The next is that they’re going to want to do that with sweet things. And if you can agree on that, then that says that there’s a place in the market for indulgent brands — ice cream, cookies, cinnamon rolls, whatever it is. That has not changed, actually. Despite all the health trends, we have just had three of the best comp sales years we have had in a decade. Lots of people are buying cinnamon rolls, worldwide. However, what’s changed is they demand higher quality for that indulgence. And of course they want more flexibility in portion size.

She continues on to respond to a common thought process for those critical of indulgent brands:

We have tested whole grain, and you know what? A couple of people think it’s a good idea. A couple, but not enough to make an additional whole product innovation worth it.

A Classic Media Response

One of the eight factors of a fear culture is the media.  While I provide a lot more information related to each of the eight factors in my upcoming book I couldn't let this great example pass by without highlighting it.

You may have heard about the recent fire in a Tesla Model S.  While a car fire should not be a market moving occurrence, this one had a little more meaning.


The backstory;

Tesla has been on a roll lately both in the stock market and in the court of public opinion with the very successful launch of its Model S exceeding sales expectations and the future looking bright for the company as it tries to introduce new lower priced models that can be produced on a more massive scale.  However, the lingering question about the Tesla engineering has been the battery pack and what safety issues may be caused by a battery pack exploding.

This past week we finally found out and within minutes of the story hitting the wire (the embedded video has 3 million views and there are others with a simple Youtube search with similar view numbers) the stock plummeted losing over 10% of its value within a matter of a couple days.  The cry starting to build quickly towards a media statement on the accident but nothing came from Elon swift enough for those in the market and the stock continued to sink.

Then on Friday Elon broke the silence with a master stroke of genius regarding the incident.  He released a blog post detailing the accident along with the emergency response.  You can read the full response at this link but a few key aspects of the response:

1. Elon highlighted the safety features - onboard alert system directing the driver and occupants to exit the car and the firewalls between battery packs preventing the fire from reaching the cabin of the car.
2. Quarter inch armor plating around the battery pack compared to a thin metal sheet protecting the gas tank in a conventional automobile.
3. He contrasted the stats so far with that of a typical combustion engine with a conclusion that is 5 times safer in a Tesla than a typical gasoline powered engine.
4. Provided a copy of the email exchange with the customer where they reinforced that they were very pleased with how everything performed and that they were even more sold on the product

While there was a pressure to rush out a response (even highlighted by the Forbes article linked) to attempt to stem the tide of fear that was building around the company and its engineering they were methodical in gathering all the facts even if it took extra time.  They created a clear, detailed description which added credibility to the message, and then turned a potential negative into a massive selling opportunity by contrasting it with the competition - the traditional automobile.

In full disclosure I just purchased less than 100 shares of Tesla on Monday, but this has been a perfect example of a brave and courageous media response in a situation where fear could have dictated a rushed and inadequate response that would have only created more questions.  It came at a cost as the shares (as of this writing) have not recovered their pre-accident price but they have a long-term perspective not driven by the very fickle short-term whims of the market.