Shutdown, Tragedy, Looming Default: Welcome to Washington

 Shutdown, Tragedy, Looming Default: Welcome to Washington

THE PR VERDICT: “D” (PR Problematic) for the United States government.

The fictional town of Sunnydale was the site of the Hellmouth in the popular TV series Buffy The Vampire Slayer, but it’s starting to feel like the true location of the portal to Hades is Washington, DC. Look at the events of the past week alone. First, the government shut down. A few days later, a delusional woman went on an automotive rampage near the Capitol and was shot and killed by Capitol police – who were receiving no pay at the time due to the shutdown. Earlier this week, a man self-immolated on the Washington Mall, motives unknown. And next week, should Congress fail to come to terms, America will hit its debt ceiling and go into default. End times, or what?

The game of high-stakes poker between Congress and President Obama saw much sweat on the Republican side and no blinking from the Oval Office. As of yesterday, House Speaker John Boehner said “I’m not drawing any lines in the sand” about budget issues – a far softer message than was broadcast merely one day ago.

Meanwhile, Congress and the government in general are coming under increasing pressure to get past this problem. Citizens are shouting at their representatives. Petitions to put Congressional paychecks on the same freeze as those of government workers are gaining signatures. And the stock market is flattening as a result of the impending default. How deeply will Washington peer into this abyss?

THE PR VERDICT: “D” (PR Problematic) for the United States government. They would have earned an “F,” but we’re saving that for next week.

THE PR TAKEAWAY: Remember who you’re fighting for. While Democrats say they’re trying to give Americans affordable health care, and Republicans are saying Americans don’t want it, both sides are receiving substantial paychecks, unlike some of their constituents. The longer the standoff, the more Americans become united – in their increasing ire at their own elected officials. Seems likely that, come voting time, Congresspeople will have hell to pay.

Is Apple’s PR Bruised?

 Is Apples PR Bruised?What to think of Apple? To hear stock analysts and business anchors talk, one would think Goliath had just taken a severe hit to the head. Apple has been the undisputed giant of tech for so long that the slightest waver on its feet has everyone talking about how the mighty may soon be falling.

True, profits are down – about 18 percent this quarter, and the first decline for Apple in a decade. Speculation that the company might slope downward following the demise of leader Steve Jobs didn’t come to pass immediately, but the birth of competitive, and cheaper, products are starting to pose a threat. And there are no new products coming from Apple, which is bad news for a company that caters to consumers mad for the latest in tech devices.

Another first for Apple is having to borrow money. The explanation? Rather than face taxes on bringing in offshore assets, Apple will take a loan to pay $100 billion to shareholders by 2015, which pleases some, but perplexes others. Bottom line: should Apple be in crisis mode or business as usual?

THE PR VERDICT: “C” (Distinctly OK) for Apple. The news isn’t good, but then again it isn’t all rotten.

THE PR TAKEAWAY: A company’s reputation can precede, and quiet, speculation. Apple may be wavering in its long-held number one slot, but one of the company’s priorities has been building a brand. People don’t speak of phones; they talk about iPhones and lead iLives. Consumers still see Apple products as cool and a cut above the rest despite their ubiquity.  While cheaper products may come around, it will take far more than that to put a dent in Apple’s brand loyalty. Apple’s PR should continue to polish its image and brand and let the stock price see-saw of its own accord. Apple’s upward unrelating share price climb had to come to an end at some point. Best thing is to pause and catch a PR breath.

Martha Stewart Cooks Up a New Image

 Martha Stewart Cooks Up a New Image

The PR Verdict: “A” (Gold Star!) for Martha Stewart.

Martha Stewart was very busy over the Thanksgiving – and not just cooking up a feast. The guru of home entertaining was featured in both The New York Times and The Financial Times. Both  articles were presumably designed to calm investor nerves about her company, Martha Stewart Living Omnimedia, which recently announced layoffs and financial losses.

The NYT glowingly described Martha as the new “patron saint” of the hipster entrepreneurial class while the FT gave Ms. Stewart multiple opportunities to talk about planned and current business initiatives (good for the stock price). And neither failed to mention her time in the clink.

Martha gave the FT passing acknowledgment of her prison sentence for lying to prosecutors about a stock sale, while the NYT asked her fan base for its opinion. Luckily, the responses were consistently positive. One fan, who referred to Martha as “The Jesus of the craft world,” said, “I heard that she just took some bad advice. Anybody can make mistakes.” Martha, from what she told the FT, takes a similar view.

The PR Verdict: “A” (Gold Star!) to Martha Stewart for putting a tough period behind her. It’s even given her street cred!

The PR Takeaway: Set the tone, and others will follow. While prison time might have theoretically ruined the image of the perfect homemaker, Martha Stewart has been able to successfully move on. Parting with the traditional PR strategy of public atonement, Martha instead describes her prison time as “a hole I fell into; luckily it wasn’t a very deep hole,” while adding that the experience didn’t teach her much. From the outset she has been unrepentant, and now her new followers are taking the same line of indifference. In the age of labored public apologies, this is one strategy that  is breaking the mold. And Martha’s expanded fan base seems to like it.

Click here for Martha’s FT interview and New York TImes feature.

What’s your opinion of Martha Stewart’s strategy? Give us your PR Verdict!

Former Citigroup CEO: “Too Big” Can Fail

 Former Citigroup CEO: Too Big Can Fail

The PR Verdict: “B” (Almost a Winner) for Sandy Weill, who has joined the chorus of concern about the “too big too fail” banking ethic.

So Sandy Weill, Citigroup’s former CEO, is now conceding that what he spent his lifetime proudly building maybe wasn’t such a great idea after all. The former architect of megabank Citigroup stunned the market this week with his observation that banks may be too big to manage. Why not split up investment banking from regular banking, he suggested during an interview on CNBC. Weill revealed a new mantra: bigger may no longer be better.

Quite a volte-face from the man who fought tooth and nail for the repeal of the Glass–Steagall Act, which previously drew a line between commercial and retail banks. Visitors to Weill’s offices when he was at Citigroup could feast their eyes on a proudly-displayed plaque that read, “The Shatterer of Glass Steagall.”  Back then, Weill and his peers credited themselves with creating a brand new banking world.

Why turn back the clock now? As an explanation, Weill’s was masterful in its positioning. Nothing wrong with what he did at the time; it’s just that well, NOW, the situation has changed, Weill explained. This was not an admission of personal responsibility–just that what was once right at the time is “not right anymore.” That was then, this is now.

The PR Verdict: “B” (Almost a Winner) for Sandy Weill, who has now joined the chorus of concern about “too big too fail”. Weill has done a neat (albeit cynical) job of personally shifting from “man in charge” to curious bystander.

The PR Takeaway: Context gives plenty of air cover. By concentrating on the macro, not the micro, Weill has moved into the debate without any personal admissions of failure. This was about what works in the market and nothing to do with his own personal role in the crisis.  Not really a change of heart, more of an update about what the markets are saying.  That makes it so much easier to swap sides and means he can now sit with the cool kids at the school cafeteria.

What’s your opinion of Sandy Weill’s about-face on banking? Give us your PR Verdict!

Barclays CEO Admits He Was Dazzled by Diamond

 Barclays CEO Admits He Was Dazzled by Diamond

The PR Verdict: “C” (Distinctly OK) for Martin Taylor, former CEO of Barclays.

What to make of the recent mea culpa from Martin Taylor, the former CEO of Barclays? The Financial Times published his opinion piece, provocatively entitled  “I Too Fell for the Diamond Myth,” in which he describes his time as CEO of Barclays during the late 1990s.  Back then, Bob Diamond was running Barclays Capital, the investment banking arm, and reported to Taylor. Judging from the article, we can safely assume they don’t exchange holiday cards.

Taylor gives an insider’s view of boardroom dysfunction and a deliberate effort by traders within Barclays Capital to work around trading limits. The traders exposed the firm to massive risks by window dressing and reclassifying bets to get them past agreed internal controls. This was the late ’90s, after all.

Russia subsequently defaulted, and the markets went into freefall. Describing Barclays’ experience as “worse than most,” Taylor says the “failure to respect the internal control system” precipitated the fire sale of key assets. Traders were dismissed, and Diamond maintained that he had known nothing. Diamond offered to resign, but Taylor, concluding that the business was still in its infancy, said his direct report should stay. Taylor concludes by saying, “I deserve blame for being among the first to succumb to the myth of Diamond’s indispensability.” Ouch!

The PR Verdict: “C” (Distinctly OK) for Martin Taylor. After more than a decade, he has come clean with some insight. Trouble is, we’re still missing some basic information.

The PR Takeaway: Personal reflection wins people over, but ignoring key questions undoes the gain. If Bob Diamond wasn’t asked to leave, was he at least given a zero bonus for the year? Was anything else done to send home the message that the CEO running the business had bottom line responsibility? Without a full explanation, it’s hard to get past the sneaking suspicion that Taylor’s mea culpa might have been more of an effort to rewrite history than a more profound and insightful contribution.

Is Taylor’s article an explanation, or an excuse? Give us your PR Verdict!