All posts in Reputation Crisis

  • Talk Talk – or Jaw Jaw?


    I was rather impressed when I heard that (Baroness) Dido Harding was hitting the TV stations and papers to brief on the cyber troubles Talk Talk were facing.

    Best practice in a crisis, as we know, is to acknowledge and respond, and to engage all stakeholders openly, accurately, and honestly.

    Only last week we had heard Lord John Browne of Maddingley argue that in times of reputational crisis leaders had to ‘lean in’, ‘over-react’ and be ‘radical in their communication’.

    Well poor old Dido Harding has had a tough time of it over the past 72 hours.

    There is no doubt she has been a decent CEO. Talk Talk is a difficult business, sitting at the cut-price end of the broadband market.  But it has grown under Harding’s leadership and now has over 4M customers.

    So when the company faced its third cyber security breach this year she hit the airwaves.

    She was frank enough to admit what she did and did not know.  Talking to John Humphreys she revealed she had no idea whether Talk Talk had encrypted its customers’ data.

    And honest enough to accept failings, for example telling the Daily Telegraph: “Do I wish I had done more? Of course I do. But would that have made a difference? If I’m honest I don’t know.”

    And she has apologised.

    Lady Harding clearly has a personal interest in online security.  When she accepted her peerage she said “whether it’s child internet safety, cyber security, internet freedoms, there are some really difficult issues.”

    And this weekend, “This is happening to a huge number of organisations all the time. The awful truth is that every company, every organisation in the UK needs to spend more money and put more focus on cyber security – it’s the crime of our era.”

    But a personal – genuine and authentic – crusade on internet security is not enough.

    Actions speak louder than words.  Two earlier break-ins in the past year have already tarnished Talk Talk’s reputation for keeping data safe.  This should have been the catalyst for serious activity addressing IT issues.  And if anybody in the company had any doubt as to the importance of this the reputational consequences ought to have been spelled out.  At all levels of the company.

    And there has obviously been a terrible breakdown in communication between the IT people and the corporate leadership.  A senior churn involving the loss of the Chief Information Officer over the summer can be no excuse.

    The message has been confused.   At one point it was 4 million customers.  Then a back-pedalling 400,000 over the weekend.  And then news broke that this might have affected millions of former customers.

    And the analysis of the nature of the attack has sounded amateurish.  Cyber security experts I have spoken to are sceptical of some of Talk Talk’s claims, and some of the language has displayed unfamiliarity with the subject.

    Talk Talk have suffered terribly in the past few days, and the damage to the company’s reputation enormous.  Yet again it’s a case of lack of preparedness and poor attention paid to reputation resilience.

    It is high time organisations like this took reputation resilience more seriously, and realise that reputation stewardship is the responsibility of everybody in the organisations. Not just the CEO.  Not just the communications people.  Everybody.  Even – especially – the IT Department.


  • Booz Allen Hamilton – Snowden

    Reporting of the Snowden/NSA case has focused on the wild goose chase for Snowden himself.

    But what about the reputational impact upon Booz Allen Hamilton, Snowden’s employer, and Microsoft, Yahoo, Google, Facebook, PalTalk, AOL, Skype, YouTube, and Apple – all of whom are in the spotlight for allegedly allowing access to users’ data through the US government PRISM programme.

    Edward Snowden

    Big mole

    In Booz Allen’s case they saw it coming.

    Take this from their annual SEC filing for 2012/13:

    “We depend on contracts with U.S. government agencies for substantially all of our revenue. If our relationships with such agencies are harmed, our future revenue and operating profits would decline.”

    And this:

    “Our professional reputation is critical to our business, and any harm to our reputation could decrease the amount of business the U.S. government does with us, which could have a material adverse effect on our future revenue and growth prospects.”

    And this:

    “Our employees or subcontractors may engage in misconduct or other improper activities, which could harm our ability to conduct business with the U.S. government.”

    And this:

    “Internal system or service failures, including as a result of cyber or other security threats, could disrupt our business and impair our ability to effectively provide our services to our clients, which could damage our reputation and have a material adverse effect on our business and results of operations.”

    All of which looks spookily prescient.

    The conclusion one would hope to draw from this is:

    • Booz Allen Hamilton has robust reputation risk identification processes in place
    • They have active internal controls to pre-empt these sort of occurrences
    • The Snowden case is a one-off / ‘rogue employee’ rather than an ingrained problem with the culture of the organisation

    We will see.

    But it’s also worth noting that Snowden is 30 years old (his birthday was 2 weeks ago).

    He is what demographers call a Millenial’ or Generation Y-er.

    Compared to previous generations Gen-Y-ers tend to be more idealistic, more cynical and questioning, less loyal, and less accepting of all forms of authority. And they are also the generation with the knowledge and skills most in demand in the digital age.

    Time for some real work on the implications of Generation-Y attitudes in the workplace, and the potential reputational risks posed to employers.

    [Photograph: Guardian]

  • BBC and LSE – Reputation Battle

    It’s clear how this London School of Economics/BBC argument will end. In the eyes of students, academics and the public (but not dictators) the reputations of both institutions will benefit – in the long run, and as long as the right decisions are made by the heads of both institutions.

    They have fallen out after a Panorama journalist secretly filmed during a LSE student visit to North Korea.

    North Koreans

    North Koreans

    Journalist Paul Sweeney posed as “Dr John Paul Sweeney, LSE Student, PhD History”. I understand that he was referred to throughout the visit as “the professor”.

    The LSE has demanded the BBC withdraw the planned episode and issue a full apology for the actions of BBC staff in using the School and its good reputation as a means of deception”.

    What implications does this row have for the reputations of these two venerable institutions?

    Firstly, LSE.

    The LSE unhappiness is to do with (a) its ability to conduct similar trips in future and (b) Sweeney gained access by deception.

    Other academics have waded in:

    “The UK’s academics have a global reputation and it is vitally important that they can be trusted and seen to be working in an open and transparent manner. The way that this BBC investigation was conducted might not only have put students’ safety at risk, but may also have damaged our universities’ reputations overseas” said Nicola Dandridge, chief executive officer of UUK, the body representing university sector in the UK.

    Reputations are complex, and have many dimensions to them. One group may have very different perceptions than another, for quite legitimate reasons.

    Dandridge’s point here is actually about universities’ reputation overseas amongst despotic regimes and dictators. Not about its reputation amongst students, academics and the public.

    Lets take as a starting point the purpose of the University. In the LSE’s own words it exists to teach, research and “to improve society and to “understand the causes of things”.

    How does this episode impact on that?

    Clearly they runs interesting trips, and if they can access such relevant places as North Korea as part of their study programmes, student applications are not going to suffer

    What about the LSE’s apparent lack of internal controls? Who was in charge? Why weren’t the three imposters spotted? (Presumably lugging around bits of camera equipment.) This does reinforce a perception of scatty academics who lack basic management and organisational skills.

    The LSE’s pursuit of access to foreign dictators has caused it problems in the past. In 2011 the university’s director resigned after it was alleged that it was involved in a multi-million pound deal to train future members of the country’s elite, and was suspected of facilitating Saif Gaddaffi’s studies there.

    Given its recent form some may see the LSE’s slightly hysterical demands as high handed, and even hypocritical. And the call by one of the student representatives that the BBC reporter “is as unwelcomed to be associated with the LSE as Saif al-Islam Gaddafi” is rather silly.

    Now to the BBC.

    The BBC’s reputation has taken a battering in recent months. A poll by YouGov in December found that only 31 per cent of respondents rated the BBC’s reputation as “high”, down from an approval rating of about 80 per cent that it had enjoyed for years.

    In the words of one overseas newspaper the broadcaster has been “condemned worldwide for a sexual abuse scandal involving a predator presenter.”

    But this episode does show BBC’s commitment to fearless journalism. Its stated mission is to enrich people’s lives with programmes and services that inform, educate and entertain“. And in this case bringing news to the world of truly terrible suffering in this benighted country.

    The BBC’s robust defence has centred on the public interest of getting the story.

    BBC News head of programmes Ceri Thomas said yesterday: “This is an important piece of public interest journalism.” Asked whether that justified putting student lives at risk, he replied: “We think it does.”

    So there we are. Fearless journalism, acting in the public interest, and a university running relevant courses, taking students to far flung and interesting places.

    We’ll be tuning in to Panorama tonight. Expectations are running high.







  • KPMG Reputation Crisis

    The KPMG insider trading scandal is a big deal that has huge implications.

    The accountancy profession has been under scrutiny over its performance during the financial crisis, and since the failure of Arthur Andersen in the wake of Enron.

    KPMG has issued a statement condemning the partner’s ‘rogue actions’.

    Honest Accountants

    Honest Accountants

    Journalists will look for the newsworthy angles – to whom was the information passed, what was the information, did it lead to buying or shorting stock, and who else was involved?

    But the big issue here is actually the reputation of KPMG, the broader accountancy profession, and the ability to deliver accurate, impartial and confidential assessments of companies’ financial positions.

    The most damaging sort of reputational crisis is that where the core business of an organisation is called into question.

    The business model of the accountancy profession is built upon partners acting with discretion and impartiality, in a position of trust.

    The violation of those principles by a partner, however ‘rogue’, is something KPMG and the profession will now have to grapple with.

    The accountancy firm’s culture, practices, oversight, and controls will be subject to a great deal of scrutiny in the coming days.