Horn Testifies Before House Committee

Michael Horn, President and CEO of Volkswagen Group of America, Inc., addressed the U.S. House Committee on Energy and Commerce Subcommittee on Oversight and Investigations about the company's emissions scandal.

His opening statement to the committee included his own defense. He said he was not aware of the software issue, but he did assure the committee that the company takes full responsibility.

Subcommittee members, such as Diana DeGette of Colorado, pushed Horn for more details about the deception:

"You haven't revealed how the defeat device affects the engine, why it was installed and how it was able to evade emissions tests. You haven't revealed when and how the engines equipped with this defeat device will be fixed. And you haven't told us whether that fix will affect the fuel economy or performance of the vehicles."

Other members questioned whether this was VW's only "dirty little secret" and expressed concern about widespread deception in the auto industry.

Discussion Starters:

• How convincing do you find Horn's opening statement?
• I wish he had coaching to pronounce "vehicle" more clearly. Do you have trouble understanding other words?
• Watch the full hearing. How well does Horn respond to questions? Which do you find particularly persuasive, and where does he fall short?

Planned Parenthood Fights Allegations

A video showing Planned Parenthood officials discussing how they provide fetal tissue for research has caused outrage and a fight from the organization. Abortion opponents use the video as evidence of Planned Parenthood's "selling baby parts," but the organization denies these claims. 

In a statement on its website, Planned Parenthood refers to opponents as "extremists" and calls the videos "highly political" with "at least 42 splices": 

"They are engaged in a fraud, and the claims they've made have been discredited and disproven. If there was any truth to these videos, the footage would be shared with a judge who would take the necessary steps to seize records and conduct an investigation.  Instead, the videos were shared with members of Congress in advance of being released to the public and then used in an effort to defund Planned Parenthood and eliminate access to women's health care."

The Planned Parenthood website has additional statements, and Cecile Richards appeared before Congress to testify. 

Discussion Starters: 

• Analyze the organization's statements on its website. What themes emerge? How would you describe the tone? 
• In what ways do your own views of abortion affect how you read the organization's statements?

GM CEO: "People Died in Our Cars"

In a statement to employees, GM CEO Mary Barra was frank: "People were hurt, and people died in our cars." Her presentation came after the company reached a $900 million settlement agreement with the Department of Justice for failing to recall cars with faulty ignition switches. (See transcript.)

Barra focused on changes at GM: 

"But apologies and accountability don't amount to much if you don't change your behavior.  We have.  And that's what I want to focus on in our time together."

She outlined what she called a "tough agreement" and then reviewed the actions GM has already taken: "We lived our values, and it made a huge difference."

Discussion Starters:

• Who are the primary and secondary audiences for Barra's presentation? Why would the company make this internal communication public?
• Assess Barra's video. What is notable about the content, organization, and delivery compared to her previous presentation to employees?

VW Executive Changes and More Comms

Since the scandal broke, Volkswagen has sprung in action, making executive changes and stepping up communications. No surprise, Martin Winterkorn resigned. However, his statement is unusual (as was his video, considering the likelihood that he would leave the company): 

"I am shocked by the events of the past few days. Above all, I am stunned that misconduct on such a scale was possible in the Volkswagen Group. 

"As CEO I accept responsibility for the irregularities that have been found in diesel engines and have therefore requested the Supervisory Board to agree on terminating my function as CEO of the Volkswagen Group. I am doing this in the interests of the company even though I am not aware of any wrong doing on my part. 

"Volkswagen needs a fresh start – also in terms of personnel. I am clearing the way for this fresh start with my resignation. 

"I have always been driven by my desire to serve this company, especially our customers and employees. Volkswagen has been, is and will always be my life. 

"The process of clarification and transparency must continue. This is the only way to win back trust. I am convinced that the Volkswagen Group and its team will overcome this grave crisis." 

Since the decision on Wednesday, VW has hired a new chief executive, Matthias Müller, previously head of Porsche. A New York Times article title calls him an "insider"-notable because of criticism about the company's centralized control of power.  

Additional communications include the following: 

• Statement by the executive board
• Statement by the CEO of VW car brands
• Statement about further restructuring

Discussion Starters: 

• Analyze the most recent communications. Are you convinced the company is doing all it can to fix the situation and regain customer confidence?
• As far as I know, U.S. VW customers have not received any direct communication (e.g., an email) from the company. What's your view about this? 

Volkswagen Upsets Customers

Volkswagen customers are furious, and the executives have a lot of explaining to do. Chief Executive Martin Winterkorn may be known for his meticulousness, but he missed the boat in ensuring that the company met ethical industry standards. An investigation has revealed that millions of diesel cars don't meet emissions guidelines; worse yet, software to intentionally deceive tests was built into many models.

A New York Times article covers background (drama) between Winterkorn and former Chairman Ferdinand Piëch. Now, Winterkorn seems to be holding the responsibility. Because VW has centralized management practices, he'll have a tough time convincing stakeholders that senior management wasn't involved. 

As you can imagine, VW customers aren't happy about the situation. They bought the "clean diesel" line from the company and "green" award-winning Passats, Golfs, Jettas, Beetles, and Audi A3's that aren't what the company claimed. The fixes are expensive and will cause drops in performance or trunk space. A Wired article also warns that, whether people "dodge the recall or not, your car's resale value is likely to drop as far and fast as VW's stock, which has plunged 20 percent since the feds came down on VW Friday." 

On its website, VW posted two statements relevant to this situation. The first addresses the findings and apologizes (below), and the second-issued two days later-says the company is "working at full speed to clarify irregularities concerning a particular software used in diesel engines." 

In addition to these written statements, Winterkorn created an apology video: 

UPDATE: Today's post, as predicted, included Winterkorn's resignation:

Discussion Starters:

• Analyze the two company statements. In what ways do they rebuild company image, and how do they fall short? 
• What else does the company need to do to gain consumer confidence? What should Winterkorn do? 
• The news was announced on Sept. 20. How many days do you predict it will take him to step down?

United CEO's Email to Customers

United's new CEO Oscar Munoz has reached out to United Mileage Plus members to introduce himself and try to improve the airline's image. Three executives, including the former CEO, left the company because of potential improprieties.

After communicating with employees, Munoz has sent a similar message to customers.

 

In an article, "How A Scandal Has Given New Life To United Airlines," the author discusses the airlines' stock gain for the past couple of days. Perhaps the CEO's clear, personal communications are contributing to the recent attention.

Discussion Starters:

• Compare the messages to employees and customers. What differences and similarities do you notice?
• In his message to customers, Munoz did not mention that executives recently left the company. What factors do you think he considered in making this decision?

Comedian Apologizes for 9/11 Account

For 14 years, Steve Rannazzisi stuck to his story of escaping the Twin Towers during the 9/11 attacks. In 2009, he gave a detailed account of the day and how the event inspired him to move to Los Angeles. Now a comedian with his own TV show, a special on Comedy Central, and an endorsement deal with Buffalo Wild Wings, Rannazzisi's lie is biting him back.

Rannazzisi posted a series of tweets, but his confession doesn't seem to be winning him any favors. He also published a statement, which The New York Times called "contrite":

"It was profoundly disrespectful to those who perished and those who lost loved ones. The stupidity and guilt I have felt for many years has not abated. It was an early taste of having a public persona, and I made a terrible mistake. All I can ask is for forgiveness."

Buffalo Wild Wings is reconsidering their deal:  

"We are disappointed to learn of Steve's misrepresentations regarding the events of September 11, 2001. We are currently re-evaluating our relationship with Steve pending a review of all the facts."

Discussion Starters: 

• What's your assessment of Rannazzisi's tweets and statement?
• Should Buffalo Wild Wings cancel his contract? Should Comedy Central cancel his show? If so, what should they say?

European Commission Official Calls for Unity

Jean-Claude Juncker, president of the European Commission, called for quotas for European countries to accept more than 160,000 refugees. Juncker is encouraging consistent immigration policies and warning sanctions for countries that don't take their fair share. 

Juncker used emotional appeals in his state-of-the-union address to the European parliament: 

"Today it is Europe that is sought as a place of refuge and exile. It is Europe today that represents a beacon of hope, a haven of stability in the eyes of women and men in the Middle East and in Africa. That is something to be proud of and not something to fear."

When speaking of the potentially 500,000 refugees who may cross borders, Juncker gave more examples: 

"Europe is the baker in Kos who gives away his bread to hungry and weary souls. Europe is the students in Munich and in Passau who bring clothes for the new arrivals at the train station. Europe is the policeman in Austria who welcomes exhausted refugees upon crossing the border. This is the Europe I want to live in."

Although Germany, France, and Italy support the plan, other EU members are reluctant. Juncker used Ukraine as an example of a country that may seek assistance in the future. But he did not convince everyone. Slovak prime minister said, "We won't bow down to Germany and France. Quotas are irrational." The plan also faces resistance from Poland and the Czech Republic, whose Europe prime minister called quotes "nonsensical." 

The UK has been a notable resistor to accepting migrants. Britain's Liberal Democrat Member of the European Parliament chastised the prime minister's lack of cooperation: 

"By refusing to take a single refugee that has arrived on Europe's shores, the UK government is shirking our international duty and lowering Britain's standing in the world. Of course we must do more to tackle the causes of the refugee crisis at source, but we cannot turn a blind eye to the human tragedy unfolding right now on our continent."

Prime Minister Cameron has defended his financial contributions and focus on resettlement. 

Discussion Starters:

• What are Juncker's challenges in delivering this speech? What type of resistance does he need to overcome?
• Read the transcript of Juncker's speech. What examples do you see of emotional appeals, credibility, and logical argument? What rhetorical devices does he use?
• Assess Juncker's delivery skills. What suggestions do you have for his future presentations?

Pilot Strikes

Two pilot associations are in the news for strikes this week: Vereinigung Cockpit (a German pilots' union for Lufthansa and Germanwings) and the Independent Pilots Association (for UPS).

The Lufthansa pilots have extended their strike-their 13th in the past 18 months-to a second day, causing more than 1,000 flight cancellations. In a press release, the company stated its willingness to negotiate with the union:

"Lufthansa remains willing to resume its negotiations on all open collective labor agreement items with the VC's Group Collective Labor Agreement Committee at any time. 'Our goal is still to work with the VC to find a joint solution to all the open CLA issues through the negotiating process,' confirms Dr. Bettina Volkens, Chief Officer Corporate Human Resources of Deutsche Lufthansa AG."

The UPS pilots took out a full-page ad in The Wall Street Journal to express their dissatisfaction with union negotiations. The ad claims, "UPS management has stalled and delayed, unnecessarily prolonging our contract negotiations."

In a statement, UPS management clarifies that, although the union is threatening to strike, it won't happen. The first three paragraphs of the statement follow:

"UPS continues to negotiate in good faith for a contract that is good for our employees, our customers and our company, and we are confident these negotiations will be completed without disruption in our service.

"Despite the IPA's announcement, there is no real threat of a strike. Such authorization votes are routine during negotiations in the airline industry, but they are legally irrelevant under the Railway Labor Act, the U.S. labor law that governs airlines.

"Under the RLA, a strike is not possible unless authorized by the National Mediation Board. Even then, there are a series of fail-safes, including presidential and congressional intervention, designed to prevent an interruption in operations. . . ."

Discussion Starters:

• What's your view of the IPA's full-page ad in The Wall Street Journal? This is an expensive communication. Is it effective? Who is the audience, and what are the objectives?

• Assess UPS's full statement. Which are the most and least convincing arguments?

Arguments About Raising the Minimum Wage

Perspectives on the whether and how much to raise the U.S. minimum wage are heating up. A recent National Labor Relations Board ruling made it easier for fast-food workers to negotiate with companies, even if they are contractors or work for a franchisee. And the minimum wage in New York State will increase to $9.00 in December 2015 and likely to $15 for fast food workers. 

The upcoming presidential election also has heightened interest in the topic. A New York Times Editorial Board op-ed describes some of the Republican candidates' arguments: "none of which make much sense." Popular opinions include the following, according to the article: 

• States should decide (Fiorina)
• The market should decide (Bush)
• Businesses will be hurt (Trump)
• Robots will replace workers (Rubio)

The National Restaurant Association has been an active voice in the debate. In an article, the organization points to potential negative impacts on young workers and the industry. 

Image source. 

Discussion Starters: 

• Which arguments do you find most and least compelling? What evidence supports your own point of view? 
• Have you worked for minimum wage? How, if at all, does that affect your position in the debate? 

Ashley Madison's CEO Resigns

Now that the jokes about increasing divorces have subsided, Ashley Madison is in the news again because company CEO Noel Biderman will step down. Ashley Madison is the online dating site that fell victim to a computer hack along with 37 million users who were exposed for cheating on their partners and spouses. The site's tag line is "Life is short. Have an affair."

Although the company promised anonymity, it couldn't protect users from having their emails revealed in an easily searchable database. Further damaging the company's credibility, thousands of Ashley Madison emails in the system showed that many of the female profiles on the site weren't real. 

In a statement, the company says decision for the CEO to leave is by "mutual agreement." 

Discussion Starters: 

• Analyze the statement about the CEO leaving the company. Consider the timing, content, and tone. What could be improved? 
• Although Noel Biderman denied having affairs, the hack revealed communications between him and women. Do you think this factored into the decision for him to resign?  
• Read additional company statements. How is Ashley Madison trying to rebuild its image?Which tactics do you find most effective? 

Walmart Stops Carrying Some Rifles

Walmart will stop some selling high-powered rifles, and the company says the decision is based on sales, not politics. Although speculation links the news to Wednesday's on-air shooting of two television reporters, Walmart's announcement came first.

Spokesman Cory Lundberg said, "It [the decision] was done purely based on customer demand." He also told Forbes, "We previously carried modern sporting rifles in less than a third of our stores. Our merchandising decisions are driven largely by customer demand. In our everyday course of doing business, we are continually reviewing and adjusting our product assortment to meet our customers' needs."

At the same time, news reports question Walmart's motivation. According to a New York Times article, sales of assault rifles have not fallen (although the sales process may be slowed by background checks). Further, after the terrible church shooting in Charleston, S.C., chief executive Doug McMillon "indicated in an interview with CNN that he wanted to curb sales of such weapons."

Image source.

Discussion Starters:

• Why is Walmart focusing on sales rather than political motivations for discontinuing these guns? Consider Walmart's constituencies when you answer this question.
• Walmart has not posted a news release on its website to describe the decision. Why do you think the company might avoid this?

Google Fights EU's Antitrust Allegations

In a post on Google's "Europe Blog," Kent Walker, SVP & General Counsel, focuses on the company's innovation and quality. In a previous post, Google argued against the contention that search results favor the company. Now Google is trying to reframe the argument for us to see the value the company brings.

The first three paragraphs of the post, shown here, explain the European Commission's Statement of Objections (SO), including how Google ads shift users away from shopping on other websites.

Read more.

The posts ends, "We believe that the SO's preliminary conclusions are wrong as a matter of fact, law, and economics. We look forward to discussing our response and supporting evidence with the Commission, in the interest of promoting user choice and open competition."

Discussion Starters:

• Assess the organization of Walker's post, particularly the paragraph organization. What principles of business communication are demonstrated by the article?
• Assess the video included in the blog post. What works well about the interviews and examples, and what could be improved? What value does the video add to the blog post?

Is Dr. Dre's Apology Enough?

The movie "Straight Outta Compton" about hip hop has raised questions about Dr. Dre's history of domestic violence. One victim called the film "revisionist history" because it omitted incidents of abuse by members of N.W.A.

Dr. Dre did issue this statement to The New York Times:

"Twenty-five years ago I was a young man drinking too much and in over my head with no real structure in my life. However, none of this is an excuse for what I did. I've been married for 19 years and every day I'm working to be a better man for my family, seeking guidance along the way. I'm doing everything I can so I never resemble that man again."

He added, "I apologize to the women I've hurt. I deeply regret what I did and know that it has forever impacted all of our lives."

Apple, which hires Dr. Dre as a top consultant, also issued a statement:

"Dre has apologized for the mistakes he's made in the past and he's said that he's not the same person that he was 25 years ago. After working with him for a year and a half, we have every reason to believe that he has changed."

Victims and reporters have been highlighting Dr. Dre's past. And the LA Times reported that an abuse scene was in an earlier version of the movie but was cut.

The controversy doesn't seem to be affecting movie goers. Box office results show "Straight Outta Compton" leading this weekend with $26 million in sales after a $60 million opening.  

Image source.

Discussion Starters:

• Are you convinced by Dr. Dre's apology? Is it enough?
• Did Apple do the right thing by issuing its own apology? What are the risks?

McDonald's Copies Burrito Ads

McDonald's has apologized for using photographs similar to another campaign. About a month ago, photos of a man getting engaged to a burrito were making the rounds on Twitter. Recently, McDonald's showed a series of photos of people in similar positions with its food. Compare the left and right images below, shown on Adweek.

David Sikorski, a freelance writer, told Adweek that he created the idea:

"I came up with the concept as a satirical take on the engagement photos that flood my everyday social media channels. The photos are in fact licensed. We gave permission to BuzzFeed for the first use of the photos within an article highlighting the project."

Kristina Bakrevski was the photographer for the campaign. She said, "My reaction was shock, disbelief. I was mad, even though a lot of friends told me the imitation was a form of flattery." For its part, McDonald's responded:

"This shouldn't have happened, and, with our agency partner, we're working to find out how it did. We're reaching out to David Sikorski and Kristina Bakrevski. We apologize to them, their fans and ours."

Discussion Starters:

• McDonald's statement says they will explore how this happened. What are your theories, and how could this have been prevented?
• What else, if anything, should McDonald's do? How could the company avoid a lawsuit at this point?
• Sikorski and Bakrevski said they would like to be paid. How much do you think is appropriate?

Update on Subway's Jared

Last month, Jared Fogle, who was featured in Subway's advertisements for more than 15 years, was under investigation for child pornography. At the time, the company reported that they "agreed to suspend their relationship." Now, Fogle intends to plead guilty to charges of paying for sex with minors and distributing child pornography. He is expected to serve 5 to 12 years in prison. 

On its Twitter feed, Subway tried to announce the final cord-cut with a simple tweet but, 20 hours later, issued a second tweet, presumably after pressure to say more. Tweets asked, "Where are the disclosures?" and are calling for a boycott. 

 

Discussion Starters: 

• Was Subway's first tweet enough? Should the company have said more and, if so, what?
• Or, perhaps the company shouldn't have said anything at all. They had already "suspended" the relationship. What could have been the consequences of that decision? 
• Did the second tweet add value? People want to hear more, but what else is there to say? 
• Would you boycott Subway after hearing the news?

Amazon Responds to NYT Article

A New York Times article revealed a tough work environment at Amazon, and the company has responded. "Inside Amazon: Wrestling Big Ideas in a Bruising Workplace" includes examples of long working hours and little tolerance for employees' personal lives or health. Within three days, piece received more comments than any other NYT article.  

Amazon CEO Jeff Bezos isn't happy about the portrayal. In an email to employees, Bezos wrote, 

"The article doesn't describe the Amazon I know or the caring Amazonians I work with every day. But if you know of any stories like those reported, I want you to escalate to HR. You can also email me directly at jeff@amazon.com. Even if it's rare or isolated, our tolerance for any such lack of empathy needs to be zero.

"The article goes further than reporting isolated anecdotes. It claims that our intentional approach is to create a soulless, dystopian workplace where no fun is had and no laughter heard. Again, I don't recognize this Amazon and I very much hope you don't, either. More broadly, I don't think any company adopting the approach portrayed could survive, much less thrive, in today's highly competitive tech hiring market. The people we hire here are the best of the best. You are recruited every day by other world-class companies, and you can work anywhere you want."

Nick Ciubotariu, Amazon's head of infrastructure development, also wrote a rebuttal-a long piece with counterarguments for many claims in the article. He admits that some examples may have been true of Amazon in the past, but they don't reflect his experience today:

"During my 18 months at Amazon, I've never worked a single weekend when I didn't want to. No one tells me to work nights. No one makes me answer emails at night. No one texts me to ask me why emails aren't answered. I don't have these expectations of the managers that work for me, and if they were to do this to their Engineers, I would rectify that myself, immediately. And if these expectations were in place, and enforced upon me, I would leave."

Discussion Starters: 

• Does the article change your opinion of Amazon? Will you still buy from the company? Would you apply for a job? 
• Assess Ciubotariu's rebuttal. What are his most and least convincing arguments? 
• How, if at all, should the New York Times reporter respond? 

Marriott Hires Comedian for Video Campaign

Marriott is encouraging guests to book directly with the hotel rather than through third-party sites. In a video campaign, YouTube comedian Grace Helbig tells viewers to book on Marriott.com to "get the best rates right there. It pays to book direct."  

The hashtag #ItPaysToBookDirect is getting some attention. One video was favorited on Twitter more than 800 times. 

A USA Today Road Warriors article identifies six reasons to book online. The best reason is to avoid rouge booking sites that inflate prices and don't guarantee a room. Guests who book directly also may get a better room and better service.

Critics say Helbig is adding a "kinda-sorta-a-little-bit funny dose of humor" to the ads. She is, after all, a YouTube celebrity, whatever that means. 

Discussion Starters: 

• The grammar bugs me. The campaign needs the adverb directly (book directly). I realize the standards are different for marketing. Am I just being picky?
• What's your view of the online video campaign? Do you find the ads funny? Will they encourage people to book on Marriott.com?

University of Cincinnati Shooting

A University of Cincinnati campus police officer shot Samuel DuBose, whose car was pulled over for a missing license plate. A video taken from the officer's own body camera led people to consider the shooting "purposeful." A grand jury has indicted the officer for murder. If he is convicted, he faces 15 years to life in prison.

Hamilton County Prosecutor Joe Deters has been outspoken about the situation. 

In a news conference, Deters, who is a University of Cincinnati graduate, criticizes the UC police force: 

"I graduated from UC twice, it's a wonderful university, I love their president, but they're not cops. And we have a great police department in Cincinnati, probably the best in Ohio. And I talked to the chief about it today, and I said 'you guys should be doing this stuff.' And I think he's in agreement with it.

"The university does a great job educating people, and they made a lawyer out of me, kinda, and that should be their job. Being police officers shouldn't be the role of this university. I don't think so. Now, they can interview these guys and I'm sure they have great cops in the university police department, but they should be held to the same standard, and if they were with the CPD, they would be held to the same standard in training CPD officers are. And I think it would be a good thing for the university."

Deters also says, "I've been doing this for over 30 years. This is the most asinine act I've ever seen a police officer make. Totally unwarranted. It's an absolute tragedy in the year 2015 that anyone would behave in this manner. It was senseless, and I met with the family just moments ago. It's just horrible."

Nothing appears on UC's website, including "News," which is prominent on its home page. 

Discussion Starters: 

• Should UC post something on its website? If so, what and where should it be placed?
• Is Deters doing the right thing? What's the relationship between a city's and a university's police force?

Reddit's CEO Change

Reddit has been a spiral of drama in the past few weeks. Wired gives a useful chronology of the CEO changes and other issues. Ellen Pao was hired as interim CEO in November 2014 after Yishan Wong resigned. Pao had been in the news because she was a junior investment partner at Kleiner Perkins Caufield & Byers and sued the firm for gender discrimination. She lost the suit, which went to trial, in March 2015. 

At Reddit, Pao was criticized for banning several subreddits (topical groups within Reddit). Although Reddit was created as a place for free speech, some of it is hateful. But users felts that Pao overstepped in closing down some sites. More than 200,000 people signed a change.org petition calling for Pao's resignation.

In her resignation post, Pao thanked her supporters but focused on the trolls and hateful comments she had received. She asks people to consider others' humanity and writes, "So why am I leaving? Ultimately, the board asked me to demonstrate higher user growth in the next six months than I believe I can deliver while maintaining reddit's core principles."

According to Wired,

Reddit is home to some of the most hateful content on the Internet, but at least some of it appears to be here to stay. Reddit [new] CEO Steve Huffman said during an AMA [ask me anything] on the site today that the company would ban communities that "incite harm or violence against an individual or group of people," as well as any subreddit that "harasses, bullies, or abuses an individual or group of people."

But he did call out a specific racist subreddit by name-a name so offensive that we won't repeat it here-as an example of the kind of content that would remain, though likely under a new classification-an assurance that brought cheers from the subreddit's members.

Wired also summarizes Pao's resignation:

Some have decried Ellen Pao's resignation from Reddit as a step in the wrong direction for an industry where women leaders are still a distinct minority, but the site's detractors say good riddance. Though Reddit was originally intended as a place where the ideals of free speech and the wisdom of the crowd would reign, often the crowd turned into a mob.

Discussion Starters:

• People are so divided over Pao's resignation. What's your opinion? Was the decision best for the website? What are the consequences? 
• How, if at all, does her Kleiner lawsuit factor into your opinion? What if she had won the case?