Capital One's Response to the Breach

A hacker got access to 140,000 Capital One customers’ credit information and social security information, and about 106 million people were affected by other leaked information. Officials arrested Paige A. Thompson, who goes by “erratic” and was a former Seattle technology company software engineer.

In a bar chart, a BBC article puts this breach in context of others. Capital One’s press release describes the company’s quick response:

“Capital One immediately fixed the configuration vulnerability that this individual exploited and promptly began working with federal law enforcement.”

The release also includes a statement from Chairman and CEO Richard Fairbank:

"While I am grateful that the perpetrator has been caught, I am deeply sorry for what has happened. I sincerely apologize for the understandable worry this incident must be causing those affected and I am committed to making it right."

In addition, as expected, the release includes information for customers, offers free credit monitoring, and provides an FAQ.

Image source.

Discussion:

• Analyze the press release. Consider the audiences, objectives, organization, tone, and so on.

• How well does Fairbanks demonstrate humility in the press release? What other leadership character dimensions are illustrated? How well does he inspire confidence in Capital One?

• Analyze the BBC chart shown here. What works well about the chart, and what else would be helpful to understand these breaches in context?

Government Scandal in Puerto Rico

Gov. Ricardo A. Rosselló says he will not resign despite protests about private messages that included personal attacks and crude language. With 11 of his top aides, Rosselló participated in chats via the messaging app Telegram. Almost 900 pages of text are now public, and we see insults about other officials with references to people’s sexual orientation, gender, and weight.

The news comes after government corruption chargers earlier this week. The governor admitted, “I committed inappropriate acts,” but also said, “I have not committed illegal acts.”

In a news conference, Rosselló used the words “improper” and “shameful,” but didn’t agree with the reporter that the chats were unethical.

Discussion:

• Should the governor resign? Why or why not?

• What’s your view of the private chats? Should government officials be able to message each other freely? Why or why not?

• How well did the governor respond to the reporter’s questions? Did he convince you?

Rutgers Chancellor "Berates" Police Officers

The Chronicle reported that Rutgers Chancellor Nancy E. Cantor “apologized for berating campus police officers.” On her way to the airport, Cantor’s driver hit a parked police car. She was detained and said, “If I miss my airplane, you folks are in trouble!” When an officer asked, “I’m sorry, who are you?” she yelled, “I’m the chancellor!”

The episode, which happened in March, was recorded on the officer’s body camera. Part of the debate is about whether Cantor needed to be detained because she entered the vehicle after the driver hit the other car.

Regardless, the video became public, Cantor apologized, and the Rutgers-Newark police chief responded:

“I appreciate Chancellor Cantor taking the time to review the video. I along with the RUPD are appreciative of her kind words and support. The sentiment is extremely appreciated, and we look forward to continuing a positive working relationship with the Rutgers-Newark chancellor’s office.”

Discussion:

• Watch the video exchange. What’s your view of the chancellor’s behavior with the police officers?

• Should the officers have done anything differently in this situation? Why or why not?

• Assess the police chief’s response. How well does he demonstrate forgiveness?
  

Boeing at the Paris Air Show

After two fatal plane crashes involving its 737 Max jet, Boeing is trying rebuild its image, and the company made some headway at the Paris Air Show, an international aircraft sales event.

Company leaders are coming closer to admitting mistakes more directly. CEO Dennis Muilenburg said, “We clearly had a mistake in the implementation of the alert.” Muilenburg also admitted that company communications were “inconsistent” and “unacceptable.” Kevin McAllister, the company’s head of commercial aircraft, said, “We are very sorry for the loss of lives as a result of the tragic accidents...our thoughts and our prayers are with their families," and "Our priority is doing everything to get this plane safely returned to service. It is a pivotal moment for all of us.”

At right is a video of McAllister discussing future plans.

Illustrating confidence in the plane, IAG, which owns British Airway, ordered 200 new 737 Max jets, worth about $24 billion at list price. Airbus wants a chance to bid, and we’ll see whether the request is granted.

Image source.

Discussion:

• Based on this and other news reports, how well is Boeing recovering from its crisis? Read more about reactions to the IAG order to help inform your conclusion.

• Analyze Kevin McAllister’s communication in the video. Compare his style and approach to Dennis Muilenburg’s. What similarities and differences do you observe?

Harvard Rescinds an Offer

Harvard withdrew an admissions offer after discovering racist comments by the applicant online. The applicant, Kyle Kashuv, posted his version of events, including Harvard’s withdrawal and his responses before and after the final decision.

Kashuv became an activist for gun rights after he survived the school shooting in Parkland, Florida. He joined Turning Point USA, which The Chronicle describes as “a right-wing organization with chapters on many college campuses.”

Despite his explanation and apology, Harvard decided to rescind the offer. ]

Harvard College image source.

Discussion:

• Read Kashuv’s account of what happened as well as news articles. What’s your view? Did Harvard make the right decision? Why or why not?

• What, if anything, could Kashuv have done to prevent the withdrawal? Could he have been more persuasive in some way?

Mets Manager Admits Mistake

Mets manager Mickey Callaway admitted that an “administrative” error of switching pitchers “probably cost” the team the game. According to reports, the admission was unusual. As one news outlet explained, “His postgame press conferences can get combative, and his unwillingness to admit to any wrongdoing hasn’t played well with the New York media.”

Fans and players seem to be responding positively to the Callaway’s apology. One example is the response from first baseman Pete Alonso:

“Having a manager that’s not straight up and honest, that’s tough to play for a guy like that. But I’m fortunate enough to play for a guy like Mick. I love playing for Mick and all of the other guys love playing for Mick because he’s been honest and straight-up.” 

For years now, corporate stakeholders have expected more humility from leaders. Seeing an example in sports is refreshing.

Image source.

Discussion:

• What’s your view of Callaway’s admission?

• Not everyone likes this approach. I haven’t seen the clip, but a friend tells me local sports commentators said they want to see more “leadership.” Is admitting failure not part of demonstrating leadership?

• What other leadership character dimensions are illustrated by this example?

VW's New Ad

Volkswagen is still trying to rebuild its image after the emissions scandal in 2015. A new advertising campaign tackles the issue directly, beginning with audio news reports from that time. But the focus, described on YouTube, is on the future: “Every negative has a positive. Learn more about our all-electric vehicles and our plans to help make a better tomorrow at vw.com #drivefortomorrow #vw.”

With an emphasis on innovation, the ad is set to Simon and Garfunkel’s classic song, “The Sound of Silence.” Viewers can imagine company engineers during the past few years creating a new line of electric cars— while VW executives said little about the controversy.

The senior VP of marketing for VW of America acknowledged that the ad is risky but explains the rationale:

“[w]ithout mentioning the past...we would never have the credibility or authenticity to move forward with the brand. Through the last three-and-a-half years or so we kind of operated as usual in the consumers [sic] eye. We kept a very consistent message in the marketplace but didn’t really have a powerful point-of-view as a brand.”

Discussion:

• What’s your view of VW’s new ad campaign? Did the company make the right decision by invoking the scandal?

• Other companies facing scandals, such as Uber and Wells Fargo, placed large apology ads, but VW didn’t take this approach. Why do you think that may be the case? Compare VW’s strategy to other recent recovery campaigns.

Carnival Responds to New Charges

Again, Carnival Cruises is accused of polluting and cover-ups. In 2016, the company paid a $40 million settlement because of actions by its Princess Cruise Lines, including dumping oil-contaminated waste. Now, the company has admitted to violating the 2016 agreement and will pay an additional $20 million.

The Justice Department’s statement identifies violations of probation terms, such as falsifying training records, preparing ships before inspections, and discharging plastic into the water. The plastic discharge was from another Carnival Cruise ship, the Carnival Elation.

In response to the charges, company chairman Arnold W. Donald said, “I do take responsibility for the problems we have. I am extremely disappointed that we’ve had them. I know you have reservations about our commitment and who we are. I want you to know we are fully committed.”

The company also posted a response on its website: corrective actions, information about water treatment, and FAQs. The short press statement, at the top, includes the company’s commitment:

“Carnival Corporation remains committed to environmental excellence and protecting the environment in which we live, work, and travel. Our aspiration is to leave the places we touch even better than when we first arrived.”

Image source.

Discussion:

• Assess Carnival’s response. What persuasive strategies does the company use on its website? What works well, and what could be improved?

• The chairman said, “I know you have reservations about our commitment and who we are.” Do you have reservations? Why or why not? How can the company change perception? Consider dimensions of leadership character.

Uber CEO Explains Disappointing IPO

Uber CEO Dara Khosrowshahi sent email to employees about the company’s disappointing IPO. Shares sold for $45 but dropped the next day to a low of $37.08. In his email, Khosrowshahi encourages employees to take a long-term view and compares the company to Amazon and Facebook, which he says also experienced trouble after their openings.

Team Uber:

I’m looking forward to being in front of you at the All Hands tomorrow, but I wanted to send you a quick note in the meantime.

First off, I want to thank you all for your passion for and commitment to Uber. We simply would not be here without you.

Like all periods of transition, there are ups and downs. Obviously our stock did not trade as well as we had hoped post-IPO. Today is another tough day in the market, and I expect the same as it relates to our stock.

But it is essential for us to keep our eye on the long-term value of Uber for our customers, partners, drivers and investors.

Every stock is valued based on the projected future cash flows/profits that the company is expected to generate over its lifetime. There are many versions of our future that are highly profitable and valuable, and there are of course some that are less so. During times of negative market sentiment, the pessimistic voices get louder, and the optimistic voices pull back.

We will make certain that we communicate our incredible value as a company that is changing the way the world moves, but also the value that we are building for our owners. But there is one simple way for us to succeed – focus on the work at hand and execute against our plans effectively.

Remember that the Facebook and Amazon post-IPO trading was incredibly difficult for those companies. And look at how they have delivered since.

Our road will be the same. Sentiment does not change overnight, and I expect some tough public market times over the coming months. But we have all the capital we need to demonstrate a path to improved margins and profits. As the market sees evidence, sentiment will improve, and as sentiment improves, the stock will follow. We will not be able to control timing, but we will be able to control the outcome.

We will be judged long-term on our performance, and I welcome that. It’s all in our hands.

I look forward to being there at the All Hands to answer Qs and tell you more.

Image source.

Discussion:

• Why would Khosrowshahi write an email in advance of an employee meeting?

• What persuasive strategies does he use to explain the IPO performance?

• Which arguments do you find least and most convincing?

Leadership Challenge at Uber

A New York Times article describes discomfort among Uber’s leadership as the company plans to go public. Founder and former CEO Travis Kalanick wanted to join the company to ring the opening bell at the New York Stock Exchange, a tradition for IPOs. Kalanick still holds a seat on the board and, as founder, he wanted to participate in the company’s joyous moment—and to bring his father.

Current CEO Dara Khosrowshahi denied the request. For two years, Khosrowshahi has been trying to shed negative public perceptions of Uber, partly attributed to Kalanick’s leadership style and the company’s “bro-culture.”

The article describes a fractured board that didn’t fully support Khosrowshahi and a company that has yet to turn a profit, losing revenue on almost every car ride. Uber follows Lyft’s recent IPO, which has lost about $26 per share since its IPO in March.

Uber image source.

Lyft image source.

Discussion:

• Did Khosrowshahi make the right decision? Why or why not?

• Consider Kalanick’s perspective. What’s his point of view? Should he have asked at all?

• What leadership character dimensions are illustrated by this situation?

Boeing's Crisis Response

At a shareholder’s meeting, Boeing CEO Dennis Muilenburg addressed 737 Max safety concerns following two fatal crashes. He started, as predicted, with an apology and sympathy for the “loss of life,” acknowledging the “devastation.” He contrasted these losses with the many Boeing flights that run safely—”roughly every 1.5 seconds.”

Muilenburg didn’t explicitly address issues raised in the past couple of days, particularly a Wall Street Journal article the previous day accusing Boeing of failing to report the safety feature shut-off to airlines (including pilots) and the FAA.

When asked during the Q&A about accountability, Muilenburg spoke mostly about plans going forward. When asked whether he would resign, he talked about his and his employees’ commitment to safety.

At about 9:00 on the video, a reporter asks about whistle-blowers at Boeing, referring to recent reports that employees tried to alert senior management and the Federal Aviation Administration (FAA). Muilenburg says the question is “fair” but doesn’t quite respond to the accountability issue. At about 14:15, a reporter asks, “Can you admit that the design was flawed?” This is after Muilenburg skirts the previous question, blaming a “chain of events.” Still, he would not admit to a design flaw.

And then he ends the news conference, as a reporter shouts, “Sir, 346 died. Can you answer a few questions here about that?” Earlier, another reporter noted that this was the first time they had a chance to meet with him to ask questions.

Discussion:

• Assess Muilenburg’s delivery skills. What does he do well, and what suggestions would you have for his future news conferences?

• How well did Muilenburg address reporters’ questions? What, if anything, could he have said differently?

• What leadership character dimensions are illustrated by this story? How well did Muilenburg demonstrate them?

Carlos Ghosn Responds to Charges

The former CEO of Nissan, Carlos Ghosn, who has been arrested four times on charges related to financial misconduct, responded in a video message. The key point: “I’m innocent of all the charges.” Ghosn also claims that accusations are “all biased, taken out of context, twisted.”

Ghosn was a celebrated business executive in Japan. His success in growing Nissan is “incontrovertible,” according to a New York Times podcast. He gained a reputation as a serious cost-cutter ("Le Cost Killer"), a strategy that was questioned at the time but brought about great profits for the company, placing it second in the list of Japanese automakers behind Toyota and ahead of Honda. Ghosn was CEO from 2001 - 2017, when he became chairman. He was then removed from the board in 2018, after his first arrest.

Charges against Ghosn include using company funds for multiple personal residences, hiding about half of his compensation, shifting $16.6 million in person losses to the company, and other accounting issues.

Nissan management responded to Ghosn’s video message:

“The sole cause of this chain of events is the misconduct led by Ghosn and Kelly. Aside from any criminal matters, Nissan's internal investigation has uncovered substantial evidence of blatantly unethical conduct. This resulted in a unanimous board vote to discharge Ghosn and Kelly as chairman and representative director, followed by a shareholder vote to discharge them from the board. Further discoveries related to Ghosn’s misconduct continue to emerge. The company's focus remains on addressing weaknesses in governance that failed to prevent this misconduct.”

Ghosn image source.

Discussion:

• What persuasive communication strategies does Ghosn demonstrate in his video message?

• What are the most and least convincing statements?

• Assess his Ghosn’s delivery skills.

• Which leadership character dimensions are illustrated by this situation?

Boeing's Apology Dilemma

A Yahoo Finance article describes Boeing CEO Dennis Muilenburg’s decision to apologize for the 737 MAX tragedies and speculates that he may open the company up to lawsuits. However, for crisis communication, his apology is the right decision.

After a report found the planes to blame, Muilenburg admitted, “but with the release of the preliminary report of the Ethiopian Flight 302 accident investigation, it is apparent that in both flights, the Maneuvering Characteristics Augmentation System, known as MCAS, activated in response to erroneous angle of attack information." He’s not telling us anything we don’t already know, and Boeing will likely get sued anyway.

He also apologized: “We at Boeing are sorry for the lives lost in the recent 737 accidents and are relentlessly focused on safety to ensure tragedies like this never happen again.” The apology is critical—and too late in my opinion. Research on apologies indicate that they often reduce lawsuits, time to agree on settlements, and settlement pay.

Discussion:

• Do you agree with the assessment that the CEO did the right thing by apologizing?

• How does this situation illustrate vulnerability as a positive leadership character dimension?

• What other character dimensions are illustrated by this situation?

Southwest Faces Customer Service Criticism

Despite trading on the NY Stock Exchange under “LUV,” Southwest is taking some heat from customers because of the Boeing 737 MAX plane groundings. According to a USA Today report, customers says Southwest didn’t handle rebookings well:

They're peeved about Southwest's handling of passenger rebookings, especially last-minute flight cancellations that leave them with few options. And they're perplexed by Southwest's uncharacteristic lack of flexibility, with affected passengers given two options: take the alternate flight, even if it's days later or to a different airport, or get a refund.

Our first clue about problems came with Southwest’s first statement about the plane groundings. Little guidance was offered for customers to rebook. The first three comments on a Southwest message posted on March 13 illustrate the problem.

A Southwest spokesman said it’s a challenging situation—like a snow storm that lasts for many weeks—and claimed that the airline did everything it could, including offering "massive flexibility'.'

Discussion:

• Southwest could not have prevented the Boeing 737 MAX disaster, but what about its own customer service situation? What, if anything, could company leaders have done differently?

• How should Southwest react to customers’ complaints now? I see nothing on its website or blog.
  

OurBus Handles a Mistake with Humor

OurBus sent an email with a link that wasn’t yet working and quickly corrected the mistake with some fun. The company offered a $7 discount for rides booked on St. Patrick’s Day and corrected the link with the subject line, “Our Bad. That code doesn't quite work yet...”

In the first email, the date is clearly March 17, but the subject line, “It's your lucky day. Our flash sale starts NOW,” is certainly deceiving.

Discussion:

• Assess the second message from OurBus. How well did the company handle the situation? What changes would you suggest? (Hint: alignment.)

• Are people still saying “my bad”? Did they intend to play on “OurBus” with “Our bad”? If so, would it have been better to write, “OurBad”?

• Which leadership character dimensions does this situation illustrate?

Another Boeing Plane Disaster

The same model Boeing plane that crashed in Indonesia last month has crashed on its way to Nairobi. Although U.S. Federal Aviation Administration confirmed that the Boeing 737 MAX Jet is safe, several airlines have grounded the planes. Other groups, such as the Association of Flight Attendants-CWA, have called for an investigation: “While it is important that we not draw conclusions without all of the facts, in the wake of a second accident, regulators, manufacturers and airlines must take steps to address concerns immediately.” American Airlines will continue to fly the planes. A spokesperson for the pilot union said, it is “very early, but we are watching it very, very closely.” Norweigan Air has grounded the planes based on advice from European Aviation Group, and the UK has banned the model from its airspace.

With 40% of the planes out of service, Boeing is taking a financial and public relations hit. In a message to employees, Boeing CEO Dennis Muilenburg wrote, “We are confident in the safety of the 737 MAX and in the work of the men and women who design and build it.” He also wrote, “Since its certification and entry into service, the MAX family has completed hundreds of thousands of flights safely.”

Boeing’s website statement expresses condolences and describes plans for a software enhancement.

Image source.

Discussion:

• How much evidence is enough to determine whether to ground planes? What is the logical fallacy to be avoided?

• How well is Boeing handling the communication? Consider both internal and external messages. What are Muilenburg’s challenges at this point?

Alex Trebek Announces Bad News

Alex Trebek, the longtime host of “Jeopardy!” announced that he has pancreatic cancer. Since 1984, Trebek has been almost synonymous with the TV show, and now his Stage 4 diagnosis is casting doubt on the show’s future.

In a video, Trebek, announced the news with optimism and some humor, referencing his three-year contract. Unfortunately, the prognosis for pancreatic cancer is very poor. The ten-year survival rate is only one percent—the lowest rate of any cancer. Steve Jobs died of pancreatic cancer in 2011.

Discussion:

• Assess Trebek’s video announcement. How does he convey the bad news and display emotional appeal?

• Did he do the right thing by announcing the news himself? Why or why not? How do the show and network benefit, and what are the downsides?

• What leadership character dimensions does Trebek demonstrate?

• Assess the cancer survival rate chart. What principles of business communication does the designer follow, and how could it be improved?

Equifax and Marriott CEOs Testify About Security Breaches

U.S. Senators grilled Equifax and Marriott CEOs about data breaches at the companies in the past two years. Equifax CEO Mark Begor responded to questions following a Senate subcommittee report titled, “How Equifax Neglected Cybersecurity and Suffered a Devastating Data Breach.” The report concludes an investigation of the 2017 breach of 143 million customers’ personal data and accuses the company of not prioritizing security, not following its own patching policies, failing to notify the public in a timely manner, and more.

Begor defended the company and blamed the increasing sophistication of hackers:

“These attacks are no longer just a hacker in the basement attempting to penetrate a company’s security perimeter, but instead are carried out by increasingly sophisticated criminal rings or, even more challenging, well-funded nation-state actors or military arms of nation-states.”

But Senators pointed out that credit company competitors Experian and TransUnion have managed to avoid similar attacks.

The Marriott breach affected 83 million guests of Starwood, which Marriott acquired after the breach took place. Compared to the Equifax situation, Marriott got a pass from senators, such as Tom Carper of Delaware, who said, “The data breach announced by Marriott this past November does not appear to have been caused by the same cultural indifference to cybersecurity the record indicates existed at Equifax. Rather, it looks like Marriott inherited this breach from Starwood.”

Marriott has been consistent in blaming Starwood for the issue, wanting to preserve the brand. In his testimony, CEO Arne Sorenson reinforced the company separation:

“We conducted an assessment on integrating the two systems, although this inquiry was legally and practically limited by the fact that until the merger closed, Starwood remained a direct competitor.”

Here is Sorenson interviewed on CNBC:

Discussion:

• Watch some of the testimony. How well did each CEO handle the Senators’ questions?

• Assess Sorenson’s appearance on CNBC. What did he do to try to rebuild the company’s image? What persuasive strategies did he use?

• Review the subcommittee’s report on the Equifax breach. How is the report organized? How would you describe the writing style and tone? What suggestions would you have for the authors to improve readability?

• From your perspective, what leadership character dimensions do the CEO illustrate or fail to illustrate?

Measles: Evaluating Evidence

The news about a resurgence of measles raises interesting questions about how we evaluate evidence. About a dozen years ago, a small study alarmed parents and caregivers that the measles vaccine may cause autism. Since then, several large-scale studies have debunked that theory, and the article was retracted.

But the damage was done—and it lingers. A few hold-outs still believe the vaccine may be dangerous, and so they do not have their children vaccinated.

Recently, about 100 measles cases have emerged in the U.S., and once again, the evidence is up for evaluation. How are people convinced? What makes people change their minds?

In his book Factfulness, Hans Rosling offers this advice:

[I]f you are skeptical about the measles vaccination, I ask you to do two things. First, make sure you know what it looks like when a child dies from measles. Most children who catch measles recover, but there is still no cure and even with the best modern medicine, one or two in every thousand will die of it. Second, ask yourself, “What kind of evidence would convince me to change my mind?” If the answer is “no evidence could ever change my mind about vaccination,” then you are putting yourself outside evidence-based rationality, outside the very critical thinking that first brought you to this point. In that case, to be consistent in your skepticism about science, next time you have an operation, please ask your surgeon not to bother washing her hands.

Along these lines, a Medium article, The Falsification Mindset, suggests ways for us to change our opinions. The author encourages us to consider what evidence we would need in order to change our minds. This process is particularly useful because we more typically look for reasons to continue believing what we believe—confirmation bias.

Image source.

Discussion:

• What examples can you identify of when you have experienced confirmation bias. In retrospect, could you have avoided the bias to make a better decision or to have a more accurate view?

• What’s your view of the measles vaccination? How did you form this opinion? How has it changed over time?

• Identify a belief. What evidence would you need to think differently?

• How is humility relevant to this situation?

Open Letter to Amazon

After Amazon’s failed move to Long Island City, Queens, local executives, lawmakers, and others signed an open letter asking Amazon to reconsider. The letter focuses on the benefits NYC would gain from having Amazon, particularly 25,000 new jobs.

Also appearing as a full-page ad in the New York Times, the letter includes some emotional appeal about New Yorkers’ “charm” and acknowledges difficulties in getting community support for the project. Not until the last paragraph do we see a shift from New York to Amazon and how the company would benefit from building in Long Island City.

Discussion:

• What principles of persuasion does the letter illustrate?

• How could the letter be improved?

• What leadership dimensions are illustrated? Which may be lacking?