Starbucks Apologizes, Again

Two black men were arrested at a Philadelphia Starbucks. Witnesses say they were just waiting for a friend and asked to use the restroom. The reason for calling the police seemed to be the same: that they were just waiting for friend. But because they didn't order anything, they were asked to leave and did not. Other customers say this is common at Starbucks, and the only reason the police were called was because the two men were black.

The company, at first, gave a weak apology using unclear pronoun references (see "this" and "these"). A longer apology came from the CEO Kevin Johnson later. In the statement, he identified steps the company would take and closed with this paragraph:

Finally, to our partners who proudly wear the green apron and to customers who come to us for a sense of community every day: You can and should expect more from us.  We will learn from this and be better.

Johnson also posted an apology video.

In a video statement, Philadelphia Police Commissioner Richard Ross explained the situation from his point of view and defended the officers' actions. He also said that all officers get implicit bias training and gave an example of a police sergeant who was also denied access to a Starbucks bathroom. Ross's conclusion was that "they are at least consistent in their policy." Of course, not everyone agrees.

Image source.

Discussion:

• Analyze Johnson's statement. Who are his primary and secondary audiences? What are his communication objectives, and how well did he achieve them?
• What organizational strategy does Johnson's statement illustrate? How do you assess his tone and writing style?
• What is an unclear pronoun reference, and how are they used in the first apology?
• What's your view of the situation? Did Starbucks do wrong? If so, at what point(s)? Are you boycotting Starbucks, as some promote, as a result?
• Which leadership character dimensions are illustrated by this example?

"Nut Rage": The Sequel

You may remember the so-called "nut rage" incident at Korean Airlines in 2015, when a company executive became enraged about how macadamia nuts were served on a flight. Cho Hyun-ah, a daughter of the company chairman, threw a document at the head flight attendant, forced him to kneel and apologize, and ordered the plane back to the gate so the flight attendant could be removed. Cho didn't know that the rules had changed: nuts were served in the bag instead of on a plate, as she expected, because of nut allergies. In February of this year, a Washington Post article details how the flight attendant has suffered since the incident. 

At the same, people were incensed by what they considered entitlement of the chaebol families, who run Korea's powerful conglomerates. Some believe they act as if they are "above the law," and this situation was symbolic of that criticism. 

This week, Cho's younger sister, Hyun-min, is criticized for losing her temper during a marketing department meeting. Some say she threw water at an employee's face, but the airline reports that she threw it on the floor.

Either way, unlike her sister, Hyun-min immediately apologized via text message to the employee and on her personal Facebook page: “I apologize with my head down for my foolish and reckless behavior."

Discussion:

• How else should the company respond to this incident? What should executives have learned from the 2015 situation? 
• How could you relate this incident to communication and character issues such as civility in the workplace, conflict management, and humility? 

Volkswagen Replaces Chairman

Three years after the emissions scandal, Volkswagen is replacing another chairman. Matthias Müller replaced Martin Winterkorn, who was ousted soon after the news broke in 2015. But Müller was another insider and hasn't led the turnaround the board expected.

Like Winterkorn, Müller struggled with public relations. During a 2016 NPR interview, Müller claimed the company misunderstood the American environmental law: “We didn’t lie. We didn’t understand the question [at] first.” After much criticism, VW’s communications department asked for another interview, which was granted. He delivered a better apology but blamed the first interview on “all these colleagues of yours and everybody shouting.” In other words, it was noisy. 

As is customary in corporate change announcements, Chairman of the Supervisory Board Hans Dieter Pötsch spoke positively about the outgoing executive:

“Matthias Müller has done outstanding work for the Volkswagen Group. He assumed the chairmanship of the Board of Management in the fall of 2015 when the Company faced the greatest challenge in its history. Not only did he safely navigate Volkswagen through that time; together with his team, he also fundamentally realigned the Group’s strategy, initiated cultural change and, with great personal commitment, made sure that the Volkswagen Group not just stayed on track but is now more robust than ever before. For that, he is due the thanks of the entire Company.”

The new chairman, Dr. Herbert Diess, offers more hope. Diess joined the board in 2015 and is known for having conflicts with the union and for cost-cutting. He may shake up the status quo at VW and inspire real action. The company has aggressive plans, including building greener cars—for real this time.

Image source (VW cover).
Image source (Diess).

Discussion:

• Assess the company's statement about this change. Who are the primary and secondary audiences? What are the communication objectives? How well does the statement meet those objectives?
• Why do these statements typically include positive quotes about outgoing executives, even if they are asked to leave or, as this statement indicates, they leave "by mutual agreement"?
• What lessons do you think Volkswagen learned since the scandal?
• Why would the board appoint someone who is considered divisive?

Mariah Carey Talks About Having Bipolar Disorder

In 2001, singer Mariah Carey learned she had bipolar disorder, and now she is admitting it to the world. In an People magazine cover story, Carey talks about her initial denial and her decision to open up about her diagnosis:

“Until recently I lived in denial and isolation and in constant fear someone would expose me. It was too heavy a burden to carry and I simply couldn’t do that anymore. I sought and received treatment, I put positive people around me and I got back to doing what I love — writing songs and making music.”

“I’m just in a really good place right now, where I’m comfortable discussing my struggles with bipolar II disorder. I’m hopeful we can get to a place where the stigma is lifted from people going through anything alone. It can be incredibly isolating. It does not have to define you and I refuse to allow it to define me or control me.”

Bipolar disorder, also called manic-depressive disorder, affects about 5.7 million adults in the U.S., which is about 2.6% of the population.

Reactions to the news seem mostly positive, with comments such as this on Twitter:

This story reminds me of a TedX talk, "Everyone Is Hiding Something" about a woman's struggle with an eating disorder.

Image source.

Discussion:

• What are the potential personal and professional consequences to Mariah Carey of going public with her diagnosis?
• What do you hide about yourself that might be useful for others to know?
• What is the value of admitting personal struggles in the workplace?
• How does Mariah Carey's story demonstrate leadership character dimensions, such as courage, compassion, authenticity, and vulnerability?

Nike Memo Describes Diversity Failings

The head of HR at Nike wrote a memo describing how the company has not lived up to plans to promote women and people of color. Nike has been grappling with complaints about its "boys-club culture," and the memo may have worsened the situation.

When complaints surfaced, Chief Executive Mark Parker said, “When we discover issues, we take action. We are laser-focused on making Nike a more inclusive culture and accelerating diverse representation within our leadership teams."

Weeks later, HR Chief Monique Matheson wrote in the memo that the company wants to “to create a culture of true inclusion. As part of our plan, we need to improve representation of women and people of color.” She also wrote, “While we’ve spoken about this many times, and tried different ways to achieve change, we have failed to gain traction—and our hiring and promotion decisions are not changing senior-level representation as quickly as we have wanted."

Of Nike's 74,000 employees, only 29% of vice presidents are women and, in the U.S., only 16% are nonwhite. In the memo, Matheson also reported that men, women, and people of color earn about the same, although she acknowledged, "We’ve also heard from some of you that this result does not reflect your personal experience" and promised to do more research into pay equity.

Discussion:

• How does the memo reflect both positively and negatively on Nike?
• Should Matheson have avoided putting such information in a memo, knowing that it could be made public? Or, do you think she intended for it to go public?
• How do executives balance internal communication and the possibility of messages being leaked to the press?
• In what ways does this situation demonstrate vulnerability?

An Interview with Sheryl Sandberg

During an interview with Judy Woodruff on PBS NewsHour, Facebook COO Sheryl Sandberg admitted mistakes and discussed plans for improving users' privacy. Sandberg didn't shy away from tough questions about Facebook's role in protecting users' information and admitted that the site had an important role during the 2016 presidential election, at least to get people to register to vote.

On whether Cambridge Analytica still has data, Sandberg admitted, "We were given assurances by them years ago that they deleted the data. We should’ve followed up. That’s on us. We are trying to do a forensic audit to find out what they have." She also said the company had "under-invested" in ways to protect users' information.

Viewers may notice that Sandberg repeatedly says versions of "That's a very good question." This could be a tactic to delay responding, or it could be that Woodruff asks good questions! Sandberg would be the first to acknowledge that many of the questions are ones the company leaders are asking themselves at this point. As pioneers, Facebook executives are reconsidering how people use the site and for what purpose.

Discussion:

• Assess Sandberg's presentation skills. How well does she deliver her ideas and address questions?
• What principles of persuasion does Sandberg demonstrate in the interview?
• What else, if anything, could Sandberg have said during this interview to rebuild trust in the company?

Mario Batali Wants to Move On

Is it too soon? Mario Batali, accused of sexual harassment and removed from the company bearing his name, is exploring a new venture. In December, reports of sexual misconduct rattled the Batali & Bastianich Hospitality Group, and Batali admitted that accusations “match up with ways” he behaved. At the time, he emailed an apology but lost ground when he included a "P.S." with a recipe for making cinnamon rolls.

Now, about four months later, people report that Batali is exploring his options. Reports say he is considering moving to the Amalfi Coast, aiding displaced Rwandans, or creating a new company.

A New York Times article speculates that Batali may be in a good position to return to public life:

He still has legions of fans and colleagues who admire and respect his generosity, culinary knowledge and charisma. Many still post their interpretations of his recipes on Instagram, ask him for selfies on the street or urge his return to “The Chew” on Facebook. His restaurants continue to attract customers.

Friends also say that he is truly taking time to be introspective and to learn from his mistakes. But not everyone agrees that a comeback would be appreciated. Anthony Bourdain, for example, isn't ready:

Retire and count yourself lucky, I say that without malice, or without much malice. I am not forgiving. I can’t get past it. I just cannot and that’s me, someone who really admired him and thought the world of him.

Image source.

Discussion:

• What's your view? Is it too soon, or is the time right for a Batali return? What should he consider in making this decision? What are the potential implications for women who complained about his behavior and for the company?
• Batali mentions wanting to understand his "blind spots." What does he mean by this?

How to Talk About Failure During an Interview

A new podcast, Change Agent, explores creative solutions to people's problems. In one episode, "Telling the Truth," a recovering alcoholic talks about her challenges during job interviews. Should she explain the gap in her resume?

For help, the moderator looks to Domino's, which had notoriously bad reviews of its pizza. CEO J. Patrick Doyle explains how the company took an open approach to admitting failure. Doyle led a turnaround by running commercials admitting criticism about their pizza, for example, that the crust "tastes like cardboard." The results are documented in a Domino's video posted on YouTube.

The woman looking for a job was able to apply what she learned during a mock interview. Part of her recovery process is about being truthful, so was open to the strategy.

During the podcast, we hear the woman admitting her challenges, although she goes on longer than may be useful or appropriate during a job interview. Still, the interviewer reacted positively to her telling the truth.

Discussion:

• What are the risks to admitting failure in this way?
• How could you apply this strategy to your own job search? What failing or misstep could you explain in a way that demonstrates self-reflection and learning from failure?
• In what ways does the podcast demonstrate authenticity and vulnerability? 

FB Admits Mistakes and Makes Promises

After five days of silence, Facebook CEO Mark Zuckerberg is addressing new criticism about privacy issues. Recent reports describe how Cambridge Analytica used data from about 50 million FB users without their permission, possibly to influence voters during the 2016 presidential campaign. Although some users gave permission for their information to be shared, their "friends" didn't, and this gave developers enormous amount of data about people's preferences. In addition, Cambridge claimed it had deleted data in 2014, but new reports indicate it did not.

Now Zuckerberg is visible in the media and has issued a statement that included the company's responsibility and failings: 

We have a responsibility to protect your data, and if we can’t then we don’t deserve to serve you. I’ve been working to understand exactly what happened and how to make sure this doesn’t happen again. The good news is that the most important actions to prevent this from happening again today we have already taken years ago. But we also made mistakes, there’s more to do, and we need to step up and do it.

He also told CNN, "I'm really sorry that this happened." He promised to limit developers' access to data in the future.

Facebook also published a full-page newspaper ad in the New York Times on March 25.

Discussion:

• How does this situation represent issues of integrity and trust?
• Read Zuckerberg's full statement. Which parts do you find most and least convincing?
• How is the statement organized? Is this the best approach, or could other organizational strategies have worked better? 
• Assess Zuckerberg's writing style. Which principles of business writing are followed, and which are not?

Uber Halts Self-Driving Cars Following Death

A self-driving Uber killed a pedestrian in Tempe, Arizona, and the company is trying to understand what happened. In the meantime, CEO Dara Khosrowshahi posted condolences on Twitter. An Uber spokesperson also made this statement:

“Our hearts go out to the victim’s family. We are fully cooperating with local authorities in their investigation of this incident.”

Apparently, a woman walked suddenly in front of the vehicle, and the local chief of police said, "It’s very clear it would have been difficult to avoid this collision in any kind of mode." A human backup driver, who was in the driver's seat without control over the car, confirmed the report. The first sign of trouble was the actual collision.

As a result of the accident, Uber announced it will stop all testing of autonomous cars. In California, autonomous Ubers were set to launch without human backups, but this may be delayed.

Image source.

Discussion:

• Assess the company's response to the news. We don't see an apology, per se. Should we?
• How can the company rebuild trust in self-driving cars after this incident?

Stanford Event Criticized as "Too White and Too Male"

The organizer of a history conference at Stanford admitted to having trouble identifying a more diverse panel of speakers. All 30 are white men.

Priya Satia, history professor at Stanford said, “Given how prevalent women are in the history department, you’d have to try really hard to come up with a roster of speakers that looks like that." Satia also leads the history department's diversity committee.

Referred to as a "conservative British historian" by the New York Times, Niall Ferguson says he invited women, but only one could attend. Ferguson also said, "We all agreed that we must redouble our efforts to represent diverse viewpoints in future conferences." 

Discussion:

• What are some possible reasons for the lack of diversity?
• Should Ferguson have done more to recruit women and people of color? How could he approach the conference planning differently?
• What is Stanford's responsibility? I don't see a statement from the university.
• In what ways does Ferguson demonstrate vulnerability, and in what ways does he fall short?

Toys R Us Closes

https://www.toysrusinc.com/restructuring

Toys R Us will close its remaining 735 U.S. stores and will lay off about 33,000 employees around the country. The company tried to survive after a bankruptcy filing in 2017, but the retailer can't compete with large stores, such as Walmart, and online sellers, such as Amazon.

Critics say Toys R Us failed to generate excitement, as one analyst describes in The Washington Post article:

“The liquidation of Toys R Us is the unfortunate but inevitable conclusion of a retailer that lost its way. Even during recent store closeouts, Toys R Us failed to create any sense of excitement. The brand lost relevance, customers and ultimately sales.”

A professor of brand management echoed this theme:

“We know that customers are willing to pay more for an enjoyable experience — just look at the lines at Starbucks every day — but Toys R Us has failed to give us anything special or unique. You can find more zest for life in a Walgreens.”

New York Senator Chuck Schumer is asking for the Federal Trade Commission (FTC) to ensure that customers aren't left "holding the bag" if they can't cash in or buy products with gift cards, particularly those recently received in December for Christmas.

Toys R Us has only a short statement on its website announcing the liquidation.

Discussion:

• Should the company leaders say more about the decision? What else, if anything, could be included in the statement?
• In addition to legal responsibilities, do company leaders have ethical responsibilities to make good on outstanding gift cards? Why or why not?
• In what ways has the company failed to learn from failure?

Turnaround for Martin Shkreli

We see a different Martin Shkreli from the one criticized for smirking during a congressional hearing on Capitol Hill in 2016. Shkreli ran Turing Pharmaceuticals when the company was accused of raising drug prices 5,000% in 2015. At the time, he was only 28 years old and was called "the most hated man in America."

Last week, Shkreli was sentenced to seven years in prison for fraud committed while he was a hedge fund manager and while running another drug company, Retrophin.

Shkreli pleaded for leniency. According to a CNBC report, he "broke down in tears." Another  article summarizes his statements in court:  

"The one person to blame for me being here today is me," a choked-up Shkreli told a judge before she imposed the prison term in Brooklyn, New York, federal court.

"Not the government. There is no conspiracy to take down Martin Shkreli."

"I took down Martin Shkreli with my disgraceful and shameful actions."

"This is my fault. I am no victim here," Shkreli said, before breaking down into tears as he promised not to let his lawyer Benjamin Brafman down in his efforts to contribute to society.

"Do not feel bad for me," Shkreli told a packed courtroom that included supporters and family members, many of whom had written letters asking Judge Kiyo Matsumoto to spare him from a harsh sentence.

And he had a message for the investors he duped: "I am terribly sorry I lost your trust. ... You deserve far better."

"I was never motivated by money," Shkreli said. "I wanted to grow my stature and my reputation."

"I am here because of my gross, stupid and negligent mistakes I made."

Image source.

Discussion:

• Let's assume Shkreli's statements are sincere. How could you explain Shkreli's smirking in 2015 at such as serious hearing and his behavior more recently?
• Do you believe Shkreli's statements are sincere? Why or why not?

NYT Learns from Failure

The New York Times admitted a mistake: the paper failed to write obituaries for some extraordinary women:

Since 1851, The New York Times has published thousands of obituaries: of heads of state, opera singers, the inventor of Stove Top stuffing and the namer of the Slinky. The vast majority chronicled the lives of men, mostly white ones; even in the last two years, just over one in five of our subjects were female.

The paper has begun a collection of obits for people "who left indelible marks but were nonetheless overlooked." Write-ups are available for 15 women, including Sylvia Plath, an accomplished poet who committed suicide; Margaret Abbott, the first woman to win an Olympics game; and Ida B. Wells, who fought racism and lynchings in the South in the 1890s.

Discussion: 

• How well does The New York Times address the failure? 
• Why are they writing these obituaries now? What are the arguments for the collection and against it?

More Companies Take Action to Curb Gun Sales

Dick's Sporting Goods has taken a strong stance on gun control. In a statement, the company announced it will no longer sell assault-style rifles and will no longer sell firearms to people under 21 years of age. The statement dances the fine line between both sides of the gun control debate:

We support and respect the Second Amendment, and we recognize and appreciate that the vast majority of gun owners in this country are responsible, law-abiding citizens. But we have to help solve the problem that’s in front of us. Gun violence is an epidemic that’s taking the lives of too many people, including the brightest hope for the future of America – our kids.

Walmart also announced it will no longer sell to people under 21 years of age. The company ended some firearm sales in 2015, so this policy further restricts what people can purchase when.

Companies are in a tough spot. Dicks, Walmart, Delta, and other companies have suffered backlash for their decisions, including people promising to boycott.

Discussion:

• Compare Dick's and Walmart's statements. How do they differ? Which is more effective and why?
• Describe Dick's choices. What are the risks and rewards of the announcement?
• Should other CEOs jump into the controversy? How might the decision depend on industry, customer base, or the leader him- or herself?

News Conference About Florida Shooting

Officials have made statements about the school shooting in Parkland, Florida, that left 17 people dead and another 16 injured. Themes focus on healing—giving families and others affected time to mourn, charging the perpetrator, and preventing similar incidents from happening in the future.

As we typically see in these news conferences, multiple people give their perspective, and we may see the influence of their role and their personal views.

Political conversations about the FBI's role and gun control have already started. President Trump also made a statement after the tragedy.

Discussion:

• Analyze each person's contribution to the news conference. How do you see their role and their personal views affecting what they say and how they say it?
• What's your view about the political conversation: should we avoid talking about gun control now, or it this the best time? How do your own political views factor into your perspective?

Tweets Cause Journalist to Lose Job Offer

The New York Times has rescinded a job offer to a journalist because of reactions to some of her tweets. Criticism about Quinn Norton came after people discovered her relationship with a neo-Nazi called "Weev." Norton referred to him as a friend. The Times also reported new information about Norton: "It also turned up years-old tweets by Ms. Norton in which she used slurs against gay people and another in which she retweeted a racial slur."

We know that most recruiters use social media to vet candidates. The practice is controversial: some believe it's an invasion of privacy, while others believe it's potentially discriminatory. In this case, information was discovered about Norton after an offer was extended, which led to the awkward situation of pulling the offer. Other companies will do a thorough review of candidates before an offer is made.

According to Jobvite's 2017 Recruiter Nation report, recruiters disapprove of candidates' "political rants" online. This situation may fit that category.

Discussion:

• What's your view of companies "Googling" candidates? What are the arguments for and against this practice?
• Did the Times make the right decision? Why or why not? Read more about Norton's views here.
• How does Norton's potential job with the New York Times affect the outcome? Would a different media company have made a different decision? In other words, how is this an issue of integrity?
• Norton chose not to disclose her social media history. Would her vulnerability have helped or hurt her candidacy at the Times?

Toys "R" Demonstrates Vulnerability in Message to Customers

Struggling with competition from Amazon and Wal-Mart, retailer Toys "R" Us will close 1,600 stores to try to stay in business. The news follows the bankruptcy filing in September and may be the company's last chance.

In a message to customers posted on the website, Chairman and CEO David Brandon delivers the bad news and demonstrates vulnerability:

In addition to the update, Brandon confirms, in bullets, two issues that may be most relevant to customers now:

• We are open for business and ready to serve you.
• We are honoring customer programs.

Discussion:

• Read the entire message to customers. What are Brandon's objectives, and how well does he meet them?
• How does Brandon demonstrate learning from failure and vulnerability?
• Assess the message organization and writing style. What works well, and what could be improved?

Morgan Stanley Clarifies a Termination

In December, a female reporter accused a former congressman who was hired as a managing director at Morgan Stanley of sexual harassment. Morgan Stanley fired Harold Ford Jr., and he lost his gig as a frequent commentator on MSNBC.

Ford had maintained his innocence, and now, the company is saying Ford was not terminated for sexual harassment but was let go because of other misconduct: 

" Morgan Stanley would like to clarify the circumstances of Mr. Ford’s departure. We take allegations of inappropriate conduct seriously, The press has reported that Mr. Ford was terminated for sexual misconduct. He was not. We have not received any internal allegations of sexual harassment or misconduct involving him either before or after his separation became public. As previously stated, his separation was based on corporate policy.”

The statement is curious because it mentions only internal allegations—or maybe I'm reading into it too much.

Discussion:

• How do you read the statement and possible distinction between internal and external?
• Why would Morgan Stanley issue such a statement two months after Ford's termination?

Intel CEO Warns of Vulnerability, a Little Late

The CEO of Intel has bad news: a patch for a chip vulnerability will slow down computer operations. In an interview with Bloomberg, a technology analyst explains the typical process when finding security issues: companies find a bug and solve it before going public. However, this time, an issue known for perhaps a year went unsolved and was kept quiet—until now.

Bloomberg says chip makers had downplayed the effects of the patch, but CEO Brian Krzanich has finally described the issue:

“We believe the performance impact of these updates is highly workload-dependent. As a result, we expect some workloads may have a larger impact than others. As of now we have not received any information that these exploits have been used to retrieve customer data.”

In other words, the patch works but will slow down operations.

A technology analyst says this is the first time chip makers like Intel have gotten caught needing to admit a potential vulnerability, and it's unclear why it hasn't been fixed before this point.

Bloomberg reports on the secrecy and implications:

“Our first priority has been to have a complete mitigation in place,” said Intel’s Parker. “We’ve delivered a solution.”

Some in the cybersecurity community aren’t so sure. Kocher, who helped discover Spectre [a bug], thinks this is just the beginning of the industry’s woes. Now that new ways to exploit chips have been exposed, there’ll be more variations and more flaws that will require more patches and mitigation.

"This is just like peeling the lid off the can of worms," he said.

Image source.

Discussion:

• In what ways did Intel avoid accountability? How did the avoidance affect the company? What would have been a more appropriate response to finding the bugs?
• Distinguish between this computer vulnerability and vulnerability in interpersonal relationships. One is good; the other is not.
• Read the Intel CEO's quote, above. It sounds jargony but was presented at CES, a conference of IT professionals. Did he use appropriate language, or does his word choice demonstrate a lack of transparency? What do you think?