Beware the Ratner effect
‘Reputation is an idle and most false imposition’ said William Shakespeare, ‘oft got without merit, and lost without deserving…’ 44’s Bryan Jones, Senior Project Manager, asks who are we to argue?
Businesses spend years building up a reputation – and can ruin it in just a few seconds.
That has always been the case – but in these days of rolling news and wall-to-wall social media coverage, disastrous brand-busting publicity can be just a tweet away.
Some of the most memorable (or notorious) business fails of the recent years have unfolded in bizarre circumstances – and have badly damaged the credibility of some of our most respected brands.
When KFC decided to change its delivery service to DHL, who could have foreseen how the reputation of both businesses would be hit?
Hundreds of KFC’s restaurants in the UK quickly began running out of the one ingredient they needed most – er, chicken – as DHL’s logistics and supply plans unravelled. And as the crisis rumbled on, KFC was forced to temporarily close more than 500 of its 900 shops.
Who knew delivering chilled chicken could be so complicated?
The fast-food chain is pretty much back to normal now, but recent figures show (not surprisingly) that KFC’s UK sales plunged 9% – one of only two regions across the world that showed a decline.
Even the most experienced and reputable brands get it wrong sometimes. But a smartphone company selling exploding handsets? How could that happen?
But it’s what customers reported when they started using Samsung’s newly released Note 7.
The company compounded the problem by initially denying the claims, and then not acting quickly enough when an issue was actually detected.
In the end, Samsung suspended sales of the model, spent billions recalling all of its Note 7s and offered replacements. It eventually revealed there was a problem with some of the batteries installed in the devices causing the handsets to overheat.
And a very modern corporate fail occurred when United Airlines considered it acceptable practice to drag a 69-year-old US doctor off a plane so its own staff could get on board.
He’d refused to give up his seat for an airline staff member who needed to fly from Chicago to Louisville. Dr Dao had an operation to perform. But it was the doctor who finished up in surgery, after having his nose broken and a couple of teeth knocked out when a security team manhandled him off the plane.
What made it infinitely worse was that a video of the innocent senior doc soon went viral online and sparked international outrage.
Will those publicity catastrophes do any lasting damage to the businesses? Possibly not – though the short-term pain was acute for all three (as well as for poor Dr Dao).
For KFC it was intensely embarrassing (and costly), but fried chicken lovers soon flocked back to its red and white counters.
And even though Samsung’s management didn’t cover itself in glory during the exploding phones fiasco, they’ll have no shortage of buyers for their latest devices.
United Airlines, meanwhile, continues to trade successfully – many people won’t even associate its name with the unfortunate battered medic.
But I’m old enough to remember the chastening case of Gerald Ratner, and the ‘gag’ that cost him a fortune.
Back in the early 90s, Gerald Ratner was the high-profile owner of a multi-million-pound jewellery empire. He had the Midas touch – but it suddenly went into reverse after a ‘joke’ at an Institute of Directors’ dinner in front of thousands of business people and journalists.
He told the audience Ratners was able to sell a sherry decanter for the extraordinary price of £4.95 “because it’s total crap”. And then, just to make sure that he really made a good job of trashing his products, he said his shops sold sets of earrings “cheaper than an M&S sandwich – though they probably wouldn’t last as long”.
His wife recently revealed she’d begged Gerald not to tell the gag. It wasn’t even that funny, and ended up costing him their fortune and 2,500 shops.
You might be interested to know that Mr Ratner has reinvented himself, and has now built himself a glowing reputation – as a humorous after-dinner speaker.