A look back at high-profile breakdowns that demonstrate how strategy and communications go hand in hand.
By Chancelor Shay, Director of Strategic Communications
It’s hard to believe Wells Fargo’s infamous “fake account” scandal is now four years in the rearview. For those who don’t recall, the bank came under enormous public ire back in 2016, when news broke that branch-level employees had opened more than two million dummy accounts without customers’ knowledge or consent. The scandal arose from unrealistic sales targets handed down from top-level executives. While the business strategy to grow revenue by cross-selling products was promising, it lacked communications support and tools to help employees implement it or voice their challenges, and thus incentivized deception and dishonesty over ethical business practices. The result? A criminal settlement of over $3 billion and a tarnished reputation.
As we say at (X), strategy is created by few but implemented by many. In the case of Wells Fargo, strategy that is not supported with adequate communications invites the related risks of dangerous misalignment and disastrous consequences.
Put simply, people cannot implement a strategy, whatever growth potential it offers, if they don’t understand it or are not shown how. To make the most of pivot opportunities, businesses need to align strategy with communications so that all parties, from top-execs to cashiers and floor workers, understand and want to carry that strategy out. Join us for a look back at some of the business world’s greatest communication breakdowns and a valuable reminder of why strategy and communications are two sides of the same coin.
Volkswagen’s Emissions Testing Scandal
In an attempt to improve its lackluster position in the U.S. car market, German auto manufacturer Volkswagen made a push to enter the U.S. market for passenger diesel vehicles in 2005, but they encountered an obstacle: in the previous year, the Environmental Protection Agency had significantly lowered the pollution threshold that a vehicle would have to meet in order to receive approval for sale in the U.S. To meet that new standard, VW needed a revolutionary engineering solution that only a sharply-defined strategy, combined with strong organizational communication and financial support, could provide.
But as those privy to the “Dieselgate” scandal already know, Volkswagen’s employee support left a lot to be desired. Rather than offer unprecedently-robust direction, communication, and financing suited to its ambitious goal of meeting U.S. emissions standards, VW gave its engineers an unrealistic time frame and budget for the project, encouraging some desperate workers to install “defeat devices” that allowed the vehicles to pass emissions tests despite the illegally-high levels of pollution they produced. Worse still, that early ethical compromise spawned a persistent culture of dishonesty at some VW plants; though they later discovered an engineering solution that would allow Volkswagen vehicles to pass emissions test legitimately, some of the company’s engineers continued to use the defeat devices, just one of “a whole chain of mistakes that was not interrupted at any point” according to Chairman Hans-Dieter Pötsch.
Volkswagen and Wells Fargo share the unfortunate experience of watching a misalignment between strategy and communications convert possibility into catastrophe. Though both companies set out with the admirable goal of expanding their market share, both also failed to communicate a clear path to the strategy’s fulfillment and support workers throughout the process, leaving uncertain ground-level and mid-level employees reaching for any solution, ethics aside.
While we certainly shouldn’t condone the behavior of either company’s employees, it’s not difficult to understand why those ground-level workers made the compromises they did, and there lies the lesson that both scandals have to teach us. For lower-level workers, who are concerned first with their own lives and families, even a billion-dollar boardroom strategy is at best meaningless and at worst devastating, if it is not made clear, meaningful, and attainable in a company’s communications. In the case of Volkswagen, “devastating” is the better term: as of 2019, the company’s losses from the scandal were over $33 billion and have continued to climb since then.
Dr. Pepper’s “Not for Women” Campaign
Not to be outdone by companies producing questionably-gendered products like toothpaste and pens, Dr. Pepper baffled the public in 2011 when it launched a gender-specific edition of its flagship soft drink. Responding to market research suggesting that men are reluctant to drink diet soda, Dr. Pepper targeted men with a wide-reaching marketing campaign, including a redesigned, steel-gray can, macho-themed social media pages containing “man’ments,” and the clincher: the slogan “It’s Not for Women.” Results were predictable: Dr. Pepper faced a slew of sexism accusations on social media and ultimately pulled the ad from YouTube and its other advertising channels.
What Dr. Pepper lacked was a clear understanding, even among its leadership, of what message the marketing strategy was meant to send. As a writer at Forbes pointed out at the time, although the company insisted that “women [got] the joke,” it was difficult to understand what the joke was in the first place. Even more difficult to understand was Dr. Pepper’s apparent belief that alienating and excluding 50% of its potential customers would add to its bottom line. There we find the double tragedy of the misfire: Dr. Pepper’s goal of engaging new markets is the stuff of great business practice, a target that anyone can get behind, but the company’s strategy for achieving that goal reached the public in the form of unpalatable, exclusionary, and therefore destructive messaging.
Most unfortunate of all is the fact that the failed campaign was truly unnecessary. Many other companies have launched wildly-successful marketing campaigns focusing on gender, all without controversy. Old Spice’s “Old Spice Guy” campaign, which poked light-hearted fun at “lady-scented body wash” and played on extreme masculinity, is just one example of a gendered marketing campaign that was nevertheless universally beloved and astonishingly successful. The difference was that Old Spice had a vision that aligned strategy and communications—a clear idea of the joke its strategy meant to tell and an equally-clear idea of how to deliver that message to the public. Dr. Pepper, as evidenced by its campaign’s fallout, did not.
Starbucks’s Wrongful Arrests
After all this talk of missteps, it’s worthwhile to remind ourselves that the business world contains more than horror stories. Some companies exemplify grace and timeliness in their alignment of strategy and communication, even in times of crisis. Many have forgotten Starbucks’s #RaceTogether debacle, during which the company encouraged baristas to discuss race issues with customers, partly because that scandal paled in comparison to a larger PR firestorm, and one that Starbucks managed with far more tact from the top down: the 2018 arrest of two black men in one of the company’s stores.
In response to the crisis, having learned from its mistakes during #RaceTogether, Starbucks offered much more than simple messaging or an inadvisable strategy for connecting with customers. When news about the arrests first broke, CEO Howard Schultz mounted an immediate and robust crisis response strategy, announcing within a week of the scandal’s emergence that Starbucks would close 8,000 of its stores to provide racial-bias training to employees. They went even further: more than a month after the training ended, Starbucks published an extensive report describing the insights, revised policies, and future plans that arose from the training.
This situation is a sterling example of alignment between strategy and communications. While it’s disappointing that the crisis response was necessary at all, Starbucks’s successful restoration of its image reminds us that relevant, clear communication of equally-clear strategy, from the boardroom to the breakroom, is the key to businesses’ ongoing survival and success.
Although COVID-19 has taken most of the public’s attention this year, American consciousness in 2020 still has plenty of room for the Black Lives Matter movement, around which conversations and activism continue to swirl. Hundreds of companies large and small have stated their support for the movement, but as Chicago diversity consultant Pepper Miller reminds us, businesses that want to demonstrate their social consciousness need more than words: “Companies need to draw long-term plans for social inclusion and racial equality that go beyond them saying that they ‘stand with black people.’”
Miller’s statement is especially poignant when we remember that out of America’s largest 500 companies, only four are headed by a black chief executive. In light of that unfortunate gap between companies’ words and boardroom realities, we must remember that appealing messaging means nothing if that messaging is empty. Companies that want to send a positive and resonant social message ought to begin with a clear, directed, and purposeful strategy. Word-only support for Black Lives Matter, without a strategy to prove that the message has teeth, invites contradictory and thus controversial communication, a loss of consumer faith, and damage to the bottom-line.
Companies’ responses to social movements, famous PR faux-pas, and historic damage control success stories may not have much in common, but as a whole, they remind us of a fact crucial for business growth: strategy and communications must be created in tandem, with equal attention to idea and implementation.