In the eye of the Tiger

The power and complexity of sincerity in a corporate crisis.

It may be early days yet, but Tiger Brands and the listeria crisis are rapidly shaping up to becoming a case study in corporate crisis management.  The South African food giant has had the deck stacked heavily against it; not the least being the legitimate practical, insurance and legal constraints in admitting accountability and by implication, liability at the outset.

In such cases, the only mitigating response is sincerity in concern for the community and customers without necessarily admitting culpability. That’s a very difficult tap-dance because it invokes what is essentially a human quality in an institutional and legal environment. Sincerity reflects a combination of attributes that ultimately create authenticity and credibility even at the institutional level. This is not something you can easily spin or rehearse from a P.R. handbook. It is fed by genuine empathy, intuition, honesty, humility, integrity and above all consistently demonstrated as a brand over a number of years. Whether it mitigates the crisis or not is ultimately not the point. Sincerity is not about purpose or motive; it is simply about being.

In Tiger’s case, sincerity, coupled with honesty about the difficulty it faced in admitting responsibility prior to conclusive tests proving the source of the outbreak, may have tempered some of the hostility.  I say may, because a hostile media is simply a given these days and lines have become blurred between direct and leading questioning; between inquiry and inquisition and between investigation and prosecution. These were all displayed in the Tiger News conference broadcast live within hours of the Department of health announcement.

It led to Tiger’s one empathetic gesture virtually being ignored; that of withdrawing all Enterprise products and not only the three suspected of contamination. That gesture seems to have been taken out of the spin-doctor’s manual relating to the famous Tylenol case of the early 80’s.  In that incident, 7 people died after consuming the popular pain-killing capsules that had been injected with cyanide In Chicago. The producer, Johnson and Johnson, immediately warned consumers not to take the Tylenol capsules and withdrew all of them throughout the United States. It later stopped producing capsules completely. It cost J&J some $100 million at the time and Tylenol’s market share dropped from 37% to 7%. But within months that had all been regained and the company’s brand emerged with an enhanced reputation.

In 2003, Pick ‘n Pay had a similar experience in an extortionist threat in Gauteng which claimed that some products in its stores had been poisoned. It immediately took the public in its confidence and withdrew the products from the shelves. The threat was shown to be a hoax, and the company’s brand and share price emerged stronger from the experience. The significant difference between Tiger and the others is that the latter were victims whereas Tiger is accused of being a perpetrator. That immediately tarnishes somewhat C.E.O. Lawrence MacDougall’s emphasis that the company had gone beyond what was expected of it in mitigating the effect of the listeria outbreak.

But there’s a far greater significance to the comparisons. Johnson and Johnson’s CEO at the time of the Tylenol crisis was James Burke – a man who passionately believed in the company’s credo, penned in the 1940’s, that J&J’s "first responsibility was to its customers and then to employees, management, communities, and stockholders-in that order”. Six years before the Tylenol event, Burke felt that the credo had lost its influence and challenged the board either to recommit to it, or “tear it off the walls.” Similarly, Pick ‘n Pay had at the time, carefully nurtured “the customer first” passion of its founder, Raymond Ackerman. Tiger Brands simply does not have the same “gravitas”, or consistent sincerity. Just over ten years ago, it was involved in the infamous bread price fixing scandal and had to pay a R100 million fine: one of a number of brand tarnishing events.

  

Yet, one has to have some sympathy for MacDougall and Tiger Brands. Largely through its own doing, business generally has created a mostly hostile public, whose anger is tempered only by even lower trust in government. Big business is reaping what it has sown for the past three to four decades in the form of a particular interpretation of free enterprise that places exclusive emphasis on capital supremacy, shareholder-value, profit maximisation and short termism. It has been “de-humanised”, preferring to cower behind an institutional shield that often exonerates individual malfeasance and accountability.

In that process it has muted and ignored the most important perspective of all: that business is not about institutional standing and performance, but about personal relationships and individual meaning. As I argued in an earlier article titled “Follow the meaning”, relationships are far more important to a company’s health than metrics or structures. This is particularly true of relationships with customers and the community at large. In that, institutions per se cannot be sincere. They need a Burke or a MacDougall to convincingly reflect that and individual behaviour to demonstrate it.

The way Johnson and Johnson lived out its credo is an important reflection of pre-80’s corporate thinking. Over the years I have cited many others who have benefitted and continue to benefit from the customer driven, “creating value for all” perspective. Today Governance prescriptions are trying to coerce companies into doing that, but it will always remain insincere, prescriptive and onerous until it becomes the understood purpose of business.

Then caring becomes sincere, and trust a given.

Popular or populist?

President Ramaphosa’s difficult choice.

Not all popular leaders are good; and not all good leaders are popular. Sometimes the right thing is not the popular thing, and often the popular thing is not the right thing. It’s often been said that one of the flaws of democracy is that it blurs that logic, giving rise to a political structure that thrives on false promises and wild rhetoric disconnected from reality and creating a dangerous gap between it and expectations.

We call that populism and it is routinely used by opposition parties to gain power. It’s a highly questionable technique which does little more than inflame expectations and help sow public discord. Populism globally in recent times has helped strengthen opposing parties, in some cases putting them in power where they not only have to backtrack on populist rhetoric but are “recaptured” by the establishment. The U.S. and France are examples.

“Cometh the hour; cometh the man” is a biblical saying that can be applied to Cyril Ramaphosa and while he has all the right attributes to exploit that to its fullest, he has openly conceded that “we must ride this wave” (while we can); and has strengthened it through promenade jogs and township walks. Charismatic, charming, accessible, affable and somewhat inspiring are mantles that fit him well. But one would be less than candid if one did not concede that in no small measure his popularity has been given a massive boost by simply being an alternative to his much maligned predecessor.

When that honeymoon fades, and when the fear of a revival of Zuma factional support starts to diminish, he will have to find a way of steering the ship between remaining popular without being populist. That will confront him soon in an election year where opposition parties are hell-bent on ensuring that the governing party does not regain what it lost during the Zuma era. It’s already happening, forcing Ramaphosa to look beyond the low hanging fruit that Zuma left him such as unleashing enforcement watchdogs on the corrupt, stabilising the fiscus; shaking up SOE leadership; and committing to a reconfiguration of the executive which most interpret as meaning a substantial cut in the size of cabinet in future. Most of these may lose him some factional support, but will certainly gain him popular support.

The more difficult path lies in the deeper, ideological issues that divide the country and where populist exploitation is at its strongest. These include land reform and concentration of capital. They are at the root of key issues such as Radical Economic Transformation, monopoly capital, WMC, state capture, inequality, cadre deployment, empowerment, inclusivity and in turn many other related issues.

Populism thrives on ignorance and incoherence. Having followed these debates intensely for decades, I am of the firm belief that the most important thing that has to be done before weighing in with legislation and execution is to create a much higher level of coherence and comprehension. On the land issue, the line has not been drawn clearly enough between food security and black economic empowerment. The vague assumption that they are not mutually exclusive may have some substance, but ultimately a single priority has to be defined. This can only be done when we stop thinking of land as political territory and more as a means of feeding the masses. That priority then has to become the ultimate purpose of land ownership – one that can be shared by all. (See article Grabbing land in La-la-land here.)

A greater degree of coherence in and understanding of the issue of capital concentration offers much promise of finding a middle ground where we are currently divided the most. Stripped of all its ideological, racial, and populist claptrap, many may be surprised to find common cause on a global scale of the distaste of what the concentration of capital ownership, control and management has created. (See article here.) 

The argument of maximising capital efficiencies has worn very thin against other outcomes such as inequality, state capture, declining innovation and competition, and tax evasion to name just a few. Market forces work at their best when they are fragmented, decentralised and free. Coupled with the rampant growth of financialisation and debt, the global economy itself has been placed on a knife edge where it can easily tumble into recession or even extended depression. Corporate malfeasance or fraud can destroy the wealth of many; collusion between one or two big players can warp price discovery, and large corporate lobby groups have inordinate power in swaying the state to serve their vested interests.

E.F.F. Commander-in-chief, Julius Malema may find it strange to discover some resonance between his views and that of Adam Smith, the father of capitalism, to be found here in a recent article by Smith scholar, Paul Sagar. Capital concentration virtually guarantees some form of state capture, while true defenders of free enterprise find it difficult to reconcile capital concentration with free markets. It has become Capitalism’s Achilles heel.

Ramaphosa does not have to fall into a populist trap. His experience in labour, business and politics equips him well to create clarity, coherence and comprehension and define a productive middle ground that is far less divisive than what we have. He can indeed chart a new course for the nation.

Time will tell.