How to respond to a devil in PradaOctober 17, 2012: 12:59 PM ET
In a business environment filled with corporate PR crises and mudslinging, does it ever pay to take the gloves off when responding? And if so, how do you pull that off?
By Harrison Monarth
FORTUNE -- Designer Oscar de la Renta recently got his silk boxers in a wad when New York Times fashion reporter Cathy Horyn penned an unflattering review of his latest runway show. De la Renta took out a full page ad in Women's Wear Daily to respond to Horyn, who in early October ignited a similar flame under Yves Saint Laurent designer Hedi Slimane.
In both cases, the designers have drawn the sympathy of devotees (Lady Gaga even leveled a rap against Horyn and her boyfriend). Yet in both cases, such behavior is, at best, viewed as diva-esque and, at worst, damaging to a company's bottom line.
In the last three years, companies have had to do serious damage control to restore their reputation in the wake of oil spills, auto recalls, and phone tapping scandals. These companies have paid a price. According to a 2011 study by consulting firm Booz & Company, stock prices of companies that are in the oil, automobile, aircraft manufacturing, and financial services industries show that shareholder value came down an average of 33% within a year. So, while designer tantrums may not put any lives at risk, a company's tarnished brand can have far reaching effects.
Service disruptions at BlackBerry manufacturer Research in Motion (RIMM) in October 2011 left millions of its users without access to email, instant messaging, and browsing for several days. RIM's response was awkward silence followed by a statement that service had been restored (it hadn't entirely).
RIM was already having a difficult year thanks to competition from Apple (AAPL), HTC, and Samsung. The company's communication missteps contributed to a 49.7% drop in its market value in the days following the debacle, according to data compiled by AON and OxfordMetrica.
"Like never before, winners and losers in the war for reputation are increasingly determined by how leaders respond to crises and criticism from single detractors or a multitude of antagonists," says Leslie Gaines-Ross, chief reputation strategist at Weber Shandwick.
Hedi Slimane referred to his critic as a "schoolyard bully," an "average writer," and "a bit provincial" in a rant on Twitter. But Francois-Henri Pinault, chairman and CEO of PPR, the parent company of Yves Saint Laurent, was quick to praise the designer's debut collection. He told Women's Wear Daily, "The house needed both a renovation and a return to its roots, and with Hedi, we have started down that road," adding that he "stands by" the house and its creative team. Pinault's response is appropriate, as Horyn's original critique was largely subjective and countered by plenty of smitten retailers.
It's trickier to take off the gloves when you are responding to criticism based on something more straightforward such as a product malfunction or corporate malfeasance. In these cases, full-frontal transparency can pay off.
Apple CEO Tim Cook's very direct apology not only addressed consumers' frustrations head on, but played to the hearts of iOS fans and countered competitors and naysayers with numbers. "There are over 100 million iOS devices using Apple Maps...in just over a week iOS users with the new Maps have already searched for nearly half a billion locations."
In a similar approach, the CEO of Canada's Windsor Regional Hospital David Musyj published his mobile and home phone numbers and invited frank talk from constituents about his $265,000 salary, how he spends more than $320 million in annual Ontario health care funds, and anything else others might question about his facility.
And Labor Secretary Hilda Solis offered a noteworthy retort to former GE CEO Jack Welch's allegations that the latest BLS jobs figures were cooked by quickly offering the general public details on how the numbers are compiled. By describing those details, she helped counter the Administration's critics.
Ultimately, it's best to play the part of the adult in a business world filled with childish antagonists. One thing's certain, though: they aren't going anywhere, or growing up.
Harrison Monarth is the founder of GuruMaker--School of Professional Speaking. He's also the author of The Confident Speaker and Executive Presence.