How to respond when scandal damages your brand

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In the wake of tragedies such as the Feb. 14 Parkland, Fla., school shooting and the Olympic sexual abuse scandals, numerous organizations are looking within themselves to reaffirm the core values underlying their brands.

A wide range of companies, including Dick’s Sporting Goods, L.L. Bean, Walmart and Kroger, halted sales of firearms to customers under age 21 after the Parkland shooting. Delta Airlines announced it would stop giving discounts to National Rifle Association members, and REI said it would stop carrying items from a company that also manufactures assault-style rifles.

For the U.S. Olympic Committee, rehabilitating its brand is going to be more complex and difficult than just denouncing Larry Nassar, the former sports physician for USA Gymnastics.

Nassar was sentenced to up to 175 years in prison after admitting that he molested women and girls under the guise of medical treatment. More than 150 victims told of sexual assaults by Nassar at his sentencing hearing.

The entire board of USA Gymnastics resigned in January, but the USOC is facing increased scrutiny for not holding the gymnastics foundation accountable. Gymnast Aly Raisman has sued the USOC, alleging that it knew or should have known about the abuse, and a group of U.S. senators has called for an investigation into both organizations.

The USOC has begun to take action. On Feb. 28, the committee announced that its CEO, Scott Blackmun, had stepped down, citing health reasons.

Before his resignation, Blackmun said the tragedy “was worse than our own worst fears. The USOC should have been there to hear it in person, and I am deeply sorry that did not happen.”

USOC Chairman Larry Probst also announced a series of reforms, including funding and resources to support and counsel Nassar’s victims, formation of an advisory group to recommend stronger safeguards against abuse, a review of the USOC and National Governing Board structure, giving athletes a stronger voice within the USOC, and doubling funding for the U.S. Center for SafeSport, created by the committee to respond to reports of sexual misconduct within the Olympic movement.

The USOC appointed board member Susanne Lyons to serve as acting CEO, a significant choice since Lyons chaired the board’s working group that is addressing issues raised by the Nassar case.

Lyons, former chief marketing officer for Visa, called for re-evaluation of the committee’s oversight of all national governing bodies, potential changes to the Olympic structure and aggressive exploration of new ways to enhance athlete safety.

Crisis management

Businesses can take a lesson from the way the USOC is handling the crisis and attempting to rehabilitate and protect its brand. The first thing the committee or any organization must do in the face of a scandal or crisis is to analyze and regroup internally, local marketing and branding, experts said.

“The first impulse is to get messaging out, but that doesn’t work if you’re not committed to returning to core values,” said Karole Campbell, owner of Madwoman Marketing. “Everyone from the leadership down stepped away from their brand, which was athletes and their hard work. They’ve done some good things and let some people go. But what’s really important is to re-examine their values internally. It’s going to take some hard work to reinvigorate and recommit to that.”

Every business and organization has a brand, but often leaders have not taken the time to define and communicate it internally and externally, said Suzanne Tulien, “brand elevation enthusiast” at Brand Ascension.

“At some level, the employees who knew what was going on did not step up,” Tulien said. “They need to say, ‘We’re committed to these values. How do we make this tangible so it shows up at every level of the organization?’ They’re going to have to continuously talk about a new narrative and share all the steps they’re taking to remedy the situation.”

Jim Knutsen of Cast Consulting said businesses and brands  are undergoing fundamental changes right now.

“There is a consumer desire to associate with brands that share their values — especially with Millennials. They’re demanding transparency from brands. It is critical to be transparent about mistakes and plans to fix them.”

After a crisis, it’s crucial to do a lot of listening to customers and employees and work hard to understand what matters to them.

“Once you’re clear about your core values, you build systems around them, make sure people understand them, and are recognized and rewarded” for acting accordingly, Knutsen said. “Most businesses don’t think about this or don’t take it seriously enough.”

Businesses may think they’ll never have to deal with the kind of crisis that’s tarnishing the USOC. According to a 2010 report in The Economist, however, Oxford Metrica estimated that executives have an 82 percent chance of facing a corporate disaster within any five-year period, in contrast to 20 percent two decades earlier.

Because they don’t have large cash cushions, small businesses are even more at risk, Tulien said.

“They can be done overnight from a scandal or something that knocks them out of the marketplace,” Tulien said. “That’s a reason to really hone in and get clear on your brand.”

It helps to have a well-thought-out crisis management plan, Knutsen said. While companies can’t anticipate everything that might happen, they can come up with a plan that reiterates the company’s values, outlines immediate steps to assure the company’s survival and redoubles focus on customers.

Collateral damage

Businesses’ concerns about the values of allied organizations are driving the actions of REI and Delta.

But should the city of Colorado Springs, and businesses that do business with the USOC, be similarly concerned about their relationship with the organization?

“I don’t see how [the scandal] can have failed to damage the perception of Colorado Springs, because we are aligned with the Olympics,” Tulien said.

Knutsen said he isn’t sure there is damage, but “the city would want to think really hard about whether this aligns with who we are and our core values. If not, are we willing to do something about it, even if there’s a financial downside to that decision?”

While the Olympic brand appears to remain strong, “how can a city like Colorado Springs and businesses that do business with the USOC put pressure on them to clean up their act?” he said. “That’s what REI is doing, hoping to put pressure on companies to rethink the way they operate.”

Asked about the relationship with the USOC, Colorado Springs Chief Communications Officer Jamie Fabos responded with the following statement:

“There is no question that the USA Gymnastics issue represents a heartbreaking tragedy, and we support the efforts to make rapid changes to help all our athletes pursue their dreams in safety and security. We recognize that this is a watershed moment for the USOC.

“That said, the designation of Colorado Springs as Olympic City USA represents a great number of factors, the most overarching being its commitment to the international Olympic values of excellence, friendship and respect, which play a starring role in our recently distributed school curriculum. These values remain constant in times of adversity as well as in times of celebration.

“The IOC defines its goal as follows[:] ‘The goal of the Olympic Movement is to contribute to building a peaceful and better world by educating youth through sport practiced in accordance with Olympism and its values.’

“This, along with our intense pride in the athletes who represent our nation on the Olympic stage, our excitement at celebrating athletes at the coming U.S. Olympic Museum, the presence of some of the nation’s most heralded training grounds and the centuries-long history of the Olympic Games as an event that brings nations together forms a brand that transcends individual organizations.

“We also continue to stand proudly with the 17 athletes who recently traveled from Colorado Springs to represent our nation in PyeongChang, and the Paralympians competing this week. We look forward to being a positive and supportive part of their inspirational stories for years to come.” 

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