You Had Better Duck

Some time ago in this space I wrote about the adventures of a 60-foot yellow rubber duck that had exploded in a harbor in Taiwan, which I used as an example of unexpected operational failures and the need to stay at least one move ahead of whatever else is going on. At the times this may have seemed a bit harsh, given that rubber ducks do not usually explode, and that if you are in the middle of displaying an 18-meter tall inflatable sculpture half a world away from your home base (the duck’s creator is from The Netherlands) there are probably a great many things on your checklist that come before “Make Sure Duck Does Not Explode.” For example, making sure that the duck does not get loose from its moorings and float away down a river, never to be seen again…

You can pick up the story from the BBC News site if this is getting too fantastical for you, and I certainly wouldn’t blame you if you did. Apparently, after exploding (or bursting, at least) in Taiwan and deflating in Hong Kong, the duck had been taken to a port on the Nanming River where it was mounted on a 10-ton metal platform and anchored to the riverbed using steel cables – none of which appears to have slowed it down when flood waters hit the installation and sent the duck drifting away. Despite the fact that the duck weighs over a ton, is as tall as a five-storey building, and is bright yellow (like the bath toy it resembles) there have been no reported sightings of it confirmed at this time…

Now, I will be the first to admit that I don’t know anything about public art installations, meteorology, river currents, large-scale rubber fabrication or the relative tensile strength of steel anchor cables. But I do know a few things about preventable failure, and I must admit that if a project I was running had already exploded, deflated, been attacked by eagles (as reported here), and was a larger-scale version of an installation that had already gotten loose from its moorings once in Europe (although that time the duck was caught again – when it became wedged against a large bridge, effectively blocking travel on both the roadway on the bridge and the canal below) I might consider asking how certain everyone was that this particular installation was safe…

Fortunately for all parties involved the duck isn’t really part of a business venture; its International tour (which has already passed through Sydney, Sao Paulo and Baku without incident) is intended mainly to bridge cultural barriers and increase understanding between nations by exposing them to something so completely absurd and yet aesthetically adorable that anyone whose sense of wonder hasn’t been surgically removed must stand in amazement and/or swear off of whatever they were drinking the night before. But advertising stunts using smaller inflatable constructs are becoming increasingly common in some countries (including the US), and the duck’s misadventures give an excellent example of just how far an otherwise harmless publicity stunt could potentially go off the rails – or, in this case, down the river…

It has often been noted that while all human beings learn from mistakes, the truly successful person is usually the one who learns from someone else’s mistakes. I certainly hope this is true – especially if any of my readers (assuming I have readers) is planning anything that involves large-scale public installations, river conditions, or inflatable waterfowl…

No Limit

Over the years I’ve been watching and writing about business failures I’ve encountered examples that can be explained by bad strategic planning, bad marketing surveys, bad demographic information, bad product design, faulty product development, faulty product construction, bad advertising, bad product distribution, bad customer service, bad human resources policy, bad financial decisions, bad accounting practices, fraudulent accounting practices, idiotic purchasing decisions, incompetent technology development (too high and too low), insufficient capitalization, absurdly bad public relations, and horrible taste. I have also encountered experts, both consultants and professionals available for hire, who can help you to avoid every one of these errors and many more in both concept and execution of your business model. There is, however, only so much they can do about rampant stupidity…

Consider, for example, the case of a movie theater in Jefferson City, MO, which decided to stage a publicity stunt for the opening of the new Iron Man movie: having a man dressed in tactical gear and carrying a prop assault rifle walking around the building. You can pick up the account of the situation from the local ABC affiliate if you want to, but the story should still seem vaguely familiar…

If you were watching the news last summer you will probably remember this as exactly how the movie theater shooting rampage in Colorado began – except, of course, that one was a real maniac with a real gun. But the similarity in the scenario (man in black tactical gear with an assault rifle invades a movie theater on opening night of a superhero movie) was enough for several patrons, who summoned the police. Needless to say, perhaps, neither the law enforcement personnel nor the theater patrons were happy to learn that the whole thing was a hoax…

Now, in fairness, the “gunman” in our story was part of a group that included an actor wearing an Iron Man costume, and anyone seeing the entire scene would probably have realized what was going on without any additional issues. Still, I think we are justified in asking why the actors arrived in costume and walked onto the property dressed that way, instead of suiting up once already inside. And, of course, we could also ask how management could possibly have thought that this sort of stunt was a good idea in the first place. Granted that having costumed actors on hand could add some impact to an otherwise routine event, there is still an excellent chance of offending people who are in favor of gun control, have friends or relatives affected by the Colorado shooting, or who have friends or relatives who have been affected by some other gun-related incident…

Then there’s the issue of fake armed confrontations turning into real ones. In this case, no one was hurt – the responding police units did not jump to the wrong conclusions, and there was no actual armed showdown. But if the officers responding to the 911 call had been just a little bit trigger-happy – or worse, if someone inside the theater had been carrying a concealed weapon and decided to take pre-emptive action – this whole situation could have ended in tragedy…

Many years ago, when I was trying to explain my new job as a management consultant to my (then) 92-year-old grandmother, what I ended up saying was “I provide common sense to companies that don’t have any of their own.” It wasn’t much of a joke even then, but when I read stories like this one I sometimes wonder if such consulting firms may become a growth industry in the new century. Assuming that anyone has the common sense to hire them in the first place…

Loser

There aren’t at lot of events that make someone like me want to make the “L” sign on our foreheads and start yelling “Loser!” at someone who has managed to create his or her own Epic Fail in a business context. Part of it, of course, is simply due to the fact that I am a mature adult with two Master’s degrees in Business and a better-than-average experience with things that can go wrong through no fault of one’s own. Some of it is because I am a student of business failures, and I’m aware of how fine a line there is between a “moderate success,” a “fail” and an “EPIC FAIL.” And some of it is just because I’m the type to view another person’s misfortunes and think “There but for the grace of God go I,” rather than “Neener Neener Neener!” None of which keeps me from wanting to call the guy who renounced his U.S. Citizenship to avoid paying taxes on the money he made on the Facebook IPO a loser – and a complete idiot with no grasp of strategy – however…

In case you missed it during the original events, you can pick up the story on the Forbes web page. A man named Eduardo Saverin bought a large amount of stock in Facebook during the initial public offering, and then moved out of the country and renounced his U.S. Citizenship in order to avoid paying the capital gains tax he was sure would arise as the stock price continued to soar. He had to pay taxes on the $2.4 billion his shares were worth on that day, but he’d be immune to any additional gains. Unfortunately, he failed to take into account what would happen if the stock didn’t continue to rise – as, in fact, it didn’t. As of this writing, Saverin’s shares of Facebook are now worth about $1.2 billion, or about half what they were on the day he renounced his citizenship. But, since he’s no longer a citizen, he can’t take advantage of the tax implications of the loss…

Yes, that’s right: his stock is now worth $1.2 billion, but he is going to have to pay taxes on $2.4 billion. Best guess, according to Forbes, is that this will cost him around $180 million – in addition to the loss of half of his stock value in the first place, of course…

Now, I don’t pretend to know much about finance or tax law, let alone karma, but it seems relatively straightforward to me that if you’re going to play games with the tax laws in order to screw the United States government out of money you owe them, you should probably at least consider what will happen to your clever stunt – and your personal fortune – if the market doesn’t do what you expected it to do. Especially in a case like this one, where nearly all of the company’s assets are intangibles – not even defined things, like patents and copyrights, but nebulous things like market position and goodwill. Because if the market does not rise, you’ve renounced your citizenship and accepted all of the issues that will come with that decision for nothing – and if it drops, you’re losing money fast…

Previously in this space I’ve noted that right or wrong, a stock price is based on what people will pay for it, not on what the security is actually worth, or even on what they think it is worth. And in the case of a company that owns no property, has no tangible or intellectual assets, and is counting on driving its stock price up based almost entirely on hype it doesn’t take much to change people’s opinions. I’m not saying that attempting these sorts of shenanigans with tax laws and citizenship will automatically make you a loser; I’m saying that just as in any other human activity, you need to plan for the possibility that you’re not quite as clever as you think you are…

This is a Strategy?

I was wandering around online this week and I ran across an interesting line of speculation about the ongoing Chick-Fil-A fracas, and whether it’s all as random – and psychotic – as it looks. If you’ve been out of touch for the last few years you may not know that this national fast-food chicken chain has a long history of supporting anti-gay political groups, and specifically those opposing same-sex marriage, or that earlier this month Chick-Fil-A’s CEO came out and defended this affiliation, saying that these are the core beliefs of his organization. This has resulted in all of the public outcry you would expect from the left side of the political spectrum, and there are now protests and boycotts being proposed all over the country (or at least those parts of it that have operating Chick-Fil-A locations in them)…

This doesn’t seem like it would be good for business, does it? The exact number of people in this country who identify as part of the group Chick-Fil-A is antagonizing is unclear, as they are still highly stigmatized in some areas, but something like half of all Americans are in favor of full civil rights for members of the GLBT community, if not for same-sex marriage itself, and alienating that much of your customer base seems unwise. Even worse, people in the younger demographic groups – who make up a disproportionately large amount of the fast-food customer base – are more likely to support the GLBT rights and same-sex marriage cause than older people in otherwise similar populations, making this public and political stance that much more likely to damage sales. But what if a change in demographic support was the whole point of the exercise?

Over the past week, as folks on the left have been organizing protests and calling for boycotts, there has been a response from right-wing political leaders who are jumping on this situation to curry support from their ultra-conservative supporters. We’ve already seen former (and possibly current) presidential candidates calling for a “Day of Appreciation” for Chick-Fil-A and urging like-minded people to support the company by purchasing more product. As a direct result, people who wouldn’t be caught dead in a Chick-Fil-A under any normal conditions are showing up, having their pictures taken, tweeting and blogging about the situation. Meanwhile, millions of people who had never heard of Chick-Fil-A before (and have certainly never eaten there) are talking about the company and debating what they think they’re doing…

Now, it may seem a bit far-fetched to believe that the company had intended such an effect all along; it certainly assumes a much greater understanding of psychology (and a great deal more intestinal fortitude) than we normally associate with the fast-food industry. But competition in that industry has been intensifying in recent years, leading to such unexpected moves as Taco Bell attempting to introduce upscale entre choices, McDonald’s offering salads and high-end coffee products, and KFC trying to promote itself as health food. And while it may be optimistic of the company to assume that they will receive more business from new ultra-conservative supporters than they lose from more liberal folks, very few companies in this country have ever lost money betting on small-minded, reactionary bigotry…

The question of whether all publicity is good publicity remains in dispute, but it’s hard to deny that in this case Chick-Fil-A has gotten millions of people to pay attention to them for the price of a press conference. Is this a devious strategy to increase sales, a Machiavellian publicity stunt, or just the political ranting of a group of people who don’t seem to understand that sometimes asserting your personal beliefs (however sincerely) is bad for business? What do you think?

Can of Worms

Last week I wrote a post for this space about the growing kerfuffle between the American Cancer Society (ACS) and an atheist group that calls itself the Foundation Beyond Belief (FBB). I don’t have any particular grasp of (or interest in) the debate between religious groups and evangelical atheists; I’ve always felt that both groups are just opposite sides of the same coin, and that neither one has anything to do with business. But I know a few things about non-profit operations and publicity, and I felt that the demand by the FBB to be recognized as a National Partner in the ACS’s annual Relay for Life on the strength of an offer to raise one team and match its collections 1-for-1 was a bit disingenuous. More to the point, perhaps, I felt that the claims that the ACS had rejected the donation because the people making it are atheists were completely missing the point – perhaps deliberately…

First and foremost, the American Cancer Society never refused the donation. Never. Not even for a moment. People continue to insist that the Society is only interested in donations from religious people, or at the very least, from donors who won’t offend religious people – but this isn’t true. According to all of the information I’ve been able to find, ACS donors include people and organizations of every possible description; secular humanists as well as members of every known religion. It’s a list that includes strip clubs as well as churches (no, really; go look it up…), businesses as well as community organizations, schools and homeowner associations, fraternities and sororities, social clubs and bowling leagues, family foundations and private individuals. If all the atheists wanted to do was contribute to the fight against cancer, they would have been welcome to do so – and still will be…

Second, a pledge is not a donation, even if it comes with a 1-for-1 matching pledge from another organization. Some of the people who had been writing to me have objected that there were individual teams that made over $23,000 last year, and with a matching donation might raise $46,000 this year. This might well be true – there’s no published list of how each team did over the past years of the event. But even if that is true, the actual offer was not a pledge of $46,000 or $46; it was the offer of one team plus a 1-for-1 match. If you divide the total collected by the total number of teams over the years you get an average of about $2,800 per team, but the FBB isn’t even promising that. In fact, they’re not promising anything, much less the minimum investment of effort and time required to be named a National Partner…

Third, a lot of people are claiming that the ACS “changed their story” multiple times about what was required to be a National Partner, or even changed what the requirements were in order to exclude the atheists. But this is nonsense; the requirements have changed over the years, as the ACS has focused more on corporate partners in order to increase its reach and recognition, but those standards have been posted on the Society’s website for all to see since well before this flap began. Moreover, you and I were not party to the communications between the Foundation and the Society, and we have only one side’s version of what was said in those discussions…

The reason I felt this was worth discussing in a business blog in the first place was that it falls into our discussions of people who aren’t really customers who demand to be treated like customers, and people who demand consideration to which they are not entitled. Whatever one thinks of atheists or their support organizations, I think we are justified in questioning whether they deserve the same recognition for one vague offer of nothing in particular that a major sponsor like AT&T or Delta gets for sponsoring hundreds of relay teams in dozens of states. It would be like me demanding the same frequent flyer benefits that the New York Times gets, even though they fly hundreds of reporters around the country every week and I only get out of Central Michigan once or twice a year…

None of this will matter to the people who are flaming the ACS, of course, any more than it will matter to the people who keep flaming me (and sending me nasty comments); it’s always easier to run around yelling “WE ARE ATTACKED!” than it is to think – and in this case, it serves their cause better anyway. Or so they believe, at least. To all of my readers (assuming I have readers) I can only say, stick to your convictions and don’t let anyone push you around, whether they claim to have the one true opinion about the nature of the Universe or not. And if you have a few dollars to spare, please give some of them to any anti-cancer organization you like, whether it makes you a National Partner or a Grand Exalted Pooh-Bah or a Special Pioneer Scout Opinion Leader or just says “Thank you” and gets on with the task of eradicating this horrible disease. You’ll be glad you did…

You Can’t Say That in Public!

This week another story popped up in our ongoing collection of examples that prove life in the Internet age really is different – and that anyone who believes that it isn’t is living in a fool’s paradise. Apparently, according to the story in the Minneapolis – St. Paul Star Tribune , a local contractor was having a dispute with a customer over the quality of some concrete work, and the whole thing had degenerated into a series of court cases, when the customer’s daughter decided to post a bunch of nasty comments about the contractor and his company on Craig’s List. This might have stayed in the grey area, except for the fact that the daughter used actual legal terms (such as “fraud”) in her Craig’s List post, and the terms were not supported by the company’s history or the court records. As a result, the contractor counter-sued for defamation and won…

If you’re a consumer advocate, you probably see this as a case of the company doing crappy work (the original customer won the original customer complaint) and then profiting when they counter-sued. If you’re a small-business advocate (the firm in question has only a few employees) you probably see this as a case of someone attempting to screw money out of the company by threatening to write nasty Craig’s List posts unless they get what they want – and then doing so. If the cases are being reported correctly in the linked article, it would appear that the company did offer to fix the problems, but the customer demanded that they refund their entire fee AND pay the “customer” an additional $800 into the bargain (for a total of $6,200), and the court would only allow the customer $440 for the repairs – which is when the customer’s daughter decided on a smear campaign online…

Now, you and I weren’t there when any of this happened, and we don’t have access to either the original contract or the court documents – but none of these points are being disputed by either party. If this is how it went down, then it does appear to be a customer making unreasonable demands on a company that is just trying to complete their obligations and make a living, and that both the customer and her daughter eventually got their just desserts. A much more interesting point, at least from where I’m sitting, is the complaint about the Craig’s List posting – and the subsequent judgment supporting that complaint…

In the days before there was an Internet, the client’s angry offspring would most likely have told friends, acquaintances, and anyone else in the community who would listen about how badly her mother was treated by this paving contractor, and how no one should ever do business with this company. This would be annoying and unfortunate for the company, and if enough people did it they’d probably have trouble getting new customers, but there wouldn’t have been anything actionable involved, and there would probably have been no occasion to counter-sue. Publicly accusing someone of a crime is another matter, however; even in the old days, you’d probably have been a bit more careful about calling someone a fraud in public, and you’d certainly hesitate before doing so in front of tens of millions of people…

Unfortunately, that’s exactly what you’re doing when you post such accusations on Craig’s List – or anywhere else online. As I’ve noted in some of our previous musings on the information age, in cyberspace everyone can hear your stupid, unfair and ultimately incorrect accusations of wrong-doing – which means that so can the person you’re maligning. And not only is that not likely to change any time soon, as more and more of the world becomes interconnected through the Web, the number of people listening to you rant is only going to get larger. So be careful about what you say in public, because I can almost guarantee you that if the people you’re excoriating aren’t watching you yet, they will be…

Beware the Crystal Skull

Anyone who saw the last “Indiana Jones” movie already has reasons to be wary of anything called a crystal skull, of course, but the item mentioned in the title of this post does not have anything to do with space aliens, evil Soviet scientists, or the ability of a college professor to survive an atomic explosion at ground zero by hiding inside a lead-lined refrigerator. No, this crystal skull is actually a bottle, which contains the beverage known as Crystal Head vodka. It’s remarkable for at least three reasons: One, the company is owned by actor Dan Aykroyd; Two, it’s an unusually clear and unadulterated version of this spirit, without any of the oils or sugars normally used to flavor vodka; and Three, it began as a lark, a product the actor expected to sell at most 5,000 bottle of as a novelty, and is now expected to gross between $40 million and $50 million in retail sales this year alone. It’s also remarkable because the bottle has been banned in Mr. Aykroyd’s home province of Ontario…

Since the whole thing is being treated as a humorous (or human interest) story and not a business piece, it’s currently on the Food and Wine page of the Globe and Mail website, but I was immediately struck by the several business lessons contained in this text. First, of course, there’s the issue of banning a product because its packaging has a dark or negative connotation. This is the sort of publicity you can’t possibly buy; the one thing that will turn almost any blandly corporate product into something “edgy” and “dangerous” overnight, and you really can’t beat gothic- or death-imagery for this purpose. Almost as important, however, is the fact that the company is offering a superior product in a package that would be instantly recognizable even if it wasn’t contraband. But I think what strikes me as the most amazing is that the product was already flying off the shelves BEFORE the Ontario Provincial government decided to ban it…

Now, in fairness, some people do find the depiction of the human skull, and its association with both death and the occult, to be somewhat disturbing. If you’re not from the American Southwest, where such things are common every November, it could be a bit off-putting. But the story goes on to note that in the 14 months the product and its distinctive bottles have been selling in British Columbia, there have be no public complaints whatsoever, and thus far there haven’t been any from south of the border, either. More to the point, perhaps, there’s no explanation of why that would be against Canadian law in the first place. Certainly, in the U.S., companies that have selected advertising or packaging graphics that disturb people and potentially interfere with sales have been allowed to plummet into obscurity and bankruptcy unassisted…

As a side note, one of the comments to the original story noted the existence of a microbrewery in Utah that produces a product called the Polygamy Porter and features the sales slogan “Why have just one?” I don’t know much about liquor regulation and similar product control laws myself, but it strikes me that if Utah can survive the production and distribution of such a brew, it’s hard to imagine what harm a skull-shaped bottle is going to do to a Canadian province. Personally, I hope Mr. Aykroyd goes on to make a huge fortune on his Clear Head products, and I commend the company to your attention…

Because anybody this good at marketing products and gaining free publicity will probably be back…