PRovoke Media 16 Jan 2023 // 10:24AM GMT
1. Twitter, Tesla and Elon Musk
It was a record-breaking year for Tesla co-founder and new Twitter owner Elon Musk — and not in a good way. Over the course of 12 months, Musk lost a staggering $200 billion (and the number one spot on the list of the world’s richest men) in a series of self-inflicted crises that appeared to be motivated primarily by a desperate desire to earn the friendship and approval of a person calling himself @catturd2.
Musk’s tumultuous year began with a crisis at Tesla, the first of several inciting incidents that on their own would have been significant enough to earn a place on this list. In February, news broke of a lawsuit filed by California’s civil rights attorney alleging an overtly and disgustingly racist culture at Tesla. Among the charges: that Tesla segregated Black workers into separate areas employees referred to as “porch monkey stations,” “the slave ship” and “the plantation,” and that Black workers were forced to scrub floors on their hands and knees.
The second Musk-related crisis of the year began in March when he began using his personal Twitter account to criticize the company for its targeting of Russian bots, anti-vaxx disinformation and election denialists. In April, he made an offer to purchase Twitter for $44 billion and take the company private. The offer was accepted by the company’s board, but within a month Musk was trying to back out of the deal, citing all manner of spurious questions about the number of bots on the platform. A prolonged court battle looked likely — as did an ultimate victory for Twitter as it sought to force Musk to honor the deal — before the billionaire capitulated in October, announcing that he would complete the acquisition.
Predictably, things went rapidly downhill from there. Twitter lurched from crisis to crisis, while Tesla began to suffer from its own issues and the erratic behavior of its seemingly distracted CEO. The crises came in such rapid succession that they blurred together and appeared to feed each other.
As is often the case, internal problems surfaced first. On October 26, the deal completed, Musk arrived at Twitter headquarters carrying a kitchen sink. The symbolism was unclear, although it provides an eerie foreshadowing of the way the company immediately begins to circle the drain under his leadership.
He fired most of the senior management team immediately and during his first few weeks as CEO he laid off some 3,700 workers. He did so without any formal communication with employees, which might have looked like a mistake until he actually did communicate, firing off what leadership experts would describe as the worst opening email from a CEO to employees in recent memory.
A week or so later, Musk doubled down, issuing an ultimatum to employees, demanding that employees either commit to his “hardcore” transformation or accept a severance package. That trigged mass resignations, forcing the temporary closure of some offices. Lawsuits ensued when it appeared that the company was not honoring its severance commitments.
At the same time, Musk’s personal use of Twitter became a separate issue. Early in his tenure, he called for a peace agreement that would force Ukraine to cede territory to Russian aggression. Later, he retweeted a bizarre conspiracy theory about the violent assault on Paul Pelosi. He launched ugly attacks on trans people and Covid czar Dr Anthony Fauci. All of these tweets damaged Musk’s personal brand and his reputation as a leader.
He also began inviting right-wing accounts banned for spreading election and vaccine misinformation — including former President Donald Trump — back onto the platform. Those moves appeared to contradict Musk’s promise that he would not turn Twitter into a “free for all hellscape,” and clearly made advertisers nervous. They became even more alarmed when, a day after claiming to be committed to “brand safety” on Twitter, he made dramatic cuts to the Twitter team responsible for fighting child sexual abuse on the platform. Within weeks of the takeover, Twitter had lost 50 of its top 100 advertisers.
A different kind of brand safety crisis hit the company in November, when Musk entered into a bizarre spat with author Stephen King over plans to charge users for the blue check-marks previously awarded to accounts that were confirmed as belonging to notable individuals. A few days later the plan goes ahead, allowing anyone to buy a checkmark. A day later “verified” but fake accounts for companies such as Eli Lilly, Chiquita and even Tesla post information that causes consternation and confusion including a 4.6% drop in the value of Lilly shares, according to exclusive analysis from SenateSHJ.
All of this was exacerbated by the fact that Musk had fired the company’s entire communications department (although he did bring on board former journalists Matt Taibbi and Bari Weiss to publicize what he called “the Twitter Files,” which were supposed to prove some sort of left-wing bias by the previous management team but ended up telling us much more about the new CEO’s confusion over what free speech means).
And he further alienated the media by banning a number of journalists who had been critical of his management style, claiming without evidence that they had revealed personal information that placed him and his family in danger and making a nonsense of his earlier claims to be a “free speech absolutist.” He was forced to reverse the bans when threatened with legal action by the EU.
Finally, Musk turned to Twitter members to ask whether he should step down as CEO. The verdict was never really in doubt, with close to 60% (10 million members) saying he should go. As of this writing, he remains at the helm.
Meanwhile, Tesla was experiencing its own crises. There were numerous stories about spontaneous combustion problems with the company’s vehicles and video surfaced of a “self-driving” car suddenly braking in a tunnel, causing an eight-car pileup. Over the course of the year, Tesla’s share price declined from $360-plus in January to less than $120 in December — losing two-thirds of its value. As a result, Musk lost his position as the world’s richest man and set a — presumably unwanted — record for the greatest financial loss in history.
At Yale University’s annual CEO Summit, Professor Jeffrey Sonnenfeld and the Chief Executive Leadership Institute’s Steven Tien surveyed more than 100 CEOs and found that 79% believed Musk had become a detriment to the value of his businesses, and just 25% believe Twitter will be more valuable five years from now than it is today.
Said Sonnenfeld, “Attention is generally good for Musk’s businesses — but attention of the kind he is getting right now is not beneficial. His investors are getting spooked and spurning his requests for additional funds across both Twitter and Tesla. Users are leaving Twitter in droves amidst hate speech and indiscriminate censoring of journalists.”
Public relations professionals are pretty much unanimous in their verdict on Musk’s tenure as chief executive of Twitter.
Says Alistair Kellie, head of the communications practice at SEC Newgate UK: “Sadly for Elon Musk, there’s a danger that Twitter could become a poster child for how to trash a brand in 30 days, perhaps even in 30 ways...time will tell. Musk acted with his instincts and emotion, damaging the brand almost instantly. Rather than take stock, he decided to keep swinging wildly, hoping something he did or said would stick. Failing to have any strategy, as Musk has shown, can make you a laughing stock but, more seriously, damage a brand beyond repair. It’s a long way back for Twitter.”
Richard Levick, CEO of Washington, DC, strategic communications firm Levick, adds: “It has become chaos. Who buys into chaos? It’s another example of something not very well thought out, and that’s what happens when you rush. Musk has been known as a trusted visionary and magician — he can’t lose that moniker and that’s what’s at risk right now.”
Speaking to this publication, Levick suggested several lessons from the Twitter-Tesla-Musk crises of the past 12 months, including the danger of making the CEO the brand (“When it is someone as mercurial as Elon Musk, the risk is guaranteed. He is no Bill Gates, Steve Jobs or Indra Nooyi.”) and the danger of over-promising and under-delivering: “The reality is less captivating than the promise… Twitter is imploding, Tesla’s stock and brand value are dropping drastically…. Fairy dust has an expiration date.”
Finally, he puts Musk’s travails in the context of other major crises from the last 12 months, suggesting a broader lesson for those who would place CEOs on a pedestal: “Sam Bankman-Fried, Elizabeth Anne Holmes, Adam Neumann and now Elon Musk. After a quarter-century of Silicon Valley worship it turns out that some of the “kid geniuses” are just kids. Black T-shirts, shorts, smoking marijuana on a broadcast and more are no longer a sign of unimpeachable brilliance but what they always were, just eccentricities.
“Current tech executives should expect more scrutiny from Wall Street, private equity, journalists and the hoi polloi.” — Paul Holmes
2. The 2022 World Cup divides the world
You might imagine that the world's most watched sporting event would help bring people together but, long before a ball was kicked, last year's FIFA World Cup had already proved to be the most divisive in the competition's 92-year history. Allegations of corruption regarding the FIFA bidding process began a decade ago, with numerous leaks suggesting that committee members were compromised in their decision to select Qatar.
Several of these members, including FIFA president Sepp Blatter and secretary-general Jerome Valcke, were subsequently banned, while former UEFA president Michel Platini was arrested by France's anti-corruption unit. The US Department of Justice, furthermore, indicted more than 40 individuals — helping to underpin the entrenched view of FIFA as a deeply flawed organization where corporate governance is concerned.
But alleged corruption wasn't the only controversy to blight the 2022 World Cup. Qatar's poor human rights record attracted considerable attention, particularly in terms of its treatment of migrant workers, and its lack of LGBT+ rights. The Guardian reported that 6,500 migrant workers had died since Qatar won the right to stage the World Cup, and the issue rose to sustained prominence, when the football associations of 10 European countries, including England and Germany, wrote an open letter to FIFA ahead of the World Cup calling for action to improve the rights of migrant workers in Qatar.
In the run-up to the tournament, intense criticism of these issues, particularly in the Western media, helped trigger an extraordinary response from FIFA president Gianni Infantino. The first salvo was a letter that instructed participating nations to "focus on the football" rather than Qatar's poor human rights record. This was followed up by a remarkable press conference in which Infantino claimed to "feel" Qatari, Arabic, African, gay, disabled and like a migrant worker. To widespread bemusement, Infantino contended that he could understand the level of discrimination faced by these communities because of his upbringing as a red-headed Italian in Switzerland.
As the tournament got underway, it became clear that few teams were willing to risk player bans in return for highlighting their support of LGBT communities. Rainbow armbands were effectively prohibited, while rainbow flags and clothing were confiscated. Several incidents also saw Qatari security officials interrupt and stop broadcasters from filming.
Qatar was further criticised for politicising the World Cup trophy ceremony when Qatari Emir Sheikh Tamim bin Hamad Al Thani presented the Arab bisht cloak to Lionel Messi. As with much of the criticism of all of these issues, though, Western media were accused by Middle Eastern commentators, in particular, for bringing racist views to bear on their World Cup coverage.
With the tournament ultimately attracting substantial goodwill thanks to the progress of underdogs from the Middle East and North Africa, the crisis issues faced by FIFA were often reframed in terms of media polarisation, with 'Western concerns' pitted against the football culture of the rest of the world.
"FIFA’s attack on ‘Western hypocrisy’ was a classic polarisation strategy — drawing a dividing line and creating a “them and us” narrative to shore up support." explains MHP Group deputy CEO Nick Barron, a former sports communications specialist. "The loudest criticisms came from some of football’s most developed markets, like England and Germany, but increasingly, FIFA’s legitimacy and money comes from emerging football markets, and the organisation believes it is on a mission to advance football’s frontiers. They will see the success of Morocco and Saudi’s historic win as vindication of their strategy, and they point to their human rights programmes, funded by proceeds from the World Cup."
As Barron notes, "FIFA has always been relatively indifferent to criticism from Western journalists and campaigners", pointing to similar attacks during the 2018 World Cup in Russia, and their ability to rely on people forgetting politics once the tournament starts. "Even though Gianni Infantino’s bizarre 'Today, I feel…' press conference may not have given this impression, they were prepared. It’s not a crisis if you’re ready for it and have factored it into your cost-benefit analysis."
But while FIFA's crisis strategy helped to placate most sponsors and stakeholders, it remains to be seen whether the World Cup's long term brand value will be impacted. "In this respect FIFA enjoyed a bit of luck," notes Barron. "People’s recall of any event is disproportionately influenced by its last moments. This is called the 'peak end rule' by behavioural scientists. The epic final, culminating in history’s greatest player being crowned world champion will be what defines the collective memory."
Even so, Barron believes that LGBTQ+ rights campaigners can claim success. "This was arguably the most sustained and intense political campaign in sporting history and the world was watching." — Arun Sudhaman
3. Disney vs DeSantis
Few crises exemplify the challenges facing modern chief executives—and corporate communicators—more vividly than the controversy in which Disney found itself embroiled during the first few months of 2022. It was, in fact, two crises in one: the first caused by the company’s craven silence on (and tacit support of) a despicable attack on LGBTQ youth; the second a response to the company’s belated decision to live up to its values.
The starting point of the crisis was a new law, supported by Florida governor (and presumed presidential candidate) Ron DeSantis, designed to limit discussion of LGBTQ issues in the state’s schools. The so-called “Don’t Say Gay” allows parents to sue school districts if teachers engage in “inappropriate” discussion of LGBTQ issues.
In March of 2022, the NGO AIDS Healthcare Foundation launched a TV ad campaign "imploring the Walt Disney Company to speak out publicly and loudly” against the law. On the same day, The Hollywood Reporter published a piece about Disney CEO Bob Chapek, quoting insiders who claimed he "is less willing than predecessor Bob Iger to take public political stands—including on LGBTQ issues.” As the protests grew, and critics pointed to the discrepancy between the company’s stated values and its financial support for many of the politicians responsible for the controversial law, Disney remained strangely silent.
Much of the outrage came from inside the company as employees made it clear that they expected better, with many participating in a walk-out. Abigail Disney, a grand-niece of the company’s founder, summed up the feelings of many: "The times for neutrality are long since over," she tweeted. " What is Disney for? Is it for pretending what America is about, or it is for defining a vision for a world in which fantasy, love, kindness, decency and loyalty are bedrock values.”
Crisis expert Eric Yaverbaum, CEO of Ericho Communications, captured the prevailing sentiment at the time: “There was a simple solution for Disney, a company with vastly more of a reserve of goodwill and affection from the American public than it actually deserves, and it boils down to one thing: if you’re going to talk the talk, you have to start walking the walk, and if you can’t do that, expect to get called out for your hypocrisy.
“Brands simply cannot drape themselves in a rainbow flag to the tune of their cash register in one moment, just to turn around and give money to politicians trying to harm the very people that flag represents. Being a hypocrite is never a good look, and it will always, always lead to PR crises. It truly is that straightforward.”
On March 9, after the bill passed the Florida State Senate, Chapek reversed himself, with a public statement that Disney was opposed to the bill.
The backlash from the right was swift and severe, led by Fox television personality Tucker Carlson and by DeSantis himself, who retaliated by removing the company’s special tax district (a move that probably cost Florida more than it cost Disney). Some protestors even gathered outside the company’s theme parks, accusing Disney of “grooming” children.
The response was remarkable both for the way in which a Republican governor was willing to take legal action to punish a company for failing to support his policies, and for the vile nature of some of the criticism—a clear signal that companies could be forced to pay a political price for meeting the expectations of their stakeholders.
Says SEC Newgate’s Alistair Kellie, “A company like Disney must be sure to know who of its audience it is alienating and who it is gaining by wading into a political fight. Previously, the advice would be to stay quiet, but that can also imply that businesses don’t care about the moral issues of the day. Disney would need to have made sure they had weighed up the pros and cons from the decisions it took – both short term hits to revenues and long-term hits from staying silent.
“Communicating and–more importantly–standing by your decision is key in creating the best outcomes and Disney was probably right to stand firm knowing it would help its reputation in the future.”
The controversy hit Disney's share price, which according to data using the Senate SHJ Crisis Erosion model declined by 10% and has yet to fully recover (a fact that may have other causes, including the company's struggles with its streaming service).
For other companies, meanwhile, the lesson was spelled out by Duke University professor Frank Bruni at our PRovoke Global conference in October: ““He [DeSantis] got so much applause from his base, so much national attention for fighting with Disney, any or all of the people thinking about challenging him for the Republican nomination are looking for their own fights to pick. They look at what he did with Disney as something to be emulated.”
4. Starbucks vs unionization
It is somewhat jarring, after the headlines of the past year, to go back and read about the employee culture at Starbucks a decade ago, when the company was winning awards as one of America’s best places to work and CEO Howard Schultz was named Fortune magazine’s 2011 businessperson of the year.
Schultz was being praised for “his consistency of effort to be a good person, amid all the distractions that come with wealth,” and the company was lauded for creating “good jobs, exceptional benefits, shared profits with partners… and changing people’s ideas about what a successful stable growing business could and should do to be a good community member.”
Fast forward to 2022 and the prevailing narrative is quite different. Writing at Slate, former New York Times labor and workplace reporter Steven Greenhouse says, “the company has long boasted that it’s a progressive, worker-friendly employer. But that claim now rings hollow thanks to the aggressive way it has sought to crush its employees’ efforts to win more of a voice at their workplace, with Starbucks using tactic after nasty tactic from the classic union busters’ playbook.”
After a unionization push earned its first success in Buffalo in 2021, Schultz returned to the company and deployed a wide range of illegal union-busting tactics, according to the National Labor Relations Board. The Board claims that the company has illegally fired workers for organizing and closing stores where unionization efforts were under way. According to SenateSHJ, Starbucks share price declined by more than 7% due to the crisis.
Says Elizabeth Cholis, a partner at Dentons Global Advisors in Washington, DC: “Schultz’s aggressive anti-union posture and rhetoric have not served to hinder the unionization efforts but instead to alienate employees and invite the scrutiny of the NLRB and Congress.”
The company’s actions have sparked a particularly negative reaction in Europe, says Simon Neville, director of media strategy at SEC Newgate UK: “It was surprising to see that Starbucks didn’t take a closer look at some of the ways labor crises have played out in Europe and the UK.
“Consumers don’t like to see low-paid staff treated badly and are more willing now than ever to vote with their feet. Trying to take a hard line and not at least appear conciliatory was always going to create conflict. When Starbucks got into trouble over its tax affairs in the UK a decade ago it buried its head in the sand and was eventually called out by the then Prime Minister. Getting on the front foot is always a better option and being willing to engage constructively will stave off any long term damage before it’s too late.” — PH
5. Bad blood between Taylor and Ticketmaster
Taylor Swift might be the biggest music artist of the 21st century, but even the duchess of pop proved to be powerless against Ticketmaster, the anti-hero of event ticketing, in November last year, when chaos kicked off around the “verified fan” pre-sale for the singer’s 2023 Eras Tour.
The scene was set for disaster in October, when Swift announced that fans ordering copies of her new album, Midnights, before the release date would be eligible to register for early access to tickets for her 52 tour dates across the US. As the date approached, excitement reached fever pitch, not least because Swift last toured pre-pandemic and in the interim has produced three critically-acclaimed albums, breaking multiple Spotify records every time.
What followed however, was one of the most disastrous ticket sale rollouts of all time: loyal fans who had effectively been promised tickets for the tour came up against faulty access codes, and long delays on a website that couldn’t cope with overwhelming demand. The result was nothing less than outrage: although hundreds of thousands of tickets were sold, millions of people had attempted to get tickets, and many verified fans were left empty-handed when the site crashed. The pre-sale was eventually cancelled altogether.
Ticketmaster said the verified fan tactic was supposed to deter bots and scalpers, so the tickets would only go to true fans – but tickets were immediately being resold on sites like Stubhub for up to $20,000.
The ticket site’s PR team remained silent for hours as the crisis unfolded, finally issuing an 800-word statement three days later which started: “We strive to make ticket buying as easy as possible for fans, but that hasn’t been the case for many people trying to buy tickets for Taylor Swift The Eras Tour. First, we want to apologize to Taylor and all of her fans – especially those who had a terrible experience trying to purchase tickets.” The statement went on to “explain” what had happened – including a graph showing the extreme leap in site traffic – which essentially presented Ticketmaster as victims of unprecedented (if entirely predictable) mismatch of supply and demand.
While Swift herself was empathetic in her response to fans and clearly deeply frustrated by the whole affair, she – like many performers before her whose fans have lost out on tickets or significantly overpaid – has not so far explicitly condemned Ticketmaster.
In a statement posted on her Instagram stories, Swift said: “It’s truly amazing that 2.4 million people got tickets, but it really pisses me off that a lot of them feel like they went through several bear attacks to get them.”
As American Prospect magazine said in a piece in December on the dark history of Ticketmaster, the crisis highlighted the firm’s “vexing combination of apparent incompetence and totalitarian control.”
Gavin Devine, founder of Park Street Partners says the debacle “illustrated just how integral Ticketmaster has become to the concert-going and the sports-attending experience and reminded everyone that the merger in 2010 of Live Nation and Ticketmaster had created a behemoth of an events promotor, venue operator and ticket seller with a dominant position in live entertainment.”
Consumers have been complaining about Ticketmaster for years – a piece in Wired in 2010 was titled ‘Everyone hates Ticketmaster – but no-one can take it down’ – and the Taylor Swift farrago wasn’t even the only negative headline of 2022, as in July its “dynamic pricing” model led to some Bruce Springsteen fans being asked to pay up to $5,000 per ticket. But do its most recent missteps finally mean that Ticketmaster’s reputation is irredeemably ruined?
Devine doubts it: “Fans are inured to paying eye watering sums for concerts, and it is hardly a unique experience to struggle to get hold of tickets or for a ticketing website to crash (the sales process for Glastonbury 2023 wasn’t exactly smooth sailing either). And the Ticketmaster interface is convenient and easy to use; its marketing is slick. A few months without any major mistakes and we would largely forget, I’m sure.”
However, Devine adds that the risks identified by campaigners ahead of integrating the two businesses have clearly played out in practice, and the disgruntled chorus of Swift’s particularly vocal fans has, finally, reached federal ears: “The dark cloud for the company is that it has put itself in the crosshairs of legislators and regulators, particularly in the US. There are plenty of people in Washington DC who have an aversion to Ticketmaster bestriding its industry and might like to see it broken up. That would explain why the company is reported to have ramped up its lobbying in recent months.
“So watch this space: 2023 could very easily see Ticketmaster regain public trust but nevertheless lose out to the political and regulatory trust-busters.” With this particular reputational crisis, it remains to be seen whether Ticketmaster will be able to shake it off. — Maja Pawinska Sims
6. FTX files for bankruptcy
FTX founder Sam Bankman-Fried garnered trust — and big money — by playing the role of crypto wunderkind worthy of investors’ millions, splashy sports sponsorships, high-profile boosters like Tom Brady and the kind of Democratic party prestige reserved for megadonors. And for roughly three years after launching FTX in 2019, Bankman-Fried nailed it, building a cryptocurrency exchange that, at its peak, was valued at a whopping $32 billion, seemingly another step in legitimizing the cryptocurrencies JPMorgan CEO Jamie Dimon has likened to Ponzi schemes.
But when Bahamas-based Bankman-Fried’s world, which he built on lies and fraud, imploded last year, his downfall was fast and merciless. At $8 billion in the hole, FTX in November filed for bankruptcy and, after resigning as CEO, Bankman-Fried was arrested on charges of widespread fraud. Big supporters saw the value of their holdings tank (Brady reportedly lost up to $45 million), while there are more humble investors out there who lost everything they had. The Miami Heat no longer calls its stadium the FTX Arena.
“Sam Bankman-Fried flew extremely close to the sun throughout his tenure as CEO,” said Bully Pulpit Interactive partner Ben LaBolt. “He portrayed himself as a virtuous boy genius who was building a business empire to earn enough wealth to solve big challenges facing society. So, it hit that much harder when it turned out that he presided over rampant mismanagement and the alleged misuse of customer funds.”
Bankman-Fried blew any early chances he may have had to save face by eschewing the basic tenets of repenting for business gone bad, essentially hanging himself out to dry, LaBolt said.
“As things unraveled, he gave a series of interviews where not only did he not take accountability or show the appropriate level of contrition, but he had no plan to announce to make things right for investors or customers. He is a case study in not all press is good press. You have to have a strategic reason to participate in interviews and to have thought through the tough questions you are likely to get.”
A subsequent rash of pre-arrest public apologies he rolled out soon after was no more potent.
“His overcooked apology tour probably connected with many crypto investors. However, he wasn’t able to deliver the other key parts of a crisis response: a reckoning about what happened and a roadmap about what would be done to fix it,” said Racepoint Global president Bob Osmond.
“SBF’s openness and transparency in apology might have made him feel better, but he wasn’t able to help his customers — and it remains to be seen if he misled them entirely. That’s now up to the justice system,” he said.
As deplorable as the FTX scam was, you do have to wonder how Bankman-Fried so successfully played us for fools, considering this is not our first rodeo. Elizabeth Holmes, who expertly duped Silicon Valley elite to fund her fraudulent blood-testing startup Theranos, is still a fairly fresh story. In December, she was sentenced to 11 years in prison.
“Truth here is that the media made SBF and FTX into a false prophet and market monster just like they did with Holmes,” said Aaron Kwittken, KWT Global founder/chairman and founder/CEO PRophet. "These companies and fraudster CEOs are responsible but mainstream media are also complicit.”
The only good news about FTX at this point is John Jay Ray III, a high-priced expert in restructuring companies who took over FTX after Bankman-Fried’s arrest. Earlier this month, he reported recovering $5 billion in liquid assets, providing a glimmer of hope to customers hoping to recoup their losses.
“In John Ray, FTX has found a credible voice with a history of success who has an opportunity to chart a way forward for a post-SBF future,” said John Rizzo, senior VP of public affairs at Clyde Group. “There’s no overstating the hole that FTX finds itself in, but John Ray’s straightforwardness and performance before Congress has been a bright spot for the company in recent weeks.” — Diana Marszalek
7. In the (Brew)dog house
Even by controversy-courting British beer company Brewdog’s standards, falling off the reputation wagon not one but four times last year was exceptional. The trouble started at the back end of 2021, when the self-styled “punk” brewery apologised to 60 former employees who had written an open letter complaining of a “toxic” working environment and a “culture of fear”.
The trouble didn’t stop there for BrewDog chief executive James Watt, however, as in January 2022 the story was covered in depth by a BBC documentary, ‘Disclosure: The Truth About BrewDog’. Watt went on the attack, apparently intending to intimidate those who had spoken out by saying “All this is very, very likely to end up in court” and complaining to regulator Ofcom about the programme, saying it had included “false information.”
Then in the run up to the Qatar World Cup, the brand announced it was an “anti-sponsor” of the football tournament, running adverts stating that homosexuality was illegal in Qatar and 6,500 migrant workers have died since the Middle Eastern country won the right to host the tournament. The brewer also slammed FIFA for corruption and bribery, and pledged profits from one of its lagers sold during the tournament would be donated to charities fighting human rights abuse in Qatar.
So far, so laudable, but the warm glow of righteousness somewhat wore off when it emerged that Brewdog was still selling its Punk IPA in Qatar, leading to the Unite Hospitality union calling out the company – and making further reference to the “toxic culture” accusations – for “yet another disingenuous advertising campaign designed to distract customers from the fact BrewDog is one of the worst employers in the brewing industry when it comes to doing the right thing by its workers”. Watt responded by saying there were few businesses “who would be prepared to attract attention — positive or negative — for taking a stance.”
The fallout from the BBC documentary continued in December, when Brewdog lost its hard-won B Corp status after an investigation by the organisation which runs the ethical business scheme. Finally, Brewdog ended the year with a rap over the paws from the Advertising Standards Authority, which banned a “tongue-in-cheek” ad claiming its fruit-flavoured beers constituted “one of your five a day ”and said Brewdog should not mislead consumers. In response, the company said it was “happy to confirm that beer is not a fruit or a vegetable.”
George Hutchinson, former Teneo director and founder of reputation risk and crisis advisory River Effra, said “The challenge for lots of founder and owner led businesses – particularly one such as Brewdog that has styled itself in creating guerilla marketing campaigns and creative stunts, but founded on a values-based core – is that when those values are called into question the spotlight you have created can be readily turned on you, and that spotlight feels very personal."
Of the company’s response to the documentary, Hutchinson said: “While the very early first reaction was emotional, the company very quickly became reflective, acknowledged its failings and put in place a plan to reassert control with their blueprint. All textbook, but further allegations emerged, tensions flared, active responses issued, and the news cycle was refreshed.”
He added that however unfair the allegations about its culture must have felt, Brewdog’s response to them shouldn’t have been about achieving justice: “In my experience leaders confronted by this type of situation end up with a flight to fight response – they try to hold the line, not to engage, yet get to the point where they feel so wronged that they look to fight every fight. And, in doing so they find it extremely hard to separate the allegations of wrongdoing from the reality of what happened. Lines harden, nuance is lost and we end up creating camps of us versus them.
“Unfortunately, in a world of social media, this is manna from heaven. And for companies like Brewdog that have traded on their values, they are held to higher standards and must ensure they maintain those standards, no matter what.” – MPS