Reputation Ruin From a 2008 Crane Collapse

The New York Times’ latest look at the 2008 crane collapse that killed two workers on the Upper East Side details a cost-cutting effort gone horribly awry. With its many missteps, we can glean some important lessons from this sad tale.

You are only as good as the company you keep

New York Crane & Equipment Corporation ignored numerous red flags in hiring “unknown” Chinese company RTR Bearing Company Limited to supply a critical part for its crane. That decision not only damaged its own reputation; it was also allegedly a fatal mistake.

Don’t believe everything you read on the Internet

Looking for a faster and cheaper alternative to domestic estimates, New York Crane happened upon RTR, but the Chinese company wasn’t all that its poorly translated website claims. “Chinese sellers can make all manner of false claims,” Paul Midler, author of Poorly Made in China, told the Times. “It really is relatively easy to perform basic due diligence in China, but relatively few American importers do any of it.”

Emails are fair game

Similar to a move in recent lawsuit involving Broadway’s Spider-Man, more than 90 emails were filed as evidence in the manslaughter case of James F. Lomma, New York Crane’s owner. The emails paint an almost comical image of incompetence at both companies.

Every aspect of a company’s communications reflect on its brand (which also happens to be the reason New York Crane never should have pursued business with RTR after seeing its website).

Poor decisions can come back to haunt you

Lomma’s lawyers argue that the crane’s collapse was caused by an operational error, not a faulty bearing from RTR. Their assertion could be true, but it’s much harder to believe given the clearly questionable decision to hire RTR.

Even the smallest decisions can be important, especially when they’re the wrong decisions

Just a small dose of common sense could have prevented this tragic story. A good reputation requires honesty and responsibility. Unfortunately, in this case all parties demonstrated that ignorance is the opposite of bliss.

Howard Schultz’s Plea to American Business Leaders

Starbucks CEO, Howard Schultz, book discussion...

Howard Schultz, the CEO of Starbucks, built one of the world’s strongest brands. In this excellent interview with Piers Morgan he discusses the importance of maintaining consistency in your message and issues a cri de coeur to American business leaders to take a more active role in shaping their communities, and our collective future.

You can read a transcript of the full interview, his most recent with Piers Morgan, here.

What Kim Kardashian Can Teach Us

“I felt like I was on a fast roller coaster and couldn’t get off when now I know I probably should have,” Kim Kardashian wrote on her blog after filing for divorce after just 72 days of marriage. Such personal revelations had only seemed to strengthen the Kardashian brand. But this time the backlash was sharp and, perhaps, surprising.

The perception that her wedding was a profit-boosting stunt made many fans feel that they were now being duped. The attention that powered her brand was based on the sense that fans were getting a privileged, honest view of her life. Not staged photo opportunities.

A Common Blunder

Ms. Kardashian’s reputation management blunder resembles some recent events in the business world. GoDaddy, for instance, triggered a much-publicized and successful boycott with its support of the Stop Online Piracy Act (SOPA) earlier this year. The mass exodus continued even long after it recanted its support. The company should have realized that the web-savvy demographic from which it draws its customers is the same demographic that strongly opposes the act. Bank of America faced a comparable backlash last year when it tried to institute new debit card fees in the midst of the uproar over banking practices.

Netflix saw its stock price and customer base plummet when it tried to split its DVD and streaming services into two different companies. “For the past five years, my greatest fear at Netflix has been that we wouldn’t make the leap from success in DVDs to success in streaming,” CEO Reed Hastings wrote. Focusing on that fear, Netflix lost sight of the reason it became so successful.

Google’s recent privacy policy changes have the potential to do similar damage, but so far it has avoided a major reputation crisis, partially by accompanying its changes with an in-depth explanation of how they will benefit rather than harm its users.

Kardashian and these companies remind us that our relationship with our customers is as good as the bond of trust that holds it together. Once that is damaged or broken, even the most carefully built brand can be lost.

Lady GaGa’s New Foundation Addresses Bullying

Yesterday Lady GaGa unveiled her Born This Way foundation, taking celebrity philanthropy to a new level.

Her partners in the venture are The Berkman Center for Internet & Society at Harvard University; the MacArthur Foundation and The California Endowment.

Born This Way addresses the disturbing social issue of adolescent bullying, including cyber bullying, the act of anonymous online harassment and defamation. Bullying has concerned the superstar for some time. She has been vocal about the issue as teen suicides in response to bullying have increased.

The Foundation is “dedicated to creating a safe community that helps connect young people with the skills and opportunities they need to build a braver, kinder world.”