But the effect is not what we might have expected. Nor is it what we should anticipate in the future. We have become much more discerning connoisseurs of calumny. Our appreciation for what matters has been honed by the sheer volume of criticism through which we must pick.
The result is that previously significant events no longer seem that important. But the cumulative impact of them over time can ultimately be devastating. The following article suggests that seemingly shocking lapses of judgment or execution have had little notable effect on financial results. However, the author's assessment may simply have failed to keep up with the evolution of public taste. Computer glitches, subordinates' foibles, human error and cyber crime may fail to shock not because they do not matter, but because of our growing awareness that 'sh*t happens,'not all of which we can manage, let alone control.
Our ire or opprobrium is increasingly reserved for those who trip over a much finer set of lines, usually having to do with the massive gap between expectation and performance. We are more tolerant of the commonplace and the obvious. We are far less forgiving of exaggeration, falsehood and the yawning gap between perception and reality.
Better information and a sense of entitled judgment, both fostered by the web's offer of democratization, have sharpened our intellectual reflexes - and our memories. We are, as a society, keeping score. Fool me once...but fool me twice...
The implication for managers is that expectations are both higher and lower. Higher in that we expect those who make promises, even offers, to deliver. Lower in that we recognize that no one is perfect. And what managers in any realm must also accept is that as our familiarity with the torrent of sense and nonsense becomes even more discerning, our expectations and judgments will continue to evolve. JL
Francesco Guerrera reports in the Wall Street Journal:
Nine-and-a-half seconds. Or the time it takes to upload a YouTube video. That is how quickly corporate reputations can be hit these days.
Just ask BATS Global Markets Inc. whose long-awaited initial public offering on its own stock exchange in March was killed by a computer glitch after less than 10 seconds. Or JetBlue Airways Corp., JBLU +0.52%which confronted a public-relations disaster last week when passengers from Flight 191 posted videos of the pilot's breakdown.
Both events are captured by a British expression that it is too rude to be printed but can be paraphrased as "Can't organize a drunkfest at a brewery." On Friday, we had a third example when credit-card processor Global Payments Inc. GPN +3.14%disclosed it had been hit by hackers. The company later said the cyberintruders stole important data from up to 1.5 million accounts.
The incidents look bad for both the companies and their customers and have triggered the customary hand-wringing by experts and schadenfreude from rivals. But how much real damage will they cause to the companies' brands and financial standing? So far, very little.
The muted reaction to these fairly big corporate messes raises an intriguing possibility: In a socially-networked world where investors, customers and employees are judge, jury and news editors, companies may be able to survive foul-ups better than in the old days of "traditional" news and corporate spin.
Customer loyalty can help companies survive public-relations embarassments. Many of those who wrote on JetBlue's blog expressed support for the crew of Flight 191 while others stated how much they liked the airline. Let's look at the evidence. BATS's IPO showed a stock exchange incapable of trading its own stock—a fact that could have prompted fund managers to go elsewhere for their trades.
Not so. BATS's share of U.S. stock trading dipped on March 23—the day of the botched listing—but has since recovered and is currently above its historical norm.
JetBlue tells a similar story, with no discernible impact on bookings or customers asking for refunds.
In the Global Payments situation, the real loss could be for Visa Inc., V +0.80%MasterCard Inc. MA +1.63%and card-issuing banks, even though the breach isn't their fault. But I doubt many customers will give up on plastic as a result of the hacker attack.
For a Wall Street example of this Teflon-like resistance to problems, take Goldman Sachs Group Inc. GS -2.26%A half-a-billion settlement with regulators over accusations of fraud, a string of PR issues and countless criticism in the media (myself included) have had little visible impact on Goldman's position atop the industry or, as The Wall Street Journal reported last week, as a magnet for young talent.
Puzzled by such sanguine attitudes, I asked PR experts for an explanation. Their answers can be grouped in three categories: "the shiny object," "the loyalty issue" and "the lack of choice."
The first one is the easiest. Attention spans are getting shorter.
As Robert H. Bloom, the former U.S. CEO of the marketing giant Publicis Worldwide, says, "Business leaders today have less and less control of the narrative around their own business than they have ever had before."
Paradoxically, however, companies' loss of control of the news can work to their advantage because the investing and consuming publics seem to move on faster than traditional media.
The corporate PR guru Robert L. Dilenschneider has a simple recipe. "Tell it and tell it fast." If you do that, it goes away in a day. The attention span of the public is very short," says Mr. Dilenschneider, who used to run Hill & Knowlton and now heads his own agency, Dilenschneider Group.
Customer loyalty also helps. Many of those who wrote on JetBlue's blog expressed support for the crew of Flight 191 while others stated how much they liked the airline.
The final factor is the lack of alternatives. Given that, on most days, BATS, JetBlue and Goldman are at least as efficient as their rivals—and that many competitors face similar issues (remember the May 2010 "flash crash" that cascaded across stock and derivatives markets?)—disgruntled customers don't have many better places to go.
The above reasoning comes with two big caveats: It doesn't apply to very serious disasters, such as BP's Gulf oil spill; and no PR setback is without costs.
BATS, for example, stripped its CEO Joe Ratterman of the chairmanship and can kiss goodbye to both its own IPO and attracting other listings for a while. In JetBlue's case, shares are down more than 6% since the Flight 191 situation—a fate that has also befallen Goldman during its public troubles.
But the bigger risk for these companies is that each misstep increases the chances of long-lasting harm to their reputation. Corporate credibility is like a porous rock: It doesn't break easily in the short-term but the slow drip-drip of bad news can cause some real damage.
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