Gallo blog



FEB 28,  ZOUZ  – I have spent the last 3 days in Zuoz, Switzerland catching up with friends from business school. Zuoz is a magical and extremely well preserved town in the Engadine mountain range with odd and interesting traditions.

One charming ritual is the signalling of the end of winter.   Young lads, perhaps 10 or 12 max, take to the streets with full scale leather whips.  During the day you can see them practicing in lane ways.  Usually with a father or older brother standing near – arms folded, grunting with approval whenever the boy achieves an almighty ‘thwacking’ sound.

By Feb 28, the last day of winter, a group of boys take to the streets.  The cacophony of whipping sounds carries on late into the night.  These sounds supposedly crack the ice – accelerating the melting of the snow.

Do these boys actually believe they have in their hands the power to dissolve snow and control mother nature?   Probably not.  But so what if they do – this is probably a better class of illusion to have.

There is a fair amount of cynicism surrounding yesterday’s Tiger Woods apology, which to be frank I don’t understand. His speech did get off to a shaky start but it was thorough, genuine and appeared to make an impact.

The pace and length of the apology was also just right – using the word ’sorry’ more than once, but not diminishing its importance by repeating it.

Also admirable was that he did NOT use the apology as a launch pad for other announcements about his career.   He referred to the ex-sponsors that dropped him as ‘friends’ (a really nice touch) thereby ensuring the attention was centred his choices and behaviour – not on other people.

Woods came across as vulnerable, shaken and genuine.   Woods appeared appropriately upset and this will go far to rehabilitating his public image.

I’ve posted about Woods in December and the future of sports sponsorship before.  The only thing strange about his statement is timing.  It is now well over 60 days since the story reached its zenith.  A public apology was necessary for his family, golf as a sport and the Woods sponsorship empire.

There is clearly a commercial dimension to last Friday’s 13-minute statement.  So if we are talking business, I wonder whether waiting 60+ days was wise.

Would we tolerated this sort of delay from other high profile brands or people?

Although the recently opened Medieval and Renaissance Galleries at London’s V&A has received much of the media attention, a small scale digital exhibition across the hall is generating some real ‘Wow’ factor.

The official interview with the artists gives a nice overview.  However, for a real idea of how people are interacting with this exhibition you can’t beat the You Tube post Rudy at the V&A.

There are these two young fish swimming along and they happen to meet an older fish swimming the other way, who nods at them and says “Morning, boys. How’s the water?” And the two young fish swim on for a bit, and then eventually one of them looks over at the other and goes “What the hell is water?” [extract from a DFW speech, addressing a group of students in 2005]

When I think of the two young fish swimming, it might as well be Adobe and Yahoo.  Google (the wiser fish) made it clear what was acceptable or not when it comes to doing business in China.  Now, Yahoo!, realising the water it swims in, has said, me too, we are ‘aligned’ with Google.

When Yahoo! had the opportunity to express its values about doing business in China, it took a different approach over the Li Zhi case (the 35 yo former civil servant, who’s conviction for reporting local corruption resulted partly on the basis of information provided by Yahoo’s Chinese operation). The decision quite rightly was criticised by Reporters Without Borders.

An ‘alignment’ statement in relation to Google puts Yahoo! in a lose-lose situation.  It draws attention to their values in relation to the Li Zhi case as well as attracting new criticism (from Chinese customers and the government).  Yesterday, the Alibaba Group [a Chinese Internet company which is 40pc owned by Yahoo!]  has described Yahoo!’s decision as ‘reckless’.

If Yahoo! wants to express a sort of moral comraderie with Google it needs think hard about its own corporate values and how they communicate them.  And not just refer to the water it swims in.



According to Rebecca Fannin from Forbes, Google is leaving China because they failed to secure a lead in the market and have lost to their local competitor Baidu. Really? The company is giving up 30% of an internet market that’s larger than the U.S. population. So this is failure according to Forbes.  And according to Paul Carr reporting on TechCrunch:

… what it’s absolutely not is a “moral position”, nor one that they should be particularly applauded for, any more than a man who has spend four years beating his wife should be applauded when he decides to stop.

But what if Google is actually willing to forgo enormous profits in the name of freedom of speech and its own corporate values – as their Dec 09 blog post suggests?  Try to picture another large player in another industry doing something similar:

• Imagine an alcohol company publicly stating that it would no longer supply Tescos or Sainsburys because of heavy price discounting  contibuting to severe binge drinking in certain countries; or,
• Imagine a tobacco company stating publicly they would no longer supply large retail national chains if they are caught selling cigarettes to minors?

Both of these industries spend money and efforts on CSR (corporate social responsibility) – inititiatives such as youth smoking prevention or Drink Awareness. Yet a single decision to sacrifice profits, for the right reasons, is worth more than any of these CSR initiatives stacked up together.  yes, Google profited in the past few years by being in China – but it is giving up future revenues now. Isn’t this worth something?

When Yahoo was faced with a tough choice in 2003, they ‘complied’ with the local authorities and handed over details of a human rights activist. Yahoo claims they had no choice but to comply with Chinese law (the ‘Yahoo-excuse’).  Yahoo did have a choice though – it chose to retain its stake in Alibaba China.

In recent statements Yahoo declares, it “stands aligned” with Google. But would they too walk away from their investments?  [Google admittedly has s significant cash-reserves and can afford to take risks.]

Profits aside, Google is sending a phenomonally clear message to governments, consumers and competitors: this is what we stand for, others can earn their profits in China ‘that way’ but we’re walking away.

Time will tell whether Google is doing the right thing.  In the mean time, money can’t buy this sort of PR and corporate reputation value.  Google has invented many things – but it has now found something better than CSR.

Additional links:

Paul Carr on TechCrunch soul searches the issue.

Links to Google’s original statement about doing business in China in 2006.

Nart Villeneuve excellent summary of the issue.

I attended a few sessions at the BBC’s News Festival today, a yearly internal event involving internal/external leading lights to talk about the future of news.  A friend who works for the Beeb invited me along – so I felt privileged to be guest to what is essentially an internal meeting.

Two observations on today’s sessions -

1. The quality of debate about Twitter/Social Media (a slight disappointment)
2. The way BBC staff talk to their senior managers (a revelation!)

On the first point: Why is that when old-media journalists talk about social media they are so negative?  Ben Brown, the chair for the Twitter discussion, opened the forum pointing out that Stephen Fry has stopped micro-blogging, along with Lilly Allen, and that he too has stopped using Twitter…  It set the tone for what followed.

Brown was right to question the role (and risks) of user-generated-content in the news – particularly as independence and authenticity of material is key to the BBC’s reputation.  Nic Newman, BBC’s head of new media, nipped this in the bud by highlighting that new standards aren’t required – just minor revisions to existing policies.

The narrowness of the discussion was a bit of surprise though.  By focusing on Iran the panel dealt with a single-issue, instead of reviewing the way media and broadcasting is evolving.  The end result is that there we left wondering how new media:

• is being used by the competition, such as Sky and eslewhere
  
• is changing the role of journalism (especially when audiences choose unfiltered information over of content filtered/repackaged by the BBC)
• could assist the BBC in reaching  new  audiences
• is affecting audiences – now that broadcasters & newspapers can be by-passed altogether

The BBC always will be an important source of independent news.  Yet for some folks this new technology is also the chance to shift some control away from the ‘journalist’ – towards the user/viewer.  A trend that is being celebrated in many circles, just not here (obviously).

On the way staff talk to their senior managers: I don’t think I’ve experienced anything like it.   The opening forum featured Helen Boaden, head of news,  being grilled by Justin Webbe about executive salaries; whether certain (very specific and senior) roles were actually necessary in the organisation, whether her pay was being reduced, etc?

Boaden did a brilliant job of fielding questions that most UK CEOs simply wouldn’t tolerate.  It was titillating.

I tried to imagine a middle manager of a major bank asking her CEO whether Mr so-and-so is justified in spending £108,000 on an external consultant, or whether the CEOs salary is justified.  It wouldn’t happen – certainly not in any company I’ve known or worked for.

As Boaden pointed out, ‘This is what makes the BBC different’.  It certainly does.  They might consider producing a training video on the topic for the private sector.

In summary, some good stuff.   What the company lacks in interrogating new trends, it certainly makes up for in debate about senior executive performance.

Last week KFC pulled an Australian TV  commercial also apologising “for any misinterpretation of the ad as it was not meant to offend anyone”.  The ad depicts a white Australian cricket fan placating a group West Indies supporters by offering them fried chicken.

Perhaps Australians weren’t aware of the US racial stereotype involving fried chicken and African Americans.  The ad received no complaints in Australia.   Since appearing on You Tube there has been plenty of comment online – ABC news covers it well.  Mashable’s Pete Cashmore offers useful (but sometimes unwatchable) links.

Note that the ‘awkwud situation’ that the Australian team supporter refers to is of a West Indies crowd having a riot of time.  ie. having more fun than him. Had they been throwing empty beer cans at one another, would this central character feel more at home?    The punch line might have actually been funny, had it referred to the Aussie’s inability to control the situation.

So it’s good to see KFC responded swiftly (see their statement).  The ad is insensitive.  At the same I think they also discovered that it wasn’t funny or very good.

Advertising now is being produced for narrower and narrower audiences.   Global companies have expanded so widely, that they can no longer centrally control all content.  The Australian arm of KFC probably produced the ad for a male, Australian segment: cricket supporters (for whom a bit of jostling and elbowing between cricket supporters is seen as normal).

Media, on the other hand, is becoming more fragmented and accessible to wider audiences.  Ad agencies and consumers want to show the world their advertising – so it goes up on You Tube for global consumption.

Two opposing forces leading to an awkward situation, but ultimately the right outcome.   The comments on You Tube videos are just as useful as any focus group session.  Good to see some companies have started to listen.