Sometimes a brand disaster is just a setback. For example, when Samsung failed to properly test the Galaxy Note 7 smartphone and the devices subsequently started spontaneously combusting in 2016, it made people feel queasy rather than excited at the prospect of owning a Samsung. Samsung has been struggling since then to rehabilitate its brand.
Worst case, though, a brand disaster can literally destroy the brand. For example, when the consulting firm Arthur Andersen neglected to properly audit Enron's books, and Enron collapsed like a house of cards, the fallout forced Arthur Andersen to abandon its brand name completely and change it to Accenture.
In 2019, there were five disasters that so seriously damaged well-known brands that it may take years or even decades for them to recover, if they recover at all:
Ever since the release of 2010's The Social Network, Facebook's brand image has been tied up in the personal brand of its co-founder Mark Zuckerberg. The Facebook brand suggested technical competence, a "change the world for the better" ethos, and an agile albeit rapacious management style.
That brand image collapsed in 2019 as the result of three events:
- A massive security breach in late 2018 made the company look as technically amateurish as the traditional institutions that have been similarly hacked.
- In the wake of the 2016 presidential election, it became clear in 2019 that Facebook, far from improving the world, is actually a vector for the spread of toxic disinformation.
- In early 2019, it broke that Facebook's content moderators were underpaid and forced to work in horrible work environments while reviewing content that was causing PTSD.
Then when Zuckerberg attempted to repair the damage during an appearance before Congress in October 2019, he came off as arrogant, ham-handed, and obviously unable to articulate a vision for the company other than the pursuit of its current business model.
Bottom line: The Facebook brand entered 2019 as an antihero (at best) but exited the year almost as a pariah.
Any organization that hires McKinsey intends to "open the kimono" (as they say) and show the consultants the good, the bad, and the ugly. The hope is that McKinsey's brainiacs will be able to fix intractable problems, improve financial performance, and generally find the right way forward. Whether McKinsey can actual accomplish those things is an open question, but there's no question that the McKinsey brand is all about trust.
Unfortunately for McKinsey, the business world discovered in 2019 that McKinsey's closets had as many skeletons as an abandoned catacomb. Highlights of the year include:
- When paid "tens of millions" to help the Riker's Island prison reduce violence, McKinsey allegedly created a measurement system that guaranteed that it would look as if the violence was reduced when in fact it went up by 50 percent.
- According to The New York Times, McKinsey faces a criminal inquiry because the company allegedly channeled valuable assets to itself and its other clients while helping two firms unwind in Chapter 11 bankruptcies.
- When McKinsey was outed for suggesting ICE save money by feeding prisoners less food, it revealed itself as a moral vacuum and became so toxic that even being associated with the company became a political liability.
Bottom line: Given that kind of publicity, trusting the McKinsey brand going forward seems less like a leap of faith and more like a leap over a cliff.
3. Wells Fargo
Founded in 1852, Wells Fargo is one of the world's oldest brands. Over the years, Wells Fargo became such part and parcel of Americana that it was eulogized in the Oscar-winning 1962 musical The Music Man. Wells Fargo's logo--a stagecoach drawn by eight horses--was specifically intended to evoke that kind of nostalgia.
By 2019, though, the Wells Fargo brand had been seriously tarnished. In late 2016, it was revealed that the company goosed up its sales numbers by opening millions of fraudulent accounts without consent. As a result, the company was fined $525 million and has paid $15 billion in settlements.
Since then, Wells Fargo has been trying desperately to rebrand the scandal out of existence. The company has swapped out its top management, launched a major ad campaign to change the subject, and updated its familiar logo. The clear message: "We've learned our lesson. We've changed back into the Wells Fargo you knew and loved."
In August 2019, though, it became clear the rebrand was lipstick on the proverbial pig. Even after closing customer accounts, it appears that Well Fargo continued to pay checks drawn on those accounts, and then charged overdraft fees to their erstwhile customers. According to The New York Times:
Aggrieved customers have brought complaints to the Consumer Financial Protection Bureau, griped on the discussion sites Reddit and Quora and voiced their displeasure through the "Community" section of Wells Fargo's website -- a public comment feature that is now disabled.
Bottom line: As 2019 draws to a close, the Wells Fargo brand gives new meaning to the immortal words from the musical: "The Wells Fargo wagon is a-comin now [and] it could be something special, just for me!"
Uber was another brand that entered 2019 recovering from tarnishment. Originally the superstar of the gig economy, Uber had become the poster boy for sexual harassment, brogrammer-style. The rumors were bad enough, but when a video went viral of CEO Travis Kalanick being majorly d**kish to an Uber driver, the result wasn't pretty. Hey, you know your brand is in serious trouble when #Delete[your brand] becomes a popular meme.
Nevertheless, by 2019, Uber was beginning to put some of the scandal behind it. Uber had new management, new policies, and ran a PR blitz for its impending IPO, secure in the knowledge that the business world will forgive just about anything, so long as the investors make money.
But then Uber's IPO only raised $8.1 billion rather than the oft-predicted $100 billion, with an IPO price of $45 a share from which the price has declined to today's $30. To say this performance was disappointing is understating with a vengeance. To make matters worse, Uber now faces the possibility of government regulation declaring drivers to be employees rather than contractors, which would render Uber's questionable business model even more improbable.
Bottom line: Uber might appropriately be rebranded "Under," as in underperforming, underwhelming, and definitely (and maybe permanently) underwater.
Entering 2019, WeWork was a perfect illustration of the power of branding. Previous to WeWork, the office space/furniture rental industry was about as interesting as rag recycling. But that was before WeWork CEO Adam Neumann worked his reality-distorting magic. Suddenly, renting open-plan office space became a lifestyle statement.
But that was just the start. In what was probably the world's most ambitious attempt at brand extension, Neumann launched WeWork Wellness spas/gyms, WeGrow private elementary schools, and WeLive communal housing environments. Neumann's TedTalky schtick made Millennials believe that they could change the world simply by doing the stuff that they needed to do anyway.
The WeWork story came crashing down (as these things will) when the company filed its SEC paperwork to issue an IPO. When the filing consisted mostly of aspirational bullsh*t, it suddenly became clear to the world what should have been obvious from the start: that the WeWork business model was strictly from cloud cuckoo land.
Boom! Within a few days, the WeWork IPO was canceled, the company's value plummeted, and the CEO resigned with a scandalous $1.7 billion golden parachute. Major layoffs ensued.
Bottom line: WeWork is now the Fyre Festival of the business world.
Dishonorable Mention: Boeing
In "best of" lists, there's often an "honorable mention" for the entry that didn't quite make the cut. In my list of disasters, though, there sometimes a "dishonorable mention"--an entry that's so egregiously awful that it's in a class by itself.
In 2019, the dishonorable mention is Boeing, and it's one for the ages.
The five disasters above were no doubt horrible for the employees and customers caught up in them, but Boeing's 737 Max planes' crashing on takeoff, which resulted in hundreds of deaths, and the ensuing cover-up, which was both inept and ineffective--these strike at the very reason for Boeing's existence.
Seriously, who will ever again trust a company that screwed up that badly? Why would any airline--especially those being financially clobbered from a grounded fleet--even for a moment consider buying from Boeing again?
The only consolation, such as it is, may be that some future company that depends entirely on the quality of its engineering and manufacturing might be dissuaded from the rank biz-blab j*ck*ssery of moving its headquarters to the middle of nowhere so that top management can be "more independent."
Bottom line: What in God's name were they thinking?