Brand Failures_ The Truth About the 100 Biggest Branding Mistakes of All Time - Matt Haig [68]
The real lesson is that no matter how much time, money and energy is poured into a brand or corporate strategy, it ultimately depends on the behaviour of individuals whether or not this strategy remains on track. The higher up the individual, the more he or she is seen as representative of the brand. To borrow a useful phrase from John Karolefski, former editor-in-chief of Brand Marketing magazine, ‘the fish rots from the head.’ In other words, those with the most responsibility must act the most responsibly. ‘The CEO must buy into and be part of the strategy from its inception,’ says Karolefski. ‘The head of the company sets the tone throughout the entire organization. He or she will also be the most likely spokesperson for the company and must be credible.’
Karolefski has also written lucidly about the Enron and related Arthur Andersen scandals. ‘A critical element in these cases is that the crisis and the resulting damage did not come from a faulty product,’ he told Brand Marketing readers. ‘All of the faults, the problems, the improprieties, the theft, all came from within the corporation, and in many or most cases, from inside the executive suite or from the CEO directly.’
On the face of it, there may not be much in common between Enron and Planet Hollywood, or Arthur Andersen and the first reality TV pop group, but there is a unifying factor. In the case of Enron it was corruption, while in the case of Planet Hollywood it was a simple case of celebrity self-deception, but either way the brand ambassadors ultimately failed the brand.
64 Enron
Failing the truth
Little remains to be said about the rise and scandalous fall of Texan energy giant Enron. In the relatively short space of 15 years, Enron rose from nowhere to become the seventh largest company in the United States, and the most well-known energy supplier in the world. It boasted over 21,000 employees and had a presence in more than 40 countries.
As well as generating energy, the firm also generated a rather healthy brand identity. It won Fortune magazine’s award for ‘Most Innovative Company in America’ six years running, and was also high in the rankings for the same magazine’s ‘Best Companies to Work For’ chart. The company projected an image of being a good corporate citizen and published a social and environmental report which looked at the moves it was taking with regard to the environmental consequences of its business, its employee relations and (most ironically) its anti-corruption and bribery policies.
Over the years, Enron depicted itself as a highly profitable, growing company. Of course, in 2001–02 this turned out to be a lie – one of the biggest in corporate history. The company’s profit statements were proved to be untrue, and it emerged that massive debts had been hidden so that they weren’t evident in the company’s accounts. Enron’s accountancy firm, Arthur Andersen, was involved in the shredding of documents relating to Enron’s accounts, which meant the impact of the scandal was going to be catastrophic for that firm’s reputation as well. As the depth of the deception unfolded, investors and creditors retreated, forcing the firm into Chapter 11 bankruptcy in December 2001. When such facts came to light, Enron executives made matters worse by refusing to testify and arguing that they had no chance of a fair trial.
The Enron scandal also had political implications, because of the firm’s close links with the White House. Enron ploughed millions of dollars into George Bush’s 2000 election campaign. Although Bush was a personal friend of Enron CEO Kenneth Lay, he was quick to distance himself from any direct involvement with the firm.
The long-term effects of the scandal will be felt for years to come, and the Enron name is already beyond repair and forever likely to be synonymous