Some corporate founders and CEOs have exhibited quite a strange management talent lately: alienating some of their customers. It's harder to sneak off and hide, too: Social media helps spread the word about situations such as those at Italian pasta company Barilla and lululemon athletica (NASDAQ:LULU), both of which have been thrown in a poor light because of highly controversial comments from very high places.
Begging for a boycott
Controversial pasta doesn't sound possible, but when Barilla Chairman Guido Barilla publicly stated that the company would never use advertising showing homosexual families, consumer sentiment bubbled over with outrage.
Many people swore they would boycott Barilla, and social media spread the outrage and the kind of sharp satire that can truly burn a brand. "Bigotoni" dinner, anyone? It gets worse. Reuters reported that Barilla added, "If [gays] don't like it, they can go out and eat another brand."
Barilla apologized for his comments and has made good on his vow to meet with gay groups, in both Italy and the United States. It's counting on Americans to further propel its pasta, and we are currently Barilla's second largest market next to its home base in Italy.
The controversy has spurred a focus on turning around the public-relations stumble. Barilla plans an ad campaign that will portray some form of diversity, it has brought in a gay activist in an advisory capacity, and it's signed on with the Human Rights Campaign's index, which tracks and rates companies on issues like this one.
Barilla's response has been fairly swift, even though some outraged consumers may understandably remain cynical, particularly those who the remarks hurt the worst -- homosexuals.
Some companies and their figureheads don't seem to worry whose feelings they trample on. Who needs apologies or even tact?
Lululemon founder Chip Wilson flipped the company's reputation out of the frying pan and into the fire just last week. The high-end yoga retailer had already gotten in hot water not only for its yoga pants that ended up being sheer in the posterior region, but then its sizing policy came into the spotlight. Lululemon's merchandise doesn't stretch beyond size 12.
The company's lame response -- on Facebook, which, again, is one of the main outlets for outrage -- was that this is part of its "formula." Then Wilson went on to say that some women's bodies simply don't fit the company's clothes properly, blaming "rubbing" and other things bodies do for any defects, including pilling.
To be exact, Wilson explained, "Frankly some women's bodies just don't actually work for it. They don't work for some women's bodies. It's really about the rubbing through the thighs, how much pressure is there over a period of time, how much they use it."
That's not cool
Over the course of business history, quite a few CEOs have made some insulting and mind-blowing statements.
Abercrombie & Fitch's (NYSE:ANF) Mike Jeffries has been up to the exclusionary thing for years. After the blunt admission (which, incidentally, wasn't exactly a news flash) that the retailer's clothes are for the "cool kids" in school, not the "not-so-cool kids," he also even more bluntly admitted the brand is "exclusionary."
Much like Wilson and the Lululemon situation, Jeffries explained that of course the retailer doesn't cater to larger-sized customers.
He apologized in words but not deeds, stating that he regretted his "choice of words." However, the company isn't changing its strategy in order to provide potential clothing for people of larger sizes who are, you know, cool.
Titan International (NYSE:TWI) CEO Maurice Taylor managed to deliver a bizarre zing earlier this year. He somehow managed to insult an entire country, one way or another.
Early this year, Taylor referred to a French factory's employees as "so-called workers" and made things even worse afterward by insulting the French government. An exact quote: "They're very sensitive -- the people in government in France. Maybe they should not wear briefs and use boxer shorts instead."
Has Taylor apologized? Nope. He is currently in negotiations to return to France and buy the tire factory he had previously rejected while insulting French work habits. In late October, The Wall Street Journal asked him about the incident. He replied, "Very few company CEOs give comment or would talk because everyone tells them you have to be politically correct. Well, I don't worry at my age about being politically correct." (Taylor is 69.)
Unapologetic vs. action
Many argue that companies are free to target whatever types of consumers that they want to. That's true; we do have freedom of speech in this country. In cases like these, they're insulting people they don't feel valuable to their corporate missions; that's pretty sad in itself.
However, by freely throwing around insults they're managing to offend their own target markets, too. Investors should remain aware of how corporate managements portray their brands.
Many straight individuals, those who wear size 0 apparel, and those who aren't French have taken umbrage at ugly words like these, too. With the rise of social media, the sheer number of those one can offend rises exponentially.
Apologies would be nice, and obviously, in some cases, high-profile individuals who make up the face of the highest echelon of corporate managements don't even bother to do that. Shareholders might want to wonder about hubris in some of those cases -- too much pride to ever examine their own behavior.
Barilla's CEO may not find too much forgiveness despite his efforts, and the brand may become tarnished from this incident. However, at least he seems to be trying to make moves in the right direction by following an apology with some kind of action.
Apparently for some, introspection is hard to do, and so is making amends for taking brands to a hurtful extreme. Over the long haul, their business futures may suffer because of nasty strategy that makes many people avoid the products altogether -- and forever. (%sfr%}