Good Honest Dollar $$

(Image provided by Sally Mahoney via Wikipedia)

Time will tell whether or not Pepsi’s move not to advertise at all during this year’s Super Bowl will pay off – after being the single biggest advertiser in last year’s event.

But what is for sure is that the company’s latest marketing push – under which grants are provided to support a range of community projects chosen by a public voting system – represents an ingenious idea for which the company is to be applauded.

 
The Strategy
As a result of changes in marketing strategy, Pepsi decided not to advertise at all during the Super Bowl this year.

Instead, under the Pepsi Refresh Project,  an amount roughly equivalent to the $20 million which it shelled out on the event last year is being allocated toward grants to a range of charities and community organisations.

What is unique about the project is that Pepsi will not decide itself which projects are to receive the funding. That decision will be made by members of the public via an online voting system.

The system works as follows:

(1) Individual members of the public are invited to submit their ideas for worthwhile community projects

(2) Members of the public vote on their favorite ideas

(3) The company provides grant funding of between $5,000 and $25,000 for the most popular projects.

 
Why the strategy is so good
This type of system has three key benefits over and above straightforward corporate donations:

 
• Backing causes which really matter to consumers.

The best thing about Pepsi’s new approach is how it allows consumers themselves to dictate where the money is spent.

Consumers themselves are best positioned to understand what causes they are passionate about. Putting decisions about allocation of cause related funding in their hands ensures that projects supported under the program are relevant to Pepsi’s target market.

 
• Generating consumer involvement.

Judging by the attention Pepsi’s new campaign has generated online, it appears to be doing well in one of the most challenging aspects of cause related marketing – getting consumers to sit up and take notice.

Why? One reason is that Pepsi’s approach is genuinely unique and therefore stands out from the crowd. But more importantly, through the submission and voting process, the project is generating involvement on the part of the general public, giving them a real reason to pay attention.

 
• Reinvigorating the brand.

There is little doubt about the relationship between a company’s marketing strategy and consumer perceptions of its brands.

Innovative marketing campaigns promote a positive brand image. Vice versa for campaigns which are dull, boring and ‘same as everybody else.’

By trying something new and innovative, Pepsi is positioning itself on the cutting edge – exactly where the company wants to be given the importance of the youth market and the associated need for the brand to be seen as hip, cool and ‘out there.’

 
Over to You
What projects would you like to see Pepsi support in your community?

Do you think companies are generally good at understanding what causes are important to consumers?

Is corporate sponsorship of community projects is more/less powerful than advertising at major sporting events like the Super Bowl?

Not being familiar with American law, I cannot comment on whether or not the alleged behavior of Robert Halderman actually represents illegal conduct.

But contrary to the assertions of his legal council, his alleged conduct was certainly not an act of capitalism.

Frankly, I am tired of hearing terms like ‘capitalist’ and ‘entrepreneur’ used in efforts to downplay the seriousness of illegal and/or grossly immoral behavior. These types of words should be reserved for those who are truly worthy of being described as such.

 
The ‘Tiger Woods’ defence
Mr. Halderman is charged with first-degree grand larceny in connection with a failed attempt to secure payments of up to $2 million dollars from David Letterman in return for silence about the talk show host’s affairs with female employees (refer article). Allegedly, Halderman threatened to go public after the discovery that his ex girlfriend was one of the women involved.

In an attempt to have the charges dropped, Halderman’s lawyer, Gerald Shragel, compared his client to women linked to Tiger Woods (who were reportedly paid to keep quiet), claiming that “their behavior was capitalist, not criminal,” and that “(The) reality is that evidence of celebrity misdeeds has a significant market value.” (refer article,)

 
Blackmail not what capitalism is about
The question of whether Halderman’s alleged behavior indeed represents criminal conduct will be decided by the American judicial system in due course.

But was it capitalist behavior? No way.

Dictionary.com defines capitalism as:

“an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, esp. as contrasted to cooperatively or state-owned means of wealth.”

Neither blackmail nor larceny are mentioned in any part of this definition. Nor, I doubt, would they be associated with the word in any other dictionary. They are not what capitalism is about and they have no place in any form of economic system, and though efforts on the part of defence council to downplay the nature of their clients’ alleged behavior are certainly understandable, I grow tired of the way in which concepts like capitalism get abused in the process.

The same applies to the concept of entrepreneurialism, a term all-too-often abused in describing the organisation of blatantly criminal or immoral operations for financial gain.

(Blackmail is defined as “any payment extorted by intimidation, as by threats or injurious revelations or accusations” and “the extortion of such a payment“)

 
Capitalism Vs Blackmail
Let’s have a look at a few differences between capitalism and blackmail:

Capitalism is an economic system. Blackmail and larceny are acts of criminal conduct.

Capitalist behavior serves genuine needs for end-consumers. Blackmail and larceny do not.

Capitalism appeals to those who seek reward for courage, initiative, diligence, hard work and sensible risk taking.

Blackmail and larceny appeal to the lazy and dishonest – those who seek to get rich quick via opportunistic behavior.

Capitalist behavior is legal in free-market economies. Blackmail and larceny are not.

Capitalist behavior (usually) contributes in a positive manner toward society. Blackmail and larceny do not.

The American judicial system will decide whether or not Halderman has breached the law. But regardless of the outcome, his alleged behavior is not what capitalism is all about.

Let’s leave words like ‘capitalist’ and ‘entrepreneur’ to those who are worthy of being described as such – those who seek reward through courage, initiative, risk-taking, diligence and hard work.

(Google Headquarters in Beijing - Image provided by M Weitzel via Wikipedia)

Given the complexity of the moral, ethical and business-case considerations involved, there are no easy or straightforward answers to the dilemma confronting Google with regard to the future of its Chinese operations.

But given the recent security breaches, the pendulum has swung a long way, and the case for leaving China – from both ethical and business case viewpoints – has surely grown much stronger in recent weeks.

 
Google’s announcement to review it’s Chinese Operations
As most of you will already be aware, Google released an announcement on January 12 to the effect that the company’s operations in China are under review, following: (a) the discovery of a highly sophisticated and targeted cyber attack on the firm’s corporate infrastructure, with the primary goal of accessing the accounts of dozens of human rights activists in China and elsewhere; and (b) a decision that the company is no longer willing to censor search engine results in China.

Although not saying anything to pre-empt the outcome, the announcement does make it clear that partial or complete withdrawal from the country is a serious prospect.

 
Previously, the company’s operations in China were OK …
Prior to the discovery of the attacks, Google’s approach toward China appeared to be sensible and pragmatic.

To be sure, the censorship of search engine results to which the company agreed in 2006 did go against one of the basic fundamental principles of the online world (freedom of expression and information flow).

But it was necessary. Without agreeing to censorship, operating effectively in China would have been virtually impossible (prior to the agreement, Google’s uncensored engine, Google.com, had apparently been blocked by the Chinese government on an intermittent basis – refer article), and any stand made by the company regarding censorship would almost certainly have cost it the chance to properly exploit opportunities within the country – a price which surely would have been too high given the size and potential of China as a market.

And from the viewpoint of Chinese netcitizens, any Google service, albeit a censored one, was better than none at all prior to the censorship agreement when the service was so frequently blocked.

 
… but the security breaches change everything
But recent events have shifted the pendulum a long way, and both the ethical and business cases for leaving have become much stronger.

Even now, ethical considerations are a long way from clear cut. Any withdrawal on the grounds of censorship would hurt Google’s Chinese staff and customers much more than it would the Chinese government. And even despite the recent attacks, human rights activists in China would almost certainly be safer using online services from Google than those provided by domestic Chinese firms.

Still, the company does now have to think long and hard about whether or not it can be confident about the secure provision of some services, especially in light of the apparent sophistication of the attacks. Given this, along with ongoing reservations about censorship, the moral case for withdrawal has grown stronger.

So too has the business case. Most obvious is the risk of backlash in rich world markets. Already significant given the contention surrounding the censorship issue, the risk to Google of backlash associated with the continuance of operations in China is bound to intensify, especially if netcitizens remain unconvinced about its ability to provide Chinese services without jeapoardising the security of human rights activists.

This matters. China represents only a tiny portion of Google’s worldwide operations (see below), and the effect of the company’s strong moral pulse as a source of competitive advantage in western markets should not be underestimated.

(Google’s Chinese operations derive about $300 million in revenue, compared to an aggregate figure $22 billion for its global  operations – refer article)

Besides, Google’s experience in China has always been problematic. The company’s market share in its core search business is languishing at fifteen percent (refer article), and outside of search, many of its other businesses continue to experience problems relating to government censorship (at present, You Tube, Picasa and Blogger are all blocked – refer article).

Add all this up and there might just be a fair case for withdrawal anyway – even if it weren’t for ethical considerations.

 
Conclusion
There are no straightforward answers to the questions facing Google over the future of its Chinese operations.

But for now, the pendulum has swung in favor of an exit – whether partial or complete.

A company’s annual general meeting is the only time that individual shareholders get to have their say, so it’s not surprising that some use the occasion to voice their frustrations or grievances.

So they have every right to – it is their company.

But problems arise where shareholders abuse this privilege.  One such case occurred at a meeting which I attended in Melbourne last month. This case highlighted the need for shareholders to observe reasonable manners and etiquette – even when voicing grievances or frustrations.

Shareholders have a right to challenge directors on tough issues. They have no right to make unsubstantiated allegations or personal attacks.

 
Drama at the Orica AGM
The drama took place at the annual general meeting of Orica Ltd, a multinational Australian company which manufactures a range of chemical products, during the discussion about the financial, directors’ and auditor’s reports.

One speaker, ‘Clancy,’ launched a tirade of disparaging remarks. (Real names have been quoted here since a podcast of the entire meeting is on public record on the company’s website)

He began:

“Yeah last year I raised the issue of (accounting firm) KPMG carrying out a false audit of this company ..”

In his one minute denunciation, Clancy went on to allege that:

• KPMG were ‘still’ issuing false audits of the company.

• Don Mercer, the company chairman, “should be in jail with Karl Williams” (a notorious Melbourne gangland figure)

• Mr. Mercer was part of the Melbourne business set – “the largest crime syndicate in Australia.”

• Mr. Mercer and others had only gotten away with it (his alleged criminal behavior) because of Managing Director Graham Liebelt’s friendship with former Australian Treasurer Peter Costello, who “looked after the Melbourne business set” and was “the most corrupt politician to sit in politics in Australia.”

(There were never any suggestions of impropriety by Mr. Costello throughout his eleven years as Federeral Treasurer of Australia between 1996 and 2007)

 
Allegations in context 
To put these claims into context, a number of points should be noted.

First, Clancy did not provide or refer to any form of evidence in support of his allegations.

Second, Mr. Mercer enjoys an outstanding reputation within the Australian business community – earned over many years of service on the board of a wide range of high profile Australian companies.

Third, immediately prior to Clancy’s attack, a representative from the Australian Shareholders’ Association had given the company a glowing report on a number of corporate governance related matters, saying that the ASA “could only be complimentary,” and that shareholders should be “very satisfied.”

In short, these were nothing more than wild allegations.

 
Let’s hold off on unsubstantiated allegations
Shareholders are the collective owners of the company – by whom directors (and senior executives) are employed and to whom they are accountable.

They have every right to voice their frustrations or concerns, just as they have every right to challenge directors on areas where performance or behavior have not been up to standard. They need not be ‘nice,’ and should not feel under any restraint toward asking difficult questions. The annual general meeting is there chance to do so, and they should not hold back.

But there are limits. Directors have a professional relationship with shareholders and deserve to be treated accordingly. This means answering tough questions, but not putting up with unwarranted personal attacks, unsubstantiated allegations or defamation.

In the case of Orica, Don Mercer did not seem overly worried about the whole situation. He’s been around the traps a long time – this was water off a duck’s back to him.

Nor did many of the other shareholders attach a great deal of credibility to Clancy’s allegations.

Nevertheless, board members should not have to put up with this kind of thing.

Shareholders must be free to challenge directors or make their feelings known.

But they have no right to make personal attacks or unsubstantiated allegations – directors should not have to put up with these.

 
Over to you
What are shareholder meetings like in your country?

Are they generally productive in terms of giving shareholders a fair opportunity to voice their concerns?

Are shareholders generally polite and well behaved?

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(Image provided by Keith Allison via Wikipedia)

Tiger Woods’ recent fall from grace is a shame, not only for those directly involved, but for the entire sport of golf.

It also highlights a wide range of broader issues and questions relating to personal, professional and business ethics.

Amongst other things, these could include:

 
• How the private conduct of high profile professionals can affect their ‘brand value’ in terms of advertising and corporate sponsorship.

The understatement made by consulting firm Accenture upon termination of its sponsorship – about Woods being “no longer being the right representative,” – said it all.

So too does the more frank commentary (same article) of public relations consultant Ian Monk, about Woods being “… damaged goods with no commercial value to sponsors whatsover.”

 
• How the expectations placed upon role models in any profession extend beyond their professional lives.

Role models, it seems, are expected to demonstrate exemplary behavior in all aspects of their life – private or professional.

 
• The issue of media outlets paying for stories.

I don’t know whether or not Jaimee Grubs or any of the other women involved have indeed received any form of payment from media outlets for going public on this story. But I certainly hope they didn’t.

Woods’ transgressions are unacceptable, but so too are those of any of the women involved. Each of them appears to have been willing participants in their affair with the superstar – none deserve any financial reward for their behavior

 
Even the best are mortal
But there is one important lesson which should not be forgotten in any of this – the fallibility of even the most revered superstars.

Prior to the revelations, there were strong reasons for holding Woods in high regard, particularly given the way his work ethic, general demeanor and extensive involvement with charities and youth projects served to complement his talent and achievements. He was, it seemed, an ideal role model.

Nor was it in any way wrong to give him so much respect. Positive role models are needed in every profession, and those who achieve excellence whilst appearing to conduct themselves in an exemplary manner deserve our admiration.

But these sentiments must be tempered with two sobering realities:

• we don’t always know the whole story; and
• even the best role models are human.

The second point is especially pertinent. No matter how exemplary their behavior may be, all role models are human. None of them are infallible, nor should we expect them to be. Disappointment is inevitable if we forget this.

Respect for high achievers who display exemplary behavior is healthy, but idolization is not. No one should be put on a pedestal.

 
Great shame, important lesson
Tiger’s fall from grace was a great pity. I certainly hope that he is able to get his life back together and, if possible, salvage his marriage.

In the meantime, his story serves as an important reminder about the fallibility of even the most revered superstars.

Those who set positive examples deserve our full respect – but they should never become our idols.

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