This Month in Reputation: Google, Nike, and More

Current Events in Corporate Reputation

 

In February, a wide range of American companies (and a couple of individuals) learned the hard way that knocks to their reputations—whether due to accidents, omissions, or a poor attempt at spin—can have major consequences.

Johnson & Johnson stock falls as the company gets further embroiled in talc-related litigation

The health giant’s shares declined 1.4% on news that the Department of Justice and the Securities and Exchange Commission were investigating whether the company’s signature baby powder contained asbestos, and, even more importantly, whether the company had known about it for decades.

When these allegations first surfaced in December of 2018 in the New York Times and Reuters, J&J stock plummeted a vertigo-inducing 17%.

It all comes mere months after a jury awarded $4.7 billion to a group of 22 plaintiffs who claimed that the company’s asbestos-tainted baby powder had caused their ovarian cancer. Other successful lawsuits in New Jersey and California have tied the baby powder to mesothelioma, an aggressive cancer that affects the lining of the heart, lungs, and abdomen.

The newspaper reports and civil judgments caught the attention of Sen. Patty Murray of Washington, who instigated this most recent investigation.

Johnson & Johnson is standing firm, adamant that decades of testing has shown its baby powder to be free of asbestos. The company believes it has strong grounds to overturn the verdicts against it. It remains to be seen whether that will be enough to assuage the concerns of its customers.

Google fails the transparency test for the second time in six months

Nest Guard owners got an unwelcome surprise last week when Google announced the devices could be used with Google Assistant, the company’s digital assistant.

Why was it unwelcome? Because they were unaware their home security system had a built-in microphone—Google had not listed a mic in the device’s tech specifications.

Oops.

The company claims the omission was a regrettable error, and that the microphones could only be activated by the customer.

Nest Guard owners, however, remain understandably creeped out. They had bought the alarm system, after all, to protect their homes from invasion.

The surprise comes on the heels of another Google gaffe on privacy and transparency, the reveal that Google Maps was logging people’s locations even after they had turned location services off.

It only adds to the growing unease among consumer advocates and digital privacy experts as tech giants like Google and Facebook seek to become ever more intimately involved in their customers' lives and homes.

Empire actor Jussie Smollett learns that (falsely reporting a) crime doesn’t pay

Scandal is one thing. Many an actor or actress has bounced back from allegations of infidelity, a debilitating drug addiction, or too much partying with the wrong people.

But staging a hate crime to get yourself a more lucrative contract, like Smollett allegedly did? When your current contract pays you nearly $2 million a year? That’s gonna be a harder sell, according to PR experts and crisis management gurus.

Formerly the recipient of bipartisan sympathy, Smollett has now opened himself up to outrage from both the right and the left: the former accuse him of unfairly painting Trump supporters (Smollett’s alleged assailants wore red hats) as violent racists and homophobes, while the latter have denounced him for trying to exploit the current cultural moment (with its newfound support for victims of sexism, racism, and homophobia) for personal gain.

He’s also opened himself up to something even more deadly to professional reputation than outrage: ridicule.

In light of the Chicago Police Department’s charges, the things that originally made Smollett’s account so chilling—the noose placed around his neck, the unidentified chemical thrown in his face, the attackers yelling “This is MAGA country!”—now seem contrived and overwrought. MAGA country? In Chicago?

Instead of a big raise, Smollett has now been dropped from the show that made him a star. His character will either be recast or written out of the show entirely. His reputation as a crusader for social justice has been ruined; he’s much more likely to be known as a huckster and a fraud.

And, if CPD’s charges are to be believed, it’s all of his own making.

A blowout on the court for Nike—but not the good kind

Duke University lost superstar Zion Williamson in a key game against the University of North Carolina, and Nike lost nearly $1.4 billion in market capitalization after one of the sneakers Williamson was wearing gave up the proverbial ghost one minute into the highly anticipated game.

Williamson, widely expected to be the No. 1 pick in this year’s NBA draft, suffered a (fortunately minor) knee sprain when the Nike shoe he was wearing split mere seconds after tip-off. Duke would go on to lose 88-72 to their cross-Research Triangle rivals. The next day, Nike stock fell by 1.4%.

It was a massive product failure on just about one of the biggest stages in college sports. And it unintentionally thrust Nike into a larger debate about student-athletes and college sponsorship deals, a debate Nike would probably like to avoid.

Nike immediately announced it was looking into the cause of the sneaker failure, which it believes to have been an isolated incident.

SHG

  Stephen Hahn-Griffiths
  Executive Partner, Chief Reputation Officer
  Reputation Institute
  shahn@reputationinstitute.com
  @shahngriff

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