In a recent Wall Street Journal article, columnist Carol Hymowitz contrasted two mega-successful companies - Wal-Mart and Starbucks. While both are investor-magnets, and unquestionably leaders in their respective categories, Wal-Mart is beset by bad ink, out-of-control growth, lawsuits, and the ongoing accusation that it has wrecked small town America.
Starbucks, on the other hand, could conceivably be criticized for some of the same reasons as Wal-Mart. Yet, Starbucks is often heralded as the paragon of a big corporation that does it right. As Starbucks' Chairman Howard Schultz points out, the company adheres to "guiding principles" - or values - that guide its decision-making. Employees are "partners," and they are eligible for stock options and health benefits. Walk into any Starbucks in America, and you'll generally find happy, exuberant workers, eager to make you a pricey latte or macchiato.
Wal-Mart has lost control of its own PR. Despite the fact they sponsor numerous charity causes, and other do-good activities, opinions have formed. Even when Wal-Mart does the right thing, it only takes a momentary setback or snafu to remind consumers that they're evil - whether this reputation is deserved or not. Conversely, Starbucks understood the power of public opinion way back at the beginning. By embracing values and making their workplace desirable, they generally escape the type of bad PR that Wal-Mart seems to consistently attract.
We see this in our own business, too. Clear Channel has made many of the classic Wal-Mart mistakes, and every focus group in one of their markets reinforces those negative perceptions. Despite efforts to turn its image around, Clear Channel is always painted with the "evil empire" brush. The company has done some smart things over the past couple of years - Less Is More, hurricane relief, etc. - but the die has been cast. While often unfair, it is always amazing to us to see the types of things that are blamed on Clear Channel.
But when consumers read a story like the one that broke late last year - about how their Madison AM news/talk station - WIBA-AM - took a sponsorship for its entire newsroom, those are the moments that simply reinforce that notion that the company will forever do heinous things.
As we were all taught, perception IS reality. And by the way, adopting strong customer and employee values are indeed good business.