A Warning from (Un)Happy Valley

“Steve, we have found cancer in your body. It’s bad, it has the potential to spread, but the good news is that we caught it early. We want to operate right away, cut out the tumor, and follow-up with chemo and radiation to try to eradicate the disease and prevent it from spreading.”

“Doc, that sounds painful. How about we just wait and let it metastasize?”

You’d think I was nuts to give an answer like that. Fortunately, the fictional conversation above hasn’t happened. I would hope I’d have the sanity to choose early intervention instead of certain disaster.

Apparently, that didn’t happen at Penn State. Now Joe Paterno, one of the most respected coaches ever in college football, is out the door with a dark cloud over his head, as is the president of the university.

Many words will be written about this unfolding scandal in the coming days, but let us immediately take one crucial leadership lesson from this.

Get rid of the cancer. Early and thoroughly.

If you have a results-producing employee who is dishonest, don’t hesitate to fire him or her. If you have an executive who is unethical, escort them to the exit door. A coach named Sandusky was a tumor in the Penn State system. He should have been removed immediately.

Now it’s metastatic, affecting children, careers, an entire university. Look at the shame that has accrued to church organizations when similar evils have been unreported – even covered up. The evil doesn’t go away. It spreads. It goes from Stage 1 to Stage 4.

Enron. Lehman Brothers. Watergate. John Edwards. From high-flyers to Hall of Shame.

(and hellooooo, pharma executives)

We need more of what Dan Rockwell calls courageous candor. If you are a leader in an organization, and you’ve been hesitating to remove the tumor you know is there, consider the consequences downstream. Let the mess at Penn State be a warning.

A good leader, at times, has to be a good surgeon. Cut now.

(Feel free to join us every Tuesday night for LeadershipChat on Twitter, where we have no-holds-barred discussions on the practice of leadership in today’s world)


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Door-to-Door Eco-Robbery

I’m mad. About light bulbs – and customer “service”.

Let me explain why, with a parable.

Let’s say you lived in a fairly well-off neighborhood. Everyone is now gearing up for the holidays – decorations are coming out, lights and displays are appearing…and, of course, the stores have been running sales since Halloween. It’s another American Christmas season.

One day you go out to check the mail, and lo and behold, someone has hung a Christmas wreath on your door. It’s decorated with sparkly balls that have smiley faces. And with it is a note from your mortgage company, explaining that latest studies have shown that Christmas wreaths lead to a 15% increase in overall societal happiness – in light of that, they are delivering wreaths to every one of their customers because…well, who can question such a good cause?

Even the president, and all the in-vogue politicos, have been mandating happiness measures. So it must be right.

You look to your left, and see that a wreath is hanging on the Goldblum’s front door. And to your right, on the Al-Mahdi”s door – another wreath. You think that perhaps your Jewish and Muslim neighbors might not approve of this gesture – and furthermore, you have your own favorite wreath already and don’t particularly care for this one hand-delivered to you without your consent.

It takes some work, but you do your digging and find out that this “free” wreath (worth about $17.00) is actually going to cost you $75.00, paid for on your mortgage bill, spread out in monthly payments over three years. WHAT? You’re going to be ripped off for something you didn’t ask for, don’t want, and perhaps even don’t believe in?? An outrage!

Far-fetched? Not at all. Let’s just change a few details, and you’ll know why I’m mad.

In Ohio, the First Energy Utility has taken upon itself to deliver unasked-for compact fluorescent light bulbs (the kind with mercury in them) to its millions of customers – and is charging them a pretty penny for the privilege. Now, these supposedly high-efficiency bulbs have gained the imprimatur of the eco-politically-correct crowd, and the utility feels that it must impose these bulbs on its customers.

    The utility will charge average users 60 cents a month extra on their electric bills for the next three years — $21.60 all together. That covers the cost of the bulbs ($3.50 each), their delivery and the delivery of the power consumers would have used if they didn’t have them…but the company — and therefore you — are paying too much for the bulbs, said Ohio Consumers’ Counsel Janine Migden-Ostrander. A five-pack of similar bulbs costs $13.99 from Ace Hardware’s Web site.

Beside the fact that the program is a form of robbery, what really irks is the fact that people are not being left with the freedom to make their own choices, based on intelligent shopping, personal conviction, and genuine need. And if you look at the reactions, this exercise in eco-bludgeoning is creating a firestorm (see here and here). I’ll just extract two comments:

    How is it even legal for any company to require customers to pay for items they neither ordered nor wanted? If CEI is allowed to get away with its lightbulb plan, it will set a very dangerous precedent.
    $21 for 2 lightbulbs? Not fair to anyone except possibly the workers getting paid to deliver them. I just purchased a package of 12 of these for less than $21. That means I have changed out all my bulbs and already have cut my electric consumption. Why didn’t they just mail coupons for a couple bulbs in our bills if they were serious about us cutting our consumption. Oh that’s right, it was a mandate so they wanted to insure they kept profits the same with generating output lowered. I think I’ll tell the boss I want the same pay and I’ll work at least 10% less, lets see what they say. It’s a bad deal and I’m tired of everyone reaching in my wallet without my permission.

Now, I don’t live in Ohio – so what’s my beef? Well, a few days ago I heard that the green-shirted volunteers were in our neighborhood here in NJ, and what did I find on my doorknob? Two unrequested and unwanted bulbs.

On Saturday, I went onto the NJ Clean Energy website and left the following (with my e-mail):

    We just had 2 (unrequested) Project Porchlight light bulbs hand-delivered to our door. I would like to know:
    1. What I am being charged for this, one-time and monthly,
    2. The actual bulk cost of one of these bulbs on the open market,
    3. What you are paying for this program, per household

Thank you.

On Monday, two e-mails drop into my InBox, from a person who will remain unnamed. One was inadvertently copied to me, the other was one of those futile “Would like to recall that last e-mail” messages (oops – too late!). In it, my message was sent to a handful of internal people for consideration, with the following note:

Do you have any suggestions on answering the below.  Not sure if you have/want to give them detail.  I can cover with the general explanation about the SBC charge and how NJCEP is funded, but want to run it by you……

Now, frankly, I’m not interested in general explanations about how the NJ Clean Energy Program is funded. Here is an explanation of the Society Benefits Charge (SBC) which already consumes 3% of our bill. What I want to know is if I am being charged even more for something I neither want (I do have a problem with these mercury-containing bulbs) nor have asked for. And I want to know the numbers if I and other NJ residents are being gouged like our fellow citizens in Ohio.

Whatever you may think of green initiatives, various types of bulbs, and the like, that’s not the issue here. This is an issue of having something shoved down our throats due to an in-vogue agenda, and being charged for the privilege. I don’t care whether it’s wreaths or bulbs – it’s just wrong.

We called the utility and, after long delays getting to anyone who could even address the issue, someone said they’d come get the bulbs back. Fine. But I still await an answer about the costs of this program to those of us who are being serviced by the utility. I’ll let you know what we find out.

Update: here is the e-mail response from the utility:

As I mentioned, I had to go to several sources top to see what numbers are available to you that may answer your specific questions.

  • As previously mentioned, the bulbs were delivered by local volunteers so there is no direct cost to you for that.
  • CFL open market costs vary by retailer and type. To give you an idea we offer a 14 watt CFL for $.95 through our online store.
  • As also mentioned, the overall funding for NJCEP is through the Societal Benefits Charge (SBC) that the main gas and electric utilities companies charge (not municipality owned utilities).  The charge can be found on your utility bill each month.  If you are unable to locate it, I would suggest you contact your electric utility company to find out what the monthly charge is.

To give you an idea, in 2008, an average residential electric utility customer contributed approximately $18 to fund these programs and an average residential gas utility customer contributed approximately $14.

The 2009 budget for the Energy Efficient Products Program is $23,315,444.  That budget supports several initiatives, including discounted ENERGY STAR lighting in retail stores like Home Depot and Lowes, incentives on clothes washers, room air conditioners and dehumidifiers, an on-line energy audit, a refrigerator recycling program and activities related to the Green NJ Resource Team of which Project Porchlight is a member.   If you wish to look at further the NJCEP’s 2009 Budget Filing can be found on our website and there is a specific section on ENERGY STAR ® Products to help you get a better understanding of the overall budget for this portion of NJCEP.

–If I’m reading this correctly, this bulb drop-off initiative is a component of a larger program, which we have no choice but to pay for, for various green initiatives, including Project Porchlight. The cost of this aspect of the program appears not to be publicly disclosed as a line item. I really wonder if a voucher program would not have been far more effective and customer-focused – providing discount vouchers for any type of energy-conserving bulb, if desired, purchased at market price somewhere instead of having people hand-deliver something that may or may not be desired or a good “match” for customer lighting needs.


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Ask the Right Questions

Quick – think of businesses that have imploded in recent years. What names come to mind?

A lot, unfortunately. Enron. AIG. GM. And loads of others.

All of it could have been avoided if these businesses were founded on the right answers to three simple questions. Questions that, if rightly asked and answered, will save any company from a world of hurt:

    1. What are the real needs of our customers?
    2. How can we add value, immediately and in the long-term?
    3. How would our practices look on the front page of the newspaper?

Instead, many companies are founded on and driven by other concerns, which override any fine-sounding sentiments in their mission statements:

    1. What do we want?
    2. How can we maximize “the numbers”?
    3. What can we get away with?

Selfish, shady, short-term business practices are the bane of our economy, leading to lost money, cynical markets, and increased regulation. But – it opens up a wide vista of opportunity for honest, truly customer-centric business people. People who have a conscience and a heart.

Ask the right questions. Then give the right answers. Over the long haul, you’ll be rewarded.


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Lipstick on the Management Pig

twomindsI had too much time in the car yesterday, so I was thinking about something that comes to mind a lot.

Cognitive dissonance.

Yes, I’m a little strange, but that’s not news anymore. I analyze a wide range of topics, which is both fun and confusing at times, and which can lead to…well, cognitive dissonance. When you see and/or believe things that don’t seem to go together.

Whether or not you’ve used the label, you’ve experienced cognitive dissonance. When your religious beliefs (or disbeliefs) seem to collide with real-life; when what you always thought about a person is suddenly proven untrue; when you find a PC easier to use than a Mac…all of that can create a sense that things don’t fit.

Then this morning Brad Farris forwards (via Twitter) this article from Harvard Business Review, entitled Why You Should Sell Only for the Company You Love. A few excerpts:

    There is no way you can effectively sell for a mismanaged company. A company that does a poor job of taking care of its people creates unhappy employees.

    Poor management is a deep problem that not even the best salesperson can overcome. It’s a pig that you can’t put lipstick on, and you shouldn’t waste your time trying.

    The problem of trying to sell around or in spite of poor management sometimes arises as a question about my advocating customer visits to our offices and plants. I’m asked: “What do you do if you have people in your offices you don’t want customers to meet? Or plants you don’t want them to see?” My response is that this isn’t a sales problem. It’s a management problem.

    Not only is it futile to try to put lipstick on the poor-management pig, it’s dishonorable and unethical even to try. Honesty is being truthful with others. Integrity is being truthful with ourselves. These are the essential ingredients of any sales-leadership program.

Amen to all of that. Many years ago, I sold equipment from manufacturers whose design and development processes, and whose deaf ears to the legitimate needs of customers, made selling a very “dissonant” chore. Fact is, any good and authentic salesperson wants to be a genuine and enthusiastic advocate for the offering and company he/she is representing. When the product or service is defective, or the management style is counter-productive, it absolutely cuts the heart out of the front-line sales staff. Then there are only three choices:

    1. Pretend enthusiasm anyway, for the sake of trying to make some money

    2. Tell potential customers the facts and deal with the consequences

    3. Leave

I’m a strong advocate of the third. It’s the only way to get rid of an energy-sapping, conscience-afflicting cognitive dissonance. I think the marketplace would evolve faster and better if more employees left poorly-run companies so that they run aground and better companies take their place. What do you think? How do you deal with cognitive dissonance in the workplace?

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Stoning our Fellow Bloggers

There is a danger to being a blogger – the same danger experienced by all public figures. Your every mistake is magnified, and that means you may end up with a target on your chest.

Yesterday, a well-known blogger made a posting that was quite controversial. Suffice it to say that some of the reaction was downright nasty. I am not going to link to the post in question, or mention the blogger’s name, or even describe the controversy, because I really don’t want to call any further attention to it.  Instead, I’d like to draw some larger lessons from the incident.

Here’s the main thing: we’re all going to make missteps. We’re human; we say and do things we shouldn’t; we occasionally react in the heat of the moment; and sometimes, we make the wrong call when trying to counter-balance competing interests. And in the age of instant publishing and networked communications, our fallibility can be magnified rather rapidly.

Before you hit that “Publish” button with a comment or a post ripping up a fellow blogger, let me recommend that you pause and consider the following:

  1. Have you ever made a mistake? Have you ever written or said something you wish later you could modify?
  2. Has this person for whom you are sharpening the knife actually been, by-and-large, a value provider? Can you couch your statements in that light?
  3. Do you think this fellow blogger might really need another public kick while he/she is down, or would perhaps a quiet back-channel word of encouragement be more helpful, along with a gentle expression of your concern for the specific action?
  4. Are you prepared to be treated in the way you treat this fellow blogger when your foibles are publicly revealed?

For the most part, the social networking crowd is a sharing and generous community. However, we need to be careful not to shoot our own when we make our mistakes and show our humanity. We don’t need an overly-hysterical “Motrin” reaction when people, companies, and brands try to put their toe in the water and get it wrong. A sense of humility is far more winsome than a self-righteous judgment on all those who don’t meet our standards. And, again, before you press “Publish” – if you’re about to pass judgment on someone’s character or motives, ask yourself if you really know that person’s heart.

“Let him who is without sin cast the first stone,” said a great teacher from centuries ago. Do we serve as correctives to one another as we evolve in social networking? Sure. But it’s far less important to prove that you are right and someone else is wrong, than it is to display a generous and gracious spirit when your fellow blogger is down.

It might just be you next time.

Illinois: Blags-to-Riches FAIL

(Chicago, IL) The ongoing investigation of Illinois Governor Rod Blagojevich took a startling turn today, when it was revealed that his original intention was to “sell” Senator Barack Obama’s Senate seat to a prominent blogger, thereby creating the first “virtual senator” in American history.

Blagojevich Corruption Probe“I was jealous, OK?” snapped the Governor, when confronted about the Blags-to-Riches scheme. “Obama had so much success with social media, that I figured I’d one-up him by sending – well, sort of sending – the first virtual legislator to Washington.

“Who cares about Illinois? This is about legacy, man!”

Rumors circulated that Blago had narrowed his choices down to well-known liberal blogger Arianna Huffington, and Instapundit’s conservative Glenn Reynolds. Bidding was fierce for the seat, including Arianna’s Lear Jet, a llama farm, and the entire University of Tennessee system (excluding the football them, as that might be a conflict of interest with the Fighting Illini).

The scheme unravelled when spurned blogger Andrew Sullivan leaked word of the bidding after his PayPal account was maxed out and his candidacy fell by the wayside.

Informed by the Chicago Tribune (whose bid was also thwarted by a chapter 11 filing) that nominating a candidate from another state that would only cast votes via Twitter might actually be against the rules, the Governor looked back blankly and said, “Rules? You mean there are rules?”

(Previous StickyFigure spoofs)

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The Financial Meltdown in One Sentence

People with an incentive to re-define risk for short-term gain will deceive themselves and others, distort the marketplace, and destroy value.

(this includes politicians who force institutions to make risky loans through market-distorting policies like CRA; institutions and individuals who willingly ignore long-term risk for the sake of short-term fees; and individuals who make commitments they cannot realistically expect to fulfill)

Sex Sells…is that a good thing?

In this well-written post over at Branding Strategy Insider, a compelling case is made for what most of us intuitively know…sex sells. Especially, sex + controversy sells.

Let’s assume that it’s true. Here’s the question any marketer now has to ask, just as they had to ask as a teenager: Should I??

The answer to that will come from the basic ethical decision-making foundation you stand upon. Choose your ground – the pragmatic approach, or the (defined) right/wrong approach.

The pragmatist will ultimately boil it down to this: if it works, why not? Now maybe, for your target audience, it won’t work. But if you’re going after the teen fashion market (as outlined in the linked post above), and it succeeds in increasing sales, and your goal as a business is to maximize profits…well, then, why not? All other considerations can be set aside, because this is not a matter of right and wrong, but a matter of effectiveness.

However, let’s say you believe that a sex-saturated culture coarsens itself, that people should not be treated as objects, that titillation as a method of money-making is creating more cultural havoc long-term even if it boosts the bottom line short-term. To distill it down: let’s say you think it’s just wrong. Now what?

It’s the dilemma every business person faces. From the temptation to misstate financial results, the opportunity to rip off a customer, even the possibility of influencing a sale by showing a little more cleavage to the male executives in the presentation, we’re faced with short-term gain and pragmatism versus doing what’s right regardless of the consequences.

I know what side I’m on. What do you think? Is it OK to take advantage of the power of sex in selling?

A Trip-up at Vanity Fair

I have no girls, and so the whole Hannah Montana/Miley Cyrus phenomenon has, up to now, passed me by. However, just last week, I read through a magazine article expressing appreciation for how this young lady has managed to keep a relatively pure image, and avoid the scandals of other tween/teen starlets.

Unfortunately, with fame and attention come a thousand opportunities to stumble.

One ill-advised photo session for Vanity Fair has managed to taint the wholesome image of this budding star and tweener role model. Of course, Vanity Fair and the photographer got what they wanted by smoothing the way for her to push the limits – knowing that in a time when few images or words remain private, she’d pay the price while they sell the scandal.

Frankly, I’m glad I don’t have the pressures that come from the thousand-watt spotlights of stardom. I don’t know how some of these young folks make it unscathed – and, it seems, relatively few do make it with their reputations intact. There is very often the smell of scandal, moral collapse, or bad judgment trailing in their wakes. It’s tough enough just being a teenager, let alone being in the public eye 24/7.

This morning, I picked up one of our cats, who was sprayed MONTHS ago by a friendly neighborhood skunk. Amazingly, I can still catch the faint whiff of the scent, which has never quite left his fur. One moment of bad judgment (getting too close to a purveyor of stench) left him – and us – with many months of repercussions.

A solid brand can recover from a stumble. I hope, in the case of Miley Cyrus, that it is indeed an isolated incident, and that she does not pursue the self-destructive path of some that have come before her. Unfortunately, the odor of even one episode of bad judgment will follow her for a while. For the sake of our own brands, we can all take warning to keep our eyes wide open, and avoid entanglements with any cute-looking creatures with the telltale white stripe…

Eliot Spitzer: A Tarnished Man, A Tarnished Brand


[3/12 update: Spitzer has just resigned. Some further thoughts on my Impactiviti blog: Flawed or Fraud?]

The news is just breaking this afternoon – Eliot Spitzer, controversial Democratic governor of New York, has apparently been linked to a ring providing prostitution services.

Spitzer is hardly the first politician to be caught (as of this writing, allegedly caught) in a situation of moral compromise. But Spitzer is in a very awkward position – his entire public career was built on being the ethics enforcer. The prosecutor. The one going after the transgressions of the rich and powerful. Brand Spitzer was all about fighting corruption. But it was more than that…

Eliot Spitzer managed to gain a reputation for ruthlessness, pettiness, and arrogance. Some of his moves as Attorney General – and as Governor – were highly questionable. And so, when someone like that is caught in hypocrisy, there is little chance of recovery. If the charges prove true, Brand Spitzer is tarnished forever.

Mere mortals who stumble morally are often forgiven, particularly if they have a track record of seeking to do what’s right, and tend to show mercy and understanding toward others. But when you make a career out of applying the law with exceptional zeal, and then manage to do something that looks like you think you’re above the law – well, there won’t be a lot of sympathy or forgiveness, I suspect.

Lesson learned? People (and brands) make mistakes all the time. Sometimes grievous ones. If we’ve built good will and kindness into our brand, we can recover. But if we’re all about right/wrong, win/lose, and the self-aggrandizing exercise of power, then we have to face the uncomfortable fact that the stakes will be far higher when we muddy our shoes.

J&J and the American Red Cross – What’s a Symbol to do?

The recent legal spat between the American Red Cross (ARC) and Johnson and Johnson (J&J) (back story here, with more reportage and comment here, here, and here) brings to the surface a very important issue. While many have focused on the public relations aspect of this messy situation, and some see it as just another opportunity to jump on Big Pharma, what it really comes down to is this: will principle, or pragmatism, carry the day?

Symbols matter – as do their use. At the core, this is a legal dispute, having to do with intellectual property, copyright laws, and interpretation of agreements. J&J believes that there is an important legal precedent at stake here, and I have no doubt that they knew, going in, that a P.R. nightmare was going to be the cost of moving forward on principle. I respect that. Justice requires that there are no favorites – the small as well as the great are held to the same standard. Legal behavior and respect for property are bedrock principles of the rule of law, and we see multiplying examples around us of smaller, poorer nations casting aside such inconveniences as patent law in order to steal pharmaceutical formulations. Pharmaceutical companies, like any other companies, have every right to defend their property; intellectual, tangible, and whatever else.

When you compare the press releases of the 2 parties in this battle, you see a very clear differentiation. The Red Cross is claiming victim status, using the “big company is bullying us” argument, the pragmatic “we’re only trying to do good” argument, and the “they’re only doing it for the money” argument (note: the same type of arguments used by developing nations that break patents on drugs). In no instance do they actually seem to address the core legal principles. Here is their press release:

WASHINGTON, Wednesday, August 08, 2007Today, Johnson & Johnson (J&J) filed a lawsuit against the American Red Cross and four of its licensing partners for “unlawful conduct” related to the nonprofit’s use of the Red Cross emblem.

Specifically, J&J demands that the Red Cross:

  • Stop the Red Cross and its licensing partners from using the Red Cross emblem permanently on first aid, preparedness and related products sold to the public;
  • Surrender to J&J for destruction the Red Cross’ inventory of accused products;
  • Hand over to J&J all Red Cross proceeds from the sale of these products with interest; and
  • Pay punitive damages to J&J along with attorney fees related to its legal action against the Red Cross.

“For a multi-billion dollar drug company to claim that the Red Cross violated a criminal statute that was created to protect the humanitarian mission of the Red Cross—simply so that J&J can make more money—is obscene,” said Mark W. Everson, President and CEO of the American Red Cross.

Research has found that only seven percent of Americans have taken the necessary steps to be prepared—and that more people would get prepared if preparedness products were more available, including at retail locations. Since 2004, the Red Cross has worked with several licensing partners to create first aid, preparedness and related products that bear the Red Cross emblem.

All money the Red Cross receives from the sale of these products to consumers is reinvested in its humanitarian programs and services.

“The Red Cross products that J&J wants to take away from consumers and have destroyed are those that help Americans get prepared for life’s emergencies,” said Everson. “I hope that the courts and Congress will not allow Johnson & Johnson to bully the American Red Cross.”

Translation: J&J is big, greedy, and bad; we’re victims just trying to do good here; and they want to hurt Americans. OK – nice job with the ad hominem attack…now, can we have your legal reasoning, please??

On the other hand, J&J appears to be focusing on the legal issues, with a concern for the long-term principles and the precedents that are at stake. Their press release:

Johnson & Johnson Statement on Civil Complaint Against The American National Red Cross and Commercial Licensees

Skillman, NJ (August 9, 2007) – Johnson & Johnson has great respect for the relief work of the American Red Cross (ARC) and over the decades has consistently supported the organization through cash donations, product donations and employee volunteering. The Company remains committed to supporting their mission through its philanthropic efforts.

Both Johnson &Johnson and the American Red Cross have long-held separate and distinct rights to the use of the Red Cross Design trademark.

Johnson & Johnson began using the Red Cross design and “Red Cross” word trademarks in 1887, predating the formation of the American Red Cross. The Company has had exclusive rights to use the Red Cross trademark on commercial products within its longstanding product categories for over 100 years. Since its creation, the American Red Cross has at all times possessed only the rights to use the Red Cross trademark in connection with its non-profit relief services.

After more than a century of strong cooperation in the use of the Red Cross trademark, with both organizations respecting the legal boundaries for each others’ unique legal rights, we were very disappointed to find that the American Red Cross started a campaign to license the trademark to several businesses for commercial purposes on all types of products being sold in many different retail and other commercial outlets. These products include baby mitts, nail clippers, combs, toothbrushes and humidifiers. This action is in direct violation of a Federal statute protecting the mark as well as in violation of our longstanding trademark rights.

For the past several months, Johnson & Johnson has attempted to resolve this issue through cooperation and discussion with the ARC, and recently offered mediation, to no avail. The Company was left with no choice but to seek protection of our trademark rights through the courts.

On Wednesday, August 8th, 2007, a civil complaint was filed in the United States District Court, Southern District of New York by JOHNSON & JOHNSON and JOHNSON & JOHNSON CONSUMER COMPANIES, INC against THE AMERICAN NATIONAL RED CROSS and its commercial licensees, LEARNING CURVE INTERNATIONAL, INC., MAGLA PRODUCTS, LLC, WATER-JEL TECHNOLOGIES, INC., and FIRST AID ONLY, INC.

The goal of this civil complaint is to restore the long-held legal boundaries surrounding the use of the Red Cross trademark.

I don’t know who will win this battle in the courts. If J&J is right, I hope that ARC’s case is crushed, and that they retreat with their tail between their legs – a very important legal precedent having been reinforced. After which, I hope J&J then turns around and makes a sizable donation to some tangible Red Cross humanitarian work (though perhaps not to their legal fund!). And, if J&J is in the wrong, then let’s hope they get a legal spanking, and volunteer to cover all costs for the proceedings.

But at least in this initial skirmish, I have to say that I think J&J’s reasons for going to battle are sound. They tried to resolve it behind the scenes. The stakes are high – matters of legal principle are in dispute, which have long-term consequences. They have the right to see it resolved in the courts. And I’d sure like, at some point, to see the Red Cross come out with a well-reasoned defense of their actions rather than this bald appeal to victim status.

Pragmatism will tend to justify the means by the end. Those driven by principle tend to be willing to pay a short-term price for the sake of seeing what is right triumph, for the long-term benefit of all. Count me among the latter.

Full disclosure: I have no financial relationship with J&J by way of investment or current contract work, nor do I have any financial relationship with ARC.

The Golden Rule – Pick One!

Golden Rule #1treat others the way you’d wish to be treated

Golden Rule #2do what’s necessary to maximize my gold

Business ethics can seem complicated. Frankly, I think most of it boils to down to a pretty straightforward choice:

Do I do what’s right? Or do I do what is expedient to try to ensure maximum (income/profitability/bonus/stock price/etc.)?

What is right? That’s a debate that can draw in threads from theology, philosophy, psychology, and other disciplines, but let’s not over-complicate it. How would you want to be treated in a similar circumstance?

You’re working on the clinical research side of a pharmaceutical company, and a promising drug candidate starts to show some anomalous results. Some potentially dangerous side effects. Not a whole lot, mind you, and just a bit of tweaking and data-scrubbing could get it below the threshold of statistical significance. The company has been investing millions into this product, and the pipeline is a bit thin. Do you report it? Do you “work the numbers”? Do you ignore and cover over the warning signs? How does all this impact your job?

Wrong questions. How about this – would I give this drug to my child?

You have a hot new product coming out, and a potentially large client is very interested. However, they have a short-term delivery need, and you know that you cannot meet it. A competitor has a product, which is adequate, but also has the virtue of being immediately available. If the client standardizes on the competitor’s offering, you lose out in the short-term and the long term. So, do you fudge the truth and figure it will all wash out in the end, or do you put the client’s interest first and speak the truth come what may? (this is not a theoretical case study – I was in this dilemma 15 years ago. Determining the right choice was a no-brainer, but it still hurt to make it!)

Which Golden Rule do you follow? Here are two simple tests: do you like what you see when you look yourself in the mirror? And how do you sleep at night?

One company that seems to embody this principle-centered approach to business is Johnson and Johnson. However imperfectly it is followed by any given individuals in the company, J&J’s one-page Credo is a marvelous example of how to flesh out the Golden Rule – Golden Rule #1, that is – in a business philosophy:

Our Credo

We believe our first responsibility is to the doctors, nurses and patients,
to mothers and fathers and all others who use our products and services.
In meeting their needs everything we do must be of high quality.
We must constantly strive to reduce our costs
in order to maintain reasonable prices.
Customers’ orders must be serviced promptly and accurately.
Our suppliers and distributors must have an opportunity
to make a fair profit.

We are responsible to our employees,
the men and women who work with us throughout the world.
Everyone must be considered as an individual.
We must respect their dignity and recognize their merit.
They must have a sense of security in their jobs.
Compensation must be fair and adequate,
and working conditions clean, orderly and safe.
We must be mindful of ways to help our employees fulfill
their family responsibilities.
Employees must feel free to make suggestions and complaints.
There must be equal opportunity for employment, development
and advancement for those qualified.
We must provide competent management,
and their actions must be just and ethical.

We are responsible to the communities in which we live and work
and to the world community as well.
We must be good citizens – support good works and charities
and bear our fair share of taxes.
We must encourage civic improvements and better health and education.
We must maintain in good order
the property we are privileged to use,
protecting the environment and natural resources.

Our final responsibility is to our stockholders.
Business must make a sound profit.
We must experiment with new ideas.
Research must be carried on, innovative programs developed
and mistakes paid for.
New equipment must be purchased, new facilities provided
and new products launched.
Reserves must be created to provide for adverse times.
When we operate according to these principles,
the stockholders should realize a fair return.

Sure, J&J companies and employees fail to live up to this standard of excellence and fair play every day. But that doesn’t mean that the standard is wrong. Only that, at any given time, individuals choose themselves above others.

What is the root cause of the parade of scandals we see in so many industries? Most of the time, we need look no further than Golden Rule #2.

We moan and groan about Sarbanes-Oxley, shareholder lawsuits, regulatory meddling, and all the other thorny features of rules and disclosures that address wrongdoing. But who is to blame? All those who lead their companies, their teams, and themselves by Golden Rule #2.

I’d love to see some major CEOs take a stand squarely on Golden Rule #1 and drive it throughout the entire organization, come whatever may. The short-term disruption would pale compared to the long-term benefit of a brand that puts others first on a consistent basis. And, of course, following Golden Rule #1 is likely to be the best way of attaining that other kind of gold anyway!