The venerable Augusta National Golf Club has been playing host to the Masters Tournament since 1934. But this year it is also playing host to another great drama, the relaunching of the most valuable personal brand in the world.
Tiger Woods' penchant for cocktail waitresses and porn actresses ended up costing an astonishing amount of money: two economists at the UC Davis, have calculated that his biggest corporate sponsors, such as Nike and Gatorade, saw as much as $12 billion wiped off the value of their shares in the wake of the scandal. But Woods' warm reception at Augusta over the past few days suggests that he is well on his way to recovering his star power.
Brand Tiger is thus likely to join a long list of brands that have come back refreshed after a spell in rehab. These include not just the predictable roster of celebrity brands such as Martha Stewart and Kobe Bryant, but also a surprising number of solid corporate citizens such as Johnson & Johnson and Coca-Cola.
Brand-threatening scandals are becoming a regular feature of the corporate landscape, thanks to a toxic mixture of globalization, which scatters corporate activities hither and yon, and the Internet, which allows bad news to spread like wildfire.
Oxford Metrica, a consultancy, estimates that executives have an 82 percent chance of facing a corporate disaster within any five-year period, up from 20 percent two decades ago. Indeed, just the day after Woods made his return to golf, the American government fined Toyota over $16 million for its tardiness in addressing safety concerns.
The key to a successful relaunch lies in making a cool-headed assessment of how much the scandal damages your company.
Does it involve life and limb, rather than less consequential matters? Has it spread beyond particular products or particular divisions to afflict the entire corporate brand? If the answer to both questions is yes, then companies are well advised to go into collective overdrive; if it is no, then they can experiment with more nuanced responses, such as lopping off a tainted product or sacrificing a rogue division.
Marsh & McLennan and JetBlue provide good examples of companies that took a no-holds-barred approach to brand rehabilitation. In 2004, Marsh & McLennan was accused of taking kickbacks to recommend insurance providers to its clients, an accusation that went to the very heart of its identity as one of the country's biggest insurance brokers.
The firm was not content with issuing groveling apologies and paying $850 million in compensation. It also appointed a new boss, Michael Cherkasky, who was the head of its financial investigation division, Kroll. Cherkasky proceeded to de-emphasize the insurance business and boost other divisions, such as Mercer Consulting and Kroll.
In 2007 bad weather presented JetBlue with a nightmare of its own. Thousands of passengers were left stranded and one planeload of unfortunates spent eight hours sitting on the tarmac, with precious little food or drink to sustain them.
The company's founder and boss, David Neeleman, immediately recognized that this made a mockery of his promise to "bring humanity back to air travel." He threw himself into dealing with the problem, issuing public apologies, telling his employees to contact passengers personally by phone and e-mail, producing a retroactive passengers' "Bill of Rights" and ponying up around $25 million in compensation.