I am routinely and genuinely bewildered and disappointed by…the actions of numerous, presumably professionals, serving in – appointed to the executive, judicial, and legislative branches of our government. It gives me absolutely no comfort, nor joy, to assert there is ample evidence that I am not the only citizen who feels this way.
By ‘this way’, I mean the bewilderment and frustration with…individuals who seek election to a legislative position and/or accept an invitation from the executive branch to serve in the Federal judiciary, or in some capacity in the executive branch. In either instance, they may, at some point, become crossways
Being an intangible asset strategist and risk specialist…I do know something about ‘reputation risk’, whether it be applied – is relevant to a company, an organization, an institution, a single person, or groups of people.
I am just at a loss to understand the rationale that presumably…underlies many utterances and actions taken by the numerous who seek to influence – sway policy and/or legislation about when, where, and how taxpayer dollars are to be spent.
Let me amend that…what occurs with some frequency within the executive branch does not appear to emerge from compromises of well-considered – debated foreign – domestic policy issues. Rather, decisions and (executive) orders appear to emerge from single source acquired ideologies and/or irrelevant perspectives which may or may not have any relationship to historical or present-day realities which the peoples, the cultures, and the infrastructures affected are experiencing.
Yes, it is both appropriate and sometimes necessary to…make (public – private sector) decisions and policy at the proverbial 30,000-foot altitudes, well above ‘ground zero’. For me, I am more confident in and supportive of decisions in which there is at least some evidence – voice that the ‘ground zeros’ have been duly considered as relevant to how the decision will be executed and the outcomes and impacts.
Sadly, the above seems variously comparable to the case of Martin Shkreli who became…the proverbial ‘poster boy’ for pharmaceuticals price gouging in 2017. Readers of this blog remember Mr. Shkreli; he was the self-styled entrepreneur, hedge fund manager, pharmaceutical CEO and buyer of Turing Pharmaceutical who promptly raised the price of Daraprim (pyrimethamine), a 62-year-old drug used for protozoal infections, to $750 per tablet from it former price of $13.50 per tablet, shortly after he (Shkreli) acquired the firm.
Mr. Shkreli’s subsequent boisterous, non-apologetic, and yes, ‘snitty’ public statements and demeanor…following his arrest by the FBI, and the subsequent SEC investigation won him both a conviction and substantial prison sentence.
Is there something in our drinking water that seemingly influences… officials – executives, be they in the public or private sectors, to consciously and sometimes gleefully engage in lapses of personal – professional ethics and civility? To the point they appear to willingly engage in ultra-high risk deeds, as a leader, which also carry an equally high probability of producing significant, long term, and sometimes irreversible reputation risks for themselves, the office they hold, and/or the company they oversee, as well as those with whom they have associated.
However, seldom do reputation risks…particularly, once they materialize, affect only the ‘decision maker’. Instead, often there are ‘trickle down and out’ affects which adversely affect (extend) to others, i.e., associates, an entire business product and service line, and to a company’s culture irrespective of truthfulness – validity of the risk.
In not an insignificant number of such instances…in which the c-suites of those company’s – institutions where the actions and behaviors of the leadership have created fertile ground for reputation risks to materialize and the inevitable investigation, begin running toward the exits, presumably not wishing to have their (personal, professional) reputations become (more) suspect or tarnished. To be sure, doing so is often easier said than done!
As readers have correctly surmised…this portion of this blog post is not about a generic, disguised, or fictionalized circumstance of reputation risk. No, it’s about President Trump’s apparent penchant, at least as I interpret it, for utterly ruining – giving suspect to the reputations of numerous associates and appointees. In each instance, its variously fair to suggest, the targeted individual apparently succumbed to the President’s disfavor, for reasons which I find are often speculative, irrespective of their frequency…
- In his short time in politics, writes Susan B. Glasser, a staff writer at The New Yorker, President Trump has shredded the careers, professional integrity, and dignity of many who have worked for him, Attorney General William Barr being no exception.
- For example, writes Ms. Glasser, in the first year of the Trump Presidency, White House advisers often promised reporters that this would be the week when they would unveil the President’s plans for a massive investment in American infrastructure.
- On the campaign trail, Donald Trump had vowed to spend a trillion dollars rebuilding roads, bridges, and airports. He said that he would work with Democrats to do it. For a time, it seemed to be the only bipartisan project that might actually go somewhere.
- But, of course, ‘infrastructure week’ never happened. There was always some distraction, some overwhelming public relations disaster ala a chief of staff to be fired, an errant tweet upending foreign policy, with ‘infrastructure week’ living on, but more as an Internet meme, a Twitter hashtag, or a joke; and it became shorthand for the Administration’s inability to stay on message or organize itself to promote a legislative agenda it claimed to support.
- President Trump never fully gave up on the infrastructure idea, though, and this past week he resurrected it in a rare meeting with congressional Democratic leaders, who emerged from the White House on Tuesday morning, smiling and apparently excited. The President, they explained, had decided to double the price tag of his proposal, from a trillion to two trillion dollars, because it sounded more impressive.
- But the meeting with House and Senate Democrats was all just a form of ‘Washington performance art’. There are no Republican votes for such an expensive package, as the Democrats knew in advance, and it’s very unlikely the President’s allies on Capitol Hill, nor his own penny-pinching White House chief of staff, would agree to such a budget-busting deal.
- Politico reported, The President’s “extreme and aspirational” idea, as Senator Kevin Cramer, of North Dakota, put it, had Republicans “rolling their eyes,”
- The ranking member of the House committee that would have to approve any measure had offered a simple answer to the question of whether President Trump’s idea could ever be passed. “No,” he said. It would not be ‘infrastructure week, or even ‘infrastructure day’. The new era of bipartisan deal making was over before it began.
- By late Tuesday (this week) the news cycle had moved on. President Trump’s Attorney General, William Barr was refusing to testify before the Democratic controlled House Judiciary Committee and would not turn over the unredacted Mueller report or its underlying evidence.
- The Administration, in fact, was refusing to comply with more or less any congressional demands for information and testimony on an array of investigations of the President, from his business-related conflicts of interest to his family-separation policy at the border.
- Then came more news: Barr had a behind-the-scenes dispute with the special counsel about his characterization of the report. Robert Mueller, it turned out, had sent a letter to Barr weeks earlier, but it was only now being revealed.
- In the letter, Mueller suggested that Barr had minimized and deflected the serious questions about the President that Mueller’s investigation had turned up. The next day, the whole mess was fought over in excruciating detail when Barr appeared before the Republican-controlled Senate Judiciary Committee to testify for the first time since the release of the Mueller report.
I do sense, at some point, for some business leader’s…during their b-school experience they may not have registered for, or only sporadically attended the required ‘business reputation 101’ course.
Another stark and very public example of…in my view, dismissive reputational demeanor was exhibited by Equifax leader ship in October 2017 upon their public admission that a ‘data breach’ had occurred involving the personal data of 140 million users-citizens, at least 30 day earlier. Standing alone, that’s a sad commentary, but one which we are hardly unaccustomed.
Well, through these intangible asset lens…these, and numerous other similar events, speak volumes about any business culture, perhaps (a.) rooted in arrogance, and (b.) operating with the assumption ‘lightening won’t strike twice’ mentality.
Aside from that, someone at Equifax made mighty poor decisions to…disregard – overlook their fiduciary responsibilities to execute exceptional safeguards over the critical ‘personal’ assets they held.
So, I respectfully commence this post by stating I do have considerable operational familiarity…with business reputation (risk) which it’s worth noting again, is an extraordinarily valuable intangible asset.
Corporate culture and reputation have obviously become overlooked – neglected aspects to the ‘Equifax’ story…that is, not being adequately reported, aside from a few like Daniel Marans of POLITICS, Huffington Post, myself, and Dr. Nir Kossovsky.
Again, through my lens, then and today, twhen a highly consolidated industry exists…ala credit reporting, with just three major players collectively holding a very substantial percentage, perhaps 90+%, of the market, i.e. Equifax, Experian, and TransUnion, having in place exceptional safeguards would constitute one of the proverbial ‘no brainers’.
In these circumstances, incentives for c-suites to ensure…deployment of effective data safeguards beyond the minimum, and closely monitoring risk vulnerability, probability, and criticality, for data breaches and/or attempts, appeared to fall below what most would agree constitutes ‘best practice minimum’.
More to the point…not taking, or only taking minimal steps to thwart, contain, and mitigate persistent probing by economic – competitive advantage adversaries for entrées to 140 million citizen’s personal data, ala risk materialization. For most companies, not doing so, or only doing the absolute minimum, would rapidly and adversely affect their reputation and cascade throughout their enterprise.
However, this obligation – fiduciary responsibility, was wholly absent based on the testimony given in Capitol Hill hearings on October 4, 2017…given by now, the former Equifax CEO Richard Smith, at the behest of the U.S. Senate’s Committee on Banking, Housing and Urban Affairs. I, like countless others, are appalled at reading Smith’s testimony.
Should my characterizations of Smith’s testimony transcript…in combination with the decisions and operational realities that were conveyed, constitutes confirmation that Smith, in a collective of arrogance, disregard for fiduciary responsibilities, and not recognizing how ‘a data breach’ of Equifax would – could be exploited by adversaries globally is astonishing.
The minimally ‘feel good’ reparations offered to…potentially 140 million Equifax customers – victims, appeared to make sense to Equifax, providing rationale for Equifax to not feel particularly uncomfortable or apologetic, even if their reputation ‘took a hit’ because there were enormous (more) revenues to be made.
Unfortunately, when there is little sector competition…devoting resources beyond a reasonable minimum, to mitigating the materialization of reputation risk(s), is, in my view, a misread of competitive advantage economics.
So, for me, such c-suite strategies are insulting…especially when such inaction invites – contributes to risk materialization, leaving consumers with no viable alternative or option when significant problems (data) breaches occur.
In addition to the inexcusable delay in reporting ‘the breach to their system’…Equifax has actually-created more business opportunities for itself”, Sen. Elizabeth Warren (D-Mass.) remarked during the October 4 hearings, to which Mr. Smith replied, “yes, Senator, it (the breach) has been a huge opportunity for Equifax”.
For readers who perhaps are unfamiliar with U.S.’s consolidated consumer credit tracking sector…i.e., Equifax, Experian, and TransUnion, each firm tracks individual credit histories and uses the collected data to compile credit “scores” which they sell to lenders for assessing the creditworthiness of prospective borrowers.
- One outcome, Senator Warren said, is companies (like Equifax) have little incentive to invest in safeguards for the consumer data they collect and store.
Senator Warren’s claim arose from the fact that Equifax…and other firms, had already sought to make money from the September 2017 data breach by offering affected – victimized consumers a year of free credit monitoring, after which the company would begin charging for the service.
Of note, “from 2013 until today…Equifax disclosed at least four separate data compromises – breaches to their client’s personal data. Not surprisingly, during those four years (2013-2017), Equifax’s revenues rose by more than 80%, a fact which Smith admitted in testimony to Senator Warren.
Another frustrating (troubling) aspect to the Equifax matter, is that organizations…not-infrequently (initially) treat these types of materialized (catastrophic and cascading) risks as ‘public relations challenges’ which presumably can be repaired – remediated. Yes, in some instances such a strategy (response) may find the proverbial traction.
- …the person who elects not to read has little or no advantage over the person who cannot read! (Variously attributed to Samuel Clemens, adapted by Michael D. Moberly.)
Michael D. Moberly St. Louis May 8, 2019 [email protected] the ‘Business Intangible Asset Blog’ since May 2006, 650+ published (long form) blog posts, ‘where one’s attention span, business realities, intangible assets, and solutions converge’.
Readers are invited to explore other posts, video, position papers, and books at https://kpstrat.com/blog