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spill slow to get going but the company refused to communicate openly with the press. The Exxon Chairman, Lawrence Rawl, was immensely suspicious of the media, and reacted accordingly.
Within hours an army of journalists had arrived to begin extensive coverage. A company spokesman pointed to the existence of procedures to cover the eventuality – procedures which the TV shots belied. When asked if he would be interviewed on TV, Rawl’s response was that he didn’t have time for ‘that kind of thing’.
While the company was getting off to a bad start with the media, the operation on the ground was failing to control the spill. Around 240,000 barrels had been spilled, with another million still on the ship. During the first two days, when calm weather would have allowed it, little was done to contain the spillage. This spillage spread out into a 12 square mile slick.
Then the rain and wind started to make things worse, meaning further containment was near impossible.
A week later the company was still tight-lipped. Following President Bush’s declaration that the spill represented a ‘major tragedy’, Frank Iarossi, the Director of Exxon Shipping, flew to Valdez to hold a press conference. It went badly. Small pieces of good news claimed by the company were immediately contradicted by the eyewitness accounts of the present journalists and fishermen.
John Devens, the Mayor of the Alaskan town Valdez, commented that the community felt betrayed by Exxon’s inadequate response to the crisis. ‘Over the years, they have promised they would do everything to clean up a spill and to maintain our quality of life. I think it’s quite clear right now that our area is faced with destruction of our entire way of life.’ Alaskan Lieutenant Governor Stephen McAlpine also said that he was ‘severely disappointed’ in the company’s response. ‘Despite all statements to the contrary, I don’t think they ever had a handle on it.’
Eventually, the Exxon boss deigned to go onto television. In a live interview he was asked about the latest plans for the clean-up. Rawl started to look nervous. It turned out he had neglected to read these, and cited the fact that it was not the job of the chairman to read such reports. He placed the blame for the crisis at the feet of the world’s media. Exxon’s catastrophe was complete.
The consequences for Exxon of both the disaster, and the poor way in which it was handled, were catastrophic. The spill cost around US $7 billion,
including the clean-up costs. Most of this was made up of the largest punitive fines ever handed out to a company for corporate irresponsibility.
The damage to the company’s reputation was even more important, although more difficult to quantify. However, Exxon fell from being the largest oil company in the world to the third largest. The ‘Exxon Valdez’
became synonymous with corporate arrogance, and the story remained prominent in the media for over a year. According to a 1990 US news poll, 65 per cent of respondents said that ‘the Valdez oil spill was the key element in raising public consciousness about environmental issues.’
Lessons from Exxon
� Live up to your promises. The company failed to show that it had effective systems in place to deal with the crisis – and in particular its stated ability to move quickly once the problem had occurred was not in evidence.
� Act like a good corporate citizen. Exxon acted indifferently to the environ
mental destruction, and therefore did little to help the company’s case.
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41 McDonald’s – the McLibel trial
As brands go, McDonald’s is a biggie. Along with Coca-Cola and Marlboro, it is one of the few brands which is recognized in almost every country. As McDonald’s itself proclaims, its chain of fast food restaurants represents the
‘most successful food service organization in the world.’ There are now approximately 25,000 McDonald’s restaurants across the globe, catering for around 40 million people every single day.
The brand reached this position of dominance by arriving at a simple formula, and pushing it hard. As Des Dearlove and Stuart Crainer explain in The Ultimate Book of Business Brands, simplicity is the secret behind the brand’s success:
Henry Ford mastered mass product production; McDonald’s has mastered mass service production. It has done so through strict adher
ence to simple beliefs. Quality, cleanliness and uniformity are the basis of the McDonald’s brand. [. . .] A McDonald’s restaurant in Nairobi, Kenya looks much the same as one in Warsaw, Poland or Battle Creek, Michigan. [. . .] In effect, the very uniformity of the brand is the crucial differentiating factor.
However, by the 1990s McDonald’s smooth ride became rather more turbulent. Although it still held onto the crown as king of fast food, the company experienced a number of setbacks. There were new product failures, such as the Arch Deluxe (discussed in Chapter 2), and various run-ins with
environmentalists, anti-capitalists and other activists. One of the most notorious, and certainly one of the most protracted of these confrontations was the libel case involving Helen Steel and Dave Morris.
Although the trial didn’t reach court until 1994, the case revolved around a pamphlet first published in 1986 by London Greenpeace, a splinter group of Greenpeace International. The pamphlet focused on a variety of social and environmental issues such as animal cruelty, exploitative marketing (in McDonald’s advertising campaigns aimed at children), rain forest depletion and the perceived negative health value of McDonald’s products.
However, very few people would now know about the contents of that pamphlet if McDonald’s hadn’t taken the matter to court. Even Naomi Klein, the anti-branding commentator and author of No Logo, claims that the pamphlet distributed by Helen Steel and Dave Morris lacked ‘hard evidence’
and was ‘dated’ in its concerns:
London Greenpeace’s campaign against the company clearly came from the standpoint of meat-is-murder vegetarianism: a valid perspective, but one for which there is a limited political constituency. What made McLibel take off as a campaign on a par with the ones targeting Nike and Shell was not what the fast-food chain did to cows, forests or even its own workers. The McLibel movement took off because of what McDonald’s did to Helen Steel and David Morris.
McDonald’s first sought action against ‘the McLibel two’ over the leaflet in 1990. In fact, the company initially issued libel writs against five activists but three backed down and apologized. For Steel and Morris, however, the threat of legal action also represented an opportunity. The trial could, and indeed did, provide a much larger platform for their views than they would ever have been given standing outside McDonald’s restaurants distributing pamphlets.
As it turned out, the trial became the longest in English history, with a staggering total of 313 days in court. And as the trial developed, so too did the media interest. Pretty soon, millions of people knew exactly what was being discussed in that courtroom. Every single statement made in the original pamphlet was discussed and dissected not only in court, but in news studios around the world. In No Logo, Naomi Klein highlights the protracted nature of the case:
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With 180 witnesses called to the stand, the company endured humili
ation after humiliation as the court heard stories of food poisoning, failure to pay legal overtime, bogus recycling claims and corporate spies sent to infiltrate the ranks of London Greenpeace. In one particularly telling incident, McDonald’s executives were challenged on the com- pany’s claim that it serves ‘nutritious food’: David Green, senior vice president of marketing, expressed his opinion that Coca-Cola is nutritious because it is ‘providing water, and I think that is part of a balanced diet.’
Whichever side of the fence they sat, most commentators agreed on one thing: the longer the trial went on, the more damaging it was for McDonald’s public image. In any case, the actual facts of the case were too complicated for most observers to be able to understand clearly – the judge’s verdict document was over 1,000 pages long.
When the verdict was finally announced on 19 June 1997, McDonald’s were able to claim victory as Steel and Morris were ordered to pay damages.
The allegations in the pamphlet linking McDonald’s to food poisoning, cancer and third-world poverty were deemed by the judge as unsupportable.
However, McDonald’s was not able to undo the damage caused by the lengthy trial. On 20 June 1997, the Guardian newspaper observed that: ‘Not since Pyrrhus has a victor emerged so bedraggled.’ Indeed, although Morris and Steel were ordered to pay £60,000, this was a low price compared to that which McDonald’s were paying in terms of negative PR (not to mention legal fees).
For one thing, the original pamphlet – What’s wrong with McDonald’s – had now become a cult collector’s item, with 3 million copies in circulation across the UK. Then there was the McSpotlight Web site which published all 20,000 pages of the court transcript. The damage was further prolonged through the publication of John Vidal’s widely acclaimed book, McLibel:
Burger Culture on Trial. There were numerous TV programmes focusing on the trial, such as Channel 4’s three-hour dramatization, McLibel.
So while McDonald’s won in court, they lost the media battle. As Naomi Klein points out:
For Helen Steel, Dave Morris and their supporters, McLibel was never solely about winning in court – it was about using the courts to win over
the public. [. . .] Standing outside their neighbourhood McDonald’s in North London on a Saturday afternoon, Steel and Morris could barely keep up with the demand for ‘What’s wrong with McDonald’s?’ the leaflet that started it all.
In the Guardian¸ the UK newspaper that covered the trial from day one, the consequences were also seen to stretch beyond the four walls of the courtroom:
Consider the cost of this pyrrhic victory. Firstly, the judge upheld several important charges made by the campaigners against the company [. . .]
But much more serious was the wide support which the McLibel Two received from the World’s media in this epic battle between ‘the small fries and the burger giant.’ [. . .] Publicly, McDonald’s has remained tight-lipped over its pursuit of two unemployed green campaigners with no assets, but somewhere in its empire must be asking some awkward questions. As PR fiascos go, this action takes the prize for ill-judged and disproportionate response to public criticism.
Ultimately, the McLibel trial serves as a reminder to other companies of the importance of ‘brand perception’. In the final analysis, the facts didn’t matter.
What mattered was the way the media’s perception of McDonald’s influenced a considerable strand of public opinion, and to this day the McLibel trial has left a stain on the company’s international reputation.
Lessons from McLibel
� Don’t underestimate the power of the Internet. Supporters of the McLibel campaign were able to organize themselves online. Brands need to monitor and respond to online criticism in a positive way. ‘Things are two- way now,’ explains Internet guru Esther Dyson. ‘Customers are talking back to companies, employers are talking back to their bosses and vendors are talking back to suppliers.’ The Internet manages to bring aggrieved consumers and activists together, in a way that simply wasn’t possible in the age of one-way media. In the words of Doc Searles, who co-founded one of Silicon Valley’s leading advertising agencies and is a co-author of The Cluetrain Manifesto, ‘What these little voices used to say to a single friend is now accessible to the world. The speed of word of mouth is now
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limited only by how fast people can type.’ In other words, if people want to get their point across there is little companies can do to stop them.
� Understand that financial muscle isn’t as strong as it used to be. Following on from the previous point, the power of the Internet means that financial resources are no longer enough to suppress criticism. ‘One of the major strengths of pressure groups,’ says Peter Verhille, of the PR firm Entente International, ‘is their ability to exploit the instruments of the telecom
munication revolution. The agile use of global tools such as the Internet reduces the advantage that corporate budgets once provided.’
� Concentrate on public perception. In trying to set an example against the Greenpeace activists, McDonald’s helped to highlight the activists’ cause.