The real problem

"It's not the problem that's the problem, it's how you handle the problem that's the problem."

An old truism, which I've been preaching to colleagues and clients for as long as I can remember. I believe it's one of the most important rules in business.

An example. I worked for a hotel group and was in a restaurant of one of our hotels when a waiter slipped and tipped a drink over a customer.

The manageress immediately hurried over with a clean, dry cloth and gave it to the customer. She apologised, said his meal would be on the house, asked him to drop the suit off at Reception, it would be dry-cleaned at no cost and returned the next day.

In a few seconds a possible problem was replaced by a positive outcome. The customer would only remember the drink spilling in the context of how well the hotel had handled the incident. A plus for the brand.

The most important thing you have in business is the brand.

It's hard work to build the brand image and its positioning, to instil a good feeling about it in the mind of users and potential users.

But to damage or destroy it is the easiest thing in the world.

There's a fairly recent absolute classic of how quickly a brand can be destroyed, which gave rise to the phrase 'Doing a Ratner'.

Gerald Ratner was CEO of a successful family chain of discount jewellers in the UK. Discounted but believed to be good value for money. A good brand image.

Then he made a speech to the Institute of Directors, which was picked up by the media.

He said the brand's products could be sold at low prices because 'it's total crap' and he went on to say that some items were 'cheaper than a Marks & Spencer prawn sandwich but probably wouldn't last as long'.

Damage to the brand? The share value fell by about half a billion pounds Sterling, the company almost collapsed. Share price had been at a high of 400 pence went as low as 9.5 pence, sales plummeted, investor dividends disappeared.

Gerald Ratner went but the damage was done. He'd been in charge for 25 years but destroyed it all in a few minutes.

I relate these stories because we currently have two examples of damage to a previously strong brand running in the media.

Very different stories but the difference demonstrates the truth of the saying and that it applies to any brand, whatever the business.

The subjects of course are Tiger Woods Brand and Brand Dubai.

Tiger Woods Brand is worth a huge amount of money, a large amount of its value based on a perception of perfection, unrealistic but that's what people tend to do.

After the row with Mrs Woods and subsequent minor car prang the damage to the brand began.

He hired a criminal attorney, refused to talk to the police and made no public statement.

The rumour mill went into overdrive, in the mainstream media and the blogosphere, and those actions added to the rumours. I haven't heard any jokes but I'm sure there must be hundreds.

He stayed silent for several days, and by the time he eventually made a statement the damage was already done.

The problem was the way the problem was handled.

Dubai World, although a very different story, is a similar example of the real problem being the way the problem was handled, which has resulted in damage to the brand.

I've already posted about the mishandling.

Brand Dubai has been built for decades on the basis of being a great business centre, perfectly located and commercially astute. A city with a long and succesful commercial history, a place where it was safe to do business, where the business people really knew how to run successful companies. Brand Dubai meant successful, safe investing.

As a result of the mishandling of Dubai World's debt restructuring and how it was announced we're now seeing things like this said in the world's media about Dubai:

"Dubai default...Dubai debt meltdown...Dubai financial crisis...bloodbath...risked triggering the biggest sovereign default since Argentina...city is now so swamped in debt that it's asking for a six-month reprieve...shock announcement that a debt-laden Dubai state corporation was unable to meet its interest bill...Dubai cast adrift as credibility crumbles...Dubai's financial health is under scrutiny"

OK, it was inaccurate, it was unnecessary blind panic, it was a misunderstanding of the status of Dubai World, it was lack of knowledge of how much debt was the subject of the announcement, of how much it was relative to the amount of debt in the world. But those reactions were caused by the mishandling of the situation in Dubai. Had the old saying been remembered the fallout would have been very different and without damage to Brand Dubai


If you are a potential investor, publicity like that will make you pause and rethink. If you are a financial institution you'll look much more carefully at Dubai companies requesting loans or offering bonds. There are plenty of other places around the world competing for your investment and loans.

However successful you are, however well you've built your brand, however long it's taken to build it to where it is today, make a mistake in handling a problem and you can damage it instantly. It can take years to regain the reputation and it can even end up as permanent damage.