Tony Cocker fronts up at Eon following Ofgem’s £12m penalty

May 16, 2014

Tony Crocker, The chastened CEO of E.on, heads for the media studio circuit to be grilled on the failings in the company following the record £12m penalty for systematic mis-selling

The BBC interviewed Mr Crocker as a follow-up to its own reporting on the fine:

Energy giant E.On is to pay a record £12m penalty following an investigation into mis-selling by the industry regulator. Ofgem has carried out a series of mis-selling investigations, and in December imposed a £3.5m penalty on Npower. Ofgem says E.On’s penalty is the biggest supplier pay-out to customers, reflecting the extensive rule breaches, both on the doorstep and by telephone. The energy supplier apologised for the “completely unacceptable” failings.

Moderated contrition

At an interview on BBC Five Live radio [16th May 2014], a well-prepared Tony Crocker just about managed to balance contrition with rejection of accusations of leading an ethically corrupt company engaged in a sanctioned policy of misleading customers to agree poor deals.

The great leader arrives

Utility Week had produced a sympathetic and admiring profile less than a year ago [September, 2013].

The story reads as ‘clever but nice guy comes in, quickly sees weaknesses in company’s relationship with its customers, sets up participative ‘listening scheme’ which fixes the problems’:

Tony Cocker is not your typical chief executive. Down-to-earth, friendly, fiercely intelligent, he doesn’t seem to possess the ego that usually goes hand-in-hand with a corner office. That may be why he was able to so quickly perceive that something was very wrong with the relationship between UK energy suppliers and their customers when he returned from a stint in Eon’s German HQ to take the reins in 2011.

Cocker decided that the situation called for a total reset of Eon’s relationship with its customers, and in January 2012 launched the “Reset” programme to do just that. A six-month initiative entailed a 28,000-strong customer panel, intense research with frontline staff and the launch of the customer council.

Eon drafted in business big shot and former Asda chief executive Allan Leighton to chair the council, who was not a man to compromise. Staff across the business, from the front line to Cocker himself, reported back to Leighton and the council, having what Cocker calls with a smile “very challenging discussions”.

By the end of the Reset period, Cocker had fully assembled his management team and board, and they were ready to plan further ahead. “We spent some time with our teams reviewing our strategy off the back of Reset. What we’d inherited as a team was a much more complicated set of strategies. It was 57 pages and simplified it down to one page, [which could be summed up as] “becoming our customers’ trusted energy partners”.

The article ended with a quote from Mr Cocker saying his plans were progressing nicely:

I would say we’ve made good progress, so come back and let’s have a chat in a year’s time. We’ll be there, eager to see if doing the right thing can really translate to a competitive advantage in today’s stormy energy market.”

Before Utility Week had a chance to accept his offer, Mr Crocker is admitting his plans are not progressing as smoothly as he would have liked.

Five down and one to go

To date, the industry regulator has found five of the six major energy suppliers in the UK to have been in breach of regulations and fined them accordingly. A spokeswoman indicated that their investigations are not completed, so the ‘one’ remaining supplier is not necessary operating to higher ethical standards.

Outrage and the path to reputational hell

Politicians and the media in the UK are finding the utility companies a convenient set of targets for their sense of moral outrage. Public sentiment retains enough loathing of greed and corruption among the privileged to have some to spare for leaders of our private and public organizations. Regardless of his good intentions, Mr Crocker has a long road to ridding himself and his company of the on-going damage to their intertwined identities.


Costa Rebrandia: A study in strategic leadership and governance

February 29, 2012

A luxury cruise liner hits the rocks with 32 fatalities. Within weeks, another ship from the same company suffers another serious incident, and is towed to safety. The company faces serious dilemmas of retaining credibility in the marketplace and of finding a way of dealing with its corporate reputation.

The leadership challenge

What would you do, as a member of the board of this hypothetical company?

Hints for students of leadership

A recent series of events prompted this post. A crisis calls for creative actions, be they to preserve the past, or initiate changes for the future. Study of firms who found ways of dealing with reputational threats might suggest parallels. The Perrier recovery from contamination of its brand has become a business school classic. Disgraced politicians and celebrities find ways back into public acceptance. Even the ostrich strategy (do nothing to attract attention) may have to be considered

Suggestions welcomed

LWD subscribers suggestions welcomed and will be added (after editing) to this post.

How a news story develops

The fatalities in the Costa Concordia accident ensured that attention would be turned to the parent company. Without that impetus, the story of a cruise ship being tuged to harbour would have hardly captured attention. By then jouurnlists have begun searches for other stories to add to the developing narrative. Here’s one claiming evidence of ‘sex and drugs on Concordia cruises’. Maybe that even has some positive rebranding opportunities. Perish the thought.


Cadbury Kraft takeover: More than meets the eye

January 20, 2010

Global Issue analysed by Susan Moger and Tudor Rickards


Updated: The integration of Cadbury into the Kraft Empire continues. Vince Cable, the highly respected financial figure imported from the Liberal Democrats, had made this one of his first interventions since the election to the Coalition Government, calling for a review of takeover practices.

Irene Rosenfeld made her first visit to her newly-acquired asset in October 2010.

The visit of Kraft CEO to Cadbury’s main Bournville cite in Birmingham, England continued the integration of Cadbury into the Kraft empire. The chief executive of Kraft Foods has not ruled out further Cadbury plant closures beyond the two years the firm is already committed to. Irene Rosenfeld said she was unable to offer further commitments after a visit to Birmingham’s Bournville factory. But she said it would remain “the heart and soul” of its chocolate business. Ms Rosenfeld had recently come second in Forbes magazine’s annual rankings of the world’s most powerful women, beaten only by US first lady Michelle Obama.

Asked what she was expecting with the merging of the companies, a net loss or gain in jobs, Ms Rosenfeld said: “I think it’s hard to say. It will vary area to area… We certainly understand that Bournville will remain at the heart and soul of our chocolate business and we are delighted about that. I think the key for us, though, this is a global business. We need to ensure that we are competitive on a global basis. As we bring together the combined company and we can share best practices we have the opportunity then to take the business to a new place.”

When it was suggested she was not able to make more of a commitment than at least two years, she said: “That’s correct.”

According to the Telegraph at the time of the takeover ,

The issues the review will look at include the “50pc plus one” minimum voting requirement for takeovers to go ahead; whether voting rights should be withheld from shares bought during an offer period; whether the 1pc disclosure threshold for dealings and positions in target companies should be reduced; and whether inducement fees and other deal protection arrangements should be restricted.

The review was launched by Business Secretary Vince Cable who said: “We welcome foreign investors but we want all shareholders to be empowered.” Last week [May 2010] the Panel took the rare step of publicly criticising Kraft over its acquisition of Cadbury. Its objections focused on assurances from Kraft that it would reverse Cadbury’s planned closure of its Somerdale factory. A week after winning the battle to buy Cadbury, Kraft reversed its position on Somerdale. The Takeover Panel concluded the US company should never have made its assurances on the Somerdale plant. It also criticised Lazard, Kraft’s adviser on the deal, saying the investment bank had “failed to discharge fully its responsibilities”. The Takeover Panel said it would take comments on the review of the code up to July 27.

An ealier post noted:

So the mighty Kraft finally hunted down its prey and swallowed up poor little Cadburys. Howls of protest from the UK. Nostalgia and affection for the taste of Diary Milk swept the land. One caller to a (BBC Five Live) phone-in said Cadburys was her favourite chocolate but that she would never buy any again.

In the wake of the takeover, LWD sought out an expert on Corporate Reputation for his views. Professor Gary Davies of Manchester Business School came up with several points that had been overlooked by other commentators in assessing the likely winners and losers of the takeover. He also added a more surprising comment based on his research into Corporate Reputation …

Students of Leadership

There are lessons to be learned from the Cadburys Kraft story from several perspectives. With the benefits of hindsight we might wish to consider what might have been done differently by the main parties involved. For the politically-minded, what ideas might be worth submitting to the Takeover Panel? How well do you think Irene and Vince Cable are operating?


National Westminster Bank finds Another Way to change its corporate reputation

January 10, 2008

nat-west-another-way-ad.jpg
The National Westminster Bank is currently running an amusing advertising campaign. It portrays a group of banking executives as amiable buffoons. The message? We aren’t like that. We have another way. Will the campaign differentiate Nat West from its rivals? Or will it reinforce a general perception that all banks are run by amiable buffoons?

The issue is nearly as old as advertising itself. Does knocking opponents work in favour of the advertiser? Maybe the issue goes far deeper than advertising, and lies and at the heart of political campaigning, and beyond, to ancient themes of human duplicity and treachery. We should not expect a simple answer. Antecedents such as corporate reputation must be taken into consideration

Experts in marketing and corporate reputation are clear about the potential pitfalls of such a campaign.

Gary Davies is Professor of Corporate Reputation and has written widely on the subject as well as teaching on a Masters course on Communication and Corporate Reputation. Gary argues that

If the purpose of the ad is to differentiate Nat West from other banks then most certainly both the strategy and marketing literature’s emphasise the benefits of differentiation. However the reputation literature emphasises that for a service business advertising what you are not is counterproductive. So the customers and potential customers of Nat West will decide if they are, as they imply, less cynical and self centred than the (fictitious?) bank portrayed in the ads. They explicitly state that there is a different way and that is theirs. They will have problems if they are found out (as Lloyds were when they implied they would open another service point if the branch was busy and customers found that this was not always the case.) For example, they have now ruled out using overseas call centres, by deprecating banks that do.

Antecedents

In recent years, Nat West has made serious efforts to present itself as a leader in financial innovations, (having ‘another way’ of doing things). While it is dangerous to read too much into blog-based criticism, the following sample all suggest that the Bank was facing a big challenge in revising its practices and public image.

One Credit Card customer put it like this

Here’s a question for all the banks out there; do you want your customers to be happy and give you more custom, or do you want to irritate them so much they leave along with their spending habits? If you’re Natwest credit card services, I’m talking to you.

Another disenchanted customer noted

I would advise anybody wanting to start an account and especially younger people, to try another bank, any bank rather than the disgusting attitude of the National Disgrace …erm, I mean The Westminster Bank.

From The ITC we have a finding against the bank for somewhat dodgy advertising claims:

An advertisement first aired on 17 July 2000 made a number of claims about National Westminster’s service. Among these were that their programme of branch closures had been abolished and that monthly fees on arranged personal overdrafts were to be scrapped. The ITC received twelve complaints from viewers saying that branch closures were, in fact, still going ahead, and six complaints saying that overdraft fees would continue to be in operation until October or November 2000.

Finally, and quite recently we have another indication of how the Bank needed to address its customer concerns:

I’m a little cheesed off at Natwest at the moment. Their “no hassle” banking is starting to become full of hassle and it’s getting on my nerves …I popped into my high-street branch today to open up a new account (to handle rent for a new house I am living in) and, in my wisdom, thought that it wouldn’t be a problem. Walk in there, get asked a few questions and kaboom – a new account. Not only could I not open one, but I actually have to book an appointment at a time convenient to them for someone to help me fill in the forms.

We are getting there

Brutal self-criticism is rare in advertising. Unusual enough for a large corporation (Ford) to win accolades for confessing shortcomings in a campaign.

The Nat West may well be engaged in genuine efforts to give its corporate reputation a makeover. Unfortunately, the campaign message is not ‘We are getting there’, (a dangerous confession to make, from historic evidence, but ‘We are the only honest bank in the high street. Honest!’

This campaign may well win awards for its brilliant ads. But it seems unlikely to change the perceptions of consumers in the intended direction.