Last year gave way to its fair share of analyses of PR blunders. These include the Eddie Bauer lawsuit over the arrest of an African-American customer; Isuzu's fight with Consumer Reports over tests that revealed its sports utility vehicles roll over; and the stance used by Intel to wiggle its way out of the critical spotlight and fix its flawed Pentium II chip.
But it's another high-profile crisis - one that had nothing to do with failed parts, failed products or failed business mores - that provides some of the greatest lessons in PR. It is the watershed decision by the American Medical Association to endorse some healthcare-related Sunbeam products. And it resulted in an unprecedented corporate/association standoff as well as a waterfall of criticism, including barbs from a cadre of physicians.
PR experts who have examined the case point to it as an example of what happens when decisions that aren't consistent with business philosophies are released in the public domain and then criticized.
Before the AMA announced the Sunbeam deal, it reportedly never confided in its members to gauge if such an agreement would be supported by its members and board or what impact it would have on the association's reputation.
"The number one PR lesson we can draw from this is that the AMA didn't even begin to give this enough thought," says Andrew Gilman, president of CommCore Consulting Group, a PR firm in Washington, D.C., that specializes in crisis/reputation management and media training. "They didn't vet it enough and they didn't test it with key constituencies."
Let's Make a Deal
The deal, which AMA back-peddled on last summer after a slew of attacks, is stalled in court as is common with such a crisis. Sunbeam's Chairman Al Dunlap met AMA's withdrawal with a $20 million breach-of-contract lawsuit filed in Federal District Court in Chicago (it's in the deposition phase).
When PR NEWS embarked on its analysis of the debacle, we were fully aware that both parties might have little to say and we were right. Sunbeam's "no comment," which was relayed by its PR firm Hill & Knowlton, was compounded by the fact that Sunbeam is trying to buy Signature Brands USA Inc. and First Alert Inc. and is in a "quiet period" according to H&K Account Supervisor Mari Hope.
AMA staffers told us: "There's nothing new. We're still in litigation."
That Sunbeam and AMA are opting not to battle it out in the press points to another poignant PR lesson: A "no comment" is not a guarantee that the media pot of stories won't runneth over. We downloaded dozens about the Sunbeam/AMA controversy.
Exec Leaves in Droves; AMA to Set Guidelines
It is rare that a crisis leaves an organization intact exactly as it was prior to the event. Although the AMA wouldn't talk to us, it did confirm some recent departures that are linked to the mix-up.
Several high-ranking execs have left, including its chief executive officer Dr. P. John Seward, who resigned in December and is temporarily being replaced by COO Dr. Lynn Jensen who is acting EVP.
Also resigning were Kirk Johnson, general counsel; Kenneth Monroe, COO; James Rappel, group VP for business and management since replaced by Robert Musacchio; and Larry Jellen, marketing VP.
But the AMA knows that this Band-Aid PR approach rarely heals wounds, and has established temporary guidelines (that have to be reviewed) to prevent such a scenario in the future.
Those specifications block the endorsement of health or medical products unless the board gives a resounding "yes." Those tenets, which also will be presented to the membership, are to be pored over at the annual meeting in June.
"The AMA seems to have done the right thing [advocacy and public education] in the wrong way," says Alan Towers, who directs Alan Towers Associates, Inc., a reputation management and PR firm in New York. "It shouldn't be in the business of promoting, but in the business of evaluating."
Towers's take is a reflection on one of the canons of PR. Making a business call or move against the nature of your organization is never smart. But on the other hand, the AMA handled the residuals of its misstep wisely, Gilman says.
"I do believe that when they [execs] realized they had made a mistake, they took dramatic actions and rescinded on the decision, which was ultimately the right thing after they were attacked for the deal," Gilman adds. "From a PR view, that's where they did the right thing."
Retrospectively, Gilman and Towers admit that Sunbeam did what it had to do when it filed the lawsuit.
"It had to make sure that the AMA's change of heart didn't negate the credibility of its products by strenuously protesting that the agreement [which was based on the quality of its products] was valid," Tower says. "It had to show that this wasn't a shady deal." (H&K, 212/885-0339; AMA, 312/464-5382; Alan Towers, 212/354-5020; Andrew Gilman, 202/659-4177)
Editor's Note
- American Medical Association
- Founded: 1847
- Headquarters: Chicago, Illinois
- Chief Operating Officer: Lynn Jensen
- Number of Employees: 1,000
- Number of Members: 297,000
- Sunbeam
- Headquarters: Delray Beach, Fla.
- Chief Executive Officer: Albert J. Dunlap
- Number of Employees: 7,000
- 1997 Sales: $1.68 billion