STARKMAN has quite an affinity for Holy Cross, as we have a longstanding relationship with the institution that has yielded numerous impressive interns who now work for us full-time (see here and here). Our other Holy Cross connection is through our friend and client Stan Grayson, the vice chairman and chief operating officer of M.R. Beal, the nation’s leading and oldest minority-owned investment bank. Grayson attended Holy Cross on a basketball scholarship and was the first African American basketball player inducted into the school’s sports Hall of Fame. He also was the first African American to head the municipal bond team of a major Wall Street firm.

So, when Grayson told me that he and Wells had attended Holy Cross together and remain close friends, I told him I found it interesting that a college that had virtually no minorities at the time had yielded two trail-blazing African Americans. He replied that there were actually five such men in his class that went on to great achievement in their fields. Their other classmates were Clarence Thomas, the Supreme Court Justice; Edward Jones, the Pulitzer Prize-winning author, and Eddie Jenkins, a running back with the legendary 1972 undefeated Miami Dolphins.

Grayson then told me the story about Reverend John Brooks, then a professor of theology at Holy Cross who, in the days following the assassination of Dr. Martin Luther King, Jr., set out to recruit African American students to the college in keeping with his shared belief in the rightness of equality and the need for an integrated society. Grayson readily credited Father Brooks for the success he and his classmates achieved. To be clear, Holy Cross’ early attempt at integration wasn’t without incident. Grayson and other minority students at the time experienced both overt and subtle racism on campus, culminating in a walkout, but they eventually persevered.

The story of Reverend Brooks’ mission and message was quite extraordinary for the times, and I felt strongly that the story should be told to a broader audience. And, when I pondered the universe of reporters who would likely appreciate the importance of the story, only one reporter came to mind: Diane Brady.

Having spent more than three decades interacting with journalists of all stripes, I can say with considerable authority that Brady is pretty much in a league of her own. Her credentials speak for themselves: stints at Wall Street Journal and Canada’s Maclean’s before joining Businessweek, various national and international awards, and a board member of the Overseas Press Club. While there are other journalists with similarly impressive accomplishments, there are few, if any, journalists who rival Brady’s integrity, fairness, and compassion.

I’ve known Brady (a fellow Canadian) for more than a decade and have closely followed her work. Her hallmark is getting her subjects to trust her and open up, and her stories are always chock full of anecdotes and telling quotes that allow readers to draw their own conclusions. I’ve never known Brady to take a cheap shot, and I defy anyone to find even a hint of bias in her stories. Recipients of less-than-flattering profiles from Brady no doubt deserved them.

When I introduced Brady to Grayson, I was confident she would readily appreciate the story of Reverend Brooks. But, getting Brady interested in doing the story was only half the challenge. Grayson is an incredibly modest and humble guy, and I quickly learned that Wells is as well (and, for that matter, so are the more than dozen Holy Cross grads I know; humility seems to be a core value of all Holy Cross alumni). Grayson and Wells were initially reticent about being profiled but, over a steak dinner one night, agreed to do so after I appealed to their loyalty to Reverend Brooks and assured them that Brady would accurately and fairly profile his magnificent career. After meeting with Brady, Grayson and Wells were sold and subsequently convinced Reverend Brooks and their other classmates to speak with her as well. Brady’s resulting story that ran in Businessweek in March 2007 speaks for itself; she was indeed the right person to tell the tale.

Magazine space restrictions being what they are, however, there was still much to the story yet untold. So, Brady decided to give the full story of the men, the times, and the mentor the full airing they deserved. The result is Fraternity, a fascinating book that chronicles Father Brooks’ recruitment and mentoring of five exceptional African American college students who achieved considerable success because of his influence and guidance.

Brady’s inimitable style and reporting talents are the foundation of the book’s success, as is the fact that she possesses the same character and humility as the individuals she profiled. Clearly, this was a book that no other journalist could have written as adeptly, and we warmly congratulate Diane on its publication.

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Starkman’s internship program is certainly one of them. Identifying, recruiting, and training exceptional young talent is a formidable challenge for any company.  It’s something Starkman excels at; our previous two interns are now valued full-time employees.  That said, I’m clueless as to how we do it.

At some point during the first week of June each year, I show up for work and am introduced to someone identified as our new intern.  Jackie was long responsible for the program, but this year she gladly handed the baton to Lauren, who interned with us two years ago.  In what I first suspected was some sort of practical joke given my penchant for confusing names, Lauren introduced me to this year’s recruits as “the Katha(e)rines.”  Technically, that’s not quite true as the two share a first name but use different spellings.  There was Katharine Rose – with an “a” – and Katherine Blackburn – with an “e.”   Our deep appreciation to Ms. Blackburn’s parents, who raised her with the nickname “Kate!”  It made things much less confusing.

Katharine is a student at the College of the Holy Cross, which has an impressive internship support program: The school’s alumni cover the costs of an internship stipend, provided participating companies ensure a meaningful work experience.  Kate, who was referred to us by someone whose impeccably high professional standards we very much admire, is a student at Wake Forest University.  Coincidentally, we have clients who are active alumni from both schools.

During a particularly busy time for Starkman, both Katharine and Kate proved to be fearless and relentless, and quickly demonstrated an impressive command of the client accounts they were assigned to work on.  Within days, Katharine could explain why the housing crisis is far from over and Kate readily understood that a BRIC is not something used to build houses.  For Lauren, the duo was an immediate godsend, as they relieved her of some critical time-intensive account support activities.

But it was not just their work ethic that won the Starkman team over:  Katharine and Kate also revealed an appreciation for cupcakes and bagels and were sympatico with our firm’s food-obsessed culture — the icing on the cake, so to speak.  Their will to pursue new lunchtime adventures (such as Cuban pork sandwiches) and their appetites for new culinary endeavors impressed us as much as their drive and determination.

Both Katharine and Kate successfully managed multiple projects with varying deadlines throughout their internships. We often asked them to quickly shift gears between tasks, and both did so without blinking twice. When they finished one task, they immediately asked for another, ultimately assuming more work and responsibility than typically should be expected of a college intern.  As for their dedication, on multiple occasions they both asked if it would be possible to work beyond their designated hours so they could see various projects to completion.

As for being the proverbial team players, Katharine and Kate were more than gracious when the hiring of a new employee required them to sit at a somewhat isolated workstation internally dubbed “Siberia.”  Indeed, as best we can tell, Katharine and Kate don’t have a capacity for complaining.  They also upheld another record: Never once has a Starkman intern shown up late for work.

Actions speak louder than words, so here is the ultimate endorsement of Katharine’s and Kate’s talents and abilities.  We’ve let them know they are welcome back as full-time employees after they graduate.  It’s another tradition we are hoping they will help us continue.

Blogs by Kate and Katharine:

La Vita è bella – In America, that is by Katharine Rose

Did a Company Really Tweet That? Don’t Make Me Twiggle by Katherine Blackburn

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I was in Florence at the time with my mother, panicking as the hotel employee, her hands flying recklessly around my face, repeatedly yelled at me, “Non è funzionata! Non è funzionata!”

It all started when I tried to tell her that we returned to our room from a morning of sightseeing to find our door not only unlocked, but wide open.  Surely we hadn’t left it that way.

Something obviously got lost in the translation.

“Non è funzionata! Non è funzionata!”

Random and irrelevant Italian words kept popping into my head as I frantically tried to find a different way to get the “conversation” back on track.  Finally, I realized she was saying something about a new light bulb…so, I just blurted out, “No! È funzionata prima!”

I had told her the light bulb was previously working. So much for reporting our security breach!

And so it began – my weeklong adventure in Italy, full of one communication crisis after the other as I navigated my way through situations without relying on my native language, agonizing over word choices for fear of stumbling into another “broken light bulb” conversation, and trying hard to communicate as clearly, respectfully and effectively as possible (something I have been doing as part of my summer internship here at STARKMAN – only in English. Pheeew!).

While I enjoyed my time in Italy with all its rich culture and ancient history – which, as a history major, I had been studying since high school – I must admit I had a few moments of culture shock.  Communication is not just about language, of course, as we “say” just as much about ourselves and where we come from through our non-verbal cues as we do through speaking.  From body language and facial expressions to how we dress, socialize and use our personal space…all of it is a treasure-trove of meaning for those who study people and cultures.

Accordingly, my experiences in Italy taught me something about both the country I was visiting and the one I had left behind.  It is only by stepping outside the known that these differences become crystalized.  Following are a few that I stumbled on while traveling in Florence.

When it comes to things like train schedules, hotel chains, and post offices, things in America are, generally, consistent and reliable. You know what to expect and are fairly certain you’ll, indeed, get it the way you expect.  That goes for our social institutions and public services, as well as for how commercial entities market themselves.  As an intern at STARKMAN, for example, I’ve seen firsthand the diligence with which corporations ensure that their customers “experience their brand” in a similar manner regardless of whether it is online or off.

It was a different story in Italy.

Take something as simple as hotel maps. When my mom and I checked into our hotel, we received a local neighborhood map. Having managed to lose it while exploring the city, we requested a replacement the next day from the concierge. But, the map we were presented with did not resemble – in no way, shape or form – the one we had been given the day before. It was not that they had run out of the earlier map, so much as it was that their stack consisted of maps of all different sizes, shapes and types – some of which were not even of the surrounding area. In contrast, I’m fairly certain that the Marriott has one standard map vendor for its New York hotels and regardless of which hotel you’re in or what time of day it is or how many times you ask, there’s likely only one map they will hand to a guest.

Similarly, on one particularly hot afternoon, my mother and I stepped into a small convenience store to buy a bottle of water; nothing in the shop had a price tag on it. The next day, the same bottle cost an extra euro. No explanation. It was just an extra euro. Well, I guess that explains the lack of a price tag! As I would come to learn, Italians seem to do (or charge, for that matter) whatever they deem appropriate at that moment.

Even signed shop hours were open to interpretation. A shop I wanted to visit was closed one afternoon and had posted that it would reopen at 3 PM; I purposely came back at the appointed hour and waited until 3:30 before giving up. This happened to me numerous times. While it was easy to bark at their perceived poor customer service standards, there’s a bigger lesson to be learned no doubt about cultural differences regarding the importance and value of time. But, I will leave that for the sociology majors.

USPS, You Have my Stamp of Approval

They say at home that southerners can always tell New Yorkers by their impatience; I think I understand that now, due to the experience my mom and I had at a post office in Florence.  Mailing a letter or buying stamps in Italy was, for us, a bit like a trip to Motor Vehicles – lots of lines, lots of people, lots of waiting, lots of confusion. After waiting for 30 minutes in what turned out to be the wrong line, we finally got to the front of the right one.  Despite the irrelevance to the question I was actually asking (I think), the clerk just kept repeating in Italian, “how many stamps?”

When we finally gave in and bought stamps, we had to go to yet another line to actually mail the postcards. By the time we left, I think it is fair to say that we were more confused than when we had entered – and more than a little frazzled. Had there been anyone from the Carolinas, Georgia or Mississippi in that post office, they’d have pegged us as New Yorkers in a heartbeat.

And a New Yorker I have certainly been this summer!  What I have come to realize, however, is that the way we live our lives and go about the day-to-day business of sharing a community, country and culture says something about the things that matter to us – what we find to be of value or noteworthy. Far too often, when people travel outside their homeland, they tend to evaluate whether the cultural differences they encounter are better or worse than what they know back home. I admit that my first reaction to the post office debacle was that Italians should learn from the U.S. Postal Service how to organize their business – that we have it figured out so much better. Yet, ask an Italian visiting the big post office at 33rd & 8th what they think, and I’m sure they’ll have the same reaction to the newness of it that I did.

Needless to say, my experiences in Italy and my interactions with Italians taught me a lot about them and myself.   Indeed, in each situation I found myself in, I become more aware of the intricacies of communication and the preconceived biases we carry as part of our cultural baggage.  It did not take me long to notice that, while interacting with me or observing my behavior and conduct, the locals were often also interpreting me through the lens of my “Americanism,” passing judgment on my country as much as they were on me.   To avoid further cementing the impression that Americans are “irrispettoso, scortese, e odioso” (disrespectful, rude and obnoxious), I admit I tried to do a little “reputation management” for my home country.   (Hmm… I wonder if I can I put Interim Unofficial U.S. Ambassador to Italy on my resume?)

In a way, this experience may have been the beginning of my interest in public relations and, in a very roundabout way, to what I now understand to be the notion of brand management.

Despite the numerous mishaps and unexpected surprises I had during what would come to be an unforgettable adventure, my long-held passion and love for Italy remains steadfast (after all, I will be graduating with an Italian minor in December). But, perhaps most importantly, despite my attempt to act, dress and speak like “una signorina italiana” (an Italian young lady), I left very much an American – granted, one with a newfound appreciation for our postal service, hotel maps and price sticker practices.

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Since first learning to string words together into a sentence, teachers and now college professors have steered me away from playing fast and loose with grammar. They’ve imprinted upon me the absolute necessity of suitable sentence structure and precise punctuation in achieving the correct (non-colloquial…) tone in writing. This, they would say dramatically, was to prepare me for the dreaded “real world.”

Coming to STARKMAN this summer reinforced what I learned about using formal language and maintaining the proper tone when communicating with clients. I’ve learned how to craft a memo and a press release into something unique and interesting while still using accepted business language.

However, a significant aspect of my internship here at STARKMAN has involved keeping up with the news on behalf of clients, which means spending quite a bit of time reading a broad range of publications. As a committed member of Generation Y, that means more than getting a little newspaper ink on my hands. I compliment traditional news mediums with online ones, such as blogs and Twitter. All of these sources play an integral role in my daily interactions with the outside world. Twitter has real time news updates that keep me current, and blogs are particularly poignant when searching for opposing opinions on a trending news story or seeing what major industry players are talking about on a given day.

Interestingly – and opposite my expectations – I found social media content from corporations to frequently disobey the golden rules of grammar, punctuation and style. And I’m not quite so sure that’s necessarily a good thing.

For example, consider a common blog and Twitter occurrence: the made-up word. Pronouncing a word wrong and creating a new one in error has happened to everyone – even Sarah Palin (see the completely fictional word ‘refudiate’), but the type of word to which I’m referring is when two words are forcibly smashed together and form a new, (supposedly) more accurate word (such as the word in this title – twiggle: a giggle caused by twitter). This used to be a common tactic of branding professionals to develop names for companies and products, but now it seems everyone is jumping on the bandwagon.

Let’s look at a few self-crafted words for reference:

• Carmageddon = car armageddon
• Spux = spandex tuxedo
• Mancession = man recession
• Pepsiverse = Pepsi universe
• Tweeps = Twitter peeps (people)

While it is expected that conversations among friends and family will be peppered with informal words and incorrect usage, corporations used to adhere to some degree of formality in their communication with targeted audiences. But, not anymore. Why is that? An easy explanation may be that if it looks like a duck and quacks like a duck – it probably is a duck. Corporations are delegating the role of social media upkeep to Gen Y employees thus ensuring the authenticity of their communication to the target audience.

Without a doubt, however, it also reflects a desire, almost desperation to connect to the everyday reader or, as marketers like to say, “to engaaaaage” their audience. There is so much competition in a consumer-driven world that every entity trying to reach a consumer (or more specifically, their wallet) must differentiate themselves in order to be heard above the din. Corporate lingo and buzzwords don’t resonate well with the everyday consumer, as companies now increasingly recognize. And, as the list above illustrates, even professional journalists are throwing out their AP and MLA Stylebooks in favor of a more relaxed writing style.

So while the made-up word may be silly sounding or even a ridiculous substitute for a perfectly reasonable real word, it pays, literally, to be accessible to all the Gen Y-ers out there with massive consuming power. Because, while I might not know what a Spux is at first, with closer inspection, I realize that a tux made from spandex is equally as ludicrous as the word Spux. I’m able to appreciate the humor and relaxed tone the writer is trying to convey with this type of word.  However, my appreciation for this type of humor doesn’t necessarily extend to corporate-to-public communication. While I understand that print publications are fighting to regain the credibility they once had and connect with a new generation of readers, this may not be the route to take.

When readers look to a source for reliable, trustworthy information, they don’t want to feel like the subject of a marketing campaign. A reader wants to know that they are being passed correct information and being taken seriously, not as mere lemmings seeking entertainment value. So while the medium for connecting with readers might be changing, the language should not. A real word can easily take the place of a fictitious one and can create an appropriate tone for a publication or company pursuing a credible image.

Sadly, this means that although its summer for a while longer, leave your flip-flips and “LOLs” at home with your personal life and pull out your loafers. After all, a well-crafted message using strong key words can still make a reader twiggle.

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Shepard left in 2005 for academia and replaced by Stephen J. Adler, an aloof, Ivy League-educated former Wall Street Journal editor who, it is rumored, was once a front-runner candidate to lead that newspaper.  Adler literally drove BW into the ground by diminishing the quality of its journalism and implementing a questionable redesign.  When he exited the doors four years later, BW’s value had deteriorated so badly it was hardly worth the paper it was printed on.  BW’s longtime owner McGraw-Hill nearly shut it down, but opted instead to essentially give it away to Bloomberg L.P.

Josh Tyrangiel

At the time of the acquisition, Bloomberg had already become the premier U.S.-based business news organization.  In terms of collective talent and experience, it has unquestionably surpassed The Wall Street Journal, a feat accomplished in part by poaching a substantial number of that newspaper’s journalists and editorial alumni. Yet despite its experienced in-house stable of capable editors, Bloomberg tapped Josh Tyrangiel, a 37-year-old Wunderkind from Time to be BusinessWeek’s editor and renamed the publication Bloomberg Businessweek.

To fully appreciate the chrysalis-to-butterfly transformation of Bloomberg Businessweek under Tyrangiel’s nearly 18-month reign, you need to understand three things:  he had no previous business journalism experience when he took the job; he is, according to his boss Norm Pearlstine, a “true dude;” and he likes to pal around with fellow unabashed “dude” magazine editors.

To his credit, Tyrangiel has restored some of BW’s former excellence.  The publication once again is chock full of insightful and tightly written articles, and its overseas business coverage is considerably broader. BW’s graphics are impressive as are its business book reviews, and its iPad app does Steve Jobs proud.  Suffice to say, BW is once again as compelling as…well, as compelling as Tyrangiel himself.

That said, readers still want substance over style, and on that front Tyrangiel’s lack of business experience is abundantly clear, particularly in the magazine’s cover stories.

BW last year ran an appallingly naïve profile of Charles Schwab, portraying the founder of his eponymous brokerage as someone who champions the interests of individual investors.   While that is how “Chuck” – and his marketing team — like to portray the founder and his company, the facts are very much at odds with the story line, as this story by New York Times reporter Floyd Norris makes clear.

More recently, BW ran a gushing cover story about Facebook COO Sheryl Sandberg, painting her as a sensitive and caring boss who sometimes cries at work and provides “adult supervision” for the company’s young staff.  The reporter was so smitten by Ms. Sandberg that he opted to gloss over the not insignificant detail that the FTC will soon decree that Facebook’s privacy policies constituted “unfair and deceptive” practices and the company will be subject to periodic privacy audits.  As the story went to press, news was breaking that Facebook had hired Burson-Marsteller to conduct a clandestine campaign attacking Google’s privacy policies without disclosing that Facebook was behind it. Ms. Sandberg, a former Google executive whose responsibilities include communications, is likely tougher and politically more brass-knuckled than BW understands.

As well, some of BW’s articles of late appeal more to stereotypical “dude” sensibilities than individuals looking to gain some business insight.  For example, the magazine ran a cover story in February about Ashley Madison, a niche website that provides a venue for men and women looking to cheat on their spouse.  The article’s only particular insight was the owner of the site purports to be the consummate family man.  The magazine has also recently run articles on the “business” of cougars and lingerie football, and profiled a small 15-store lingerie chain specializing in custom-fitting bras.  It’s hard to take seriously a business magazine that refers to Victoria’s Secret as the “Goldman Sachs of ladies underwear.”

I’ve long maintained that mainstream journalism’s declining influence stems from the repeated promotion of failed editors and journalists writing stories to impress each other rather than the readers they serve.  Underscoring my point, Stephen Adler, the former BW editor, in February was named editor-in-chief of Thomson Reuters, an even bigger news organization.   Fortunately, Mr. Adler just hired former Dow Jones executive Paul Ingrassia, one of the few business journalists with a successful leadership and management track record, to serve as his deputy.

As for Tyrangiel, if he wants BW and the impressive editorial team he oversees to garner the respect they rightfully deserve, it might behoove him to spend more time focusing on the stories truly shaping the economy and the business of business.  Leave the “dude”-esque stories to publications like Maxim.

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During his earlier career as a political reporter, he no doubt frequently found himself on the receiving end of “you-didn’t-hear-it-from-me-but” calls from politicians, candidates, aides, lobbyists, and the like looking to plant stories that would smear the opposition.  So when he jumped to the other side and entered the PR world by joining Burson-Marsteller, that’s the playbook he brought with him.

Mercurio and his colleague Jim Goldman, another newly hooked BM employee fished from the journalism sea (Goldman is a former CNBC reporter), soon learned that what works in the political world doesn’t necessarily translate to the business sector, particularly when public – or soon to be public — companies are involved.  There are simply too many constituencies with a real vested interest — investors, employees, customers, analysts, vendors, and regulators, to name a few — for the usual chicanery of politics to prevail.  If Mercurio and Goldman didn’t know that when they set out on their secret mission to raise privacy concerns about Google’s Social Circle, my guess is they do now.

The media’s outrage to date has focused primarily on Facebook’s hypocrisy for secretly trying to point a damning finger at Google given its own track record with user privacy transgressions.  Despite founder Mark Zuckerberg’s claims that he’s all about transparency, the company is reportedly close to signing a consent decree with the Federal Trade Commission for its repeated violations.  With the Burson stunt, Facebook was clearly trying to end their ignoble reign as poster child for online privacy violators by dragging Google up to the podium with them.

Despite the industry’s professional code of ethics requiring PR practitioners to reveal sponsors for represented causes and interests, it shouldn’t come as too great a surprise that Burson-Marsteller chose to violate it.  While the company insists that Mercurio and Goldman breached the firm’s ethical guidelines, BM got caught doing pretty much the same thing for Microsoft two years ago with respect to Google’s planned acquisition of DoubleClick.  Having a code of ethics is the easy part; expecting employees to adhere to it is something entirely different.  After all, even Enron likely had a well-written code of ethics in its new employee onboarding package.

The issue of bigger concern is the inevitable adverse consequences when people from the world of politics infiltrate senior corporate communications positions, or in the case of Facebook and Burson-Marsteller, are allowed to run entire companies. Facebook COO Sheryl Sandberg, whose responsibilities include overseeing communications, is a former Treasury Department Chief of Staff in the Clinton Administration. Elliot Schrage, vice president of communications, marketing, and public policy, also is a political veteran. Mark Penn, Burson’s CEO, was a close aide in the presidential campaigns of both Bill and Hillary Clinton.

“Reputation management” has a very different meaning in politics.  It’s about swaying public opinion by any means necessary.  Politicos and lobbyists spin and leak stories, and political reporters lap it up and keep score.  The effectiveness of this constant spinning is measured in news cycles; if you are featured positively in more news cycles than not, you’re ahead.  Is it any wonder that Congress and the media are routinely ranked as America’s least trusted institutions?

Accordingly, individuals steeped in politics instinctively see nothing untoward about anonymously casting doubt on a rival.  I believe BM’s claim that it was Facebook that insisted it not be identified as the sponsor of the campaign against Google, but I’m highly doubtful that Sandberg and Schrage weren’t a party to the decision.

Moreover, the very cynical side of me suspects that, despite the negative press, Penn, and perhaps Sandberg and Schrage, view BM’s whisper campaign as a huge success.  Yes, the disclosure that Facebook was behind the campaign is somewhat of an embarrassment but the fundamental message points have been well reported.

Sadly, the Facebook-BM-Google debacle isn’t an isolated incident of a dubious corporate PR campaign being run by a former politico.  Leslie Dach, who held various positions in the Clinton Administration, was the architect of the “Wal-Marting Across America” blog.  It was positioned as being penned by a couple of genuine pro-Walmart customer enthusiasts, but was really an initiative of Walmart’s PR firm.  That ill-advised campaign ranks among the biggest PR blunders by a major consumer corporation.  Dach launched the campaign while working at Edelman, but he’s now Walmart’s executive vice president for corporate affairs. (For more on Dach and his corporate communications activities, read this damning profile in The New Yorker.)

The financial services sector is now turning to politcos for its communications counsel.   Citibank recently hired Ed Skylar, a former aide to Mayor Mike Bloomberg, as its head of public affairs, and Goldman Sachs last year retained Clinton aide Mark “Master of the Disaster” Fabiani to help clean up its image.  John Thain, CEO of CIT and the former head of the NYSE, has relied on former state department spokeswoman Margaret Tutwiler for his communications counsel for several years.

All of these companies are in some sort of trouble, whether it be financial, competitive, or reputational.  It will be interesting to see the tactics these companies use to turn themselves around.

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The Internet provided an opportunity to level the playing field. The rise of the blogosphere quickly cut the media down to size and exposed their rampant irresponsibility. Mainstream publications and broadcast outlets were held to an unprecedented accountability standard and many reporters crumbled under the scrutiny.  An untold number of prominent media stories have been retracted because of eagle-eyed bloggers.

Harnessed correctly, the Internet can be a powerful marketing tool, but it’s also an effective vehicle for fraudsters, flim-flam artists, and for companies with no qualms about using deception and unscrupulous tactics to win over customers.  It’s in the best interest of the PR industry to promote and adhere the highest standards of ethics in Internet marketing.  The more credible the medium, the more potent its efficacy.

Sadly, the PR industry has contributed mightily to the corruption of the Internet.  One of the biggest global agencies was caught years ago for running the “Wal-Marting Across America” blog, supposedly penned by a couple of customer enthusiasts who turned out to have been shills paid by the PR firm.  The person responsible for overseeing the Wal-Mart account was recently deemed one of the most influential professionals in the industry, underscoring that there are no material career consequences for dishonest or questionable practices.

Some PR firms also were caught secretly paying off or bribing bloggers with products to post positive reviews, but fortunately a PR blog named “Strumpette” was quite aggressive about exposing the practice and some industry leaders became quite vocal about condeming the practice.  While blogger payola has not yet been eradicated, fortunately most recent exposed incidents didn’t involve PR firms.

Nevertheless, some PR firms still can’t resist employing deception as part of their “strategic” arsenal.  Last week, the Federal Trade Commission settled charges with a California PR firm for having its employees “pose as ordinary consumers posting game reviews at the online iTunes store, and not disclosing that the reviews came from paid employees working on behalf of the developers.”

Rather than taking the high road and saying the firm settled the matter in support of the FTC’s desire to ensure greater transparency on the Internet, the company’s owner haughtily dismissed the agency’s concerns as a “frivolous matter”, saying they only agreed to settle to save on the cost of litigation.  Perhaps most disappointing of all was the disclosure in the New York Times that the deceptive reviews in question were written and posted by interns.  Thus, a new generation of PR professionals was taught that deception is an acceptable communications tool.  That’s a toxic message to teach impressionable college students interested in pursuing a PR career.

Sadly, there is no shortage of PR firms who will welcome the skill-set these interns acquired.  It’s an open secret that other PR firms regularly engage in having employees post reviews on behalf of clients.  Let’s hope that the head of the FTC’s advertising practices division successfully eradicates the practice.  Now there would be someone I could get behind as deserving of the “most influential leaders in the PR industry” title.

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Today is Erin’s last day as our summer intern.  We are truly sorry to see her go.

For several years now, all our interns have come to us through an innovative program sponsored by the College of the Holy Cross. The school’s alumni association provides each intern with a stipend to enable students to pursue internship opportunities that intrigue them intellectually rather than just tempt them financially.  Participating companies must have a Holy Cross alumnae on board and pledge to provide a truly meaningful learning experience that goes beyond the usual filing, photocopying and fetching. The program has introduced us to an amazingly talented group of Holy Cross students including Lauren Olney, who interned with us last year and joined us full-time after graduating in June. Others we’ve worked with have been equally talented and impressive (see here, and here.)

We knew that Erin was cast from the same mold when she showed up for work on her first day having already read the Wall Street Journal on her Kindle.  Actually, no – it was earlier than that.  To apply for the internship, candidates must submit a cover letter and three writing samples with their resume.  My colleague Jackie — who has the keenest eye for even the teensiest of errors — deemed Erin’s written correspondence flawless.

As might be expected of a woman who voluntarily took a class at Oxford in Italian Renaissance Art despite having absolutely no background in that area of study, Erin relishes a good challenge.  She didn’t flinch when assigned to research the fundamentals of an esoteric Wall Street trading strategy and soon after she was up to her elbows in research for a healthcare initiative.  Erin also provided invaluable assistance putting together a timeline for a litigation support project.  No filing, photocopying or fetching for her!

Underscoring Erin’s work ethic and commitment, she asked to attend some meetings with various charities she had identified as worthy of support by one of S&A’s clients, even though they started well beyond her scheduled hours and were held on one of those brutally hot days we had this season.  Charitable and non-profit work are truly one of Erin’s passions; she spent three summers working as a counselor at a camp for children with Autism, Turrets, ADHD, and other anxiety orders. She also has considerable experience tending to exotic animals (a skill-set that will no doubt come in handy dealing with some members of the media).  At Oxford, Erin participated in a program to assist international students with personal and emotional issues.

Erin is the consummate team player. She delights in working as part of a group and never once sought special acknowledgment for her formidable contributions.  Erin also doesn’t have much of an ego; one day on her own initiative she opted to clean out the company fridge.  Trust me, no alumni association in the world offers a stipend large enough to tackle that nasty task!

Erin continued to impress us even when we took her out for drinks to thank her for her hard work.  We learned she has an appreciation for Oban single malt scotch, although a purist would question the appropriateness of her adding ice cubes. Nevertheless, Don Draper would be proud.

Some people see the proverbial glass as being half full, while others see it as half empty.  Erin approaches life with an energy and zeal the likes of which we’ve rarely seen.  She is a credit to Holy Cross and another example of the impressive discipline and humility the college instills in its students.  Though she worked with us for only 10 weeks, she will be long remembered and greatly missed.

Erin, best of luck in your senior year!  Care to turn off the lights on your way out for old times’ sake?

To learn about Erin’s S&A experiences and her astute observations about public relations, read here, here, and here.

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Enron, for example, had a strongly worded code of ethics that proclaimed it was “dedicated to conducting business… with the highest professional and ethical standards.” But, employees no doubt knew that the creed was a sham, nothing more than pretty words on a piece of paper to be tacked up on the local office bulletin boards by someone in HR or internal communications.

More recently, there is technology giant Hewlett-Packard and its broken moral compass.  H-P’s business conduct standards reportedly require employees to consider how any business decision “would look in a news story.” Hmmm….so “how it might look” should take priority over the rightness or wrongness of the action itself? That certainly seems to be the message, intended or otherwise.  And, if that’s the case, then the decision whether to do something unethical will simply come down to how likely it is that they’ll get caught.  Who knows how much that played into former H-P CEO’s decision to allegedly fudge his expense account – something rarely scrutinized at his level on a day-to-day basis – but I’m guessing it played a part.

Given H-P’s concern for how actions might be viewed if reported in a news story, it’s a wonder that contractor Jodie Fisher was ever hired to interact with the company’s major clients at corporate events. Her background does not scream “seasoned Corporate America professional.”  That Ms. Fisher reportedly commanded as much as $5,000 a day to appear at corporate events is a pretty sad commentary on how H-P peddles its IT products to its biggest customers.

Equally eyebrow-raising, given their “think of how it will look” standard, is H-P’s choice of outside PR counsel when the bad news started to snowball.  Let’s just say that firm has garnered more than a fair amount of negative coverage for itself over the years (see here, here, here, and here).

As for Mr. Hurd, his response to his transgression has not exactly been inspiring.   Rather than take responsibility and unequivocally admit he made a major mistake in judgment and by doing so betrayed H-P, its employees, and its shareholders (and likely garner a considerable measure of sympathy), he hired a PR firm known for its aggressive “scorched earth” tactics.  According to the Wall Street Journal, one of the firm’s message points is that Mr. Hurd’s expense account transgressions were quite small and that he offered to repay the amount, seemingly hinting that the punishment didn’t fit the crime.

When it comes to corporate ethics and reputation risk, potential bad press should have no bearing.  None.  Zero.  Zilch.  Adherence to a company’s guiding principles of integrity, trust, and responsibility should not depend upon what the press may report.  A code of conduct is a company’s line in the sand about what is right and what is wrong, about what it stands for, and about how it  defines itself as a member in some greater community.  Sometimes that means companies and their leaders must do the proverbial right thing even when it invites media fallout. Just ask Royal Caribbean.

Early this year, Royal Caribbean faced a very difficult decision in the wake of the catastrophic earthquake in Haiti, the cruise company’s tourism partner for nearly the 30 years.  The cruise company’s private resort called Labadee, located 85 miles or so from Port-au-Prince, suffered very little damage, with all facilities in prime condition to continue hosting ship passengers scheduled for a day of fun there.  But as Chairman and CEO Richard D. Fain wrote at the time:

Should we bring guests to our private destination in Haiti or should we simply bypass the island and bring them to another destination further away from all the suffering? Bringing our guests to Haiti could be characterized by some as insensitive to the suffering of the Haiti people in the rest of the country, and we wrestled with this sentiment ourselves. After the government of Haiti asked us to continue to call on Labadee, there really was no choice; bypassing Haiti would do more harm to an already ravaged people by taking away essential income from our employees and their families.  The Haitians told us they were desperate for our return and we couldn’t refuse… I remain convinced that we took the only honorable path and I remain convinced that we and Haiti will be better off in the long run because of it.”

As soon as the first ship dropped anchor and started tendering passengers ashore, the “how dare they?!” newspaper articles started, as Royal Caribbean’s management and savvy PR team undoubtedly knew that they would.  The initial press was unfavorable, but Royal Caribbean stayed the course, working to explain their rationale for returning to Labadee and their broader contributions to Haiti’s recovery, both financial and in terms of getting much-needed food, materials, humanitarian aid, and other much-needed items to the country. In other words, they did what they thought was the right thing, backlash be damned.

Given the competitive nature of business today, adhering to ethical and moral business practices is more difficult than ever.  Staying on the honorable path requires a strict moral code and a team with shared values. Given H-P’s code of conduct and the company its board and Mr. Hurd chose to keep, it’s little wonder they find themselves in such a messy and distasteful situation.

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When the SEC first unveiled charges alleging that Goldman misled investors when it sold a package of risky subprime mortgage-related securities known as Abacus, the mighty investment bank wasted no time to thunder that the civil allegations were  “completely unfounded” and vowing it would  “vigorously” challenge them.  A few hours later, Goldman issued a second statement, saying that it had lost more than $90 million on the transaction and proffered that it couldn’t have honestly believed the investments would fail given the firm’s own exposure.

Admittedly, quite a few reporters initially bought Goldman’s argument, repeating it without any objective analysis.  However, all Goldman’s strategy bought them was time – not a free pass – as the media wasn’t duped for long.  Within days, The New York Times reported that Goldman had insurance in place on the Abacus transaction to offset the $100 million loss and, separately, internal Goldman Sachs emails made public by a Congressional committee also suggest that Goldman handsomely profited as the housing crisis escalated.  The Columbia Journalism Review has gone so far as to warn reporters to be wary of Goldman’s “forked tongue.”  In addition to combating charges of fraud, Goldman must now deal with the fallout from being publicly accused of lying.

Regretfully, there are now other known incidents of spin that suggest that Goldman views the intellect of Congress and the public as cynically as the investors who were long on the Abacus deal.  Goldman took out prominent ads in Politico, a newspaper closely read by Washington’s political elite, trumpeting that it was the biggest issuers of Build America Bonds; the ads neglected to mention that Goldman earns considerably higher commissions on the bonds.  Goldman also seems to have leaked a story that it is mulling a requirement to compel its top executives to donate a certain portion of their earnings to charity.  Giving to charity is an admirable initiative but it won’t alleviate the public’s anger about the firm’s perceived ill-gotten gains.

Goldman’s lament that the SEC’s charges are politically motivated is pretty tenuous. Decrying politics is a tad hypocritical given that many people believe that Goldman’s political connections were responsible for Washington making the firm whole on its AIG contracts.  In any case, the interests of the SEC and The New York Times are closely aligned in making the fraud charges stick so the argument just won’t fly with the newspaper at the forefront of the media hunt for the rest of the story.  Tongues are wagging that the SEC gave the Times a sneak preview of the fraud charges before they were even filed, perhaps as a reward for its dogged reporting.  Even if the fraud charges are dismissed on summary judgment, the Times has pretty much secured itself a Pulitzer Prize.

Finally, there’s the issue of Robert Khuzami, the SEC’s enforcement chief and a prosecutor whose credentials include taking on organized crime.  Although it’s been reported that Robert Khuzami previously oversaw a team of lawyers at Deutsche Bank who also were closely involved in structuring subprime mortgage-related investments similar to Abacus, Goldman would be wise to resist even veiled attacks on the enforcement chief.  Given Khuzami’s impressive track record standing up to hardened criminals without the proverbial white collars, the public will likely relish the prospect of a proven legal tough roughing up Goldman’s top brass, regardless of the merits of his case.

For Goldman Sachs to survive this reputational crisis, the firm will have to devise a credible strategy that addresses both the legal and moral issues relating to its profiteering from the housing collapse.  Its practice of deception and playing with the facts could potentially doom the firm.  Because here is a secret that a spinmeister will never tell you:  When you utilize spin as a strategy to minimize a crisis, the crisis will almost invariably spin right out of control.

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The Journal will soon be launching a special section devoted to New York City.  Robert Thomson, the WSJ’s editor, must believe that his newspaper can dethrone The New York Times as the city’s most influential newspaper.  ”My advice to New York Times readers is cancel your subscription, read it on the Web for free and buy The Journal,” Mr. Thomson recently told The New York Observer.

I won’t debate Mr. Thomson as to whether he can best the Times‘ local coverage – or even that of the Daily News or NY Post for that matter – but I will challenge him on his advice to buy the Journal.  After being a loyal Journal subscriber for more than two decades, I recently threw in the towel – and not because of the extreme makeover the Journal has undergone since Mr. Thomson took over the paper.  I simply couldn’t buy the newspaper when I needed it.

Although much has been written about News Corp’s transformation of the Journal into a mainstream newspaper over the last two years, significant changes to its distribution, at least in New York City, have largely gone unnoticed.  During the 20 or so years I’ve lived in Manhattan, I always knew that when I opened my apartment door at 6:00 am, the Journal would there waiting for me.  Further, I knew that calling the customer support center in Chickobee, MA to suspend delivery when going out of town would be a painless process.

Not anymore.

In the past few months, there have been big hiccups in distribution to my neighborhood.  The newspaper hadn’t arrived by the time I left in the morning and were not yet available at the local newsstands.  ”Not in yet,” is how the guy at the counter greets me most mornings when I stop by to try to grab the Journal. It seems I’m not the only one hearing it as he told me that he loses at least a half-dozen Journal sales a day because of the paper’s late delivery.  I’d be much more understanding if I was out at 4:30 am looking for the paper or if the newsstand in question was out in the suburbs somewhere, but we’re talking 6:00 am in the middle of Manhattan.

Adding insult to injury, News Corp. has transferred the once-reliable customer care center to some incompetent outsourcing firm overseas.  After 30 minutes on the phone with them trying to resolve my missed deliveries, I recently became so exacerbated I simply cancelled both my Wall Street Journal and Barron’s subscriptions (News Corp. owns both).  Sadly, in the process I may have cancelled another subscriber’s subscription, as the woman on the phone called me by the wrong name. (Apologies to Mr. Levy, whoever you are!)

To be fair, I’ve had troubles in the past with my New York Times delivery, but the newspaper always managed to resolve the issue fairly quickly. It’s a good thing – since the paper is now my first-read of the day. As for the Journal, I read it online when I get to work.

Mr. Thomson, the WSJ editor I mentioned earlier, bragged to the Observer that the Journal is already “developing a closer relationship with an ever-larger number of women” and that the New York edition will help snag a broader array of readers. Maybe so – but he better hope they aren’t early-risers living in midtown Manhattan.

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Here’s why:

BENJAMIN STEAK HOUSE

http://www.benjaminsteakhouse.com/media/benjaminsteakhouse.html

Opening a 150-seat restaurant on a non-descript block on 41^st between Madison and Park took guts.  Previous restaurants in this space inside the Dylan Hotel didn’t last long, including Britney Spear’s ill-fated NYLA.  When Benjamin Steak House first opened, business was indeed quite slow.

Never one to follow the in-crowd, I gave the restaurant a try and immediately appreciated its outstanding food, responsive service, and friendly staff.   I admit to becoming something of a regular.  I knew others would eventually catch on despite its off-the-beaten path location and told Prelvukaj he better remember me when they get discovered.  “Mr. Starkman, you will always be guaranteed a great place in this restaurant,” Prelvukaj promised with his inimitable smile. Viktor, the restaurant’s amiable manager assured the same.

Prelvukaj and his partner, Arturo McLeod, both hail from Peter Luger’s, a Brooklyn-based restaurant that has long been famed as being one of the top steak houses in New York.  Prelvukaj was its former maitre d’ and McLeod was one of its chefs.  Benjamin steaks are from the same quality cuts of meat and are prepared in the same family style manner; but whereas Peter Luger’s is infamous for its surly service, Benjamin prides itself on treating customers with old fashioned respect.  And if you eat there often enough, the place becomes like ”Cheers” – everyone knows your name.

In addition to serving some of the best steaks in New York City, it offers a wonderful salmon entree and the side dishes are highly recommended, including its non-greasy onion rings and homemade potato chips.  Hungry yet?

Benjamin also has the best Happy Hour deal in New York City.  Even premium drinks are half price at the bar from 4 p.m. to 7 p.m. and the bartenders at Benjamin are quite generous with their pours.  Kenny, one of the restaurant’s longstanding bartenders, is unquestionably one of the best mixologists around.  If you can drink more than one of Kenny’s to-the-brim martinis, you’ll need to take a cab home. 

Benjamin has long since been discovered, but Prelvukaj is a man of his word.  Jackie and I ate there last night and, just as Prelvukaj promised me three years ago, we’re still getting one of the best tables in the house. 

PERA

http://www.peranyc.com/

 I still remember with great delight the email Jackie sent me about a new restaurant called Pera that had just opened in a space across the street.  One of the local tabloids had run a piece that morning on its opening and its chef and co-owner, Jason Avery.  We knew Jason and were excited he’d come to midtown.

Prior to October 2001, S&A was based on Wall Street directly across the street from a five-star hotel called the Regent Wall Street.  At the time Avery was the executive sous chef and the chef de cuisine at its restaurant called 55 Wall Street.  Jackie and I frequented that restaurant – it had a Happy Hour in the spirit of Benjamin’s – and Avery always took especially good care of us. 

Avery is well on his way to getting the recognition he deserves as one of New York’s most talented chefs.  I can confidently recommend everything on Pera’s menu, ranging from its inventive salads to its daily specials.  Lamb is among the restaurant’s specialties, and it took Avery months to wean me off his lamb burger before I would sample his other dishes.  Avery is always concocting new and interesting appetizers and entrees, and he recites them with a certain relish and zeal that underscores the pride he takes in his craft.  I once mentioned an appetizer of peas and feta cheese that I had sampled and loved at my favorite restaurant in San Francisco; Avery made the dish even better.

Pera has an interesting and fairly priced wine list and the service is always quite attentive.  The restaurant has an open kitchen, and Avery is always quite visible supervising the line or interacting with customers.  Avery treats all his guests like royalty, which is why I frequent the place at least three times a week.

So a tip of the hat — or should I say toque? — to Benjamin Prelvukaj and Jason Avery.  Your restaurants are probably the greatest things that have happened to the neighborhood since Grand Central Terminal was first built in 1871.

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Much has been written about the changing role and significance of mainstream media and the myriad factors that continue to erode its once-vaunted credibility.   Chief among them is, of course, that the field is rife with unethical individuals who fabricate and plagiarize, a trend I wrote about last May when New York Times columnist Maureen Dowd was caught using prose previously published by a blogger (my take here).  Since then, at least two other high-profile cases of journalism plagiarism have emerged, as outlined in this column by New York Times columnist Clark Hoyt.

Another major factor for mainstream journalism’s decline is the profession is plagued with failed leaders who, despite their less-than-stellar track records, continue to hold their senior positions.  Mainstream journalism is in desperate need of radical visionaries, yet the industry continues to be led by people who are part of the problem rather than a source for the solution.  Is there any other business where failure and myopia is so frequently and handsomely rewarded?  If ever there was a single industry that illustrates the concept behind The Peter Principle, today’s mainstream media is it. 

Marcus Brauchli, the former managing editor of the Wall Street Journal, is a prime example.  Under the leadership of Brauchli and other senior editorial leaders, the Journal went into a near-irreversible economic spiral.  A very senior Dow Jones executive confessed to me that the company quite possibly would have gone bankrupt had Rupert Murdoch’s News Corp. not come to the rescue.  As part of the deal, Brauchli retained a degree of “veto” power over anything Murdoch might want to do with the paper, ostensibly to protect the Journal’s editorial integrity and standards.  Once the deal closed, however, Brauchli reportedly received a whopping $6.4 million to go away instead.  In this market, Brauchli’s payout is sufficient to finance the hiring of at least 10 reasonably experienced reporters.

Brauchli has since been named Executive Editor of The Washington Post, another newspaper that has suffered a significant erosion of prestige, talent, and national influence.  The paper is badly in need of an innovative editorial leader to regain the previous glory it once had under the editorial leadership of Benjamin Bradlee in the late sixties through early nineties.  Brauchli is no Bradlee; if he is doing anything of note to save that newspaper, it isn’t readily apparent.  Indeed, the newspaper’s one known attempt at, ahem, “innovation” — soliciting lobbyists to pay a hefty fee for exclusive meetings with editors and reporters — was the biggest journalism ethics debacle in recent memory.  Brauchli claims he wasn’t told of the pay-for-access program, a possible indication of how he’s regarded by the business side of the newspaper.  

Stephen J. Adler, who also held senior editorial positions at the Journal before being named editor of BusinessWeek in 2005, is another example of how journalism rewards failure. BusinessWeek, a once grossly underrated magazine that long eschewed gourmet sizzle for solid meat-and-potatoes reporting and analysis, badly stumbled under Adler’s four-year leadership.  Under his tenure, the weekly magazine essentially became the Reader’s Digest of American finance, replete with oversized typeface, condensed stories, and bulky photos and graphics that badly reduced the magazine’s news hole. The magazine was on the brink of failure when Bloomberg picked it up for next-to-nothing last fall.  Adler resigned shortly after the deal was announced, subsequently moving on to Thomson Reuters where he was named senior vice president and editorial director of its Professional division.  Since the sale, BusinessWeek is fast returning to its previously high editorial standards, which is to Bloomberg’s great credit.

The disturbing state of journalism leadership was, ironically, further demonstrated recently at a meeting held by a trade group called the Committee of Concerned Journalists who are “worried about the future of the profession” (I guess non-members belong to the Association of Reporters Who Don’t Give a Damn). As reported by Fox Business News Senior Correspondent Charles Gasparino (Full disclosure: Gasparino is a longtime friend of mine), the high-minded committee last week held a seminar to breast-beat themselves for their failure to warn the public that the U.S financial system was on the brink of collapse.   

Hank Paulson, the former Treasury Secretary and CEO of Goldman Sachs in the period leading up to the economic collapse, gave the keynote address.  If anyone there could have shed valuable light on the subject, clearly he was the one.  However, according to Gasparino, the “concerned” journalistic luminaries on the panel, including Fortune editor Andrew Serwer and New Yorker media writer Ken Auletta, never availed themselves of the opportunity to ask Paulson the tough questions about his own failure to anticipate or prevent the economic collapse.  

Hmmm…just a wild guess here, but reporters who don’t act like reporters could have something to do with the professional pickle they collectively find themselves in. 

Personally, I don’t buy into this notion that reporters should have been able to predict the financial meltdown.  It takes unabashed arrogance for journalists to believe that they are so well-steeped in economics and high finance that they can possibly forewarn the nation of a pending financial collapse.  They are on the sidelines, not in the game itself.  Most business journalists tend to mime conventional wisdom of the day, which explains why the leaders of Enron, Worldcom, and Tyco were heralded in newspaper and magazine cover stories before those companies blew up.  Journalists would serve their audiences best if they reported as many informed perspectives as possible, rather than spew out their too often misinformed and biased opinions about the companies and subjects they supposedly objectively cover. As for the prescience of mainstream journalism about Goldman Sachs and Paulson, check out this fawning profile that Fortune published in 2004.

According to a study by the Pew Project for Excellence in Journalism, less than 30 percent of Americans believe what they read in the mainstream media.  That’s a fairly sobering statistic, and one that the Committee of Concerned Journalists should be focused on rectifying above anything else.  Sadly, absent a real change in the vision, mindset and competencies of the bold-faced names that occupy the upper echelons of the business, mainstream journalism will likely only continue to go downhill.  

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On the service and value front, Charles Schwab is quietly becoming the financial services industry’s closest equivalent to Nordstrom. But they’re not entirely there yet, and founder Charles Schwab would be wise to take a closer look at the customer service playbook of Blake Nordstrom, the CEO who runs the retailer that bears his surname. (While Schwab is no longer CEO, he remains chairman and apparently is active enough in the business to command more than $3 million in annual compensation).

Although I maintain some of my assets with Schwab, I readily admit that I am highly distrustful of the company. Allow me to explain the paradox.

My relationship with Schwab is currently limited to plain vanilla bank products where I’m certain I have virtually no risk (or at least the faith and backing of the U.S. government). I would never buy an investment product from the firm because, unlike what I’ve learned to expect from Nordstrom, I do not trust Charles Schwab to stand with integrity behind the products they push.

In the past few years, Schwab has unloaded some highly dubious products on its customers, including quasi money market funds called Schwab YieldPlus and long-term bonds known as auction rate securities. Schwab faces class actions suits relating to the sale of its money market funds and has been charged with Martin Act Fraud by New York Attorney General Andrew Cuomo for peddling the auction rate securities. (Important Disclosure: S&A represents an attorney who has a case against Schwab relating to Schwab YieldPlus. That said, the comments in this blog post represent my thoughts and observations and are mine alone).

My outrage and lack of confidence in Schwab is not simply that it sold the money market funds and auction rate securities, but rather its failure to do right by clients who allegedly were misled. While most of Schwab’s competitors have settled with regulators and reimbursed their clients for losses relating to auction rate securities, pass-the-buck Chuck is following the old-school Wall Street strategy of saying the clients were entirely to blame: “Roughly 90% of the clients who invested in (auction rate) securities came to Schwab asking us to locate and make available these investments for them,” Chares Schwab wrote in a Wall Street Journal op-ed last August, emphasizing his firm “never guaranteed individual success.”

While that may be true, customer service is not simply about written guarantees, Chuck. It’s also about ensuring your customers view you as trustworthy and reliable.

People shop at Nordstrom because they can do so with confidence. If something goes wrong with a purchased product, there’s little if any doubt that the store will do the right thing when you bring the defect to their attention.

In truth, when it comes down to the fundamental principles of effective brand management and customer service, it really doesn’t matter what you are selling. As Donald Porter of British Airways once aptly put it, “Customers don’t expect you to be perfect. They do expect you to fix things when they go wrong.”

So why didn’t Charles Schwab do the right thing with respect to making customers who essentially were sold defective products whole again? Perhaps the lawyers deemed doing so too great a legal risk.

While that stance may have a significant upside in the courtroom, it will not be without a significant downside cost elsewhere. By not stepping up as other firms have done (voluntarily or otherwise) to make allegedly misinformed product purchasers whole again, Charles Schwab will squander immeasurable current and potential client goodwill and badly undermine the impressive work of those responsible for creating Schwab’s Nordstrom-like experience.

In truly world-class organizations, the legal and marketing functions do not operate as separate silos, in good times or crisis, and a measured balance is routinely struck between their sometimes conflicting interests – and for good reason. After all, the only ones to ultimately benefit from letting Legal call all the shots are, well, the attorneys themselves.

Customers have talked, Chuck. Perhaps it is time you started listening.

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An egregious example of this misplaced and often smug superiority was evident in this blanket statement made in a Wall Street Journal op-ed by Peter Kann, the former Dow Jones chairman who nearly drove that company to ruin:

“The Internet is not filling news vacuums either.  There are hundreds upon hundreds of online sites and blogs that claim to provide news, but virtually none of them even pretend to pursue the traditional news role of newspapers, which is to invest in professional staffs dispersed around a community and across the country or the globe to cover, analyze, and only then comment on, events.  Actually, all they do is comment.”

Yes, the Internet is indeed filled with wanna-be journalists and mischievous trolls who simply publish trite pablum or grossly reckless commentaries simply for the sake of getting noticed or causing a stir.  But mainstream publications produce more than their share of irresponsible drivel as well, such as this “investigative” article published in the San Francisco Chronicle or this doozy published in the Orange County Register.

The American public clearly isn’t impressed with the content produced by mainstream media: According to a September Pew Research survey, just 29% of Americans say that news organizations generally get the facts straight, while 63% say that news stories are often inaccurate.  But hey, even Pulitzer Prize-winning reporters like Kann apparently don’t have to let the facts get in the way of a good argument.

In truth, many of today’s bloggers are increasingly establishing themselves as authoritative sources of news and commentary in a variety of industries.  Blogging is not a mere trend; its advent has proven to be a significant mile marker in the evolution of mass communication.  Any organization that believes otherwise is deluding itself.  Brett Snyder, who pens the “The Cranky Flier,” airline industry blog, best personifies the new breed of blogger who most threaten the survival of mainstream journalism.

I’ve closely followed Snyder’s work for the past two years.  A former industry insider and self-professed “airline dork,” he is wise to the industry’s shenanigans and isn’t afraid to call them on it.  Brett’s readers also are remarkably well-informed and civil in their comments on his observations.  If you want to understand the airline business, “Cranky” is truly a must-read.

As for Kann’s dismissive claim that all bloggers do is comment, sometimes informed commentary is decidedly more valuable and insightful than the original “reporting” trumpeted by Kann.  To wit, Snyder’s initial post regarding the crash of the Air France flight from Brazil stood in stark contrast to the speculative reporting of mainstream reporters.  He derided the “million different theories” he had seen about what happened, cautioned readers that “none of the theories that keep being flung out there by the media seem to make sense on their own,” and forewarned that the true cause of the crash may never be known. By comparison, among the speculative stories published by the Wall Street Journal were this one, this one, and this one.  More than six months later, we still do not know what really happened.

Unlike a lot of mainstream reporters, Snyder isn’t above admitting he might have been wrong, as he recently did in a post discussing Virgin America’s announcement that it posted an operating profit (as he put it himself, he’s “been a harsh skeptic of the viability of Virgin America since the beginning”).  When is the last time you can recall a mainstream publication openly admitting without public pressure or the threat of a lawsuit that it may have gotten something wrong?

Snyder tells me that not one mainstream publication has ever approached him about a job.  Given that he lives in suburban Los Angeles, which is heavily impacted by the airline industry, you might expect the Los Angeles Times or Orange County Register would be fighting to scoop him up, but therein lies the judgment of the leadership of mainstream publications.  Hmm… is it any wonder the owner of the Orange County Register in September filed for Chapter 11 bankruptcy.

Blogging about airlines may be his passion but, like everyone else, Snyder needs to make ends meet.  To that end, he recently launched Cranky Concierge, an airline planning and travel problem-solving service that I wholeheartedly endorse.  Snyder recently figured out a way for me to fly business class from New York to San Francisco on my preferred flights for less than $250. Trust me: the guy knows his way around the system. And if anyone can solve your air travel dilemma, it’s him.

A tip of my hat to you, Cranky.  Dork or not, it’s conscientious bloggers like you that should have the mainstream media now reaching for the overhead oxygen masks…

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