{"id":7529,"date":"2012-10-12T12:40:10","date_gmt":"2012-10-12T02:40:10","guid":{"rendered":"http:\/\/blogs.unsw.edu.au\/knowledgetoday\/?p=7529"},"modified":"2012-10-12T12:40:10","modified_gmt":"2012-10-12T02:40:10","slug":"corporate-apologies","status":"publish","type":"post","link":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/blog\/2012\/10\/corporate-apologies\/","title":{"rendered":"The ifs and buts of corporate apologies"},"content":{"rendered":"

From the\u00a0Knowledge@Wharton today\u00a0blog<\/a>.<\/strong><\/p>\n

A decade after a Knowledge@Wharton article<\/a> analysed an outpouring of corporate apologies, the word \u201csorry\u201d is back in the headlines. Apple\u2019s apology for errors in its maps app sounds truly remorseful, but the company needs to watch out for less forgiving technology users, says Wharton professor of operations and information management Kartik Hosanagar<\/a>.<\/p>\n

\u201cWhile it is true that consumers are often forgiving of [problems] with technology products because of the usual trial and error issues, this is less so for a product that charges a premium like the iPhone,\u201d Hosanagar notes. \u201cApple will need to be careful about these kinds of mistakes more so than a typical tech player.\u201d<\/p>\n

This isn\u2019t Apple\u2019s first mea culpa over the iPhone. The company was prompted to offer $100 rebates to some consumers after it slashed prices for the first iteration of the iPhone from US$599 to US$399 just two months after the product launched. Apple was made to apologise again in 2010, when iPhone 4 users complained about poor signals and dropped calls due to a design problem with the device\u2019s antenna.<\/p>\n

Apple under Jobs had been seen as generally reluctant to acknowledge errors. But current CEO Tim Cook was more candid in his statement<\/a> about the maps flap. \u201cWe fell short on our commitment,\u201d he said, as he apologised for the company\u2019s decision to remove Google Maps from the list of default apps in the newest version of the iOS operating system and to replace it with an in-house program that has proven to be riddled with errors. Cook even directed customers to maps apps of rivals including Google and MapQuest while Apple fixes its mapping utility.<\/p>\n

Comparing Jobs to Cook on apologies may not be entirely fair. \u201cTim Cook is an unfortunate position in which everything he does will get compared to Steve Jobs,\u201d Hosanagar notes. \u201cThese kinds of things happen often and good CEOs often take responsibility for such missteps. That his style is different from that of Jobs will keep getting attention. But analysts must recognise that Cook has his own style.\u201d<\/p>\n

Others like ousted Barclay\u2019s Bank CEO Bob Diamond have also not minced words when their firms were caught making an error. In July, he apologised to a British parliamentary panel for \u201creprehensible behavior\u201d on the part of his bank\u2019s traders indulging in manipulating interbank lending rates<\/a>. It didn\u2019t help much, though. By then, U.S. and U.K. regulators had already slapped a fine of $453 million on the bank.<\/p>\n

On Thursday, appliance maker KitchenAid of St. Joseph, Mich., apologized for \u201can irresponsible tweet\u201d about President Barack Obama\u2019s late grandmother. \u201cAnother company learns the pitfalls of social media,\u201d said a USA Today<\/em> report<\/a> on that episode.<\/p>\n

Companies must use their apologies carefully, Wharton marketing professor Stephen Hoch<\/a> cautioned in the 2002 Knowledge@Wharton article referenced earlier. When a company is apologising for a mistake to a group of people, such as customers, who know about the mistake, then the \u201cright way to do it is to spill your guts, lay the negatives on the table and then try to refute those negatives,\u201d he noted. It\u2019s a kind of \u201cboomerang approach, turning the negative into a positive \u2026\u201d Yet, he advised against firms apologising to all and sundry, since they tend to deal with heterogeneous sets of customers. \u201cIn fact, a massive apology can be risky.\u201d<\/p>\n

Even the world of apologies has its heroes, however. James Burke, the former Johnson & Johnson CEO who died last week, will be most remembered for the 1982 Tylenol recall, according to a Knowledge@Wharton Today blog post<\/a> from last week. Burke ordered a nationwide recall after seven people died in Chicago from taking cyanide-laced Tylenol capsules. In a 2004 Wharton School Publishing Book titled, Lasting Leadership: What You Can Learn from the Top 25 Business People of Our Times<\/a>, <\/em>Burke explained that Johnson & Johnson\u2019s celebrated credo that places customers above all had emboldened him: \u201cIt gave me the ammunition I needed to persuade shareholders and others to spend the $100 million on the recall.\u201d<\/p>\n

This post was previously posted in Knowledge@Wharton<\/a> today blog:\u00a0The Ifs and Buts of Corporate Apologies<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

From the\u00a0Knowledge@Wharton today\u00a0blog. A decade after a Knowledge@Wharton article analysed an outpouring of corporate apologies, the word \u201csorry\u201d is back in the headlines. Apple\u2019s apology for errors in its maps app sounds truly remorseful, but the company needs to watch out for less forgiving technology users, says Wharton professor of operations and information management Kartik […]<\/p>\n","protected":false},"author":336,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[64],"tags":[],"class_list":["post-7529","post","type-post","status-publish","format-standard","hentry","category-technology"],"_links":{"self":[{"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/posts\/7529","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/users\/336"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/comments?post=7529"}],"version-history":[{"count":2,"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/posts\/7529\/revisions"}],"predecessor-version":[{"id":7531,"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/posts\/7529\/revisions\/7531"}],"wp:attachment":[{"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/media?parent=7529"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/categories?post=7529"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/tags?post=7529"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}