Current events always provide excellent fodder for public relations' dissection, er, discussion. Martha Stewart's crisis is no different. Specifically, the investigations concerning her involvement with possible insider trading of ImClone Systems, Inc. stock.
As you should know by now, Stewart sold her shares of ImClone the day before the Food and Drug Administration announced it would not review the company's cancer drug application. Stewart is also a personal friend of ImClone's former CEO, who was arrested on charges of securities fraud and conspiracy for allegedly tipping family members to sell their stock.
This is obviously a great example of the need for crisis communication plans. According to the Associated Press, Stewart spent her Fourth of July holiday hiring The Brunswick Group to do damage control.
This was immediately after her last, and now infamous, appearance on CBS' The Early Show. She said, ''I want to focus on my salad,'' when asked about the ImClone issue during her then weekly cooking segment (she canceled the segment shortly afterwards).
We could note this snafu proves out the importance of media training. But lets look at the bigger issue of brand strategy. Crisis communication's and media training's role in a brand strategy is to preserve and reinforce the brand—when used proactively. Far too often, they're used reactively with mixed results.
In a recent quarterly earnings call, Stewart focused on how she is one employee of Martha Stewart Living Omnimedia (MSLO). She noted the show will go on and the brand will endure without her.
This approach keeps everyone focused on the business, focused on the many employees that have nothing to do with Stewart's personal investments. This distances MSLO from Stewart.
Another strategy, implemented by a Stewart fan, is grassroots activism. Save Martha is a movement that has been getting a lot of attention, claiming Martha Stewart is a victim. The Web site points to the management of companies under scrutiny right now (from Tyco and Adelphia to WorldCom and Enron). Save Martha feels they are the real criminals and tries to minimize the allegations against Stewart. It also enables visitors with an action plan and offers them merchandise so they can show their support.
Will this all have an impact and help Stewart save face? It is too soon to tell as allegations are still being investigated. But whether it is a quarterly earnings call or grassroots activism, the strategy of distraction only buys her some time.
For now she is lying low, perhaps planning phase two of her brand defense. She'd better hurry. With the Corporate Reform Bill fast en route to becoming a law, the stakes are even higher for Stewart if she is found guilty.
To keep track of all the recent corporate scandals, check out CNN's special section