<< CIB Home

Learning from a field guide to the low road (Abercrombie & Fitch), a “small” indiscretion (Boeing), and the price of leadership (Aaron Feuerstein)

A Field Guide to the Low Road

Abercrombie & Fitch placed itself at the center of controversy once again. Most recently, the company was protested by groups for its sale of a shrink wrapped catalog (“Christmas Field Guide”) featuring nude models in sexual poses. Although the company denies it, controversy appears to be a key component of the company’s strategy to craft an “edgy” image in order to be appealing to its core customer demographic. In the last two years, A&F also triggered criticism for its release of a line of thong underwear for girls (ages 10-16) featuring suggestive slogans, and for its marketing of a line of t-shirts emblazoned with racist slogans.

Does taking the “low road” in marketing pay? Using controversy to appeal to certain demographic groups is nothing new, of course. Going back just a decade, brands such as Calvin Klein, Guess and Benetton all used similar tactics to sell fashion. Companies often resort to shocking means to break through the “clutter” that crowds communication media. It works. There is no use denying it. Widespread (and free) media coverage followed each of A&F’s actions. In contrast, taking the high road is more difficult. A greater degree of creativity is required, and it may not “work,” especially if short-term results are being sought.

Boeing recently fired company CFO, Mike Sears for an ethics violation. Sears, 56, rumored to be the company’s next CEO, was fired for allegedly speaking with Darleen Druyen, a former high ranking government procurement official, about possible future employment at the aerospace giant while she was still in a position to influence Boeing contracts at the Air Force. Druyen eventually joined Boeing, but was fired along with Sears. Sears has denied the allegation stating that he never violated company policy.

Within days of Sears’ firing, company CEO, Phil Condit resigned. While the official statement from Boeing described Condit’s resignation as voluntary, some published reports state that Condit resigned under pressure.

Amidst the turmoil, Defense Secretary Donald Rumsfeld called for an investigation of a a multi-billion dollar tanker leasing deal with Boeing to see if proprietary information was passed by Druyen to the company during negotiations.

This episode can be spun a number of ways. It’s a great lesson about conflicts of interest and corporate ethics programs. It’s also a reminder, however, of a lesson we all learned as children: a seemingly small indiscretion can have large, unforeseeable consequences. In addition to the immediate costs -

The Price of Leadership

Mr. Feuerstein’s actions earned him a wide-spread praise for his leadership and commitment to corporate responsibility at considerable personal financial expense.

However, the story eventually took a turn for the worse. Due, in part, to the financial costs associated with rebuilding, the company filed for Chapter 11 bankruptcy protection in late 2001.

Recently (in October, 2003), the company announced that it had successfully emerged from bankruptcy. Various creditors (unsecured and secured) received a majority of the company’s stock. Mr. Feuerstein is trying to raise financing to reacquire the company. For now, he and other family members who were the majority owners have lost their level of influence. Significant questions about the future of the company are open, namely, will more production jobs move overseas to keep the company competitive? Mr. Feuerstein believes the company can keep production in the U.S., however, the new owners may not share his views.

While we will continue to root for Mr. Feuerstein, we are faced with the sobering reminder that things may not always magically work out in the end. Moral leadership often has its costs. Integrity does “pay,” but not always in ways we might expect.