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Tesla · Communication Breakdown

• 0:00
  Welcome back to Communication Breakdown, a new podcast from the Observatory on Corporate
• 0:07
  Reputation.
• 0:08
  Thanks for joining us.
• 0:09
  I'm Steve Dowling in Silicon Valley.
• 0:11
  I'm Craig Carroll in New York City.
• 0:13
  Each week, Steve and I take a look at strategies companies are using to shape headlines and
• 0:17
  sometimes save their skins.
• 0:19
  It's a post-game show for PR Pros.
• 0:22
  This week, personal politics takes a toll on Tesla sales and shareholders.
• 0:28
  That could the magnificent seven shrink to six?
• 0:32
  Tesla's market cap dipped below $1 trillion this week, with shares down some 35% from their
• 0:37
  peak in December.
• 0:38
  Most of that precipitous drop has been since inauguration day when Trump took office alongside
• 0:43
  his top donor, Tesla CEO Elon Musk.
• 0:46
  And while Tesla has seen recalls, weak financials and slowing sales growth, Elon's extra
• 0:52
  curricular activities are increasingly getting the blame.
• 0:56
  In the European analyst's old Bloomberg this week, quote, Tesla's biggest challenge
• 1:00
  in 2025 is in technology its perception.
• 1:04
  After discussing it briefly in last week's episode, we decided the impact on Tesla's reputation
• 1:09
  is worth a closer look.
• 1:10
  And maybe there are some learnings for the rest of us.
• 1:13
  The numbers from Europe are stark.
• 1:15
  In Germany, Musk threw his support behind the right wing AFD party in last week's elections.
• 1:20
  Tesla sales there were down 60% in January.
• 1:24
  In the UK, Elon's been attacking the new labor government and endorsing the populist
• 1:29
  reform UK party.
• 1:31
  Tesla sales there are down 8% and recent polling shows 71% of Britain's have an unfavorable
• 1:38
  view of Musk.
• 1:40
  Earlier this week of video in London went viral, trolling him with a bus shelter ad for a fictional,
• 1:45
  Tesla branded swastikar with Elon giving a Nazi salute.
• 1:49
  The caption goes from 0 to 1939 in three seconds.
• 1:54
  And here in the United States, buyers for more has been a recurring theme among Tesla owners
• 1:58
  going back at least two years.
• 1:59
  And that's when a Bloomberg survey of Tesla owners found that their opinion of Elon had
• 2:03
  dropped from almost 4.5 on a five point scale to just under three.
• 2:08
  We don't have recent sales data for the US, but as we mentioned a moment ago, the stock
• 2:12
  is in the slump and multiple analysts are saying that Musk's political activities are a factor.
• 2:18
  Steve, what to do here?
• 2:20
  How should Tesla be responding?
• 2:25
  Where does Tesla go from here?
• 2:27
  Well, the stock is down pretty hard, so it's a company problem.
• 2:31
  The question is, can they do something?
• 2:33
  Should they do something?
• 2:34
  And I think the thing that you would do in this situation is put some distance between
• 2:39
  these policies, this posture of the CEO and what the company actually does and how it
• 2:44
  actually makes money.
• 2:45
  The question then, can they, the answer is probably no.
• 2:50
  I mean, look at the factors.
• 2:51
  The board has been criticized for years as too cozy, too much of an enabler for Elon.
• 2:57
  I think if they could do something, I would think you would start with advertising, reiterate
• 3:03
  what the company does well, that it stands for something other than politics.
• 3:07
  But Tesla doesn't advertise very much.
• 3:09
  They have no agency of record.
• 3:11
  Their advertising spend is tiny, mostly online.
• 3:15
  So it's not like they can do a, quickly do a big TV ad.
• 3:19
  And the third thing, which is probably most relevant to our podcast is they famously have
• 3:23
  no comms team.
• 3:24
  There are just no levers to pull.
• 3:26
  Elon does not believe in PR other than his own outbursts on Twitter, which are, which are
• 3:34
  Legion.
• 3:35
  But for all practical purposes, can they distance themselves from him?
• 3:39
  I don't think so.
• 3:40
  First of all, there's so much there, right?
• 3:42
  I mean, there's the question of, should there be a distancing between Musk?
• 3:47
  That's one thing.
• 3:48
  I think dealing with the board's response is another factor.
• 3:54
  And the fact that you mentioned, they don't even have a comms team.
• 3:57
  And I think, lastly, whether or not advertising plays any role here, let's start with the first
• 4:03
  one of whether or not they should be distancing themselves from Musk, whether they can or if
• 4:09
  they should.
• 4:10
  All things being equal, if you're just looking at this, let's say from a shareholder perspective,
• 4:15
  or maybe an employee perspective.
• 4:17
  You're just looking at it as the work itself, the development and production of cars to sell.
• 4:23
  Yes, you would want to eliminate this major distraction, not eliminate, eliminate, but
• 4:28
  you would, you would like to be not as closely associated with it.
• 4:31
  But I don't think that it is possible because of the way the company runs, the way it has
• 4:37
  been set up.
• 4:38
  It is, I think, in the short term, inseparable from the CEO.
• 4:43
  So I think for the people inside of Tesla, the question is, what do we do about that?
• 4:48
  And unfortunately, one of the options they have are kind of like, well, you deal with it
• 4:54
  and you run through it.
• 4:56
  So I think that the normal rules just don't apply here.
• 5:01
  And on the one hand, I think that is probably how it has been set up because that has worked
• 5:05
  so far.
• 5:06
  And for all the criticism he is coming under, deservedly so, he is an ambitious executive
• 5:12
  who has pushed this company to the forefront of electric vehicles.
• 5:17
  I think for a while, certainly, they were synonymous with electric cars.
• 5:22
  But that close association, there is a downside to it now, a very clear downside, I think, as
• 5:27
  analysts are identifying.
• 5:29
  And it is not clear what the company can do about it.
• 5:32
  Part of the issue here is that there is no traditional levers for them to pull.
• 5:35
  Tesla doesn't have a communication scene.
• 5:37
  We've established that.
• 5:38
  It just has one guy doing the job and that guy is Elon Musk himself.
• 5:42
  Most companies will have a pure person to shape the message, but here, there are CEOs, the
• 5:48
  one who is the message.
• 5:49
  It's not like they forgot to hire a pair of professionals.
• 5:52
  They just made a strategic decision not to have them.
• 5:55
  No, they consciously.
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  I mean, Elon is famous for making that move at Tesla and at Twitter, it was to just phase
• 6:02
  out or in Twitter's case, just straight up acts them because he just sort of felt they
• 6:07
  weren't needed.
• 6:08
  And I wonder about whether that was not that the communications function was not needed,
• 6:14
  but that someone to tell him to do things differently or that maybe the way he was going about
• 6:19
  it wasn't the best was what he was really looking to eliminate.
• 6:22
  Yeah, and but also from a media perspective.
• 6:25
  I don't think he has any trouble generating media attention himself.
• 6:30
  And I think that's part of the reason another issue, right, that he doesn't have anyone
• 6:34
  in communications.
• 6:36
  But they could benefit from is better alignment between what it says, what it does and what other
• 6:40
  people are experiencing right now.
• 6:43
  The thing is you have to look at the magnitude of each of those factors like if Tesla had
• 6:49
  a runaway popular product that every owner loved and you had a CEO who did some crazy things
• 6:57
  on the side, you would think that that would be manageable the way you describe it.
• 7:01
  Instead, I think you have Tesla, which has a product that is popular in some circles and
• 7:08
  they had an early lead, but now there are tons and tons of new entrants.
• 7:14
  They have they have a lot more competition than they did even three years ago.
• 7:19
  And especially as we look at Europe, there are Chinese manufacturers who are coming to market
• 7:24
  with some really strong competitors.
• 7:27
  So I'm not an expert in automotive area though we've done a lot of shows about cars, which
• 7:31
  is fun, but they face real competition.
• 7:34
  So they're not the only game in town.
• 7:37
  And I think more importantly, the outsize profile of their CEO is just getting so much more
• 7:44
  attention than anything they're doing on the product side.
• 7:48
  It is really, here's a guy who makes cars and look at all the things that he's doing.
• 7:52
  And especially in Europe, the activity is very disruptive on the election side and he's
• 7:57
  very vocal in the UK.
• 8:00
  So I think that it's just that the balance is completely out of whack for Tesla.
• 8:05
  And it's real because it's showing up in sales certainly on the continent.
• 8:10
  Seems to be happening in the UK.
• 8:12
  It's amplified by the fact that they're losing market share because of the new entrants.
• 8:16
  Well, okay.
• 8:17
  There's actually a couple of things there that I want to hit on because I know that is
• 8:21
  significant impact on their sales, right?
• 8:24
  You know, losing 50% of sales in a key market, that's huge.
• 8:29
  But when you consider the fact that they only had 1% of the market, I don't know.
• 8:34
  It just seems like from a media perspective, if that part is not in there, I mean, obviously
• 8:39
  it loses its newsworthiness there, but it is part of the story.
• 8:43
  Well, it's the part of the story I think when it comes to the stock and to the company
• 8:47
  and to the shareholders.
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  So if we look at the story of Elon, I think maybe it's a smaller part of the story, but
• 8:53
  if we look at the story of Tesla, this has got to be a four alarm fire.
• 8:58
  And no, it is.
• 8:59
  So I don't want to discount that.
• 9:00
  But the fact that they only have 1% of the European market number one.
• 9:05
  Number two, they haven't even introduced a car there since 2021, right?
• 9:09
  So it's been four years without a new car.
• 9:12
  I would have to ask, you know, is this is this all about perception?
• 9:16
  Are there some additional business factors here as well that affect the sales?
• 9:20
  I mean, I know I'm not going to go out and buy an electric vehicle that's already four
• 9:25
  years out of date.
• 9:26
  Well, I mean, first off, I think the electric vehicles, especially Tesla, I would argue, are
• 9:32
  a little different in that equation because the software updates are much more frequent.
• 9:37
  But half of 1% seem like not much in the scale of the market.
• 9:42
  But half of what they were selling is that's a big.
• 9:46
  That's a big problem.
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  And also, I think it would be different if you were looking at a, like, a long gentle decline
• 9:52
  of a company that weren't introducing a lot of new things.
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  This looks like sales are falling off a cliff.
• 9:58
  And of course, this is by analysts are looking going, what's changed?
• 10:01
  Oh, well, Elon's being very vocal in Germany and in the UK and in the US politically.
• 10:07
  And that's why they're reaching that conclusion.
• 10:08
  I think it's hard to argue with.
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  The reality is Tesla is going to be putting some space between itself and Musk, but in
• 10:15
  practice, that's impossible.
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  There's no corporate firewall here.
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  He's not just the CEO.
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  He's the product, the marketing, the comms, the crisis response, all rolled into one.
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  And the board is not exactly an independent check on its power, the more like a cheering section.
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  It seems to be a really tough spot.
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  And without the significant change internally, I don't know how they change perceptions,
• 10:38
  except if this episode with Elon sort of fades and it was just a phase.
• 10:45
  You can go back to make cars, but I don't think anybody thinks that's likely to happen anytime
• 10:49
  soon.
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  What would you say CCO should do when you've got a CEO that is helping on some type of destructive
• 10:56
  decision, right?
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  I mean, there's a talk in democratic politics right now of letting things get bad.
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  Is that a viable strategy here?
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  Well, and it's a viable strategy for an opponent.
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  I don't necessarily think that I agree with it for the Democrats.
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  That's a subject for a different podcast.
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  But I think that's you're looking at it from an insider point of view.
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  If you're on the team, what do you do if someone's making a difficult decision and let's
• 11:22
  be clear, this Elon Musk and Tesla scenario is an extreme, extreme example.
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  But what do you do when you see something going the wrong way?
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  You have to do something is the first thing.
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  Like you have to do something.
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  And the most important thing to do is bring it to them, bring it to the boss or bring it
• 11:41
  to the decision maker.
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  It's your job in communications.
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  I mean, your job is to give them your best advice, even if it's about them.
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  And I think for our comms leaders, as they all know, a key skill is delivering bad news
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  and generally telling people that they don't want to hear.
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  I mean, you don't need to be mean about it.
• 12:00
  But here's what's wrong with that interview.
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  For example, here's where we took a wrong turn and here's how I think we can get out
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  of it.
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  And sometimes the PR person is the only one with that position.
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  And sometimes the only one with the guts to do it.
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  But you have to do something is the first thing.
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  It's clear, right?
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  Your job is to make things palatable.
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  Your job is to get it away and make sure that as the last line of defense between an
• 12:27
  impulse move and lasting reputational damage, right?
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  It's not about PR.
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  It's about protecting the long term viability of the business.
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  But here's where it gets complicated.
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  If you built trust with your CEO, you can speak up, you can challenge them and sometimes change
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  the course.
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  But if you haven't and your voice gets sideline, you're just shouting at a devoid and that's
• 12:48
  where the real test of a CCO comes in.
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  Because if your CEO is helping on self-destruction, you have to ask, are you here to fix things
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  or are you just here to clean up the mess afterwards?
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  You're right.
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  That's some reputation management of your own as a CCO that you have to do.
• 13:04
  You ultimately, they're the CEO.
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  You can't stop them.
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  You need to give them your best advice and you need to make sure they know that you're
• 13:11
  not just crying wolf.
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  And the best way to do that is make sure you're not sounding the alarm too often.
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  You have to keep things in perspective.
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  That's a big part of the job.
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  You put yourself in the customer's shoes.
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  You understand the press point of view.
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  You get ahead of the problems and hopefully you can identify them before someone makes a
• 13:30
  misstep.
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  And at the end of the day, I think the things get really bad.
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  You need to know where your CEO lives in case you need to lie down in their driveway.
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  You need to communicate to them.
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  This is going to be really bad.
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  And how can I convince you of that?
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  But you can't quit.
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  You can't threaten to quit.
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  You can't run that play very often.
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  So yes, to your point, you need to build that reputation.
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  You need to build that relationship within the organization so that people understand this
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  person is not crying wolf.
• 14:01
  If they say it's going to be bad, it's probably going to be bad and are we ready?
• 14:05
  Yeah, I know it's a joke about you need to know where they live to lie down in their driveway.
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  But also it's not.
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  The best CCOs understand that sometimes their job is to throw themselves in front of a bad
• 14:17
  decision.
• 14:18
  But the real skill isn't just stopping you from making a bad mistake.
• 14:23
  It's making them think it was their idea to abort it in the first place.
• 14:28
  You don't win these battles by saying don't do this.
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  You win by reframing the problem in a way that aligns with their goals.
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  You've got to give them a better hill to die on.
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  One that doesn't take the company down with them.
• 14:39
  Yeah, and you've got to make sure that you're at all times you're part of a team, right?
• 14:44
  It's, you know, I know we're headed towards this decision, but I think it could be a really
• 14:49
  bad one.
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  And the other part of that is let me show you a path out.
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  The other thing that can be effective is if we do this, here's the problem we're going
• 14:57
  to face.
• 14:58
  And then this is the position we're going to be in.
• 15:00
  Like here's the explaining we're going to need to do to this audience.
• 15:03
  Or here's what we might have to make up for.
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  And that here's what that might look like.
• 15:07
  Yeah.
• 15:08
  So look James Carvell is the one I was thinking of in terms of the response here on whether
• 15:13
  Democrats should just let the administration have all the rope that they need to hang themselves.
• 15:18
  That's the issue.
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  But not stop fighting things.
• 15:21
  Just let it play out.
• 15:23
  You know, have we exhausted that?
• 15:26
  How does that?
• 15:27
  Any situation where you let that happen with your CEO?
• 15:31
  I don't believe so.
• 15:32
  I mean, I don't believe in the let it happen strategy.
• 15:34
  It might work for Democrats.
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  It doesn't work for a corporate leader.
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  I don't think.
• 15:38
  I mean, at some point you have to let it happen because you don't have a veto.
• 15:41
  The boss is the boss disagree and commit, but you can disagree or make the counter point
• 15:48
  right up until you have to commit right up until the decision is made.
• 15:51
  Yeah.
• 15:52
  The best thing I think you can do is be setting expectations for what the reaction will
• 15:56
  be.
• 15:57
  It's easy to succumb to second guessing on that.
• 15:59
  Maybe it won't be so bad.
• 16:00
  Maybe he's right.
• 16:01
  Sometimes, sometimes the person with the idea you think is really bad is right.
• 16:08
  It can be lonely being the dissenter in these situations and you don't want to be Debbie
• 16:13
  down or all the time.
• 16:15
  Right.
• 16:16
  Over time, over a relationship, a career of accurate calls, ideally people listen when you
• 16:23
  raise a note of caution.
• 16:25
  Look, if you can't deliver bad news, you really shouldn't be a CC on the first place.
• 16:29
  You know, your value isn't like telling leadership what they want to hear.
• 16:33
  It's about being able to give them the truth before the market does because if you wait
• 16:37
  too long for the backlash starts, you're not leading, you're reacting like everyone else.
• 16:42
  So delivering bad news isn't just about saying this is a terrible idea.
• 16:46
  You've got to be able to show consequences before they happen.
• 16:50
  What will investors do?
• 16:51
  How will employees react?
• 16:52
  What's the media angle?
• 16:53
  What a great CCO's got to be able to anticipate the backlash before it happens and present
• 16:58
  solutions before too late?
• 17:00
  As you keep bringing up James Carve, let me just give you my two cents on the let it break
• 17:04
  philosophy.
• 17:05
  Yeah.
• 17:06
  I think that the weird thing about that is that it's kind of playing the Elon Musk, the
• 17:11
  Doge game.
• 17:13
  The approach seems to be like, you know, the Elon, we're going to dial everything way
• 17:17
  back.
• 17:18
  We're going to slash, you know, budgets and headcount, whatever way back and see what
• 17:22
  breaks or see what, you know, what the impact is, see what doesn't work with.
• 17:25
  And you can do that in an enterprise software company.
• 17:28
  You can't do that with Ebola or air traffic control or Medicare.
• 17:32
  It doesn't translate to government, I think.
• 17:35
  And so unfortunately, the let it break philosophy is kind of playing at Elon's game.
• 17:41
  And I don't think that's, I don't think it's going to work.
• 17:44
  Well, look, I'm going to push this idea of how we think about a response a little bit
• 17:49
  further here.
• 17:51
  Because, you know, at the end of the day, it's going to be the CEO making the decision, but
• 17:54
  I'm going to say if the communication leader is ignored, I'm going to blame them.
• 17:59
  I'm going to say if they had no role in the decision, then they failed in making their
• 18:05
  viewpoint impossible to ignore.
• 18:07
  And that means that they weren't just good enough at their job.
• 18:09
  But the communications leader could get blamed at any given moment for anything.
• 18:12
  So they just need to be ready for that no matter what.
• 18:16
  That also comes with the job.
• 18:18
  Well, yeah, but sure, but look at you made a kid who's job isn't just about offering advice.
• 18:22
  It's about making sure that the advice is heard, considered and factored into the decision
• 18:26
  making.
• 18:27
  So for sure.
• 18:28
  If the CEO is not listening to you, if they're not, you know, it's not just their failure,
• 18:31
  I feel like it's part of yours because, you know, your job isn't just to speak up.
• 18:35
  It's to make sure that leadership stops and thinks.
• 18:38
  You have to be adaptable at that.
• 18:39
  You have to roll with you can't be too rigid and just like this will not work.
• 18:44
  You kind of have to help them play it out or play it out for them and maybe, you know, it's
• 18:49
  not binary.
• 18:50
  Maybe you can help make an adjustment that makes, you know, the decision less bad.
• 18:55
  All right.
• 18:56
  Well, let's get back to the current situation with Elon Musk.
• 19:00
  The question I think in my mind is, are other companies being held by association or otherwise?
• 19:07
  Are other companies being impacted, helped or hurt by the way Elon Musk is going about
• 19:13
  this in government?
• 19:15
  Yeah.
• 19:16
  I'd say for other companies, Musk is clearly a double-edged sword on one hand.
• 19:21
  He's sucking all the oxygen, you know, if there's outrage to be had, it's aimed at him first.
• 19:26
  And that gives up plenty of coverage to companies that might otherwise be the target of public
• 19:31
  scrutiny.
• 19:32
  Yeah.
• 19:33
  But on the other, I don't know.
• 19:34
  He's redefining what it means to be politically lined and companies that might have been conservative
• 19:39
  and they might have been differently now, look, moderate by comparison.
• 19:44
  Exactly.
• 19:45
  No, I think that's right.
• 19:46
  So I don't know.
• 19:47
  That could be a liability if they're trying to play both sides here.
• 19:48
  So in a way, I think he's creating a new spectrum.
• 19:50
  You know, he's not just prohibit, he's aggressively publicly taking positions that put him beyond
• 19:57
  what corporate leaders would ever say out loud.
• 19:59
  Maybe.
• 20:00
  I think that shifts expectations for everyone else.
• 20:02
  Yeah.
• 20:03
  I think the interesting thing for me is that both for Trump and for some elements of corporate
• 20:09
  America, Elon is acting as a human shield.
• 20:12
  A lot of the negativity about the things that he's doing at Trump's supposed direction, but
• 20:18
  in partnership with Trump, a lot of that negativity is being directed at him.
• 20:22
  We talked about it last week, like the Tesla cars, especially the cyber truck is like a proxy
• 20:29
  for the policies that people don't like.
• 20:33
  And then for other corporations here in the US, other business leaders who are looking to
• 20:40
  align themselves with Trump either for ideological reasons or for business purposes or just
• 20:47
  defensively, to your point, Elon has completely blown the curve.
• 20:52
  You could sort of look at anything any other CEO might be doing in support of Trump or in parallel
• 20:59
  alignment with Trump.
• 21:01
  And it looks like nothing compared to what Elon's been doing.
• 21:06
  I think that's a great way of putting it that he's serving as a human shield.
• 21:11
  He's absorbing all the heat for Trump, just like he's absorbing the heat for now.
• 21:15
  For now.
• 21:16
  For the corporate America.
• 21:17
  Yeah.
• 21:18
  You know, if the public wants someone to lash out over deregulation, over anti-dei policies
• 21:22
  or over-tech monopolies, it's must first every time.
• 21:26
  And for every CEO who wants to be a pro-business without being the center of controversy, I don't
• 21:31
  think that's pretty useful.
• 21:32
  But I'd say here's what the risk is.
• 21:34
  He's put himself out there so far that he's redefining what it means to be aligned with Trump
• 21:40
  and these policies.
• 21:41
  So it's no longer about a CEO being quietly supportive.
• 21:47
  It's about whether they're in the musk orbit.
• 21:49
  The thing I think that I focus on is the collateral damage from that.
• 21:54
  And Tesla is experiencing it unlike any other company, I think, right now.
• 22:00
  The products are a proxy for Elon, a proxy for the policies people don't like.
• 22:05
  And we see graffiti on cyber trucks and people literally dumping eggs on them and worse.
• 22:12
  It's really remarkable.
• 22:13
  I can't think of another time when a company's products have been attacked in this way for
• 22:21
  something that doesn't have anything to do with the company.
• 22:25
  Yeah.
• 22:26
  There's certainly a problem having a company that's inseparable from its CEO because Tesla
• 22:32
  is not just collateral damage.
• 22:34
  It's a proxy war for musk politics, as you said.
• 22:37
  He's not just a business leader at politics.
• 22:40
  He's a political force and like it or not, Tesla is going to be carrying the consequences.
• 22:45
  And getting back to what we really started, the thing that you were looking to talk about
• 22:49
  again was if they had played it differently, not talking about the transition or any time
• 22:55
  in recent, if they're approached with Tesla had been different, if they had a communications
• 22:59
  department, if they had, I think, even more importantly, any advertising at all about the
• 23:05
  company and its products, you wouldn't have this such a close association between Elon
• 23:11
  and Tesla going into this situation where now it's just been exacerbated and Tesla shareholders,
• 23:18
  Tesla employees, I think are the ones who are feeling it.
• 23:22
  Yeah.
• 23:23
  I don't know.
• 23:24
  But Tesla really wants to fix the reputation in Europe.
• 23:28
  The answer is not going to be more advertising.
• 23:30
  I think it's going to be more engagement.
• 23:33
  It's going to be the same situation here in the US.
• 23:36
  The problem is not that people don't know what Tesla stands for.
• 23:40
  It's that they do and they don't like what they see.
• 23:43
  So the real work isn't running ads.
• 23:44
  I think it's getting the right stakeholders to see for themselves that Tesla is walking
• 23:50
  the wall.
• 23:51
  And bringing up advertising just because I think it's probably the most efficient channel for
• 23:54
  delivering that message.
• 23:56
  But I don't think they have that message right now.
• 24:00
  You don't see a lot of product messaging obviously because they don't have a communications
• 24:05
  department.
• 24:06
  The emphasis just has not been on the product.
• 24:07
  Well, I still think there's a little bit more here in the end.
• 24:11
  I mean, not all the answers are going to be through your own media here.
• 24:15
  But for me, the term I like using is architecting transparency.
• 24:20
  So architecting transparency is a little bit more effective than just trying to control the
• 24:24
  message.
• 24:25
  You know, you can't message your way out of a disconnect between expectations and reality.
• 24:30
  But what Tesla could do is build in real transparency so that third parties, regulators, partners,
• 24:37
  even skeptical customers can see that their actions are in alignment with their claims.
• 24:41
  And that's going to carry far more weight than any kind of paid advertising campaign.
• 24:47
  But if you're, you know, if your behavior and expectations don't match, there's no amount
• 24:52
  of advertising that's going to save you here.
• 24:54
  So that's part of the issue.
• 24:56
  You could spend billions in advertising, but if customers feel misled or employees don't
• 25:00
  believe in the mission or if stakeholders see a gap between words and actions, that's going
• 25:05
  to be where the world damages.
• 25:06
  And they don't need to have a better ad budget.
• 25:09
  They just a better alignment between their promises and reality.
• 25:12
  I think that's fair.
• 25:14
  One thing that has been on my mind is we think about this.
• 25:17
  We call it the Tesla scale of impact on a company because of the policies in this period,
• 25:25
  especially related to Trump.
• 25:26
  Who would be second, a distant of super, like Pluto, distant second, but who would be second
• 25:33
  on that scale as far as impact to a company's reputation because of their interaction with
• 25:41
  Trump policies?
• 25:43
  It has to be target.
• 25:44
  Okay.
• 25:45
  We made that decision in January to announce changes to their diversity policies and it was
• 25:49
  swept up in the frenzy of news that week.
• 25:53
  But it has had a much longer tail than I think anybody expected.
• 25:58
  And now we are hearing, this could be a topic for a future podcast.
• 26:02
  Now we are hearing about potential boycotts, one day boycotts, one month boycotts, who knows
• 26:09
  how much will materialize.
• 26:12
  But I think that it's nowhere near the impact that Tesla has experienced, but it's certainly
• 26:19
  a very interesting case study for the distant number two on that scale.
• 26:24
  So look, Target is the best example of how a single decision can create narrative accretion.
• 26:30
  It wasn't just one headline.
• 26:32
  It was the rolling, sustained backlash that stuck.
• 26:35
  They made changes to their DEI policies.
• 26:38
  And before they could control the framing, the story had already hardened, right?
• 26:42
  Target gave us to conservatives.
• 26:44
  Target baked back down to DEI.
• 26:46
  And the impact is lasted.
• 26:47
  So we still hear about Target as the company that got burned.
• 26:51
  Other companies saw that and of adjusted.
• 26:53
  They're making the same moves just with better timing, better messaging and less visibility.
• 26:58
  So certainly, yeah, Target was the lesson everyone else took notes.
• 27:02
  Target was the high water mark, I think, on this diversity, the changes to diversity policies
• 27:08
  and I think the other companies were in a similar time frame, time, the Walmart McDonald's
• 27:16
  meta, certainly.
• 27:18
  And some companies went further than Target did.
• 27:21
  But in that weekend, you would have thought that Trump himself killed DEI at Target because
• 27:25
  everybody was talking about Trump.
• 27:27
  They took that moment at the end of that week to make their diversity policy changes.
• 27:32
  And then the coverage, immediate coverage was really about Trump.
• 27:35
  And I'm guessing in that moment, they probably felt like, okay, well, everybody understands
• 27:40
  that it wasn't us, it was Trump.
• 27:42
  But I get it.
• 27:43
  The tail has been so long on this.
• 27:45
  Your narrative accretion.
• 27:47
  I'm, yeah.
• 27:48
  Got a new term, which is a good one.
• 27:51
  You like it?
• 27:52
  Yeah.
• 27:53
  I do.
• 27:54
  I understand it.
• 27:55
  Okay.
• 27:56
  All right.
• 27:57
  So I guess as we wrap up, there is one other thing that I'm thinking about as well.
• 28:00
  We talked a little bit about briefly about not having a translator and having two highly
• 28:04
  visible cases.
• 28:05
  And others, what this means for companies, communications mindset.
• 28:09
  So I would say every company's got a communications mindset, whether they realize that or not.
• 28:14
  It's not about having a PR team or corporate affairs function.
• 28:18
  It's about how leadership views communication as a tool for influence strategy and risk management.
• 28:24
  And in Tesla's case, their communications mindset is just radically different from traditional
• 28:30
  corporate structures.
• 28:31
  For most companies, communication is about shaping external narratives, managing reputation
• 28:36
  and ensuring that there's alignment across stakeholders.
• 28:39
  But for Tesla, it's purely about direct leadership communication with no filter, no safety
• 28:44
  net and no traditional messaging infrastructure at all.
• 28:49
  Right.
• 28:50
  So I would say, you know, musk's mindset, whether intentional or not, it's created a model
• 28:53
  where there's no distinction between the CEO and the brand.
• 28:57
  There's no comms, team to absorb the backlash.
• 28:59
  There's no structured approach to stakeholder engagement.
• 29:02
  Everything flows directly from musk in real time.
• 29:05
  And I think that's why Tesla's reputation swings as dramatically as he does.
• 29:11
  But here's the thing, you know, as we're closing out, I just want to suggest that communications
• 29:15
  mindset can determine competitive advantage.
• 29:18
  And if you know, if a company sees communication as a strategic force, it can amplify its ability
• 29:24
  to shape the market position, build trust and mitigate risks.
• 29:27
  But if leadership sees communication as reactive, secondary or optional, then it becomes more
• 29:34
  of a liability than as an asset.
• 29:37
  And I think now Tesla's kind of living the consequences of that choice.
• 29:41
  So for companies watching this play out, to me, the lesson isn't just about musk, it's about
• 29:46
  how your leadership team views communication.
• 29:48
  And if your communications mindset is weak, then your influence on the market is weak.
• 29:52
  If you don't intentionally define your approach to comms, then your media, your competitors,
• 29:58
  your critics are going to do it for you.
• 30:00
  Great point to end on and could not agree more.
• 30:03
  That is our show for this week.
• 30:04
  We want to thank Shawn P Neal and the PeopleForward Network for making our podcast possible.
• 30:10
  If you'd like to tell us what you think, there you have a topic you'd like to suggest for
• 30:13
  our show.
• 30:14
  We'd love to hear from you.
• 30:15
  We actually had listeners write in and ask us to talk about Tesla, which was great,
• 30:19
  although we were already planning to do it just so you know.
• 30:21
  Our email address is podcast@ocrnetwork.com.
• 30:26
  Communication breakdown is a production of the Observatory on Corporate Reputation.
• 30:31
  I'm Steve Dowling.
• 30:32
  And I'm Craig Carroll.
• 30:33
  Thanks for listening.
• 30:34
  We'll be back next week.
• 30:35
  [MUSIC]