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Welcome back to Communication Breakdown, a new podcast from the Observatory on Corporate

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Reputation.

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Thanks for joining us.

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I'm Steve Dowling in Silicon Valley.

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I'm Craig Carroll in New York City.

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Each week, Steve and I take a look at strategies companies are using to shape headlines and

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sometimes save their skins.

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It's a post-game show for PR Pros.

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This week, personal politics takes a toll on Tesla sales and shareholders.

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That could the magnificent seven shrink to six?

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Tesla's market cap dipped below $1 trillion this week, with shares down some 35% from their

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peak in December.

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Most of that precipitous drop has been since inauguration day when Trump took office alongside

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his top donor, Tesla CEO Elon Musk.

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And while Tesla has seen recalls, weak financials and slowing sales growth, Elon's extra

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curricular activities are increasingly getting the blame.

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In the European analyst's old Bloomberg this week, quote, Tesla's biggest challenge

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in 2025 is in technology its perception.

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After discussing it briefly in last week's episode, we decided the impact on Tesla's reputation

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is worth a closer look.

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And maybe there are some learnings for the rest of us.

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The numbers from Europe are stark.

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In Germany, Musk threw his support behind the right wing AFD party in last week's elections.

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Tesla sales there were down 60% in January.

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In the UK, Elon's been attacking the new labor government and endorsing the populist

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reform UK party.

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Tesla sales there are down 8% and recent polling shows 71% of Britain's have an unfavorable

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view of Musk.

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Earlier this week of video in London went viral, trolling him with a bus shelter ad for a fictional,

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Tesla branded swastikar with Elon giving a Nazi salute.

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The caption goes from 0 to 1939 in three seconds.

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And here in the United States, buyers for more has been a recurring theme among Tesla owners

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going back at least two years.

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And that's when a Bloomberg survey of Tesla owners found that their opinion of Elon had

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dropped from almost 4.5 on a five point scale to just under three.

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We don't have recent sales data for the US, but as we mentioned a moment ago, the stock

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is in the slump and multiple analysts are saying that Musk's political activities are a factor.

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Steve, what to do here?

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How should Tesla be responding?

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Where does Tesla go from here?

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Well, the stock is down pretty hard, so it's a company problem.

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The question is, can they do something?

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Should they do something?

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And I think the thing that you would do in this situation is put some distance between

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these policies, this posture of the CEO and what the company actually does and how it

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actually makes money.

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The question then, can they, the answer is probably no.

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I mean, look at the factors.

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The board has been criticized for years as too cozy, too much of an enabler for Elon.

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I think if they could do something, I would think you would start with advertising, reiterate

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what the company does well, that it stands for something other than politics.

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But Tesla doesn't advertise very much.

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They have no agency of record.

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Their advertising spend is tiny, mostly online.

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So it's not like they can do a, quickly do a big TV ad.

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And the third thing, which is probably most relevant to our podcast is they famously have

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no comms team.

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There are just no levers to pull.

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Elon does not believe in PR other than his own outbursts on Twitter, which are, which are

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Legion.

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But for all practical purposes, can they distance themselves from him?

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I don't think so.

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First of all, there's so much there, right?

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I mean, there's the question of, should there be a distancing between Musk?

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That's one thing.

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I think dealing with the board's response is another factor.

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And the fact that you mentioned, they don't even have a comms team.

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And I think, lastly, whether or not advertising plays any role here, let's start with the first

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one of whether or not they should be distancing themselves from Musk, whether they can or if

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they should.

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All things being equal, if you're just looking at this, let's say from a shareholder perspective,

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or maybe an employee perspective.

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You're just looking at it as the work itself, the development and production of cars to sell.

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Yes, you would want to eliminate this major distraction, not eliminate, eliminate, but

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you would, you would like to be not as closely associated with it.

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But I don't think that it is possible because of the way the company runs, the way it has

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been set up.

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It is, I think, in the short term, inseparable from the CEO.

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So I think for the people inside of Tesla, the question is, what do we do about that?

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And unfortunately, one of the options they have are kind of like, well, you deal with it

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and you run through it.

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So I think that the normal rules just don't apply here.

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And on the one hand, I think that is probably how it has been set up because that has worked

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so far.

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And for all the criticism he is coming under, deservedly so, he is an ambitious executive

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who has pushed this company to the forefront of electric vehicles.

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I think for a while, certainly, they were synonymous with electric cars.

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But that close association, there is a downside to it now, a very clear downside, I think, as

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analysts are identifying.

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And it is not clear what the company can do about it.

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Part of the issue here is that there is no traditional levers for them to pull.

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Tesla doesn't have a communication scene.

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We've established that.

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It just has one guy doing the job and that guy is Elon Musk himself.

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Most companies will have a pure person to shape the message, but here, there are CEOs, the

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one who is the message.

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It's not like they forgot to hire a pair of professionals.

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They just made a strategic decision not to have them.

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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

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out or in Twitter's case, just straight up acts them because he just sort of felt they

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weren't needed.

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And I wonder about whether that was not that the communications function was not needed,

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but that someone to tell him to do things differently or that maybe the way he was going about

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it wasn't the best was what he was really looking to eliminate.

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Yeah, and but also from a media perspective.

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I don't think he has any trouble generating media attention himself.

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And I think that's part of the reason another issue, right, that he doesn't have anyone

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in communications.

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But they could benefit from is better alignment between what it says, what it does and what other

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people are experiencing right now.

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The thing is you have to look at the magnitude of each of those factors like if Tesla had

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a runaway popular product that every owner loved and you had a CEO who did some crazy things

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on the side, you would think that that would be manageable the way you describe it.

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Instead, I think you have Tesla, which has a product that is popular in some circles and

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they had an early lead, but now there are tons and tons of new entrants.

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They have they have a lot more competition than they did even three years ago.

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And especially as we look at Europe, there are Chinese manufacturers who are coming to market

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with some really strong competitors.

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So I'm not an expert in automotive area though we've done a lot of shows about cars, which

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is fun, but they face real competition.

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So they're not the only game in town.

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And I think more importantly, the outsize profile of their CEO is just getting so much more

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attention than anything they're doing on the product side.

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It is really, here's a guy who makes cars and look at all the things that he's doing.

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And especially in Europe, the activity is very disruptive on the election side and he's

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very vocal in the UK.

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So I think that it's just that the balance is completely out of whack for Tesla.

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And it's real because it's showing up in sales certainly on the continent.

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Seems to be happening in the UK.

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It's amplified by the fact that they're losing market share because of the new entrants.

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Well, okay.

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There's actually a couple of things there that I want to hit on because I know that is

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significant impact on their sales, right?

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You know, losing 50% of sales in a key market, that's huge.

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But when you consider the fact that they only had 1% of the market, I don't know.

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It just seems like from a media perspective, if that part is not in there, I mean, obviously

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it loses its newsworthiness there, but it is part of the story.

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Well, it's the part of the story I think when it comes to the stock and to the company

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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

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if we look at the story of Tesla, this has got to be a four alarm fire.

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And no, it is.

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So I don't want to discount that.

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But the fact that they only have 1% of the European market number one.

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Number two, they haven't even introduced a car there since 2021, right?

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So it's been four years without a new car.

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I would have to ask, you know, is this is this all about perception?

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Are there some additional business factors here as well that affect the sales?

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I mean, I know I'm not going to go out and buy an electric vehicle that's already four

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years out of date.

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Well, I mean, first off, I think the electric vehicles, especially Tesla, I would argue, are

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a little different in that equation because the software updates are much more frequent.

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But half of 1% seem like not much in the scale of the market.

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But half of what they were selling is that's a big.

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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

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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.

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And of course, this is by analysts are looking going, what's changed?

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Oh, well, Elon's being very vocal in Germany and in the UK and in the US politically.

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And that's why they're reaching that conclusion.

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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

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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,

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except if this episode with Elon sort of fades and it was just a phase.

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You can go back to make cars, but I don't think anybody thinks that's likely to happen anytime

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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

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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

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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

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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.

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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

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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

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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.

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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

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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

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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.

236
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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.

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If they say it's going to be bad, it's probably going to be bad and are we ready?

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Yeah, I know it's a joke about you need to know where they live to lie down in their driveway.

240
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But also it's not.

241
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The best CCOs understand that sometimes their job is to throw themselves in front of a bad

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decision.

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But the real skill isn't just stopping you from making a bad mistake.

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It's making them think it was their idea to abort it in the first place.

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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.

249
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Yeah, and you've got to make sure that you're at all times you're part of a team, right?

250
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It's, you know, I know we're headed towards this decision, but I think it could be a really

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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

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to face.

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And then this is the position we're going to be in.

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Like here's the explaining we're going to need to do to this audience.

257
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Or here's what we might have to make up for.

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And that here's what that might look like.

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Yeah.

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So look James Carvell is the one I was thinking of in terms of the response here on whether

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Democrats should just let the administration have all the rope that they need to hang themselves.

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That's the issue.

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But not stop fighting things.

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Just let it play out.

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You know, have we exhausted that?

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How does that?

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Any situation where you let that happen with your CEO?

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I don't believe so.

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I mean, I don't believe in the let it happen strategy.

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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.

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I mean, at some point you have to let it happen because you don't have a veto.

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The boss is the boss disagree and commit, but you can disagree or make the counter point

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right up until you have to commit right up until the decision is made.

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Yeah.

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The best thing I think you can do is be setting expectations for what the reaction will

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be.

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It's easy to succumb to second guessing on that.

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Maybe it won't be so bad.

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Maybe he's right.

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Sometimes, sometimes the person with the idea you think is really bad is right.

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It can be lonely being the dissenter in these situations and you don't want to be Debbie

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down or all the time.

285
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Right.

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Over time, over a relationship, a career of accurate calls, ideally people listen when you

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raise a note of caution.

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Look, if you can't deliver bad news, you really shouldn't be a CC on the first place.

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You know, your value isn't like telling leadership what they want to hear.

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It's about being able to give them the truth before the market does because if you wait

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too long for the backlash starts, you're not leading, you're reacting like everyone else.

292
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So delivering bad news isn't just about saying this is a terrible idea.

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You've got to be able to show consequences before they happen.

294
00:16:50,040 --> 00:16:51,040
What will investors do?

295
00:16:51,040 --> 00:16:52,400
How will employees react?

296
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What's the media angle?

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What a great CCO's got to be able to anticipate the backlash before it happens and present

298
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solutions before too late?

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As you keep bringing up James Carve, let me just give you my two cents on the let it break

300
00:17:04,680 --> 00:17:05,680
philosophy.

301
00:17:05,680 --> 00:17:06,680
Yeah.

302
00:17:06,680 --> 00:17:11,400
I think that the weird thing about that is that it's kind of playing the Elon Musk, the

303
00:17:11,400 --> 00:17:13,360
Doge game.

304
00:17:13,360 --> 00:17:17,680
The approach seems to be like, you know, the Elon, we're going to dial everything way

305
00:17:17,680 --> 00:17:18,680
back.

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00:17:18,680 --> 00:17:22,080
We're going to slash, you know, budgets and headcount, whatever way back and see what

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00:17:22,080 --> 00:17:25,320
breaks or see what, you know, what the impact is, see what doesn't work with.

308
00:17:25,320 --> 00:17:28,520
And you can do that in an enterprise software company.

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00:17:28,520 --> 00:17:32,840
You can't do that with Ebola or air traffic control or Medicare.

310
00:17:32,840 --> 00:17:35,840
It doesn't translate to government, I think.

311
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And so unfortunately, the let it break philosophy is kind of playing at Elon's game.

312
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And I don't think that's, I don't think it's going to work.

313
00:17:44,280 --> 00:17:49,040
Well, look, I'm going to push this idea of how we think about a response a little bit

314
00:17:49,040 --> 00:17:51,000
further here.

315
00:17:51,000 --> 00:17:54,560
Because, you know, at the end of the day, it's going to be the CEO making the decision, but

316
00:17:54,560 --> 00:17:59,640
I'm going to say if the communication leader is ignored, I'm going to blame them.

317
00:17:59,640 --> 00:18:05,000
I'm going to say if they had no role in the decision, then they failed in making their

318
00:18:05,000 --> 00:18:07,320
viewpoint impossible to ignore.

319
00:18:07,320 --> 00:18:09,560
And that means that they weren't just good enough at their job.

320
00:18:09,560 --> 00:18:12,400
But the communications leader could get blamed at any given moment for anything.

321
00:18:12,400 --> 00:18:16,600
So they just need to be ready for that no matter what.

322
00:18:16,600 --> 00:18:18,000
That also comes with the job.

323
00:18:18,000 --> 00:18:22,080
Well, yeah, but sure, but look at you made a kid who's job isn't just about offering advice.

324
00:18:22,080 --> 00:18:26,000
It's about making sure that the advice is heard, considered and factored into the decision

325
00:18:26,000 --> 00:18:27,000
making.

326
00:18:27,000 --> 00:18:28,000
So for sure.

327
00:18:28,000 --> 00:18:31,280
If the CEO is not listening to you, if they're not, you know, it's not just their failure,

328
00:18:31,280 --> 00:18:35,600
I feel like it's part of yours because, you know, your job isn't just to speak up.

329
00:18:35,600 --> 00:18:38,320
It's to make sure that leadership stops and thinks.

330
00:18:38,320 --> 00:18:39,760
You have to be adaptable at that.

331
00:18:39,760 --> 00:18:44,280
You have to roll with you can't be too rigid and just like this will not work.

332
00:18:44,280 --> 00:18:49,720
You kind of have to help them play it out or play it out for them and maybe, you know, it's

333
00:18:49,720 --> 00:18:50,720
not binary.

334
00:18:50,720 --> 00:18:55,520
Maybe you can help make an adjustment that makes, you know, the decision less bad.

335
00:18:55,520 --> 00:18:56,520
All right.

336
00:18:56,520 --> 00:19:00,640
Well, let's get back to the current situation with Elon Musk.

337
00:19:00,640 --> 00:19:07,240
The question I think in my mind is, are other companies being held by association or otherwise?

338
00:19:07,240 --> 00:19:13,360
Are other companies being impacted, helped or hurt by the way Elon Musk is going about

339
00:19:13,360 --> 00:19:15,360
this in government?

340
00:19:15,360 --> 00:19:16,360
Yeah.

341
00:19:16,360 --> 00:19:21,560
I'd say for other companies, Musk is clearly a double-edged sword on one hand.

342
00:19:21,560 --> 00:19:26,560
He's sucking all the oxygen, you know, if there's outrage to be had, it's aimed at him first.

343
00:19:26,560 --> 00:19:31,520
And that gives up plenty of coverage to companies that might otherwise be the target of public

344
00:19:31,520 --> 00:19:32,520
scrutiny.

345
00:19:32,520 --> 00:19:33,520
Yeah.

346
00:19:33,520 --> 00:19:34,520
But on the other, I don't know.

347
00:19:34,520 --> 00:19:39,440
He's redefining what it means to be politically lined and companies that might have been conservative

348
00:19:39,440 --> 00:19:44,160
and they might have been differently now, look, moderate by comparison.

349
00:19:44,160 --> 00:19:45,160
Exactly.

350
00:19:45,160 --> 00:19:46,160
No, I think that's right.

351
00:19:46,160 --> 00:19:47,160
So I don't know.

352
00:19:47,160 --> 00:19:48,160
That could be a liability if they're trying to play both sides here.

353
00:19:48,160 --> 00:19:50,680
So in a way, I think he's creating a new spectrum.

354
00:19:50,680 --> 00:19:57,000
You know, he's not just prohibit, he's aggressively publicly taking positions that put him beyond

355
00:19:57,000 --> 00:19:59,440
what corporate leaders would ever say out loud.

356
00:19:59,440 --> 00:20:00,440
Maybe.

357
00:20:00,440 --> 00:20:02,240
I think that shifts expectations for everyone else.

358
00:20:02,240 --> 00:20:03,240
Yeah.

359
00:20:03,240 --> 00:20:09,240
I think the interesting thing for me is that both for Trump and for some elements of corporate

360
00:20:09,240 --> 00:20:12,800
America, Elon is acting as a human shield.

361
00:20:12,800 --> 00:20:18,160
A lot of the negativity about the things that he's doing at Trump's supposed direction, but

362
00:20:18,160 --> 00:20:22,400
in partnership with Trump, a lot of that negativity is being directed at him.

363
00:20:22,400 --> 00:20:29,800
We talked about it last week, like the Tesla cars, especially the cyber truck is like a proxy

364
00:20:29,800 --> 00:20:33,000
for the policies that people don't like.

365
00:20:33,000 --> 00:20:40,520
And then for other corporations here in the US, other business leaders who are looking to

366
00:20:40,520 --> 00:20:47,480
align themselves with Trump either for ideological reasons or for business purposes or just

367
00:20:47,480 --> 00:20:52,360
defensively, to your point, Elon has completely blown the curve.

368
00:20:52,360 --> 00:20:59,480
You could sort of look at anything any other CEO might be doing in support of Trump or in parallel

369
00:20:59,480 --> 00:21:01,200
alignment with Trump.

370
00:21:01,200 --> 00:21:06,280
And it looks like nothing compared to what Elon's been doing.

371
00:21:06,280 --> 00:21:11,200
I think that's a great way of putting it that he's serving as a human shield.

372
00:21:11,200 --> 00:21:15,040
He's absorbing all the heat for Trump, just like he's absorbing the heat for now.

373
00:21:15,040 --> 00:21:16,040
For now.

374
00:21:16,040 --> 00:21:17,040
For the corporate America.

375
00:21:17,040 --> 00:21:18,040
Yeah.

376
00:21:18,040 --> 00:21:22,440
You know, if the public wants someone to lash out over deregulation, over anti-dei policies

377
00:21:22,440 --> 00:21:26,640
or over-tech monopolies, it's must first every time.

378
00:21:26,640 --> 00:21:31,160
And for every CEO who wants to be a pro-business without being the center of controversy, I don't

379
00:21:31,160 --> 00:21:32,160
think that's pretty useful.

380
00:21:32,160 --> 00:21:34,960
But I'd say here's what the risk is.

381
00:21:34,960 --> 00:21:40,960
He's put himself out there so far that he's redefining what it means to be aligned with Trump

382
00:21:40,960 --> 00:21:41,960
and these policies.

383
00:21:41,960 --> 00:21:47,000
So it's no longer about a CEO being quietly supportive.

384
00:21:47,000 --> 00:21:49,560
It's about whether they're in the musk orbit.

385
00:21:49,560 --> 00:21:54,760
The thing I think that I focus on is the collateral damage from that.

386
00:21:54,760 --> 00:22:00,720
And Tesla is experiencing it unlike any other company, I think, right now.

387
00:22:00,720 --> 00:22:05,280
The products are a proxy for Elon, a proxy for the policies people don't like.

388
00:22:05,280 --> 00:22:12,800
And we see graffiti on cyber trucks and people literally dumping eggs on them and worse.

389
00:22:12,800 --> 00:22:13,800
It's really remarkable.

390
00:22:13,800 --> 00:22:21,880
I can't think of another time when a company's products have been attacked in this way for

391
00:22:21,880 --> 00:22:25,400
something that doesn't have anything to do with the company.

392
00:22:25,400 --> 00:22:26,400
Yeah.

393
00:22:26,400 --> 00:22:32,120
There's certainly a problem having a company that's inseparable from its CEO because Tesla

394
00:22:32,120 --> 00:22:34,520
is not just collateral damage.

395
00:22:34,520 --> 00:22:37,360
It's a proxy war for musk politics, as you said.

396
00:22:37,360 --> 00:22:40,000
He's not just a business leader at politics.

397
00:22:40,000 --> 00:22:45,320
He's a political force and like it or not, Tesla is going to be carrying the consequences.

398
00:22:45,320 --> 00:22:49,560
And getting back to what we really started, the thing that you were looking to talk about

399
00:22:49,560 --> 00:22:55,480
again was if they had played it differently, not talking about the transition or any time

400
00:22:55,480 --> 00:22:59,920
in recent, if they're approached with Tesla had been different, if they had a communications

401
00:22:59,920 --> 00:23:05,040
department, if they had, I think, even more importantly, any advertising at all about the

402
00:23:05,040 --> 00:23:11,400
company and its products, you wouldn't have this such a close association between Elon

403
00:23:11,400 --> 00:23:18,840
and Tesla going into this situation where now it's just been exacerbated and Tesla shareholders,

404
00:23:18,840 --> 00:23:22,280
Tesla employees, I think are the ones who are feeling it.

405
00:23:22,280 --> 00:23:23,280
Yeah.

406
00:23:23,280 --> 00:23:24,280
I don't know.

407
00:23:24,280 --> 00:23:28,240
But Tesla really wants to fix the reputation in Europe.

408
00:23:28,240 --> 00:23:30,160
The answer is not going to be more advertising.

409
00:23:30,160 --> 00:23:33,880
I think it's going to be more engagement.

410
00:23:33,880 --> 00:23:36,680
It's going to be the same situation here in the US.

411
00:23:36,680 --> 00:23:40,320
The problem is not that people don't know what Tesla stands for.

412
00:23:40,320 --> 00:23:43,080
It's that they do and they don't like what they see.

413
00:23:43,080 --> 00:23:44,560
So the real work isn't running ads.

414
00:23:44,560 --> 00:23:50,160
I think it's getting the right stakeholders to see for themselves that Tesla is walking

415
00:23:50,160 --> 00:23:51,160
the wall.

416
00:23:51,160 --> 00:23:54,880
And bringing up advertising just because I think it's probably the most efficient channel for

417
00:23:54,880 --> 00:23:56,160
delivering that message.

418
00:23:56,160 --> 00:24:00,000
But I don't think they have that message right now.

419
00:24:00,000 --> 00:24:05,320
You don't see a lot of product messaging obviously because they don't have a communications

420
00:24:05,320 --> 00:24:06,320
department.

421
00:24:06,320 --> 00:24:07,920
The emphasis just has not been on the product.

422
00:24:07,920 --> 00:24:11,880
Well, I still think there's a little bit more here in the end.

423
00:24:11,880 --> 00:24:15,880
I mean, not all the answers are going to be through your own media here.

424
00:24:15,880 --> 00:24:20,920
But for me, the term I like using is architecting transparency.

425
00:24:20,920 --> 00:24:24,760
So architecting transparency is a little bit more effective than just trying to control the

426
00:24:24,760 --> 00:24:25,760
message.

427
00:24:25,760 --> 00:24:30,160
You know, you can't message your way out of a disconnect between expectations and reality.

428
00:24:30,160 --> 00:24:37,240
But what Tesla could do is build in real transparency so that third parties, regulators, partners,

429
00:24:37,240 --> 00:24:41,800
even skeptical customers can see that their actions are in alignment with their claims.

430
00:24:41,800 --> 00:24:47,840
And that's going to carry far more weight than any kind of paid advertising campaign.

431
00:24:47,840 --> 00:24:52,200
But if you're, you know, if your behavior and expectations don't match, there's no amount

432
00:24:52,200 --> 00:24:54,320
of advertising that's going to save you here.

433
00:24:54,320 --> 00:24:56,040
So that's part of the issue.

434
00:24:56,040 --> 00:25:00,360
You could spend billions in advertising, but if customers feel misled or employees don't

435
00:25:00,360 --> 00:25:05,320
believe in the mission or if stakeholders see a gap between words and actions, that's going

436
00:25:05,320 --> 00:25:06,800
to be where the world damages.

437
00:25:06,800 --> 00:25:09,080
And they don't need to have a better ad budget.

438
00:25:09,080 --> 00:25:12,840
They just a better alignment between their promises and reality.

439
00:25:12,840 --> 00:25:14,480
I think that's fair.

440
00:25:14,480 --> 00:25:17,320
One thing that has been on my mind is we think about this.

441
00:25:17,320 --> 00:25:25,160
We call it the Tesla scale of impact on a company because of the policies in this period,

442
00:25:25,160 --> 00:25:26,880
especially related to Trump.

443
00:25:26,880 --> 00:25:33,400
Who would be second, a distant of super, like Pluto, distant second, but who would be second

444
00:25:33,400 --> 00:25:41,480
on that scale as far as impact to a company's reputation because of their interaction with

445
00:25:41,480 --> 00:25:43,160
Trump policies?

446
00:25:43,160 --> 00:25:44,160
It has to be target.

447
00:25:44,160 --> 00:25:45,160
Okay.

448
00:25:45,160 --> 00:25:49,920
We made that decision in January to announce changes to their diversity policies and it was

449
00:25:49,920 --> 00:25:53,040
swept up in the frenzy of news that week.

450
00:25:53,040 --> 00:25:58,320
But it has had a much longer tail than I think anybody expected.

451
00:25:58,320 --> 00:26:02,080
And now we are hearing, this could be a topic for a future podcast.

452
00:26:02,080 --> 00:26:09,720
Now we are hearing about potential boycotts, one day boycotts, one month boycotts, who knows

453
00:26:09,720 --> 00:26:12,720
how much will materialize.

454
00:26:12,720 --> 00:26:19,800
But I think that it's nowhere near the impact that Tesla has experienced, but it's certainly

455
00:26:19,800 --> 00:26:24,360
a very interesting case study for the distant number two on that scale.

456
00:26:24,360 --> 00:26:30,440
So look, Target is the best example of how a single decision can create narrative accretion.

457
00:26:30,440 --> 00:26:32,560
It wasn't just one headline.

458
00:26:32,560 --> 00:26:35,800
It was the rolling, sustained backlash that stuck.

459
00:26:35,800 --> 00:26:38,440
They made changes to their DEI policies.

460
00:26:38,440 --> 00:26:42,560
And before they could control the framing, the story had already hardened, right?

461
00:26:42,560 --> 00:26:44,400
Target gave us to conservatives.

462
00:26:44,400 --> 00:26:46,660
Target baked back down to DEI.

463
00:26:46,660 --> 00:26:47,860
And the impact is lasted.

464
00:26:47,860 --> 00:26:51,280
So we still hear about Target as the company that got burned.

465
00:26:51,280 --> 00:26:53,080
Other companies saw that and of adjusted.

466
00:26:53,080 --> 00:26:58,320
They're making the same moves just with better timing, better messaging and less visibility.

467
00:26:58,320 --> 00:27:02,360
So certainly, yeah, Target was the lesson everyone else took notes.

468
00:27:02,360 --> 00:27:08,400
Target was the high water mark, I think, on this diversity, the changes to diversity policies

469
00:27:08,400 --> 00:27:16,480
and I think the other companies were in a similar time frame, time, the Walmart McDonald's

470
00:27:16,480 --> 00:27:18,200
meta, certainly.

471
00:27:18,200 --> 00:27:21,480
And some companies went further than Target did.

472
00:27:21,480 --> 00:27:25,480
But in that weekend, you would have thought that Trump himself killed DEI at Target because

473
00:27:25,480 --> 00:27:27,000
everybody was talking about Trump.

474
00:27:27,000 --> 00:27:32,520
They took that moment at the end of that week to make their diversity policy changes.

475
00:27:32,520 --> 00:27:35,720
And then the coverage, immediate coverage was really about Trump.

476
00:27:35,720 --> 00:27:40,200
And I'm guessing in that moment, they probably felt like, okay, well, everybody understands

477
00:27:40,200 --> 00:27:42,800
that it wasn't us, it was Trump.

478
00:27:42,800 --> 00:27:43,800
But I get it.

479
00:27:43,800 --> 00:27:45,280
The tail has been so long on this.

480
00:27:45,280 --> 00:27:47,280
Your narrative accretion.

481
00:27:47,280 --> 00:27:48,280
I'm, yeah.

482
00:27:48,280 --> 00:27:51,520
Got a new term, which is a good one.

483
00:27:51,520 --> 00:27:52,520
You like it?

484
00:27:52,520 --> 00:27:53,520
Yeah.

485
00:27:53,520 --> 00:27:54,520
I do.

486
00:27:54,520 --> 00:27:55,520
I understand it.

487
00:27:55,520 --> 00:27:56,520
Okay.

488
00:27:56,520 --> 00:27:57,520
All right.

489
00:27:57,520 --> 00:28:00,240
So I guess as we wrap up, there is one other thing that I'm thinking about as well.

490
00:28:00,240 --> 00:28:04,680
We talked a little bit about briefly about not having a translator and having two highly

491
00:28:04,680 --> 00:28:05,680
visible cases.

492
00:28:05,680 --> 00:28:09,560
And others, what this means for companies, communications mindset.

493
00:28:09,560 --> 00:28:14,560
So I would say every company's got a communications mindset, whether they realize that or not.

494
00:28:14,560 --> 00:28:18,360
It's not about having a PR team or corporate affairs function.

495
00:28:18,360 --> 00:28:24,240
It's about how leadership views communication as a tool for influence strategy and risk management.

496
00:28:24,240 --> 00:28:30,040
And in Tesla's case, their communications mindset is just radically different from traditional

497
00:28:30,040 --> 00:28:31,520
corporate structures.

498
00:28:31,520 --> 00:28:36,520
For most companies, communication is about shaping external narratives, managing reputation

499
00:28:36,520 --> 00:28:39,680
and ensuring that there's alignment across stakeholders.

500
00:28:39,680 --> 00:28:44,720
But for Tesla, it's purely about direct leadership communication with no filter, no safety

501
00:28:44,720 --> 00:28:49,240
net and no traditional messaging infrastructure at all.

502
00:28:49,240 --> 00:28:50,240
Right.

503
00:28:50,240 --> 00:28:53,320
So I would say, you know, musk's mindset, whether intentional or not, it's created a model

504
00:28:53,320 --> 00:28:57,600
where there's no distinction between the CEO and the brand.

505
00:28:57,600 --> 00:28:59,640
There's no comms, team to absorb the backlash.

506
00:28:59,640 --> 00:29:02,400
There's no structured approach to stakeholder engagement.

507
00:29:02,400 --> 00:29:05,160
Everything flows directly from musk in real time.

508
00:29:05,160 --> 00:29:11,000
And I think that's why Tesla's reputation swings as dramatically as he does.

509
00:29:11,000 --> 00:29:15,560
But here's the thing, you know, as we're closing out, I just want to suggest that communications

510
00:29:15,560 --> 00:29:18,800
mindset can determine competitive advantage.

511
00:29:18,800 --> 00:29:24,120
And if you know, if a company sees communication as a strategic force, it can amplify its ability

512
00:29:24,120 --> 00:29:27,600
to shape the market position, build trust and mitigate risks.

513
00:29:27,600 --> 00:29:34,200
But if leadership sees communication as reactive, secondary or optional, then it becomes more

514
00:29:34,200 --> 00:29:37,160
of a liability than as an asset.

515
00:29:37,160 --> 00:29:41,480
And I think now Tesla's kind of living the consequences of that choice.

516
00:29:41,480 --> 00:29:46,360
So for companies watching this play out, to me, the lesson isn't just about musk, it's about

517
00:29:46,360 --> 00:29:48,600
how your leadership team views communication.

518
00:29:48,600 --> 00:29:52,720
And if your communications mindset is weak, then your influence on the market is weak.

519
00:29:52,720 --> 00:29:58,080
If you don't intentionally define your approach to comms, then your media, your competitors,

520
00:29:58,080 --> 00:30:00,200
your critics are going to do it for you.

521
00:30:00,200 --> 00:30:03,360
Great point to end on and could not agree more.

522
00:30:03,360 --> 00:30:04,640
That is our show for this week.

523
00:30:04,640 --> 00:30:10,480
We want to thank Shawn P Neal and the PeopleForward Network for making our podcast possible.

524
00:30:10,480 --> 00:30:13,440
If you'd like to tell us what you think, there you have a topic you'd like to suggest for

525
00:30:13,440 --> 00:30:14,440
our show.

526
00:30:14,440 --> 00:30:15,440
We'd love to hear from you.

527
00:30:15,440 --> 00:30:19,600
We actually had listeners write in and ask us to talk about Tesla, which was great,

528
00:30:19,600 --> 00:30:21,840
although we were already planning to do it just so you know.

529
00:30:21,840 --> 00:30:26,840
Our email address is podcast@ocrnetwork.com.

530
00:30:26,840 --> 00:30:31,640
Communication breakdown is a production of the Observatory on Corporate Reputation.

531
00:30:31,640 --> 00:30:32,640
I'm Steve Dowling.

532
00:30:32,640 --> 00:30:33,640
And I'm Craig Carroll.

533
00:30:33,640 --> 00:30:34,640
Thanks for listening.

534
00:30:34,640 --> 00:30:35,680
We'll be back next week.

535
00:30:35,680 --> 00:30:45,680
[MUSIC]

536
00:30:45,680 --> 00:30:55,680


537
00:30:55,680 --> 00:31:05,680
#CorporateReputation, #Trump, #TechIndustry, #Tariffs, #Tesla, #diversity, #DEI, #StakeholderEngagement, #CommunicationStrategy #DOGE #MAGA #Musk #Elon #ElonMusk