The world of the instantaneous corporate scandal

The world before the internet used to be far more comfortable for companies caught doing embarrassing things, as both KFC and H&M have discovered.

Do something wrong – or even something that American internet users deem to be wrong – and you will be pushed on to the defensive extremely rapidly.

Wednesday’s examples were H&M, which was caught by the New York Times shredding unsold clothes from a Manhattan store, rather than donating them to the homeless; and a KFC television advertisement in Australia which provoked (in my view misplaced) accusations of racism in the US.

Whatever the rights and wrongs, the internet firestorm quickly raged out of control. The KFC ad was picked up by outlets including Gawker – which was particularly hostile – and the Huffington Post, while the H&M story is a trending topic on Twitter as well as being featured by HuffPo.

KFC appears to have reacted faster than H&M by pulling the advertisement – which showed an Australian cricket supporter offering West Indian supporters fried chicken. H&M’s Facebook page is still full of very hostile messages, with no clear corporate response.

Of course, before the broadband internet, it would have been impossible to watch an Australian television ad in the US shortly after it aired but that technological barrier has now gone.

As to H&M, it was embarrassed in the old-fashioned way, by a newspaper reporter, but the amplification of the outrage online is a new phenomenon.

The discomfiting lesson for companies is that they need to be able to react rapidly to PR crises that blow up on the internet – preferably instantaneously. Things can get out of control very fast.

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This blog is mainly about business and strategy and how and why people who run companies take the decisions that they do.

Most of the time, John Gapper is in New York and Andrew Hill is in London. We occasionally debate business issues between us, but your comments and criticism are welcome.




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About John and Andrew

John Gapper is an associate editor and the chief business commentator of the FT. He has worked for the FT since 1987, covering labour relations, banking and the media. He is co-author, with Nicholas Denton, of All That Glitters, an account of the collapse of Barings in 1995.

Andrew Hill is an associate editor and the management editor of the FT. He is a former City editor, financial editor, comment and analysis editor, New York bureau chief, foreign news editor and correspondent in Brussels and Milan.

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