General Motors Like a Rock?

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Copyright 2002 by Keith Krehbiel. All rights reserved. Reprinted with permission.
What is an institution?
What is an legislature news media news media public sentiment
institution? (advocacy mode) (transmittal
mode)
1. arena for yes yes yes yes
competition or
conflict
resolution
2. populated by officeholders editors, editors, people
actors with journalists journalists
preferences and
(self?) interests
3. its actions yes; e.g., pass a yes; draw no individual or
resolve (at law conclusions collective action
least in part) the (e.g., boycott)
conflict or comp.
4. those actions yes yes, usually no yes; this may
reduce extent depends occur through
managerial on whether either the market
discretion; i.e., it viewers or or nonmarket
matters readers are environments
persuaded
Is it an yes; yes; not clear; it is yes, if action and
institution? governmental nongovernmental certainly an arena effect are
for competition present;
for coverage and nongovernmental
treatment

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When is the news media an interest?

When it operates in other institutional arenas for its

own benefit; e.g., for stronger protection from
defamation lawsuits.

Is Dateline an interest? Is Dateline acting in the

institution of public sentiment for its own benefit; e.g.,
seeking status, power, or social impact?

It certainly seeks advertising revenue by attracting

viewers.

What mediates between its roles as an institution and

its interest? Professional standards and editorial
controls.

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Objectives of the GM Like a Rock? case
Consider a complex strategic situation involving the
public, activists, trial lawyers, government, and the
news media
Consider the role of the news media in nonmarket
issues
Consider strategy formulation and implementation in
the eye of the media
Predict (make reasoned judgments about) what is
likely to occur as a function of the strategy chosen
and the strategies of the other interests and
officeholders

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Role of the news media in the business environment
Provide information to the public--essential in a democracy
The media cannot be used as part of a strategy
But, its decisions about coverage and treatment can be
anticipated--theory of the media--and activists and interest
groups choose strategies anticipating the medias decisions
News media can be viewed as an arena to which strategies are
directed
News media protects its editorial judgment above all
News medias judgment is protected by freedom of the press
Assumed a role as protector of the peoples right to know
Thomas Jefferson
Were it left to me to decide whether we should have a
government without newspapers or newspapers without a
government, I should not hesitate to prefer the latter.

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Between a Rock and a Hard Place -- February
S M Tu W Th F S
1. 2. 3. 4. 5. 6.
Pearce January Moseley Moseleys
meets sales off. verdict on
GM's S&P announced Today.
Board of down-
Directors grades GM
GM's meets
debt.
7. 8. 9.* 10. 11. 12. 13.
Ditlow,
CAS, .
press
confer.
Dateline
tonight
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Features of the strategic situation
Underlying issuevehicle safety
overall safety comparable to (better than?) other
trucks
or, a defective design for side impact collisions?
A good story for the media
a highly critical Dateline story
Suspicions
GM expresses concerns to NBC about fairness
others investigate and bring information to GM
What to do?
Let a sleeping dog lie? (The story was aired nearly
three months ago.)
Act? As a matter of principle? Or, for what benefit?
Will it hurt more than it helps?
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The news media and C/K pickup trucks
issue vehicle safety
audience interesthigh
societal significancemoderately high
issue malfeasance(?) by GM wrt design (and recalls)
audience interestmoderately high
societal significancehigh
coverage and newsworthinessa good if not great story
treatmentadvocacy?
presentation of Dateline segment
human tragedy/people telling stories
controversy and conflictDitlow, trial attorneys, experts
visual and vivid
demonstration of crash and fire (NBCs proof)
protector of peoples right to know
Public is ignorantwhat does it conclude from Dateline?
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 Analytic approach to GMs problem--post-Dateline

Analysis Strategies Frameworks Predictions Outcomes

Issues
Interests Anticipated
Counteract
Institutions Theory of consequences,
Specific given actions by:
Information the media uncertainty
alternatives
Life cycle - CAS remains
including:
Facts and strategy - Trial Lawyers
-defamation
Private - NHTSA Implementation
-public
Audience collective - Courts matters
communication
interest action (to be - Media
-withdraw
Societal continued
advertising -Consumers
significance on Friday)
-complain to -
government
Regulatory
status Ignore - CAS uncertainty
-trial lawyers remains
Lawsuits -courts
- NHTSA

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How will the news media treat GMs response
Issue of the truthfulness of the Dateline story
audience interestlow to moderate
societal significancehigh; implies coverage
Medias reaction?
Will the media circle their wagons and protect NBC?
Will they cover the story objectively?
Answer depends on the strength of GMs case.
Will GM have a chance to tell its story?
positive messageoverall crashworthiness
negative messages
NBC fabricated the demonstration
NBC denied that it did anything wrong
What should GM seekcompensation or a retraction?
Will the news media be more cautious in the future?

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What GM did -- summary from GM Like a Rock? (B)

Established crisis management team - swat team

Reframed the issue - overall crashworthiness
Defamation suit with precise, extra-legal objective:
Dateline retraction (not compensation)
Shifted advertising from NBC News to NBC
entertainment: symbolic gain without financial pain
Major press conference on Monday
150 journalists, 25 camera crews, simulcast to GM
dealers and major suppliers
prosecution with evidence
sharp, prioritized messages / audiences:
overall crashworthiness / customers and general public
compliance with government standards / NHTSA
wrongdoing by NBC, pre- and post-Dateline / media
institutions and public generally 11
CAS Update
Campaign GM Firebombs went ahead as scheduled but
received minimal coverage relative to GMs press conference
In June 1994 a U.S. District judge fined Ditlow and his
attorney for flagrantly violating a court order not to provide
information from depositions in one trial to attorneys involved
in other trials. The fine was $5,000 for each attorney plus
$37,000 in legal fees to be paid to GM.
Ditlow claimed that the lawyer receiving the information was
unpaid counsel.
These actions stem from a defamation suit against Ditlow by
an attorney who had worked for GM (Ditlow called GM officials
fire babies who burned corporate documents).
Ditlow claimed in 1997 (on the occasion of the 25 th
anniversary of the introduction of the C/K trucks) that the gas
tanks had claimed 800 lives.

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Regulatory update

NHTSA asked for a voluntary recall in April 1993

(cannot force GM to pay for a recall of vehicles sold
more than eight years before final decision).
GM refused.
Dept. of Transportation head Pena pushed for a quick
review but eventually conceded that the issue was
very complicated. (must show an unreasonable
safety risk)
GMs interpretation was that there was internal
disagreement within NHTSA and/or lack of support
from the Department of Justice.
No recall but GM agreed to spend $51 million on
safety programs including buying 200,000 child safety
seats for low-income families
Lawsuits settlement discussed in E200
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NBC update
Day after GM press conference, NBC News made
an embarrassing retraction not disputing GMs
facts
NBC News paid for GMs costs of investigation
New NBC policy--no unscientific demonstrations
NBC commissioned an independent investigation
Established the position of ombudsman for
professional standards and program review
Producer was fired
Dateline senior and executive producers resigned
(went to work for ABCs 20/20
Michelle Gillen was reassigned to Miami
President of NBC News retired (was fired)
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Moseley update

In June 1994, the Georgia Court of Appeals

overturned the $105 million Moseley verdict.
Prosecutors repeatedly violated judges warning not to
inject information from other trials/accidents without
establishing its relevance.
References to the NHTSA investigation were also held
to have been inadmissible.
GM hailed it as a major victory, even though the case
was to be retried.
Ditlow of the CAS was delighted. There is so much
more good information available today for a lawyer
that they might break the bank against GM next time.
Case was settled out of court shortly after the Court of
Appeals ruling.
- New York Times, 6/14/94

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Conclusions
Nonmarket issues are often incompletely-formed and thus
their development can be affected by managers (particularly
early in the issue life-cycle), but they become much more
difficult in the eye of the media.
To answer the question What should a company do? takes a
blend of
intuition and experience
analysis and prediction (application of frameworks)
strategy formulation and implementation
We will incrementally develop frameworks useful in analysis,
prediction, and strategy formulation and implementation.
In its successful response, GM was lucky that NBC acted so
egregiously. It is very hard to beat the news media.
Was there a safety flaw in the C/K pickups?

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