What Purdue’s Sackler Family Can Teach Families About Transparency And Being The Best Owners.
‘There’s no such thing as bad publicity’ is a saying that can be traced back to the eighteen-hundreds but is indeed wisdom that should never be employed by a family-run business today when discussing brand management. Who has heard of the Sackler family? Until recently, the majority of the American public who, for years, have been purchasing pharmaceuticals manufactured by Purdue Pharma, would not be aware of the Sacklers — an American family at the helm of this multi-billion dollar enterprise. When Oscar Wilde said that “The only thing worse than being talked about is not being talked about,” the Sacklers would surely disagree. They are now a household name in America and abroad- not because of their $13bn fortune, or their philanthropic investments into the Metropolitan Museum of Art and the Louvre, but due to their alleged unethical business practices contributing to the massive opioid crisis in America.
So what learnings can we take from the Sackler controversy and apply to our own brand management?
The Reputations Of Families And Their Businesses Are Inextricably Linked.
The two lawsuits against Purdue Pharma are clearly not just an effort to secure compensation. Investigations are aimed at exposing the extent to which the Sacklers themselves have been calling the shots. Recently, more than 500 counties, cities and Native American tribes have named the Sacklers in a case in the Southern District of New York. Families need to be very conscious of the fact that it is the owners and executives behind brands and businesses that tend to be targeted when questionable business practices and high-risk products negatively impact communities. That is why we are seeing many powerful families exiting controversial industries that they helped build, tobacco being a good example, as they recognise the need to keep brand management and the centre of their decision making.
Company Ethics Need To Go Beyond Window-dressing
Even companies like Google, who are renowned for their mantra of ‘Do no evil,’ are struggling to apply their ethical principles consistently, the tricky issue of artificial intelligence being a case in point. Businesses are coming under intense scrutiny as the global community becomes more socially and environmentally conscious and therefore companies, especially family-run enterprises, need to protect their reputations by applying a consistent and authentic ethical compass to all decision-making and brand management strategies, across and through their structures.
Recently, we have also seen many companies and families being accused of philanthrocapitalism or reputation laundering. The Chan Zuckerberg Initiative, founded by the tech billionaire and his wife, pledged 99% of Zuckerberg’s shares in Facebook to the mission of advancing human potential and promoting equality. Zuckerberg was lauded for his generosity, but a closer look at the facts revealed that this Initiative was not a not-for-profit vehicle, but a limited liability company. This allowed Zuckerberg to do much more than charitable activity, but potentially invest in other companies and make political donations with significant tax advantages, whilst yielding a massive PR benefit to Facebook. Regardless of Zuckerberg’s actual intent, the point here is that companies need to act with transparency and integrity or risk serious reputational damage.
A more blatant example of ‘window-dressing,’ is the practice of investing money into the mitigation of ongoing damage caused by your company. Purdue is a classic case in point, media reports alleging that the company planned to profit from selling treatments for opioid addiction while still aggressively marketing their opioid-based products, during an addiction crisis. It is doubtful whether the Sacklers will ever be able to resurrect their reputation after the hammering they have taken for these alleged actions.
Governance And Transparency Is Critical
Decision-making needs to be aligned to well-articulated guiding principles, and there needs to be adequate governance in place to ensure that companies consistently act by these principles, and remain with the guidance of their brand management strategy or risk a reputational fall-out. This is not only critical for running a business in the current environment but ensures that the next generation is not left with the almost impossible task of mitigating and correcting the questionable decisions and direction that a company takes today.
The global community is demanding greater transparency. This poses a significant risk to businesses that are profiting from unethical practices but presents a massive opportunity to companies who embrace this trend and openly align their business models, offerings and activities to an authentic set of values and priorities.