Hindu Hotdogs

Why There's No Escaping the Blog - FORTUNE (Hat Tip: Instapudit)

Just as Rathergate was breaking, corporate America got its clearest sign of blogger muscle—in this case, brought on not by memos but by a Bic pen. On Sept. 12 someone with the moniker "unaesthetic" posted in a group discussion site for bicycle enthusiasts a strange thing he or she had noticed: that the ubiquitous, U-shaped Kryptonite lock could be easily picked with a Bic ballpoint pen. Two days later a number of blogs, including the consumer electronics site Engadget, posted a video demonstrating the trick. "We're switching to something else ASAP," wrote Engadget editor Peter Rojas. On Sept. 16, Kryptonite issued a bland statement saying the locks remained a "deterrent to theft" and promising that a new line would be "tougher." That wasn't enough. ("Trivial empty answer," wrote someone in the Engadget comments section.) Every day new bloggers began writing about the issue and talking about their experiences, and hundreds of thousands were reading about it. Prompted by the blogs, the New York Times and the Associated Press on Sept. 17 published stories about the problem—articles that set off a new chain of blogging. On Sept. 19, estimates Technorati, about 1.8 million people saw postings about Kryptonite (see chart).

Finally, on Sept. 22, Kryptonite announced it would exchange any affected lock free. The company now expects to send out over 100,000 new locks. "It's been—I don't necessarily want to use the word 'devastating'—but it's been serious from a business perspective," says marketing director Karen Rizzo. Kryptonite's parent, Ingersoll-Rand, said it expects the fiasco to cost $10 million, a big chunk of Kryptonite's estimated $25 million in revenues. Ten days, $10 million. "Had they responded earlier, they might have stopped the anger before it hit the papers and became widespread," says Andrew Bernstein, CEO of Cymfony, a data-analysis company that watches the web for corporate customers and provides warning of such impending catastrophes.

Those who have tried to game the blogosphere haven't done much better. Mazda, hoping to reach its Gen Y buyers, crafted a blog supposedly run by someone named Kid Halloween, a 22-year-old hipster who posted things like: "Tonight I am going to see Ministry and My Life With the Thrill Kill Cult.É This will be a retro industrial flashback." He also posted a link to three videos he said a friend recorded off public-access TV. One showed a Mazda3 attempting to break dance, and another had it driving off a ramp like a skateboard, leading in both cases to frightening crashes. Other bloggers sensed a phony in their midst—the expensively produced videos were tip-offs—and began talking about it. Suddenly Mazda wasn't being hailed; it was being reviled on widely read blogs. "Everything about that 'blog' is disgusting," wrote a poster on Autoblog. Mazda pulled the site after three days and now says it never intended it to have a long run. "It was a learning experience," says a spokesman. Tig Tillinghast, who runs the respected advertising industry blog Marketingvox.com, calls Mazda's blogging clumsiness "the moral equivalent of doing an English-language print ad that was written by a native French speaker."

"If you fudge or lie on a blog, you are biting the karmic weenie," says Steve Hayden, vice chairman of advertising giant Ogilvy & Mather

Being a rabid blogger and a Corporate Executive, I've certainly sensed the "transperency" aspect of blogging as very threatening. Companies do a lot to suppress bad news...I don't find it as sinister as the sensational cases (Enron-WorldComm-Adelphi etc). I'm thinking of the bland-ass Company Newsletter (now Website) that wreaks of Orwellian happy news. I do find good companies unbelievably self-critical, but they rarely do it publicly. You don't see a Fortune 100 Harvard MBA CEO blubbering through a bitten lower lip re-hashing his failure in front of the world.

So when it comes to the immediate impact on new products, unhappy customers, and "getting real', I see corporate leaders very generationally challenged. They will be caught with their pants at their ankles. If there were a serious blog for every Fortune 500 company...a group blog like Command Post..look out. You could say that we've had whiny hysterical message boards for years and they done nothing much, but blogs are different and they have real traction and many times, real accountability. The message boards never took downs a News Anchor.