Netflix, this one’s for you: The art of a good apology


Netflix CEO Reed Hastings has taken heat from customers for changes to the company’s business model--and the ill-received apology that followed. (MIKE CASSESE/REUTERS)
September 26, 2011

This piece is part of an On Leadership roundtable, which this week explores apologies — in light of CEO Reed Hastings’ ill-received mea culpa for Netflix changes.

“The only correct actions are those that demand no explanation and no apology,” Red Auerbach said.

If only we could all live up to the famous coach’s standards. But since we can’t, we can at least all aspire to making straightforward explanations and clear apologies.

Last week’s bizarre mea culpa by Netflix CEO Reed Hastings was neither. He began an email to subscribers with an apology, which gave the initial impression he would be reversing recent price increases. Instead, he apologized for the way he’d delivered that news, and went on to describe a new business model that could be more inconvenient for customers.

Still, many CEOs do get it right. When they do, it’s typically because they took control of the apology themselves, addressed the issue quickly, picked the right channel to deliver their mea culpa, offered a concession, and really meant it when they said they were sorry.

Consider what may be the best CEO apology of the last ten years. Former General Electric Chairman Jack Welch came under attack for a lavish (albeit well-earned) retirement package that surfaced during contentious divorce proceedings in 2002. At the time, critics contended that the perks, which included use of the company plane, went too far. But rather than let others set the terms of debate, Welch took control and published an extensive apology in The Wall Street Journal. Most important of all, he made several concessions to answer his critics, such as putting a plan in place to pay GE back for certain perks and benefits that had been provided to him over time. In the process, Welch retained his reputation as a class act, and his apology and payback have been held up as an example of good practice ever since.

Similarly, former JetBlue CEO David Neeleman kept control of the situation and used concessions to make things right after the airline famously left passengers stuck on the tarmac for hours following its ambitious attempt to take off during a 2007 ice storm. Neeleman and JetBlue promised and have since lived up to a host of changes, codified in a “customer bill of rights,” that involve cancellations (customers get a refund), overbooking (passengers get a payment if they are bumped) and, most important, onboard ground delays (the airline does not permit a delay on the tarmac of more than three hours and promised to have clean bathrooms available).

Neeleman’s apology was also clearly sincere. In it, he admitted “we are sorry and embarrassed. …you deserved a lot better from us last week, and we let you down.” Since then, the company has made a swift recovery in terms of reputation, with a top ranking for U.S. customer satisfaction.

More recently, fashion designer Kenneth Cole came under attack earlier this year for a tweet he made during the riots in Egypt. “Millions are in uproar in #Cairo,” he wrote, adding, tongue in cheek, that the “rumor is they heard our new spring collection is not available online.”

The resulting uproar was overwhelming. The attempt at humor came across as insensitive during a time of violence and struggle in Egypt. Within an hour, Cole responded on Twitter, writing “we weren’t intending to make light of a serious situation” and “we understand the sensitivity of this historic moment.” An apology on Facebook went much further, saying that “I’ve dedicated my life to raising awareness about serious social issues, and in hindsight my attempt at humor regarding a nation liberating themselves against oppression was poorly timed and absolutely inappropriate.” While his initial comment may have had bad timing, his response didn’t: The immediate apology showed Cole to be adept at the use of fast-moving social media.

Finally, one of the most effective apologies of the last few years involved Steve Jobs, who was able to combine sincerity and an offer of concession in his “I’m sorry” for an iPhone price change. After launching the iPhone at $599 in 2007, Apple dropped the price by $200 two months later, stinging Apple’s many early adopters.

Since this group included some of the company’s most important customers, Jobs acted quickly with an open letter to them. “We need to do a better job taking care of our early iPhone customers as we aggressively go after new ones with a lower price,” he wrote. “Our early customers trusted us, and we must live up to that trust with our actions in moments like these.” Customers who’d bought an iPhone were offered a $100 store credit.

While he gave customers something in return, he also stood his ground by doing what was best for the company. Jobs was believable because of the tone he used and because he also took the time to explain his rationale and offer up something in return. That may not meet Auerbach’s standard. But it’s probably a good step toward meeting his customers’ needs.

Paul A. Argenti is a professor of corporate communication at the Tuck School of Business at Dartmouth College.

Related Articles:

Peter H. Kim: The science behind saying you’re sorry

Christopher Lehane: When apology is a sign of the times

Jena McGregor: Want angry Netflix customers to let up?

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