A Recipe for CEO and Company Trust

CEM_SONNENFELD_GSSince founding Chipotle 23 years ago, the visionary Steve Ells built a colossus of 1,900 restaurants based upon branded principles of wholesome high-quality fast food ingredients and animal welfare, brazenly teasing the standards of his competitors over processed foods along the way. Now with waves of food poisoning in his own restaurants, his confidence has wilted to queasiness.

Over the past six months, each time Ells announced that they turned the corner on safety, there was yet another mass outbreak of suffering customers—five people in Seattle; then 234 in Simi Valley, California; 64 in Minnesota; 140 Boston College students. Ultimately, the number of victims topped 500.

“Trust is the most powerful tool you could possibly have.”

Many required hospitalization, suffering norovirus and E. coli outbreaks of uncertain origin—despite closing 43 restaurants. Investors suffered heavy losses as this once high-flying stock dropped more than 30% and sales fell by 16%. Nonetheless, the restaurant chain is reluctant to identify its suppliers. Chipotle continues its high-velocity growth, throwing thousands of new hires into high-speed food assembly lines.

In 1993, 623 people across several Western States suffered from E. coli poisoning traced to undercooked burgers at Jack-in-the-Box restaurants. More recently, Yum! Brands stumbled into serial mass food poisoning fiascos at its chains. Food quality scandals at Chinese Taco Bell, Pizza Hut and KFC chains forced Yum! to split off the China business, formerly its strongest division.

Similarly, in 2012, Taco Bell customers from around the U.S. were felled by salmonella poisoning in meat and by E. coli in vegetables in 2010 and 2006. Company reassurances were coupled with denial and finger-pointing. In his autobiography, the CEO actually bragged about stonewalling the media.

Recall the dismissive but empty pronouncements in New Orleans by Homeland Security’s Michael Chertoff and FEMA’s Michael Brown after Hurricane Katrina in 2005 and the disdainful sneers of BP CEO Tony Hayward in the 2010 aftermath of the massive Gulf Coast oil rig explosion. Then there were the false assurances of safety from top officials of Tokyo Electric Power
Company following the 2011 meltdown of the Fukushima Daiichi nuclear plant.

Remember, as well, when Carnival’s Micky Arison went AWOL, except for merrily cheering on a Miami Heat basketball game from the comfort of his owner’s box, while a fire onboard the Carnival Triumph stranded 4,229 passengers and its crew at sea. It was hours before passengers finally got an explanation for the power loss—and 12 hours passed before they were told of
possible rescue options. The ship’s crew did not communicate, reportedly, because they did not know Carnival’s plans.

J&J’s legendary CEO Jim Burke provided a different model with his mastery of the research, embrace of critics and open pipeline to the media. In his celebrated national recall of tainted Tylenol capsules. Burke told me: “All we said was, ‘Trust us.’ We were cashing in on 100 years of trust that had been built up…. All the previous managements that built this corporation handed us, on a silver platter, the most powerful tool you could possibly have—that institutional trust is real, palpable and bankable. So that every act that every person puts into an organization that builds that trust enhances the long-term value of that business and with every improper payment or every time you put a product out that is inferior, you trade off that trust.”

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Jeffrey Sonnenfeld
Jeffrey Sonnenfeld is senior associate dean, leadership studies, Lester Crown professor of leadership practice, Yale School of Management, as well as president of the Yale Chief Executive Leadership Institute and author of The Hero’s Farewell and Firing Back.

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