The Year Scandal Turned Into A Business

scandal2018 was the year that “corporate scandal” turned into a business. There were several foreshocks from United Airlines and Starbucks, two great companies that fell into the grasp of mass outrage after employees took it upon themselves to evict people from the premises—or a plane, in the case of United. Starbucks had to close down for a day of training and United’s stock dropped $7 billion. But these incidents were self-inflicted, the sort of thing that could happen to anyone. What the scandalmonger industry wanted was a clear validation point, the kind that would prove scandal could be created from thin air and bring down a giant.

That came about in a rare instance of Amazon CEO Jeff Bezos failing to spot a turn signal. In January, Bezos was busy fitting together his jigsaw puzzle of fulfillment centers that power Amazon Prime. Amazon often locates these in the heartland. The company has taken ghost towns suffering from joblessness and crime and restored them with solid wages and healthcare benefits. It is one of the reasons it employs over 600,000 people today, making it the second-largest employer in the U.S.

Around the same time, a small-time Ohio labor activist with a vengeance against John Kasich, Ohio’s Governor and an Amazon booster, issued a brazen press release targeted at its board and labor donors. The occasion was Bezos being named the world’s richest man, and the activist drummed up the charge that 700 of Amazon’s warehouse employees were on food stamps.

Mainstream media fell all over itself. The articles lifted the “research,” which turned out to be hypothesized or fictitious. In fact, Amazon’s wage and benefit practices were among the highest of their kind, better than those of the companies where the journalists were employed. But that made no difference.

The scandal created a social media avalanche of 40 million views. Ordinarily thoughtful publications screeched, “Why is Bezos so rich and his employees so poor?” It wasn’t just the usual anti-business screeds like Salon.com and Slate either, but wealth-worshippers like CNBC and Business Insider.

The Twitterverse lit up. Lawyers lined up to sue. Humanitarian activists joined the fray, screaming that the Seattle giant was immoral. The scandal turned into a goldmine for anti-business crusaders. Then, finally, Senator Bernie Sanders, never one to miss an opportunity to denigrate business, tweeted that Amazon’s poor were creating a burden for the government.

That was the tipping point. All it took was a 10-person labor activist with an e-mail account, bogus research, Twitter and the media’s connivance to upend a trillion-dollar company whose only mistake was job creation. I know from Amazon employees that Bezos was beside himself. What does it mean for the business community if the world’s most powerful, most intelligent and richest CEO could be blindsided so easily?

It means business leaders should be on the alert that scandal pays off in many ways that may have nothing to do with the facts. Amazon proved that the scandalmongers aren’t out to win a debate on poverty. There is much more profit to be made from a public thrashing that plays to the entire scandal universe of activists, lawyers, politicians and the media.

Only two remedies can effectively put out the flames of bogus charges. First, be sure your team’s leadership meets the highest possible standard in ethical matters. Second, have a well-trained counter insurgency operation. These should be true believers in the company’s mission who are willing to step up to the plate on social media to fight an unsavory enemy.

Read more: A Playbook for CEO Activism

Jeff Cunningham
Jeff Cunningham is Chief Executive magazine's editor-at-large and a professor of leadership at Arizona State University/Thunderbird School of Global Management, where he has also endowed the Cunningham Global Fellowship for next-generation leaders. He also is the founder of Thunderbird Opinions poll of business trends. He was previously publisher of Forbes Magazine and CEO of Zip2 (founded by Elon Musk). Watch his YouTube interviews at Iconic Voices and connect on Twitter @CunninghamJeff and LinkedIn.