What did the firing of Rosanne Barr and the termination of her eponymous sitcom “Roseanne” teach us about corporate branding?
No, I promise, not another blog on the pitfalls and snares of social media and tweeting protocol. Roseanne’s self-immolation points up a more fundamental issue, one that concerns the risks inherent in naming an entity, any entity, after a founder.
To reset the scene: Roseanne Barr is a high-profile TV personality with a well-followed and highly toxic Twitter feed. She was also the star and co-creator of the sitcom, Roseanne. The show and the person are, or were, inseparable. In fact, she insisted the show be called Roseanne and not “Life and Stuff” – the original working title – since she is the main character and it was based on her life.
That was the dilemma for ABC, the network that broadcast the show. You can’t have one without the other. Hours after a particularly ugly tweet from Roseanne’s phone, ABC – with the backing of parent company Disney – cancelled the show and sent Roseanne on her way.
Too bad for Roseanne, you might think – she got what she tweeted for. For the show and the hundreds of professionals who had no personal association with her views or her tweets, it was a disaster and they were thrown out of work through no fault of their own.
Project this sordid little episode on to a bigger screen and change the protagonist to Harvey Weinstein and the implications become much clearer.
Although the allegations of extreme sexual impropriety have been well documented, the speed with which his once-thriving studio, The Weinstein Company, crashed and burned as a result is no less shocking to witness.
It began when The New York Times published a story in October 2017 detailing decades of allegations of sexual harassment against Harvey Weinstein. He was fired as CEO soon after. The Weinstein Company hung on, eventually declaring bankruptcy in February 2018, with independent studio Lantern Entertainment acquiring a majority of its film library and assets. By July 2018, The Weinstein Company was officially dead.
There is an ironic side note to this story: Harvey’s first company, founded with brother Bob, was Miramax. It gave the brothers a start in the business in 1979 by distributing independent films deemed commercially unfeasible by the major studios. The Miramax name was created by combining the first names of the Weinstein brothers’ parents, Miriam and Max. Miramax was sold to Disney in 1993 and, unlike its successor company, it survives to this day.
The lesson in all this wreckage about the questionable wisdom of naming a company after an individual, especially if he or she happens to be an active and influential founder, is writ large. But one report referenced recently in The Economist argues the opposite.
The report by academics from the Fuqua School of Business at Duke University in North Carolina suggests that doing so not only saves money— you don’t have to pay those expensive brand consultants – it can also boost profits.
The study looked at small businesses in western Europe. It relied on a sample of almost two million firms, data for which are contained in Amadeus, a commercial database. Companies in the sample tended to be, on average, fairly young, with few shareholders and employees. Checking the surnames of the largest shareholders, the authors found that 19 percent were named after their founders.
After accounting for other factors, those companies enjoyed a return on assets that was three percentage points higher than others.
This hypothesis was tested by comparing different types of names. Founders with more common names – Schmidt, Jones, etc. – will be less closely identified with their companies and the premium is, indeed, lower.
The authors attempt to pin the explanation for this phenomenon on a simple commodity – confidence. If you have enough confidence to give your business your name in the belief it is good enough to stake your personal reputation on, then that, in turn, inspires confidence. It’s a strategy well known to Donald Trump, for example.
As the Economist observed, “vanity can be sound business strategy.” What it failed to note are vanity’s inherently unstable properties. Mixed with success, money and ambition, vanity can be catalyzed into an explosive substance known as hubris, which is often signaled by a loss of contact with reality and an overestimation of one’s own competence, accomplishments or capabilities.
The shaming of Harvey Weinstein and the demise of The Weinstein Company epitomize the condition, but it doesn’t stop there. The consequences of hubris are everywhere.
The current wave of sexual harassment scandals has also sloshed to the door of Mario Batali, the celebrity chef. Allegations against him led to a police investigation. In December last year, employees of the Batali & Bastianich Hospitality Group were told in a letter that a new company, with a new name, will be created “whose structure will better reflect that our restaurants’ success is built on the contributions of many, not just one or two.”
To go on – Intel finally changed the name of MacAfee, the anti-virus company it acquired in 2010 for more than $7.6 billion. After his bizarre personal antics, founder John MacAfee left them with no option. The name change to Intel Security is as feeble as the company’s response to MacAfee’s taunting shenanigans, but it should have happened at the time of the acquisition. Cisco wouldn’t have missed a beat. And there is Steve Wynn, CEO of Wynn Resorts, who stepped down after misconduct allegations. The company renamed a new $2.5 billion casino it was building in Boston to Encore Boston Harbor, removing Wynn’s name.
Business success, publicity and hubris seem to go hand-in-hand. For a small business the damage will be limited if the founder goes off the rails and, as noted in the Fuqua report, the sample companies tended to be fairly young, with few shareholders and employees.
For larger companies, it comes down to an awkward matter of corporate governance and whether it’s possible to put the founder of a business that bears his name under some sort of contractual electronic ankle bracelet that constrains damaging reputational behavior. To my knowledge, no such contraption yet exists.
Until then, and especially these days, the better long-term naming strategy would be to follow Steve Jobs’ example with Apple, and not Donald Trump’s.