Managing rumors Featured

8:00pm EDT March 26, 2007
Rumors have been around since the beginning of time. While some are based on fact, many are predicated on fantasy and are cobbled together with a smattering of relevant information, combined with doses of the unsubstantiated.

Politicians are frequently masters of using rumors to float trial balloons to test reactions, running ideas up the flagpole to see if voters salute. Corporate executives run a close second to elected servants with this type of “opinion research.”

Many times, people launch a rumor knowing they have a safety net to prevent a boomerang effect by maintaining plausible deniability. As in “Mission Impossible,” the tape concludes with, “If you are discovered, the secretary of this secret team will disavow knowledge of your actions.”

The voice then asserts the tape will self-destruct, followed by a boom.

Rumors can be nefarious, a weapon of mass destruction (WMD) used against the naive or unprepared. Stock touts have used rumors since trading began to entice others into buying or selling a stock with the hope that its price will move to benefit the perpetrator.

Others are mere gossipmongers who take information out of context.

Every company has to deal with rumors, ranging from the benign to the cataclysmic, threatening the very foundation and credibility of the company.

It’s usually difficult to determine the origin of rumors. For example, participants at a trade show might hear a rumor about a competitor, then they repeat it to suppliers. The next competitor embellishes the story for his or her own benefit at the expense of the rumor’s target.

If you are the subject of negative rumors, it’s more important to launch damage control than to unearth the source. These harmful tales can take on a life of their own as they gain momentum and mutate, spawning other subplots.

Rumors can strike out of the blue. For example, you’re looking at results for the past week, which, for once, might hit the target. You’re breathing easier, and your perennial chest palpitations are gone. You’re thinking that life is good, and your worst fears that the ship would sink on your watch are fading.

But your bubble bursts when the phone rings and it’s your biggest customer asking if there is anything to the word on the street that the bank is calling your loan and you won’t be able to meet customers’ production requirements.

Instantly, the palpitations are back, as perspiration drips down the back of your neck.

Your first response is, “Where did you hear this idiotic story?” But the customer just wants to know if it’s true and, if it’s not, how you can give him the assurance he needs to continue to do business with your company.

You ask Mr. Big Customer to hold while you get your banker on the line. You then conference together Mr. Banker and your “can’t afford to lose, or you’re out of business” customer. You restate the rumor, ask the banker to confirm that the bank has no issues with your company, and the customer thanks you for providing reassurance.

Next, you summon your senior team and explain what happened so that everyone is on the same page. Simultaneously, you dictate a note to your salespeople outlining this issue and how to handle inquiries, providing a list of possible customer questions, along with answers.

If you think there is a reasonable chance your other large customers might hear this story, get them on the phone, tell them what happened and offer to have your banker call them directly. Your customers will appreciate your decisiveness, candor and the respect you gave them by bringing them into the loop. You also showed them leadership and that you are in control.

The only real rule for handling rumors is this: Don’t put your head in the sand and hope the problem goes away. Instead, deal with the issue head-on and get your pertinent players involved from the get-go.

Always place yourself in the other guy’s shoes by trying to understand what he needs to know to assuage his concerns. When you do it right, with a ferocious sense of urgency, you’ll have managed the rumor and possibly turned it into an advantage by solidifying your credibility with your customers.

WMDs can do huge damage, whether they’re real or only imagined. Rumors can have the same effect unless you know how to react and manage the process.

MICHAEL FEUER is co-founder of OfficeMax, which he started in 1988 with one store and $20,000 of his own money, along with a then-partner and group of private investors. During 16 years as CEO, he grew the company to almost 1,000 stores with sales approximating $5 billion before selling it for almost $1.5 billion in 2003 to Boise Cascade Corp. In 2004, Feuer launched another start-up, Max-Ventures, a venture capital operating firm that focuses on buying control and/or making substantial investments in retail-oriented businesses and businesses that serve retail. Reach Feuer with comments at mfeuer@max-ventures.com.