EDITION 12Weekly October 12, 2012customerExperienceNordstrom sets a new standard
03 Contents 04 Customer Experience Nordstrom Sets a new standard 09 Cloud Computing Security, Privacy and Strategy for the Boardroom 10 The Meningitis Outbreak What Can Compounding Pharmacies Do Next? 16 Business Gif ts Build an appropriate policy 24 Data Security PricewaterhouseCoopers’ Edward Gibson 25 Blogs To Follow 26 LEVICK In the NewsCOVER Image: The rotunda of the Nordstrom store on Market Street in Union Square, San Francisco.
customerExperience How Nordstrom Evolved from Bricks to ClicksRichard S. Levick, Esq.Originally Published on Fastcompany.comHalting brick and mortar sales of the Kindle at stores like Target is nothingmore than a Band-Aid on the bullet hole created by mobility’s impact one-commerce. Here’s how one upscale retailer is doing it right.Back in May, Target announced that it would others as nothing more than showrooms. Theyno longer be selling the Amazon Kindle. Ear- take potential purchases for a test drive, andlier this month, Wal-Mart followed suit. While then log onto mobile devices or home comput-neither big box retailer explained exactly why ers to buy from Amazon and other e-tailersthey’ve declared war on Amazon’s tablet, the that might be selling the same product for lessmotive is clear. Every time Target or Wal-Mart (and pick up other household staples whilesells a Kindle, they put their brick and mortar they’re there—free shipping, why not?). Asstores in jeopardy by providing Amazon even BGC Financial technology analyst Collin Gillisgreater reach in its digital retail power grab. told the New York Times, selling KindlesViewed in this context, the tandem moves are “encourages consumers to step into thatdirect, sharp-shooter responses aimed directly ecosystem.”across the bow of a major competitor. All the while, Amazon is establishing ware-The real problem for big box stores is that houses and kiosks that can provide customersconsumers are increasingly utilizing physical in major metropolitan areas with same-daystores such as Target, Wal-Mart, Best Buy, and service, thereby eroding a key brick and mor- 05
Weekly “ tar selling point in the process. The digital and Target and Wal-Mart can’t keep these devices physical retail worlds are colliding. With the out of consumers’ hands by themselves, and increased competition that accompanies the they can’t engage in the unending game of It’s a best-of-both-worlds strategy that phenomenon, at least two major big boxes are whack-a-mole that is a race to the bottom on accepts the “bricks and clicks” reality of apparently taking a “no more Mr. Nice Guy” price. As such, what’s needed is a communica- today’s retail marketplace.” approach. tions and marketing approach that emphasizes everything shoppers still love about the brick In truth, halting brick and mortar sales of the and mortar shopping experience—and that Kindle is really nothing more than a Band-Aid does so on the digital landscape consumers you need because we offer the tools, perks, and Nordstrom call center, which isn’t outsourced, on the bullet hole created by mobility’s impact have come to love just as much. expertise that ensure the most informed and but rather staffed by specialists with all the on e-commerce. The number of active mo- enjoyable purchase possible. expertise of those who assist customers in the bile devices is expected to exceed the world’s Simply put, big boxes need to infuse their on- men’s department or at the cosmetics counter. population by the end of this year. That means line properties with all the service and conve- It’s a best-of-both-worlds strategy that accepts just about anyone who walks into a brick and nience advantages absent from e-tailers that the “bricks and clicks” reality of today’s retail Second, Nordstrom places significant emphasis mortar establishment has the ability to snap are often nothing more than glorified middle- marketplace. Fortunately, there a number on ease of use for online shoppers. Customers a photo of a barcode, upload it to a mobile ap- men. The overarching message is that Amazon brick and mortar retailers that are already are never more than two or three clicks away plication, and compare competitors’ pricing on might have what you need; but we know what providing templates for how it’s done. from the content they want to access. Searches the spot and in real time. can be performed based on department, brand, Nordstrom, for one, is meeting the bricks and or lifestyle. With the site’s simple yet elegant clicks challenge head on. The chain’s online design and limited navigation options, it’s shoppers might not hear that live piano player likely easier to get lost at a brick-and-mortar in the background as they point and click or Nordstrom location than it is to end up re- be able to grab a bite at the café after making peatedly clicking the “back” tab on your Web a purchase, but there’s little else about Nord- browser. strom’s traditional brand that is absent from its digital presence. Third, Nordstrom’s online shoppers are pro- vided all the same benefits they would receive First, Nordstrom’s online shoppers have access if making a purchase at a brick-and-mortar to any item in any retail location across the location. Returns of online purchases are just country—a melding of online and in-store in- as easy as those of items bought in person. And ventories that remains rare in the retail world for those customers who crave the convenience today. Customers can see all available sizes and of online shopping but still enjoy a trip to the colors of a particular item and can actually see store from time to time, Nordstrom provides them modeled by a real person, rather than the capability to make a purchase online and just a screen shot of the apparel lying against pick the item up same day—and without the a white background. If customers have ques- wait or shipping costs to boot. tions, they can call a “personal stylist” at the6 07 Image courtesy of nordstrom.com. All rights reserved.
Weekly NACD BoardVision Cloud Computing: Security, Privacy & Strategy for the Boardroom Finally, Nordstrom’s website is fully integrated are showing the big boxes how they can re- with its social media presence. Its Facebook main relevant in the digital age. By applying page, which is liked by more than 1.6 million traditional brand strengths to the digital pres- This week’s edition of NACD BoardVision focuses on security and privacy concerns as they relate people, and its Twitter profile, which has more ence, every retailer has the ability to provide to cloud computing. Join Steve Kalan, associate publisher of NACD Directorship, and Daimon Geop- than 200,000 followers, provide forums where consumers with what they want most out of fert, McGladrey’s national leader for IT security and privacy consulting, as they discuss the hidden customers can discuss fashion and resolve any their bricks, as well as their clicks—and that’s costs and boardroom strategies of the new computing future. issues they might have. Nordstrom even shares an absolute imperative at a time when com- fashion interviews on a YouTube channel that petitors are bearing down from all sides. L boasts more than 4.3 million video views and is Richard S. Levick, Esq., President and CEO of LEVICK, using mobile applications to alert its consumer represents countries and companies in the highest-stakes community to upcoming sales and events. The global communications matters—from the Wall Street use of video is especially advantageous, as it crisis and the Gulf oil spill to Guantanamo Bay and the Financial Communications Litigation Catholic Church. provides a leg up over the competition in terms of search engine optimization (SEO). Corporate & Reputation Public Affairs While none of these features represents a groundbreaking leap forward in e-commerce, forward-thinking retailers such as Nordstrom Crisis Sign Up Today08 09
The MeningitisOutbreak:What Can CompoundingPharmacies Do Next? Richard S. Levick, Esq. Originally Published on Forbes.com
Weekly Those of us who’ve habitually watched It’s A New England Compounding Center of Fram- welcome federal oversight and the confidence Wonderful Life over the decades well remem- ingham, Mass., which suspended operations in its products that the FDA stamp of approval ber how protagonist Harry Bailey intervenes to and recalled all products, including potentially would engender. After all, the change may be prevent Mr. Gower, the local pharmacist, from tainted vials sold to 75 hospitals in 23 states. inevitable anyway. Why not embrace it? Why not accidentally poisoning a child. The episode was The CDC expects more fungal meningitis infec- work with the FDA to determine the fairest and certainly not meant to indict the practice of on- tion among the 13,000 people injected. most effective regime before something signifi- premise medicine mixing nor the business en- cantly more unattractive is imposed on them? The best known of the industry’s past crises tities we now call “compounding pharmacies,” involved polo ponies when, in 2009, 21 horses No doubt it’s an approach that communica- which create alternative versions of medicines died from a vitamin mixture prepared by a tions as well as legal strategists have readily to meet special needs. compounder in Ocala, Fla. At the time the advocated for other industries facing various To the contrary, Gower’s establishment wist- extensive risks of such custom-made drugs, sorts of regulatory challenges. But we shouldn’t fully recalls a simpler, gentler world of wholly so widely used by veterinarians, were promi- be quite so glib in this instance. Yes, a collab- personalized pharmaceutical service. Current nently noted. But this year’s meningitis deaths orative dynamic with the FDA would enhance spokespersons for the compounding industry are by no means the first related human fatali- the industry’s credibility and legitimacy. But, still lean heavily on that nostalgia as an arrow ties. In 2012, nine deaths in Alabama were as Berman points out, the new drug approval in their promotional quiver. traced to nutritional supplements from con- process is “very expensive, not feasible for any taminated IVs. There were fatalities in Virginia pharmacies,” and certainly out of reach for the Or at least they did until the current meningitis individual patients from the same require- in 2006 and Oregon the following year. smaller-scale compounding pharmacists who outbreak,which, to a greater extent than other ments governing manufactured drugs. How- make simpler, presumably safer medications recent industry crises, has aroused strong out- If there wasn’t then quite such a clamor ever, the Supreme Court ruled part of that law in their own drug stores. cry for federal regulation (as well as predict- for stricter laws, the warnings from federal unconstitutional, and the lower courts are split able client-trolling by plaintiffs’ lawyers). The regulators were crystal clear. Since the most on whether the rest of the provisions that affect Continued reliance on state oversight does not medications that compounders produce do not recent federal guidelines were issued in 2003, the compounding pharmacies remain in effect. seem to be a compelling alternative message as undergo the rigorous screening needed for FDA the agency has, in fact, sent warning letters to these companies can simply shift operations to Given this ambiguous legal picture, the FDA approval; their business is only subject to state compounding pharmacies around the country. less strict venues, while multi-state commerce does still retain a kind of murky “enforcement board review. suggests need for something beyond local Yet the regulatory picture is by no means discretion” that only makes it tougher for this oversight. It’s a point not lost on expert com- The outcry, spearheaded by Democrats like clear. As Jonathan Berman, a partner in the industry to define its long-term options and the mentators. “For states to try to regulate this is Rep. Edward Markey and Sen. Richard Blu- Washington, DC office of Jones Day, points out, overriding strategic direction that will serve really difficult. It has to be done nationally,” menthal, may not go away too soon, especially “the law remains very much in flux.” There is its interests in the near future. In other words, said Boston University law professor Kevin as each day brings reports of new meningitis even significant question as to whether com- the compounders are living in limbo. “The first Outterson. occurrences. As of this writing, the outbreak, pounding is in and of itself legal, he adds. thing that the industry should seek is clarity in traced to tainted steroid injections, has caused the law,” says Berman. Nor does self-regulation necessarily offer the In the Food and Drug Administration Mod- 12 deaths and adversely affected people in at public much comfort. The Pharmacy Com- ernization Act of 1997, Congress specifically Beyond that, a good argument can certainly be least 10 states. The specific cause was an epidu- pounding Accrediting Board (PCAB) provides exempted drugs compounded for identified made that the compounders are well-advised to ral medication for back pain produced by the12 13
Weekly “ ... it’s hard to know if this industry, caught in an ideological cross-fire, has any friends left.” quality accreditation but the New England tinue to be for quite some time to come. The Compounding Center was not a member. The industry has duly pointed out that drug com- actual number of accredited PCAB members panies cannot manufacture every medication is small. that’s needed; that the compounders are filling a critical gap in our healthcare system; and There are other alternative messages tied in to that compounding pharmacists are steadfastly the healthcare debate, although the positioning working with hospitals and doctors to help here gets a mite Byzantine as even conserva- meet a prescription drug shortage of near- tives are joining the pro-regulatory side, argu- crisis dimension. ing that President Obama’s FDA has been too preoccupied with providing cheaper drugs to Courts will still need to rule, legislators vote, “crack down” on compounding pharmacies. In regulators act. New public health crises related a debate where liberals like Markey simultane- to compounding pharmacies may likely occur ously deplore “the magnitude of sales” by the next year or the year after. Amid such uncer- New England Compounding Center, it’s hard to tainty, the industry’s only viable message in the know if this industry, caught in an ideological long run is that, whatever happens, everybody cross-fire, has any friends left. has a stake in their success. L The best way out of any such reputational Richard S. Levick, Esq., President and CEO of LEVICK, represents countries and companies in the highest-stakes cul-de-sac is to hit hard on the value that your global communications matters—from the Wall Street company or industry provides even as you crisis and the Gulf oil spill to Guantanamo Bay and the fully cooperate in efforts to remediate the Catholic Church. problems you’ve caused. If you deserve to sur- vive, the public benefits will palpably outweigh the liabilities in the court of public opinion. The compounding pharmacy industry knows what those benefits are and what they’ll con-14 15
how to buildan Anti-Corruption Policy that Allows for Appropriate Business Gifts By Suzanne Rich Folsom & Victoria McKenney Originally published in the FCA Report
Panettone is a delicious Italian sweet bread, originally As long as panettone is not paired with cash or maintaining business and securing a competi- expensive items and is given during Christmas- tive business advantage.”from Milan and often given as a gift at Christmastime time and without any intent to obtain a specificin Europe and South America. The bread requires 20 benefit in return, it ought not to appear as a U.S.’s Lengthy History withhours of rising and must rise four times, so most people bribe or in any way run afoul of the antibrib- Anti-Bribery Laws ery provisions of the FCPA or local anti-briberypurchase panettone from bakeries rather than make it laws. Interestingly, though, it was once used as The FCPA has been the law in the United States since 1977 after Watergate investiga-from scratch. The bread is usually wrapped by hand and a defense by a Brazilian official who was caught tions brought to light that U.S. companies wereput in a gift box. It is relatively low in cost, consumable, accepting bribes from private contractors. The paying bribes to foreign officials to obtain official claimed he used the money to purchaseeasily shipped, and can be shared by a group, all of which panettone for the poor. This novel assertion, business. Other countries did not immediately follow suit in enacting anti-bribery legislation.make it a very good option for corporate gift giving. which might be titled the “Marie Antoinette de- Nearly 20 years later, in March 1996, the mem- fense,” did not prevail, at least not in the court bers of the organization of American States ad- of public opinion. opted the Inter-American Convention Against What is a multinational company to do when Corruption. Shortly thereafter, in December there are government officials who are open to 1997, the industrial countries belonging to accepting bribes, or when multinational com- the Organization for Economic Cooperation panies operate in countries where gift-giving, and Development reached an agreement on even to government officials, is culturally ac- a Convention on Combating Bribery of For- cepted and potentially could appear as a bribe? eign Public Officials. This Convention in turn The FCPA absolutely prohibits companies from needed to be ratified by each country, which paying bribes to foreign government officials then had to enact implementing legislation. It and political figures. There is no de minimis was not until six years later that the world saw exception. The presentation of a gift, however the enactment of a truly global anti-corruption small, can violate the FCPA if it is given with initiative. In December 2003, 140 countries a corrupt intent to obtain or retain business signed the U.N. Convention Against Corruption, or secure any other improper advantage. The a binding agreement that has now been accept- recent enforcement action initiated by the SEC ed by 161 countries and represents a global against alcohol beverage producer Diageo plc consensus. The long and short of it is that the underscores this point. The SEC’s cease-and-de- United States not only has strict laws but has sist order in that case alleged that, among other been accustomed to banning bribery of foreign things, a Diageo subsidiary “routinely made officials much longer than other countries. hundreds of small payments to South Korean This presents a challenge to multinational com- military officers for the purpose of obtaining or panies, whose employees and agents in other 19
Weekly countries might not be attuned to the illegality regulations. . . .We have laws against it precise- Dodd-Frank Wall Street Reform and Consumer and infrequent gifts of nominal value that are of such payments. ly so we can get away with it. . . . Corruption is Protection Act of 2010, provides a financial not provided with any expectation of return why we win.” This stirring speech, excerpted incentive for individuals to disclose to the SEC favor would likely fall outside the crosshairs of But they need to be. This is where an effec- here, made for good box office receipts but original information that leads to successful the FCPA. In addition, a nominal gift related to tive compliance program pays for itself. Above hardly presents an enlightened view. Corrup- enforcement of the FCPA or other U.S. securi- the promotion or demonstration of a product all, multinational companies should have an tion breeds inefficiency and stagnates growth. ties laws. In the first seven weeks of the pro- may be permissible as a “business promotion” effective compliance program, with strong gram’s existence, the SEC received 334 tips, expense under certain circumstances. The DOJ internal controls and procedures for complying It can lead to a contract being awarded to the and the first bounty of nearly $50,000 was has issued several opinions suggesting that with the FCPA. All company officers, directors, unethical company that slipped money into a awarded to a whistleblower in August 2012. such gifts would not be viewed as FCPA viola- employees and agents must receive training foreign official’s pocket but whose product is tions. These opinions were issued pursuant to concerning what conduct is prohibited by the second-rate. Moreover, a company that pays FCPA. A company policy regarding hospitality bribes may also be the same company that Ways to Build an Anti- the DOJ’s established FCPA Opinion Procedure, expenses and gift giving, facilitation payments, turns the other cheek when it comes to strin- Corruption Policy that through which any U.S. company or national and compliance with the FCPA must be estab- gent compliance with health or safety stan- Allows for Appropriate may request a written statement of the Justice lished and adhered to. A member of the legal or dards. Ultimately, it is the consumer and public Business Gifts Department’s present enforcement intentions under the anti-bribery provisions of the FCPA compliance department should be designated who suffer when corruption is unabated. Of Does all of this mean that a U.S.-headquartered regarding any proposed business conduct. Al- to address FCPA compliance questions. An course, there is another argument in favor of company must prohibit all corporate token though the DOJ’s formal opinions may be relied anonymous incident reporting hotline should strict adherence to the strictures of the FCPA gifts of hospitality that, depending on the on authoritatively only by the party that seeks be established so that employees and even by companies who do business in the United country in which the company is operating, the opinion, they offer useful guidance third parties can report possible non-compli- States: it is the law, and it is heavily enforced. would be viewed as customary? Not necessar- to others. ance with the FCPA without fear of reprisal. Prosecutions under the FCPA are on the rise. ily. The FCPA prohibits gifts given with a “cor- From many directions, but especially from the As The New York Times recently reported, rupt intent” to influence a corporate official to Every formal opinion and every case brought top, companies must send the message that there are at least 78 companies now under obtain or retain business, or otherwise secure by both the DOJ and SEC should be taken into bribery is unacceptable, and this message must investigation for violations of the FCPA. These  an improper business advantage. Small, token, account in shaping your corporation’s anti- be reinforced not just in words, but in the ac- include big name American companies like tions and conduct of the senior management. Avon, Alcoa, Goldman Sachs, Pfizer and Wal- Mart. When a door-to-door cosmetics company “ Corruption Is Why We Win? enters into settlement talks with the DOJ and the SEC concerning alleged bribes to officials One often hears the argument that bribes in China and elsewhere, this should give any The New York Times recently reported, there are are the only way to conduct business in some company pause. Already Avon has reportedly at least 78 companies now under investigation for countries. We even hear it at the movies. The 2005 Oscar winner Syriana featured a fictitious racked up almost $280 million in legal costs violations of the FCPA. These include big name alone. This recent trend of heightened en- oil company director mouthing off, “Corruption forcement activity is unlikely to subside in the American companies like Avon, Alcoa, Goldman charges! Corruption? Corruption is government near future. The SEC’s whistleblower bounty Sachs, Pfizer and Wal-Mart.” intrusion into market efficiencies in the form of program, which was created as a result of the20 21
Weekly BLOGS to follow Data Security Thought leaders Industry blogs PricewaterhouseCoopers’ Edward Gibson Amber Naslund Holmes Report brasstackthinking.com holmesreport.com Amber Naslund is a coauthor of The Now A source of news, knowledge, and career Revolution. The book discusses the impact of the information for public relations professionals. social web and how businesses need to “adapt to the new era of instantaneous business. NACD Blog blog.nacdonline.org Brian Halligan The National Association of Corporate Directors hubspot.com/company/management/brian-halligan (NACD) blog provides insight on corporate HubSpot CEO and Founder. governanceand leading board practices. Chris Brogan PR Week prweekus.com Chrisbrogan.com PRWeek is a vital part of the PR and Chris Brogan is an American author, journalist, communications industries in the US, providing marketing consultant, and frequent speaker about timely news, reviews, profiles, techniques, and social media marketing. ground-breaking research. David Meerman Scott PR Daily News davidmeermanscott.com prdaily.com David Meerman Scott is an American online PR Daily provides public relations professionals, marketing strategist, and author of several books social media specialists and marketing on marketing, most notably The New Rules of communicators with a daily news feed. Marketing and PR with over 250,000 copies in print in more than 25 languages. Guy Kawasaki BUSINESS Related guykawasaki.com FastCompany Guy Kawasaki is a Silicon Valley venture capitalist, fastcompany.com bestselling author, and Apple Fellow. He was one Fast Company is the world’s leading progressive of the Apple employees originally responsible for business media brand, with a unique editorial marketing the Macintosh in 1984. focus on business, design, and technology At a time when companies are working to mitigate the cyber-security risks arising from criminals, Jay Baer Forbes jaybaer.com Forbes.com competitors, and other external sources, Mr. Gibson spoke about what is perhaps the most over- Jay Baer is coauthor of, “The Now Revolution: 7 Forbes is a leading source for reliable business Shifts to Make Your Business Faster, Smarter and news and financial information for the Worlds looked threat today—a company’s own employees. With the rapid increase of internal breaches, More Social. business leaders. employee policies and controls that can limit intentional or accidental data breaches are an abso- lute necessity for any company seeking to protect sensitive information. Mashable Rachel Botsman mashable.com rachelbotsman.com Social Media news blog covering cool new web- As a former special agent with the Federal Bureau of Investigation (FBI) who most recently served Rachel Botsman is a social innovator who writes, sites and social networks. consults and speaks on the power of collaboration as the Chief Cyber Security Officer for Microsoft LTD in the United Kingdom, Mr. Gibson shared and sharing through network technologies. these insights and many more with Bulletproof™. Seth Godin sethgodin.typepad.com Seth Godin is an American entrepreneur, author and public speaker. Godin popularized the topic of permission marketing.24
IN THE NEWS ArticlesLA TImes | October 11, 2012USADA report details case against Lance ArmstrongPR Week | October 9, 2012LEVICK EXPANDS WITH NON-CRISIS BUSINESS PRACTICESUSA TODAY | October 5, 2012‘NOBODY IS GOING TO WIN WHILE PLAYERS ARE OFF THE ICE’The Washington Post | October 5, 2012APPLE, A YEAR AFTER STEVE JOBS VideoO’DwyersGRABOWSKI ON AMERICAN AIRLINES’ THE URGENCY OF NOW.WOES 27