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Three Questions

Three Questions: Prof. David Bach on the NBA’s China Dilemma

Since Houston Rockets general manager Daryl Morey tweeted in support of pro-democracy protests in Hong Kong, the NBA has struggled to calm anger in China without alienating audiences in the United States. We talked with Yale SOM Deputy Dean David Bach, an expert on business-government relations and global markets, about how world-spanning organizations should navigate conflicting values in key markets.

Houston Rockets star James Harden with young fans during a visit to China in 2016.

Houston Rockets star James Harden with young fans during a visit to China in 2016. Photo: Visual China Group via Getty Images/Visual China Group via Getty Images.

  • David Bach
    Deputy Dean for Executive Programs & Professor in the Practice of Management

How should a global organization navigate an issue like this when it gets caught at the nexus of major markets with conflicting values?

What the NBA is experiencing is the nightmare scenario of CEOs of global enterprises. You have hundreds of millions in revenues and the fruits of many years of hard work on the line on the one hand and foundational values on the other hand. Unlike the NFL, the NBA has celebrated their players, coaches, and GMs speaking out on political issues, including stars LeBron James and Kyrie Irving wearing “I Can’t Breathe” warm up T-shirts to protest police brutality and Warriors coach Steve Kerr relishing his role as a public foil for President Trump. Meanwhile, they’ve invested heavily to build the brand in China. The rapid escalation since Houston Rockets GM Daryl Morey sent his tweet shows it’s pretty much impossible to satisfy all stakeholders.

There are two goals of effective crisis management: (1) do what you have to do to get the story out of the news and (2) do #1 in a way that minimizes future complications, restrictions, and damage to the enterprise. What follows from this is that neither “tail option” is viable: apologizing profusely to Chinese fans and throwing Morey under the bus would alienate key stakeholders at home; and standing firmly and unapologetically on principles of free speech could shut the NBA out of its most lucrative market for an extended period of time as the challenge in Hong Kong and fervent nationalism engulf China.

The best course of action is therefore to take a stance between the extremes but ensuring such a midway position is principled and not a foul compromise. What does this mean in practice? It means affirming principle but distancing oneself from specific conduct, as in “While we do not endorse X’s personal point of view and join him in regretting that it has caused Y, we affirm our community’s support for his right to Z…” By acknowledging that individual conduct has aggrieved key stakeholders and distancing the organization from it, it becomes easier to move on. Yet by affirming principle, the hope is that efforts to move on do not come at the expense of permanently alienating other key stakeholders, chief among them employees. To be believable, though, any declaration of values or principles must be seen to match the organization’s actions; it must be authentic. Otherwise you risk coming across as either craven or hypocritical.

The NBA more or less followed this formula when its spokesperson said, “While Daryl has made it clear that his tweet does not represent the Rockets or the NBA, the values of the league support individuals’ educating themselves and sharing their views on matters important to them.” Of course, the effectiveness of this statement was severely diminished by the fact that the NBA put out a separate statement in Mandarin that sounded very different.

The translation of the NBA’s statement into Mandarin was more apologetic than the English version. What does that say about the NBA’s approach?

It suggests that the NBA has not learned one of the most basic lessons about contemporary global business and politics. Particularly in a controversy, you cannot tailor political messages by geography. Sure, we teach our students to segment markets by geography, to think globally and adapt locally to market characteristics. But while that approach often works with product features, it doesn’t work when it comes to politics, values, and principles.

What Tom Friedman argued in The World is Flat was not that countries don’t matter anymore or that all cultures are converging. What he meant instead was that barriers have come down and information now flows so freely that we can see what is happening over there and vice versa. It took only a few minutes for somebody to share on social media an English translation of the NBA’s apology in Mandarin, which began: “We feel greatly disappointed at Houston Rockets’ GM Daryl Morey’s inappropriate speech, which is regrettable. Without a doubt, he has deeply offended many Chinese basketball fans.” The sharp contrast in tone not only further fueled accusations of hypocrisy, but also ensured that the issue remained very much in the headlines in both countries, thus undermining the attainment of objective #1.

In a situation like this, the best practice is to have one statement outlining exactly one position. Obviously, this means that this statement will not address everybody’s concerns equally, since it will be somewhere in the middle of the distribution. However, the benefits in terms of maintaining credibility and authenticity or, put differently, avoiding the reputation and credibility loss that inevitably results from different messages to different audiences, is certainly worth it.

How can global firms prevent something similar from happening?

An expert in corporate communications working for a large multinational once told me that she very much prefers installing sprinklers to running into a burning house with a fire extinguisher. We are about to see if the NBA installed sprinklers. Does it have enough influencers in the U.S. and China who will speak out in support of the effort to distance the organization from individual conduct while affirming community members’ right to express views on issues that matter to them? Do these supporters understand and buy in to the organization’s values? Does it have friends who will counteract opportunistic behavior by policymakers in both countries? As I tell my students, try to make friends when you don’t need them so that you can call on them when you do need them. Making friends when you are in a bind is much harder.

It is also important to realize that it’s not only the NBA, its teams, and its players that have dollars on the line. Many Chinese firms benefit handsomely from making and selling merchandise in China and around the world, and in a country that reportedly has 600 million NBA fans, there is a real cost in not streaming games. So the NBA has at least some leverage here. Indeed, we are about to find out if NBA basketball is so popular in China that neither the government nor private firms will find it in their interest to sustain punitive measures over a prolonged period of time.

The bottom line for any global organization is (1) to make sure you have friends and allies who know you and appreciate what values you stand for, and are willing to speak up on your behalf—or at the very least not throw gasoline on the fire even if it might benefit them; and (2) make sure people know and appreciate the value you bring to their community. While it is tempting to see a tradeoff between dollars and principles, more often than not value and values go together.

Department: Three Questions