The “Taken Out of Context” Defense

June 22, 2007

As originally posted on on June 23, 2007.

WholefoodI’ve always been dubious about the “taken out of context” defense. It’s like the proverbial dog-ate-my-homework excuse. Sure it’s a possible explanation, but nobody really buys it.

Merrill Lynch gave it a shot when it first became public that its once-high-profile analyst Henry Blodgett was singing the praises of certain stocks publicly while privately referring to them in emails as “crap” and “pieces of s***.” Ouch. Merrill, to its credit, came clean a week later and acknowledged that the analyst’s e-mails were “unacceptable” and “inappropriate and well below the standards that Merrill aims to achieve.”

Flash forward to this year and you have former Wal-Mart marketing executive Julie Roehm giving the “taken out of context” defense a whirl. Roehm was fired for various alleged improprieties, including an inappropriate relationship with an underling. She claims that some of the risqué comments in a series of lovelorn emails to subordinate Sean Womack are “easily explainable” and don’t prove that she violated the retailer’s policy against employee fraternization. If that’s the case, I’d love to see the rest of Wal-Mart’s HR manual. I just can’t figure out any scenario under which “I think about us together all the time. Little moments like watching your face when you kiss me…” could possibly be deemed appropriate corporate-speak.

Don’t get me wrong – I am hardly declaring Goliath victor over David in this PR battle. Wal-Mart has had plenty of its own missteps in the public handling of this affair – ahem, no pun intended – but we’ll leave that Monday morning quarterbacking for another day.

So back to current headlines and more people with context issues. This time it is John Mackey, founder and CEO of Whole Foods Market, who is waving the “taken out of context” flag. At issue are some seemingly damaging comments he made in emails and other correspondence that the FTC subsequently cited when issuing its rationale for blocking the retailer’s proposed acquisition of rival Wild Oats Markets. Among the remarks was a discussion about how the acquisition would enable the company to “avoid nasty price wars” that could harm gross margins. Hmmm, that sure smells of antitrust aroma to me.

Here’s the kicker: Turns out Mackey’s comments really were taken out of context and “easily explainable” as well (eat your heart out, Julie Roehm).

How do I know? Rather than ask the general public to blindly take their word for it, Mackey and the folks at Whole Foods took the bold step of posting the alleged damning documents and other related materials – including a confidential memo to the board of directors outlining the rationale for the Wild Oats acquisition – to its website. And you know what? Mackey makes a pretty convincing business argument why the Wild Oats acquisition isn’t anticompetitive.

While Whole Foods certainly gets some positive points for backing up its claims of comments being taken out of context with tangible evidence, they are offset by demerits earned for two negative outcomes generated by their transparency play.

First, Whole Foods’ leadership lets its collective frustration get the better of themselves by launching a highly questionable and very vitriolic attack on the FTC as part of its posted defense. Questioning the legitimacy of the agency and the ethics of government bureaucrats before whom you have significant business dealings is not a smart negotiating tactic.

The second related cringe-inducer is from a PR standpoint: As shared in his blog, Mackey argued that Whole Foods faces formidable competition from mainstream supermarkets, not just ones specializing in natural foods. He is especially passionate about Wegmans Food Markets, an upscale Northeast supermarket chain with legions of fans, including one of my colleagues, who lives for its chocolate chip muffins.

To wit: “Wegman’s (sic) operates huge stores with excellent quality of perishables and low prices and it is difficult for us to effectively compete against them“. (emphasis mine).

If I were Wegmans, I’d have my advertising team working on full-page advertisements with the following headline: “Even Whole Foods Raves about Our Excellent Quality and Low Prices.” John Mackey has already written the ad copy.