The Closing of EGL Int’l and Its Lessons for Our Business

Aside from the various lab-grading issues it raises, the story of EGL International is instructive as an example of how fast information can spread in the current age. 

In May, a Nashville, Tenn., TV station aired two stories that criticized a local jeweler who used the lab’s reports. This led to lawsuits against that jeweler. Then RapNet banned all EGL reports from its platform. And now EGL International is shutting down, as the EGL network seeks to rehabilitate its image.

It took seven months from the airing of that first broadcast to EGL International closing down. And that is slow by social media standards. In the United States, we have watched the career of Bill Cosby—a beloved icon—implode in a little more than a month.

So what are the lessons here?

It pays to be proactive.

EGL’s reorganization is a welcome and positive step. But think how much stronger its brand name would be if it took those actions after those first stories aired, before RapNet banned EGLs from its network. Or, even better, before that.

And that’s in part because…

When you are in play, you are in trouble.

Industry leaders often say things like “the consumer doesn’t care” about certain issues. There is no more shortsighted or wrongheaded comment. You don’t want to wait until consumers care. You want to act before they care. Once they do, you run a huge risk. 

At the 2000 World Diamond Congress in Antwerp, a PR consultant spoke about the conflict diamond issue. He said the biggest danger is when an image problem reaches a boiling point, because then, “emotion trumps reason.”  

When the conflict diamond issue was at its height, not everything said about the diamond trade was accurate or fair. It may not have been justified for RapNet to ban every EGL lab from its network. The banks are likely overreacting to the issues in our industry.

And yet, that is what happens when a company or business is “in play.”  Once people see you as a malevolent, untrustworthy, or unreliable entity, once you have a target on your back, the standards of proof become lower, and all bets are off. Sometimes it just takes being linked to a disreputable actor for your company to be tarred.

The overall message here is:

Don’t do business in a way you wouldn’t want the world to know.

Today, businesses are under a microscope like never before. Just because people or consumers don’t care about an issue now doesn’t meant they will always feel that way. For a long time, different grading standards weren’t that big an issue. Now they are. For decades, buyers didn’t care that the diamond business was controlled by a monopoly. Now, they do. Again, the Bill Cosby example is instructive. At first, people ignored the allegations against him. They don’t anymore.   

Your reputation matters for business.

Comcast is another case in point. Like all cable companies, it had a reputation for bad customer service. But it was a monopoly, so it didn’t care.

Then a bad customer-service call went viral around the same time Comcast wanted to purchase Time Warner Cable. And now those service complaints are being invoked to block the merger. Now it cares.

If you ignore image problems—and our industry has a disturbing tendency to do that—they can come back to haunt you. Maybe not today, but eventually. It can just take one movie, or news report, or, as we have just seen, a stand-up comedy routine, to tear down decades of goodwill. With social media, reputations can go up in smoke in an instant. 

And, of course, our industry is more vulnerable than others because we sell a luxury product that people don’t have to buy. As the saying goes, people don’t eat diamonds. 

So when this industry has issues—and we certainly do—we must face them proactively and honestly. We can’t assume that people will always love diamonds or jewelry. Today, you can’t take any consumer loyalty for granted. Ask Bill Cosby. 

I am not saying all this to scare people. Social media firestorms are often ugly and misguided. But in general, this can be viewed as a positive trend. It favors businesses that do the right thing. Because doing the wrong thing just got a lot riskier.

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JCK News Director

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