The Penn State Scandal and What Every Entrepreneur Can Learn From It

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With the Scandal Threatening to Damn Penn State’s Future, the CEO of, Charles Gaudet, Says This Could Be a Lesson in Transparency for Every Entrepreneur

Penn State Scandal Lessons for Entrepreneurs

Penn State Scandal Lessons for Entrepreneurs

as business owner, you have a choice: you can control the result of the mistake by becoming the trusted source for information and remediation, or you can withhold the solution and provide an opportunity for someone else to take control...

On July 13, 2012, the New York Times reported that officials at Penn State, including its president and its famous football coach, Joe Paterno, were aware of sexual misconduct between Jerry Sandusky and two young boys as early as 1998, but failed to take steps to protect the children from further victimization (source: New York Times, July 13, 2012: "Abuse Scandal Inquiry Damns Paterno and Penn State"). Marketing expert, Charles Gaudet, suggests Penn State’s strategy to cover up the incident was, in fact, more damaging to its future success and profitability then admitting to the mistake.

“A college is no different than a business. A person chooses to enroll in a program they first believe will provide the greatest advantage or benefit, and, secondly, will make the purchase decision predicated upon whether they feel they know, like, and trust the college,” says Gaudet. “With the administration of the school covering up the truth in order to protect their own interests (rather than protecting the students), they are sending the message that Penn State’s reputation is more important than the protection and security of their students.”

Gaudet continues to point out the fact that customers are becoming increasingly distrustful of businesses. In a recent survey, only 46% of respondents replied positively to the question, “how much do you trust a business to do what’s right?” (source: 2011 Edelman Trust Barometer). On the contrary, because trust and transparency are characteristics consumers want and expect from a business, when the entrepreneur emanates this trait, they benefit from new customers, repeat business, and referrals.

Had the officials at Penn State consulted with Gaudet when they were first made aware of the situation, Gaudet would have advised the following:

1.    Communicate the event with the authorities, media, and students immediately by making them aware of the problem and reinforcing the school’s commitment to protecting its students.

2.    Remind students why they made the decision to enroll in Penn State, and the steps Penn State’s administration is taking to ensure students continue to get the best results they’re after.

3.    Clearly define the problem that took place, how the administration is handling the problem, and the steps they are taking to prevent a similar problem from happening again in the future.

4.    The administration must understand, recognize and communicate the thoughts and feelings of the students. This will let the students know their feelings are understood, and the better the administration communicates this message, the more the students will continue to trust the school to do what is right.

5.    Continue to work with students and encourage communication between the students and the administration for feedback.

“People understand when a mistake is made, and are overwhelmingly forgiving when it’s admitted and handled correctly. On the other hand, they are intolerant of cover-ups, deception, and a lack of communication. It’s important for all entrepreneurs to see this as a lesson in transparency,” says Gaudet. “So, as business owner, you have a choice: you can control the result of the mistake by becoming the trusted source for information and remediation, or you can withhold the solution and provide an opportunity for someone else (such as the media, your customers, or other authorities) to take control and force you to defend and protect your position. In the end, your success will be proportionate to the quality and transparency of your communication.”

For more information on how to increase your small business profits and create a more customer-centric organization, please visit and register to receive Gaudet’s free CD on becoming a magnet for customers and profits in any economy.

Gaudet started his first business at just four years old, and has been involved in entrepreneurial enterprises ever since. Upon finding himself in millions of dollars of debt and under enormous stress at the age of 24, he and his wife systematically grew their first multi-million dollar company. Gaudet has traveled much of the world studying from business, political, and social leaders studying entrepreneurial, marketing, and business excellence. He is widely regarded as a marketing expert for consistently delivering windfalls of profits to his clients, unveiling opportunities that have been previously under-utilized or have gone unnoticed.
He is the founder of, the creator of the Predictable Profits (TM) methodology, and the author of the popular blog at

Predictable Profits is a leading small business marketing company and a division of Managed Marketing, LLC. The company specializes in finding overlooked marketing opportunities commonly found in most small-to-medium sized businesses, and creating actionable marketing strategies for increasing a company's profits. You can read more about Predictable Profits by visiting the company's website at

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Charles E. Gaudet II
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