You know a story is getting old when the analysts start analyzing the other analysis. This is what happens with TV punditry, and now I am engaging in it related to the Murdoch News Corp crisis.
I’ve seen several commenters lately highlight different aspects of this crisis and how the Murdoch’s are responding as lessons for crisis management. But one element is missing from all the blogs I’ve seen which is the issue of character.
Character and the public’s perception of the character of the central characters are at the heart of any reputation crises. This was highlighted for me, first, by a study coming out of Oxford in the 1990s that analyzed crises from the standpoint of share price. It showed that the key element that people were looking at in a crisis is the behavior (actions) of the lead players and whether or not those actions were the ones they wanted and expected. The second was Peter Firestein’s excellent book called “Crisis of Character” in which he linked the character of the CEO and the senior leadership to the formation of crises and effective response to them.
What is character? We know what it is, but find it hard to define. We know it has to do with right and wrong, with moral stance, with value systems, with unselfish behavior. In an earlier book (Friendship Marketing) I connected the trust that customers must develop for loyal business relationships to the sense they had that the company (that is, the people from the company who can make decisions) will act on their behalf even if it may not be at that moment in the company’s best interest.
I believe character and the public’s perception of it is what has made the myth and legend of the Tylenol crisis which is still held by many to be the best example of crisis management. Why? Because, despite the fact that the contamination was a criminal act done by a bad person outside the company, by voluntarily recalling every bottle and repackaging them for safety the company demonstrated that their concern was for people’s safety more than for the high cost of the recall. In other words, the public saw the company leadership sacrificing their own interests on behalf of the public’s, and did so voluntarily. That, they saw, was character. That demonstrated that at the top there were people you could trust. (Side note–I think it a bit of a myth given that Tylenol simply implemented a plan for recall that anticipated contamination from within the company–a crisis that hit them earlier in which they acted poorly due to lack of preparation–but that’s another story.)
So what does this have to do with Murdoch? Everything. I’m quite certain that neither the elder nor younger Murdoch will be found to have known about or personally authorized the phone hacking. But they hired, supervised and held accountable the people who did know about it and possibly who ordered the hacking and paid for it. You cannot tell me that when you hire and direct senior people you don’t have an idea of what lengths they will go to do their job. The Murdochs are responsible for creating a culture that both demanded the kind of media scoops that are virtually impossible without walking the line and occasionally crossing over it in terms of right and wrong, legal and illegal. They are also responsible for hiring and supervising the people who had the willingness to cross the lines of moral and legal behavior. The Murdoch’s may not be guilty of crimes or immoral action. But they are certainly guilty of creating and sustaining a culture where this kind of behavior could emerge.
Since I believe this is at the heart of public outrage over this situation, what can the Murdoch’s do? When you have violated the public’s view of right and wrong behavior you have the choice of arguing over it, or accepting it and saying you are sorry. The public thought a big company like BP should have had the technical ability to first keep a wellhead from blowing up and then, if it did, to be able to fix it quickly rather than letting it spew oil for months on end. They were right to believe that and BP should have (and did) apologize profusely for that failure to meet reasonable expectations. The public believes that a company like News Corp ought to be managed so that senior leaders will know the difference between right and wrong, legal and illegal but that proved not to be the case. The Murdoch’s message should be simple: “we are responsible for creating a culture where these things can happen. We are very sorry for this, we know we have failed the public trust, and we will do what we need to to clean house and firmly establish policies and operating principles that will put public trust above all else.” They haven’t done that. I’m quite certain the lawyers won’t let them do that. But I do not see that anything less can ever make a real difference. And now, of course, is too late.