Category Archives: Crisis Case Studies

Can cyberattacks improve your reputation?

Think Target and the hit it took when hackers stole the private information of millions, requiring many to update credit cards and the like. It’s a disaster that most executives believe will happen to them–not if, but when. So, that makes it even more amazing to find out that most executives think, according a study published in the Economist, that two thirds of CEOs think a good response to such an attack will enhance their reputation.

PRNewser from mediabistro reporting on the Economist story notes that while 66% think they will come out of such an event smelling like a rose, only 17% surveyed say they are “fully prepared.”

Hootsuite, perhaps the best social media management and monitoring tool that I know of, today experienced a hack attack in the form of a Denial of Service attack. One client emailed me Ryan Holmes’ response. The CEO of Hootsuite was fast, empathetic, transparent and almost completely on target. (Only thing missed in my mind was an apology, but perhaps he felt there was nothing to apologize for and he may be right).

A couple of things stand out to me in this new arena of crisis communication:

- CEO’s seem to get the idea that fast, transparent communication can actually enhance a reputation even when customers/stakeholders have been hurt

- There seems to be quite a gap between the confidence displayed and the level of preparation. That is surprising. I would think the confidence would come after preparation, not before.

- The reality (certainty?) of this kind of crisis seems to be quite well accepted.

Now, we will see how it all turns out. My prediction: Another Target-type hacking will occur and the press and social media pundits will be better positioned to blame the company. “They knew it was coming but did not take the steps they needed to to prevent it–it was profits above people all over again.” Then, the crisis communication game really begins.

Crisis wisdom from Richard Nixon

Dartmouth professor of corporate communications, Paul Argenti, wrote an interesting and useful blog on Harvard’s HBR Blog on crisis communication. Specifically, it looks at GM’s CEO Mary Barra and how she is dealing with the inherited crisis of the current ignition switch recalls.

This is a concise and very useful summary of the key crisis communication principles–some of which I saw put to use to very good effect recently on a situation where I was a close observer.

At the very end, Professor Argenti quotes Richard Nixon from his famous Checkers Speech.  Nixon:

 “The easiest period in a crisis situation is actually the battle itself. The most difficult is the period of indecision—whether to fight or run away. And the most dangerous period is the aftermath.  It is then, with all his resources spent and his guard down, that an individual must watch out.”

Not sure truer words about crises have been spoken.

 

The hardest part of communications

Reflecting on some of the most recent crises I’ve been involved in as an advisor, I asked: what am I really contributing?

I concluded by far the most valuable contribution was an outside perspective. Looking at the event and issues from the viewpoint of the customer, the stakeholder, the reporter, the victim, the detached observer. It is often very difficult for even the best communicators who are deeply embroiled in a problem to maintain that outside perspective. It’s the main reason why I think it is probably essential that your crisis communication plan include a qualified person completely outside your organization.

I worked on a plan for a major oil company a few years ago and saw in their plan the role of a Communications Advisor. In their case, it was intended for a specific PR expert who had a strong relationship with the President. But, it struck me as such a good idea I have built that role into almost every plan I have worked on since then. The responsibility of that person is to maintain a 30,000 foot view, maintain contact with stakeholders outside the organization, and represent an honest, objective and uninformed perspective.

I say uninformed because there are always so many good reasons to not do what is needed. We can’t do this because our lawyers say we can’t, because we had such and such problem in the past, because the union leaders would have a hissy fit, because senior management doesn’t like so and so–whatever the reason. They are powerful obstacles but the outside perspective says: it doesn’t matter. It has to be done.

I’ve often said being a consultant is the best job for someone like me because I have so little to lose. Sure, I can get fired, but after about three plus decades I’ve gotten some confidence I can get another gig. I don’t have my future tied to relationships within the organization, to political sides, to protecting anything. Therefore I can be honest, even undiplomatic (which seems to come too naturally to me).

The hardest part of communication is taking a three foot jump from your skin to that of the person or people you are talking to. If you do look at the situation with their eyes, all the “yeah, but…” excuses melt away. All the obstacles that look insurmountable become hurdles that must be bowled over.

The purpose of suggesting this is not to sell my services or even other crisis consultants (I’m plenty busy enough right now, thanks very much). It is rather to point out that the first thing you learn in your very first communication class should be learning to think like the one you are communicating with. But, as foundational as the”you attitude” is, it remains the biggest obstacle to effective communication and the very hardest part of this job.

 

 

Benton County (WA) PUD demonstrates what is expected in admission of error

Admitting you messed up and hurt someone or something is one of the biggest dilemmas in crisis communication. Your lawyers are screaming you can’t do it because its an admission of guilt and will kill you in court. The public is thinking–let’s see what these folks are made of. They messed up and now they won’t accept responsibility or are trying to blame someone else. The media, of course, plays the blame game right from the start and any attempt to duck it almost automatically assures the black hat treatment.

That’s why it is so refreshing to see when the legal concerns are brushed aside and someone just comes out and says, yep, we screwed up and we are really sorry.

That’s the story that is told by Dave Statter of Statter911 about Benton County, Washington, Public Utilities District. A young firefighter almost lost his life because linemen from the district checked the scene, didn’t see a live line, and cleared it for firefighters to enter. The firefighter went into ventricular fibrillation but was rescued by his fellow firefighters and is fine.

I’m guessing (and I certainly hope) that this firefighter understands that the linemen and the District are very sorry, that mistakes happen.  But the sad part about a story like this is that he is likely already being contacted by plaintiff’s attorneys with all kinds of promises about how much they can get him for this accident. The same plaintiff’s attorneys who for years on end have supported candidates who fight tooth and nail to prevent legal reforms that would enable agencies and organizations and doctors to apologize when mistakes are made and not have the apology used against them in court. British Columbia has such a law, some states (Colorado I believe) has a law relating to medical malpractice, and I wish it could be the law of the land.

Would make seeing this kind of apology a lot more common. But, I applaud Benton County for doing the right thing and sincerely hope they do not have to pay for it in court.

 

Harvard study says BP’s “greenwashing” paid off

I greatly object to the obvious bias in this report on the value of “greenwashing.”  According to Wikipedia “greenwashing” is “spin” and deception.

The real point and value of this study about the impact of BP’s pre-spill advertising on its sales and reputation after the 2010 Gulf oil spill is that building reputation equity makes a huge difference when you encounter a major crisis. This is an extremely important point. Not because it supports buying expensive advertising, but because it supports the value of working hard to build reputation and trust before an event.

I call it reputation equity and liken it to a bank account. It’s a fund of goodwill and positive perceptions that will be extremely important when/if you ever face a major reputation crisis. In my other blog at emergencymgmt.com, I suggested that my emphasis in 2014 would be building that reputation equity and suggested some ways to start thinking about that. This report provides academic credence to that position and further encouragement to continue to focus on that part of crisis communication.

Crisis communication is primarily about preparation. If you’re not prepared to deal with it and communicate effectively, it’s almost a matter of just stick your head down and ride out the storm or succumb to it (like Freedom Industries in WV). But preparation is not just about putting a good plan together, creating message maps and all that–those are extremely important of course. Preparation is above all , analyzing your risks and redoubling efforts to prevent bad things from happening and then, working hard to build the trust in your key stakeholders that will be essential if/when you do face a problem.

This study doesn’t provide any information on the relationship building with key stakeholders that I think is the core of a reputation equity effort. But it does show that working hard to communicate who you are with the public prior to an event happening can pay off big time when the big event happens.

About “greenwashing.” I can understand why many believe that BP’s ad campaign “Beyond Petroleum” was deceptive. In one way it was. I don’t think it communicated, as I see with other oil companies such as Shell, that alternative and renewable energy sources are one part of the mix and that petroleum would continue to be essential. But I think this is judging the past from the perspective of the present. Even just a few years ago we were facing “peak oil” and renewables such as solar, wind and geothermal were the future. Nuclear was even getting a new look. Then fracking happened, and Fukushima and now nuclear is once again off the table and the US (amazingly) is set to become an energy exporter–at least until the rest of the world starts getting serious about natural gas. When the Beyond Petroleum campaign started I believe it was aspirational and forward thinking telling the world what BP was and that it was going to be about far more than oil. Is that greenwashing? For some, no doubt, but I think the researchers doing this study are showing their bias. It’s noteworthy that their own conclusion is that the government needs to get involved in investigating environmental claims made by companies.

Yeah, right. Because we little people are too stupid to see through the “greenwashing.” Give me a break.

 

Farmers now have “go to jail jobs” too

(Similar post also published on emergencymgmt.com)

A few years ago, a friend and board member of my company who was an oil industry executive, talked about “go to jail” jobs. He said a lot of senior leadership positions in the oil industry were now jobs that carried the risk of jail time if things went wrong on their watch.

That was borne out in the first major crisis I was involved in, the Olympic Pipeline accident. The GM of the pipeline company went to jail for six months. This despite the fact that the accident, like many, was caused by a very strange confluence of a number of factors, many of which he had absolutely no control over and which, if they had changed just a bit, would have prevented the accident from happening.

Now I am shocked, appalled and saddened to find out that farmers also have “go to jail” jobs. This article from NBC News tells about the sentencing of two young Colorado farmers from whose farm tainted cantaloupes emerged that resulted in a listeria outbreak that killed 33 people. The farmers narrowly avoided jail time, instead are sentenced to five years probation and a large fine. The reporter/editor of the article clearly feels this was a gross injustice. Look at the headline and focus of the article.

It is a horrible tragedy that 33 people lost their lives, including the 92 year old “spry” victim whose son is so disappointed in the result. If there was intent, if there was criminal negligence, if there was an established pattern of callous disregard for harming others, I could see the calls for treating these farmers as criminals. But, even this very biased article makes it clear there was no intent, no pattern, no callousness. There was a mistake, or mistakes made. The farmers are called “salt of the earth” types.

I will withhold further comment on the sad state of our justice system, and our society, and the state of our media. Instead, this situation requires the attention of anyone who is in a business or government position where action or inaction could harm others. And that is a lot of you.

First, the lesson clearly is to look at all your plans and procedures and make certain you are doing all you can to prevent such things from happening. That is the value of such a great tragedy and the shocking outcome. Preventive measures will greatly reduce the risk, but not eliminate it. And when, despite your best efforts, something goes horribly wrong, what do you do?

This situation creates a dilemma for crisis communications. In the pipeline accident the company was “lawyered up” to the max. But, it made sense despite the severe impact on reputation. The company went bankrupt, but gasoline continues to flow through the pipe. Now farmers and others have to look at the legal implications when something goes wrong. A sincere apology with acceptance of responsibility is absolutely necessary to avoid turning the media and public against you. And a highly negative public atmosphere is just what a plaintiff’s attorney or prosecuting attorney wants when selecting a jury. So, it makes sense to be transparent, empathetic and forthcoming. But, such admission in our great nation, is going to be used against you in court. So, you end up walking a very fine line–or saying nothing.

There are two preventive measures to consider right now. One, we already talked about, which is preventing bad things from happening. The other, recognizing that all risks can’t be eliminated, is building reputation equity before something bad happens. I commented on this on Rich Klein’s “The Crisis Show” last week looking at the very different press coverage and social media comment about Freedom Industries vs. International Nutrition. Both had tragedies–one of them involving fatalities. But it was the company without the fatalities that took by far the greatest beating. It’s worthwhile looking at why that may be.

Justine Sacco, Phil Robertson and the end of 2013

The year 2013 winds down with two crises that make me sad for the state of affairs in this grand country and world. Justine Sacco was  PR director for InterActive Corp, which owns the Daily Beast, Vimeo and other hot Internet properties. She isn’t anymore. She made one too many outrageous comments on her personal Twitter account just before boarding a plane and the s-storm that resulted on social media erupted into typhoon-force before she even landed. Next day, she was fired, and all traces of her had been removed from IAC websites.

While the comments she made are indefensible, I find it ironic (and very sad) that the vitriolic attacks against her are not causing the outrage that her comments. One tweeter suggested her problem was watching too much Duck Dynasty.

Which brings me of course to Phil Robertson and the decision of A&E to suspend him from the wildly popular (and wildly wild) show Duck Dynasty. Here’s the irony: much of TV and virtually all of reality TV has devolved into the modern day equivalent of Barnum and Bailey’s freak shows. The more outrageous and extreme the behavior the better TV and ratings apparently. Duck Dynasty has developed a vast audience because whether it is shooting all kinds of animals, building duck blinds out of RVs hosted high into the trees, or eating coon poop instead of berries, these people are not the common ordinary Chicagoans or New Yorkers. They’re different. And its good to be different except when you say something that is deemed to be politically incorrect.

I won’t comment on the substance of either Sacco’s tweet or Phil Robertson’s GQ interview–those are readily available by reading the links.

The irony of political correctness is that while our cultural values honor diversity in nearly all things, political correctness is there to ensure uniformity of thought and action in certain highly selective things. I vote for diversity and recognizing that people have a right to their opinions regardless of whether or not I agree with them. In this regard I consider the over-reaction of the Twittersphere and A&E to be unAmerican and unhealthy for our future.

I suspect many will disagree.

And so 2013 ends with powerful lessons about crises and crisis avoidance:

1. Think before you tweet.

2. Understand the current cultural values and understand that if you say anything publicly that violates those values even to a minor degree, a storm will almost certainly ensue.

Along these lines I note that Chip Wilson has resigned his position with Lululemon. Another casualty.

 

Now its FOX News doing the coverup

This one cost them $8 million. That’s to keep a former PR executive from publicly disclosing his complaints about FOX News. He was a top aide to Roger Ailes when Ailes was president of the news organization.

Eight million is a lot to pay to someone to keep them quiet. My question is what was so horrendous that either he threatened to disclose or they were afraid he might? You wonder that too? So, let the digging and speculation begin–it already has. The whispers are about “financial irregularities.”

I really don’t understand this strategy. Do they think they can succeed in hiding it, now that there is a lot of blood spilled in the water and all the sharks in the neighborhood are smelling it? Is it some kind of legal protection? Would the damage from a legal settlement be worse than the world wondering what kind of shenanigans are going on behind the scene that they are so desperate to hide?

I understand I have a completely outside perspective and no doubt, inside things are far more complicated. Not long ago, I was privy to some facts about an organization that was being roundly criticized by crisis experts for their inept handling of a significant public issue. I wanted to call them or write them and say, wait, you don’t understand, there’s more to this than that. I suspect there is a lot of that going on behind the scenes at FOX. But, the real point is, it really doesn’t matter. Not from a reputation management standpoint. Perception is still reality and it the reality is, FOX looks like they are hiding some pretty stinky stuff.

Samsung forgot lesson 1: it’s always about the coverup

To err is human. To cover up is…stupid. I thought smart companies like Samsung understood that basic rule. Ever since Watergate, every reporter is looking for a cover up. But, now, since we turned most of the population of 7 billion folks into reporters, there are an awful lot more just waiting for you to hide something you don’t want people to see.

In case you missed it, a Samsung smartphone apparently caught fire. The company demanded proof before replacing, so the guy put the proof in video form on YouTube–just sort of a natural thing for a digital native to do. The company said, OK, we’ll replace your phone if you take the video down, promise not to it again, absolve the company of all legal liability, waive all his legal rights and and and…

What would you if Samsung made you this offer? Right. That’s what he did. Took their response onto YouTube. Now (as of this writing) nearly half a million know of not only the safety issue, but of Samsung’s heavy-handed, highly ridiculous attempt to hide it.

What’s kind of funny about this to me is we are heading toward the end of the year. I was contemplating writing a post about how it seems that most everybody gets it now, crises aren’t what they used to be, maybe it’s time to stop harping on this stuff.

Then, Samsung happens…happy new year.

 

Lululemon’s crisis points us in the wrong direction

Jonathan Bernstein’s blog post on the Lululemon double crisis (sheer pants then a bad Bloomberg interview, followed by a rather pathetic “apology” video, caused me to look closer at the videos.

The Bloomberg interview which aired Nov 5 had Chip Wilson and Shannon Wilson, founders of Lululemon discussing the problems they have had with sheer yoga pants.

That was followed by an apology video posted on YouTube in which Chip Wilson accepts responsibility for the fray that followed.

What happened? The Bloomberg interviewer asked about pilling. And Chip Wilson (with a very anxious looking Shannon looking on) explained that like a lot of other problems, seatbelts for example, what happens with pants has to do with the woman wearing them and the kind of bodies they have. He referred to thighs rubbing together. OK, now Bloomberg has something juicy, so they headline the interview thusly: “Lululemon Pants Don’t Work for Some Women: Founder.”

And then the sh-storm began. The storm that led to the rather pathetic apology on YouTube.

It’s a crisis, and not a very effective response. But, overall my reaction is different. Mr. Wilson spoke the truth. Those super tight fitting yoga pants are not for every woman. What?! I can’t say that on the Internet! We’re supposed to pretend there are no differences and a company making pants should be egalitarian. Give me a break! This “crisis” isn’t about Lululemon, Chip Wilson or even ill-thought comments. This crisis is about our society and its prickliness, hyper-sensitivity, offensibility, intolerance in the name of pluralism and non-discrimination. Someone looking at this rationally would say its the society in crisis and not the company who doesn’t make yoga pants for every woman and a founder who would have the integrity to express that on TV.

Sure, some are going to be offended. Hey, if your thighs rub together a lot, then these pants are going to pill and you should probably look at something else–maybe like jeans. But, we can’t say that can we. Not with the Internet. Not with a TV channel that will take your words, meant to explain and be helpful, and turn them into a headline sure to cause outrage.

The truth is Chip Wilson should not be doing interviews, nor should he do YouTube videos. He’s too honest. Bernstein would have him in his interview be more apologetic rather than asking his employees (whom he acknowledged he hurt by his comments) to be above the fray. Here he is being honest and authentic again. Apologize for what? Speaking the truth? For causing the fracas? Why, when it is the hypersensitive fed by an outrage seeking media that caused it?

The truth is that is the world we live in and Chip Wilson lives in. It is a crisis, a crisis that could have been averted by being less honest, less forthright, less transparent than Mr. Wilson. I hate to say this, God I hate to say this, but Lululemon needed a spinner on that interview. One that would have stuck to the talking points. Who would have diverted the question by saying: we continually look for ways to improve our product so that all women of every shape and size can enjoy our superior pants. It wouldn’t be true, honest or transparent, but it would not have caused the storm.

And if the apology was needed, Mr. Wilson should have had a script and practiced and practiced it, rather than going off rather like he was just getting over a serious bout of grief. He should have said, “I am so sorry, sorry that I misspoke and offended women across this country. We of course are working harder than ever to make the best possible pants for all women regardless of how much their thighs rub together.” No, he shouldn’t have. Because he couldn’t in all honesty. And I do get the sense that honesty, transparency and integrity are important to him.

So many crises these days are a result of not thinking through how the loud, prickly, hypersensitive voices will dominate the conversation. Far too many are created by the outrage seeking irresponsibility of media–fanning the flames for their own profits. I can decry it, and I do. But it is our reality and one we must live in.

I suspect Mr. Wilson has learned that lesson. Next time, we will see someone capable of meeting these expectations more effectively.