Heads up

By Julian Rogers

Repairing a badly damaged brand in the wake of a crisis doesn't come cheap, both in hard cash and man-hours. So what lessons can we learn from those who tackled a crisis full-on and those who ducked for cover?

“Crisis management has significantly intensified with the emergence of online forums, blogs and social networking sites.”
-Julian Rogers

An outdated approach to fending off a looming crisis could be to bury your head firmly in the sand and keep telling yourself that any publicity is good publicity; after all, today’s news is tomorrow’s fish and chip paper, right? Unfortunately, that kind of laissez-faire attitude is a one-way ticket to Disaster City. For the exec at the top of the corporate tree – the CEO – it can mean falling on his or her sword if a poorly managed incident snowballs into an avalanche. The boardroom bigwigs will invariably have a trained eye on how an impending catastrophe affects the all-important bottom line, but the damage to an organisation’s reputation can sometimes prove irreparable. And while it’s a natural reaction to develop Schadenfreude-like glee if your biggest competitor’s name is being hung out to dry, don’t get too smug: your own crisis could be hurtling over the hills as we speak.

A nightmare is unfolding right this second for oil and gas supermajor BP, as crude oil spews out into the Gulf of Mexico following an explosion that killed 11 rig workers. The oil and gas industry doesn’t exactly have a squeaky clean image at the best of times, let alone following this ecological and deadly disaster. BP has seen €28 billion wiped from its market value and besieged CEO Tony Hayward is all too aware that his head is on the chopping block.

Company chiefs don’t have crystal balls forecasting impending crises. They can strike out of the blue, 365 days of the year, but how you react defines whether the incident is nipped in the bud or whether it lingers like a badly infected wound, dragging the brand’s name through the mud for weeks or months, or even years. “The damage is done by how the organisation responds to the crisis rather than the crisis itself,” suggests brand reputation expert Jonathan Hemus, founder and Director of PR company Insignia. “What an organisation does in the first hours or days is absolutely critical in terms of whether it emerges from the crisis very quickly, potentially with its reputation enhanced, or whether it’s going to do significant damage to the organisation and require financial and human resources to restore it.”


In safe hands

Throughout history, safety has been at the epicentre of copious brand crises. Lose consumers’ trust in your products because of a slap-dash attitude with safety and watch your market share nosedive like a stricken plane with one wing. The food and drinks industry, for instance, has had innumerable product recalls. One that probably eclipses all others in the drinks sector was the recall of 30 million cans of Coca-Cola due to school children falling ill with vomiting and stomach cramps in Belgium 10 years ago. The situation was worsened by the fact that the Atlanta-based company was especially sluggish in its reaction to the crisis.

They eventually ordered the recall, took out full-page adverts in the media to apologise and offered every Belgium householder a free bottle of Coca-Cola. But their initial reluctance to accept responsibility led to further problems down the road. “The crisis got bigger and bigger without Coke ever really establishing any influence over it until a fortnight into the crisis, when the global CEO flew over from the United States to Belgium,” says Hemus. The cost to Coca-Cola was hard to swallow. “It meant the CEO losing his job, the brand value falling and the cost of the recall running into over US$100 million. The brand has ultimately recovered, but it took good year for the organisation to get back to where it was before the crisis.”
 Julius Duncan is Director of Social Reputation at social media agency Headstream. He says honesty is the best policy in any situation like this. “You have to quickly acknowledge any blame, show your concern as a company and show that your customers and protecting their safety is at the forefront of what you’re thinking about. It comes above absolutely everything else and you have to stress that the whole time.” More recently (2009), safety concerns surfaced at child buggy-maker Maclaren when dozens of youngsters had fingers chopped off, broken and sliced in the hinges of their pushchairs. But instead of ordering a blanket recall, Maclaren had one million prams returned in the US, leading to uproar in the UK from worried parents confused by the inconsistency. “Because of the global nature the of media and the way that news disseminates now, this became a big issue around the rest of the world,” Duncan asserts. “They [Maclaren] should have gone global with it immediately and said to everybody, ’We’re absolutely shocked about this and we’ve got a free fix here that you can get from your local store, to stop this happening ever again.’”

Maclaren refused to admit liability, but has agreed to pay between €2300 and €11,600 to at least 40 children. By then, of course, the damage was well and truly done, primarily due to the mixed messages, says Hemus. “Ultimately, it wasn’t a sustainable situation to have two different messages about the same products in two different markets.” He believes the best course of action is to flip your perspective on the situation and look at things through the public’s eyes. How will these actions be received by consumers? Will they gain or lose confidence in the brand? “It didn’t seem like Maclaren took that perspective to their decision-making in this particular situation,” he suggests.

Conversely, when toy manufacturer Mattel was forced to recall 18.2 million toys in 2007 – the most in the company’s history – due to lead paint and design flaws, Chairman and CEO Bob Eckert took the crisis personally. There were no mixed messages over the recall and Eckert himself was all over the media and using the company’s social media channels to create transparency. Mattel employees told of Eckert’s willingness to speak to them directly and how they felt the company pull together to overcome the challenge. “By demonstrating the right behaviours, by filling the vacuum and by taking steps to address the situation, they controlled it and the reputation is intact,” Hemus reveals.

Web reach

It goes without saying that crisis management (as well as standard PR efforts) has significantly intensified with the emergence of online forums, blogs, social networking sites like Twitter and Facebook, and video sharing giant YouTube.

All these channels are weapons in your arsenal when conveying your message; on the flipside, these online tools are at the disposal of Joe Public sitting at a PC anywhere in the world. It’s often said that if consumers suffer a bad experience they will tell around 10 people. If they receive good service they will inform just a fraction of this number. With the power and global reach of the web, consumers with an axe to grind or your common-or-garden activist can post, blog and tweet pretty much what they like about your organisation.

Emergencies that spawn online require an online approach, says Jay Baer, a social media and strategy coach at Convince & Convert. “Companies don’t fight social media fire with social media water. If a crisis erupts on YouTube, you don’t answer back with a press release – you answer back on YouTube.” He adds: “Social media moves so swiftly that unless a company has a crisis plan in place before the crisis occurs, it’s unlikely that they can move fast enough to limit damage.”

Domino’s Pizza followed Baer’s advice and leveraged YouTube to its advantage after two US employees filmed themselves carrying out vile acts in one of the fast food chain’s branches. One of the perpetrators passed wind on a sandwich, shoved cheese up his nostril and wiped his backside on a cloth. The video was uploaded to YouTube and viewed more than one million times. This was a potentially catastrophic situation for Domino’s, so bosses sacked the offending pair and quickly decided to fight fire with fire and post their own YouTube video. The crisis originated online so needed to be solved online.

In the Domino’s video, senior management, franchisees and staff expressed disgust at the offending video and pledged to sanitise every outlet globally. “They moved forward on to their front foot and started to push the agenda in the direction they wanted it to be in,” says Duncan, “because they managed to find opportunity in the crisis. Coming from the shop floor, the video was very authentic and powerful.”

Domino’s also used Twitter and Facebook to refute claims that this was a widespread problem, but instead a regrettable and isolated incident committed by two rogue employees. Communication was a cornerstone in the recovery. Stephen Cheliotis, Chairman of the Business Superbrands Council, believes global companies like Domino’s need to take a philosophical viewpoint because you can’t control every eventuality. “Consumers aren’t stupid; they will sit there and say, ‘It’s just some bloody idiot in Domino’s who has taken it upon himself to do something stupid.’ However, the bigger the brand and the more consumers and employees you have, the more likely there is to be a crisis. You have to have contingency plans in place for everything that could go wrong, however improbable, because your reputation is the most important thing that you’ve got. As long as brands react, people will say ‘Fair enough, they’re now supervising this closely so it can’t be repeated.’”

Confectionary king Nestlé was quick to react to a damaging affair, but they chose the wrong course of action and discovered that negative publicity cannot always be swept under the carpet. Greenpeace uploaded a graphic video to the net alleging that Nestlé uses palm oil suppliers who contribute to deforestation. The video showed an office worker greedily chomping on a pretend Kit Kat made of an orangutan’s fingers rather than chocolate wafer. Nestlé’s response: get the video removed from YouTube ASAP. This draconian reaction merely fuelled increasing interest in the offending film, so Greenpeace switched to video sharing site Vimeo – by which time it had gone viral.

Nestlé has since announced a “zero deforestation” policy in partnership with The Forest Trust, but Duncan argues that the chocolate-maker’s efforts to stifle the video “backfired”. “All that did was make it much hotter currency, because everybody now wanted to see what was becoming known as the censored Greenpeace video that Nestlé had taken down,” he insists. “You have to realise that you can’t control who is saying what and you haven’t got the same level of control as you used to have when it was just mainstream media. It’s really about engaging with consumers and putting out your own content to balance out this negativity, rather than thinking you can completely control the message or what people are saying about you.”

Whichever communication platform management opts for, it needs to connect with the consumer and be devoid of corporate language. Bland, impersonal statements go down like a lead balloon with the public. “The conversation needs to be authentic and transparent,” says Duncan, “and have a level of humanity to it if you’re going to really make things work on these platforms.”

Baer echoes these thoughts, stressing the need for a humanised presence with communications, particular social media. “The companies that are the best at social media conflict resolution do so by attaching real people to the scenario, not a logo. Ford did this incredibly well during the auto bailout, building an entire microsite explaining the company’s present and future from the mouths of key executives.”

Speech bubble

Like Ford, part of the communications offensive will usually include sticking a congenial and voluble spokesperson in front of a camera, be it for television, YouTube or the organisation’s own website. Conventional wisdom says it should be your CEO and nine times out of 10 it will be the CEO. Whoever is selected to face the music needs to command authority, without appearing aloof, and succinctly convey their points lucidly. “Don’t put forward someone who has the right title but is not capable of communicating effectively,” Hemus stresses. There’s always the risk that your chosen spokesperson could squirm or struggle to express the right message if a media scrum is pitching awkward questions amid a sea of flickering flash bulbs.

Charismatic Virgin boss Sir Richard Branson is an instantly recognisable entrepreneur, particularly in the UK. When one of his trains derailed in 2007, leaving one dead and dozens injured, he took full control of the PR machine in the aftermath – arriving at the crash site and becoming the face and mouthpiece for the company.

But when Eurostar trains connecting the UK and France broke down last Christmas, leaving thousands of passengers stranded, some stuck in the darkness of the Channel Tunnel without food or water for 16 hours, CEO Richard Brown’s words didn’t carry the same gravitas. His PR efforts received a lukewarm response from customers, but the company as a whole was ill prepared for the breakdowns and ensuing mayhem. “They tried to set up Twitter accounts but the names that they wanted weren’t available,” says Hemus. “So they were communicating via a Twitter name that had been setup to promote short breaks rather than having an account ready to use in the heat of a crisis.” Lousy crisis management and not having an effective ‘voice’ of the company meant that Eurostar took a battering for the fiasco.

According to Hemus, Japanese automaker Toyota had a similar problem with its MD for the UK, Miguel Fonseca, when he appeared on breakfast television recently. Toyota had already been accused of procrastinating over the recall of more than eight million vehicles globally following cases of stuck accelerator pedals. Again, the salient issue of safety was the crux of this potentially deadly crisis. “In the interview he just was not an effective communicator,” suggests Hemus. “He did not get his point of view across well and that was bad for Toyota, but it was also bad for viewers because they didn’t get clear guidance on what they needed to do.”

Even if you are blessed with a great communicator, you will need back-up spokespersons. “Otherwise, you can bet your crisis will happen on the day when your super spokesperson is on holiday in Australia and not available to do the interview,” advises Hemus. Baer says customers often need to see and hear the CEO as soon as possible in a crisis. “I ask my clients whether they can get a video from their CEO recorded and uploaded to YouTube within two hours, even if that CEO is fishing in Arkansas. If they can’t then they don’t have an adequate social media crisis plan. It’s less about messaging and more about rapid response capability.”

As well as good communication, experts agree that honesty is the best policy. Organisations need to come clean about their failings and where mistakes were made. Concealing the truth or trying to wriggle free from any blame merely antagonises customers and turns people off the brand. If you fumble the ball, be brave enough to admit it. “Some companies tie themselves in knots about using the ‘S-word’,” says Duncan. “If you decline to do that it becomes the story rather than actually just accepting some responsibility, saying sorry and moving the debate forward.” This is reiterated by Baer: “There’s no place to hide any longer; Toyota’s biggest problem isn’t really the product quality concerns, it’s the lack of transparency and appearance of a ‘cover up’.”

Supermarket titan Tesco swallowed its pride and took the blame for a fuel contamination incident three years ago. Motorists filling their vehicles at a batch of Tesco forecourts in the UK soon spluttered to a halt, leaving them with repair bills running into hundreds of pounds. The petrol, linked to one supplier, contained traces of silicon. But instead of blaming the supplier, Tesco took out full-page newspaper adverts apologising for the mistake and offering a refund for the petrol as well as to foot the hefty bill for repairs. They also set up a website and advice line dedicated to offering help on what to do and how to claim for repairs. Hemus commends Tesco for adopting this strategy. “I’m sure the repairs cost them many thousands of pounds but if they had not paid and said it was not their problem but the supplier’s fault, the longer-term damage to their reputation could have been far, far worse.”

Having looked at the tactics to deploy and pitfalls to dodge, is there in validity in the first point that today’s news is tomorrow’s fish and chip paper? Can a 21st century company really expect to survive with this mentality or can sitting on your hands and hoping the storm clouds quickly pass save you from garnering more publicity from a bungled crisis management plan. “Doing nothing may have been a good strategy 10 years ago, but online media means that this definitively isn’t true anymore because anything that has appeared is now stored and referenced via Google,” says Hemus. “Also, all publicity certainly isn’t good publicity and I think anyone who still believes that is living in a fantasyland.”

The good, the bad and the ugly: A sideways glance at reputation crises in recent years. 

The good: Mercedes

Like any car launch, the unveiling of Mercedes new A Class in 1997 was a big deal for the German car company. However, Mercedes bosses were left with egg on their faces when the diminutive car was put through its paces with the ‘elk test’ – a simulation in Scandinavia to see whether a car can cope with avoiding an errant moose on the road. A Swedish motoring journalist swerved to avoid a set of cones but the A Class toppled over, coming to rest upside down smashed and dented. With safety of paramount importance to the car industry, Mercedes immediately postponed the car’s release and added fatter tyres, ESP (electronic stability programme), lowered the ride height and strengthened anti-roll bars. They communicated with the public every step of the way to highlight how they were tackling the problem. For the re-launch Mercedes invited the press along and hired the services of Formula 1 driver Niki Lauda to push the car to the limit. A delayed and costly, not to mention embarrassing, launch that was eventually put back on track. 

The bad: Jyllands-Posten newspaper

Although started by a handful of people, this controversy soon spread around the world, damaging a whole country’s reputation and leaving more than 100 people dead. In 2005 Danish newspaper Jyllands-Posten printed cartoons depicting the Islamic prophet Muhammad, including one with a bomb in his turban. News of cartoons spread in the Muslim world and soon Danish embassies in Arab countries came under siege, some being set alight. Violent protests led more than 100 people being killed. Fuel was added to the fire when the offending cartoons were printed in more than 50 other countries.

The uproar led to a boycott of Danish products in certain countries and Denmark’s Prime Minister describing the scandal as his nation’s worst international crisis since World War II. The cartoonist behind the bomb in the turban illustration was forced to go into hiding following death threats and a bounty being put on his head. A few year later Danish police arrest three men planning to assassinate him. Denmark’s crisis lingered for years, not weeks, and has not been fully laid to rest to this day.

The ugly: Sanlu Group

Probably the biggest controversy to ever hit the food industry was the Chinese melamine contamination in powder milk in 2008 that affected an estimated 300,000 victims and left six babies dead. Farmers laced their produce with melamine, used to make plastics and fertiliser, in order to increase its content. When consumed in large amounts, melamine can cause kidney stones and kidney failure. China’s largets milk producer, Sanlu Group, wasn’t the only company to sell the tainted milk but bosses did try to keep a tight lid on the scandal once reports of babies falling ill began to surface. Even the world’s best PR guru would struggle to put a positive spin on this tragic mess. Indeed, the World Health Organisation said the crisis of confidence among Chinese consumers would be difficult to overcome. Four Sanlu executives went on trial in China, including the company boss who was spared the death penalty and jailed for life. Two men accused of being responsible for the contamination were handed down death sentences. For China, which relies on its exports, this was a national disgrace that severely dented its image.

People brands

How two high profile celebrities adopted contrasting stances to their recent scandals.

Tiger Woods                       VS                    David Letterman
 

From the outside looking in, US golfer Tiger Woods had it all: a glittering career, a Swedish model for a wife and more cash in the bank than any other sportsman in the world. But In 2009, he reputation and the Woods brand was in tatters when news surfaced of a string of affairs behind his wife’s back.

Altogether, more than a dozen women came forward in the media with claims of having had steamy sexual encounters and relationships with the golfing great. Despite the kiss-and-tells revelations and media circus surrounding the infidelities, Woods remained tight-lipped, taking a self-imposed hiatus from golf. He did his best to avoid the glare of the media but paparazzi photos of him trying to remain incognito while checking into a sex addiction clinic only fanned the flames of speculation.

Woods’ silence exacerbated the crisis, says Insignia’s Jonathan Hemus. “Everbody else was being interviewed by the media for their views and rumours were spreading like wildfire, but the one person who wasn’t shaping or exerting any influence on this was Tiger Woods himself – presumably in the hope that it would just go away but it clearly didn’t go away.” When he eventually faced the limelight, his ‘apology’ hit out at the media rather than expressing remorse. The fallout from the whole debacle was a backlash from sponsors with the likes of Gatorade, AT&T and Accenture axing lucrative endorsements. These companies couldn’t associate themselves with a tarnished star who shaped his brand on his seemingly clean-cut image. Woods, a magnet for sponsors like Nike, was thought to earn US$100 million a year in endorsements before the adultery came to light.

US chat show supremo David Letterman decided to tackle his personal crisis head-on – revealing live on air that he was being blackmailed over an extramarital affair. His unexpected outpouring had the studio audience initially questioning whether it was all part of his primetime talk show but it soon became clear Letterman was telling the truth, revealing how he had sex with women on his staff. CBS producer Robert Halderman demanded US$2 million in hush money after discovering the adultery though peeking at a former girlfriend’s diary. Letterman displayed genuine fear for his safety during the 10-minute speech interspersed with the odd quip: “Would it be embarrassing if this were to be made public? Perhaps it would – especially for the women.”

Viewers were left stunned by Letterman’s admissions but Hemus says his direct approach to the situation was the polar opposite of Woods’ head-in-the-sand ploy. “As soon as allegations of an affair arose, he went on-air, apologised, and took control of the communication of the message. Yes, it was still a big story, but it was nowhere near as damaging to his reputation as it has been for Tiger Woods.” Letterman, who married his long-term girlfriend last year, with whom he has a six-year-old son, is normally very guarded about his private life so his on-screen admission was all the more startling. It also severely denting his good guy image. Halderman was arrested and eventually sentenced to six months in jail and 1000 hours of community service after pleading guilty to attempted grand larceny. For Letterman, who was commended for his honesty, the scandal had little effect on his career.

5 Golden rules for crisis management

Have a plan: You can’t foresee every eventuality but you need to ensure you can go on the front foot once the need arises. Fail to prepare and prepare to fail.

Act fast: Hoping a problem goes away is not an option because there is nowhere to hide nowadays. Be quick to put fire up your action plan

Be honest: It’s OK to say sorry. Consumers respect companies that admit mistakes and vow to put things right.

Use social media: Banal press releases or, heaven forbid, “no comment” quotes rile consumers. Build a following on social media sites now – not in the heat of a crisis.

Good spokespeople: The CEO needs to spread the right message eloquently and effectively. If the CEO isn’t that press savvy train up senior people who can do the job instead.