Eric Dezenhall considers some different ways to approach modern business crises and the ensuing reputational threats

A big drug company I worked with was facing a withering controversy over the safety of a blockbuster medicine.

The company’s PR-firm advised the CEO to “show concern,” “apologize” and “take responsibility.” When the PR person left, the CEO turned to me and said, “I’m paying a hundred grand a month for this?”

It wasn’t that the CEO opposed these high-minded touchstones per se, he just believed this counsel was unwise and uninspired.

He felt that his drug saved lives and that the attack on it was unmerited. Would it have been more ethical to traffic in the hackneyed dogma of repentance – which would have put his company at legal and commercial risk – or fight for a drug he believed in, and offend the PR priesthood?

This anecdote is emblematic of the chronic complaint of the PR industry: Its inability to earn the respect of corporate leaders.

But it’s hard to take seriously the opinions of a profession where the same dollops of advice are rehashed without reflection and don’t square with the complex challenges of top management in the Digital Age.

All one needs to be a crisis manager these days is a sport jacket and the invocation of the following sugar-coated chestnuts of boilerplate “solutions” that masquerade as moral leadership:

Boilerplate #1: “Get out in front of the story” (aka “tell your side of the story”)

A self-styled crisis PR man recently blogged that the scandalized Tiger Woods should have “gotten out in front of the story.” What was Tiger supposed to do, call an impromptu press conference and rattle through a list of lady friends declaring, “Tiffany, yes; Trixy, no, Amber, don’t remember…?”

And, assuming that Tiger had preempted with a confession, would this have caused the news media, bloggers, pundits, Hooters waitresses and millions of independent players to collectively reward him with their silence? Not a chance, once the electronic crisis vortex began churning.

Seasoned crisis managers protect their clients from brutal downsides, but when you don’t have a good side to your story, sometimes “less bad” is the best that’s doable.

Boilerplate #2: “Too little too late”

It’s cheap to argue that something that wasn’t done would have led to a perfect outcome if it had been done – even “immediately,” a favorite damage control adverb. In major crises, decision makers often don’t know all of the facts immediately to make sweeping assurances.

Recall how the U.S. Postal Service “immediately” assured the public that their mail was safe during the 2001 anthrax scare. The next day two postal workers died of anthrax poisoning in Washington, D.C.

The “too little too late” saw was recently deployed when Goldman Sachs announced it would contribute $500 million out of its multibillion dollar bonus pool to a fund to help finance small businesses. This was predictably deemed a flop.

Outside of giving 100 percent of their bonuses to charity, was there anything an investment bank that accepted bailout funds from the federal government could do to make people feel better about their largesse?

I thought Goldman needed to curb its ill-advised rhetoric such as the comments of CEO Lloyd Blankfein that the bank was “doing God’s work.” I also felt that the $500 million was a small but worthwhile first step in building a long-term arsenal of allies.

Would this modest advice have defused Goldman’s woes? No, but PR tactics are only a price of entry, not the antidote to systemic problems.

Boilerplate #3:“Fess up/Apologize”

When Martha Stewart was first accused of insider trading in 2003, the airwaves were awash with crisis experts who declared the whole problem would vanish if she apologized for her actions.

Confessions in most forums are admissible in court. Had Stewart “fessed up,” an indictment would have been virtually assured, as would have been a conviction, which is ultimately what happened. Her legal position was that she was not guilty.

Had she apologized “immediately,” what exactly would she have apologized for, after all, one cannot express regret for things they are claiming they did not do?

The apology mythology was also invoked when Merck faced lawsuits over their Vioxx drug that were estimated at the time to cost $25 billion in settlements.

Merck didn’t roll over; the company successfully fought lawsuit after lawsuit, and eventually settled with a smaller class for about $5 billion. The company’s indelicate, but legally and financially effective strategy, saved shareholders $20 billion.

Boilerplate #4: “Speak with one voice”

Companies under fire should adhere to a central message, but the challenge quickly becomes how to do this in an age of geometrically cascading voices that a company cannot control. I call these voices “crisis capitalists,” those with a vested interest in seeing the crisis get worse.

These crisis capitalists include an agglomeration of reporters, victims, bloggers, tweeters, plaintiff’s lawyers, regulators, legislators, non-governmental organizations, activists, short-sellers, anonymous sources, technical experts, analysts, media hounds, opportunists, and a cavalcade of amateur crisis experts.

Crisis targets can speak with their own voice, but they won’t drown out all the others.

Boilerplate #5: “A crisis is an opportunity”

Wrong. A crisis is a mugging. Your goal in a mugging is to get out alive, not get out with all your money and self-esteem. The term “damage control” had its origins in the Navy around the time the torpedo was invented.

It simply meant plugging up the damage on the main vessel in order to get sailors safely onto lifeboats. Note that the term chosen was not “damage never happened.”

Boilerplate #6: “When I worked on the Tylenol case…”

When showcasing effective damage control, PR people habitually invoke the fabled Tylenol cyanide tampering case of 1982 where seven people died, but the brand recovered.

The case is largely a myth and an anachronism. Still, a curious percentage of the PR profession claims to have worked on it, and it has become a boardroom joke.

One of the most lauded features of the Tylenol case was Johnson & Johnson’s “immediate” recall. The recall actually didn’t begin until seven or eight days into the crisis – an eternity by today’s standards – and didn’t even happen until Walgreen’s and CVS began pulling the product off the shelves.

Another myth was J&J’s forthright disclosure. The company, in fact, made assurances that there was no cyanide in any of its facilities, which turned out to be untrue.

The stored cyanide did not play a role in the killings, and J&J was probably unaware of the compound’s presence in one of its plants.

Nevertheless, to ignore these seminal facts to worship at the Tylenol altar is to embrace a flawed -- as all high-stakes engagements are – crisis management template.

Boilerplate #7: Gratuitous displays of “transparency,” environmentalism and “corporate social responsibility”

OK, we get it: Being transparent is good. Trees are good, too, and responsibility is AOK. But corporations have become too enraptured by their own love of the rhetoric of the 1960s, which begs the question: Is it better to do the right thing, or just keep head-faking it with self-congratulatory allusions to flower power.

After all, it’s a lot cheaper for an oil company to pose as a solar power provider in advertisements than to become one in real life.

One of the greatest challenges crisis managers have is to get their clients to change bad behaviour. The more intoxicated businesses become with the theatre of corporate social responsibility the less they will devote to making systemic changes.

So what’s a crisis manager to do?
1. Set achievable objectives based on known facts. Decide what’s doable and what’s not.

2. Determine where your situation lies on the continuum between repentance and defiance. When you are guilty, repent; when you are innocent, push back.

3. Define a plausible alternative narrative to what is being alleged. Crisis management is storytelling. If everything being reported is wrong, what, then, is right? Now prove it.

4. Identify adversaries and how they can be disarmed. Crises are usually conflicts, not communications problems. It’s not enough to espouse your own virtues; you must truthfully exploit the weaknesses in your adversary’s case.

5. Identify allies and mobilized them. In an age of limitless “wiki” voices, preach to the choir, harden receptive voices, and stop trying to persuade those who will never see things your way.

6. Become familiar with case studies of effective crisis management – especially those that contradict conventional wisdom. Keep in mind that the best case studies are often the ones you don’t hear much about. Tyco, which was as the forefront of corporate scandals in the early 2000s, recovered by discreetly shoring up its strong businesses and abandoning weak ones, and we’ve barely heard a peep about it.

7. Allow for the unexpected. It is vanity to believe all variables are foreseeable. Given the choice between a good crisis plan and good leadership, pick a good leader.

8. It is not unethical for corporations to defend themselves. Nor is it ethical to traffic in insincere dogma about corporate social responsibility in the absence of demonstrable progress.

Eric Dezenhall is the co-founder and CEO of Dezenhall Resources, a communications firm.

Related Reads

comments powered by Disqus