Crisis communication

Monday, August 30, 2010

Infamy and Internet infamy: Is there a difference?

While taking a qucik glance at news headlines at the MSNBC site, I stopped to click through on one that read:

“Cat Bin Lady’s” Internet infamy grows

In case you missed it, this is the tale of UK resident Mary Bale, who gained notoriety after a video showing her dumping a cat in a garbage bin was posted online. Facebook groups have formed calling for a prison sentence. She has received death threats. Parody videos have appeared, including one in which someone wearing a Sylvester (of Warner Brothers cartoon fame) costume dumps a woman wearing a grey wig into a bin. The Sun developed a video game for its site that lets users slam a garbage bin lid on Bale every time her head pops out of the trash.

Ample content has been produced about Bale, her action and the firestorm it has unleashed. Less has been said about the idea that a story like that that once might have remained contained to the Net will now invariably cross online boundaries and reach people who aren’t spending time online. Is there another kind of infamy these days besides “Internet infamy?”

The headline strikes me as one that would have made sense five or 10 years ago. “It’s not a real scandal,” I used to hear people say, “it’s just the echo chamber on the Net.”

Today, though, the Net and other media through which scandals propagate have been so thoroughly mashed together that it doesn’t matter where one begins; it’ll spread through the Net, drawing even more attention from mainstream media and building into an avalanche. This is the consequence of an undeniable critical mass that has been reached online, evidenced by (among other things) half a billion active Facebook accounts.

In Bale’s case, it was 4chan that got the ball rolling. 4chan is an image-based bulletin board where anyone can post an image (or a video) and others can comment on it. According to a Gawker article, the video started out on YouTube where it “went viral” (I wsh there was a quantitative criterion for what that means) before it appeared on 4chan. It took readers only about four hours to identify Bale, leading to all manner of harrassment finally driving Bale into hiding.

There are points to be made here about privacy, as well. The video, captured by a family’s closed circuit TV camera used for security purposes at a nearby house, shows Bale on a quiet residential street, where most of us would presume, in the absence of a Google street view van, that we weren’t being recorded. And Bale was no doubt shocked to have been identified in less time than most police departments need to track down a suspect. Even her employer’s name and phone number were made public. As former Sun Microsystems CEO Scott McNealy so famously pointed out more than a decade ago, “Privacy is dead; get over it.”

But the point here is that you can no longer relegate scandal or infamy to the Net. If it rises to the level of the scandal or infamy, then it’s everywhere. If you doubt it, check out the 500-plus mainstream news articles covering the story. From an organizational standpoint, shrugging off an online scandal could cost you precious time you could be spending communicating in order to protect your reputation.

Sunday, July 18, 2010

Apple press event a lesson in how not to handle a crisis

Much has been written about Apple’s press event held last week to address the iPhone 4 dropped-call kerfuffle. Some people were satisfied (especially Apple’s most loyal customers, who melted into gooey puddles when Apple CEO Steve Jobs got choked up over how much he loves Apple customers); others weren’t.

I’ve made no secret about my view of Apple’s business practices while recognizing that the company cranks out some amazing products. But for the press conference, I stepped into my crisis counselor shoes. (I wrote a post on crisis communication fundamentals a few years ago that will serve as a foundation for my comments. You can read it here, but I’ll point to four of the guidelines for responding to a crisis:

• Treat perceptions as fact—Jobs insists there’s really no problem
• Acknowledge mistakes—Jobs insists Apple has made no mistake
• Tailor messages to address the aggrieved or angry party—The message to the aggrieved parties: “There’s really nothing wrong with your phones that isn’t wrong with all phones”
• Note the other side’s concerns; don’t be dismissive—“Dismissive” characterizes Jobs’ remarks
• Make no public confrontations—Jobs took on every other cell phone manufacturer

Let’s explore these points in more detail.

Dissecting the statement

The free iPhone bumper is the right solution and, on its face, is aligned with the principle of tailoring messages to the aggrieved party. It deals with the problem without going to the extent of a recall, which I don’t think is warranted. Not everybody agrees. Notably, Consumer Reports doesn’t think the free bumper goes far enough. “What we were hoping for was a concrete, this-is-it fix for the phone,” according to Mike Grikas, the magazine’s senior editor for electronics and technology.

Interestingly, a wave of anti-Consumer Reports sentiment has surfaced with detractors insisting the magazine must be biased. Few of these individuals struck me as paragons of objectivity themselves. Each of them cites Jobs’ discussion of reception issues that plague all smartphones, but Grigas notes, “The human hand—the body—attenuates signal on all phones, but we haven’t seen it happen to the degree that it’s happened with the iPhone 4.”

By dragging the entire smartphone industry into the fray, Jobs invited comment from competitors. Both RIM (makers of the BlackBerry) and Nokia cited their decades of experience in antenna design. RIM’s statement noted the company has deliberately avoided designs like that employed for the iPhone 4 “and instead has used innovative designs which reduce the risk for dropped calls, especially in areas of lower coverage.

“One thing is for certain,” the RIM statement adds: “RIM’s customers don’t need to use a case for their BlackBerry smartphone to maintain proper connectivity.”

Nokia focused on the thousands of hours spend studying how people hold their phones for different purposes. ” As you would expect from a company focused on connecting people, we prioritize antenna performance over physical design if they are ever in conflict.”

Wireless networking engineer Richard Gaywood—he has a Ph.D. in wireless network planning techniques—reinforced these points: “No other phone has ever put an electrically active antenna on the exterior of the device,” he told Newsweek.

Deflection as crisis response

It was Jobs’ attempt to suggest that the iPhone 4 suffers no more from reception issues than any other phone—a discussion that occupied the first part of his remarks, long before he talked about solving customers’ problems with the free bumper offer—that rubbed me the wrong way. That and his complaint that the whole issue is nothing more than the media whipping up unjustified hysteria.

To prove his point, Jobs said only 0.55 percent of iPhone 4 users reported problems. Of course, the number of people calling Apple customer service most likely does not represent the total number of those who experienced reception woes when their skin came into contact with the antenna. The issue was widely reported, as were Apple’s responses (hold the phone differently, we’re going to issue a software update). If you already knew what you were going to be told, why would you bother to call customer support?

Jobs also blamed the press for creating “Antennagate” and blowing the situation out of proportion, a bandwagon on which a lot of Apple supporters have jumped. (I got one tweet after expressing my view of Jobs’ dismissal of the issue that read, “You and the media are driving the myth.”) However, it was widespread discussion on Twitter, in blogs and throughout the social media space that made the media aware of the problem in the first place. I can’t remember, nor have I been able to find, any similar flurry of complaints by consumers about any other new-phone release.

Still, my issue isn’t whether Jobs was accurate. It has more to do with the principles of crisis communication. Crises are emotional, not rational, in nature. People are risk-averse. They react to crises based on an understandable desire to avoid being subjected to a risk that an organization has imposed on them. Companies engaging in rational debate when people are upset only look defensive, even if their arguments are sound and accurate.

If you need an example, look to the Exxon Valdez. Then-Exxon CEO Lawrence Rawl rationally argued that he did not need to visit the scene of the oil spill because he was better equipped to manage the situation from his offices in New York. Logistically speaking, that was undoubtedly true, but the emotional reaction from the public was that he didn’t care about the ecological damage the spill was inflicting, leading former Environmental Protection Agency chief William Reilly to proclaim that Rawl “provided a casebook example of how not to communciate to the public when your company messes up.”

Sound crisis principles require companies to (among other things) acknowledge the aggrieved party without dismissing their complaints. When Jobs shrugged off the problem as typical of smartphones in general, he did exactly that. And while the millions of iPhone 4 users who have not experienced the problem may have smugly nodded in agreement, I’m sure those who had suffered dropped calls on their iPhone 4s—but not on their 3Gs or 3GSs—felt belittled.

Excuses, excuses

By announcing the fix after insisting there’s really nothing wrong with the iPhone 4 from which all smartphones don’t suffer, Jobs essentially said, “This is a tempest in a teapot, there’s really no problem, but we’re going to do something to appease all the whiners and shut up the press.”

I’m not alone in this sentiment. Newseek’s Daniel Lyons wrote of Jobs’ talk:

Part 1: There is no problem. Part 2: Even though there is no problem, we’re going to give everyone a free case, which should insulate the antenna and prevent the interference that we just told you isn’t actually occurring. But if you’re still not happy, you can give back the phone for a full refund. Jobs’s snotty tone made it clear that he was pretty fed up with all the whining about a problem that he says doesn’t exist.

Those rising to Apple’s defense have embraced the media conspiracy theory as well as the idea that the attacks are Apple’s punishment for its success (a notion endorsed by right-wing radio talk show host Rush Limbaugh). You have to wonder where all these people are when Microsoft finds itself under attack. They also point to Jobs’ expression of love for customers, words that aren’t matched by many of Apple’s actions. If the company loves its customers so much, why refuse to engage in any kind of dialogue with them? Apple is notoriously absent from any presence in blogs or other social channels. Why delete references to the Consumer Reports findings from Apple forums? For that matter, why refuse to sell an iPad to a customer who wanted to pay cash? Or start a blog to address MobileMe issues to customers, then abandon it after only three posts (the last of which promised another update shortly)? Or, ultimately, why maintain an exclusive agreement with AT&T as the only U.S. iPhone carrier when those customers Jobs claims to love so much have been outspoken in their desire for an alternative?

I could go on, but you get the point.

Antennagate would have been dealt with easily by dropping the “all phones suffer from this issue” excuse in favor of, “Our external antenna isn’t working the way we though it would and we’re going to give you all a free bumper to address it, and if that’s not enough, you can return it.” Period.

I can’t speak to why Jobs took the approach he did. Newsweek’s Lyons calls it arrogance. Others think it’s sincere denial. But as Toyota and others immersed in crises have learned, the longer you deny the existence of a problem, the longer the story lasts as reports of problems continue to surface.

Jobs could have ended this story. Instead, expect to see it continue for the forseeable future.

Wednesday, April 14, 2010

FIR Interview: Christian Gunning, Boingo

In this FIR Interview, co-host Shel Holtz talks to Christian Gunning, director of Corporate Communications for Boingo, which provides WiFi service in airports across the U.S. On Saturday, April 10, an email meant to be used as a test was inadvertently sent, sometimes repeatedly, to Boingo customers. The company’s social media manager saw customers talking about it on Twitter, leading the company to deal quickly with the issue, reaching out to customers through a variety of channels.

Gunning discusses the use of the company’s home page as well as its blog, Twitter, Facebook and LinkedIn to keep the problem from escalating into a full-blown crisis.

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About our Conversation Partner

As Boingo’s director of corporate communication, Christian Gunning is responsible for the public relations, social media, marketing communications and web asset functions.  He is blessed with a talented team of professionals who make his job a joy. He has been with Boingo since its inception in 2001, and has served in product management, product development, marketing communications, public relations, and myriad other roles — as necessary — during its startup phase.

Before Boingo, he served as director of public relations for eCompanies, a technology start-up incubator, and has also worked for networking, software and semiconductor companies in various senior roles at Shandwick International (via Miller/Shandwick Technologies) working with companies such as Microsoft and Compaq Computer in the U.S. and in Singapore. He got his start in the industry at Manning, Selvage & Lee working on the California Lottery and California Department of Forestry.  Christian has a BA from the University of Southern California’s School of Journalism, where he also served as an adjunct professor teaching “PR for the Internet and High Tech.”

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Tuesday, March 23, 2010

Six questions to ask before launching a Facebook fan page

In yesterday’s post, I took issue with critics of a marketing campaign that directed those who saw the ads to the company’s Facebook page. If the company knew what they were doing—that is, they were being strategic—and the campaign achieved its goals, then it was a smart move.

One of the comments to the post, from Ed Lee, pointed to the Nestle dustup of the last several days (which Neville Hobson and I addressed in some detail on yesterday’s FIR. Between the two situations, I’ve been musing over the questions companies should ask themselves before launching a Facebook fan page.

These questions are doubly important in the wake of the Nestle debacle, in which Facebook members—many of whom had just learned about Nestle’s use of unsustainable palm oil sourced from rain forests at the expense of organgutan habitat—deluged the already-established Facebook page with vitriolic messages condemnation. Nestle did itself no favors when the individual tasked with responding to messages on the wall behaved rather rudely (for which he or she later apologized).

But even if your company isn’t a likely target of a coordinated activist campaign, you still may be thinking of slapping up a fan page, adding a logo and a few other items, then waiting for the fans to come streaming in—an approach sure to make you look lame and clueless to all but the least sophisticated Facebook users.

So before you start, ask yourself…

1. Who do you want to become a fan of your page?

With 400 million-plus people on Facebook, it’s easy to fall into the trap of responding, “Well, all of them.” Based on what your marketing goals are, you should be able to determine to whom you’re trying to appeal. In yesterday’s post, I suggested Uniball may have been seeking people who weren’t currently buying their pens but who fit the profile of “joiners” as defined by Forrester’s Technographics profiles.

Based on the goals you’re trying to achieve—more sales to a particular group, a home for raving fans of your product, a place for customers to stay in touch with the company and learn about training opportunities and other events or a place to address corporate social responsibility issues (for example)—you’ll craft the kind of content the audience will want crossing their news feeds.

2. What are these audiences likely to want from your fan page?

If your company produces or sells consumer products, Facebook members want to be kept updated about promotions and offers. It’s not likely that they want a personal relationship with someone in an organization that makes pens, for instance, or facial tissue. If you represent a local community hospital, on the other hand, it’s likely that people do want to establish a direct connection.

Be sure you’re targeting the content of your page to the people you want to reach and who are likely to spend time on Facebook.

One of the comments to yesterday’s post makes this concept explicitly clear: A fan of the product promoted with a giveaway exclusively on Facebook, wrote, “I wouldn’t go to the Uniball site unless I had a very specific need, e.g., refill info. But I see (their updates) in my (Facebook) feeds all the time. So, whether you’re a long-time fan, someone who likes to write (me), or a social media maven, you found their promotion, which you might not have done any other way.”

3. Who else might your fan page attract?

Nestle undoubtedly launched a fan page for people who bake Tollhouse cookies, love Nestle crunch bars or sip Nestle hot chocolate. As a longtime target of activists for a variety of reasons, it was just plain irresponsible to ignore the likelihood that activists would campaign the page.

What organizations or individuals might find your fan page an appealing place to take issue with your organization?

If your organization isn’t prepared for the glare of transparency, opening a public forum to comment from any of 400 million people probably isn’t a good move. If you’re ready to open up and have a dialogue with your critics, on the other hand, Facebook could be a very desirable venue where your authenticity and candor will be plainly visible.

Even after deciding to engage critics, you need to be ready for the behavior your critics are likely to exhibit. Will they see your fan page as an opportunity to express their more hostile feelings, are they organized and likely to undertake a campaign on your page, are they interested in a genuine dialogue, or is it a random group of unhappy customers looking for a place to vent?

4. Who will be tasked with the care and feeding of the page?

Too many fan pages are created, then abandoned, perhaps with the expectation that fans will feed the content while marketers and communicators occupy themselves with loftier activities. The fact is, people ally with a fan page because they want to be notified, in their news feeds, when the company has something to say or offer. You need to keep the page updated with the kind of content that led people to sign on in the first place.

5. Who will monitor the page?

Companies look particularly clueless when fans post questions or comments and nobody from the company responds. Have you appointed a community manager to oversee the page and to scan comments left to the wall and discussion groups? Is the community manager empowered to bring appropriate representatives into the conversation based on the topic and their areas of responsibility and subject matter expertise? Are employees empowered to participate?

6. Do you have contingency plans for unanticipated activity?

When something like the firestorm that engulfed Nestle occurs, you should already have a plan of action. Nestle might have been well-served by having its top environmental officer begin engaging, either on the Facebook page itself or somewhere else, with Facebook fans notified of the venue for the discussion.

You could do worse than to study General Motors social media director Christopher Barger’s actions when GM Next—a completely social website—was campaigned by an environmental activist group. When it became clear the organization was simply reposting the same messages in order to shout down alternative views, Barger shut down the one uploaded photo that was attracting the comments and moved the discussion to a series of chats featuring GM’s environmental chief and several others. The activist group was invited to participate and Barger was prepared to include their tough questions in the mix, but the chat forum allowed for a balanced discussion that welcomed all points of view.

This is by no means an exhaustive list—just six items that I’ve been thinking about in light of the recent Facebook fan page episodes. What other questions would you ask?

Saturday, February 06, 2010

Are we overvaluing real-time feedback?

Warning: Lost post follows

Back in 1995, “Snow Crash” author Neal Stephenson teamed up with his uncle George Jewsbury under the pseudonym Stephen Bury to produce a potboiler titled “Interface.” The premise: A presidential candidate suffers a stroke and has a chip implanted in his brain. The chip features a wireless connection to feedback from thousands of watch-like devices distributed to a representative sample of Americans. These devices gauge the wearer’s reaction to political speeches, allowing the candidate to make mid-course adjustments and bolster public reaction to his candidacy.

To me, this bit of speculative fiction defines the notion of a real-time feedback loop.

As the Web proceeds along its evolution into a more real-time network, a idea of a real-time feedback loop is becoming a popular topic of discussion. I attended a panel discussion on Thursday night, part of Social Media Week here in San Francisco, that focused on these loops, defining them as “a method for capturing ideas as they arise and bringing them back into the group for examination through the use of social media.” Promotional copy for the event asserted:

When an idea’s expression generates a creatively relevant or insightful response, a well-organized listening/engagement practitioner captures that flash of brilliance, and feeds it back to the originator as an enriched question, thus creating a real-time feedback loop.  In this transformational moment, a thought-leader may have a second opportunity to be heard and have their expression innovatively re-cast. 

With social media we facilitate this process ever more effectively. It is like cold fusion—when used properly, it creates more value than it consumes, lowering the carbon footprint of innovation.

The idea of real-time feedback loops have been rattling around in my brain since Thursday night’s discussion. Then it occurred to me: What better place to organize my thoughts than my blog?

Where do real-time feedback loops begin?

The Internet didn’t invent real-time feedback loops. The thunderous applause of an audience that leads to a multiple curtain calls is a real-time feedback loop; so is tepid applause followed by a rush for the exits. The Grateful Dead’s symbiotic relationship with its audience influenced the band’s live improvisational music. The crowd’s response almost always affects a standup comic’s routine.

The Net, however, has added two dimensions to real-time feedback loops: specificity and reach.

Specificity—The aggregate response of the crowd is pretty simple. They love it, they’re into it, they disagree, they don’t think it’s funny, they hate it. The Net has provided individuals a voice that allow the performer or communicator to analyze why the crowd is reacting the way it is and respond to specific observations or alter behaviors in order to influence opinions. This is nothing new: For at least a decade, probably longer, Internet Relay Chat (IRC) has provided the infrastructure for backchannels, on which conference attendees discuss presentations with one another in real time. In some instances, these backchannels have been projected on a screen where a speaker can see and react to it. Now, Twitter’s hashtag convention—along with some other tools—have made backchannels available to more people than just the geek crowd who knew how to tap into IRC.

Reach—Streaming media and Twitter have expanded the reach of events—from keynotes and panel discussions to product launches and press conferences—to people who can’t be there in person. Again, this is nothing new. The presidential State of the Union address is one example of a speech that is available to larger audiences than just those who can squeeze into the chamber of the House of Representatives. The Net’s streaming capabilities, though, have made it possible to extend this ability to speakers and events that don’t warrant mainstream television network coverage. The most recent LeWeb, for example, was streamed to an audience hungry for presentations they couldn’t see in person due to the event’s cost (expensive) and location (Paris).

Combine these factors and the significance of real-time feedback loops becomes clear. Not only can an executive speaking at a product launch hear specific feedback in real time, but the audience is now expanded to customers or stakeholders from anywhere in the world.

Generally, this feedback comes in two forms: the general chatter of individuals expressing their opinions or talking with one another and targeted questions from individuals to the speaker. Both were in play last Thursday night as people watching a live stream of the presentation (courtesy of Justin.tv) talked among themselves and posed questions for panelists that were relayed by an in-person moderator.

All eyes on real-time

It’s clear that the Net has altered and expanded realt-time feedback loops. Google has incorporated real-time results into its search results. A new category of real-time search engines has emerged sporting names such as Collecta, Topsy and Scoopler.

Prominent people are writing about the real-time web, including the authors of influential outlets like ReadWrite Web, GigaOn, Mashable and TechCrunch. Jeff Pulver, Stowe Boyd and Jeremiah Owyang have written about it. It found its way onto many 2010 prediction lists.

Protocols are being developed to support it. RealTime RSS—from RSS godfather Dave Winer—sends updates when they’re added to a site rather than waiting for an RSS reader or other utility to poll feeds to find what’s new. Google’s PubSubHubbub is similar although not necewssarily a competing standard; the two can work together. Chris Messina described PubSubHubbub’s function this way: “Let’s say (you write) a new blog post; the blogging software then pings any number of hubs with a message: ‘Hey, new content here.’ The hub says, ‘Great thanks,’ grabs the content, and then pushes the content to everyone on its ‘subscriber” list.’

These two protocols expand the opportunity for anyone to get real-time feedback. A marketing executive introducing a new product to a live audience and a virtual one watching the stream can hear back instantly from those engaged over conversational channels (Twitter and IRC, for example) as well as those writing for online news outlets and blogs.

As a result, the focus on real-time feedback has become intense. Some have proclaimed the ability to assess sentiment through real-time search a replacement for costly polling that has been the province of organizations like Harris and Gallup.

But how important is all this real-time feedback?

Is it accurate?

What you think at the instant you hear something may not be what you think after you’ve had time to digest it. Consequently, your immediate feedback may not reflect your long-term view.

This is one of the issues many speakers have with members of the audience live-tweeting their talks or with journalists live-tweeting events.

Much of the tweeting of live events is objective, though, rather than subjective. It’s more like note-taking than analysis. And even the opinions tweeted in real time have value. After all, you’re presenting in real time and people are reacting. Before, you could only see them shifting uncomfortably in their seats, or maybe actively booing or walking out. Now you can assess exactly why they’re reacting the way they are.

But in some respects, the critics have a point. Consider the widely-covered Apple iPad announcement. Information from Steve Jobs’ presentation was made available in real time through a number of channels and a lot (though certainly not all) of the real-time feedback suggested Apple had another sure-fire hit on its hands. But then came the analysis. Tech journalists, bloggers and others began producing the more thoughtful, detailed reviews after they had a chance to internalize the information, consider it, chew on it. FOr many members of the audience, digesting these views, then sharing them and discussing them with each other, led to a shift in their opinions. In the end, their early tweets didn’t reflect their ultimate views.

Is it representative?

During Thursday night’s panel, the point was made repeatedly that only about 10 percent of your audience will offer real-time feedback. And your larger audience—the customers for the product you’re launching, for instance—won’t even watch the event.

Reacting to real-time feedback, then, could mean that you’re taking action on information that isn’t representative of your customer base. In fact, those who pay attention to the live stream or real-time tweets of your message could be as far from a statistically valid sample of your population as you can get.

Is it contextual?

As I sat in the room where the panel was presented on Thursday, I was able to take in everything at once. There was the reaction of other panelists to what one panelist was saying, panel moderator Jennifer Lindsay‘s reaction, the panel’s reaction to Lindsay’s questions and the reaqction of the audience.

Those watching the stream, on the other hand, saw only what the camera allowed, and the camera was almost always focused on whoever was speaking. Those watching the stream got only a sliver of the experience had by those in attendance. IT’s even worse with those who see only the 140 characters broadcast by those who are live-tweeting the event. The reactions of those receiving these messages, then, could be based on incomplete or out-of-context information. It could conflict with the opinions of the people whose opinions you’re really trying to understand.

Because of these realities, the rush to embrace the real-time web can easily lead us to overvalue real-time feedback and make inappropriate decisions based on it.

When real-time feedback matters

Of course, recognizing the limits of real-time feedback doesn’t mean you shouldn’t be paying attention to it, only that you should be cirumspect in terms of what you do with it.

In a crisis, for example, you’d be foolish to ignore commentary emerging in real time. By monitoring public sentiment, you can determine the depth of reaction to the situation and quickly develop a response strategy. Real-time feedback in response to change initiatives is equally important. People resist change for a variety of reasons and listening to feedback can help you shape your efforts to overcome that resistance.

As for other feedback—to speeches, to announcements, to events—organizations will have to develop processes to determine which feedback requires immediate internalization and action and which becomes just additional information to factor into longer-term thinking. After all, how much can you really do with real-time feedback? We have no brain-implantable chips to help us adjust our comments in real time based on listener feedback. We can’t alter the presentation in mid-course when CNN’s cameras are on you. You can’t redesign the product if it’s already on trucks heading to retail stores. In most instances, real-time feedback won’t be more important than other forms of input, including the articles, reviews, blog posts, tweets and other consumer-generated content that will trickle out over days, weeks and months in response to your company’s message. Your best bet will be to add it to the mix in order to figure out your next steps, whether it’s a version 2.0 of your product, an enhancement to a program or a response to a query or criticism.

None of which means that engaging people through social channels is less important than it was before the real-time web became a hot topic. Engaging individuals through social channels isn’t necessarily the same as participating in a real-time feedback loop. Engaging in conversations, responding to questions and participating in communities is all part of an effort to establish strong relationships that will pay off over the long term.

Nor does this suggest that the real-time web isn’t important. The instant delivery of news means organizations have less time to prepare and more information through which to sift.

But when it comes to taking immediate action on the instant feedback to your message, tread with care. You could be solving a problem that doesn’t really exist.

Related post from Tom Foremski, who was on the panel (and is in the photo above): The Real-Time Web Turns ‘Conversational’ Media Into Noise

Friday, February 05, 2010

Evidence exists for the “high-school” notion of admitting mistakes

In an interview on NPR’s “Talk of the Nation” broadcast addressing Toyota’s PR woes, a crisis management executive dismissed the notion of a company quickly admitting when it has done something wrong.  Eric Dezenhall, CEO of Washington, D.C.-based Dezenhall Resources, responded to a question from host Rebecca Roberts:

Roberts: ...when a consumer base needs some compassion and needs some hand-holding, as you say, that conflicts with legal advice to admit no wrong. So how do you tread that line between admitting error but also apologizing to your consumers?

Dezenhall: You’re hitting what the great tension is. I mean, whether it’s Tiger Woods or anything, you’re always hearing these very silly PR people when a crisis hits dive in front of the camera and dish out this ridiculous cliche that if you just fessed up, the problem would go away.I see absolutely no evidence whatsoever that that’s true. Okay, it sounds wonderful in a high school PR class. I don’t see evidence that it’s true. If all of these people start confessing to things and apologizing to things, you’re vulnerable legally.

Well, I suppose if you shut your eyes really, really tight, you won’t see any evidence. My question to Mr. Dezenhall is simple: Have you ever looked for such evidence?

Here are a couple nuggets from a post I wrote last June:

In a study conducted 12 years ago, the year-end closing stock prices of companies that experienced crises were compared. Those that responded well saw their share value 4%, then rebound and remain 7% above their pre-crisis close, while those responded badly (that is, did what their lawyers told them to do) experienced initial declines of 10% with share prices remaining down, closing the year 15% below pre-crisis levels. That’s a 22% difference in year-end share value between companies that responded honestly and candidly versus those lawyered up over the possibility of lawsuits.

(The Oxford Executive Research Briefing that reported these findings is detailed in this Wharton Leadership Digest, a PDF file.)

Another study, this one from the Stanford Graduate School of Business, found that companies taking responsibility in a crisis outperformed those that blamed someone else by 14-19%.

(Note to Mr. Dezenhall: The “American Heritage Dictionary” defines “evidence” as “a thing or things helpful in forming a conclusion or judgment.”)

In the same blog post, I referenced Jim Golden, a negotiation counsel for a Tennessee law firm, who said that doing the right thing and telling the truth results in fewer cases going to trial and smaller judgments from those cases that do make it to the inside of a courtroom. Why? Because the truth that was hidden and denied on advice of counsel is revealed in court to a judge and jury who then perceive the organization as the bad guy. As I wrote in June, when companies “fess up” (as Dezenhall puts it) “there’s nothing left to be proven in court. Golden’s clients that have taken this approach have had their insurance premiums reduced by up to 30%.”

See? If you look for evidence, you’ll have a much better shot at finding it.

There’s even more evidence in FIR Live featuring Golden and New York-based crisis expert Fred Garcia.

To be clear, neither Golden nor Garcia recommend an organization take responsibility for something it didn’t do. But if they know they screwed up, they’re able to get it behind them faster by just admitting it, rather than allow information to continue to dribble out over weeks or months.

Wednesday, June 03, 2009

“Deny-delay-defend” crisis strategy isn’t sound just because it comes from the legal department

In the countless battles between communicators and corporate attorneys over what to say in response to reputation-threatening situations, the lawyers’ advice to say nothing (or little) usually prevails.

The result is often disastrous for the organization, but CEOs and senior leaders presume that mitigation of legal risk is of paramount concern. Industry pundits often agree, arguing that corporations are legal entities, requiring leaders to sweep legal concerns under the rug.

There is no need to characterize this situation as a battle between PR and Legal, however. The fact is that, viewed strictly through the legal prism, the counsel coming from corporate attorneys is frequently bad legal advice. The reasons bad advice comes from the general counsel’s office:

• In a crisis, lawyers are no less inclined to jerk their knees and make bad decisions than any other unprepared member of senior management
• Law schools do a lousy job of equipping their graduates to address the long-term consequences of short-sighted legal counsel

Still, bad legal advice is followed with barely a thought simply because it’s coming from a lawyer who has a seat at the management table. In far too many organizations, management does not share that same level of built-in trust with its top communicators.

Bad advice

The typical advice from legal counsel—silence or something close to it—is usually designed to minimize the risk of judgments awarded to plaintiffs in lawsuits filed in the wake of whatever situation prompted the statement in the first place. That same silence, however, is construed as guilt by a risk-averse public, which can have consequences far more dire than a large judgment. Stakeholders are inclined teo assume the worst about companies in a crisis, so they lose confidence when they resort to typical non-responses.

This isn’t opinion. In a study conducted 12 years ago, the year-end closing stock prices of companies that experienced crises were compared. Those that responded well saw their share value 4%, then rebound and remain 7% above their pre-crisis close, while those responded badly (that is, did what their lawyers told them to do) experienced initial declines of 10% with share prices remaining down, closing the year 15% below pre-crisis levels. That’s a 22% difference in year-end share value between companies that responded honestly and candidly versus those lawyered up over the possibility of lawsuits.

(The Oxford Executive Research Briefing that reported these findings is detailed in this Wharton Leadership Digest, a PDF file.)

Another study, this one from the Stanford Graduate School of Business, found that companies taking responsibility in a crisis outperformed those that blamed someone else by 14-19%.

Expressing regret, apologizing, and acknowldging blame (if there’s blame to acknowledge) do more than help a company’s reputation, though. They actually produce better legal results. While this flies in the face of conventional wisdom—that same conventional wisdom that drives CEOs to buy into the say-nothing strategy promoted by their attorneys—just isn’t supported by the facts. Just ask Jim Golden.

Golden served as general counsel for a company in the trucking industry, a litigation-prone business if ever there was one. He practiced what he calls the “deny-delay-defend” approach to crises, but has since concluded tehat the legal results are far better if companies embrace the responses so often advanced by their PR advisers. Golden, now a negotiation counsel for a Tennessee law firm, says that doing the right thing and telling the truth results in fewer cases going to trial and smaller judgments from those cases that do make it to the inside of a courtroom.

In those cases that do go to trial, Golden says, juries believe that justice has already been done and see no bad guys in the case; there’s nothing left to be proven in court. Golden’s clients that have taken this approach have had their insurance premiums reduced by up to 30%.

This isn’t just Golden’s experience. A study of doctors accused of malpractice found that those who apologized for the outcome (without necessary taking blame) experienced fewer trials and lower settlements. That’s counterintuitive to the legal advice most doctors get, to keep their mouths shut so the lawyers can deal with it in court.

Blame law schools

Golden—who recently participated in an FIR Live discussion on lawyers and communicators—blamed law schools for the deny-delay-defend tactic. Corporate counsels, Golden says, “don’t know their options” because law schools aren’t presenting them. Mid-career attorneys, however, are increasingly seeking training on just those options, with bar associations and litigation departments bring the training in-house.

In the meantime, communicators can do a better job of making the case against deny-delay-defend by pointing out that there are more options than saying nothing (what the lawyers prefer) and self-destructive blathering (what the lawyers fear). According to Fred Garcia, founder and president of crisis management firm LOGOS Consulting Group—and another guest on the recent FIR Live—there’s a lot of room to maneuver in between those two extremes.

It would help, though, if the top communicator’s views were held in the same regard as the top legal counsel. A Financial Post article suggests that’s not the case, with communications relegated to middle management where they don’t have leadership’s ear:

Whether it is due to arrogance, entitlement or a sense of invulnerability among senior executives, as one expert suggests, the reality is that many kings of the corporate world no longer put communications at the top of their agenda. Such isolation has made them more vulnerable to crisis.

It is this inattention to the reputational issues at the heart of communications’ agenda that has led (at least in part) to “the AIG spa scandal, the car manufacturers’ jet debacle and the bonus blowup,” the Post article concludes.

We in communications have been talking about that seat at the management table for at least as long as I’ve been in the profession—more than 30 years. The obvious approach to securing that seat is to prove the bottom-line value of our counsel. But I’m curious: What’s your approach to being taken as seriously as the lawyers in your organization?