By Chris Gidez
Senior Vice President & U.S. Director,
Risk Management/Crisis Communications
Hill & Knowlton New York

Johnson & Johnson’s handling of the Tylenol product tampering incident in the early 1980s remains the gold standard for effective crisis management.

Management knew instinctively this was not just a reputation exercise but a direct threat to its business. Bold steps were needed. Most important, J&J knew the central issue was one of trust – and how to regain it with consumers, customers, physicians, shareholders and others.

These principles are part of the rule book that crisis counselors and senior managers still follow.

But it’s been a quarter-century since the Tylenol incident, and a company finding itself in a crisis today will face pressures far different than those which confronted J&J. Any CEO or communications manager in the midst of a crisis who thinks he or she can simply follow the J&J game plan and expect similar results could learn a painful and costly lesson.

The landscape is a far different and more treacherous minefield than that which J&J faced a generation ago, with a complex set of obstacles along the path.

Speed

The time between the flashpoint of a crisis and the impact of measurable damage has been greatly compressed. Managers have far less time to process information, consider options, make decisions and execute plans.

The speed at which information moves was made dramatically clear during the terrorist bombings in London in July, 2005, when commuters used their cell phone cameras to transmit photos of the damage to the web even as emergency responders were still en route to the scenes of the bombings.

The concept of a news deadline is as antiquated as the slide rule. The media – new and old – demand instant information. The idea of ‘buying time” by promising a news release or news conference in the coming hours (or days) is no longer sufficient.

At the same time, organizations must never compromise accuracy for speed. The Sago Mine disaster is now a textbook example of an organization (or set of organizations) that were not equipped to meet the “need for speed.” When they tried, the results were tragic – announcing to the world a faulty conclusion that the trapped miners had survived.

More recently, Taco Bell learned a hard lesson about the speed in which information moves when, on the same day it published full-page ads in newspapers announcing their actions in response to an e-coli outbreak (including the removal of green onions from their ingredients) those same newspapers were reporting that investigators had ruled out green onions as a potential cause of the outbreak.

http://blogs.hillandknowlton.com/controlpanel/blogs/www.whathathgodwrought.com

Crisis management is, to a large degree, information management. Consider then the challenges posed by the internet, and the profound impact it has had on information flow and management in just over a decade.

First is the sheer volume of information that is at one’s fingertips. The internet offers the consumer a limitless amount of nformation. But it doesn’t help them process that information. Everything is equal on the web, even when it isn’t. Try Googling cancer treatment -- 105 million hits. But is each one equally valid or legitimate? Bad information sits side by side and equal with good information. How is a consumer to make sense of all this?

Second, the web has become a combination global water cooler and bulletin board. It’s where people go to put information into play. And once it’s in play, it can be as dangerous as taking the rods out of a nuclear reactor – an uncontrollable chain reaction.

Comedian Michael Richards’ tirade at a Los Angeles comedy club found its way onto the web, and in a matter of days his reputation had been forever stained. And the granular cell-camera images of Saddam Hussein’s execution has caused even further instability in the volatile Middle East. The public hanging on YouTube is no longer a figurative term.

The manager trying to manage web-based information in a high-profile crisis might have better luck trying to grab Jell-O moving at the speed of a light.

Thank you, Ted Turner

Media traditionally have turned to bona-fide experts to provide analysis and context enabling readers, viewers and listeners to better process information. No more. As Tim Weiner noted in The New York Times, “Instant news spawned instant analysis and suffocated deep thought.”

With CNN, CNBC, MSNBC and Fox News Network, we have the grand-slam of 24-hour networks -- 96 hours of time to fill each day. But what if there isn’t 96 hours worth of news? Aha! The answer is instant analysis. But instant analysis isn’t enough. It has to be dramatic, in order to capture ratings. Today, there are legions of “experts” who aren’t expert at much other than self-promotion, postulation and exaggeration.

Is the average viewer capable of separating smart analysis from the BS? Not always. The 24-hour networks and their tele -experts contribute mightily to the vast amount of noise that accumulates quickly in a time of crisis and can create significant pressure on companies.

The desire of the networks to over-dramatize and exaggerate a situation poses challenges to the communications manager attempting to plead for a degree of balance and context to a crisis situation.

Let’s face it – the level-headed, considered analysis of legitimate experts doesn’t grab ratings.

The “Compensation Culture”

Someone smarter than I coined the term, but it aptly describes the state of our society. These days, the central question is no longer, “What went wrong?” but “Who will pay?”

Shareholder lawsuits and class-action lawsuits by “victims” are now so commonplace that many corporate lawyers shrug them off as routine and expected. Many insurers would prefer to settle than to fight the good fight and put their fate in the hands of an emotional jury.

I had a conversation recently with a business editor at a national newspaper, about that paper’s coverage of an ongoing environmental lawsuit involving a client. I spent the better part of an hour walking her through the legal and technical issues in the case, all of which gave credence to the argument that in this case the company had acted properly, and that there was more than enough evidence to cast doubt on the credibility of the people bringing the suit. Her reaction was, “I understand, but these people deserve money, you have the money, so isn’t it just easier if you settle?” Hard to argue with that logic.

Stakeholder Expectations

In the 1980s, managers understood that they were expected to abide by the law, and that they were answerable to their shareholders and their customers. Today, the law is seen only as a minimum standard of behavior.

Companies now are judged against a higher, yet more ambiguous, set of standards established by organizations and people who believe they deserve a seat at the table -- community groups, employee networks, NGOs and even the news media. Corporations – and executives -- may not be rewarded for clearing this higher bar, but they can certainly feel the pain if they don’t.

Home Depot CEO Bob Nardelli, who was ousted in early 2007, was unintentionally prophetic when he said earlier, "In football, you always know the score. Now, it's like we are ice-skating, and you've got a bunch of judges on the sideline shouting out the scores.”

In the corporate social responsibility (CSR) arena, companies often feel pressure to surrender to NGO agitation, only to find that once they've cleared the so-called performance bar, that bar is arbitrarily raised by these same NGOs, or others. The outcome is akin to the proverbial carrot and stick – while encouragement is constant, the reward is forever elusive. Trying to determine the right level of response in this age of “civil regulation” is no simple feat.

The Elliott Spitzer Syndrome

I know many a corporate executive who’s neck turns red and eyes bulge when the topic of Elliott Spitzer is raised. While certainly not alone, Spitzer during his tenure as New York State Attorney General established a reputation as a corporate crusader adept at using the media to short-circuit the legal process. Today we see no shortage of state attorneys general, district attorneys and U.S. attorneys all trying to “be like Elliott.” Many of them prosecute through the media – an anonymous comment, a leaked document or e-mail, or a news conference – all as damaging as a grand jury indictment.

In this arena, companies proceed at their own peril. By responding in the media they risk incurring the wrath of the modern day Elliott Ness. But by remaining quiet they risk being tried and convicted before a single legal motion is filed. While public companies are still expected to abide by the Marquess of Queensbury rules, they are wholly disadvantaged by enterprising prosecutors who behave more like professional wrestlers. It’s not a fair fight.

The Transparent Corporation

E-mail is a great thing, but it can be dangerous. How often have we read about the leak of an internal e-mail that “warned” management about a problem, or the e-mail from a senior executive being dismissive of a potential problem, or worse, sounding conspiratorial about an issue?

Lawyers, prosecutors and the news media are happy to take advantage of the casually written e-mails, or the e-mails taken out of context and conveniently leaked.

Yet, not all e-mails are created equal. Too often they are taken out of context, or are just a snippet of a larger story that, if told in its entirety, would suggest an entirely different outcome.

Again, companies are virtually powerless to fight such tactics. Worse still, there is a growing expectation that companies should be fully transparent – an open book where nothing should be secret. The media, trials lawyers and misguided politicians are misunderstanding the concept of the “public company.” And for all the good it has done, the Sarbanes-Oxley Act has only further strengthened the notion that there is no such thing as “business confidential.”

Tylenol 2006?

So, how might the Tylenol tampering of 1982 play out in 2007?

Class-action lawsuits by shareholders and consumers… Directors moving quickly to throw management under the bus… Leaked e -mails from self-proclaimed whistleblowers… NGOs using shareholder resolutions and grassroots campaigns as means of extortion to pursue their agenda… incessant chatter on 24-hour news networks… and an endless stream of commentary and unsubstantiated rumors in the blogosphere… all coming together to create an acutely intense environment for CEOs and communications managers.

Corporate managers must ensure that their crisis plans are not based on old models and assumptions. Fortunately, management and communications managers have evolved with the times. The good ones know how to neutralize these forces, and even exploit them. While there are more mines in the minefield today than 25 years ago, the company that continues to focus on the right things – possessing a bias for action, regaining control of the agenda, emphasizing substance over spin, winning back trust and, like J&J, living up to its values – will survive, if not flourish.