Crisis Musings

I was having lunch recently with a client.   Through three years we’ve weathered several imminent threats to her company due to potentially explosive crisis situations. But none had materialized into a full-scale crisis.  As we finished our coffee, this client asked a thoughtful question.

 

“Is it possible to predict whether a situation will remain just a mere nuisance, or instead morph into a full-blown, pants-on-fire crisis?”

 

Why, in other words, do some situations escalate to crises while others do not, even though they seem to pose the same characteristics?

 

In fact, by examining various crises that have dominated headlines in recent years shows it’s possible to identify common combustion factors that can cause a matter to ignite.

 

And while there is rarely a single reason why a situation erupts into a Defcon 1 event, using the following factors should enable communications managers to predict with some degree of accuracy whether a situation holds the potential to escalate.

 

 

·         Is it real?  Of course, the first question to be asked is whether the situation poses a legitimate threat to the enterprise.  Think Lehman Brothers, GM or Countrywide Financial.  Their respective fates were not caused by a PR problem (although their mishandling of PR didn’t help).

 

·         A Clearly defined, tangible, measurable risk.  It is easier for the public and media to go hysterical over H1N1 or salmonella in the food supply than over the gradual threat of the icecaps melting due to climate change.  When the risk appears real rather than abstract, the issue has a greater likelihood of escalating.

 

·         A sympathetic victim or set of victims.  Cynical as it may sound, the media are far more interested in conflict where there is a vulnerable party.  Children, the elderly and animals are the most attractive to the media.  This is why scandals involving day care centers and nursing homes are so compelling.  It also explains why the Michael Vick/dog-fighting scandal captured far more headlines than it really deserved.  On the other hand, I read a news report last month of a gender discrimination lawsuit brought by a former senior communications executive at Anheuser-Busch.  This woman might have a legitimate case, but when I read that she was entitled to millions of dollars in salary, benefits and other compensation as part of her employment agreement, I quickly lost interest in the story.

 

·         Scale – Together with the need for a sympathetic set of victims, this is perhaps the most significant combustion point. Consider the Madoff scandal: Investor fraud is common, but not when so many billions of dollars and thousands of investors are involved.

 

·         Topicality and trends.  I call this the shark attack syndrome.  Each year (typically at the beginning of the summer), there is a news report of a swimmer attacked by a shark.  Then another and another.  It would seem the memo went out to all sharks – “Attack!” (And let the media know)” In fact, media love trends .  If a situation fits into an existing pattern, or is otherwise topical for other reasons, the greater chance it will escalate.  When I was heading media relations @ Texaco in 1996, the company faced a mammoth crisis caused by the release of audiotapes of executives seeming to use racial epithets  in discussing a race discrimination case the company was facing.  It made national headlines because of the nature of the matter.  But the media attention was compounded because the day after the matter was first reported in the press, Californians went to the polls to vote on Proposition 29, a referendum challenging affirmative action.   So the Texaco case became the poster child of the larger issue of the state of race relations and opportunity in America and the media attention was disproportionately large relative to the incident itself.

 

·         Timing.  Speaking of race, the alleged discrimination by the Valley Swim Club in suburban Philadelphia against a local day camp ignited into a national story. Why? Timing.  Not only did the story deal with a summer day camp at a time of year when millions of children are enrolled in summer camps, but the story also broke on a weekend, when the amount of news to be covered drops, forcing the 24-hour news programs to milk every last bit of life from an event.  Here we see a number of these combustion factors at work – timing, topicality, and a sympathetic set of victims.  (Post-script:  In early November the Valley Swim Club filed for bankruptcy, citing the subsequent lawsuit around this controversy as a contributor to its problems).

 

·         Hypocrisy.  When a politician who has based his career on law and order or in promoting religious or family values is caught soliciting prostitutes or cheating on his spouse, that politician shouldn’t be surprised at the tsunami of media attention.

 

·         Compelling Images.  What nearly wrecked Michael Phelps’s career in product endorsements was not that he smoked pot, but that someone happened to have a camera to capture the moment and then post it to the internet.   In another example, the recent fire at the gasoline storage facility in Puerto Rico captured enormous amount of media interest.  Why?   Certainly not because of any death or injuries, or widespread destruction (injuries were minor, there was virtually no damage outside of the facility itself, and it didn’t impact the availability or price of fuel in the area.)  In other words, a non-event.  But the images made for good television.

 

·         Viral videos.  We live in a YouTube world.  The Internet and personal technology can spread a scandal faster than Al Gore could have imagined when he invented the internet (J).  Just ask Dominos Pizza, United Airlines, Michael Richards, or player on the University of New Mexico’s women’s soccer team who is famous for all the wrong reasons due to her rough play, captured on video. 

 

·         Mismanaging the crisis.  Last year’s episode involving auto company CEOs, their corporate jets and Congressional hearings about bailouts has become a case study in mismanaging a crisis (or at least one element of it).  Typically one doesn’t see big companies mismanaging a crisis, as there are enough checks and balances in place (and consultants).  Celebrities often seem to have two left feet when it comes to handling their own problems.  While Don Imus’ joke about the Rutgers University women’s basketball team was in bad taste, it was the way in which he so completely mismanaged the fall-out that led to his demise. All he had to do was to use his own radio program – where he already enjoyed a reputation of hosting provocative discussions of topics of the day — to have a frank talk about race in our society. Instead, he hesitated with his apology and then relied on bad advice that just compounded his problems.  He may be back on the air with another network, but the episode will follow him (and his Wikipedia entry) forever.

 

·         Deceit – They lied and they got caught lying. Eliot Spitzer, Rod Blagojevich, Mark Sanford.  Sammy Sosa, Pete Rose.  Enron, Worldcom, Adelphia, Tyco.  Say no more (also see #7, above, Hypocrisy).

 

·         Irony – Generally, when a company or public personality (politican, entertainer, etc.) turns out to be the opposite of what they purport to be, that’s irony.  BP spent hundreds of millions of dollars (maybe more) over the better part of a decade in an effort to convince the public that they were different than other oil companies, better than their competitors, and were committed to the environment, clean energy technology and reshaping the energy sector (“Beyond Petroleum”).  Perhaps employees didn’t get the message about this radical shift.  In short order, the company faced a fatal explosion at its Texas refinery (subsequently linked to decisions to cut corners on safety and maintenance), an oil pipeline spill in Alaska, and a criminal investigation of price fixing.  One could argue that the reputation damage suffered by BP would not have been as severe were these same events to occur to another oil company that didn’t try so hard to convince people it was something it wasn’t.

 

·         Bad luck, or wrong place/wrong time – Sometimes companies find themselves in the midst of a nightmare through no fault of their own; they just happen to be in the wrong place at the wrong time.   For instance, in early 2006 DP World, a company with a stellar record and reputation, was set to announce that it had won the contract to manage port operations in six major U.S. markets.  However, because of internal political issues in the U.S. and the anti-arab xenophobia which was unfortunately still too prevalent in post 9/11 America, this became a major political firestorm in the U.S., and the company was forced to withdraw from the contracts.

 

So, what is the lesson here?

 

A Monday morning quarterback will always look smart in conducting a forensic autopsy of a crisis.  But such Monday morning analysis doesn’t help on the preceding Saturday.  Of course, if I could predict the future with certainty, I would have won the Powerball lottery many times over.    The problem is, I cannot.  Nor can anyone else.  So for us mere mortals, we can use these combustion points as yardsticks to guesstimate how severe a crisis may become, and we plan accordingly.  But the really smart reputation manager will have plans ready for all levels of crisis, and be able to throttle up or down depending upon the course the crisis takes.