As appeared in the Charlotte Business Journal on September 5, 2008
By Rick Lyke
As reports of a scandalous affair emerged, former N.C. Senator John Edwards used the three “Ds” that made for a death strategy when it came to his political career.
The folly of this strategy was clear during this week’s Democratic National Convention in Denver. Edwards, who at one point had been among a small group of potential vice presidential running mates for Barack Obama, was nowhere to be found. Politics aside, the controversy offers some valuable lessons for businesses.
The Edwards affair would have been damaging no matter how he responded to initial inquiries. But rather than the three Ds, Edwards would have been much better off following the two Fs.
And provide facts.
Fast because in today’s new media realm, where word spreads quickly on the Web, on blogs and through 24-hour cable news broadcasts, it doesn’t take long for any bad news to become public. We all remember when Vice President Dick Cheney shot a friend in a hunting accident, but do you recall how the story broke?
The ranch owner contacted a local reporter at the Corpus Christi Caller-Times. Within hours of the shooting, the story was posted to the paper’s Web site and, in turn, promptly picked up by media outlets across the globe.
That means the No. 1 management issue in dealing with a ‘bad news’ situation is time. Most companies can survive one day of bad news. It’s when the story drags on and the crisis persists that your reputation suffers. How you handle the first hour of a crisis goes a long way in determining how long the negative news will persist.
Look at what happened when tires failed on Ford Explorers, causing deadly accidents. Ford and Firestone wasted years pointing fingers before addressing the real problem. The ultimate price tag for the delay was over $10 billion in lost sales, lost market share, legal fees and settlements, fines, mandated recalls, additional regulation and wasted management time and attention.
It’s critical that companies develop the ability to handle a crisis correctly during the first hour. Making good decisions under incredible time pressure in a high-stress situation is not easy, nor is it a skill anyone acquires naturally. Yet 57 percent of today’s companies don’t have a crisis plan in place, according to a recent survey of marketing executives conducted by BtoB magazine and Eric Mower + Associates. And of those who do have crisis plans, more than 10 percent of those respondents said they had little or no confidence in their companies’ ability to implement them.
There’s no substitute for having an easy-to-use crisis plan – no one has time to flip through a 3-inch thick binder in an emergency. Communicating effectively and credibly during a crisis is the key to minimizing permanent damage to a company’s reputation and returning it to “business as usual” as soon as possible.
That’s why besides being fast, you have to provide facts. Disclosing facts instills confidence that your organization is acting honorably. And people deal better with bad news than they do with uncertainty. Facts help squash rumors. Remaining silent, avoiding the media or, worse, denying, delaying and deceiving, leads in a direction that can destroy corporate reputations, damage brand equity and ruin careers.
Today the public is highly sophisticated and, thanks largely to all the sources of available information, quick to form an opinion. People can spot a phony very well. They can spot a liar even better. They’re also ready to give the benefit of the doubt to companies that step forward to provide facts and take responsibility.
In a crisis situation, the court of public opinion renders a quick and decisive verdict on your reputation. How do you want to be judged?