An EMA White Paper based on a workshop conducted for North Carolina Chapter of Public Relations Society of America on November 20, 2008
By Peter Kapcio
Caution: It’s not your father’s journalism. In retrospect, 2008 proved to be a turning point for American news reporting. As an industry-wide financial crisis depopulated traditional media newsrooms, some less-than-savory developments in the online world occurred that together fundamentally change the way we consume news. A precipitous decline of news source credibility dictates a new set of rules for dealing with bad news and communicating during a business or organizational crisis.
Nobody likes bad news. Most human beings recoil at it. They don’t like to hear it, be confronted by it or be forced to respond to it.
But most of all, people hate to deliver it.
Some go to remarkable lengths to avoid becoming the presenter of bad news. The larger the organization or the higher you climb up the executive ladder, the more likely you’ll find this to be the case.
Dealing with bad news has never been a welcome assignment for business and organizational leaders, but the recent erosion of journalistic standards has now rewritten the rulebook. To understand these new strategies requires understanding a changed and vastly more complex landscape.
Crisis mismanagement is a behavioral problem.
When institutional or individual embarrassment, hubris or ego get in the way of the honest and candid delivery of bad news, the same dangerous behaviors are inevitably repeated. First comes denial. “Problem? What problem?” Then delay. “If we wait long enough, this will just go away.” Sometimes, reluctant messengers go way beyond making excuses or blaming others and cross the moral line into deceit. In other words, they flat-out lie, as in “We did nothing wrong” or “Our tires did not fail” or “I was not privy to those decisions.”
We call this progression of Deny – Delay – Deceive the “Death Strategy.” Employ the Death Strategy and you’ll kill your company’s or organization’s reputation by destroying the public’s trust.
Legendary practitioners of the Death Strategy include Enron and Arthur Andersen, whose last trip took them both to the Graveyard of Lost Companies. Ford and Bridgestone / Firestone provided a memorable demonstration of it during the Explorer rollover / exploding tires fiasco. Together over a period of several years, they sent more than ten billion dollars up in smoke by way of lost sales, lost market share, whopping legal fees and settlements, government-ordered recalls, punishing fines, and most entertainingly, travel expenses for their execs’ 2001 trip to Washington so they could be dragged before Congress for some public humiliation.
More recently, both Toyota and BP field-tested the Death Strategy for our instructional benefit, further illustrating its ill effects on businesses deploying it.
With the exception of fighter pilots and Grand Prix racing drivers, few human beings possess the inherent ability to make good decisions rapidly while under great stress. This explains why bad news and crisis responses are so often mishandled.
And it also explains why so much advice peddled by “crisis experts” proves useless (or worse, dangerous). They ignore the basic human factor: delivering bad news is a tough, nasty, unpleasant, unrewarding task. In an emotional state of dread, at a time when individuals are likely to be under the worst stress they’ll encounter in their careers, it’s impossible for anyone to communicate properly without training, preparation and practice.
Interestingly, many otherwise competent public relations people in Corporate America prove to be as uncomfortable and inept with bad news as ordinary civilians. People who—by their training and very nature—tend to believe that all organizational communication must be unrelentingly positive viscerally recoil at the negativity of bad news. As a result, they lack the battlefield skills necessary to be effective communicators when the bullets start flying.
Simplicity is a core strategy for successful crisis response. If you are ever presented with a list of “50 Things to Do When Crisis Hits”, run the other way. If your organization’s crisis response plan fills a thick three-ring binder, abandon all hope. If you want to properly manage and survive a bad news event, you must recognize the fundamental crisis dynamic—there is simply no time for preparation, training or practice when one hits. And in addition to having no time, neither will you have the courage nor emotional stamina to remember and do 50—or even 10—things. That’s why we will limit the New Rulebook to just five.
Is bad news a crisis trigger?
Remember the definition of an organizational crisis: any situation that both disrupts normal operations and simultaneously threatens the organization’s reputation. Conventional crisis PR wisdom historically identified six categories of risk events capable of triggering business or organizational crises:
- Operating or business failures
- Legal or ethical problems
- Individual misconduct or wrongdoing
- Political problems or issues
- Environmental problems or issues
- Safety and security issues
When you think about it, these six types of crisis triggers correlate closely to the core news topics or “beats” of the traditional news media, which also relate directly to the perceived role of journalists as “public protectors” in the event of any danger.
Viewed in that light, the six triggers described above make perfect sense. However, they also date to the time when television, radio and newspaper newsrooms dictated the daily news cycle. Clearly, that has changed.
In recent years, a seventh set of potential crisis triggers emerged. Classified as “smoldering crises” and thought to be merely early warnings, such things as sudden drops in sales; a plummeting share price; an employee exodus; a partnership breakup; a buzzing grapevine or rumor mill; or speculation about possible lawsuits or government investigations all suggested trouble might be coming. In the good old days when these things were just early warnings, wise managements would take action to prevent a full-blown crisis from exploding.
That was then. This is now. So what’s different? It’s a new game where even hints of bad news—things that used to be mere indicators—are now increasingly capable of triggering a full-blown crisis all by themselves. In other words, crises can begin much earlier, and on much shakier causal foundations than ever before. Something as small as a particle of bad news, no matter how incomplete or undeveloped, can morph instantly into big trouble for any company or organization.
What’s worse for crisis managers is that these “bad news”-triggered crises are proving to be more difficult to manage and can potentially do greater damage than a crisis based on a concrete real-world happening.
It’s all the Internet’s fault.
We now believe the year 2008 marked a critical “tipping point” for the practice of reputation management and crisis communications.
The reason? The Internet.
Depending on your point of view, the Internet is either:
a.) the most wondrous and important communications and information tool ever devised that is transforming business, democracy, society and the world, or
b.) a fetid swamp of lies, misinformation, perversion, sleaze, fraudulent behavior, unsubstantiated claims, unchecked self-aggrandizement, pathetic self-absorption, smarmy rumors, damaging speculation, deliberate attacks and general mischief making. And oh yes, politics.
We’ve witnessed a veritable explosion in the number of organizational crises caused not by actual events or facts or truth, but on what passes for “news reporting.” And the triggers? Rumor, speculation, allegations, gossip, invective, and intentional or unintentional humiliation or embarrassment. In short, internet mischief.
In 2008, a rapid-fire series of events signaled our entrance into uncharted territory:
- In August 2008, a prank video posted on MySpace depicted an Ohio Burger King employee taking a bubble bath in a restaurant sink. The four-minute video captured the employee, self-described as “Mr. Unstable”, bathing in a large stainless steel sink as several other employees and a store manager looked on. Needless to say, the Ohio health department was not amused, nor were BK customers and BK’s brand management. How did they find out? It was widely circulated virally and then … reported as news in the mainstream media. [Just a few months later, a copycat incident struck KFC.]
- Then in September 2008, United Airlines lost more than $1 billion dollars in market capitalization when a Google searchbot got confused and dug up a 2002 story about a potential UAL bankruptcy. The item “accidentally” got recirculated in Google news searches and news alerts, then reported by traditional media. Innocent error or not, it caused a billion dollars in damage in just a few hours, facilitated by an Internet institution which many people regard as infallible.
- Later that September, SparkSpread (www.sparkspread.com), the self-proclaimed “leading real-time news service covering financing, M&A and trading in the energy industry” sent out a “Breaking News” alert that “Constellation Energy Group is understood to be preparing to file for Chapter 11 bankruptcy protection.” This came as quite a shock, as just a few days earlier Warren Buffett had seemingly acquired Constellation in a friendly merger approved by the Constellation board. SparkSpread’s alerts went out at 1:36 pm. At 3:59 pm, AP reported Constellation Energy shares tumbled 9.5 percent in afternoon trading. Constellation’s response that the report was “absolutely false” didn’t hit the Reuters business wire until 4:14pm EDT. While notably swift for a large corporation, it was unable to prevent costly damage.
- In early October, a so-called “citizen journalist” posted a story on CNN's iReport Web site stating Steve Jobs had been rushed to the ER as a result of a "major heart attack." The user cited "an insider" who he said "opted to remain anonymous" but was "quite reliable." Totally bogus, this report nevertheless sent Apple's stock plummeting by more than 10 percent shortly after its publication. The share price continued falling until Apple spokespersons finally came forward to adamantly deny the claims.
- On November 13, the AP reported MSNBC retracted its story that Sarah Palin couldn’t identify Africa as a continent. David Shuster, an anchor for the cable news network, said on air that a McCain policy adviser was the source of a story saying Palin mistakenly believed Africa was a country instead of a continent. Turns out it was a hoax, perpetrated by two guys who created a phony “Harding Institute for Freedom and Democracy” and a phony “senior fellow” at the Institute, neither of which exist. More disturbing is the fact that the perpetrators had previously struck more than once, suckering the Los Angeles Times, the New Republic and Mother Jones into referencing other false material.
Internet-based mischief is not a totally new or unanticipated phenomenon. One of our firm’s crisis engagements in 2004 involved a vicious Internet attack orchestrated by dissident faculty which destroyed both the professional reputation and career of a college president. Although their online postings crossed the legal line well into slander and libel territory, the cowardly posters cloaked their identity so effectively that the legal team could not identify them with sufficient certainty to bring them into a court of law.
Do you remember when you first saw Sarah Palin in a bikini toting an assault rifle? I do. It was on my MyYahoo News page. Of course it was a Photoshopped fake. But that didn’t stop a seemingly legitimate source from labeling it as news.
And therein lies the core problem: the word “news” still means something, at least for a little while longer.
We now are in a game-changing 4-way convergence.
First, the Internet has changed fundamental human behavior regarding (what used to be) “mass communications”. The Web taught consumers that all news and information is now free. And available any time of the day or night, weekend or holiday, all year around. No need to sit around waiting for someone to “push” information and ideas to you. Just search for what you want. Google knows all, right?
Everything you need to know, whatever you want, it’s all there on the Internet. And hey, it must be true! If CNN is willing to trust “citizen journalists,” that should be good enough for you, right?
And whatever you find, you can pass along to anyone with a simple click of the forward button. Or “share”. Or Twitter or Digg or…
Second, the Internet has fundamentally changed American journalism. Forget fair, balanced, fully sourced or corroborated. The basic rules of the game, what you and I learned in News 101 in J-school, seemingly no longer apply out here in the real world.
We all know that mainstream media newsrooms are shrinking and contracting. Today’s brutal economics put enormous pressure on fewer trained journalists to maintain their franchise and livelihood by producing more content than ever before. In my local market, the daily newspaper’s reporters—a staff reduced by an estimated 40%—are now being required to blog, post breaking news stories and write, produce and appear in online video reports in addition to delivering the print edition stories they’ve always generated.
You don’t have to be an MBA to understand how this corrodes the quality—the accuracy—of today’s reporting.
Driven by its unquenchable need to fill airtime, Cable TV news accelerates the phenomenon. If you watch the cable business news channels, you’ll observe that a significant portion of their coverage consists of rumors being reported. Some argue it's just part of the accepted content of business news… as in, "buy on the rumor, sell on the news." But in times past, reporting based on rumors was not an accepted practice in professional journalism.
Third, competitive and time pressures are forcing journalists themselves into the fetid swamp—the Internet—for story ideas, information and content. It’s faster, easier and cheaper than the old way of doing things. Reporters and editors are stretching further afield for story ideas to compete with the vast scope of what’s available on the Internet. In the process, they’re embracing some pretty questionable content that never would have made it past an old-school editor. In some cases, what’s happening on the Internet becomes the news all by itself! In other cases, the mere fact that something—no matter how sketchy—breaks online prompts the traditional media, fearing being left behind, to respond by covering it as well.
And finally, the real core of the problem. Today, we collectively find ourselves in that murky transition period between the time when traditional news media and professional journalism dominated and the digital age where it’s all one big kettle of soup available online.
The individual is stuck with the responsibility of figuring out what’s truth and what’s not. We used to be able to trust major news organizations because they employed experienced, trained journalists whose jobs depended upon maintaining a solid reputation for accuracy. How many “iReporters” do you think are concerned for their reputations as real journalists?
Writing in the Toronto Star, Murray Whyte got right to the point: “Where the press used to shield the public from the worst of these baseless, false and factless claims, now there's no gatekeeper. There's no gate. There's not even a fence. This stuff just comes washing over us, and the press has been very slow to realize that its role is no longer gatekeeper, but referee or umpire or a judge—pick the metaphor you want—because people are looking for someone to sort this mess out.”
As the reach of traditional news outlets declines while the audience turns increasingly to online sources, news consumers have no choice but to develop their own skills in determining the veracity of whatever they obtain from the digital space. But that certainly hasn’t happened yet, making information users and news consumers ripe targets for hoaxes and misinformation, deliberate or not.
Alternatively, we can hope for a new online service that instantly fact-checks and certifies the “truthiness” of every piece of digital content before it’s delivered to us. We can all agree that we need the equivalent of the Good Housekeeping Seal of Approval to certify 100% bogus-free information. But let’s be realistic; that’s just not likely to happen soon. As Whyte admits, it’s impossible to sort “through this massive swirl of babble that keeps coming at us from the online world.”
Here’s the key point: absent a “UTF”—a universal truth filter—the very word “News” still carries strong connotations that whatever it embraces is believable, credible, to be taken seriously. Just the fact that something is labeled as News, or is carried by or referenced on a known news outlet, gives it a dangerous power to deceive.
This makes the Internet the perfect vehicle for attacks, mischief, dishonesty and wrongdoing. Identity can be cloaked. Anonymity means the old rule “consider the source” no longer applies. In the absence of traditional journalistic practices, there’s no oversight, no checks and balances, no fact checking. Whatever the Internet is, it’s not credible journalism.
Meanwhile, for anyone involved in protecting organizational or individual reputations, it’s a cruel world out there. There seems to be no shortage of disgruntled employees, angry customers, enemies, irresponsible noise- or mischief-makers, opponents, critics, self-serving watchdogs and whistleblowers, uncredentialed experts, advocacy groups, publicity seekers and amateur politicians. Every one of them represents a risk factor—and together, a whole new category of risk factors.
Whether they have an agenda, a cause, a grudge or a screw loose, perpetrators have one thing in common: they all need targets to reach their objectives. The higher your individual or organizational profile, the greater the risk that someone out there might target you.
Crisis management is all about time management.
Even though he said it a century ago, Mark Twain anticipated our current predicament with: “A lie can travel halfway around the world while the truth is still putting on its shoes.”
Lurid stuff takes on a life of its own, thanks to instantaneous digital repetition. Writing in the Wall Street Journal on December 16, 2003, Carol Hymowitz said it best: “‘Time compression’ is your biggest problem.” Referring to the stress inherent in any crisis situation, and compounded by the natural aversion to dealing with bad news, she went on to describe how “weak crisis management prolongs the mess and worsens scandal. Ignoring bad news doesn’t make it go away. It causes spiraling problems.”
While we are postulating that bad news, either potential or actual, must now be considered to be a crisis trigger, it’s not bad news by itself that fuels the crisis. It’s the combination of bad news and time mismanagement. When organizational leaders and crisis managers wait too long to respond, simple bad news compounds into a complex crisis. A delayed response signals a second negative dimension: that management is attempting a cover-up, is hiding, or avoiding responsibility, any one of which tends to make people suspicious, angry and impossible to reason with.
Research has shown that the damage from negative news does not correlate to its intensity… it’s a function of time. The longer the duration that bad news is allowed to prevail, the greater the long term damage and cost. This applies to any negative story… in the press, or viral online or via word of mouth. Thus, getting the story over with and behind you must always be the crisis manager’s primary objective. At the onset of their recent travails, Toyota would have been well advised to remember how costs mushroomed as the Ford/Firestone crisis dragged on for years instead of ended quickly.
For many years now, we’ve taught that the most effective crisis response occurs in “the golden hour.” In our crisis training program, we stress that to successfully take command of a crisis situation, an organization must be ready to respond within one hour from the declared onset of a crisis.
Again, that was then; this is now. In the October 13, 2008 New York Times, reporter Noam Cohen observed that “most of the damage from false (Internet-driven) reports occurs in less than an hour.”
So if 2008 marked a tipping point for crisis managers, it’s time to rethink crisis strategy. It’s time for a new set of best practices for responding to bad news. Taken together, these guidelines form a new rulebook—a coherent master strategy intended to prevent bad news from triggering a full-blown, nasty, unpleasant, reputation-damaging and expensive-to-fix organizational crisis.
If bad news is going to come out anyway, YOU should release it first, proactively and preemptively.
Your mom was right. In life, you only get one chance to make a good first impression.
And when bad news is imminent, you only get one chance to shape and control the story… at the very beginning. Being first to reveal a negative story about yourself defuses anger, suspicion and hostility, thus changing the entire tone of how it’s reported and how it’s perceived.
This strategy works because admitting your own failures marks you as a “stand-up guy” and in our culture, a stand-up guy almost always wins forgiveness and a second chance (assuming they truly deserve it). Acknowledging your own failings also tends to make the story fade away quickly.
Ignoring people’s legitimate concerns during a crisis can never work. It’s an insult, and that just makes people angrier or more likely to panic from the rumors and speculation that arise to fill the void created by your silence.
Why is this so important? Because you simply cannot reason with angry or panicked people. And if you cannot reason with them, you have rendered yourself impotent in ending the crisis.
Ignoring bad news doesn’t make it go away. Remaining silent means you agree with your accusers… which usually equates to “Guilty as charged”. Both gambits merely cause problems that spiral out of control. Attempting to cover up bad news rarely worked in the past, and today has even less chance of succeeding given online culture and expectations of total transparency.
When your mom said “Silence is Golden”, she called that one wrong.
Practice full disclosure—get it all out at once.
If all the bad news comes out at once, then you have a realistic chance for a short-lived crisis. (We used to call them one-day stories back in the old days when there were such things as editions and news cycles.)
If on the other hand, parts of the stories are withheld so they might come out in dribs and drabs later, then all you’ve guaranteed yourself is a lingering, multi-day story. Remember, the longer the duration of a bad news story, the greater the ultimate damage. When a negative story is repeated over and over, the perceptions it creates become reinforced and remembered longer.
The best way to answer tough questions is to answer them before they’re asked.
This is a corollary of Rules 1 and 2. If you anticipate the worst, the nastiest, the most uncomfortable questions and then answer them honestly and completely in clear direct language, you will further defuse anger, suspicion and hostility. You will look like someone who is not trying to hide, and thus will benefit from the “stand-up guy” phenomenon.
Sounds easy, but it’s not. Consider the credibility and end result contained in Nokia’s CEO Simon Beresford-Wylie’s language regarding layoffs of 3,000 human beings: "With the successful completion of these plans, we will have the vast majority of the synergy-related headcount reductions completed and we can then start to put this chapter of our history behind us and focus on creating a world-class company."
Not surprisingly, Paul McNamara of NetworkWorld.com ranted against “A tone-deaf Nokia Siemens public relations department that goes so far as to put these mealy-mouthed words on the CEOs lips.” Apparently, being told that you are a “synergy-related headcount reduction” is supposed to make you feel better. McNamara said “Actually, it tells me that someone doesn't care all that much… and thinks I'm an idiot.”
If you want people to pay attention, you have to level with them. Facts are specific, platitudes are ignored. In a bad news situation, jargon-laden CEO-speak is increasingly seen as a cloak for incompetents, weasels and cowards to hide behind.
Facts and actions are the only things that trump rumors and speculation.
If you find yourself in a crisis or bad news situation, don’t open your mouth unless and until you are ready to tell people what you are going to DO about it. Actions speak louder than words.
“We’re committed to returning life for Gulf Coast residents back to normal” is exactly the kind of empty, imprecise baloney most Americans have lost their taste for. “Don’t tell me what you’re committed to; hey I’m committed to winning the Lottery. But that doesn’t mean I will. Just tell me what you’re going to do.”
Public tolerance to mealy-mouthed corporate-speak is at an all time low.
It’s unlikely that you will have all the answers and the complete solution to the problem in the first minutes or hours. People aren’t stupid. They understand that.
What they want to know is that you know there’s a problem, that you’re on top of it and are taking responsibility for fixing it, and are doing something.
“At 2:30 pm today, we learned of a problem with our (whatever). By 3:00 PM, a team of our best technical personnel had assembled and was determining how to fix it. As soon as we know more about the situation, we will post the information on our website” is a sufficiently fact-based and action-based message to get you through the early minutes of a crisis.
Your behavior counts far more than your words.
Always reveal and share the bad news with your own people first.
More importantly, give them full permission to share the news and your response to it whenever and wherever they encounter concerned people.
In today’s world, the majority of employees have access to company-provided email. Our preferred tactic today is to utilize e-mail for crisis and bad news response communications whenever possible, knowing that the ability to forward /share / tweet /post /blog is one click away.
“What?” you say. “Give our own employees morale-destroying bad news?”
Seriously, do you think they won’t get the news as soon as it breaks online? That their friends and family and customers and professional colleagues won’t be sending them e-mails or texts with “What’s happening?” “What’s going on?” “What does it mean?”
Think of what it says if your own people are kept ignorant of the news while the rest of the world knows all about it. It says you don’t trust them. And if in fact you don’t trust them to defend and support their own organization, then you have far larger problems than we can address here.
On November 5, 2008, the New York Times carried a report on how endemic blogging about layoffs and downsizing is these days, giving multiple examples of bloggers reporting layoffs before the affected employees even knew.
Quoted in that article, Rusty Rueff, a former human resources exec at Electronic Arts and PepsiCo, said “Today, whatever you say inside a company will end up on a blog. So you have a choice as a company—you can either be proactive and take the offensive… or you can let someone else write the story for you.”
The odds of you liking how someone else writes your story are close to nil.
What to tell your CEO now.
To some, “reputation management” conjures up the impression of an abstract and unmeasurable theory that doesn’t add much to an institution’s value equation. When you encounter such skeptics, it’s helpful to remind them exactly how much value a reputation underpins and supports.
Reputations are like magnets. Good ones attract people and relationships to companies and organizations. Bad ones repel them.
And to any CEO or CFO, the business costs of operating with a damaged reputation are guaranteed to get their attention. If they want to measure them, suggest they look right on the bottom line.
If a company must constantly struggle to overcome a poor or negative reputation, then it will be condemned to spending more to accomplish less than its competitors. Winning new customers will cost more, and so your marketing costs will be higher. Recruiting the best employees will cost more. Financing costs will be higher. Getting community or public support to expand (or in some cases, even continue) operations will cost more. Governmental or regulatory compliance will cost more. Your legal bills will probably cost more. Nearly every aspect of the business’ or organization’s activities will have higher costs embedded in them.
And for those with poor reputations to begin with, every little controversy becomes protracted, more painful, more costly. There’s something called “distraction cost.” When management is consumed by putting out fires, they’re not growing the business. In business school, that’s called opportunity cost, and it’s lost.
We tell you all this, because you may be serving a company or organization whose leaders may be bad-news averse. They may not like to hear bad news, be confronted by it or be forced to respond to it. Surely, they will hate to deliver it, as they inevitably will be forced to some day.
The five new rules above can save your organization’s reputation, but only if you have the ability—and management’s approval and buy-in—to use them in the first few minutes after the bad news hits.