Let us spare a thought today for poor Amazon as it lurches forward from perhaps the most out-of-left-field crisis of the decade. According to The New York Times, the company has now severed its ties to the security firm it had hired to protect its warehouses in Germany who, it was disclosed, had, at the very least, a predilection for Neo Nazi outerwear. One could raise the question whether anyone at Amazon thought it odd that the security firm’s name in acronym spells out H.E.S.S., the name of Hitler’s deputy, but to us, this crisis is an object lesson in the futility of crisis “playbooks.” We award a golden pompom to anyone who could have predicted that such an event might befall Amazon which is precisely why lengthy crisis playbooks that purport to spell out what to do in any eventuality are relatively useless. By all means, have prepared language for the most likely problems but the best practitioners focus on the process more than the content. If you can get the right team on the line quickly and effectively you will have accomplished more than will be found in any playbook no matter how extensive.
Heisenberg famously calculated the limits to our ability to measure the position and momentum of sub-atomic particles at the same time. Perhaps that is why it is hard to pinpoint the exact level of collusion between business leaders asserting that uncertainty is holding them back from investment and hiring. Obeisance to the great god, uncertainty, became a cliché of business rhetoric two years ago after the worst of the depression had passed. Today’s New York Times’ piece by Nelson Schwartz takes the lamentations to a new level. “We’d love to hire more people, but we’re saying no,” Schwartz quotes Legrand’s CEO as saying. Timothy Powers, Hubbell, Inc.’s chief executive told Schwartz that he is not filling 100 positions that are open. The political impasse driving these concerns is the failure of opponents in Congress to find consensus on Bush-era tax cut extensions, but the sub-text in a presidential election year has a frisson to it that should give business leaders pause. At some point, complaints about uncertainty due to partisan rancor run the risk of looking like the American business community is sitting on its hands because a brisker recovery might aid an Obama victory in November. There is no evidence of this, but if this narrative takes hold it could generate an anti-business momentum that will be damaging for everyone. This is a Pandora’s Box that it is in no one’s best interests to kick open accidentally.
These words, the concluding salvo of the Communist Manifesto were published in February 1848 at the beginning of that great year of revolutions across Europe. 2012 began with the decision by Apple to monitor labor conditions at its Chinese suppliers more transparently. Today’s New York Times carries the story of the murder of a labor organizer in Bangladesh. Tommy Hilfiger and Walmart have pledged their commitment to improving labor conditions in that country. H&M did not respond to a request for comment.
Is there a contagion of issues in today’s instantly connected world similar to, if more compressed than, 1848? We believe that there is, that the Arab spring demonstrated this and that protest crackdowns in Western China suggest the Chinese government believes this, too. We have no evidence that the Foxconn story inspired Bangladeshi labor activists or that there is a connection with the murders of six Guetemalan union organizers last year. We do believe, however, that corporations need to be freshly alert not just to issues that affect their industry or only in the regions in which they operate. They must be alive to what we’ll call “issues contiguity,” the ability of seemingly unrelated concerns to jump the firebreak. We may see vast disparities between economic conditions in Bangladesh, Turkey or Chile but Karl Marx knew a meme when he saw one — “The price of a commodity, and therefore also of labor, is equal to its cost of production. In proportion, therefore, as the repulsiveness of the work increases, the wage decreases.” Is it so far fetched to think that we will soon, once again, be talking about the “ownership of the means of production?” Who knows, but it is certainly not too soon to be paying attention to the way this global meme shapes issues, independently of industry, subject matter or country.
Poor Otto. Bismarck’s timeless quip that “laws are like sausages, it is better not to see them being made” seems to have lost its bearings in current discourse. Thus, Gerard Corbett, chairman of the Public Relations Society of America, discussing the search for a new definition of public relations in today’s New York Times – “it was basically an exercise in making sausage.” Huh? In any event, we can certainly celebrate this effort that resulted in the warm and only slightly moist sentence “Public relations is a strategic communications process that builds mutually beneficial relationships between organizations and their publics.” Celebrate because, in the current first flush of social media’s youth, it has finally become obvious again that “PR” is about building and nourishing relationships not “communications consulting” or any of the other seventeen things it has been called since people started fretting that “public relations” was insufficiently dignified for such an august profession. So, three cheers for the committee and may “a thousand flowers bloom.” Well, actually, Mao Tse Tung’s campaign was the “Hundred Flowers Movement” but never mind. Let’s get back to making sausage while the sun shines.
The evolving story of the ill-fated Costa Concordia is an almost casebook illustration of the dangers in crisis response of rushing to place an interpretation on a murky situation too quickly. It may well be that the “hero/villain” narrative elevating the Coastguard captain and demonizing Captain Schettino turns out to be correct. However, the emergence of conflicting data about the pattern of Costa Cruise ships route deviations suggests that much has yet to be learned that may not reflect so well on the company, as FT.com suggests today (“Focus Shifts from Ship’s Captain to Company”). It can be very stressful to withhold judgment in these circumstances but it is critical in order not to box oneself into a corner.
By contrast, some steps in crisis response should be undertaken without delay even before all the facts are known. In this spirit, it was much better news that the parent company Carnival is launching a “stem to stern” audit of all its safety and emergency practices for every one of its cruise lines. This makes emotional and psychological sense and represents a logical human response to the fear and pain people feel in response to such a crisis, irrespective of the cause ultimately determined.
Yesterday’s news brings yet another tale of unanticipated reputational threat arising from the terminally outsourced world in which we currently live. We can, I think, confidently say that the Hershey chocolate company never in its wildest imaginings considered the possibility that employing international students through a government program would become a “sweatshop” flash point as reported in today’s New York Times
This most recent example of the networked enterprise focuses our attention once more on the critical need for employers to have transparency in their supply chain. Many years ago, energy companies tried to argue that because the tanker truck in the freeway pile up was operated by a contractor, they bore no responsibility. That argument didn’t wash then and any suggestion that a long outsourced HR supply chain absolves Hershey of responsibility for work performed to get its own product to the end customer would be equally wrong. The vigilence is all, and having ordinary managers who can spot an obvious disconnect when they see one.
The New York Times barely concealed glee at the misfortunes of News Corp. shouldn’t distract us from this rare example of crisis over-reaction. The negative response to the decision to shut down The News of the World, which may well have had iron-clad operational logic, demonstrates that in every crisis there is an irreducible narrative arc that must not be violated. In the context of the ongoing uncertainties about whose cell phone was hacked by whom, shutting the newspaper was akin to knocking off the key government witness prior to the trial. The News Corp.’s explanation for the decision was also a textbook non-explanation explanation. The New York Times called James Murdoch’s statements “a striking example of self-critical apology” but if all the key players, James Murdoch and Rebekah Brooks, among others, remain in place, this is an odd sort of self-criticism. Rather like the exquisite torture of business executives appearing before a Congressional committee in order to provide headlines for politicians, it is sometimes most effective simply to stand out in the withering fire until public interest begins to fade. By attempting to bring down the curtain prematurely, to mix metaphors, News Corp. has robbed the public and the politicos of their moment of hypocritical self-righteousness and it will assuredly not smooth things out for the BSkyB deal. The only effective brand recovery has to include publicly acknowledged learnings. Riding out of town in the dead of night makes this hard to do. There will be more twists and turns before the public has had its fill of this story.