Posts Tagged ‘crisis’

“Everything in this Section could Kill You”

November 4, 2010

California health authorities were not amused when, in response to the E Coli lettuce panic a few years back, a large grocery chain posted this sign at the entrance to its produce section.  It does, however, serve as a fitting metaphor for the difficulty companies have in identifying and tracking reputation risk in a systematic manner.  It is especially hard for them to adjust to changes in public expectations that can leave them suddenly vulnerable.

In order to bring order to the seemingly infinite number of possible threats, we’ve devised a methodology we call “Issues Mapping.”  It involves subjecting a company’s entire value chain to a scrupulous evaluation that  maps all of its operational activities against four forces — Demographics, Technology, Economics and Culture.  Using this mapping process, a medical testing company can anticipate that in strong economic times, the education levels of its van drivers will drop.  Solution?  More safety training.  A US airline famous for its wise cracking flight attendants paid close attention to demographic shifts in its passenger base from white male Christian to gender and religious diversity.  Result?  Fewer lawsuits.

The mapping process thus provides a framework in which to examine new potential threats in unexpected areas.  Most companies quickly understood the security impact of improving cell phone cameras.  Few of them thought through the effect of this technology on workplace harassment.

Applied consistently and periodically refreshed, Issues Mapping can be a powerful tool to manage reputation risk and prevent crises before they occur.

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Finagle’s Law and the Gulf Oil Crisis

November 3, 2010

Yesterday’s admirable piece by Michael Skapinker in the Financial Times about BP’s crisis in the Gulf got us to thinking about what really good reputation risk management looks like.  Skapinker rightly recommends that boards of directors pay careful heed to what Bob Dudley, the new CEO of BP had to say about the Gulf disaster at a Confederation of British Industry conference this week.  Perhaps, but they will need to re-read carefully the passage in which he talks about “a series of interlinked failures” as the cause of the spill.  If they do so, they might begin to apply “Finagle’s Law,” the gold standard of disaster prevention.

Finagle’s Law, an elaboration of Murphy’s or Sod’s Law states that “if anything can go wrong, it will go wrong, at the worst possible moment.”  It is hard to reconcile a complete understanding of this principle with the way most companies practice crisis prevention today, with their reliance on fail safes not themselves failing.  In fact, Murphy himself or rather Air Force Colonel Stapp who coined the phrase in the 1940s, understood that Murphy and Finagle were not simply articulating a fatalistic point of view but recommending a critical series of thought experiments — imagining the worst case scenario for every sequence in a chain of events and the failure of its back-up, in order to engineer effective safeguards.

With apologies to Mr. Dudley, “low probability event” and “unimaginably devastating” are not quite the same thing.  We’ll talk tomorrow about how companies can stress test their entire value chain in order to uncover hidden risks.

Clutch & Choke

September 27, 2010

Two new books reviewed in today’s Wall Street Journal, Clutch by Paul Sullivan and Choke by Sian Beilock are a timely reminder of some age-old crisis communications rules.  In describing Alex Rodriguez’s long run as a serial big-game choker, Sullivan writes about the batter’s excessive focus on external criticism, what people thought of him.  Professional crisis managers spend a great deal of time worrying about how things look.  They should be focused on what stakeholders think are credible solutions.

Beilock, according to the reviewer, discusses research into why people best-suited to problem-solving, reasoning and comprehension are most likely to fail under the pressure of a timed math test.  Apparently, they are unwilling to take shortcuts and “prone to putting too much meaning into situations they think are important.”  Improving in the ability to succeed under stress also involves facing the truth about one’s actual abilities.

We like what this says about how best to deal with crises: sweat the details, but don’t become captive to them.  Focus on what’s important to your stakeholders, not to you. Understand your weaknesses as an organization so, when the crisis comes, they don’t take you by surprise.  Better yet, practice effective scenario planning so you can eliminate those blind spots.  It’s simple, really.  Just like hitting a fast ball.

Hurd on the Street II

August 17, 2010

Alfred Hitchcock used the term the “McGuffin” to describe a plot-enabling device which drives the behavior of a film’s characters.  It’s usually mysterious like the secret government plans in “The Thirty-Nine Steps” or the meaning of Rosebud in “Citizen Kane.”  In the evolving saga of the resignation of Mark Hurd at HP, the McGuffin is surely the charges of sexual harassment that didn’t involve intimacy and that Ms. Fisher claims she never imagined would cost Mr. Hurd his job.  This McGuffin is clearly working over time.

 Since Hurd’s resignation, as Ashlee Vance writes in today’s New York Times, there has been “a string of leaks from both sides resulting in a very public imbroglio.”  Like all crises, the HP saga illustrates some key principles very effectively.  The first is, that from the corporate perspective, nothing is more important than starving the narrative of oxygen.  This means that even if you believe the story is slipping out of control, resist the  temptation to leak further details that you believe bolster your position.  It is better to get off the front page than win the argument.  The second more elusive principle is that it is crucial to stick to your storyline.  If the issue is expenses, then you need to stick with expenses.  Revelations about inappropriate web-surfing at work or undisclosed settlement negotiations muddy the waters and throw your entire rationale into question.  Whoever is leaking information from HP’s side is doing the company no service.

In some of the best films, the McGuffin is actually completely forgotten about by the end of the picture. It might be a suitable fate for this particular example of the genre.

Return of the Nattering Nabobs

June 14, 2010

Clive Crook, writing in today’s Financial Times, rightly warns the British commentariat against complaining about the perceived anti-British tone of criticism of BP. Let us hope that his advice is taken to heart, in contrast to the switch in tone taken by President Obama’s administration last week in response to media criticism that he was failing to express the appropriate outrage (see last week’s post, Channeling Calvin Coolidge).

The ersatz brouhaha about the temperature of the president’s response reminded us of Vice President Spiro Agnew, who, courtesy of William Safire, called the media “nattering nabobs of negativism.”  He was fond of this sort of rhetoric.  He also called another group “hopeless, hysterical hypochondriacs of history” but the reason he springs to mind is that Agnew was, until their relationship soured, a very effective hatchet man for President Nixon, taking on the president’s opponents vigorously  while allowing Nixon to appear as the leader/statesman.

One can’t quite picture Vice President Biden in this role, but perhaps another member of the US cabinet or White House staff could have performed this vital role in order to give the nabobs their outrage while enabling President Obama to be the forceful but calm leader.  This dual response model runs counter to most expert opinion about the importance of speaking with one voice  in a crisis but the challenges of very big crises, in our opinion, require a “palette” of communications styles in response to a diversity of psychological needs among different stakeholders.  If these styles can be carefully coordinated, there are sometimes powerful benefits, benefits incidentally that would also have been available if BP had activated Chairman Svanberg in coordination with CEO Tony Hayward.  Perhaps there is yet time.

Toyota Travails: Twitter over Facebook?

February 4, 2010

As Toyota’s recall travails deepen, it is interesting to observe the company’s use of social media to communicate with owners and the public.  As of today, the company appears to be fielding four official Tweeters, both commenting on changing events and thanking Twitterati for support and comments.  On Facebook, a box directs people seeking recall information directly to the Toyota website, but amidst the shrieking or supportive wall postings, there appears to be no official interaction.  We surmise that the company has decided to let its many fans handle the firefight on Facebook while concentrating resources on Twitter, more immediate and more beloved of politicians and reporters.  If this is the case, it will be interesting to see if other companies in crisis follow the same approach.  This is obviously a tough time for Toyota because extensive apparent quality issues violate their customers’ baseline of expectation which is quality and safety.  Judging by the flow of commentary on both Twitter and Facebook, many of them are willing to give the company a chance to make things right.

Issues Mapping

November 16, 2009

A great piece in the new McKinsey Quarterly by Charles Roxburgh about the value of scenario planning prompts me to share our own version of scenario planning we call “issues mapping.”  Whereas Charles uses certain criteria he calls pre-determined outcomes to frame scenarios, we frame our process using four forces: economics, demographics, technology change and culture change.  We map these four forces against the entire value chain of an organization to identify reputation risks and opportunities that arise as these four forces interact over time.  What this process does is it throws into sharp relief how an organization that fails to adapt can go from being a reputation leader to a reputation laggard or be exposed to a crisis that could have been predicted.  Charles offers an example of a pre-determined outcome as used by Shell Oil, a pioneer in scenario planning: “Rainfall in the mountains means flooding in the plains.”  A simple example of our issues mapping process is what happens when a smaller than average 18-34 year old age cohort interacts with a strong economy: front line customer service quality declines because more qualified workers can find better jobs in a strong economy.  The answer — investment in training and supervision.  These are certainly times for companies and organization to take the time to think through the unthinkable.  Issues mapping isn’t a bad way to do it, when reputation is at risk.