- Five principles of successful crisis management
Many thanks to the Sunday Business Post and Media & Marketing Editor, Catherine O’Mahony for kind permission to reblog this article which first appeared in the print edition of the SBP on 8th May 2011.
Crisis management can enhance reputation
Good crisis management is not rocket science. There are a number of core principles. One would have hoped that Sony might have learned from the experience of another Japanese company, Toyota whose brand value plummeted by more than an estimated $5 billion following its accelerator PR debacle.
Even in the worst tragedies, companies can in fact enhance their reputation if they manage communications sensitively. This occurred in the case of the British Midland Boeing 737 crash on a flight between Heathrow and Belfast in 1989 when 47 passengers sadly lost their lives. The speedy response of the chief executive and sensitive handling enhanced British Midland’s reputation.
On the other hand Pan Am, one of the iconic names in aviation, went out of business probably not solely because of the Lockerbie disaster itself, but because of the insensitive and overly secretive handling of the aftermath. Airline crisis management handbooks were re written following the communications lessons learned.
First principle – Identify the scale of the problem
The first principle is to identify if there is a problem and if so how large. In the case of Sony this was not an issue that could be handled with a ‘drawer statement’. A drawer statement, as it implies, is a company approved response in case of a press query to a potential issue. If the query does not surface the statement remains in the drawer.
In the case of Sony we are talking about over 100 million accounts (an estimated 436,000 in Ireland alone) being infiltrated including passwords and credit card details. This has been called the largest hack in history, so not something that you could sweep into a drawer, sit tight and hope for the best.
Second principle – Come out with your hands up
Secondly, if the problem is serious enough to concern a significant number of customers then you need to come out quickly with your hands up and report it. This is the biggest criticism of Sony.
One does not know to what extent the conservative, closed style of Japanese management (also obvious in the recent nuclear accident in Fukushima) caused a delay of almost a week before the company admitted to the problem. It is unforgivable that it took so long before customers were alerted to the threat to their personal ID and financial security.
Third principle – Say sorry!
Thirdly, while you do not and cannot speculate, you must say sorry. Not the traditional Irish politician, “regret for any inconvenience I have caused” but a proper, fulsome apology to customers. Sony’s apology early on tended to veer more towards the “regret” rather than “we’re sorry” axis.
Fourth principle – Reassure customers
The fourth principle is that you reassure customers that you will spare no cost to a) rectify the situation and b) take all possible measures to ensure that the problem does not reoccur.
Part of this is being fulsome with information. To be fair to Sony, their Q&A website response was reasonably forthcoming although it came too late.
Fifth principle – Fail to prepare, prepare to fail
There are a number of other core principles. One is to prepare for the worst in advance. This involves putting together a small crisis management team with the hope that you never have to activate it. This must, repeat must, be led at senior director or CEO level, with PR or communications input.
Legal counsel must be consulted early and be comfortable with the importance of overall survival and communications over short term liability. Some companies have the unfortunate habit of gauging advice by the size of the hourly rate they are charged. In such a scenario the lawyers usually win out.
The natural instinct of many (not all) lawyers is to say nothing in case it implies liability. Saving a few Euro in potential liability charges counts for nothing if reputation or the company itself has gone down the tube. And Sony’s slow response has done nothing to save it from litigation. In Canada alone it is reported that one million affected users are planning a $1 billion class action law suit.
No matter how good or professional your crisis management is, it cannot defend the indefensible. So at a time of rigorous cost cutting, you cannot risk your reputation and future by poor security, quality control, testing or indeed viewing communications as a cost centre.
Jon Shute in his Consoling Gamers (www.consoling.tv) posting ‘It’s better to be safe than Sony’ sums it up well: “Being hacked is the small part of this issue… Sony need to do something to help restore trust, but they are stuck in the old ways and aren’t going to realise that (probably) just giving us all a free game isn’t going to cut it. It probably won’t even occur to them that better communications is what they really need in the long term, not token financial compensation.”
Ends
Contact: Ronnie Simpson (Simpson Financial & Technology PR) ronnie@simpsonftpr.ie or + 353 1 260 5300
