Crisis Communication #1
!!!!!Guided Discussion 1: Begin this discussion posting by stating what you believe to be a crisis. Next, explain what crisis communication involves and describe several types of crises. When writing your discussion, sure to include examples from the assigned readings/videos (In addition, you may also include personal experiences). Your post MUST be at least one paragraph!!!!!!
Watch the assignment video.
https://learn.saylor.org/mod/page/view.php?id=11658
Read 4 articles below:
1. Read: (Mitroff (2005) Managing Crises Before They Happen, Chap 1 “Why Crises Are Inevitable”)
2. Read: Mitroff, Chap 3 “Best Practices Model”
3.Read:
Girboveanu, Sorina-Raula: How to Manage a Public Relations Crisis
4. Read:
Johar, G.V., Matthias M Birk, and Sabine A Einwiller (Summer 2010)” How to Save Your Brand In the Face of Crisis.” MIT Sloan Management Review. 51 (4), pp 57+.
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HOW TO MANAGE A PUBLIC RELATIONS CRISIS
Assoc. Prof. Sorina-Raula Gîrboveanu Ph.D
University of Craiova
Faculty Economics and Business Administration
Craiova, Romania
Silvia-Mihaela Pavel Ph.D Student
University of Craiova
Craiova, Romania
Abstract: A crisis is any situation that threatens the integrity or reputation
of a company. Public relations is the discipline which looks after reputation,
with the aim of earning understanding, support and influencing opinion and
behaviour. There have been several examples of public relations crises
that were handled. At the same time, there are even more instances where
companies have failed to properly manage crisis situations. What can, and
must be managed is the response. Each crisis situation is unique and,
therefore, requires a tailored response.This article presents some
examples from each category. As a result, some steps that should be
executed in order to properly manage a crisis, including the necessity to
create a crisis plan before a crisis actually occurs. Finally will be presented
ways to survive a public relations crisis.
JEL classification: M31, M37, M3
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Keywords: public relations, reputation, public image, crisis management, prevention,
societal expectations
1. INTRODUCTION
Hundreds have written definitions attempting to capture the essence of public
relations by listing the major operations that make up the practice – what public relations
does. As one observed, definitions serve at least two purposes: to help us understand the
world around us and to argue for a particular worldview of how one concept relates to
other concepts. (Gordon C. Joye, 1997) A long time public relations scholar and
professional leader, the late Rex F. Farlow, collected almost 500 definitions. He then
identified major common elements in an attempt to define public relations. His definition
includes both conceptual and operational elements. (Farlow F. Rex, 1976)
The first World Assembly of Public Relations Associations, held in Mexico City in
August 1978, defined the practice of public relations as ″the art and social science of
analyzing trends, predicting their consequences, counseling organizational leaders, and
implementing planned programs of action, which will serve both the organization and the
public interest″ (Wikipedia). Public relations (or PR) is a field concerned with maintaining
public image for high-profile people, organizations, or programs.
Public relations practitioners help others establish and maintain effective
relationships with third parties. Their work is usually performed in organizational
environments like a public relations firm or an agency, or as independent consultants or on
the communication staffs of corporations, not-for-profit organizations, or government
agencies. To establish a broad, realistic, and accurate description of the public relations
function – we offer the following definition (Latimore Dan, Baskin Otis, Heiman T.
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Suzette, Toth L. Elizabeth, Van Leuven K. James, 2004): Public relations is a leadership
and management function that helps achieve organizational objectives, define philosophy,
and facilitate organizational change. Public relations practitioners communicate with all
relevant internal and external publics to develop positive relationships and to create
consistency between organizational goals and societal expectations. Public relations
practitioners develop, execute, and evaluate organizational programs that promote the
exchange of influence and understanding among an organization’s constituent parts and
publics.
Here is a formal three-part definition of public relations (Centrer Allen, Jackson
Patrick, Smith Stacey, Stansberry R. Frank, 2008):
a. Public relations is a condition common to every individual and organization in the
human environment – whether or not they recognize or act upon the fact – that refers to
their reputation and relationship with other members of the environment.
b. Public relations is the systematized function that evaluates public attitudes and
behaviours; harmonizes the goals, policies, and procedures of an individual or
organization with the public interest; and executes a program of action to earn public
understanding, acceptance, and supportive behaviour.
c. Public relations is the full flowering of the democratic principle, in which every
member of society is valued for himself or herself, and has both a right and the duty to
express an opinion on public issues, and in which policies are made on the basis of free
exchange of those opinions that results in public consent.
In other words: Public relations is something that everyone has; public relations
foster the improvement of public relations through specific activities and policies; Public
relations is the cornerstone of a democratic society.
The definition of public relations describes what public relations is and does, as
well as how it relates to other organizational activities: Public relations is the management
function that establishes and maintains mutually beneficial relationships between an
organization and the publics on whom its success or failure depends. This definition of
public relations positions the practice of public relations as a management function,
meaning that management in all organizations must attend to public relations. It also
identifies building and maintaining mutually beneficial relationships between
organizations and publics as the moral and ethical basis of the profession. At the same
time, it suggests criteria for determining what is and what is not public relations. (Broom
M. Glenn, 2009)
In today’s competitive market, reputation can be a company’s biggest asset, the
thing that makes you stand out from the crowd and gives you a competitive edge. Effective
PR can help manage reputation by communicating and build good relationships with all
organization stakeholders.
Public relations is about reputation – the result of what you do, what you say and
what others say about you. Public relations is the discipline which looks after reputation,
with the aim of earning understanding and support and influencing opinion and behaviour.
It is the planned and sustained effort to establish and maintain goodwill and mutual
understanding between an organization and its publics. Public relations take many forms in
different organizations and come under many titles, including public information,
marketing or customer relations. To add to all the confusion, not all of these titles always
relate accurately to public relations, but all of them cover at least part of what public
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relations is. At its best, public relations not only tell an organization’s story to the publics,
it also helps to shape the organization and the way it works. Through research, feedback
communication and evaluation, the practitioner needs to find out the concerns and
expectations of a company’s publics and explain them to its management. (Chartered
Institute of Public Relations)
An organization or corporation is a group of people working together to a specific
purpose. That purpose invariably involves gaining the confidence of other people who will
buy the product or use the service, invest in the organization’s stock (or donate funds to
nonprofit entities), and support its positions on issues. The managerial challenge is whether
something is consciously done to face the fact of reputation and relationships. The
approach the public relations department takes, however, is another challenge. Many
companies – too many, some observers say – operate in a reactive mode. They wait for
public criticism, emergencies, or bad publicity before they act. They are usually likened to
firefighters who don’t get going until there’s a fire. Because reputations are formed and re-
formed in people’s mind continuously, and because public issues debates are constantly
taking shape, a more strategic approach is to be proactive. This approach is like fire
prevention. It constantly looks for opportunities and problems. Proactive public relations
practitioners will be ready to take advantage of opportunities when they arise and to
prevent potential problems from flaring up. (Centrer Allen, Jackson Patrick, Smith Stacey,
Stansberry R. Frank, 2008)
2. CRISIS MANAGEMENT
Crisis management is a professional approach to handling the crises that come up
with organizations and people who are often in the public eye. Crisis management is one of
the special realms of the art of public relations. Public relations consultants are trained in
the arts of crisis management. A ″crisis″ is a negative event. A ″crisis″ is when something
bad, unwanted, or terrible happens. (Crisis Management, 2009)
The word crisis comes from the Greek krisis, meaning ″decision″. We’ve all been
there. Those moments when we’re pressed in an instant to decide a course of action. Move
to the left, or move to the right. Fight or flee. Offer an explanation, or dummy up tight.
(Van Hook R. Steven, 2010)
In the opinion of the Institute for Crisis Management a crisis is a significant
business disruption that stimulates extensive news media coverage. The resulting public
scrutiny will affect the organization’s normal operations. Moreover, it could have political,
legal, financial and government impact on its business.
Also, a crisis may be defined as any situation that is threatening or could threaten
to harm people or property, seriously interrupt business, damage reputation or negatively
impact share value. (Bernstein L. Jonathan, 2010)
A ″crisis″, in public relations terms, is any event that draws intense, negative
media coverage and interferes with normal business activity; or a highly stressful struggle
or conflict within an adversarial environment. It is marked by a potentially damaging
turning point that could result in financial or mortal disaster – after which things will never
be the same. (Ross Dave, 2010)
It can be highlighted the difference between an issue and a crisis. The difference
can be understood on the basis of five parameters like speed, surfacing, scrutiny, structure
and stance. A crisis happens quickly, suddenly and demands intense scrutiny whereas an
issue develops gradually and generates sporadic interests from the audience. An
organization’s structure needs to be rigid during a crisis, on the other hand, in case of an
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issue, it should be fluid. The stance should be reactive in a crisis situation whereas in the
case of an issue, an organization should be proactive. The public relations practitioners
should also understand the relationship between the two. Crisis and issues are not two
different entities, rather they share a deep relationship. One can say that if an issue is not
managed timely, it can result in a crisis. (Bensilum Eddie, 2010) In other words, when an
issue escalates, it may become a crisis.
We can categorize crisis according to the cause of their existence or in another
way, based on the warning time. Crises, like any business activity, have life cycles. The
length of each phase depends on the efficiency of the management in dealing with the
crisis. It is management’s responsibility to try to solve the crisis using everything it can,
beginning with self confidence, going through using all the skills and ending by having the
ability to absorb the public’s anger or fear without harming the firm’s income or
reputation. If a manager solves a crisis without the public hearing about it, the manager has
proven his brilliant capability. (The Texas State Office of Risk Management)
Crises can cost organizations millions of dollars to repair or can potentially put
them out of business for good. So for those looking to steer clear of any possible PR crisis,
the following list outlines the principal categories that the PR disaster can spring from
(McCusker Gerry, 2010):
a) Acts of God. Even when natural disasters – such as a Tsunami – cause unforeseeable real
life crises (and even if no-one was directly responsible for the incident) pockets of the
media frequently describe how it’s a PR disaster of some sort; for tourism or even for
the governments of the countries involved.
b) Business Operations. This is where corporate activity adversely impacts on stakeholder
groups, such as when Coca Cola and Pepsi had to defend themselves in India against
allegations that their soft drinks contained excess levels of toxins. From a PR disaster
viewpoint, both companies managed to fan the flames or discontent, rather than calm
matters down.
c) Corporate Moves. Around the time of acquisitions, mergers or takeovers, there’s plenty
of room for dissatisfaction and even scandal, such as when a London PR man found
himself rumbled, tried and prosecuted after indulging in a bit of insider trading. This
happened after a client had confidentially told him of its plan to take over a competitor
organization.
d) Legalities. When contentious issues are debated in court, then reported in the media –
such as in the notorious McDonald’s ″McLibel″ case – the potential for PR disasters is
massive. Media watchers labeled this case “the world’s biggest corporate PR disaster”.
e) Rumours. Gossip can be highly damaging for brand reputation, as Procter & Gamble
found when malicious rumours of Satanism – in part propagated by a P&G competitor –
dogged the company for decades, forcing a worldwide logo redesign and extensive
counter PR efforts.
f) Staff. When New York’s Twin Towers collapsed on 9/11, staff at one of the city’s
Starbucks charged rescue workers for bottled water they needed to treat victims of the
attack. When word got out ″virally″ about this incident, the PR fallout was highly
damaging.
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g) Scandal. Financial or sexual shenanigans generally capture the media’s attention, such
as when basketball star Kobe Bryant faced allegations of sexual assault. ″PR disaster″
the media screamed, as Bryant’s lucrative sponsorship deals and image as an all-round
good guy were jeopardized.
Human nature. When people are subjected to great emotional stress, their
normally self-controlled behavior tends to become irrational and unpredictable. Their
reactions turn down the steps of Maslow’s hierarchy of human needs. At the bottom, of
course, are a person’s physical needs. One step above are a person’s safety needs. When
people feel that physical needs and safety needs are threatened, they are prone to panic. In
panic, people’s baser instincts for survival take command. This ″survival″ might be
physical, financial, social, or some other component vital to a person’s life, but you can
count on self-interest or self-preservation to take command of a person’s emotions and
actions. These phenomena become immediately apparent in such catastrophic
circumstances as fires, floods, explosions, and tornadoes. The same pattern emerges, with
less severity, in noncatastrophic situations such as scarcity of gasoline or coffee, a spate of
crime in a community, or even a standing-room-only crowd at a public event. Similarly,
sensations approaching panic may invade us when it appears that we may miss a departing
airflight, lose of a dear friend, find ourselves unexpectedly deprived of light in our home at
night, or walk a dark street to our parked car. (Centrer Allen, Jackson Patrick, Smith
Stacey, Stansberry R.Frank, 2008)
Understand how people typically respond to issues. Philip Lesley (1984), a
veteran public relations counselor and philosopher/critic of the field, developed the
following model. On any given issue dividing public opinion, people will fall into these
groups:
Source: Lesley Philip, Overcoming Opposition, Upper Saddle River, NJ: Prentice Hall, 1984
Figure no. 1 Groups of people divided by public opinion
Zealots will be the first to take firm stands on
the issue
– for and against. The
majority, however, will watch to see which way the opinion leaders go before they are firm
enough in their views to speak or act. Public relations efforts must focus on the opinion
leaders / the 8 percent who can influence the 90 percent. Resist the temptation to capitalize
on the lea lots who support your view. They anger people on both sides of the issue,
1%
Immediately
Favorable
Zealots, minds
made up as soon
as they hear of
the issue
45%
Leaning
Favorable
Have opinion
won’t do anything
about it
8%
Opinion
Leaders
Willing to discuss,
open-minded will
drive decision
45%
Leaning
Unfavorable
Have opinion
won’t do
anything
about it
1%
Immediately
Unfavorable
Zealots, minds
made up as soon
as they hear of
the issue
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including those inclined to agree with them. Keep in mind that opinion leaders are rarely
the visible leaders (elected officials or organization officers). Look for them at all levels
and in all segments of society. The opinion leaders are not necessarily the educated and
articulate, but are always the familiar and trustworthy. Most of us are inclined to seek
reinforcement for our choices from people who are in the same situation we are, not from
people who are ″different″.
There are three smart ways to approach crisis situations (Van Hook Steven, 2010):
1) Avoid a crisis in the first place (a pinch of prevention is worth a mound of cure);
2) Quickly address and resolve crisis issues before they escalate;
3) Seek possible ways to turn your crisis into an opportunity.
Dealing with a potential crisis, crisis management is crucial to the survival and
reputation of the company. Depending on the situation, simply responding can help to
alleviate the problem and diffuse the bomb before it goes off.
3. PLANNING FOR A CRISIS
A crisis can come from nowhere at any time; natural disasters, human error
(including management itself) and industrial accidents can all cause a crisis. The most
serious property of crises is the element of surprise. The most dangerous thing in a crisis is
not knowing about it or not being prepared for it, whether it is natural, mechanical, human
error, or a management problem. The natural causes are hard to control as they happen
unexpectedly. For other causes, they can be faced with the proper planning and sometimes,
the plans are well-designed enough to suit and deal with even the natural causes. (The
Texas State Office of Risk Management)
There are several consequences to incidents associated with organizational crises.
They include financial loss, increased security and insurance costs and faltering of the
company’s image in the customers’ eyes. Additionally, costs may be staggering from an
employment perspective. The psychological trauma following a traumatic workplace
incident from both an individual and from an organizational standpoint, can result in
decreased productivity, increased absenteeism and an increase in workers’ compensation
claims.
The expectation is that through preparation for such an event, the physically
harmful effects of the traumatic event will be minimized. Such preparation might include
identification of the ″most likely to occur″ crisis situation and the establishment of crisis
plan. Additional factors to consider are how to respond to customer reactions and questions
and how to respond to the media. (The Texas State Office of Risk Management)
Too often, companies and organizations make the mistake of waiting for a public
relations crisis to happen and then responding to it. No matter how much damage control a
company does, it’s hard to overcome an embarrassing clip from a movie or TV show that
will be indelibly stamped in the minds of millions of televiewers. A better approach is
what many of us in the PR industry call ″crisis prevention″. (Gabrowski Mark, 2010)
In effective handling of a crisis, preparation and anticipation are key
considerations. Of course, sometimes crises will occur even when all possible preparations
have been made. So, every organization needs a plan to enable it to handle a crisis quickly
and effectively if the need arises. (Whims Ellie, 2010)
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A. Examine Vulnerabilities
The most important first step in crisis management is to prevent a crisis in the first
place. Take a hard look at your company, and examine potential vulnerabilities from every
angle, and seek out potential problems in your dealings with your customers, your
employees, and even your vendors.
B. Develop a Crisis Communications Plan
This is one of those ″don’t try this at home″ situations. Working with seasoned
public relations professional will help you in a number of ways. A pro will be able to
provide an unbiased, outsider’s opinion about both your vulnerabilities and
communications plans. Experienced media relations pro can anticipate questions the media
will, and can therefore help you craft appropriate answers.
Your Crisis Communications Plan should:
a) Identify steps to gather information about the situation – make sure you know the
pertinent facts.
b) Appoint a Crisis Team – these individuals will be responsible for handling the crisis
itself.
c) Appoint a spokesperson – this person will typically serve as the point of contact
between your Crisis Team and the media.
d) Identify your key audiences – your customers, employees, vendors, and the media.
C. Warning: objects in the mirror are closer than they appear
The object lesson here is: don’t wait. Don’t wait until you are in the midst of a
crisis to try to figure out what needs to be done. You will have your hands full as it is,
dealing with whatever situation caused the crisis in the first place. As Louis Pasteur once
said, ″chance favors the prepared mind″. Your best chance for a favorable outcome in a
crisis is to lay the groundwork well in advance by developing a sound Crisis Management
Plan.
4. EXAMPLES OF PUBLIC RELATIONS CRISES
There have been countless public relations crises in the past. Each crisis situation
is unique and, therefore, requires a tailored response. There have been several examples of
public relations crises that were handled properly and did not have an overall negative
effect on the company in question. At the same time, there are even more instances where
companies have failed to properly manage crisis situations.
In 2008, the following industries racked up the most business crises according to
the annual ″Business Crisis Trend Report″ by the Institute of Crisis Management (May
2009):
1. Banking
2. Food Industry
3. Security Brokers/Investment Co.
4. Petroleum Industry
5. Insurance Industry
6. Automobile Manufacturing
7. Pharmaceutical Companies
8. Software
9. Aircraft Industry
10. Telecommunications
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Eight of the ten most crisis prone industries repeated from the previous year. The
American Big Three and the entire top selling European and Japanese Carmakers struggled
with ever worsening bad news throughout the 2008. Product defects and recalls accounted
for 15% of all crises in 2008, including recalls by GM, BMW, Honda, Pontiac, Chrysler
and Porsche. There were major toy recalls, including problems with dangerous and tainted
toys. China’s toy industry was devastated, as a result, and 3,600 factories were closed and
thousands of workers out of work.
Here’s a classic model of how a crisis can be turned into an opportunity for good
PR (Van Hook R. Steven, 2010): In 1986 someone put capsules poisoned with lethal
amounts of cyanide in Johnson and Johnson bottles of Tylenol on store shelves. Before
anyone could do anything, seven people died from the poisoned medicine. The company
met the crisis head-on. First, they spent $300-million recalling all samples of the medicine
bottles. Then the company introduced new tamper-proof medicine containers that changed
the entire industry. But most importantly, the company was prepared, it acted coolly, they
answered the tough questions, and in the end maintained their dominance in the market.
They used the media to demonstrate their concern and their determination to resolve the
crisis. It was a message of courage and leadership through effective public relations.
The first critical public relations decision, taken immediately and with total
support from the company management, was to cooperate fully with the news media. The
press was key to warning the public of the danger. The poisonings also called for
immediate action to protect the consumer, so the decision was made to call two batches of
the product and later to withdraw it from store shelves nationally.
During the crisis phase of the Tylenol tragedy, virtually every public relations
decision was based on sound, socially responsible business principles, which is when
public relations is most effective.
Johnson & Johnson’s corporate Credo strongly influenced many of the key
decisions. The Credo lists four responsibilities. The customer is placed first and foremost,
followed by responsibility to employees, to the communities where they work and live, and
finally, responsibility to the stakeholders.
At Johnson & Johnson, Lawrence G. Foster, corporate vice president of public
relations, reported directly to chairman and CEO James E. Burke, who promptly formed a
seven-member committee to deal with the crisis. Foster and five senior executives on the
committee met with Burke twice daily for the next six weeks to make key decisions,
ranging from advertising strategy and network television interviews to planning Tylenol’s
comeback in tamper-resistant packaging.
In the weeks following the murders, Foster and his three senior staff members, all
former journalists, responded to the more than 2,500 calls from the press. They were
helped by the smaller public relations staff at McNeil Consumer Products (manufacturers
of Tylenol). While the corporate staff was dealing with the press, Burson-Marsteller, which
had the product publicity account for Tylenol, began planning a unique 30-city video press
conference via satellite to reintroduce the product. Polls showed that 90 percent of
Americans did not fault the company, and 79 percent said they would again purchase
Tylenol. The satellite relaunch took place in just six weeks. Later, sales of Tylenol began
soaring to new highs.
The unthinkable happened four years later. A woman in Westchester County, New
York, died after ingesting a Tylenol Capsule that contained cyanide. A second
contaminated bottle was found in a nearby store a few days later. Chairman Burke
reconvened the strategy committee, and the Credo was at the center of the discussion. The
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next day, Johnson & Johnson announced that, henceforth, no J&J Company worldwide
would market any over-the-counter capsule product because the safety of customers could
no longer be assured, even when the capsules were in the new safety packaging. The public
made Tylenol caplets a best seller soon after, and to this say Johnson & Johnson has kept
its pledge not to market an over-counter capsule product anywhere in the world.
Once again, Robert Wood Johnson’s Credo had shown the way. The Tylenol
tragedies demonstrated that Public relations is a business of basic and that the best public
relations decisions are closely linked to sound business practices and a socially responsible
corporate philosophy. The Washington Post wrote: ″Johnson & Johnson has effectively
demonstrated how a major business ought to handle a disaster″. (Foster Lawrence, 2002)
A great example of a company acting quickly is Odwalla, who’s juices were
contaminated. Despite where Odwalla’s contamination took place (though it was found
that some of their oranges contained the E. coli making consumers ill), they knew they
needed to recall their juices. They also changed their methods of making the juice to avoid
and lower the possibility of contamination. (Wirthlin
Ashley, 2009)
Odwalla is a juice company that built its reputation – and its business – on
providing natural juice drinks to health-conscious people. After drinking Odwalla drinks
containing apple juice contaminated by the E. coli bacteria, 65 people, including many
children, became severely ill. Then, when it looked like the worst was over, one of those
infected by E. coli, a 16-month-old Colorado girl, died. As you might expect, some of the
sickened people have decided to sue Odwalla.
Odwalla is still feeling the effects of the crisis, but its financial picture is
improving. Its products are still on the shelves, customers are coming back, and stock
prices are up, so the company’s future looks positive.
The picture today might be very different if Odwalla had looked at the E. coli
contamination problem from a purely risk management standpoint. Since risk managers
seek to minimize the company’s risk it might have taken the very different strategy of
denying liability for the contamination or of waiting to act until the link to its products was
proven. Instead, Odwalla considered its philosophy and its customers in formulating its
approach. In doing so, it protected its most valuable asset – good name. And that’s what
effective public relations is all about.
Although you may never been faced with life and death problems, any company
runs the risk that a problem with its products or actions could affect its reputation. Having
an action plan ready before crisis strikes will help you act quickly and correctly. Like your
buildings or inventory, your company’s reputation is a valuable asset that deserves
protection. Public relations, used properly, can help you protect this asset. (Wirthlin
Ashley, 2009)
Another example of crisis management can be seen by Pepsi who took the time to
research and evaluate the next steps. They were accused of allowing syringes to be canned
in some of their soda. Instead of first allowing the recall to take place, but while still not
avoiding responsibility, they were able to ensure that syringes being canned did not take
place in their factories. After time, the claims came out to be rumors, and Pepsi was saved
millions of dollars a recall would have cost.
Remember the old rule: the best defense is a good offense. Always look for a new
opportunity in the middle of a crisis; and take the following example. It was in Los
Angeles during a long drought, when a huge water pipe burst right in the middle of one of
the busiest streets, the Ventura Boulevard, causing the road to split apart. Water flooded
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the street and sidewalks, closing all the businesses. The area was blocked off, so no
customers could get to any of the businesses.
One of the businesses in the flood area was a hamburger restaurant called Mel’s
Diner. Since he didn’t have any customers, Mel started giving away free hamburgers to
the workers repairing the water pipe. The TV news crews took video of this, and that
evening thousands of viewers saw a happy report on what a fine citizen Mel’s Diner is. For
the cost of a few hamburgers, Mel got the kind of media coverage you just can’t buy,
because he did the right thing at the right time.
Hurricane Katrina: A Disaster from Beginning to End. The facts about
Hurricane Katrina are well known: thousands of hundreds of people displaced; hundreds of
lives lost; property damage in the billions of dollars; confusion, consternation, and
complacency coming together to leave a landmark America city in shambles. The
devastation in New Orleans was real.
No one was ready for the hurricane; not people of New Orleans, not the Federal
Emergency Management Agency (FEMA), not the State of Louisiana nor the City of New
Orleans. No one was ready for its aftermath of displaced citizens, lost services, diseases,
death, and destruction.
Perhaps most telling, however, was the fact that no one was prepared to
communicate through the crisis. Tylenol, for example, communicated well through its
well-known crisis, and even though no one has ever been arrested and no one knows why
or how the tampering occurred, Tylenol and Johnson & Johnson generally get high marks
for handling the crisis. No one in New Orleans approached problem in Tylenol-like way.
Politics seemed more important than the people.
The problem in New Orleans was a bifurcated one-half operations and half
communication. On the operational side, the cleanup suffered from: poor planning; poor
anticipation; poor execution. On the communication side, the story was similar.
Communication efforts suffered from: poor planning, poor anticipation; poor execution;
lack of anything to communicate.
No one knew what needed to be done or said. There was little compassion from
FEMA or state or officials. No one was able or willing to meet the needs of those most
affected by Katrina. One great truth of public relations is that ″communication must follow
performance″. In New Orleans, performance didn’t happen. There was no performance to
communicate. Without performance, communication is hollow, and even disingenuous.
With respect to the Public Relations Impact (Broom M. Glenn, 2009), there was no
consideration prior to, during, or after how a coordinated public relations plan would help
the Katrina aftermath. There was no one Clear Voice. No one was able to set a positive
agenda. No reasonable expectations were established. No one seemed to have ″expected
the unexpected″ and made any preparations. If there were competent public relations
counsel available, it was difficult to see amid the confusion that was New Orleans in
August 2005. Decision makers were equally impaired. The mayor, the governor, the
director of FEMA, no one was able to make sense of what was going on. Rumors thrive in
the vacuum of no information, and rumors ran rampant after Katrina. It is likely that the
finest public relations counsel would not have made much difference, but, then again, it
might have.
Planning and preparation are invaluable. When disaster strikes, it’s too late to write
a crisis plan or develop a legacy of trust with key publics. What might some good public
relations planning and preparation have added to the situation in New Orleans? 1) One
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Clear Voice could have been established. 2) Regular news alerts could have been
scheduled to report on what is known at the time. 3) With a good crisis communication
plan in place perhaps there would have been more to communicate. 4) Good public
relations could have anticipated the conditions, at least to a certain extent. 5) In addition,
opinion leaders trusted by disenfranchised publics could be lined up, providing effective
intervening publics to those who might not hear or believe mainstream media. 6) Messages
could be pretested to be sure what is being said is being heard and understood by those to
whom it is being said. Pretested messages can smooth the path to better understanding. 7)
In lining up dependable communication tools, the public relations counselor would have
anticipated media being out of operation. Phone lines, cell towers, and broadcast media
won’t survive 165-mile-per-hour winds. So the savvy practitioners will look for short-
wave/ham operators, satellite communication, and other ways to keep in touch with key
audiences.
5. CONCLUSION
Every organization is vulnerable to crises. Used effectively, public relations can
prevent a critical situation from resulting in irreparable damage to the business’s reputation
and goodwill.
Companies in crisis are nothing new. As we have seen time and again, from
Tylenol to Exxon to Firestone to Enron, how you act and react once a crisis begins often
forms your company’s future. Companies face crises all the time – product recalls, plant
closings, tainted products, a crime committed by an employee, a branded item found at a
crime scene, a company leader making a poor personal decision.
Effective communication is an essential part of trying to control any crisis
situation. It is the responsibility of the company or organization to provide information
about what is happening, the effects it will have a numerous publics, and what the
company plans to do to resolve the situation. The questions most asked by the public
involved are: What exactly has happened? Why was information about the crisis not
released sooner? What could have been done to prevent it from happening?
Any action is better than nothing and it is surely better than the denial that some
managers tend to do with the public and the press. A better action is to choose a well-
trained spokesperson that can give the bad news in a ″sweet″ way in order to gain the
respect of the people and at the same time not expose every detail that is harmful. During a
crisis, effective spokespersons must, through their non-verbal cues, leave their audiences
with the impression that they are: compassionate, competent and confident.
While no one can predict a crisis, appropriate foresight and thought can mean the
difference between maintaining a stellar corporate reputation and the dreadful alternative.
There are six steps to follow for a crisis resolution: preparation is key (if you don’t prepare,
you will take more damage), make sure you have all the facts, take immediate action to
minimize danger to human life, tell the truth, show you care and be sincere, and never
overlook the power of common sense.
Timing is the essence, taking responsibility is key, and acting responsibly is vital
to overcoming a crisis. As can be seen with Odwalla and Pepsi are gone on to continue
being profitable. Consumers still enjoy the beverages either company provides, and they
can continue providing them because of the great crisis management they each used.
12
REFERENCES
1. Bensilum Eddie Corporate Reputation and Crisis Management, 30 March
2010, www.insidepublicrelations.blogspot.com
2. Bernstein L. Jonathan The 10 Steps of Crisis Communications – part 1, March 30,
2010, http://managementhelp.org/blogs/crisis-management
3. Broom M. Glenn Effective Public Relations, Person Education, Inc., Upper
Saddle River, New Jersey, 2009
4. Centrer Allen, Jackson
Patrick, Smith Stacey,
Stansberry R. Frank
Public Relations Practices: Managerial Case Studies and
Problems, Pearson Prentice Hall, new Jersey, 2008
5. Chartered Institute of
Public Relations
http://www.cipr.co.uk/
6. Farlow F. Rex ″Building a Public Relations Definition″, Public Relations
Review 2, no. 4 (Winter 1976)
7. Foster G. Lawrence ″Tylenol: 20 Years Later″, The Public Relations Strategist 8,
Issue 4, Fall 2002
8. Gabrowski Mark Crisis Prevention through Foresight, 2010,
http://aboutpublicrelations.net
9. Gordon C. Joye ″Interpreting Definitions of Public Relations: Self Assessment
and a Symbolic Interactionism-Based Alternative″, Public
Relations Review no. 23, no. 1 (Spring 1997)
10. Institute of Crisis
Management
″Business Crisis Trend Report″, May 2009,
http://www.crisisexperts.com/reports.htm
11. Latimore Dan, Baskin
Otis, Heiman T.
Suzette, Toth L.
Elizabeth, Van Leuven
K. James
Public Relations: The Profession and the Practice, McGraw-
Hill, New York, 2004
12. Lesley Philip Overcoming Opposition, Upper Saddle River, NJ: Prentice
Hall, 1984
13. McCusker Gerry The Truth about PR Disaster – A cautionary tale for
practitioners and their clients, 2010,
http://aboutpublicrelations.net/ucmccuskera.htm
14. Ross Dave How Crisis Communication Plans Work, 2010,
http://communication.howstuffworks.com/how-crisis-
communication-plans-work.htm
15. The Texas State Office
of Risk Management
Public Relations and Crisis Coordination,
http://www.sorm.state.tx.us/Risk_Management/Business_Con
tinuity/pr_crisis.php
16. Van R. Hook Steven. Crisis Management Moments: Making the most of a bad
situation, http://aboutpublicrelations.net/aa021701a.htm,
http://aboutpublicrelations.net/aa021701b.htm
17. Whims Ellie Crisis Communications for Small Business: A well-
developed crisis plan can save the unexpected sting, 2010,
http://aboutpublicrelations.net/ucwhims1.htm
18. Wirthlin Ashley Public Relations & Crisis Management, December 2009,
http://publicrelationsblogger.com/2009/12/public-relations-
crisis-management.html
19. * * * Crisis Management, November 2, 2009,
www.publicRelationIdeas.com
20. Wikipedia, the free encyclopedia,
http://en.wikipedia.org/wiki/Public_relations
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S U M M E R 2 0 1 0 V O L . 5 1 N O . 4
Gita V. Johar, Matthias M. Birk and
Sabine A. Einwiller
How to Save Your Brand
In the Face of Crisis
Please note that gray areas reflect artwork that has been
intentionally removed. The substantive content of the ar-
ticle appears as originally published. R E P R I N T N U M B E R 5 1 4 1 5
C R I S I S M A N A G E M E N T
How to SaveYour Brand
In the Face of Crisis
When bad things happen, companies need the right strategy
for talking their way out of a mess and avoiding a calamitous
pummeling of their corporate image. Choosing the best
response can spell the difference between a brand’s survival —
even enhancement — and its irreversible tarnishing.
BY GITA V. JOHAR, MATTHIAS M. BIRK AND SABINE A. EINWILLER
IN 2009 AND 2010, Toyota Motor Corp. was the target of much adverse media attention after a
series of accidents due to sudden acceleration incidents and brake faults that led to deaths and inju-
ries. What started as a smoldering issue in 2005 with incidents of unintended acceleration and
consumer complaints about sticky accelerators culminated in massive recalls of Toyota vehicles,
totaling 8.5 million vehicles recalled by February 2010. It turned out that Toyota knew about pos-
sible safety issues much earlier than 2009, but refrained from issuing large-scale recalls. Consumers
and media were harshly critical, and included comments such as:
“House Panel Says Toyota Misled Public on Safety”1 and “Shame on you, Toyota.”2
The Toyota brand’s reputation — which had been closely linked to safety and quality and was a key
element in the company’s success — took a serious battering. Toyota management had a choice — to
be resigned to this fate or to use effective communication strategies to recover from the crisis. Crises
THE LEADING
QUESTION
How should a
company best
communicate
with the public
during a mar-
keting crisis
to protect its
brand from
damage?
FINDINGS
••If the brand is at
fault and the crisis
is severe, come
clean quickly.
••If the brand is not
at fault but the
crisis is severe,
defend yourself.
••If the accusation
against the brand
is not true and not
severe, denial is a
useful strategy.
••In normal, noncrisis
times, work to
bolster your image
and enhance
consumers’ brand
identification.
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C R I S I S M A N A G E M E N T
such as the one Toyota experienced are business dis-
turbances with potentially negative outcomes that
stimulate extensive media coverage and marketplace
scrutiny. The goal of a communication strategy in
the face of a crisis should be to prevent severe dam-
age to the brand’s reputation and eventually to
restore consumer trust.
Drawing on scientific research on persuasion, we
have assembled a comprehensive crisis communica-
tion framework that highlights when specific
communication strategies should be used to help a
brand recover from a crisis and restore trust and
brand image with customers. While other stakehold-
ers, such as investors, need to be considered as well,
we focus here on practices in response to customers
and consumers in general. And here’s an amazing
thing: Recovering from a crisis in the “right” way may
sometimes even improve brand image. By the same
token, using the “wrong” communication strategy
could damage the brand beyond repair.
Events that precipitate crises are, for the most
part, unexpected by consumers. If there is no pat-
tern of crisis-prone behavior, then consumers are
likely to start thinking about the event and why it
happened.3 When a crisis hits, consumers reading
or hearing about it likely ask themselves a predict-
able set of questions:
■ Is this true?
■ Who is responsible?
■ Was it intentional?
■ Will the brand do this again?
■ What does this event say about the brand?
Consumer responses to these questions are, in
part, based on the brand’s communications before,
during and after the crisis.
Navigating the Crisis
With this understanding of the public mind-set, we
can provide communication strategies that help
consumers answer the questions posed above in a
variety of real-world situations. We evaluate the
situation along three dimensions:
■ The truth/falsity of the accusation of wrongdo-
ing — that is, is the crisis real?
■ The severity of the crisis.
■ Whether customers (existing and potential) have
forged a strong personal identification with the
brand.
Our research has generated a comprehensive crisis
communication framework that offers the manager an
arsenal of communication strategies in different types
of situations. (See “About the Research.”)
Is the accusation true? The first question to ask is
whether the information provoking the crisis is ob-
jectively true, and based on solid facts. Did Toyota
really know about its flawed pedals and stuck floor
mats or potential problems in the electronic system
before the fatal accidents happened? Did the com-
pany really try to avoid a large-scale recall, hoping
that the issue would blow over? Even if the company
believes the accusation is false, managers need to
view the accusation from customers’ perspectives.
Customers’ beliefs regarding the validity of the event
provoking the crisis are likely to be based on whether
they themselves or someone they know experienced
it, or whether they learned about it from a credible
source — e.g., a government agency like the National
Highway Traffic Safety Administration. Strikingly
credible, for example, was the repeatedly broadcast
911 call by Chris Lastrella when the accelerator in his
Lexus got stuck and the car crashed, killing him and
the three other occupants of the car in which he was
a passenger. At the same time, hearing about an event
repeatedly, even if the repeated messages are from
sources of dubious repute, will make consumers be-
lieve that the event was real.4 If consumers identify
closely with the brand, however, they are likely to
question the validity of the transgression in order to
protect their positive connection with the brand.5
Is the crisis severe? Crisis severity lies in the eyes
of the beholder, in this case the consumer. From the
company or brand management’s standpoint, the
incident that sets off a crisis could seem minor. Yet,
it could be magnified by circumstances or by media
buzz. Nestlé S.A., for example, underestimated the
perceived severity of the situation after traces of ink
were found in its baby milk formula in various Eu-
ropean countries in 2005. Chairman and CEO Peter
Brabeck-Letmathe publicly called the problem a
“storm in a teacup.” According to Nestlé, and later
confirmed by the European Commission, there was
no danger to health from drinking the milk. But in
the eyes of consumers and the affected countries’
food safety agencies, the problem was dire — and
from a communications standpoint, that was the
perception that mattered.
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Do customers identify with the brand? The ap-
propriate communication strategy also depends on
whether customers identify strongly with the brand.
In fact, customer identification is one of the best forms
of insurance against the possibly devastating effects a
crisis can have for an organization. Identified custom-
ers show loyalty to their brand, share values with it and
feel emotionally attached to it.6 In contrast, customers
who do not identify with the brand will devote less
attention to examining carefully whether the infor-
mation is true — they will tend to believe an accusation
on its face, especially if it comes from a credible source.
Further, they are more likely to think that the problem
may also affect other parts of the brand or the com-
pany.7 However, if the transgression is very severe,
identification might not buffer against the ill effects of
a crisis, and the brand image takes a hit even among
identified customers.8
The Communication Arsenal
Having established the key questions about the sit-
uation, a manager can then select the appropriate
communications approach. The Crisis Communi-
cation Network summarizes the decision tree that
is the basis of our framework. (See “Crisis Commu-
nication Network,” p. 60.) Just as a mechanic
shouldn’t reach for a hammer when the task at hand
is to drill a hole, managers need to assess their situa-
tion accurately before picking a weapon from the
communications arsenal. And as the Crisis Commu-
nication Network makes clear, these approaches are
best used in various synergistic combinations.
Come Clean If the brand is truly at fault and the crisis
is severe, the only viable option is for management to
apologize quickly, express sympathy with the ag-
grieved parties and accept responsibility. In this era of
enhanced transparency, vigilant media and citizen
journalists, trying to cover up a real transgression is
futile. The goals are to reduce customers’ perceptions
of the brand’s responsibility and intentionality, and to
make clear that this will not happen again. Accepting
responsibility is often inhibited by legal consider-
ations; however, management has to weigh the
long-term effects of brand damage against potentially
shorter-term monetary damages due to litigation,
which might be unpreventable anyway.
All the bad news has to be communicated quickly
ABOUT THE RESEARCH
We have studied the effects of brand and company communication in different
critical situations and settings by conducting more than 34 experiments in the
United States and Germany.The consumers who participated in our research
were either recruited from an online consumer panel, by mall intercepts or on
university campuses. In all, nearly 3,500 people took part in the experimental
studies. We also reviewed relevant research articles in the fields of crisis com-
munication, consumer behavior, psychology and brand management published
by other scholars between 1949 and 2009.
From the data gathered in our own research and via review of the relevant
literature in the field, we were able to determine what situational factors mod-
erate the effectiveness of crisis responses and what communication strategies
are most effective to protect brand image and customer trust in different crisis
situations.This resulted in a comprehensive crisis communication framework
that helps managers to navigate a crisis by providing guidelines on what strat-
egy to choose depending on whether the transgression is real; whether it is
severe; and whether customers identify with the brand. By choosing wisely
from the communication arsenal, managers can positively influence custom-
ers’ perceptions of brand responsibility, intentionality, veracity and persistence.
and, if possible, all at once. Steadily trickling infor-
mation serves as a constant reminder of the crisis
and aggravates negative perceptions of the brand.
Transparency is essential. All the efforts undertaken
to contain the situation, as well as the regulations
and safety procedures that will prevent similar acci-
dents from happening, have to be communicated.
This information has to be clear, understandable and
free of jargon.
In a severe crisis, the company’s top manager has
to step up and serve as the first spokesperson. Crisis
communication has to help consumers make sense of
the event and affirm that management is dedicated to
preventing these types of events from occurring again.
If this information is made compelling, customers
may even end up with stronger attitudes toward the
brand than they had before the crisis hit.9
While words of apology and sympathy are neces-
sary, they may not be sufficient. Corrective action
may be necessary as well. After all, consumers may be
influenced by what a company says. But even more,
they are influenced by what it does and whether it lives
up to its words. In severe crises, giving those affected
by the situation clear and understandable instruc-
tions on how to handle the situation and where to get
help is essential. In the case of a product recall, this
involves detailed instructions about how to get the
product replaced or fixed, as well as corrective action.
The Toyota crisis exemplifies good and bad
aspects when tr ying to “come clean.” First, it
demonstrates the detrimental effects of neither acting
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C R I S I S M A N A G E M E N T
nor communicating swiftly and openly when faced
with a severe problem. Despite the fact that there were
indications of safety problems for a long time, Toyota
did not openly acknowledge them until it was heavily
pressured by NHTSA. Although the company’s man-
agement apologized and expressed sympathy, it did
so inertly. Toyota president and CEO Akio Toyoda
c o m m u n i c a t e d h i s f i r s t d e e p a p o l o g y t o
reporters at the Japan National Press Club in Tokyo.
Not until four months later was an apology addressed
directly at U.S. consumers. Exacerbating the delay,
this message came not from Toyoda himself but from
Jim Lentz, president and chief operating officer of
Toyota Motor Sales U.S.A. Inc., in a video posted on
the company’s website. Furthermore, a remedy to fix
the problem could not be offered swiftly, and when
offered, customers complained that the fix did not
work. To make matters worse, in April 2010 NHTSA
ordered Toyota to pay a fine of $16.4 million, on the
grounds that the company had covered up the defect
CRISIS COMMUNICATION NETWORK
The crisis communication network summarizes the decision tree outlined in this
article. Managers need to assess their situation accurately before deciding on a path.
These approaches are best used in various synergistic combinations.
Do customers
accusation
Is theIs the
identify with Reduce
true?
crisis
severe? the brand? perceptions of:
Yes
• Brand responsibility
• Brand intentionality
• Repeat occurrence
Yes
No
• Accusation as
reflective of brand
No
Yes
Yes
No • Brand responsibility
• Brand intentionality
• Repeat occurrence
• Accusation as
reflective of brand
• Accusation truth
• Brand responsibility
• Accusation as
reflective of brand
No • Accusation truth
Yes
No
• Accusation truth
Recommended
communication
responses
• Come clean
• Polish the halo
• Not just me
• Inoculation
• Come clean
• Yes, but…
• Not just me
• Come clean
• Yes, but…
• Polish the halo
• Rebuttal
• Vilifying the accuser
• Inoculation
• No, not I
• Rebuttal
• Vilifying the accuser
• Polish the halo
in the gas pedal in some of its vehicle models and de-
layed reporting the matter to regulators.
Finally, after much damage had already been
done, Toyota seriously started trying to “come clean.”
Clearly, the coming clean response involves various
activities of communication and action. In addition,
to overcome a potential backlash to the brand, this
approach should be accompanied by a “polish the
halo” strategy, which we will discuss next.
Polish the Halo When an apology becomes neces-
sary, the brand may also need to bolster its image so
that less-identified customers (those who do not iden-
tify strongly with the brand) do not become even
more negative toward the brand or transfer their neg-
ative beliefs about certain features to other features
of the brand — the “spillover” effect.10 One way to
prevent spillover is to polish the brand image. Less-
identified customers interpret information through a
broader lens and use their liking for the brand to de-
termine what the information means with respect to
other brand features.11 Brand advertising and public
relations activities should accompany or follow the
apology, without seeming to excuse the transgression
in any way. These actions could bolster brand image
immediately in the aftermath of a crisis.
Toyota has followed this strategy. In the context
of coming clean, the company started a campaign to
bolster its image by launching a TV advertisement
stressing its commitment to fixing the problems and
reminding consumers of Toyota’s long tradition of
safety and quality. Crucially, the ads showed only
Toyota factories in the United States, thereby im-
plicitly focusing consumer attention on the
numerous American jobs Toyota provides.
The polish the halo strategy has the advantage of
working even without consumers extensively pro-
cessing the message. This makes it a viable choice in
cases in which customers invest less attention in the
specifics of the crisis. This strategy is of special im-
portance for customers who do not identify with
the brand and who are unlikely to generate their
own arguments to refute it.
Polishing the halo works best when the customers
can be convinced that the company’s intentions are
good. For example, did Toyota abandon its strict ad-
herence to quality controls in favor of conquering an
ever larger market share? Consumers could infer that
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Toyota puts maximizing its profits ahead of its cus-
tomers’ safety, so these types of accidents were
inevitable and will be in the future. Or they could con-
sider this event a one-time transgression. If consumers
believe there is a recurring pattern of transgressions,
they are likely to abandon the brand altogether.
It’s important to realize that no amount of pol-
ishing the halo can inoculate a brand against future
severe crises. The massive Gulf of Mexico oil spill in
April 2010 from an offshore oil rig owned by BP
p.l.c. provides a sad illustration. For many years, BP
had been attempting to rebrand itself as a company
that also invests heavily in alternative energy. The
Gulf spill strengthens associations of the BP brand
with “Bad Petroleum.” The image of a green, virtu-
ous, “Beyond Petroleum” company was blown to
pieces with the explosion of the Deepwater Hori-
zon and the seemingly unstoppable gushing of oil
into a cherished natural environment.
The “Not Just Me” Response In many cases, a
company’s transgression, while real, is not some-
thing unique to the brand under attack — the same
thing could happen to any other brand. If consumers
understand this, they are less likely to generalize from
the crisis to other aspects of the brand. Consumers
need to be provided with information to consider
whether the crisis-provoking event was unique to
the brand. For example, could market conditions
have provoked this crisis for any competing brand as
well? Cues should be provided that help consumers
construct a narrative that absolves the brand of sole
responsibility for the event. This message can help
consumers put the transgression in perspective and
lead the way to brand forgiveness.
Take, for example, the case of Dell Inc. and its lap-
top computer batter ies. In 2006, repor ts of
combusting Dell laptops spread rapidly. The com-
puter maker acknowledged the threat to its customers’
safety and voluntarily recalled 4.2 million laptops.
More importantly, it pointed out that the cause of the
explosions was malfunctioning batteries — and that
those batteries were manufactured by Sony Corp. Just
a few weeks later, other computer makers also started
recalling laptops that ran on Sony batteries, vindicat-
ing Dell’s early recall as the right thing to do, and
making Dell appear particularly service oriented and
concerned about customers’ safety. In the end, most
of the public blame was laid not on Dell but on Sony,
which was accused of taking too long to accept
responsibility, disclose information and coordinate
the global recall. The “not just me” response should
be especially effective with identified customers.
These customers are prone to counterargument and
just need to be provided with ammunition in the
form of informational cues.
Note that consumers are likely to blame the
brand for the transgression if there is no easy alter-
native entity on which to pin responsibility. Most
auto parts, for example, are produced by suppliers
unaffiliated with the carmaker. However, if the cri-
sis is severe, as in the Toyota case, pointing fingers is
unwise because consumers are less likely to shift the
blame. They are inclined to attribute responsibility
to the company that they expect to ensure the qual-
ity of the end product.
A company’s track record is also a factor in
whether consumers hold the brand responsible for
a problem. Brands that have a history of similar cri-
ses are more likely to be held responsible for the
critical situation.12 On the flip side, consumers are
less likely to blame the brand for the transgression
if the brand has a favorable reputation, if consum-
ers trust the brand or identify with it.
Inoculation This is the only strategy that requires
anticipating a crisis. The idea is to prepare consum-
ers for a negative event by communicating a small
dose of the accusation together with counterargu-
ments that refute it — and to do this before the
accusation breaks. Inoculation is particularly effec-
tive if the crisis is likely to be severe and likely to
receive a lot of media coverage. If you believe that
even identified consumers will begin to question
your brand when the news hits, then it is wise to
adopt this preemptive strategy. Anticipate the criti-
cism and prepare consumers with counterarguments
prior to the attack. The inoculation message acts like
a vaccine and prevents the “crisis virus” from attack-
ing the brand. Consumers are fortified by the
message and ready to counterargue when the crisis
hits. Inoculation is useful even if the crisis-provoking
event is true — in this case, the role of the message
is to make consumers believe that the crisis is not as
severe as it will be made to seem in the media.
The effectiveness of the inoculation strategy was
Dell’s “exploding”
laptop batteries were
manufactured by
Sony — a fact Dell
pointed out early in
the crisis.
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C R I S I S M A N A G E M E N T
Fashion designerTommy
Hilfiger used multiple
strategies to counteract
rumors that caused a
boycott of the brand,
including appearing on
“The Oprah Winfrey Show.”
shown in a study of Wal-Mart Stores Inc. Consum-
ers who read an advertisement by the retailer that
contained messages like “Wal-Mart is accused of
paying employees poverty wages, but … our average
wage for full-time hourly store associates is almost
twice the federal minimum wage” were less likely to
believe an accusation on the wage issue than con-
sumers who had not received this kind of statement.
Interestingly, the inoculation even spilled over
to other accusations, and made people less likely to
believe assertions about Wal-Mart having nothing
to do with the company’s wage practices.13
The “Yes, but …” Response Management can re-
duce the power of accusations by augmenting a
“come clean” approach with a forthright explanation
of the reasons for the crisis, along with an argument
that downplays the damage done. Justification is es-
pecially needed for customers who do not identify
with the brand, because they will not generate these
excuses for themselves. Unless persuaded otherwise,
these customers are likely to believe that the trans-
gression was intentional and that the brand is to
blame. Further, they may believe that this is the “true
face” of the brand and that similar events are likely to
occur again. Providing reasons why the transgres-
sion occur red could make these customers’
attributions of blame less severe and help keep them
in the brand franchise.
Rebuttal The communication strategies discussed
above all apply when the crisis is truly the conse-
quence of something the company has done wrong.
But there are also instances in which the brand is not
at fault. In this case, the lack of response by the com-
pany might be interpreted as a confession. If the
crisis precipitated by such a false accusation is severe,
the company under attack must defend itself with a
point-by-point rebuttal of the spurious allegation.
In 1993, for example, PepsiCo Inc. was confronted
with multiple claims that it had sold cans containing
foreign objects such as syringes. The issue quickly es-
calated into a national news story. With a crisis plan
for product tampering in place and the support of the
Food and Drug Administration, which had found no
health hazards related to the claims, the crisis was
brought to an end within eight days. Pepsi’s most
vivid communication instrument was a video news
release that showed the process of a can-filling line,
which persuasively demonstrated that it was impos-
sible for objects to enter the cans during production.
The video was broadcast by the media, including
those outlets that had originally spread the claims.
This example shows the relevance of speed, which
is greatly boosted by good preparation, persuasive
depiction of disproof and the importance of the sup-
port of a trusted third party (in this case, the FDA).
The rebuttal response can also work for crises
that are not in reality very serious, but that are in
danger of being perceived as severe — especially by
customers who lack a strong identification with the
brand. Consumers who do identify with the brand,
in contrast, are likely to spontaneously question the
validity of an attack and can generate their own
counterarguments. They are less apt to need help to
counterargue when the crisis is not severe.
The rebuttal response requires good preparation.
If the disproof cannot be presented persuasively, it
might just appear defensive and backfire. If the re-
buttal is directed at the source of the attack, it can be
communicated in the form of a “vilify the accuser”
response, which we describe next.
Vilify the Accuser If a false allegation is severe, it
might be necessary not just to lay out a defensive argu-
ment but to go on the offense. The idea here is to
decrease the credibility of a claim by discrediting the
source of the accusation. This strategy should be used
with caution, because it could backfire if it is viewed as
being unfair or defensive. Even in minor cases, vilify-
ing the accuser could be useful in communicating to
less-identified customers (though it would be unnec-
essary with highly identified customers).
During the Toyota crisis, a Southern Illinois Uni-
versity professor claimed that he could induce
unintended acceleration in Toyota vehicles without
leaving any trace, thereby suggesting flaws in the
cars’ electronics. Toyota discredited the professor’s
research report and called it a manipulation that
could be contrived only in the laboratory. The com-
pany supported its rebuttal with its own research,
conducted by an expert and backed by a statement
from a Stanford University professor. Toyota pre-
pared a detailed video demonstrating its findings
and discrediting the source of the allegation, and
effectively spread the vilification in the news media.
62 MIT SLOAN MANAGEMENT REVIEW SUMMER 2010 COURTESY OF TOMMY HILFIGER
https://practices.13
Denial Under certain situations, a company could
use a strategy of flat denial. This approach makes
sense when the following holds: The accusation
against the brand is not true; target consumers iden-
tify with the brand; and these consumers do not
perceive the crisis to be severe. Other constraints also
apply. Denial should be used if the accusations have
gained traction, are clearly linked to the brand and
are widely reported in the media. Otherwise, denial
could be seen as an admission of guilt. In general, the
claim that the reported transgression did not in real-
ity occur, or that the brand has nothing to do with it,
has to be viewed as plausible.
Take the rumor that started in 1996 claiming that
fashion designer Tommy Hilfiger had appeared on
“The Oprah Winfrey Show” stating that he wished
people of color would not wear his clothes. As the
rumor spread on the Internet and consumers were
called to boycott the brand, the company was forced
to react. The company addressed the rumor on on-
line discussion boards and created a section on its
own website denying the claim. Hilfiger hired out-
side experts to try to trace the source of this rumor.
Winfrey herself denied the allegations on her show
in 1999 and posted a statement on her website that
Hilfiger had never appeared on her show. The rumor
proved so persistent, however, that in May 2007
Hilfiger did appear on the show in another attempt
to make clear that the allegations were false. His
appearance on the show and the support by Winfrey
(who called the rumor “a big fat lie that never hap-
pened”) seemed to lay the rumor to rest.
Trustworthiness of the brand’s denial message is
critical. Some ways to make this response ring true
include providing a narrative that absolves the
brand completely and using tactics that increase
message credibility. Message credibility can be en-
hanced by spokesperson characteristics, such as
expert status or unbiasedness. Getting a third-party
expert to speak in favor of the brand, such as the
representatives of the FDA who supported PepsiCo
in rebutting the syringe rumor, greatly enhances a
denial’s credibility.
The effectiveness of a denial strategy will work
best for identified customers. Customers who do
not identify with the brand are unlikely to devote
much attention to such a narrative; for them, a pol-
ish the halo approach may be more effective.
Conclusion
The goal of communication during a crisis is to dif-
fuse the episode’s negative impact. The company
embroiled in such a crisis should aim to explain to
consumers why the problem arose, and why the
brand should not be viewed more negatively as a
result of the event. Companies have to manage con-
sumers’ attributions of blame, as well as their
thoughts about the future of the brand, by providing
them with a clear narrative that answers their ques-
tions about the crisis. By choosing wisely from the
communication arsenal we have described, compa-
nies can avert backlash from consumers and perhaps
even strengthen the brand when a crisis hits.
The Toyota example offers several valuable lessons
for managers. The first and most important is the im-
perative for speed. In a 24-hour news cycle and given
the ubiquity of powerful, real-time communication
tools, companies should be ready to react almost
immediately when a crisis breaks. Toyota’s reluctance
to come clean quickly made matters worse.
This leads to the second lesson. Companies should
have a detailed plan on hand at all times — a protocol
that lays out step by step what should be done in case
of a crisis. This plan should include designating who
will act as spokespersons during a crisis, a list of the
relevant media contacts and boilerplate press release
wording (which will, of course, need to be refined and
made specific to address the particular crisis). The
crisis communication plan should also include a de-
tailed account of how to interact with people who
might be harmed in a crisis. Again, Toyota’s reluc-
tance to come forward with a spirited reaction to the
unfolding crisis showed that it did not know exactly
how to act once problems started to evolve into a
dangerous situation for the company.
The third point concerns the role of the CEO. Es-
pecially in severe crises, the apology should come
directly from the CEO and not some lower-ranking
official. Ideally, the CEO should also be the first per-
son at the company to issue a statement. Although
Toyota CEO Akio Toyoda did communicate to U.S.
consumers, he did so much too late in the crisis. This
delay raised speculation that he initially did not
consider the unintended acceleration problem to be
important enough to warrant his attention.
Fourth, hoping for a crisis to blow over without the
public taking note will almost never work. This seems
SLOANREVIEW.MIT.EDU SUMMER 2010 MIT SLOAN MANAGEMENT REVIEW 63
https://SLOANREVIEW.MIT.EDU
C R I S I S M A N A G E M E N T
to have been Toyota’s initial intention, and that passiv-
ity and hunkering down made matters worse. Once a
crisis breaks, affected companies have to come clean.
There is no way around that. After much wavering in
the beginning, Toyota finally seriously tried to come
clean, and it combined this strategy with a “polish the
halo” response. Due to the belated and initially
botched response to the crisis, however, Toyota will
have a hard time regaining its lost reputation.
Despite all the criticism, Toyota has a great advan-
tage: It had built a favorable reputation and strong
customer-brand identification before the crisis hit.
Therefore, if the crisis is managed well going forward
and, importantly, the technical fixes for the cars prove
effective, Toyota has a good chance of recovering from
the crisis. A survey conducted in February/March of
2010 compared the feelings of Toyota car owners
about Toyota’s handling of this crisis with the feelings
of owners of other makes of vehicles. Toyota owners,
the survey showed, believed more strongly that Toyota
appropriately handled issues with respect to the brake
pedal recall; they were more likely to say they believed
that this incident is an outlier. Also, Toyota owners did
not believe they would be less likely to buy a Toyota
vehicle in the future because of this incident, and they
considered Toyota to be one of the most reliable auto-
motive brands.14
As this article has made clear, when facing a crisis,
companies have a number of response strategies to
choose from. It is essential that companies gauge the
customers’ perception of the crisis correctly. As some
of the examples in this article show, there often is a
difference between how management sees a crisis and
how its customers see it. Once the characteristics of a
crisis are identified (e.g., its validity, its severity, iden-
tification of affected customers), a response strategy
can be chosen. However, since crises are complex and
dynamic, this framework is not a cookie-cutter solu-
tion, but a starting point to help companies ask the
right questions and come up with effective commu-
nications to reduce damage to the brand.
Gita V. Johar is Meyer Feldberg Professor of Busi-
ness at Columbia University’s Graduate School
of Business. Matthias M. Birk is a consultant in a
leading strategy consulting firm. Sabine A. Einwiller
is a professor of corporate communication at
Johannes Gutenberg University Mainz in Germany.
Comment on this article or contact the authors
at smrfeedback@mit.edu.
REFERENCES
1. M. Maynard, “House Panel SaysToyota Misled Public
on Safety,” NewYorkTimes, Monday, Feb. 22, 2010, sec.
B, p. 5.
2. “Toyota Victim Recounts ‘Near Death’Trip,” Feb. 23,
2010, www.cbsnews.com.
3. G.V. Johar, “Intended and Unintended Effects of
Corrective Advertising on Beliefs and Evaluations: An
Exploratory Analysis,” Journal of Consumer Psychology
5, no. 3 (1996): 209-230.
4. A. Roggeveen and G.V. Johar, “Perceived Source
Variability Versus Recognition:Testing Competing
Explanations for the Truth Effect,” Journal of Consumer
Psychology 12, no. 2 (2002): 81-91.
5. S.A. Einwiller and M.A. Kamins, “Rumor Has It:The
Moderating Effect of Identification on Rumor Impact and
the Effectiveness of Rumor Refutation,” Journal of
Applied Social Psychology 38, no. 9 (September 2008):
2248-2272.
6. S. Fournier, “Consumers andTheir Brands: Developing
RelationshipTheory in Consumer Research,” Journal of
Consumer Research 24, no. 4 (March 1998): 343–373.
7. R. Ahluwalia, R.E. Burnkrant and H.R. Unnava, “Con-
sumer Response to Negative Publicity:The Moderating
Role of Commitment,” Journal of Marketing Research
37, no. 2 (May 2000): 203-214.
8. S.A. Einwiller, A. Fedorikhin, A.R. Johnson and M.A.
Kamins, “Enough Is Enough! When Identification No
Longer Prevents Negative Corporate Associations,”
Journal of the Academy of Marketing Science 34, no. 2
(spring 2006): 185-194.
9. J. Sengupta and G.V. Johar, “Effects of Inconsistent
Attribute Information on the Predictive Value of Product
Attributes: Toward a Resolution of Opposing Perspec-
tives,” Journal of Consumer Research 29, no. 1 (June
2002): 39-56.
10. S. Einwiller and G.V. Johar, “Preventing Damage from
Accusations —The Case of WalMart” (presentation at
the 36th Annual European Marketing Academy Confer-
ence, Reykjavik, Iceland, May 22-25, 2007).
11. G.V. Johar, J. Sengupta and J.L. Aaker, “Two Roads to
Updating Brand Personality Impressions:Trait Versus
Evaluative Inferencing,” Journal of Marketing Research
42, no. 4 (November 2005): 458-469.
12. W.T. Coombs, “Impact of Past Crises on Current
Crisis Communications: Insights from Situational Crisis
Communication Theory,” Journal of Business Communi-
cation 41, no. 3 (July 2004): 265-289.
13. Einwiller, “Preventing Damage from Accusations.”
14. V. Mittal, R. Sambandam and U.M. Dholakia, “Does
Media Coverage ofToyota Recalls Reflect Reality?” Harvard
Business Review blog, Mar. 9, 2010, http://blogs.hbr.org.
Reprint 51415.
Copyright © Massachusetts Institute of Technology, 2010.
All rights reserved.
64 MIT SLOAN MANAGEMENT REVIEW SUMMER 2010 SLOANREVIEW.MIT.EDU
https://SLOANREVIEW.MIT.EDU
http://blogs.hbr.org
www.cbsnews.com
mailto:smrfeedback@mit.edu
https://brands.14
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Back to Top
Page 1
Chapter One—
Why Crises Are an Inevitable and Permanent Feature of Modern Societies
”There are no whole truths; all truths are halftruths. It is trying to treat them as whole truths that plays the devil.”
Alfred North Whitehead, Dialogues, 1953.
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Account: s8862125.main.ehost
Page 3
Since 1900, twentyeight ”major” industrial accidents have occurred worldwide, with “major” meaning fifty or more deaths. 1 The most disturbing part of this statistic is
that half of the twentyeight have occurred in the past fifteen or so years. There has been a sharp increase in the sheer number of accidents, and the time between them
is shrinking dramatically.
In 1982, five persons died from poisoned Tylenol capsules. It was a landmark event because it was the first time that a major pharmaceutical product had been
poisoned without prior warning. The perpetrators were never caught. The parent company, Johnson & Johnson, handled the situation so well that they became the
standard for crisis management (CM). Indeed, the modern field of CM is generally acknowledged to have started with the Tylenol poisonings.
Crises have become an inevitable, natural feature of our everyday lives. Hardly a day goes by without the occurrence of a new crisis, or the unfolding—better yet, the
“dragging on”—of old ones. In other words, crises have become an integral feature of the new information/systems age.
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Page 4
If there are any doubts whatsoever that crises have become a permanent and a prominent feature of our lives, they are quickly dispelled by the following list. The
names and the particular crises with which they are associated have become so familiar by now that it is no longer necessary to spell their exact details:
• Mad cow disease
• Nike
• Kathy Lee Gifford (child labor)
• Orange County
• ValuJet
• Columbine
• TWA Flight 800
• Swiss Air 100
• President Clinton’s impeachment
Although these recent crises are important, the names of some crises that occurred even earlier have become so well ingrained in our collective psyche that they have
become icons:
• The Three Mile Island nuclear disaster
• The Challenger explosion
• The Tylenol poisonings
• The explosion of Union Carbide’s chemical plant in Bhopal, India
• The Exxon Valdez oil spill
In short, crises are no longer an aberrant, rare, random, or peripheral feature of today’s society. They are built into the very fabric and fiber of modern societies.
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Page 5
Crises are no longer an aberrant, rare, random, or peripheral feature of today’s society. They are built into the very fabric and fiber of modern societies.
All of us everywhere are impacted daily by crises large and small. As a result, all of us, whether we work in large organizations or not, need to understand why crises
have become integral features of today’s world, and what, if anything, can be done to lessen their impact. We also need to understand what can be reasonably
demanded of large organizations so that they can be made as safe as possible, and hence, lower their potential for major crises as much as possible.
While not all crises can be foreseen, let alone prevented, all of them can be managed far more effectively if we understand and practice the best of what
is
humanly possible.
This book is the result of my more than thirty years’ experience in studying complex systems and applying that knowledge to messy problems in business and notfor
profit organizations, as well as numerous government agencies. 2 In particular, since the Tylenol poisonings in 1982, my colleagues and I have helped to found the field
of CM. 3 We have studied virtually every kind of crisis imaginable. In addition, we have also advised American and European companies, as well as major
government units around the world, on how to prepare for and manage crises more effectively. In the process, we have become privy to some of the most critical and
reveal
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ing information about leading organizations and institutions around the world.
What Is Crisis Management?
In contrast to the disciplines of emergency and risk management, which deal primarily with natural disasters, the field of CM deals mainly with man made or human
caused crises, such as computer hacking, environmental contamination, executive kidnapping, fraud, product tampering, sexual harassment, and workplace violence.
Unlike natural disasters, humancaused crises are not inevitable. They do not need to happen. For this reason, the public is extremely critical of those organizations
that are responsible for their occurrence.
As a result of our work, my colleagues and I believe that we have developed one of the best and most powerful frameworks for understanding why crises occur in the
first place, and what can be done to manage them better before, during, and after their occurrence. (This framework is the subject of Chapter Three.) Nonetheless,
even with the best of frameworks and the best of preparations, it is unfortunately still the case that not all crises can be prevented. This even holds true for those crises
that we know with almost complete certainty will occur. But the impacts of all crises can be lessened if one has a thorough understanding of the ”essential basics” of
CM. While not all crises can be foreseen, let alone prevented, all of them can be managed far more effectively if we understand and practice the best of what is
humanly possible.
What Is Different about Today’s World?
What is it about our modern information/industrial society that makes it more prone to crises? And, in particular, why
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have humancaused crises escalated especially in the last twenty years?
The vast majority of organizations and institutions have not been designed to anticipate crises or to manage them effectively once they have occurred. Neither the
mechanisms nor the basic skills are in place for effective CM. Most fundamental of all, the managers and executives of most organizations and institutions still do not
understand the ”new management and thinking skills” required to head off crises.
What’s tragic is that these new skills are not esoteric. They can be taught directly and simply. They are also some of the very same skills that are needed for success in
the new global economy.
CM is broader than dealing with crises alone. It provides a unique and critical perspective on the new management skills and the new types of organizations that will
be required in the twentyfirst century.
Many organizations still think of CM primarily as an exercise in public relations. They feel that the media unfairly manipulate unfortunate events, thus making them into
major crises. More to the point, they feel that the media are actually a cause of crises for organizations. From this perspective, the problem is to communicate
effectively with the media after a crisis has occurred. These same organizations feel that preparing for the media is all the protection they need. While “crisis
communications” is certainly an important aspect of effective CM, it is not the whole of it. Effective CM involves much more.
Signal Detection
For instance, signal detection is one of the most important components of CM. Long before they actually occur, vir
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tually all crises send out a repeated trail of ”early warning signals,” announcing the probable occurrence of a crisis. If these early warning signals can be picked up,
amplified, and acted upon effectively, then many crises can be prevented before they occur, which is the best possible form of CM. As a result, all organizations need
to constantly scan their entire operations and internal and external environment for early warning signals of potential “ticking time bombs” (latent defects) before it is too
late to correct. In short, they need to shift from being reactive to being continuously proactive. The slogan “If it ain’t broke, don’t fix it” needs to be replaced with a
new attitude: “If it ain’t broke, it soon will be; therefore, fix it now when you can still be the good guy, or fix it later and risk being labeled the bad guy.”
Denial
In the end, the main enemy, the main barrier to be overcome, is denial. Far too many organizations mouth the cliche´, “It can’t happen to us; therefore, we don’t need
to spend the money to prepare for crises.” They are wrong, dead wrong!
The main enemy, the main barrier to be overcome, is denial.
But denial is being overcome by the steady increase in the number of crises, which makes it harder and harder to put our heads in the sand. To those of us who work
in the field of CM, the issue is not whether an organization will have a string of major crises, but rather how, when, and why a string of crises will occur, what form
they will assume, and how prepared an organization is to handle them.
Denial is also being overcome by the growing number of model organizations that are doing their best to be better pre
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pared for major crises and thus to manage crises before they occur.
Strategy List for Chapter One
• Recognize that crises are an inherent part of modern societies.
• Realize that manmade crises are avoidable.
• Contemplate forms of signal detection to constantly scan the environment.
• Overcome denial—the worst enemy of crisis management.
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Chapter Three—
A Best Practice Model:
A General Framework for Crisis Management
”The only way to make bedrock, largescale change in an organization is to teach it how to be different, not how to do something differently.”
Jac Fitzenz, The ROI of Human Capital
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AN: 50485 ; Mitroff, Ian I..; Managing Crises Before They Happen : What Every Executive and Manager Needs to Know About Crisis Management
Account: s8862125.main.ehost
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One of the most important findings from studying a large number and a wide variety of different crises is that there is a method, or a general framework, for managing
major crises. If there weren’t such a method or framework, the situation would be truly hopeless. This is not to say that even with the best methods or frameworks one
can prevent all crises. Indeed, complete prevention is impossible. Nonetheless, with appropriate and advanced planning and preparation, one can limit substantially
both the duration of and the damage caused by major crises. In fact, it has been found repeatedly that those organizations that are prepared for major crises not only
recover substantially faster but with significantly less damage than those organizations that are not prepared. 1
There are other substantial benefits that accrue from being prepared for major crises. One, an organization’s major business objectives are less likely to be derailed.
For this reason, one is better able to make a strong case for top management giving their strong support for a major program in crisis management. Two, since there
are a number of key overlaps between CM and other important organizational programs—
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CM must not be viewed as another, standalone program. Unless it is integrated with other important programs, it will not succeed, and neither will the
other programs.
such as environmentalism, issues management, reengineering, strategic planning, and quality assurance—CM can help to effect the integration that is needed between
various key programs. Especially in today’s world, one cannot keep adding new and costly programs to an organization, no matter how important each individual
program is. In today’s world, one must take advantage of every possible synergy. For this reason, CM must not be viewed as another separate, standalone program.
Indeed, unless CM is integrated with other important programs, it will not succeed, and neither will the other programs.
A Best Practice Model
Exhibit 31 shows the components of a Best Practice Model for CM. The five factors—types/risks, mechanisms, systems, stakeholders, and scenarios—are the key
elements of the model that must be managed before, during, and after a major crisis.
Before discussing the model in detail, it is especially important to emphasize that no current organization of which I am aware does well on every one of the key
factors. The model is thus a composite of best practices drawn from a wide variety of organizations. In this sense, the model is an ideal. However, it is not utopian,
and there is no reason in principle why every organization cannot do well on each of the factors. In this sense, one of the main purposes of the model is to serve as
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Exhibit 31
The Components of a Best Practice Model for CM
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a benchmark against which all organizations should measure their current CM performance.
Types and Risks of Major Crises
Research demonstrates that crises can be sorted into the general categories, families, or types shown in Exhibit 32. 2 These are the major types of crises or major risk
categories that all organizations should be prepared for. Indeed, a robust ”crisis portfolio” consists precisely of the preparation for at least one crisis in each of the
various types or families shown in Exhibit 32.
Within each general family, specific crises share strong similarities. On the other hand, there are sharp differences between the general categories, families, or types of
major
crises.
Research in CM also reveals how the best organizations plan for major crises. The first finding is that they attempt to prepare for at least one crisis in each of the
families.
This finding is especially important for the following six reasons:
• First, most organizations only consider at most one or two families. For instance, most organizations prepare at least for natural disasters, such as fires, earthquakes,
or floods. Natural disasters occur with great regularity, and they strike all organizations equally. Thus, they are the least threatening to the “collective ego” of
organizations. For instance, earthquakes affect all organizations in the Los Angeles area equally. Furthermore, since one can neither predict nor prevent earthquakes,
there is not the blame associated with earthquakes as
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there is with other types of crises—such as workplace violence—that call for special human vigilance and mitigation.
However, even earthquakes have some degree of human blame or responsibility associated with them. For instance, even though we can neither predict nor prevent
earthquakes, humans are still charged with the responsibility of designing appropriate buildings that will withstand their worst effects. Humans are also charged with
designing appropriate recovery efforts for the victims of earthquakes.
Thus, even those crises that are due solely to ”acts of nature” still have a strong human component associated with them, as recent tragedies in Turkey and Venezuela
demonstrate so vividly. In the case of Turkey, the failure to design appropriate apartment structures led not only to their collapse but to the deaths of hundreds of
occupants. Thus, while Mother Nature may produce earthquakes, humans contribute to their worst effects through shoddy, irresponsible, and even criminal actions.
• Two, organizations that do broaden their preparations for crises other than natural disasters most often do it only for “core or normal” disasters that are specific to
their particular industry. For instance, no one really has to prod the chemical industry to prepare for explosions and fires, since such occurrences are part of the
industry’s daytoday operating experience. Such occurrences are considered a natural part of the territory. For another, no one really has to prod fast food
companies to prepare for food contamination and poisoning, since such incidents are also unfortunately part of their daytoday operating experience.
• Three, one does have to continually prod organizations to consider the occurrence of crises from any and all of the families in Exhibit 32 simultaneously. That is,
major crises occur not only because of what an organization knows, antici
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Exhibit 32
Major Crisis Types/Risks
pates, and plans for, but just as much because of what it does not know and does not anticipate. Organizations also need to consider that even when they have
prepared for a particular type of crisis and a specific form of it, major crises will still occur because of constantly emerging new environmental factors that give a new
wrinkle to old forms.
At this point, it is important to say a few words about the definition of a crisis. Up to this point, I have deliberately avoided defining a crisis, for while they are
important, definitions are only really important with regard to the purpose they serve. Unfortunately, it is not possible to give a precise and general definition of a crisis
any more than it is possible to predict with exact certainty how a crisis will occur, when it will occur, and why.
Nonetheless, a ”guiding definition” is that a crisis is an event that affects or has the potential to affect the whole of an organization. Thus, if something affects only a
small, isolated
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Major crises occur not only because of what an organization knows, anticipates, and plans for, but just as much because of what it does not know and
does not anticipate.
part of an organization, it may not be a major crisis. In order for a major crisis to occur, it must exact a major toll on human lives, property, financial earnings, the
reputation, and the general health and wellbeing of an organization. More often than not, these occur simultaneously. That is, a major crisis is something that ”cannot
be completely contained within the walls of an organization.” Although they are rare, a few crises, such as the one at Barron’s Bank a few years ago, have the potential
to destroy a whole organization. And, as the recent experience of the Los Angeles
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Police Department shows, a major crisis can exact a tremendous financial cost potentially in the billions of dollars.
• Four, every organization should plan for the occurrence of at least one crisis in each of the various families or types for the reason that each type can happen to
any organization. For this reason, all of the various types must be considered explicitly.
Every organization should plan for the occurrence of at least one crisis in each of the various families or types for the reason that each type can happen
to any organization.
For instance, consider product tampering. Product tampering does not apply only to food or pharmaceutical organizations. All organizations are vulnerable to a form
of product tampering that applies specifically to them. For instance, computers are an integral part of every organization. As a result, the true value of computers is
neither their hardware nor their software. Rather, it is the information that they contain about customers and other key stakeholders. For instance, a person or persons
gaining access to and tampering with an organization’s key records could seriously affect that organization’s products and services.
An interesting example is the famous French manufacturer of encyclopedias, Larousse. Apparently, the French are avid collectors and eaters of mushrooms. At
particular times of the year, they literally go into the forest with their Larousse encyclopedias at their side. In one section of the encyclopedia there are two facing
pages. One side has pictures of the mushrooms that are safe to eat, and the other side has pictures of the unsafe mushrooms. For some unknown reason, whether
intentional or not, the labels on the two pages in one edition were reversed. Thus, the safe mushrooms were labeled unsafe,
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and vice versa. This is a prominent example of product tampering. The moral should be absolutely clear: One ignores all or any major types of crises at one’s peril!
• Five, one fortunately does not have to prepare for every specific type of crisis within each of the families. If this were required, then the task of CM would be
rendered both impossible and hopeless. Instead, it has been found that, within limits, it is acceptable to merely prepare for the occurrence of at least one type within
each of the families. The reasoning behind this is as follows: If no crisis ever happens precisely as one plans for it, then the critical factor is doing one’s best to think
about the unthinkable prior to its occurrence. Indeed, it has been found that just thinking about the unthinkable prior to its occurrence makes one much more able to
think on one’s feet and hence to recover from a crisis once it has occurred. The fact that one has anticipated the unthinkable means that one is not paralyzed when it
occurs.
If each of the specific types of crises within a particular family share strong similarities, then all that really matters is that one has given serious consideration to each of
the families and not necessarily to the particular members within each family. This is not to say that over time one should not attempt to prepare for a broader and
wider range of crises, both within and across the families. It merely means that to start on the difficult and onerous road of CM preparation, one need not prepare for
everything simultaneously, which is both an impossible and hopeless task.
One of the reasons why I am extremely critical of traditional risk analysis, and as a result, counsel against it, is that it mainly selects only those crises that one has
already experienced in the past or with which is familiar. Traditional risk analyses mainly lead one to construct models of the probability of occurrence of various risks.
These probabilities are based on historical data of the occurrence of past crises or on various analytical models. The models traditionally give high
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weight or high ranking to certain types of crises to prepare for, and conversely, low weight or low probability to others. The fallacy behind this procedure is that it is
precisely those crises that have not yet occurred to an organization that need to be considered.
The fact that one has anticipated the unthinkable means that one is not paralyzed when it occurs.
In effect, one is caught in a vicious loop. One does not prepare for something until it has happened, and then it may be too late for the organization to recover from the
particular crisis. That is, the crises that an organization is not prepared for have the potential to destroy an organization. Thus, the strategy of spreading one’s risk
across all of the families attempts to correct for this limited oversight.
• Six, another important reason for preparing for at least one crisis in each of the families is that in today’s world any crisis is capable of setting off any other crisis and
in turn being caused by it. That is, every crisis is capable of being both the cause and the effect of any other crisis. For this reason, the best organizations not only
prepare for each individual crisis that they have selected as part of their crisis portfolio, but they also attempt to prepare for the simultaneous occurrence of multiple
crises.
Organizations that are prepared for crises have done so by studying past crises and looking for patterns and interconnections between them. They have generated
visual maps to better understand how crises unfold over time and how they reverberate both within and beyond the organization.
Again, it is not enough to be prepared for individual crisis in isolation. In today’s world no crisis ever happens in isolation. For this reason, one’s CM preparations are
not effective
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if one does not consider the impact of every crisis in an organization’s crisis portfolio on every other crisis.
In short, CM is strongly systemic.
Like total quality management or environmentalism, if CM is not done systemically, then it is not being done well.
Like total quality management or environmentalism, if CM is not done systemically, then it is not being done well.
When my colleagues and I perform a crisis audit of an organization, one of the things we especially look for is the range and scope of the crises that are prepared for
as well as of those crises that are not prepared for. To do this, we deliberately do not give people a copy of Exhibit 32. To do so would alert them to the broad range
of different types of crises. Instead, we deliberately ask the openended question, ”What would you consider to be a crisis for your organization?” We then ask them
what crises they believe their organization is prepared for and why, and what crises their organization is not prepared for and why. In addition, we ask such questions
as what they think their organization will do well in the heat of a crisis, and what it will not do well.
In this way, we are able to obtain their informal and implicit “maps” of Exhibit 32. That is, we are able to obtain a portrait of the crises that their organization even
considers, let alone those it is adequately prepared to handle. In addition, by interviewing an appropriate number of individuals, we are also able to see the similarities
as well as the gaps that exist in the thinking of the organization with regard to types of crises.
Mechanisms
One of the other findings of CM research 3 is that there are a relatively small number of mechanisms that are extremely
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important in planning for and responding to major crises before, during, and after their occurrence. Indeed, the fact that these mechanisms apply before, during, and
after a major crisis shows why effective CM is not merely a case of responding or reacting to a major crisis after it has occurred.
Most serious students and workers in the field of CM acknowledge that the best form of CM is preparation for a major crisis before it has occurred. For this reason,
those of us who work and do research in the field of CM know that it is not CM plans per se that are important in preparing for a major crisis. Rather, it is an
organization’s CM capabilities that are all important.
Well in advance of their occurrence, all crises send out a trail of early warning signals.
The various CM mechanisms are for anticipating, sensing, reacting to, containing, learning from, and redesigning effective organizational procedures for handling major
crises. Like total quality management or environmentalism, if CM is not done systemically, then it is not being done well. Far in advance of their actual occurrence, all
crises send out a trail of early warning signals. If these signals can be picked up and acted upon prior to the occurrence of a crisis, then a crisis can be prevented
before it occurs, which is the best possible form of CM. Since we will talk about ”signal detection” in Chapter 6, we simply mention its existence and importance at
this point. The key point is that signal detection mechanisms have to be in place and operable long before a crisis occurs or they will not function in the heat of an
actual crisis. Furthermore, without the proper signaldetection mechanisms, an organization not only makes a major crisis more likely, but it also reduces its chances to
bring it under control. Because
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crises can expand quickly, early signal detection is vital. In addition, one has to have an appropriate range of signal detection mechanisms, since a signal detector for
one type of crisis in Exhibit 32 will not necessarily be appropriate for the other types.
Except in cases of criminal malfeasance or negligence, blame and fault finding are not to be encouraged. The main emphasis should be on nofault
learning.
Even with the best of signal detection mechanisms and programs, crises are inevitable. For this reason, one of the most important aspects of CM is damage
containment. As its name implies, the purpose of damage containment is to keep the unwanted effects of a crisis from spreading and hence affecting uncontaminated
parts of an organization. For instance, damage containment mechanisms are common in the oil industry. Although they are not perfectly effective, especially given the
size and the nature of a particular oil spill, the appropriate mechanisms are nonetheless under constant redesign and improvement to keep spills from spreading. As in
the case of signal detection, damage containment mechanisms for one type of crisis will not necessarily be appropriate or effective in containing others. Thus, a
systematic and systemic program of CM tries as much as is humanly possible to ensure that a variety of damage containment mechanisms is in place and is constantly
maintained.
Two of the most important mechanisms reveal why the vast majority of CM programs are not effective. These concern postcrisis learning and the redesign of systems
and mechanisms to improve future CM performance. Unfortunately, few
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organizations conduct postmortems of crises and near misses, and those that either do not perform them correctly or do not implement their findings. The purpose of
such sessions is not to assign fault or blame, but rather to examine the key lessons that need to be learned so that future CM performance can be improved. Except in
cases of criminal malfeasance or negligence, blame and faultfinding are not to be encouraged. The main emphasis should be on nofault learning. That is, it should be
on the key lessons that need to be learned as well as those that have not been learned in the past, and why. The same emphasis has to be placed on the redesign of
systems so that the effects, if not the probabilities, of future crises can be lessened.
Systems
Exhibit 33 shows the various systems that govern most organizations. The five components that are key in understanding any complex organization are:
1.
Technology
2. Organizational structure
3. Human factors
4. Culture
5. Top management psychology
Exhibit 33 is known as the ”onion model” of CM. 4 As we peel off the layers of an organization and get beneath its surface, the key factors that drive an
organization’s behavior become exposed.
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Exhibit 33
The ”Onion Model”: The “Layers” of an Organization
Technology
Let us start with the surface or outer layer of the model. In today’s world, all organizations contain complex technologies. These range from computers that process
key information to larger plants and processes that manufacture products. Even those organizations in the service area are still involved with complex technologies.
Technology is often the most visible part of an organization, i.e., it can be seen from the highway. Even though most
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of us may not understand the intricate details of a chemical processing plant, we can at least see the various ”protrusions.”
The key thing about technology is that it neither exists nor functions in a vacuum. It is run by alltoohuman beings, who are error prone. Whether we like it or not,
human beings get tired, suffer from stress, or become irritated, all of which contributes to intentional and unintentional errors. The field of “human factors” is precisely
that branch of knowledge that exists to assess the causes of human errors and to design systems that, as much as possible, will eliminate or decrease the effects of
human errors.
A common example is an airplane cockpit. To the uninitiated, an airplane cockpit is an exercise in extreme chaos at best. The controls are bewildering in themselves.
They are laid out in such a fashion that an amateur literally cannot make sense of them, let alone operate them correctly. Yet human factors engineers have created the
best possible layout of controls to minimize the chances of catastrophic error for pilots, who often have to operate under stressful conditions. The same considerations
are obviously just as critical in the operation of chemical and nuclear power plants.
The next important thing to recognize about technology is that as much as it is run by humans who make errors, it is also embedded in complex organizations that also
introduce different sources and kinds of errors. These errors result from the different and multiple layers of an organization across which messages and communications
have to travel. They also result from the reward systems that reward certain kinds of behavior and attempt to extinguish other kinds of behavior. All of these factors
can both help and hinder the right information reaching the right people in a timely fashion so that the right decisions can be made. For instance, when these factors
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don’t work appropriately, as in the case of Exxon Valdez, then critical time is lost in getting the right people to the scene of a crisis in order to deal with it in a timely
and appropriate manner.
Exhibit 34 (see page 46) shows the potential interactions between the subsystems of Exhibit 33. That is, it shows that the operation of technology is affected by
people and the organizations in which it is embedded, etc.
Organizational Structure and Culture
To get at the underlying layers of an organization, and to understand how the various subsystems can interact, one has to be privy to the inner workings of an
organization. This requires that we take an even deeper look inside an organization. To do this, we have to examine in detail the policies and procedures that govern an
organization’s behavior.
The deepest parts of an organization reside in its culture and in the psychology of its top management. These two layers are the most difficult to get at, and for this very
reason, the most critical determinants of an organization’s CM performance.
Defense Mechanisms
Exhibit 35 shows some of the key components of an organization’s culture and its relationship to CM. One of the first and most important discoveries regarding CM
was the identification and the assessment of organizational culture. 5 It was found that organizations, like individuals, make use of various defense mechanisms in
order to deny their vulnerabilities to major crises and hence to justify why they did not need to engage in effective CM. The various mechanisms can not only be
identified, but are easily sorted and labeled.
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Exhibit 34
Interactions among the Layers of the Onion Model
Exhibit 35 is merely a small sampling of the wide variety of defense mechanisms that organizations use to deny their vulnerabilities to major crises. What is both
interesting and important is that these mechanisms follow almost to the letter the classic Freudian defense
mechanisms that apply to individuals.
For instance, the first item in the table is denial. This mechanism completely denies an organization’s vulnerability
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to crises. Somehow or another, the organization is exempt from a whole class of crises, if not from crises altogether. The next item is the classic Freudian mechanism
of disavowal. Unlike denial, disavowal recognizes the existence and the threat of a major crisis, but it downplays its importance or seriousness. In other words,
disavowal diminishes the size, the magnitude, or the importance of a crisis.
Exhibit 35 is important because it can be used to assess both the kinds of defense mechanisms that an organization uses as well as the extent to which they are used.
In effect, the
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mechanisms constitute an organization’s culture with regard to CM. For instance, an organization that subscribes to a preponderance of the mechanisms in Exhibit 35
almost ensures that it will not take CM seriously. As a consequence, the organization will have dramatically increased its odds that it will experience a major crisis. It
also seriously lengthens the time that it will take the organization to recover from a crisis.
Organizations use a variety of defense mechanisms to deny their vulnerability to major crises. These mechanisms follow the classic Freudian defense
mechanisms that apply to individuals.
Stakeholders
Stakeholders involve the broad range of internal and external parties who have to cooperate, share crises plans, and participate in the training and the development of
organizational capabilities in order to respond to a range of crises. Stakeholders range from internal employees to external, city, community, state, national, and even
international parties, such as the Red Cross, police departments, armies, and fire departments, all of whom may be called upon to help in a major crisis. What is key
about stakeholders is that important relationships among them have to be worked on years in advance if an organization is to develop the capabilities and the smooth
functioning that are required in the heat of a major crisis.
Scenarios
Good scenarios are the ”integrative glue” that binds all of the preceding factors together. A good CM scenario is the “best
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A good CM scenario is the ”best case, worst case” scenario that one can construct with regard to how a crisis will affect an organization.
case, worst case” scenario that one can construct with regard to how a crisis will affect an organization. That is, a good crisis scenario involves the occurrence of a
type of crisis that the organization has neither considered nor has prepared for. In addition, the crisis should not only occur at a completely unanticipated time, but at
the worst possible time, such as over a holiday weekend. Furthermore, a good scenario involves the breakdown of the most takenforgranted, welldesigned, and
wellperforming systems. It should include a chain reaction of crises—related or not related—happening all at the same time. In effect, a good crisis scenario is a plan
for how the unthinkable can and will occur.
Concluding Remarks
All of the preceding factors constitute not only a set of ideal benchmarks by which any organization should evaluate itself, but the scorecard that the media will use to
evaluate and to ask questions about an organization’s crisis performance. This is precisely why it is important for an organization to undergo crisis training and
preparation. In short, it is the reason why an organization has to ask the toughest questions of itself.
No matter how hard an organization is on itself, I can guarantee without qualification that the outside media—one of the most important of all stakeholders—will be
even harsher. For this reason, a successful crisis audit of an organization is not only that which points out the most serious weak
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nesses of the organization, but one that is absolutely and ruthlessly blunt and honest. Although the prime purpose of such an audit is not necessarily to offend people,
the report should be so honest as to cause those who prepared it to be fired!
In the end, effective CM comes down to two main questions: ”How much reality can an organization bear to learn about itself with regard to its crisis strengths and
weaknesses?” and “How much is an organization willing to invest to correct its weaknesses and improve upon its strengths?”
Strategy List for Chapter Three
Integrate crisis management with other programs; do not make it a separate program.
• Create a crisis portfolio that prepares the company for at least one crisis in each of the seven categories: economic, informational, physical, human resources,
reputational, psychopathic acts, and natural disasters.
• Don’t limit the crisis portfolio to just natural disasters or to disasters specific to your industry.
• Don’t rely on traditional risk analysis, which concentrates only on those crises that have occurred in the past.
• Manage the five factors involved in a crisis: stakeholders, mechanisms, types/risks, systems, and scenarios.
• Look for patterns and interconnections in past crises.
• Generate maps to understand how a crisis develops and reverberates within and outside of the organization.
• Consider the impact that one crisis will have on the other seven categories of crises. Will it generate new crises?
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• Set up mechanisms to detect the early warning signs of a crisis.
• Set up damage containment mechanisms.
• Conduct postmortems of crises and near misses.
• Avoid using such meetings as a means to assign blame but rather concentrate on improving signal detection and crisis prevention.
• Examine the five systems that govern an organization: technology, organizational structure, human factors, culture, and top management psychology.
• Determine how crises can develop from these systems, and how you can reduce errors.
• Identify the defense mechanisms the company uses to promote denial that crises can happen to them.
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