TAKE TIME TO PREPARE FOR WORST-CASE SCENARIOS
Effective communication in crisis management
By Professor Dominique Turpin (August, 2006)
“No comment”. Those two simple words can shatter a company’s reputation and cost it millions in lost sales. How can you turn a corporate crisis into competitive advantage?
Crisis-management experts are unanimous in concluding that it is not a matter of if a company will be faced with a crisis, but when and how well-prepared executives will be to weather the storm. Take for example the rumour that potentially harmful bacteria were found in a McChicken Burger in Buenos Aires, Argentina. The news spread across South America via television and the Internet. Although no one was proved to have been made sick or placed at risk, the incident cost McDonald’s several million dollars in lost sales and damaged brand equity.
No company is immune
A potential crisis can be created by flawed products, blackmail by unscrupulous consumers, dishonest acts by employees or managers, the sudden death of a senior executive, terrorist acts or natural disasters. In any one of these situations, saying the “right” thing, showing real concern and compassion with actions that are consistent can save companies much trouble. Even if management perceives the crisis as “unfounded” or “unfair” because of below-the-belt attacks or because they underestimate the problem at hand, years of efforts aimed at building a strong brand and reputation can be ruined in the time it takes to say “no comment”.
The new context
The importance of communicating effectively in times of crisis is further reinforced by the growth of “instant information” networks. Thanks to the Internet, dissatisfied employees, angry customers and other disappointed stakeholders can easily spread information and false facts about products, services, suppliers and other business partners almost instantaneously. The proliferation of dedicated television news channels, such as CNN, BBC World and Al-Jazeera, and the increasing number of radio networks specializing in instant news, means that information is increasingly delivered “live”, making it harder for corporations to take the lead and control the quality of information disseminated to the global public. Rumours and false information can spread around the world as fast and as widely as the truth.
Several lessons drawn
From analyzing a number of recent business crises, including McDonald’s in Argentina, the recall of Bridgestone/ Firestone tyres in the US, tainted Coca-Cola cans in several European countries, the mismanagement of the Snow Brand milk scandal in Japan and the Swissair bankruptcy, we have drawn several lessons on how to prevent a communications crisis.
Even the most damaging event can be turned into a competitive advantage if it is handled properly.
We have identified six steps for crisis planning and six steps for dealing with a crisis once it occurs. You may read more about communicating in a crisis from the article that first appeared in EBF, European Business Forum entitled "When disaster strikes: communicating in a crisis". Professor Dominique Turpin teaches in the Orchestrating for Winning Performance program and the Program for Executive Development.