Crisis Communications: Avoiding the Titanic Scenario

1. Crisis Communications:Avoiding the Titanic Scenario Philip J. Kitchen University of Hull, UK p.j.kitchen@hull.ac.uk

2. In 2001, the now defunct airline, Ansett, was enmeshed in a major safety crisis when its fleet of 10 Boeing 767’s was grounded by the Civil Aviation Safety Authority (CASA) after safety checks revealed engine pylon cracks. The grounding caused flight cancellations, mass disruption of passengers, reputation damage and multi-millions of dollars in lost market share for Ansett. Ansett Example

3. The authors describe the mid-2003 government-ordered withdrawal of almost 2000 complementary and alternative medicines, across multiple brand names, in Australia and New Zealand. See Eagle, Rose, Kitchen, Hawkins, ‘Regulatory Oversight or Lack of Foresight? Implications for Product Recall Policies and Procedures, Journal of Consumer Policy, 2005. Pan Pharmaceutical

4. Global Ads and Importance of Topic Call for Papers An International Conference on “Corporate Responsibility and Global Business: Implications for Corporate and Marketing Strategy” Hosted by London Business School July 13-14th, 2006 London Business School is pleased to invite submissions to the third in a series of international corporate responsibility conferences (following the Haas conference in 2005 and the Boston conference in 2003). Topics for inclusion again range widely. We are particularly interested in papers that explore the implications of corporate responsibility, globalisation and global business for business and marketing strategy. Research papers can be either empirical or conceptual. A selection of papers presented will be considered for a special issue of the California Management Review. Proposal submission • deadline (1-page abstracts) is December 31st, 2005.

5. The Nature of Corporate Crisis and Management’s Response Crisis is defined as: “a people-stopping, show-stopping, product-stopping, reputationally defining event, which creates victims and/or explosive visibility” (Source: Jim Lukaszweski, in Kitchen & Schultz, 2000)

6. Value and Belief Systems Affect Crisis Response • Avoid poor, delayed, or unnecessary communication NEED 1. An effective communication policy model 2. A method for determining prioritization of actions and communicating during urgent situations 3. An accountability process, which can move the entire response to conclusion, while simultaneously regaining credibility and re-establishing reputation.

7. 1. Crisis Communications Policy Model Standards • Openness, accessibility • Truthfulness • Responsiveness • Transparency

8. 2. Communication Priorities • Address fundamental cause • Assist and care for those directly affected • Inform and involve employees • Alert those indirectly affected • Manage the news media

9. 3. Accountability • Seven Essential Steps • Candor • Explanation • Declaration • Contrition • Consultation • Commitment • Restitution

10. But, there are other (well-known) and avoidable models Behaviour 1: Denial • Victim confusion • Testostoris • Arrogance • Search for the guilty • Fear of the media • Management by whining around

11. Community versus corporate priorities in terms of timeline Community Priorities High 1 Health and safety 7 2 Natural environment 6 3 Social environment 5 4 Cultural environment 4 5 Technical considerations 3 6 Financial considerations 2 7 Economic considerations 1 Low Corporate Priorities

12. An (unnamed) example: Fast Food Day 1: Sicknesses, denial, media speculation, reluctant statement. Notify Dept of Health. Day 2: Admit possibility, blame suppliers, caution to media. Day 3: First deaths reported, meat inspectorate condemned, increased ads, blame industry. Day 4: More deaths. Company cites safety codes. Day 5: More deaths. Company sponsors study of food safety. Refers to problem as ‘a government problem’. Whistleblowers speak out. Day 6: More deaths. Litigation commenced by consumers, criminal charges levied. Company request consumers come to them, not government, media, or law. Day 7: Company forced to close down

13. Don’t Ignore Issues and Crises “An issue ignored is a crisis ensured” Dr Henry Kissinger

14. Circumstances • Disaster • Criminal acts • Terrorism • Ethics failure • Financial / business problems • Clash of cultures • Science/Consumer activism • Changing public values • Demands for public consultation • 24/7 intrusive media • Don’t trust “experts” or “government” Equal real or perceived risk

15. ORIGIN ORGANISATION MEDIATION / AMPLIFICATION RESOLUTION Issue management Early issue identification Risk issue life cycle Opportunity to influence Difficult to influence Formal constraints Period of increasing awareness Media coverage Pressure Potential Emerging Current Crisis Dormant Development (Source; Tom Watson, 2005, used here with permission)

16. ORIGIN ORGANISATION MEDIATION / AMPLIFICATION RESOLUTION Issue management Early issue identification Now apply Accountability or Avoidability Opportunity to influence Difficult to influence Formal constraints Period of increasing awareness Media coverage Pressure Potential Emerging Current Crisis Dormant Development

17. Seven years after its original launch, Mercedes-Benz has introduced an all new A-Class. And as the old one managed a staggering 1.1 million sales, the importance of this new A-Class to Mercedes overall business is huge. Given the history of the original A-Class, this one needs to be right. And right from day one. When the original was launched in 1997, it went straight onto the front page of national papers across Europe. Unfortunately, that was because it had a tendency to fall over whilst in the hands of Scandinavian journalists attempting the famous 'elk test' avoidance manoeuvre. Mercedes went into damage control mode and within weeks, had engineered an electronic stability control to fix the problem. Still, the damage had been done, with some journalists criticising the ride and handling of the subsequent car. Worse was to come, as question marks began to appear over the A-Class's quality, from a standpoint of cabin materials as well as build. Enough time has passed that Mercedes now feels free to make elk jokes at its own expense. But tellingly, the first thing journalists were told about the new car was how good the latest generation of ESP (electronic stability control) is. Read on to see whether issues over quality, ride and handling have also been buried.

18. ‘There are some dark and disturbing clouds on the horizon. The darkest is the tendency of many large MNC’s to make international public relations management the victim of benign neglect.As a result of this neglect (this function) has not developed in large corporations as it should. While this may seem to bode well for the public relations agencies and consultancies that are filling the void, I believe that over the long term it can spell trouble’ Source: Foster, cited in Wakefield, 1999)

19. Raise - not the Titanic, - but the Corporate Umbrella “The ribs of the umbrella refer to the integrated communication activities in support of the overall communication system. Lose, mismanage, or damage one of the communication ‘ribs’ such as crisis management …., and the whole communication coverage of the organisation becomes unstable in the winds of change, … allowing turbulence to impact on corporation, strategic business, and brands” Source: Kitchen and Schultz - Raising the Corporate Umbrella, Palgrave-Macmillan, 2001.

20. Questions or Comments? Questions? Comments?