David: I think a lot of people’s first misperceptions when they hear “crisis management” is that we’re thinking about natural disasters, forest fires, floods, outbreaks of the Zika virus. But one of the reasons we need help understanding how to react properly to a crisis is that a lot of leaders don’t know they’re in one until they do something stupid and make it a whole lot worse.
Melissa: Yeah, or the organization is being pummeled by the media, and reputation equity is going down, share prices are going down, and all of a sudden they’re going, “Okay, what do we do now?”
David: So the first lesson may be realizing when you’re going to hit [a crisis].
Melissa: Not just realizing when you’re about to hit one, but [identifying] the organization’s top high-risk scenarios. Natural disaster usually fits into the top 10, but it’s certainly not the top 3, for example, [for which] we’d look at cyber security or perhaps an onsite industrial accident where people [get] injured or die in an explosion.
So [don’t] just detect when it’s happening, but understand what the most impactful and realistic risks are. Then from there say, “Okay, what would bring each of these incidents to crisis level, where the executive team is getting involved and it’s no longer business as usual?”
David: When it’s not business as usual is probably a big indicator that it’s time to actually respond to this thing.
Melissa: It’s funny because a lot of times, organizations that aren’t prepared haven’t thought it through in advance. If you think it through in advance, you have the luxury of being comprehensive and thoughtful, whereas in the heat of the moment you don’t.
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First of all, it’s emotional because you’re dealing with a crisis and stress levels are running high. Not to mention that your stakeholders [are] expecting consistent communication, which doesn’t give you the luxury of time either. But it’s funny how often a crisis response is basically, “Don’t worry, we’re still operating business as usual.” Whereas everybody else is going, “You’re not, you can’t be. So what are you hiding from us?”
David: It takes my mind to Wells Fargo. It didn’t seem like they were being fully forthright with everything that was going on, and the situation just kept getting worse.
Melissa: The Wells Fargo crisis was a crisis of culture. It stemmed right down to the fundamentals of the corporate culture, of the [incentives] that the CEO was giving to management and trickling down from there. And yet when you watch their crisis management, from a tactical, strategic point of view, they did everything almost perfectly. They said all the right things. For example, the CEO kept saying, “I’m holding myself accountable.” They said all the right things, but they never acted the right way, and actions speak louder than words.
When it’s a crisis of corporate culture, the only way to start managing it is to fix the culture, and that starts from the top down. The fundamentals were completely off, so it didn’t work.
“If you think it through in advance, you have the luxury of being comprehensive and thoughtful, whereas in the heat of the moment you don’t.”
David: [What if] they had done the exercise you had described, this idea of “What are our vulnerabilities?” I can’t believe that they didn’t know ahead of time. After you watch the movie or read the book The Big Short, you are amazed that no one took the time to go, “Okay, what would it take to bring the entire system down? What are the signs of that, and are those happening? Oh no.” That only a few people actually did that, versus these senior leaders, is one of those weird things. Like you said, it’s a culture crisis, but it’s hard to believe that they didn’t know that they had that issue.
Melissa: Either they didn’t know, or they didn’t take the time to figure it out, but either way, they were in the wrong.
David: You wonder if their strategy was just do everything right on the PR side and wait it out. Do you think what causes these failures is [that] we think, “Oh, it’s such a short news cycle. Let’s just hunker down and survive it, and then we don’t actually need to make those fundamental changes?”
Melissa: I won’t say that everybody has that mindset, but I see it often. Before the news cycle was so fast, you could get away with “No comment” because nobody was there to publicly call you out.
Yet now [there is,] with social media and mobile tech and Google. There are a lot of executives who fall back on that previous default, and every time that is attempted in a real crisis, it bites them. It [takes] longer for them to respond appropriately and meet the expectations of those that mean the most to their business. So the longer you wait, the more control you lose and the more reputation damage and bottom line damage you incur. It’s inevitable that you have to respond.
David: When the iPhone 7 came out, I got a pretty generous ribbing from all of my Samsung Galaxy friends about how much better their Note 7 was than my iPhone 7. And then all of their phones started lighting on fire, right? I remember the very first time I was traveling after the initial word started to spread, the airline was literally saying that you couldn’t have it on the plane. Powering down wasn’t even an [option]. [Later, the policy] pivoted, like, “You just have to power it down.” What’s going on here? All it’s going to take is one fire on some airplane for this to be huge immediately.
Melissa: Mostly we see organizations take their time to respond, so much [so] that they lose even more control, and a lot of speculation and rumors and sensationalization by the media happens as a result. Samsung was the opposite. They were so quick to respond that they ended up sticking their foot in their mouth because they had to retract and correct statements. They got in trouble with regulatory agencies because when you’re doing a recall in the US, you have to collaborate with the SCC, and they jumped the gun. So they had these great intentions of communication and transparency. “We don’t care about the bottom line, it’s about our customers and their safety!” And then that is actually what bit them. A few days later they had to correct all kinds of statements, and that caused much confusion and regulatory action.
“Just because it may not be preventable doesn’t mean there’s not a plan.”
David: Samsung was fast to respond, and the FAA [Federal Aviation Administration] was quick to respond with their regulation, but it seemed slow to respond with the explanation of why it’s going on.
Melissa: I work a lot with the government, the public sector, and they have this struggle but they’re getting better. I love the Boston [Police Department] as an example. [After the] Boston Marathon bombing, Boston PD was so quick to talk and activate their social media channels that they actually positioned themselves as the source of credible information throughout the management of the crisis, to the point that the media would not publish anything before confirming it on their channels. So government goes at their own pace, but there are some that really get it.
David: Another one that really gets it was Mayor Naheed Nenshi. During the Calgary floods he was everywhere.
Melissa: That was beautiful. There were these massive floods a couple years ago, and it wasn’t just the city of Calgary but the surrounding cities as well. As a result of Calgary’s effective communications, they were the only city that did not have any fatalities as a result of the floods. The Calgary PD’s account was tweeting so frequently that they actually got locked into Twitter jail, which is a thing. If you tweet too much, you get frozen out of your account until Twitter realizes you’re not spam and puts you back up.
Most emergency responders and government agencies would be like, “Okay what do we do now?” Whereas this one police officer just intuitively went, “Doesn’t matter, we’re using the right hashtags.” He jumped onto his own personal Twitter account and kept using the hashtags that everyone was following. There was no skipped beat. The communications continued to be seamless and effective.
David: In an age of social media, people are talking faster than you can respond. But this is also an asset because, like the Boston PD or the city of Calgary, you can use this asset to communicate fast if you want to.
Melissa: We have so many challenges that work against us in a crisis. [So it’s important to] put that thought into it beforehand, implement this crisis-ready culture, have a program that’s scalable and goes across every department, train your teams, understand who your stakeholders are (investors, customers, etc.), and know where they would intuitively go to if they heard that your organization was in crisis. Are they going to go to your website or Facebook page? Are they going to call you or email you? If we understand that, then we can identify the right strategies, the right means to streamline our communications to them. Technology today gives us unprecedented opportunities to do that. It’s incredible what you can find when you start looking at it not as a risk but as an opportunity.
David: Let’s talk about this term “crisis-ready culture” and what else there is to do. You mention having a system and knowing what needs to happen, and getting your people trained to be able to react to it. What does that look like?
“That’s really where you want to go, where the plan is like a comfort blanket, but the team just knows intuitively the right steps to take and the right decisions to make, and they feel empowered to [do so].”
Melissa: The first step is that we identify the risk. Then we dive deep into each of those risks because they’re all different. They all have different escalation points, points of entry for not just the incident to occur but also detection. We do exercises to look at all angles, all the different stakeholders that would potentially be impacted. What would be their expectation of the organization in those times?
Then we’re able to identify ways to mitigate the risk at some level. Not every risk is preventable, but if you don’t prevent the preventable, there’s no excuse. You become completely accountable for the crisis. Even if you are the victim of a brilliant cyber security hack, but you didn’t do everything in your capability beforehand to mitigate that risk, you’re going to be blamed. You’re going to lose stakeholder trust.
And then, we identify what’s not preventable, and prepare for it. So a lot goes into systems and protocols internally, but a lot also goes into communication. Organizations have been very good at the systems part of it. “What do we do if there’s an explosion? Do we have an emergency management plan? Do we have a business continuity plan?” That stuff has always been top of mind, whereas today we have this element of response and expectations. Every single one of your stakeholders has a platform to voice their discontent, and if it’s emotionally relatable and impactful, then that can go viral.
And then that becomes the subject: how terrible you are, how much you don’t care that this is happening, even though you’re doing everything you’re supposed to do behind the scenes. If you’re not communicating with those who matter most to your business, you’re going to fail at crisis management. So there’s this new dimension to crisis preparedness that needs to be very well thought-through.
When a crisis hasn’t occurred, you have the luxury of time. You have the time to gain buy-in, to gain approval for main message points and strategy, and then to figure out how you would execute on those comms to meet everybody’s expectations. You have that luxury now, [which] you will not have in the midst of a crisis, so it’s worth going through those motions.
David: I love this idea of preventing the preventable, which is a huge leadership lesson in and of itself. But also just because it may not be preventable doesn’t mean there’s not a plan.
Melissa: The crisis-ready corporate culture is more than just the plan. In the past, crisis-savvy organizations would have a plan and file it away somewhere, knowing that if the worst were to happen, they could pull it out. Today, with the speed at which everything happens and all of the factors that can escalate the severity of a crisis, you don’t necessarily have time to fall back on the plan.
So the plan is a tremendous exercise that should be undertaken, [as is] really diving deep into each of those pre-identified high-risk scenarios. But in order to get to that crisis ready culture, [you have] to train and empower your team on every level [so that they] understand everything. What risk looks like, what you should do with red flags, [how] to get it back to the right eyes to determine whether or not it is a crisis. What are the expectations of the stakeholders that they own relationships with? How can we better prepare them to meet those expectations so that it’s more of an instinct than a fallback onto a plan? That’s really where you want to go, where the plan is like a comfort blanket, but the team just knows intuitively the right steps to take and the right decisions to make, and they feel empowered to [do so].