Crisis management and how your business can survive

Could your business cope with a crisis?


No entrepreneur should ever be heard to utter the phrase ‘crisis – what crisis?’ because ‘crisis – what crisis?’ as a policy is always wrong, as Coca-Cola found out to its cost.

Launched in the USA in 1999 as a bottled, purified water, Dasani had become number two behind rival Pepsi-Cola’s Aquafina brand. Taking the same formula and repeating it for the UK market must have looked like a breeze, but that wasn’t quite how it turned out. Coca-Cola committed £7m to the marketing of Dasani in the UK, focussing on the product’s purity. Ironically, it was this selling point which landed the company in so much bother.

Essentially, what Coca-Cola was going to do was take Thames Water straight from the tap, put it through a purification process and call it ‘pure’, a procedure no different from many of its competitors. So why did it all go wrong? Rumour has it that it started when retailers in Buxton phoned their local paper, and complained Coca-Cola was demanding they remove bottles of Buxton mineral water from their chiller cabinets and put Dasani in instead. Others say it came to light when a complaint was made to the British Food Standards Agency over the use of the word ‘pure’ in its marketing. Most likely it came from an article by Simon Mowbray of The Grocer magazine where he mentioned the source of the water in an article. It was common knowledge in the drinks industry at the time and Mowbray didn’t think anyone else would pick up on it. With the benefit of hindsight he now sees it more graphically. “It was a bomb waiting to go off,” he admits. The next step was when Press Association reporter Graham Hiscott saw the reference in The Grocer to the real source of Dasani. The following day, the story was splashed across the daily papers.

 

Despite the pages of negative press coverage, Coca-Cola persisted with Dasani. Executives protested they had simply been misunderstood and the drink was not just tap water but in fact the result of a highly sophisticated process to create the purest drinking water you can get. As far as Coca-Cola was concerned the source was all but irrelevant.

However, in addition to the PR problems, something else went wrong. The water had become contaminated with bromate – a cancer-causing chemical – and Coca-Cola admitted defeat. Immediately it withdrew all 500,000 bottles of Dasani in circulation. Since then Coca-Cola has also decided to withdraw its launches in both France and Germany.

The real problem was not the fact Dasani was based on water taken from the local water supply, it was that Coca-Cola was arrogant enough to think that if it hid the fact it could get away with it. The Dasani lesson is just the latest in a long line of major gaffes that goes to prove being evasive or pretending the problem isn’t there, ignoring the press and not being direct with your customers is a certain recipe for even more disaster.

What you should do

The spiral of decline that is a media crisis normally follows this pattern: A piece of information is picked up by a journalist and the company is asked for a response, normally with a very short timeframe. The piece is printed, and then the rest of the media pick up on it. The first article will consist of the piece of information with additional speculation, and no quote from the company.

The company in question then goes into a defensive mode, closes down all methods of communication and cherry-picks a few key journalists to talk to. The rest of the media has deadlines and acts on whatever information it has, which is precisely nothing, so they speculate on the speculation and report on what others have said. And this reporting on reporting can go on and on, so by the time the company finally gets around to clearing up the layers of misinformation it’s usually too late and the speculation has become accepted as fact.

Step one: prepare and plan 

It’s not likely that you will have a crisis on the scale of Dasani, but a local news story can have a big effect on a small company. So how do you get away from the spiral of decline? The first thing is be prepared. Of course, incidents can be unforeseen but research from the States has revealed 85% of crises affecting businesses are what’s described as ‘simmering’ – problems or issues just waiting for a chance to erupt. There might not be anything you can do to stop them, but there’s plenty you can do to brace your business for their impact.

Peter Ruff is a consultant at executive communications company The Aziz Corporation. As a former journalist and Head of Media Relations for the UK Chemical Industry, he’s had extensive experience of dealing with the media. “What you need is a clear and concise plan on what to do in the event of a crisis. Lots of companies tend to have plans as thick as a bible but totally useless in practice, as what you need at the time are clear principles and common sense,” he says.

Step two: get the right people together

What every potential disaster needs, along with a clear plan, is a ‘crisis management team’, with representatives from key parts of the business such as the legal, HR and financial departments, along with a designated company spokesperson. Calling in experts will also be a huge help in this area.

Xavier Adam, managing director, Xavier Adam Public Relations was working for an internet business on a wider public relations campaign when the company had a serious and not fully foreseen downturn in business. It had to cut right back, merging operations and making people redundant and the situation, through internal politics, had been handled very badly. “Incorrect information, but which made good news as it was negative, was rapidly circulated by an eager media. Understandably many, including the media, were keen to see a once arrogant industry giant descend in to bankruptcy. We expressed the reality that business was not as it had been. Projects of several million pounds in value disappeared in to thin air. The whole sector was taking a very severe knock,” he says. In this instance an honest appraisal helped quell what was a bad situation, preventing the business from going bankrupt in a matter of weeks, and eventually it started to win back work and rebuild its image.

There are many companies offering crisis management assistance, for a cost, but check out their credentials before you dive in otherwise it may be a case of the blind leading the blind. If you can’t find a company experienced in crises then use them as a quick way of getting to journalists, rather than advisors.

 Step three: get your message clear

“If you phone up a company and the spokesperson sounds unsure or flustered then you’re not going to believe them,” advises Ruff. “You’ve got to have a strong message otherwise your audiences both external and internal, such as staff, clients and suppliers, will not feel you’re in control.” You should also be prepared to cope with the problems of all this adverse publicity internally and make sure you’re all ‘singing from the same hymnbook’. It’s important that everyone in the company understands the full story. Keep your existing customers informed too as they could be your strongest supporters. So make sure they get the full story as well as the journalists. Some of your strongest supporters will be your customers, but remember they’re also members of the public so what they read in the newspapers or see on television could sway who they do business with – unless you are able to get to them first.

When it comes to what to say, in the vast majority of incidents, Ruff would always advise choosing emotion over logic. Rather than reading from a clichéd press statement, refusing to answer questions and focussing only on the technological details, instead show concern, empathy and sincerity. As a successful business person you’re fighting against a stereotype, so to get the press and public onside you need to show how the event has affected you personally, not just your bank balance. For example, when a British Midland plane en route from Heathrow to Northern Ireland crashed, killing 47 passengers, chairman Sir Michael Bishop made numerous television appearances where it was quite apparent just how the tragedy had affected him personally. His credible and sincere comments helped to win back the minds of the public, and ticket sales actually went up – the first time this has happened for any airline following a crash.

Step four: keep four : keep all avenues of communication open

Journalists don’t just look for information via press releases. They want to be able to get information via the phone, email, fax, and the web so make sure you put as much information out via all of these methods. Get an FAQ (frequently asked questions) section on your website and put up every answer to every question you can think of on there. If a journalist rings or emails with a new question that isn’t up there then add it. The idea is to drown out every problem with a flood of answers. And if you are not in a position to talk, or want to buy some time, don’t just have your PA or secretary fob off a media enquiry – they should treat the request for information like any other, offer to look into it, promise to call them back, and make sure they do.

When you are ready to speak, cherry-picking friendly journalists can help get your story out, but in times of crisis it can also help to create enemies. Talk to them all, don’t show any preferences, make the process as open as possible, but don’t feel forced into committing to a press conference. Oneto- one meetings are controllable, you can make your story fit their needs and it’s easier to deal with tricky questions. One-to-many (or many-against-one as it sometimes feels) is a recipe for disaster; it’s impersonal, difficult to handle, patronising and doesn’t work for many journalists if it’s too early in the day or too late, or it clashes with some other event. Remember you are not the only story out there.

On the whole you’ll find that the majority of journalists are English graduates, they are not biologists, chemists, nuclear weapons experts or the slightest bit technical in anything. Most of them also wouldn’t know which way up to hold a company report let alone know how to read one. So make sure you understand their level of technical competence and business-expertise before you start.

Once you have started speaking to the press, don’t patronise, don’t hide anything, don’t baffle them with science, but also don’t lie to them. The good ones will check the information you’ve told them with experts, others will pick up on things you mention and then get the wrong end of the stick.

The most important point to learn about this is don’t let the media make a mountain out of a molehill. If there’s something there, then come clean about it, before anyone has a chance to make it into something more.

ACTION POINTS

? Create a crisis action-plan detailing contact emails and phone numbers for all key personnel, and detailed product information. Regularly update the action-plan.

? Select a PR company that understands your sector and knows the key journalists in the industry, as well as having access to the wider media.

? Circulate up-to-date contact details for key customers.

? Develop relationships with local media.

? Build a media section on your website with archives of press releases and include an FAQ section for information about your products and services.

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