No one expects a crisis to hit. That’s why they are so disruptive.
When something really bad happens, turmoil follows. And crises are inconsiderate; they happen at the most inconvenient times — the middle of the night, weekends or even major holidays.
I spent many years in the bicycle business, where a big crisis was a safety related recall. If a bike fails unexpectedly someone usually gets hurt, sometimes seriously, and such accidents could be fatal. That meant a recall was an “all hands on deck” scramble to identify the problem, contain the products, get them back, protect consumers and customers and resolve accidents or claims.
We learned a valuable lesson. Follow the Boy Scout motto: Be Prepared.
Everyone tries to produce to quality standards. The better the quality and the higher the standards, the less likely a crisis. However mistakes are made, often involving simple oversights. (e.g., Could toy makers have foreseen the rash of lead content problems from China?)
Worse yet, a “brush fire” can be created by a false report of a problem and the crisis that results from this can be almost as bad as the “real one.” A crisis threatens a company’s greatest assets — its reputation and good name — its brand image. The Audi car brand was almost killed by “phantom acceleration” - an issue that was actually user error and confusion. In today’s interconnected, instant communications environment a rumor, a story, a claim of a real problem can spread like a “wild fire,” damaging companies and reputations at light speed. Of course, when a real crisis event occurs, this happens with even more intensity.
In the past decade, we’ve all seen crises mishandled (Katrina) and I’ve had the good fortune to see how a crisis can be handled properly, containing the damage, managing the message and avoiding being “tried and convicted in the media” — or blogosphere — before all the facts are even known.
I will share the lessons from my years as President of the largest bicycle company in the United States, and my more recent involvement as a consultant and/or a director with companies from the food industry, the chemicals industry and many others industries. (A disclaimer is in order here: some of my new knowledge comes from my association with Levick Strategic Communications where I serve as an advisory board member.)
We’ve all heard, “An ounce of prevention is worth a pound of cure.” That certainly applies in being prepared to deal with a crisis. Just consider some of the most common crises: natural and man-made “disasters” like earthquakes, hurricanes (remember Katrina), fires, explosions; those caused by hostile acts (like 9/11); the Enron debacle; and more recently the “bailout” repercussions on Wall Street.
The kinds of crises are too numerous to name, but all of them dictate a few similar steps for being prepared.
Here are steps for dealing with a crisis in your business:
Step One: A Crisis Management Group
First, form a crisis management group in the company who will come together in the event of a crisis. Include legal, financial, operational, sales, marketing and product people and above all, crisis communications and web/media communications specialists. A key member is “the boss” — the CEO, President or General Manager — who sponsors and attends/leads the meetings. In the absence of a current crisis, to “be prepared” this group should meet 3 times a year, to consider the risks, review current (active) issues, and consider new potential issues.
Some companies are forming risk management functions to assist in this, and hiring risk management specialists. Many companies are also hiring outside specialists to help them be prepared - before a crisis actually occurs. If the company is either already in, or considering a high-risk market, that’s a big topic, but even the most mundane situations can blow up. The same goes for threatened or actual lawsuits, and in today’s globally interconnected markets, international mistakes or misbehavior can create as bad a crisis as those made here at home.
Remember the problems with lead content in toys (China), tainted green onions (Mexico), with spinach (California), and with contaminated Peanuts (Georgia-USA). All were unexpected; all were serious, too. To learn from examples of how smart people are thinking about and handling crisis management, visit Bullet Proof Blog.
Step Two: Knowing What to Do
Second, carefully consider what might go wrong (or has in the past) and what steps need to be taken to gain control of the situation (crisis).
Check your balance, review recent transactions and pay your bill on the go.
