When "It" Hits the Fan: Top 10 Mishandled Crises of 2011

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For 16 years I’ve stressed the need for 1) speed in crisis communications, 2) the need for a top of the line Crisis Communications Plan that dictates rapid communications, and 3) having a plan with 100 or more pre-written and pre-approved communications templates. I’ve emphasized that leaders who are arrogant and in denial will compound the effects of the crisis. Also, a key element of my teaching is that most crises are smoldering crises, that give you time to make the crisis go away before it ignites; but a smoldering crisis also gives you time to prepare a statement and take the issue public on the time and date of your choice.

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  • Great observations Judy. I was rather shocked when I did look up the real financial losses to Netflix. It exceeded what I expected. I'm not sure if the numbers were global or only U.S.
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  • Gerard, although I agree that Netflix dropped the ball in communicating its changing 'business' model in the USA, in Canada (where it was ONLY introduced as a streaming option) it is going gangbusters.

    I'm not positive, but I also believe it was introduced in Mexico (the third 'North American' country) as streaming-only, as well.

    Ergo, I'm not convinced the 'business' impact of slowly phasing out the mailing option to American customers is going to have nearly the (long-term) share price impact that so many predicted.

    It would be interesting to know if the US is treated differently regarding financial statements and share price than its international components (i.e., setting up head offices in Canada and Mexico).

    Thanks for the comprehensive review, which looked outside of the USA for a change. I also appreciated you taking the time to outline what constituted a 'crisis' at the front end. Too many people jump immediately to a subjective list of 'PR disasters,' without indicating why they are a crisis (or #epicfail) and what are the paramatres re: a timeline.

    Judy Gombita
    http://www.prconversations.com (PR Conversations)
    http://windmillnetworking.com/category/public-relations-2/ (Windmill Networking)
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When "It" Hits the Fan: Top 10 Mishandled Crises of 2011

  1. When "It" Hits The Fan Top 10 Mishandled Crises of 2011
  2. Top 10 Mishandled Crises of 2011 Copyright 2011 Diversified Media, LLC | gerard@braudcommunications.com | www.braudcommunications.com <ul><li>For 16 years I’ve stressed the need for 1) speed in crisis communications, 2) the need for a top of the line Crisis Communications Plan that dictates rapid communications, and 3) having a plan with 100 or more pre-written and pre-approved communications templates. I’ve emphasized that leaders who are arrogant and in denial will compound the effects of the crisis. Also, a key element of my teaching is that most crises are smoldering crises, that give you time to make the crisis go away before it ignites; but a smoldering crisis also gives you time to prepare a statement and take the issue public on the time and date of your choice. </li></ul><ul><li>In 2011, the Top 10 Mishandled Crises all include the following: </li></ul><ul><li>Poor communications </li></ul><ul><li>Smoldering issues that reached a flash point that could have been controlled through crisis management </li></ul><ul><li>Arrogance and denial by those in leadership positions </li></ul><ul><li>Failure to learn from an institution’s own past mistakes or the past mistakes of others </li></ul><ul><li>The influence of Social Media in escalating the flash point and outcome of the crises </li></ul><ul><li>The world is a living classroom of crises. My hope is that the observations in this list will guide you to better manage your own Crisis Communications through a well written Crisis Communications Plan and rapid communications. </li></ul><ul><li>Gerard Braud (Jared Bro) </li></ul>
  3. 1. Arab Spring Copyright 2011 Diversified Media, LLC | gerard@braudcommunications.com | www.braudcommunications.com The generational gap between young people who use Social Media and older people who use it far less was personified during the Arab Spring . Tunisia, Egypt and Libya all had revolutions that unfolded in open sight via Social Media, right under the noses of and in the faces of political leaders. The Arab Spring was a classic smoldering crisis, with a flash point far beyond what leaders expected. Powerful leaders in government and in corporations are often arrogant and in denial of how a small issue can blow up into a larger crisis. I often speak to leaders about the effects of their denial and arrogance . This article called, Leadership When “It” Hits the Fan may be something you’d like to share in your organization. In many cases, a wise leader can make changes that will eliminate and snuff out the smoldering crisis before it ignites. Changing behavior is the best form of crisis management. Using Facebook and Twitter, Wael Ghonim to help ignite the smoldering crisis in Egypt.
  4. 2. Fukushima Nuclear Accident Copyright 2011 Diversified Media, LLC | gerard@braudcommunications.com | www.braudcommunications.com The Japanese earthquake and tsunami would be classed as a sudden crisis because, although likely to happen, the exact time and date were unpredictable. But the nuclear accident that followed is a classic smoldering crisis in which owners of the nuclear power plant failed to proactively connect the dots. While their nuclear plant was built to withstand an earthquake, their cooling water pumps and back up electrical supplies were vulnerable to the tsunami. Without back-up electricity and cooling water pumps, every nuclear plant in the world has the potential to melt down to some degree. The lesson you should take away is the need to connect the dots before a crisis. That means you must annually assess your vulnerabilities, and trace each vulnerability to its root cause. I suggest a major Vulnerability Assessment before writing a Crisis Communications Plan, then subsequent assessments once a quarter. The Japanese earthquake and tsunami couldn’t be prevented, but putting back-up electrical systems and extra cooling water in an elevated location above the flood zone was a logical option.
  5. 3. Penn State Sexual Abuse Allegations Copyright 2011 Diversified Media, LLC | gerard@braudcommunications.com | www.braudcommunications.com This crisis has been difficult to write about because of public outrage about the sexual abuse that allegedly occurred. But to study the crisis, one must put their outrage aside and study what happened in the background. If, as it appears, the university knew for years of accusations against Sandusky , a good Crisis Communications Plan would have instructed communicators to prepare a holding statement. At the same time, leaders should have taken firm action against Sandusky, then proactively held a news conference to expose the allegations. The financial impact and fallout to the coaching staff would have been significantly smaller had the university leadership exposed this smoldering crisis on their own terms years ago. Instead, needless mass firings followed as blame was placed on the wrong people, revenues dropped significantly and the brand is damaged for a long time to come. After a stellar career, Penn State football coach Joe Paterno’s reputation was forever tarnished because university leaders failed to proactively communicate and expose the allegations of sexual abuse against former assistant coach Jerry Sandusky.
  6. 4. Herman Cain’s Women Copyright 2011 Diversified Media, LLC | gerard@braudcommunications.com | www.braudcommunications.com The first thing you do in a presidential campaign is to look at what dirt your opponents can dig up on you. If the dirt is bad, you then have to decide if you can explain your way out of it, which means you need Media Training on how you will respond when confronted with the dirt. Herman Cain obviously failed to do this, because when first asked if he had ever been accused of sexual harassment, he responded to the reporter by saying, “Have you ever been accused of sexual harassment?” I’d expect such a reply from a 10-year-old on the play ground, but not from someone who is a leading presidential contender. This crisis, like others on our list, is a classic smoldering crisis, punctuated by a so-called leader who is arrogant and in denial of just how bad the smoldering crisis could be when ignited. Maybe next time he’ll learn that a better response may have been, “I’m rubber and you’re glue…” Media Training and having a non-spin answer for every potential question is a critical part of Crisis Communications. Cain failed in the same way that many before him have and as many after him will. Answering a question with a question doesn’t work. Blaming the media doesn’t work.
  7. 5. Anthony’s Weiner Copyright 2011 Diversified Media, LLC | gerard@braudcommunications.com | www.braudcommunications.com Taking a picture of your body parts with a cell phone is always a crisis waiting to happen. However Congressman Anthony Weiner proved this point better than anyone could, when he sent the lewd photo via Twitter to a young female. Weiner realized what he had done, then Tweeted that his account was hacked. A timeline of events showed he then spend days denying he had done anything wrong. All the while he held too many news conferences and eventually called one reporter a “jackass” during a news conference . As we’ve see in other crises, the faster you admit fault and take responsibility, the faster the crisis ends and the impact of the crisis is minimized. Weiner waited too long and caused a bad situation to get worse, leading to heavy fallout. Weiner admitted fault and resigned. Had he fessed up sooner, perhaps he could have kept his job. The above photo was sent via Twitter by Congressman Anthony Weiner. He lied, he denied, he was arrogant and eventually had no alternative other than to resign. The faster you address a crisis, the faster the crisis goes away.
  8. 6. Occupy Wall Street Copyright 2011 Diversified Media, LLC | gerard@braudcommunications.com | www.braudcommunications.com This was a two part crisis. Part 1 was the pure lack of focus by the unorganized mass known as Occupy Wall Street. Part 2 is that government officials in every city that had an Occupy movement failed to act decisively to identify and end their crisis. Had the protestors had focus, they would have perhaps gained more respect and experienced less ridicule. For all their effort, they achieved no American equivalent to the Arab Spring and appeared to be just noisy gongs. Had political leaders assessed the situation with a true Vulnerability Assessment, they would have seen that they were not fighting against Freedom of Speech, but really fighting against unlawful overnight camping in public spaces. If the protestors had assessed their vulnerabilities, they would have learned that the lack of focus would lead to a lack of respect. Had political leaders assessed their vulnerabilities, they would have seen that camping was the crisis they could attack.
  9. 7. Netflix Copyright 2011 Diversified Media, LLC | gerard@braudcommunications.com | www.braudcommunications.com Two words: Focus Group Netflix's brilliant business model catapulted them to success among their youthful, budget-minded, Social Media savvy demographic. Netflix was so successful it nearly made category killer Block Buster go bust. In June, a poorly written blog post announced changes in plans and pricing. Immediately 800,000 subscribers cancelled their membership. It took nearly 3 months and huge financial losses for a second blog post to follow , essentially saying, “oops.” But it was a well written oops from the CEO, that pointed out the need for communications. The post also had a corporate leader recognizing that arrogance was the cause of his crisis (we’ve mentioned leadership arrogance in several of our crises). Sadly, the damage is done, with 800,000 fewer customers and the stock price plummeting from $298 per share to $75 per share. Making a major change to their business model has been a crisis for many companies. For Netflix, the crisis meant a loss of subscribers and a huge tumble in stock prices. This brand is as popular as the government agency that delivers their envelopes.
  10. 8. Bank of America Copyright 2011 Diversified Media, LLC | gerard@braudcommunications.com | www.braudcommunications.com A classic smoldering crisis can occur when a corporation fails to listen to the complaints and concerns of a single customer. After imposing a $5 fee for some customers to use their ATM Card, Bank of America failed to give the complaints of 22-year-old Molly Katchpole their full attention. She collected more than 300 signatures from other angry customers, then amplified her anger using Social Media. This crisis is also another in which older, non-users of Social Media failed to see the power that young, frequent users of Social Media have. Note to BofA: Did you see any of that news coverage about the Arab Spring thing? A lesson for every corporation is to use Social Media more for listening and less for talking. Your customers will tell you exactly what they think of you. Failure to give great customer service to one customer can cause a crisis. Social Media allows a single unhappy customer to reach the world in seconds.
  11. 9. Virginia Tech Shooting December 8, 2011 Copyright 2011 Diversified Media, LLC | gerard@braudcommunications.com | www.braudcommunications.com Sadly and ironically, as Virginia Tech was appealing a $55,000 f ine for not communicating fast enough during its 2007 massacre with 33 deaths, another shooting happens on campus. The school used text message alerts and sirens to warn students of this latest shooting, but still failed to hold a news conference until 5 hours after the first event. Social Media and texting are useful for alerting, but first class Crisis Communications should include a live news briefing within 1 hour of the onset of a crisis. This allows you to demonstrate human emotion through visual appearance and voice inflection. Necessary details and emotions cannot be fully conveyed in 140 characters. This video outlines some of my thoughts as the event was unfolding. VT did better, but after their failures in 2007, they should be world class at Crisis Communications and not just “better but not best.” Every university should learn from VT’s mistakes. VT Facebook clips above show the 5 hour delay from the 1 st notice at 11:36 a.m. and the 4:30 p.m. news conference.
  12. 10. Calif. Nurses Strike Copyright 2011 Diversified Media, LLC | gerard@braudcommunications.com | www.braudcommunications.com Nothing says bah humbug like nurses going on strike at Christmas, thereby abandoning their patients; you know, the people that nurses, by their career choice, are supposed to care for. Yet nurses in California decided to go on strike. It is clear the nurses have not provided good Media Training for their spokespeople, who have said they don’t think their replacements can adequately care for the patients. Unions and strikes rely heavily on public sympathy to pressure management to cave to the usual demands for higher wages, more benefits and better working conditions . What nurse could possibly think the public will be sympathetic toward them when they abandon the sick, especially at Christmas. Their mixed message that cuts at hospitals will put their patients in jeopardy is dumb, considering their walkout definitely puts patients at risk. Bad messaging = bad crisis. Online videos from the nurses show them discussing having picket parties, while they appear happy and smiling on the picket line. Meanwhile, cynical patients and family members wonder if the nurses care more about their own personal welfare and income than the welfare of the patients.
  13. About Gerard Braud Copyright 2011 Diversified Media, LLC | gerard@braudcommunications.com | www.braudcommunications.com Gerard Braud (Jared Bro) is known as the guy to call when “it” hits the fan. Companies and organizations on 5 continents depend upon Gerard to be their expert for writing Crisis Communications Plans and Media Training. Among his most amazing creations is a system that allows companies to write an entire Crisis Communications Plan in just 2 days.   Gerard is also the author of the book , Don’t Talk to the Media Until… 29 Secrets You Need to Know Before You Open Your Mouth to a Reporter.   For 15 years, Gerard (Jared) was an award-winning journalist on the front line of breaking news, with affiliate reports seen around the world on CBS, NBC, CNN and the BBC. Since leaving the news business in 1994, Gerard (Jared) has dedicated his life to helping spokespeople and organizations communicate more effectively in critical times.  
  14. Additional Resources Copyright 2011 Diversified Media, LLC | gerard@braudcommunications.com | www.braudcommunications.com • www.braudcommunications.com • www.crisiscommunicationsplans.com • www.schoolcrisisplans.com • www.DontTalkToTheMedia.com • BraudCasting - Free Podcast www.braudcasting.com • [email_address] • Twitter @gbraud • Gerard Braud on Facebook • Gerard Braud on Linkedin • 985-624-9976

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