Crisis Communications - How To Manage Negative News

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Stephanie Fox, Kris Patrow & David Erickson of Tunheim Partners discussed crisis communications and how to manage negative news on April 2, 2009.

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Crisis Communications - How To Manage Negative News

  1. 1. Crisis Communications How to Manage Negative News
  2. 2. Tunheim Partners Thinking Tunheim Partners is constantly tracking and analyzing trends, data and research in our specialized practice areas to ensure the most effective and timely information drives our strategy. Tunheim Partners’ top-level talent is constantly focused on innovative, thoughtful, smart and results-focused strategies that deliver to the right audiences for our clients. The channels of information and targeted messages are multiplying daily. Tunheim Partners uses insight and strategy to deliver and maintain the attention of targeted audience considering who, what, when and where.
  3. 3. What is a crisis? <ul><li>Major, unpredictable event or cultural change </li></ul><ul><li>Poses a risk to an organization’s reputation </li></ul><ul><li>Threatens to harm an organization and its stakeholders </li></ul><ul><li>Common elements </li></ul><ul><ul><li>Timing and/or scope is unexpected </li></ul></ul><ul><ul><li>Decisions must be made quickly </li></ul></ul>
  4. 4. Crises may or may not be “emergencies” Acquisitions Layoffs CEO succession Online ad YouTube Video Nationwide salmonella outbreak Pinelake Rehab & Health Online ad YouTube Video
  5. 5. Protecting and preserving a good reputation <ul><li>According to the Harvard Business Review, 70 – 80% of a company’s market value comes from hard-to-assess intangible assets such as brand equity, intellectual capital and goodwill. </li></ul><ul><li>Given this, organizations are especially vulnerable to anything that damages their reputations </li></ul><ul><li>Crisis preparedness and crisis management is critical to protecting and preserving a good reputation </li></ul>
  6. 6. Crisis Communications Planning: Why it’s Important <ul><li>During the next five years 83% of companies will face a crisis that will negatively impact profitability by 20-30%. </li></ul><ul><li>-Oxford-Metrica study 2006 </li></ul><ul><li>Impact on shareholder value: </li></ul><ul><ul><ul><li>Companies with effective crisis plan: 5%+ (positive impact) </li></ul></ul></ul><ul><ul><ul><li>Companies without plan: net negative cumulative impact of 15% on stock price up to one year after the crisis </li></ul></ul></ul><ul><ul><ul><li>-Dr Rory Knight and Dr Deborah Pretty, (1995, Templeton College, University of Oxford - commissioned by the Sedgewick Group). </li></ul></ul></ul>
  7. 7. Why It’s Important (continued) <ul><li>Your credibility and reputation is heavily influenced by the extent of your active and consistent responses during crisis situations. </li></ul><ul><li>Cases where positive reputation has helped market value: Apple, GE, Google </li></ul><ul><li>Cases where lack of proactive reputation management hurt when crisis occurred: BP, Exxon, Enron </li></ul>
  8. 8. A crisis puts your reputation at risk <ul><ul><li>Affects more people than you think </li></ul></ul><ul><ul><li>Lasts longer than you expect </li></ul></ul><ul><ul><li>Becomes a permanent part of your reputation </li></ul></ul>
  9. 9. Why “Exxon” still means “Oil Spill” 20 years later <ul><li>Exxon did not have a crisis communications plan or team in place to handle such an event; therefore it didn’t… </li></ul><ul><ul><li>Respond quickly enough </li></ul></ul><ul><ul><li>Communicate broadly enough </li></ul></ul><ul><ul><li>Help clean up enough </li></ul></ul><ul><ul><li>Assume responsibility for spill or </li></ul></ul><ul><ul><li>harm to environment </li></ul></ul>
  10. 10. Effective Crisis Communications = Protecting Your Reputation <ul><li>Preparation </li></ul><ul><ul><li>Assess current reputation: does it need work </li></ul></ul><ul><ul><li>Imagine all possible crisis scenarios </li></ul></ul><ul><ul><li>Assign core crisis communications team </li></ul></ul><ul><ul><li>Develop and practice crisis response and communications </li></ul></ul><ul><ul><li>Monitor and participate in media coverage of your company </li></ul></ul><ul><li>Execution </li></ul><ul><ul><li>Respond immediately; get out ahead of crisis </li></ul></ul><ul><ul><li>Customize communications to all audiences </li></ul></ul><ul><li>Resolution </li></ul><ul><ul><li>Follow through </li></ul></ul><ul><ul><li>Make changes; make amends </li></ul></ul>
  11. 11. The Media Landscape has Changed <ul><li>News cycle is 24/7 </li></ul><ul><li>Every media outlet has an online component </li></ul><ul><li>“ Citizen journalists” </li></ul><ul><li>constantly “report” </li></ul><ul><li>Bloggers </li></ul><ul><li>Posts on YouTube </li></ul><ul><li>Facebook groups </li></ul><ul><li>Patient “review” sites </li></ul>
  12. 12. Consumer Behavior has Changed <ul><li>63.7% of the U.S. adult population </li></ul><ul><li>reports having looked for health </li></ul><ul><li>information for themselves or others </li></ul><ul><li>online at least once in the previous </li></ul><ul><li>12 months. </li></ul><ul><li>-Health Information National </li></ul><ul><li>Trends Survey 2005 </li></ul><ul><li>66% of health seekers began their last online health inquiry at a </li></ul><ul><li>search engine </li></ul><ul><li>27% began at a health-related website </li></ul><ul><li>72% of health seekers visited two or more sites during their last health </li></ul><ul><li>information session </li></ul><ul><li>- Pew Internet & American Life Project, 2006 </li></ul>
  13. 13. Case Study: Stryker Medical “ That Must Be Bob. I Hear His New Hip Squeaking”
  14. 14. Case Study: Stryker Medical (continued) <ul><li>Timeline </li></ul><ul><ul><li>“ Squeaky hips” recalled on January 22, 2008 </li></ul></ul><ul><ul><li>Only response was a corporate news release online </li></ul></ul><ul><ul><li>Citizen YouTube video uploads May 1 & 12, 2008 </li></ul></ul>
  15. 15. Case Study: Stryker Medical (continued) How bad news travels fast <ul><li>See report on TV </li></ul><ul><li>Hear about it on radio </li></ul><ul><li>Hear about it from friends </li></ul><ul><li>See it online </li></ul><ul><ul><li>May or may not recall brand </li></ul></ul><ul><ul><li>Will recall “squeaky hips” </li></ul></ul><ul><ul><li>That’s what they’ll search for </li></ul></ul><ul><ul><ul><li>Google it </li></ul></ul></ul><ul><ul><ul><li>Search YouTube </li></ul></ul></ul>
  16. 18. All YouTube Video Statistics <ul><li>6 YouTube videos generated </li></ul><ul><ul><li>55,493 Views </li></ul></ul><ul><ul><li>48 Ratings </li></ul></ul><ul><ul><li>29 Favorites </li></ul></ul><ul><ul><li>60 Comments </li></ul></ul><ul><ul><li>30 “Embeds” </li></ul></ul><ul><ul><li>led to 957 clicks </li></ul></ul><ul><li>Video gets repurposed </li></ul>
  17. 19. Case Study: Stryker Medical - Results <ul><li>Stryker Medical share price dropped 17% January – May 2008 </li></ul><ul><li>Negative conversation continues </li></ul><ul><li>My problem continued to worsen with the squeaking and popping getting louder and worse pain. I eventually elected to have them removed (by the same suregon - because no other surgeon will dare to try and correct someone else's mistake). Even though this was a Stryker problem I needed to go back to the same surgeon. The explants were extremely damaged whcih did not show on xrays. I am very happy with the new parts, no NOISE, no pain. I hope that congress gets this law passed </li></ul><ul><li>barbmartin2000 (2 months ago) </li></ul><ul><li>If you or a loved one were seriously injured as a result of a defective Stryker Hip Implant, you may have valuable legal rights. </li></ul><ul><li>Squeakyhips (2 months ago) </li></ul><ul><li>I replaced my hip &quot;again&quot; in August 2008 with a Stryker ceramic ball and plastic cup. No more squeaking! Still no word from Stryker on why the squeaking or how they might compensate me for expenses. I could hardly walk towards the end because of pain and discomfort. I am happy to report this hip seems to be working fine! </li></ul><ul><li>mikemuelleraz (2 months ao) </li></ul>
  18. 20. Case Study: Stryker Medical – Lessons Learned <ul><li>Prepare for scenarios that may seem “outside the box” </li></ul><ul><li>Constantly monitor and participate in what is being said about your company </li></ul><ul><li>Do proactive reputation management before a crisis occurs (i.e., positive media stories, increase your “share of voice”) </li></ul><ul><li>Be ready to respond quickly and engage all of your audiences </li></ul><ul><ul><li>Stryker didn’t engage the customer </li></ul></ul>
  19. 21. Effective crisis communications planning is “reputation insurance” <ul><li>A positive reputation requires that at least 20% of stories in the leading media be positive, no more than 10% be negative, the rest neutral. </li></ul><ul><li>– Harvard Business Review, February 2007 </li></ul><ul><li>Generate good media coverage about your company; get to know the journalists who cover your industry BEFORE a crisis strikes </li></ul><ul><ul><li>Merck still recovering from 2004 Vioxx crisis </li></ul></ul>
  20. 22. Case Study: Tylenol Scare 1982 <ul><li>Situation </li></ul><ul><ul><li>Seven people died after taking cyanide-laced Tylenol capsules </li></ul></ul><ul><li>Response </li></ul><ul><ul><li>Immediate nationwide recall </li></ul></ul><ul><ul><li>Assumed responsibility </li></ul></ul><ul><ul><li>CEO appeared in TV ads and press conferences informing consumers of company’s actions </li></ul></ul><ul><ul><li>Introduced tamper-resistant packaging </li></ul></ul>
  21. 23. Case Study: Tylenol (continued) <ul><li>Result </li></ul><ul><ul><li>Public confidence restored </li></ul></ul><ul><ul><li>Sales swiftly bounced back to near pre-crisis levels </li></ul></ul><ul><ul><li>Able to position itself as a market-leader with the introduction of tamper resistant packaging </li></ul></ul>
  22. 24. Successfully navigating negative news <ul><li>Preparation </li></ul><ul><ul><li>Resort property accident </li></ul></ul><ul><li>Execution </li></ul><ul><ul><li>Methodist Hospital </li></ul></ul><ul><li>Resolution </li></ul><ul><ul><li>Comcast </li></ul></ul>
  23. 25. Successfully navigating negative news <ul><li>Preparation before a crisis occurs: </li></ul><ul><li>Evaluate existing and relevant SOPs and consider possible crisis scenarios </li></ul><ul><li>Create a communications plan </li></ul><ul><ul><li>Develop a core crisis management team </li></ul></ul><ul><ul><li>Develop response plan </li></ul></ul><ul><ul><li>Key messages for each scenario </li></ul></ul><ul><ul><li>Update your plan annually </li></ul></ul><ul><li>Develop contingency plans to handle post-crisis impact on production, sales, quality assurance, confidence </li></ul><ul><li>Participate in table-top exercises and evaluate preparedness </li></ul><ul><li>Continual online monitoring </li></ul><ul><li>Consider bringing in outside counsel for an objective perspective </li></ul>
  24. 26. Successfully navigating negative news <ul><li>Execution once a crisis has occurred: </li></ul><ul><li>Bring situation under control </li></ul><ul><ul><li>Reduce public uncertainty </li></ul></ul><ul><li>Analyze and gather all facts </li></ul><ul><ul><li>Do not speculate, release only verified information </li></ul></ul><ul><ul><li>Never purposely mislead your key stakeholders, the media or the public </li></ul></ul><ul><li>Keep internal and external constituents well-informed </li></ul><ul><li>Communicate with media </li></ul><ul><ul><li>Expressing concern is not expressing guilt </li></ul></ul><ul><ul><li>“ I don’t know” is acceptable </li></ul></ul><ul><ul><li>Always be accurate, always be consistent </li></ul></ul>
  25. 27. Successfully navigating negative news <ul><li>Resolution/Follow Through: </li></ul><ul><li>Maintain dialogue with key stakeholders, the media and public as appropriate </li></ul><ul><li>Follow contingency plans to minimize impact on operations </li></ul><ul><li>Post-crisis, evaluate what happened </li></ul><ul><ul><li>Make any necessary changes to SOPs, crisis plan or protocols </li></ul></ul><ul><li>As appropriate seek opportunities to leverage what was learned from the crisis into positive change/news </li></ul>
  26. 28. Why it’s important… <ul><li>“ It takes many good deeds to build a reputation, and only one bad one to lose it.” </li></ul><ul><li>-Benjamin Franklin </li></ul>
  27. 29. Summary <ul><li>A crisis is NOT the time to try and figure out what to do </li></ul><ul><li>Engage in or increase positive media relations before a crisis occurs </li></ul><ul><ul><li>A positive reputation requires that 20% of news stories about your organization be positive </li></ul></ul><ul><li>Put someone in charge of crisis preparedness </li></ul><ul><li>Establish a crisis plan, complete with scenarios, key messages and contingency plans </li></ul><ul><ul><li>Your crisis communications plan acts as a “map” during a crisis; one that is comprehensive and flexible enough to accommodate any crisis situation </li></ul></ul><ul><li>Don’t postpone getting prepared </li></ul>
  28. 30. Discussion Stephanie Fox Vice President 952.851.7241 [email_address] Kris Patrow Account Supervisor 952.851.7214 [email_address] David Erickson Director of e-Strategy 952.851.7242 [email_address] Presentation available at Slideshare.net/TunheimPartners

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