Uber

The Deflation of “I’m Sorry” in the Economics of Apologies

A recent study suggests the best apology may be one that involves monetary compensation. Experience shows the best apologies are ones that include credible, demonstrable action that shows you really mean ‘I’m sorry.’ [Illustration Credit: Paul Rogers/New York Times]

A recent study suggests the best apology may be one that involves monetary compensation. Experience shows the best apologies are ones that include credible, demonstrable action that shows you really mean ‘I’m sorry.’ [Illustration Credit: Paul Rogers/New York Times]

We may have entered an era when a simple “I’m sorry” has little currency to the recipient of an apology. You might do better offering some form of compensation.

Effective apologies have become a mainstay topic when discussing crisis communications. Crisis counselors, including us, have encouraged sincerity buttressed by demonstrable actions to correct the wrong that required an apology. But a recent study hints that might not be enough to regain or even maintain a level of trust. 

Ben Ho is an associate professor of behavioral economics at Vassar College who applies economic tools like game theory and experimental design to understand social systems such as apologies, identity, fairness and attitudes about climate change. Ho holds seven degrees from Stanford and MIT in economics, education, political science, math, computer science and electrical engineering. He was recently featured in a  Freakonomics podcast  about apologies. [Photo Credit: Tamar M. Thibodeau / Vassar College]

Ben Ho is an associate professor of behavioral economics at Vassar College who applies economic tools like game theory and experimental design to understand social systems such as apologies, identity, fairness and attitudes about climate change. Ho holds seven degrees from Stanford and MIT in economics, education, political science, math, computer science and electrical engineering. He was recently featured in a Freakonomics podcast about apologies. [Photo Credit: Tamar M. Thibodeau / Vassar College]

Benjamin Ho, an economics professor at Vassar who studies apologies, teamed up with Uber to test a variety of apologies following a ride gone bad. Apologies that included a commitment to do better in the future often backfired, especially when there was another subpar ride. The apologies that worked best involved monetary compensation.

If Ho was a psychologist, he might have explored why an apology tied to money was a better palliative than an apology tied to a commitment to do better. My dime store interpretation: People have become increasingly cynical. They doubt whether a promise about better behavior in the future will be – or can be – kept. Immediate gratification, like a $5 coupon for a future Uber ride, is more satisfying because it’s more tangible.

Tangibility is the key here. People expect an apology. It’s like “thoughts and prayers” after a mass shooting. But the apology isn’t enough. What counts is the action that follows. The more tangible the action, the better. Or as Ho put it, “Show me the money, basically.”

The Uber example focuses on money, but compensation isn’t the only tangible value apology recipients may desire. If a new water reservoir construction site suffers a major slide, neighbors will be less interested in money than concrete assurances the problem has been fixed. If your bank has been hacked, depositors will want protection from theft.

The phrase “action speaks louder than words” applies. Apologies are something you say. Actions are something you do. Saying you are sorry is important, but it’s best to prove your sincerity through meaningful, relevant and tangible actions. What you say and do after the apology is what counts.

You can’t overlook the economics of apologies. As Ho explained to NPR, “We tested apologies with or without a coupon. We found basically the most effective [Uber] apology, the ones that increased revenues, were just with a $5 coupon.”

Ho’s findings suggest apologies can be transactional. However, as any husband has discovered when bringing home flowers when he forgets an anniversary, the gesture only gets temporary love. You might earn forgiveness, but you don’t build trust with money or flowers.

Trust is the true goal of an apology. Individuals, businesses, nonprofits and public agencies need to realize the point of an apology is to regain trust that is lost or tested – and, when possible, to burnish a reputation. Trust and an enhanced reputation typically aren’t built on cash; they are earned by credible, demonstrable actions, which may include restitution. 

The underlying message of Ho’s study is that ordinary, pro forma apologies aren’t enough now, if they ever were. If you face a crisis, big or small, treat it seriously and put on your work boots to do what’s necessary to earn trust. 

Doing anything less is worse than a waste of time; it is a lost opportunity. And the loss could be permanent.

Gary Conkling Image.jpg

Gary Conkling is principal and co-founder of CFM Strategic Communications, and he leads the firm's PR practice, specializing in crisis communications. He is a former journalist, who later worked on Capitol Hill and represented a major Oregon company. But most importantly, he’s a die-hard Ducks fan. You can reach Gary at garyc@cfmpdx.com and you can follow him on Twitter at @GaryConkling.

 

Uber Fatality Shows a Crisis Can Travel Far and Fast

The first recorded fatality resulting from a driverless vehicle reinforced the reality that technology has the potential of turning a communications crisis into a family affair, complicating how and when to respond.

The first recorded fatality resulting from a driverless vehicle reinforced the reality that technology has the potential of turning a communications crisis into a family affair, complicating how and when to respond.

Managing a communications crisis in the age of technology has the quality of managing the branches of a family crisis, as evidenced by the fatal accident in Tempe, Arizona involving an Uber vehicle operating in autonomous mode. It may be the first recorded fatality involving a driverless car.

The pedestrian fatality ensnared Uber (which was testing the driverless vehicle), Volvo (the manufacturer of the vehicle), an unidentified software developer and other automakers working on autonomous vehicles. For its part, Uber expressed condolences to the victim’s family, suspended its driverless vehicle testing program and said it was cooperating with local police.

Preliminary indications suggest the accident, which involved a woman and her bike emerging from a shadowy area where there wasn’t a crosswalk, may have been unavoidable with or without a driver. However, that finding is unlikely to quell concerns about the safety of autonomous vehicles nor the communications crisis surrounding the incident.

Some critics have jumped on news that the Uber driver was a felon. More thoughtful critics have wondered how the software controlling the vehicle was written, and what priority it gave to avoiding a pedestrian, even one that may have been hard to spot with a human eye. Broader criticism has centered on how rapidly driverless cars have been advanced and whether the transformation should be slowed or even scrapped.

Automakers with autonomous vehicles on the cusp hustled to lament the fatality, but defend the project. Software developers may be squirming to find out how to avoid becoming scapegoats.

Construction accidents, environmental spills and financial embezzlements spill over to multiple parties, usually resulting in finger-pointing. But technology-centered crises are even more borderless. People harbor skepticism about technology. Ride-hailing Uber may be the most distrusted technology company, even among people who rely on it to get home safely from a night on the town.

Managing a crisis has always been a fluid, ill-structured exercise. When a crisis goes 3-D, it takes a special kind of communicator binoculars to track. Adding to the fun are the ever-changing outlets for crisis exposure. More angles, more players, more outlets make for more headaches.

Perhaps the most telling lesson from the Uber fatality is the crisis trail it creates for uninvolved parties. Even though a Volvo was involved in the accident, Mercedes felt compelled to comment since it has signed up to provide Uber driverless. Toyota commented because it is exploring driverless cars. The police made a point to note it was investigating the fatal accident just like any other fatal accident.

Responding to a crisis is hard and it is getting harder. More vulnerabilities. More “reporters” with smartphones. More “news” outlets. And now more players. If you thought you could skate by or play it by ear, your odds continue to plummet. You never know when a crisis can occur, and you can’t really guess how, who or where it will affect your business or reputation.

Crisis preparation may be harder than denial, but is a lot more useful and constructive. The Uber fatality should be a loud horn honk that crisis prep is a basic accessory to any successful business.