crisis management

Combatting the Crisis of Competition

Businesses should prepare for crisis involving an environmental spill, financial fraud, cyberattacks or sexual misconduct. They also should plan for an eventual crisis of competition, especially a disruptive idea that topple a business from a mountaintop to a scrap heap.

Businesses should prepare for crisis involving an environmental spill, financial fraud, cyberattacks or sexual misconduct. They also should plan for an eventual crisis of competition, especially a disruptive idea that topple a business from a mountaintop to a scrap heap.

Years ago, a Tektronix executive burst out of his office brandishing a report showing the company had achieved a 99 percent market share in analog oscilloscopes. He beamed at what he viewed as a sign of world domination.

However, the executive missed the subtle signal in the report that the market – and Tek’s competitors – had moved on to digital oscilloscopes. Tektronix had corralled the lion’s share of a vanishing market. It wasn’t world domination as much as a crisis of competition.

When we consider crisis in terms of business, our minds naturally think of environmental spills, financial fraud, cyberattacks and sexual misconduct. We forget about a crisis of competition, which can be an existential battle, not just a bad headline. People get fired and businesses pay fines in most crises, but in a crisis of competition a once-thriving company may cease to be relevant or even exist.

RCA was the biggest thing in vacuum tubes and actually did pioneering work on semiconductors, long before they made vacuum tubes obsolete. RCA executives apparently thought semiconductors never would amount to much, let alone replace their bread and butter. They failed to see their crisis of competition in the glare of their own success.

A crisis of competition deserves the same forethought, careful planning and strategic preparation as any other kind of crisis. Perhaps ironically, the best time to plan for a crisis of competition is when your business or organization is on the top of the mountain. Think of it as the most strategic view to see what everyone else is doing that may affect your standing – and eventually your bottom line.

Competition can take many forms – lower prices, better marketing, new technology or a wholly different approach. A competitor may be a business you know and watch, someone who comes out of left field or a galaxy like Amazon. Like RCA, the next bright idea could be shining in your own lab or workshop.

Unlike more common forms of crises, an apology or clever social media post won’t do much good in a crisis of competition.

Keep in mind success invites company and competition isn’t spontaneous. That means you know competitors are coming after you and you have a head start – not a bad position to begin crisis of competition planning, but also not a moment for complacency.

While market research is good for revealing what customers like, dislike and want, it isn’t the right tool to search the universe for innovative new competitors or disruptive emerging ideas. This takes a vastly different mindset to see the world of potential competition less like a vector and more like an erratic line.  

Market research for automakers didn’t stumble onto the idea of car-sharing. Market research for Folgers Coffee never anticipated Starbucks. Market research for multi-family housing developers left unexplored the idea of adult dormitory living. The strategic lens for crisis of competition planning isn’t looking for trends; it is looking for trendsetters.

Canvassing the arena of ideas to see which ones make economic sense, which ones could be disruptive and which ones are most likely duds is the business of crisis for competition planning. And just because an idea initially looks and behaves like a dud doesn’t mean it is permanently a non-starter. The investors on Shark Tank frequently wave off ideas that go on to be entrepreneurial successes, despite their misgivings.

Companies must realize they have a built-in bias for their product or way of doing things, which can result in their downfall. (Think of the progression of cameras from boxy things on a tripod to a button on a smartphone.) They need to fertilize their own thinking with outside views. Be curious. Follow some promising trails. Talk to people with unconventional viewpoints. Talk to you customers about what their next frontier looks like so you are better prepared to take the journey with them.

Back to Tektronix for a moment. There was an engineer who walked through the corporate cubicles carrying a small disk with wires sticking out both sides. For anyone willing to listen, the engineer would say what he held by his fingers could do everything that one of Tek’s large laboratory oscilloscopes could do – only cheaper, faster and anywhere. A lot of people thought he was crazy. What he was carrying around was, in actuality, a digital oscilloscope.

Make a point of listening to the contrarian in your midst. He or she might not be crazy. They may be on to something. They may show you how to avoid the crisis of competition by discovering the road to your own breakthrough. That breakthrough might eventually put you out of the business you’re in, only to set you up in the business you could be for years to come.

Props to Chipotle for Cooking Up Real Food Safety

Chipotle took a hit for slacking food safety procedures that resulted in sick customers, but now the company has responded with food safety steps that are significant and verifiable, which should ease concerns for patrons who have stayed away.

Chipotle took a hit for slacking food safety procedures that resulted in sick customers, but now the company has responded with food safety steps that are significant and verifiable, which should ease concerns for patrons who have stayed away.

We chopped Chipotle for mishandling a food safety crisis that sickened customers. Now it's time to give the Mexican fast food chain props for taking savvy steps to rebuild its reputation for "making better food accessible to everyone.”

In full-page print ads, Chipotle Founder and Co-CEO Steve Ells owns the crisis as he lays out specific ways the company will sharply improve its food handling practices. 

“In 2015, we failed to live up to our own food safety standards, and in so doing, we let our customers down. At that time, I made a promise to all of our customers that we would elevate our food safety program.”

The ad lists eight “important advancements” that include improving supply chain food handling, employing new technology in prepping food, training farmers to meet stricter food safety requirements and improved in-store food handling procedures.

The list goes further, citing actions that crisis counselors often recommend – credible, validated third-party evaluations and inspections.

Ells says Chipotle managers and field leaders will need certification from a nationally recognized institution, which he added is a “first for any national restaurant chain.”

Restaurant inspections will “dramatically increase,” conducted by both Chipotle inspection teams and independent auditors.

Chipotle will implement an advanced electronic tracking system to monitor food sources and be able to trace supplies that should be removed or not accepted.

Chipotle will also create an advisory council comprised of industry experts charged with “continually reviewing procedures and providing insight into new food safety advancements.” An unsolicited suggestion, expand the advisory committee to include an online panel of Chipotle consumers and listen to their concerns, praise and ideas. 

It wasn’t that long ago that Chipotle’s sharpest critics suggested scrapping the brand and starting over. Instead, Ells chose the path of weathering the storm, which has included a significant drop-off in business, and emerging with a redoubled commitment to food safety. The ads are in effect the coming out party for the Chipotle brand and its new standards.

The actions Ells laid out aren’t flashy, but they respond directly to consumer questions (and fears) about the fresh food Chipotle serves. Maybe the chain should have figured out sooner that fresh fast food has higher risks than processed food. Chipotle’s response, at least as described, appears genuine and likely to be effective in reassuring wary customers to return.

With the painful lesson that fresh food demands greater vigilance now learned, Chipotle can embark on being the brand that leads the way on both. If it does, Chipotle will have converted its crisis into an opportunity to become better than before.

Actions Speak Louder Than Reputations

When your actions, reputation and reality don’t align, you are courting trouble. Actions guided by values speak louder than reputations based on puffery and promises.

When your actions, reputation and reality don’t align, you are courting trouble. Actions guided by values speak louder than reputations based on puffery and promises.

Your reputation should shadow your reality, not precede it. When reputation gets out in front of reality, you are courting scrutiny to see whether the two match up – and scorn when they don’t.

Remember, actions speak louder than reputations. Actions guided by solid values enhance reputations.

It is all about the difference of earning a reputation versus projecting a reputation. There are tangible dimensions to an earned reputation as opposed to the airy lightness of a projected reputation.

A useful exercise is to measure the gap between your reputation and your reality. This gap analysis can affirm an earned reputation or expose a hot-air projected reputation. If the perceived gap between reputation and reality is significant, you have a credibility problem.

“Effectively managing reputational risk begins with recognizing that reputation is a matter of perception,” according to a Harvard Business Review article. “When the reputation of a company is more positive than its underlying reality, this gap poses a substantial risk. Eventually, the failure of a firm to live up to its billing will be revealed and its reputation will decline until it more closely matches the reality.”

“To bridge reputation-reality gaps, a company must either improve its ability to meet expectations or reduce expectations by promising less,” the HBR article continues. Some companies panic and resort to financial tricks, sleight of hand or outright fraud to mask the gap, which can result in an even greater fall. Think Enron.

Because your reputation is your most valuable asset, managing your reputation should be a top priority. Reputation management should be based on actions, not promises. Actions to build or defend your reputation should center on actions that align with your core values and who you want to be.

When clients ask me about how to respond to a crisis situation, I advise to start by thinking about the organization's core values and let them be the guide for action. If you say your customers come first, then act like it when responding a crisis that may put customers at risk. If you say you want to be a good neighbor, then act like a good neighbor.

A brand promise – such as healthy, locally sourced fresh food – is only as good as the actions to fulfill that promise. Chipotle discovered the hard way that a brand promise rings hollow unless you ensure that locally sourced fresh food is also healthy food.

One of the best ways to earn a reputation is by solving other people’s problems. Another reputation-burnishing effort is to undertake steps that eliminate problems down the road, as Tillamook Cheese did when it chose to eliminate use the growth hormone rBst in its dairy herds.

The 2016 presidential election has highlighted reputations and realities that are out of sync. Jeb Bush was deemed the GOP frontrunner before winning a single primary. He raised millions of dollars in campaign contributions on the basis of his reputation, but when the voting started, his reputation imploded. He became the proverbial hollow suit.

Democratic presidential nominee Hillary Clinton has campaigned as highly competent, but she has been tagged for her handling of classified emails on her private server as extremely careless. GOP nominee Donald Trump touts himself as a winning businessman despite a record of bankruptcies, failures and a continuing lawsuit alleging fraud by Trump University. Not surprisingly, a majority of voters view both Clinton and Trump as either untrustworthy or unfit.

The 2016 Olympics in Rio offer some sterling examples of men and women who have paid the price and earned their glory in the pool, on the track and in other venues. Some Olympic stars have to live up to their reputations, while most Olympians earn their own reputations based on their performance. Some win medals. Others compete and never get to the award podium. Still others are indelibly imprinted on our memories because of their actions.

In an instant after their legs tangled, they fell to the track and helped each other up, Abbey D'Agostino of the United States and Nikki Hamblin of New Zealand earned a reputation as true Olympians. (Photo Credit: AP Photo/David J. Phillip)

In an instant after their legs tangled, they fell to the track and helped each other up, Abbey D'Agostino of the United States and Nikki Hamblin of New Zealand earned a reputation as true Olympians. (Photo Credit: AP Photo/David J. Phillip)

Abbey D’Agostino, a 24-year-old Dartmouth graduate, and New Zealand’s Nikki Hamblin were total strangers before running the 5,000-meter race in Rio. Twenty minutes into the race, their legs crossed and both fell to the track. Instead of worrying about their medal chances, the two women helped each other to their feet and hobbled to complete the race, finishing far behind other competitors. In an instant, they showed their true mettle by reflecting the traditional Olympic spirit of good sportsmanship.

Two days earlier, in the men’s 10,000-meter race, Mo Farah fell after his feet and got tangled with Galen Rupp’s. Perhaps sacrificing his own medal chances, Rupp slowed down to be sure Farah, his friend and long-time training partner, was okay. Farah gave him a thumbs up and went on to win his second consecutive Olympic gold medal in the event. Rupp put his values and his actions ahead of his reputation, and by doing so he ended up enhancing his reputation.

Gary Conkling is president 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.

Manage Issues from the Front, Not Rear

Detective Danny Reagan chases down bad guys on  Blue Bloods , but you may not be able to catch up to a bad problem that you should have anticipated and might have avoided.

Detective Danny Reagan chases down bad guys on Blue Bloods, but you may not be able to catch up to a bad problem that you should have anticipated and might have avoided.

The best position in which to manage an issue is from the front, not the rear. If you are chasing an issue, chances are you won’t catch up before you go over the cliff.

This is a painful lesson that some organizations learn the hard way. For some, it takes more than one mistake to learn that it is smart to anticipate problems and take steps before problems become crises.

Easier said than done, to be sure. But it can be done.

Chipotle is a poster child for the point. The company ballyhooed fresh food from local sources. You don’t have to be rocket scientist to anticipate potential problems in food safety that could – and apparently did – lead to serious health outbreaks at more than one of the burrito chain’s outlets.

Jack in the Box learned its lesson from a 1993 E. coli outbreak that killed four children, infected 732 people and left 178 victims permanently injured with kidney and brain damage. The fast food chain, which owns the Qdoba Mexican Eats franchise that is a Chipotle competitor, installed food safety measures up and down its supply chain. Jack in the Box hasn’t experienced a major problem with food safety since then.

Qdoba promises “food for people who love food,” which isn’t as enticing as food made with fresh, locally sourced ingredients. Company execs decided a weaker tagline was better than sicker customers.

Issue management is not reserved just for customer-facing problems. It applies equally to issues with neighbors, constituents, stakeholders and employees.

The Southeast Portland glassmakers that used cadmium and arsenic in their processes could easily have anticipated air contamination, regardless of whether they were operating within the boundaries of their air permits. While the businesses showed good judgment by suspending the use of those chemicals once data emerged that there was a problem, they would have displayed greater judgment by insisting on regular independent testing so they could detect the problem earlier.

Some problems are obvious; some are not. That’s why we advise organizations to undertake issue audits. An issue audit is a no-holds-barred process to identify and vet all kinds of potential problems – legal, financial, technical, operational, environmental and competitive. The list of problems then should undergo an evaluation to determine the most probable risks and the ones with the most serious potential consequences.

That is invaluable, if sometimes inconvenient information.

The matrix of problems should be assessed by a risk/benefit test. The risk with the highest likelihood of serious consequence is where you start. If you determine, the cost to remediate the problem is far cheaper than the outfall of a crisis involving the problem, then it is a no-brainer decision to fix it. That’s a great way to get ahead of a problem.

Some problems may be too expensive or technically challenging to fix. You have to employ different tactics to stay ahead of their curve toward crisis. That might involve an open house or creation of an advisory committee. It could require meeting with affected people one-on-one. Such tactics take time, but it could be time better spent than facing a battery of TV cameras and angry questions.

In an era when everyone with a smartphone is the equivalent of an investigative reporter and social media moves at light speed, getting in front of an issue is more important than ever. Detective Danny Reagan may catch the bad guy on every episode of Blue Bloods, but don’t count on the same script when you are chasing a really bad problem that you should have anticipated and might have avoided.

Gary Conkling is president 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.

Ethics and Crisis

A crisis can test your ethics. An ethical crisis response can turn a mess into a reputation triumph.

A crisis can test your ethics. An ethical crisis response can turn a mess into a reputation triumph.

A crisis is an unwelcome way to prove your mettle and test your ethics.

The chaos of crisis will challenge your calm, creating an opportunity to perform under pressure amid events out of your control. But crisis also will tempt you to cut corners, blame scapegoats and bend the truth. Your core values may take a backseat to expediency. Your ethics is one of the best tools to carry around in a crisis. 

Acting ethically in crisis, while hard, is the right thing to do. Ethical behavior is the path to a burnished reputation.

Johnson & Johnson's handling of the tainted Tylenol incident is the perfect example of a crisis response based on values. James E. Burke, CEO of J&J, challenged all his employees to put "Patients First," the company's brand promise. Pulling Tylenol from shelves, meeting with thousands of care providers and patients and developing the tamper-proof container were the fruits of following that core value.

Your ethics will be on the line when you are called on to stand in front of microphone, admit a mistake and take responsibility for a mess. Your reputation can take a hit if you hide out, shift responsibility and blame others.

People know stuff happens. They tend to judge based on what you do after stuff happens. Sluggish responses, fingerprinting and denial often leads to a cascading drop in credibility.

Here are four tips on how to integrate ethics into your crisis response:

Look in the Mirror
Before doing anything else, take stock of your reputation, your brand promise, what you stand for. Let that be your guide as you lead efforts to clean up a spill, stabilize a faltering operation or condemn a bad practice. Deputize everyone involved in the crisis response to follow the same guideline. Make an enhanced reputation your goal.

Be Proactive
Don't let events beyond your control define your response. Take charge of fixing what's wrong. Find a long-term solution. Communicate with your own employees and those who are impacted. Use tools such as Twitter that allow real-time communications.

Seek Advice
Owning a crisis doesn't mean dealing with it alone. It is a sign of strength, not weakness to seek expert opinions, consult your own employees and ask those caught in the crisis what they think should be done. Be curious and empathetic, not cavalier and impulsive. You may get conflicting advice, but you also will get invaluable suggestions.

See Your Actions in a Newspaper Headline
A simple test to assess your actions is to write the most slanted story and headline to describe them. If the result disturbs you, then reconsider what you do. Pursue actions that are unmistakably sound and reflections of your ethics, actions will are likely to produce headlines you would want your family and friends to read the next day.

Affirmations First, Then Explanations

Ohio officials, including the governor, faced a crisis over safe water in Toledo. Direct, plainspoken affirmations would have helped reassure a wary public.

Ohio officials, including the governor, faced a crisis over safe water in Toledo. Direct, plainspoken affirmations would have helped reassure a wary public.

Affirmations work better than explanations in crisis situations. Affected audiences want to hear that you have fixed the problem, not necessarily how.

For knowledgeable people, this can be a challenge. Their instinct is to explain the cause of the problem and explain the solution. Those details are important, but in a real-time environment they serve best as secondary messages, not primary ones. People want reassurance you are on top of the problem. That requires declarative language, not jargon.

For example: "We deeply regret the incident, but we are fixing it and will take steps to prevent it from ever happening again. We also will make things right with those who have been impacted."

Simple words, but a powerful message that conveys the key elements of an effective crisis response – remorse, resolve, reform and restitution. Just as important, it qualifies as a sound bite with a chance to be seen on TV, heard on radio or viewed in a newspaper or online.

Following a strong, assertive statement, you can fill in the details – in priority order. In some crises, the priority is to make things right with those affected, such as airline passengers stranded on a runway for hours. In other cases, the priority may be on describing the fix.

The same rule applies to details – use direct, plainspoken language. If you are describing safe drinking water from the Willamette River, paint a picture of what happens. "We know how to treat water to make it safe to drink. We test water from any source coming into the treatment plant so we know what we have to treat. Then we test the water before it leaves the treatment plant to make sure we made it safe to drink."

That may seem sparse to technical ears, but it is train of events that average people can grasp. And it mentions "safe to drink"  – a bottomline message – twice in just 50 words.

The point of an interview is to get your point across to viewers or readers. Like any interaction, you have to be mindful of what audience will tolerate and be willing to absorb. In a crisis, people want to hear some empathy and hear about some action. The English language contains a lot of words. For this purpose, simpler ones are most appropriate.

If you want to be understood, skip the explain and stick with the affirmation.

Think Before You Post Online

Venting on social media can feel good in the moment, but could bring your career to a jolting halt. 

Venting on social media can feel good in the moment, but could bring your career to a jolting halt. 

Think twice before you post.If you ever feel the need to sound off, find a secret spot and vent. Don't spew on social media.

The latest reminder of this online truth is Elizabeth Lauten, formerly the communications directors for a Tennessee congressman. After her Facebook bashing of the Obama daughters, Lauten finds herself embarrassed and unemployed. 

The spark that blew up Lauten's career was the sight of Sasha and Malia Obama looking and acting like teenagers when their father, the President, performed the annual ceremony of pardoning a turkey. Most people found this scene silly enough that they didn't watch, let alone let loose a social media mega bomb.

Many people may have shared Lauten's views about the girls' behavior, but only Lauten felt compelled to share her views about the girls – and gratuitously about their parents – with the world on her public Facebook account, and the world responded very quickly.

What did Lauten expect? Even teenagers could have predicted the blow-back she received from her Facebook posts. They've seen it over and over when someone posts an in-your-face screed.

Lauten's apologies won't win a crisis response award either. She took her Facebook page private and issued a sort-of apology. Lauten said after re-reading what she wrote, talking to her parents and "many hours of prayers," she realized her words were "hurtful." Her apology was aimed more at offended viewers of her post than the two young girls whom she directly offended.

A Republican Party operative added more gasoline to the fire by telling people to get over the incident, which he characterized as a mistake by a middling staffer for a rank-and-file congressman. That certainly was helpful context, especially in the world of social media where status doesn't matter.

The cautionary tale, acted out once again, carries the simple message of thinking before posting. Venting may be good for your mental health, but public venting often can land you in hot water. Or, as in Lauten's case, in the unemployment line. 

Issues Beyond Defense

A leaked audiotape threatens to turn LA Clippers owner Donald Sterling into a pariah. Actually, his long-held views on blacks are what paved his path to becoming a pariah. 

As offensive as the taped remarks are — and they could be offensive enough to force Sterling out of the NBA — the real offense lies in the viewpoint and attitude that prompted Sterling to make the racist comments.

Former Clippers player Baron Davis tweeted that the views expressed on tape by Sterling are no different than the views he displayed when Baron was on the team. 

It seems like an odd choice for Sterling to own a professional basketball team made up of mostly African-American players. If he doesn't like blacks and doesn't want them to come to Clippers games, then why own the team?

As a lot of prominent people have discovered — remember presidential candidate Mitt Romney writing off 47 percent of the electorate at a fundraiser for the elite 1 percent? — what you really feel will sooner or later surface in what you actually say.

Deeply held feelings are not something you can manage. They control you. 

Mitigating Risks to Avoid Inflamed Issues

The best issues-management strategy is one that recognizes risks before they become issues. This requires the foresight and courage to identify risks and take proactive action.

The advantage of tackling risks is avoiding protracted public debates when those risks fester into issues that cause heartburn in a neighborhood, community or state. Drawn-out controversies cost money, often lead to expensive settlements and deeply bruised reputations. 

A month ago, Freedom Industries informed West Virginia officials of a leak from one of its chemical storage tanks into the Elk River, the source of drinking water for 300,000 people and hundreds of businesses.

Embarrassment abounded. Freedom Industries couldn't say for sure when the leak began or how much of the chemical spilled into the river. Government officials admitted they knew little about the chemical that potentially contaminated Charleston's water supply. The issue has gone from bad to worse with admissions of an additional chemical involved in a spill and reports of lax oversight of the company's accident prevention plan.

Freedom Industries has filed for bankruptcy, amid questions of who really owns the company. State and local officials are scrambling for answers. Meanwhile, community residents are unsettled and unsure whether their water is safe to drink — or even use in toilets.

Miracle on Your Crisis

Safely landing a commercial airliner with two disabled jet engines on a frigid river is an amazing feat. It also has been the launchpad for its pilot to champion confidence-building pilot safety.

Captain Chesley "Sully" Sullenberger became an instant hero January 15, 2009 when he set down his gasping Airbus A320-214 on the Hudson River minutes after taking off from LaGuardia Airport. The emergency ditch resulted in no loss or life and only one injury among its 150 passengers and five crew members.

Appearing Sunday on Face the Nation, Sullenberger credited the successful emergency landing to discipline that allowed "doing our jobs under stressful conditions."

Sullenberger has leveraged his act of heroism to push for stricter rules on how long pilots can fly without rest and more strenuous requirements for flight training. He said pilots must understand the basic operation of the planes they fly even as aircraft becomes more technologically advanced. That's what makes them pilots.

The Miracle on the Hudson River was less a miracle, Sullenberger said, than an example of pilots improvising in an unanticipated situation while relying on their basic training.