PR Lessons from BP, Toyota & Goldman Sachs, Part II

The Harvard Business Review or other business school magazine will be covering the 2010 crises for lessons learned, and someone will try to make money writing a book about these crises and how the companies should have avoided making them worse.

It's always easy with hindsight. That said, gathering lessons learned can help developing and executing your crisis plan. (Check out some lessons learned here: PR Lessons from BP, Toyota & Goldman Sachs.)

Without a plan -- and sometimes, even when you do have a plan -- a crisis can alter the perception of the organization, cloud their minds when it comes to objectively assessing the facts, the internal and external perceptions, the priorities, even the right move. Having a plan helps identify the priorities and action steps.

Of course, having a plan does not prevent the distortion, does not prevent the exhaustion that can cause more problems.

One thing that can get overlooked during a crisis is the need to communicate to your employees, customers, and partners.

For public companies, it's critical to communicate with your board of directors and major investors. Even if you handle the situation, you may lose the confidence of the board or shareholders if they feel you have not been honest with them. That's part of the reason H-P's board pushed out Mark Hurd, despite the fact he had turned around the company. Poor communications with his board after a poor response during an ice storm is part of the reason that JetBlue fired its founder David Neeleman. Good communications plans identify in advance who the crisis team needs to keep informed.

BP Report on Cause of Spill Does Not Difuse Crisis

One of the lessons in PR Lessons from BP, Toyota & Goldman Sachs is to not blame other people or factors.

"There's not a lot of news when the company takes responsibility and moves on," James Donnelly at Ketchum, told the New York Times.

But BP apparently doesn't read this blog or the New York Times.

Today, it issued a report that found several companies at fault in the spill. Among the findings in a BP-sponsored report are some that, as the Times notes, "While it puts some responsibility on BP for errors made — such as misreading pressure data that indicated a blowout was imminent — the report tries to undermine the notion that the company acted with gross negligence."

Because it still blames the leak on the work of other companies, this report is, as the Times understates it, "is unlikely to carry much weight in influencing the Department of Justice, which is considering criminal and civil charges related to the spill."

So why did BP issue the report?

The Times called the report "a public relations exercise."

But I think it won't work. Again, blaming others is another way to avoid responsibility. Doing so dilutes a company's ability to take corrective action to prevent future crises. Not only does blaming others dilute the public's confidence in all the companies involved, it especially dilutes the public's confidence -- hurting the brand value -- of the company doing the blaming.

PR Lessons from BP, Toyota & Goldman Sachs

The cover of Sunday's New York Times Business Section was: what not to do in case of emergency, drawn from the recent examples of BP, Toyota and Goldman Sachs. I would also add H-P to that list, though obviously to a lesser degree.

It's well worth reading the article, but here are some lessons, drawn from Peter S. Goodman's article. Please note: what follows is general advice, not directed at or in response to any particular company or specific situation.

1. When faced with a potential crisis, don't delay in responding. At the same time, don't give off-the-cuff responses. If you need to research the situation, say so, then provide regular updates because of course you'll need to evaluate the issues involved.
   
2. Don't blame other people or factors. You can't spin your way out of a catastrophe. "There's not a lot of news when the company takes responsibility and moves on," according to James Donnelly at Ketchum.
3. Don't take an adversarial position with the public, government officials or the media. After all, when the crisis is over, you'll need to maintain good relations with customers, regulators and the media.
4. You don't always have to get out in front of the story, according to Eric Dezenhall, who believes there may be some situations where the issues are just against you, and it's best to "absorb the pounding," in the words of the Times article. Tiger Woods' scandal may be an example of when it might be best to make an apology and drop out of view.
5. Don't start post-crisis communications efforts (usually done via TV spots and the phrase, "working together, we're solving this issue") while the crisis has not yet been solved. It will look insincere. However, it's okay to start communicating your apology and taking responsibility for the crisis.
   
6. Don't forget your communications goals: As Dezenhall says, "It's the height of arrogance to assume that in the middle of a crisis the public yearns for chestnuts of wisdom from people they want to kill. The goal is not to get people not to hate them. It's to get people to hate them less."
7. Don't provide the updates you want to hear. Provide accurate updates. Credibility will be important after the crisis has been forgotten. But people will remember if they felt you were not truthful.
8. Don't get caught between your attorneys and your PR team. Your attorneys will advise against taking responsibility because that may open you to law suits or make it easier for plaintiffs to win their claims against you. On the other hand, your PR team will advise you to be as open as possible. You've got to draw a line in the sand, and stick with it, and not get caught in ongoing arguments from either side.
9. You should prepare a crisis plan to keep focused on how to research, resolve and communicate about a crisis. That means you should update the plan, too. If you pull your crisis plan out of your desk, does it include how to monitor and address social media? If the plan was created six years ago, it's way too old because that was before Twitter, YouTube and other tools that can communicate the other side of the story -- i.e., not yours -- fast.
10. Don't go off message. Recent off-the-cuff messages by CEOs sparked more controversy, and became the main story element for the next 48 hours or longer. If the message is off, it can have a stronger impact than much of what you're doing right. Who can forget Pres. George W. Bush's "You're doing a heckuva good job, Brownie" to Michael D. Brown, the then-head of FEMA in the immediate aftermath of Hurricane Katrina -- when the opposite was clear to everyone watching TV.
11. Remember to communicate internally. Too many companies circle the wagons in a hastily set war room, and forget to communicate to their employees, customers, and partners -- these are potential allies who can help. They can also lose confidence if the only information they're getting is from external sources.
12. Keep your board of directors and major investors informed. For public companies, it's critical to communicate with your board of directors and major investors. Even if you handle the situation, you may lose the confidence of the board or shareholders if they feel you have not been honest with them. That's part of the reason H-P's board pushed out Mark Hurd, despite the fact he had turned around the company. Poor communications with his board after a poor response during an ice storm is part of the reason that JetBlue fired its founder David Neeleman. Good communications plans identify in advance who the crisis team needs to keep informed.
13. People in a 24//7 war room still need to take a break. Exhaustion can distort perception, realities and priorities. A crisis can alter the perception of the organization, cloud their minds when it comes to objectively assessing the facts, the internal and external perceptions, the priorities, even the right move. For that reason, people inside the war room need to make sure to take a breather, go for a walk, get outside the war room mentality so that they can be effective. We can never know for sure, but if Tony Hayward had taken a break, he might not have said during an interview, saying apologizing and saying "There's no one who wants this over than I do," that "I would like my life back."
14. Don't blame the 24/7 news cycle. According to Google CEO Eric Schmidt, writing in Forbes: "What are our choices when we, whether as individuals or businesses, get it wrong--sometimes badly wrong? We can try to conceal our blunders, as so many people have done for so many centuries. But in a world where everything is recorded and stored, that is not a realistic option. Nor should it be. For a company that aspires to true significance or an individual who wants to rise to prominence, the question is, 'How should we behave?' The answer must be, 'We did the best we could and did so transparently.' In time this should move from a defense to an expected standard."
15. Even if you have a plan, you need to be able to adjust it as necessary. The nature of a crisis is that you can't always anticipate how the narrative unfolds. Developing and rehearsing a crisis plan is important. But it's also important to know when to change directions and adjust tactics, mid-crisis, to achieve your goals. After all, too often a seemingly minor issue can become the story -- like when the CEOs of the major US automakers flew on separate private jets to testify before Congress. The point: you may have to sort out the realities of the actual crisis as well as the perception around the crisis, and those perception issues follow a different, unexpected path.
    

For more, check out the Times article. The hardcopy also included a sidebar, "Three P.R. Nightmares" (not available online) that listed the cost of the impact the scandals had on the stock prices of Toyota, BP and Goldman. Interesting proof points to why crisis planning is important and valuable.

Five PR Steps AIG Should Take

There's been some discussions online and on Twitter about whether some companies are beyond the help of PR.

Mostly, the discussion centers on AIG.

If they don't change how they operate, then I agree: AIG is beyond the help of PR.

But I don't think that has to be the case.

Pre-crisis, AIG needed to focus on investor relations, not consumer PR because it does not sell to consumers. That has changed. As taxpayers, we now own 80% of AIG, having contributed more than $170 billion. AIG still needs IR, but it needs to reach out to the rest of us, too.

Here are five PR steps AIG needs to consider:

1. Apologize for mistakes made. Make it sincere, make sure people have a chance to hear it. It better be sincere because the public can tell when it's not. Act as if your jobs depend on it -- because the taxpayers and the country need you to get this right.
   
2. Explain the steps they're taking to get on solid footing. The taxpayers have committed at least $170 billion. Depending on whether you prefer the government cliche -- sooner or later that will add up to real money -- or the advertising spend cliche -- I know I waste 50% of my media buy, I just can't figure out which 50% -- AIG needs to clearly explain how it is using taxpayer money to get on solid footing. JetBlue pubslihed it passenger bill of rights, explaining the steps it would take; AIG needs to publish something similar, something easy to understand. This is complicated stuff, just check out part of the current explanation: "The facility carried a rate of LIBOR (the London Interbank Offered Rate – a widely used benchmark used to set short-term interest rates) plus 8.5%, a commitment fee of 2% on the loan principal and a fee on the undrawn portion of 8.5%." Meanwhile, the document that includes "AIG’s Plans Going Forward" could include some specific bulleted points to make it easy to understand what the company is doing.
3. Recognize that the culture of million-dollar bonuses and life pre-crisis has changed. They need to start by rescinding the bonuses. But they need to go further, and make significant changes to how the company and its employees interact with the public. Goldman Sachs employees now visiting New York City have to stay at Embassy Suites, not the Ritz, both to save money and because it owns Embassy Suites. Employees are grumbling about the change, but it's the right thing to do. In fact, AIG needs to take a hard look at the way it operates, from catered lunches to offsite golf boondogles and ask themselves, "Would I like news of this to be on the front pages of the New York Times?" Or, worse, "Would I like to see this as a segment on the Daily Show?"
   
4. Make sure PR counsel has a seat at the table, and listen to them. If they say a move or decision or event would look bad if made public -- listen to them. Realize you're operating under crisis conditions, and your PR should reflect that. Yes, that can be an expensive way to conduct a PR program, but it may help avoid significant problems. After all, taxpayers who feel wronged are more outspoken than shareholders. Taxpayers will complain, loudly and often, to politicians. And that won't help down the road, when AIG needs more money.
   
5. Continue to provide status updates on the progress AIG is making, be accessible, and engage by offering ways for the public to provide feedback. The image right now is a company run amock. AIG's senior management needs to continue to demonstrate that it is getting its house in order. That means being transparent. That means being accountable. That means making significant changes to "that's the way we always did things." By the way, AIG does have a web page devoted to informing the public; it's called AIG Moving Forward, and it's available from a button off the home page. The last time the page seemed to have been updated was March 2 -- that's more than two weeks ago -- with one link from March 14. It needs to be updated on a daily basis. It needs to have its CEO Ed Liddy regularly provide a video update on its site. And AIG Moving Forward needs to make it easier for people to comment and provide feedback. Overall, the site didn't look very friendly or engaging.
   

There are more specific steps AIG should consider -- namely measure stakeholders' attitudes, establish benchmarks, develop a stakeholder communications strategy. But that would require AIG to want to engage the American people. So far, the company has not sought to engage us. It has taken our money but shown little desire to be accountable or to act as if it finally recognizes that the new normal means the old way of doing business no longer works.