Crisis communications and reputation management are central parts of media training. Companies face reputational risks every day, but few are ready to respond appropriately when a crisis hits. In this episode of CXOTalk, the former Chief Communications Officer of United Rentals explains how to prevent PR nightmares and offers many crisis management and communication examples.
Crisis communications and reputation management are central parts of media training. Companies face reputational risks every day, but few are ready to respond appropriately when a crisis hits. In this episode of CXOTalk, the former Chief Communications Officer of United Rentals explains how to prevent PR nightmares and offers many crisis management and communication examples.
A highly regarded communications and marketing executive, Bill is globally recognized for leadership in crisis communications. Bill Wohl brings experience in diverse industries, across global markets, and at companies from the Fortune 10 to the Fortune 500, working as in leadership roles at SAP – where he reported to the CEO and led CEO, PR, analyst relations, crisis, and field communications. He was the Chief Communications Officer at Hewlett Packard when the company had revenue of $120 billion annually with 300,000 employees. He was Chief Communications Officer at data management leader Commvault. Most recently, he was Head of Brand & Communications at United Rentals, a $9 billion revenue leader in the construction equipment rental space.
During the conversation, we discuss the following topics:
- Which events are truly a crisis rather than just a PR nightmare?
- First steps for crisis communication management
- Are data breaches a crisis?
- Is newsjacking ethical?
- Crisis communication and social justice
- Crisis communication strategies and corporate PR
- Reputation crisis management and corporate risk management
- The crisis management team
- Honesty in strategic messaging and crisis communications
- Role of media interviews and analysts in crisis communications
- Advice to avoid a PR crisis and manage crisis communications
Michael Krigsman: Today, we discuss crisis management, communications, and media relations with Bill Wohl, a world expert on this topic. Just briefly, tell us about your background and what your focus has been over these years.
Bill Wohl: I've spent the vast majority of my career, Michael, working in corporate communications. Most people have a good understanding of what that role is. We help companies with their messaging, their relationships with the media and external audiences, and of course, increasingly, social media.
Communications people are often pulled into the most unusual and difficult circumstances when crises arise. We've all been watching what has been a tumultuous year because of the pandemic and the relatively unstable political situation in the United States. There have been lots of discussion about crisis and crisis communications. Now, I run a consultancy that helps companies think about how to handle crises, how to counsel their CEOs, and how to set up and manage communication teams that are best prepared for that.
Michael Krigsman: When we talk about crisis management, crisis communication, what do we mean by a crisis? When do you kind of ramp up into that mode?
Bill Wohl: My perspective is that a crisis happens at most companies zero times a year. What I mean by that is a true crisis is one that has an impact on the company's total valuation (if you're a publicly-traded business) and overall reputation. That's what we would call in the public company world a material event. It changes people's viewpoint on the company so substantially that it requires a specific and different response.
I firmly believe that most companies go through a series of business events every year and those business events can be as simple as a software glitch, a customer goes down, a midlevel executive changes jobs, or a new product is announced. They don't warrant a full-blown crisis response. If a CEO dies in a plane crash, if an activist shareholder makes a play for the company's stock, if your company is accused of theft on a grand scale (for any business, public or private) that requires a different kind of response.
To give you a specific example, when I worked in communications at SAP—a company you closely followed as an industry analyst—we had a viewpoint that crisis was zero to one time a year, but we had 250 business events a year. Almost every day something was happening somewhere around the world with SAP. The importance of that distinction is to not get too distracted by the day-to-day and leave the special crisis response for when it's most needed.
Michael Krigsman: Then would it be correct to say that a crisis is something that affects the business as a whole as opposed to, say, one business unit?
Bill Wohl: Perhaps. Ultimately, for me, the test is, does it change substantially the perception, the reputation of the company in the eyes of its critical audiences? Those audiences are internal and external. If it rises to that test, it's most likely a crisis.
Michael Krigsman: Who decides that we need to go into crisis mode?
Bill Wohl: I think companies that have good discipline about this have a group of people that can quickly gather together and make that distinction. I find that that should not just be a decision left to the head of communications or even to the CEO who has a business to run.
Often, I would recommend that people have a core group of maybe three or four executives that work well together—typically communications, legal, human resources—those who are the most trusted advisors to the leadership team. They can usually make a very quick assessment. "Let's call in the crisis team. This is big," or "Let's assign someone to handle this and move on. Speed is important there.
Michael Krigsman: All right. Something bad has happened. The team has gotten together and they've ascertained, "All right. This is not just a run of the mill business event. We're going to have to pull out all the stops. Essentially, we're declaring an emergency." Is that the way to talk about it or no?
Bill Wohl: Every situation is different and unique but, at the end of the day, there is that moment where you say, "Okay. We're in it now. Let's get started." This is where I think companies that do a really good job in crisis set themselves apart because they've done the preparation.
The very best example, I think, are airlines. I think airlines intuitively understand that the ultimate crisis for them is an aircraft down.
All of my experience working around, meeting, and talking to people in the airline industry, these are folks who have volumes of plans that outline what is required because that type of crisis will always generate a huge media response. It involves federal authorities (wherever the plane happens to go down – the U.S. and internationally) and is a crisis of enormous magnitude.
They've got volumes of crisis planning and they rehearse this all the time. Simply the challenge of responding to thousands of press inquiries and sorting through which of those are the most important (with teams both at the crash site and back at headquarters) requires a lot of preparation.
Where I think companies struggle a little bit—because everybody will reach that moment where they say, "Okay, we're in a crisis."—is, are you now ready to take the next step? Have you thought that through?
It doesn't require that every business generate an airline sized crisis plan, but a once a year tabletop exercise so that people actually stretch those muscles and understand what it means to be in the midst of working with your colleagues on an unexpected event is really important to set companies who are prepared aside from those that are not.
Michael Krigsman: All right, so we've pulled the switch. We've determined that this is of sufficient magnitude that we need to go into crisis mode. What do we do?
Bill Wohl: Obviously, it depends on the circumstance. It depends on the group of people and the enormity of the challenge. Typically, it does require a division of labor.
In my experience, one of the first things to do is to very quickly have something to say. We live in a world of real-time social media and transparency. The audiences that matter to the company are going to need to hear from the company absolutely as quickly as possible.
I'll give you a good example, and I'm going to turn back to an airline example. I'm fortunate enough to have met some of the great people who run communications at Southwest Airlines.
They will often talk about the crisis situation involving a plane that left Dallas/Ft. Worth airport once traveling westbound and the roof of the 737 rolled back simply because of metal fatigue. You can imagine; that's a pretty scary situation. Think of the sunroof on your car suddenly opening but now you're in a plane at 10,000 feet with hundreds of people on board.
The airline learned of this pending disaster because of the social media tweets of passengers onboard. That's because the pilots were so consumed with saving the aircraft, they didn't have time to contact their operations center. (They have the radios to do that.) They were busy trying to save the plane.
Why do I tell this example? Because the social media monitoring team at Southwest Airlines were the first to learn of it. Who typically staffs a social media monitoring team? A bunch of 25-year-old kids who are on the frontline every day of dealing with delayed flights and angry passengers.
They were trained well enough to be given the authority to say, "We are aware of an emergency on our aircraft, which is unfolding. Our thoughts are with the passengers. We will provide more information as soon as it's available."
In the old days, Michael, company lawyers would have taken hours to even approve a statement like that. Yet, these youngsters on the social media team—as well trained as they were in crisis—knew that it was important for the airline to speak quickly.
Back to your question. Speed then becomes important. What do you know? That's important. What do you know that allows you to say something? Then be ready to constantly be evolving that message as the crisis unfolds.
Michael Krigsman: We have a question from Twitter. I love taking questions from Twitter and from LinkedIn. Arsalan Khan says, "Do you consider a data breach to be a crisis? Beyond just providing credit monitoring services to those affected, what are the best practices you've seen in response to data breaches?" We're going kind of down a very specific example, but I think it follows very closely, Bill, to what you were saying earlier about determining what's a crisis and what is merely a business event.
Bill Wohl: I think it's a timely question because many companies are going through that and, in recent weeks, we've seen this on an international scale.
When I was at United Rentals, we went through a phishing incident. It was a large one and it didn't happen because of anything that we did at United Rentals but it did impact a lot of our customers.
I do think that data breachers rise to the level of crisis simply because they involve the trust equation that exists between companies and their customers. What's important in those circumstances is to, as fast as possible, determine the extent of the breach and the potential for loss.
It also goes to the trust equation that customers have with a brand to assure that the transactions between the businesses are valid, appropriate and, of course, safe. That's why it does rise to crisis.
The good thing about data breaches is that while they all may be slightly different, the response to them is the same. You can plan for a data breach.
That's one of those circumstances in which you can say, "All right. Let's practice how that would be. What would we say as a company? What experts would we bring in? Who are the people involved in assuring that systems can be rapidly taken down, fixed, and returned to service?"
It's predictable. Almost every company is under attack almost every day, and so a company that isn't prepared for a data breach crisis at this point really has questions that should be raised because this one is easy to plan for.
Michael Krigsman: Again, it comes down to that planning that you were discussing earlier. Tell us more about that.
Bill Wohl: I think that, in the early day of crisis planning, everyone had multiple three-ring binders full of plans that outlined people, responsibilities, division of labor, chain of authority. Those things are all so important.
At the beginning, it was all about the size and scope of the plans. Today, it's really about the flexibility of the plans because the unusual nature of transparency of business today requires a lot more communication than it did in the past.
When the school of crisis communication was first built, you really could get your arms around a crisis and put a halt to a story and get it correct. Given the proliferation of social media, the speed of the Internet, and the inability of the media to be able to afford beat reporters who have a deep understanding of your business, the requirements to communicate are much, much steeper.
The number of audiences involved that you have to communicate to has also grown. In previous eras, there was less concern about talking to employees and more concern about talking to the press. Today, every audience is a critical stakeholder audience.
I could give you an example, which I think would be really important. When I worked at Commvault, we experienced an activist shareholder attack. In putting together the response to shareholder activism, which itself is its own unique science, one of the things that was really important to us was to make sure that everyone in the company had something that they could say.
The reality is, at every business, customers call the front desk and a receptionist answers the phone. They often are asked questions. Front-line salespeople are dealing with open deals that need to be closed and customers are going to ask questions about the crisis situation. Salespeople need to be armed with something to say.
Average employees will go to backyard barbeques and be asked by their neighbors, "Hey, I hear your company had a data breach," or "is being attacked by a shareholder." "Is your job safe?" They need to have something to say because, ultimately, they're all active on social media. They're all talking to customers, and everyone needs to be on the same song sheet on messaging.
Those of us that are in the crisis world understand how important it is now to arm our front-line people. At SAP, we started a program I called the Heads Up Alert. We had those 200 business events every year, Michael, I talked about earlier.
The list of people receiving the morning Heads Up Alert was in the thousands and our commitment to the business was, within one business day (less than 24 hours), you will hear from communications about what has taken place, why it matters to the business, and what you're allowed to say. I think that's a good discipline for any company to be prepared for a crisis.
Michael Krigsman: Raj asks, "What is your opinion of newsjacking in the event of a crisis in the industry?
Bill Wohl: Crisis creates an opportunity for the company under crisis and for its competitors. There certainly is a tactic that competitors will and can use against you in a crisis. This is why I feel it's so important to talk to salespeople.
Very often, a competitor will quickly use a crisis at company A (if they work for company B) to go after company A's customers. They'll go in and talk about the fact that company A will now be distracted by this crisis and it's time to do business with company B. I've actually also seen companies try to take a more positive spin and position themselves as better around the issue than the company that is facing the crisis.
Look. Those of us in business all want to be treated fairly. I don't believe in taking advantage of a competitor's crisis. If anything, as an industry player, a company should be supportive (even of a competitor) when those situations occur.
I'm not sure that that's exactly what Raj was asking about, but I hope it's a good answer to the question.
Michael Krigsman: Well, he has a follow-up. He says, "How do you respond if a newsjacking takes place?" We've seen a great deal of that in the last few weeks in cybersecurity, which then also implies that not everybody shares your viewpoint, your integrity, or ethical view around the use of newsjacking. Maybe, Bill, can you explain what that is?
Bill Wohl: Look. I think any time an organization purposefully tries to ride the coattails of a situation to their own advantage, you are (to a certain extent) hijacking. In a positive sense, Michael, you can also look at how companies would do that in a situation where there was good news and they try to ride that news stream to their advantage.
Let me take it back to the topic at hand, which is crisis management. I think it's important for CXOs (whatever role they're in) to keep their company focused on preserving, enhancing, and protecting their own reputation and not worry so much about what's happening around them.
There's no doubt that there will be grenades thrown across the fence when you're under attack as a business. We saw that at SAP, and I can talk about that.
In the end, you have to stay focused on the situation at hand. What has happened? Why has it happened? What does it mean to your business? How do you explain it to your stakeholder audiences? Then how do you make it right?
Look. We're all human beings. Everyone makes mistakes, which means, in business, companies will make mistakes. You've covered that as analysts.
While it might sound traditional to say it, how companies respond to those mistakes really speaks to their core business values, reputation, and leadership. The response to the mistake needs to be the focus of the effort not the distractions on the outside.
Michael Krigsman: Your approach is collegial, gentlemanly, and maybe a little bit old school. I don't mean that in a negative way at all, but old school, traditional of having integrity and ethics.
Bill Wohl: Look. Let's be clear. At the end of the day, crisis can happen to anyone, and so the tables can easily be turned. The right behavior, when your competitor is in crisis, is to be supportive because it's pretty easy for the shoe to be on the other foot.
Michael Krigsman: We have a very interesting question from Marissa Baum. She says, "Can we talk about crisis communication in terms of social justice? Companies have had to answer for either past wrongdoings or to speak about current events. How can we plan for this? How do you make sure that the message comes across authentically?" It's a great question.
Bill Wohl: It is. Frankly, Michael, you could have an entire program just on that topic.
Just today, we're recording today, we're having this program today in the wake of the storming of Capitol Hill. Someone may watch this program six months from now, so I wanted to provide the date context.
I can give you an example that's happened in the last 24 hours. It's a company called Goosehead Insurance. I've never heard of them before and I've never worked with them, but one of their employees was involved in storming the Capitol 24 hours ago. We know that because he recorded a video of himself doing that.
Goosehead fired him. He was a lawyer for the company, so he wasn't an average employee. He was one of the company's executives.
Now, Goosehead finds itself in the middle of a huge firestorm of press coverage because one of their employees was socially active. Why are they in the midst of it? Well, not only was the employee a lawyer for the company and they had to publicly terminate him, but the media's coverage behind the scenes has now uncovered that the executive staff at Goosehead, including the CEO and his wife, were significant contributors to the President and the Trump reelection campaign. Now, that doesn't really matter in its own right. In the context of this lawyer being involved on Capitol Hill makes Goosehead right in the middle of this big news cycle and that's a problem.
I would tell you that one of the things that I advise clients on responding to these social justice issues is to be really, really careful about topics involving politics. They need to be true to their brand.
What I mean by that is, if a company or a CEO (as a spokesperson) has typically been quiet on political or green issues to suddenly make a statement on a topic out of the blue will feel out of character or out of brand. That's typically when companies get themselves into trouble because their audiences sit up and take note that something has changed.
Then the tough questions: Why are you saying this now? Why haven't you said this in the past? Why are you talking about this one issue when you never actually talk about social issues?
In the midst of a crisis, one of the roles of the communications officer is to make sure that the statements being generated (whether they come from legal or from HR) are consistent with the character of the company on an ongoing basis so that they don't inadvertently signal a shift that is unintended. That's particularly true on social issues.
Michael Krigsman: When you have these kinds of emotional situations and the CEO or the senior leadership spokesperson says to you, "Bill, here is how I want to do this," and you say, "No," in the heat of the moment does that spokesperson listen to you and follow your advice?
Bill Wohl: If I'm working as a consultant, ultimately, the company makes the final decision about conducting its business. In between the lines on that question, Michael, is ultimately one of the critical issues that is faced by chief communication officers, which is to have the necessary status as a trusted advisor to the C-suite to be able to give very tough counsel.
Not every chief communication officer is in the position to be able to say to the CEO, "I think you're wrong here and here's why." That's why that work needs to be done in advance of the crisis. It's really important for the communications team to be in a position to be trusted enough to say, "We're doing this wrong and here's why."
Now, you don't always win those battles, but what's important is that communications represent the viewpoint of the outside world. "This is what people are saying about us. This is how this is going to be perceived when we say it," and that that's part of the decision equation on deciding how to respond to the crisis. Even when you don't get your way, that point of view needs to be represented.
I can remember—and it's been reported, so I'm not telling any secrets here—when I was the chief communication offer at HP and the moment of the greatest crisis. I gave communications advice that resulted in the CEO throwing a chair at me. That's a true story.
He didn't actually throw it at me to hurt me. He threw it across the room in frustration because of how the board reacted to the advice I had given him. That was high stakes, right?
That meant that I was giving really tough advice in a very difficult situation, but I had standing in that room to do that. Now, most CCOs will not get chairs thrown at them but the point is, you have to have the ability in a crisis to offer tough advice when it's most needed.
One other thing I would say to this particular question you raised, it's important that someone be the calm in the center of the storm. In a major crisis, it's a lot like a hurricane. You know, in a hurricane, there are hugely revolving winds of the storm and the closer you get to the center of the hurricane, the more intense the winds become. In a corporate environment, the closer you get to the conference room of the C-suite, the stronger the winds become.
You, as the crisis leader, have to be the eye of the storm because the eye of a hurricane, the winds are still, the storm is circling around you, but you have to be the person who does not bring emotion and energy, but brings sound advice based on experience. That's where crisis leaders need to be.
Michael Krigsman: Hearing about the CEO throwing a chair across the room, that's definitely a first for me.
Bill Wohl: It's all about perspective, Michael. I think perspective is important. Business crises are just that; they're business.
You know, because we've known each other for many years, in my private life I'm a volunteer firefighter and I've done that for nearly 40 years. One of the things that volunteer firefighting gives me is the perspective of life and death and the difference between true emergencies and emergencies.
When you're on an auto crash scene and someone is entrapped in a car, or you're standing in front of a house that's on fire and there are people trapped, that's life and death. When you're in the midst of a business crisis, I can bring that perspective in and say, "Hold on, folks. Take a big breath here. This is just business. The day will end. The sun will go down, and it will come back up tomorrow. We will move on as a business. Let's take a deep breath and find a solution."
While it may feel like life and death—may be the CEO gets fired, maybe the shareholders sue you, maybe your largest competitor accuses you of theft on a grand scale—it's still just business and life goes on. That perspective from my private life has been really helpful to me in the midst of some of the most difficult business situations I've faced over 30 years of doing this.
Michael Krigsman: We have a question on Twitter from Barbara Bates. Barbara says, "So many crises that we're dealing with are external to the business. What role do corporate communications have in helping companies decide how to address (or even whether they should address) a particular external event as a genuine crisis?"
Bill Wohl: We live in a very complicated world, Michael, and I think Barbara's question is a good one. It's complicated for lots of reasons. The pace of change in the world is constantly evolving geopolitically, from a climate perspective, from a business regulatory perspective.
One of the important roles of corporate communications people and the agencies that support them is to monitor all of that and get a sense of its direct impact on the company. The temptation, of course, is to always somehow decide that whatever is happening in the world impacts the business and should be commented on.
In the end, there has to be a test about the appropriateness of attaching your brand to a particular issue or situation. Does it fit the character and culture of your company? Is the risk associated with jumping in worth the potential upside of jumping in?
You could say that the opposite way, right? If staying out is a safe thing to do, but then are you perceived by your stakeholder audiences for failing to get involved in an issue that might be important?
What's gone on in the United States for the last 18 months is a perfect example. It's a huge election cycle. A lot was at stake. Employees have typically been polarized. They were either pro-Trump or anti-Trump. Those workforces were asking, were their leaders leaning one way or the other, and did the company take a particular position?
For many companies, the temptation to say something was very real. Unfortunately, getting companies involved in political discussions is fraught with risk, and the same could be said of the pandemic, which had a direct impact on businesses. I think that sort of forced people to be engaged in the issue.
The social justice issues that a previous questioner raised, the issues of green policies, even the issue that relates directly to what we're talking about—transparency for employees—all of those issues have potential positives and negatives. Communications people and the agencies that support them really need to think through those issues and determine what makes sense to be involved in.
Michael Krigsman: You can see I really try to prioritize the questions that come in over my own. We get such great and insightful questions, very often.
Bill Wohl: It's an opportunity to build relationships further than they may have been in the past. It's also an incredible risk to screw it up. I say that just being honest because some company executives are horrible communicators and may miss the opportunity to do exactly what this comment is talking about.
In a crisis, your employees, your shareholders, your customers, your partners, your stakeholder audiences are counting on you to do the right thing, respond appropriately, effectively communicate. If you do a good job at that, you can deepen and mature the relationships with those stakeholder audiences – no doubt.
There's also the risk that you don't do it correctly. Where companies tend to take their biggest reputational hits is when they don't handle the most difficult situations correctly. People can forgive the sort of day-to-day, but the expectation that the leadership team can conduct themselves appropriately in the midst of a crisis is really important.
One of the mistakes that companies tend to make in a crisis—and this goes right to the heart of this person's comment—is middle-level managers in the business love to sit on their hands during a crisis and allow the company spokesperson and CEO to parachute in all the messages to employees. That creates a real gap between the top of the company and the front-line worker.
That's why I think it's so important, in the midst of a crisis, to remember that internal communications is absolutely as important as external communications. We have to arm – not only arm, Michael. We have to demand that front-line managers meet with their people.
Example: The CEO makes a statement publicly. Sends an email out to the whole company, "Here's our response to this crisis." Immediately, the front-line supervisor for this team of 12 people should call those folks into a room and say, "Let's talk about what the CEO just announced and what does that mean to each of you. Do you have questions? Can we talk about what he/she just said and what it means to us in our function at the company?" That too often does not occur because we somehow give these middle managers permission to sit on their hands.
A good crisis plan really involves every level of management so that employees (that critical stakeholder audience) feel like they've not only heard from the big boss; they've heard from the people that signs their paycheck directly. That's an important component and speaks directly to the point that was made on Twitter.
Michael Krigsman: Bill, you made a comment that I think gets right to the heart of why this is so hard. You said that the risk of screwing up crisis communication creates a horrible risk. That was the term you used, "horrible risk," which I think gets to the point of why this is such an important topic.
Bill Wohl: It does, and also why I think there needs to be the distinction between a crisis and a business event. In a crisis situation, you should have thought through response, responsibilities, and roles. You clearly don't want to put people in roles where they don't belong.
Let me give you an example. I'm going to go back to my firefighting experience to make the case, but I think people listening to their program will intuitively get it.
What you learn quickly in the fire service, if you have 100 people in the fire department, there are about 5 of those 100 people that can hold the radio, wear the white hat, and serve as the chief officer. They are born leaders. They understand the role and responsibility of the leader to direct the crisis at hand.
There's a mass group of people out of that 100—I'm going to say 75 or so—that really are not leaders but they're committed to the cause. They go to training every week and they're kind of what I call the fence-sitters. What I mean by fence-sitters is, if you give them good training and good direction, they will go into battle at a fire scene without any hesitation. They know how to work together and they do great work.
Then the other—if I did the math right—15 people, they're the people who run around like chickens with their heads cut off. They insert a lot of emotion and chaos to a crisis. You don't want them on your fire scene.
Now, if I adapt that same model to the corporate world of crisis response, there are always a few people who are the natural leaders in the business. They should be on the frontlines. They should be the spokespersons and be providing direction.
The people who add emotion, concern, and unnecessary energy, they need to be hidden somewhere in the back office. They're not even answering the phones. They might be writing copy and helping, but they need to be away from the core team.
Then everybody else can get focused on doing their jobs, whether they're writing releases, answering the phones, conducting interviews, sending out briefing materials. That bell curve model of staffing is really important. When you insert leaders into that white hat role and you put them in front of the microphone or you ask them to speak to stakeholder audiences and they're not prepared, well, in a crisis, the risk is they can damage the business and, frankly, wreck their careers.
Michael Krigsman: When you're planning for a crisis, then we could say the talent management aspect, the choice of spokespeople is crucial. What are the criteria? Obviously, you just spoke about emotion but, clearly, leadership in the organization, and there are other factors. How do you choose those spokespeople?
Bill Wohl: Well, in a true crisis situation, there is an expectation that people in certain roles are involved in being a spokesperson. You start right at the top of the house with the CEO and, certainly, the chief communication officer as the chief spokesperson.
Then, depending on the nature of the crisis, other executives can be expected to participate as spokespersons. If it's a people-related crisis like a labor issue or a strike, the chief human resources officer might be appropriate. If it's a legal matter, the general counsel might be.
Behind all of that, Michael, is something that I call the spokesperson cascade. I think it's really important. Early on in a crisis is not the time to involve the CEO—even if it's the biggest crisis that the company has faced—because you want to reserve the CEO for the penultimate statement. The CEO should be able to come into the room (even deep into the crisis) and say, "Look. You've heard from everybody else, but I'm the boss. The buck stops with me. Let me tell you what happened and what we're doing about it."
Let me give you a perfect example of this. You'll remember ten years or so ago, Boeing Corporation launched a very famous new airplane, the 787. The Dreamliner was revolutionizing travel.
What happened in the first week the Dreamliner went into service? The lithium batteries in the belly began catching on fire. Now, this was a $200 billion investment by Boeing, highly public, and planes were catching on fire.
You live in Boston, Michael. You'll remember Japan Airlines' plane right there on the runway, live on television, in flames.
I was asked to comment during that situation about Boeing's response and the concern that was being raised about the media is, "Where the hell was Jim McNerney, the CEO of Boeing?" He had been the most visible proponent of the aircraft but 10, 15 days after the planes were catching on fire, no one had heard from the CEO yet.
I thought Boeing was incredibly smart in how they did that because the first spokesperson they put forward was the designer of the plane, the engineer, the gentleman who was responsible for the engine. He could answer difficult technical questions and he could work through those interviews because, at that point, Boeing didn't even understand why the batteries were catching fire.
They were using – I don't want to call him a junior leader because this was a gentleman who was highly responsible at the company. You start lower down and you work your way slowly up.
Another effective technique that Boeing used during that crisis is that they got their customers to go in front of the media and talk about their faith in the company. The day before I appeared to talk about the Boeing response to this crisis, Robert Crandall, who had been the chairman of American Airlines for 25 years, was a guest on Bloomberg. He talked about the fact that he personally had purchased billions of dollars of Boeing aircraft and he had complete confidence in Boeing engineering and Boeing as a company to respond to the crisis. Using third parties to step forward is also a way to avoid the CEO's participation until the right moment.
Ultimately, Boeing's CEO did comment, but he commented once the company completely understood why the lithium batteries were catching on fire and what the company was prepared to do to resolve the issue. That's what I mean by the cascade of spokespersons.
I often spoke for the brands I worked for as the chief spokesperson, but I always knew that if I didn't get it right or the situation changed, ultimately the CEO could step in and say, "Well, you've heard from my PR guy, but I run the company." Even above the CEO is the chairman of the board. In a crisis, you use people based on the appropriate role, but you consider using third-parties like customers to also support the situation.
Michael Krigsman: In a crisis, how open should we be? To what extent should a leader acknowledge that, "It's our fault. We screwed up"?
Bill Wohl: I think transparency is an expectation in today's world. Too often, people tend to think about PR as a way to hide problems.
There is a level of transparency, obviously, that you need to take to support the business and its brand and reputation. There is no reason to over-communicate more than you need to say. But, at the same time, in the midst of a crisis, you're trying to protect reputation, people's faith in your business, and honesty is a way to really get to the heart of the issue.
I want to give you an example that I lived for almost three years. When I was a communications leader at SAP (a giant enterprise software company) – Michael, you follow them – we came into work one day to find an announcement from Oracle (our chief competitor) accusing SAP of theft on a grand scale. In their press release, they announced that SAP had stolen trade secrets of the company and they were suing us for multiple billion dollars.
It was a shocking announcement. I'm sure you can probably even remember where you were that day. I know I can.
Here's the thing. You think you're having a bad day. Then, 72 hours later, we figured out it was actually true. My company was guilty of theft. That's a very difficult situation to be in.
Of course, we didn't realize that at the moment the press release was issued. It took a little bit of digging. Ultimately, we discovered that a small business unit of the company that was purchased for $100 million—a company we acquired, a few employees (ten, in fact) way down in Southern Texas—had actually taken some of Oracle's proprietary material.
Here we are as an executive team faced with what we've been accused of – theft. Most companies would say, "Well, we don't comment on pending litigation," and we did that for about 24 hours.
Once you discover that you're actually guilty of it, you have a real choice to make. The choice to make is really born out by what is the ultimate resolution of this situation. Working closely with the executive team and the legal department, our goal was to protect the company's reputation, make sure this doesn't happen again, and not pay the $3 billion that Oracle was demanding.
Ultimately, our communications strategy, which was linked tightly with our legal strategy, resulted in us advising the CEO of the business (us as communicators in partnership with legal) to issue a statement that was this:
"We're aware of the accusation by Oracle of corporate theft and, unfortunately, based on our investigation, we have determined that that indeed occurred. We're sorry and we've taken immediate steps to make sure that it never happens again. We've also instituted a plan of action to make sure that the customers that were directly involved in this situation are transitioned in a way that protects their business. Then, of course, we want to make sure that Oracle is appropriately compensated for the actual damages they experienced."
You may remember that language from those days. That was the statement we used for the next 24 months, all the way through the trial in federal court. People were surprised that we 1) admitted that we were guilty and 2) that we wanted to pay Oracle.
In the end, our strategy was to make sure that when this was all said and done, we weren't giving Oracle billions of dollars, but we were giving them what we estimated on the first week was probably a court case worth several hundred million dollars. After four or five years, the case was ultimately settled for $350 million.
During that period, Michael, and even while the case was in court, SAP enjoyed the best share price in the company's history up until that point. Why? Because we were honest and transparent.
During that period, we were constantly surveying our customers, and our customers never lost trust in us. Were they disappointed that it happened? Yes. Did they appreciate that we were honest with them about what took place and that we wanted to compensate Oracle? Yes.
That was an important lesson that speaks right to your question. Too often, people assume that the crisis response is to say, "Hey, I didn't do it. It didn't happen." But if it did, it's best to be straightforward about it.
Michael Krigsman: What if there are legal implications of that? You come out. Somebody was killed, for example, in a factory. You come out and acknowledge that this happened and that the company was at fault. You immediately open yourself up to a lawsuit.
Bill Wohl: Well, there's no question, but you're opened up to it no matter what. I think this is ultimately, in crisis, the importance of planning and, in particular, partnerships elsewhere in the business.
One of the things I've learned over nearly 40 years in this business is that my most important partner in crisis planning is the general counsel. There is not a crisis that a company faces that does not involve a legal aspect and component to the situation.
I have to have a trusted working relationship with the general counsel. We need to share secrets on both sides. We need to be transparent with each other and we cannot have conflicting agendas.
It would have been very easy in the SAP situation for the general counsel to say, "We're being sued for billions of dollars. We're not going to talk." That would be a classic response from a lawyer. I think the lawyers intuitively understood that for us to get to our strategic goal, which is to minimize the damages, it was important for us to communicate in a way that got us to that end goal.
People often underestimate the importance of protecting the company's legal interest, but I would say this, which I think will make some general counsels cringe. Lawyers provide advice. You don't have to take it. Just like communicators provide advice that you don't have to take. This is why the CEO's job is so hard.
Now, lawyers will say, "Well, if you don't take a lawyer's advice, you lose a lawsuit or you go to jail." Okay. Fine. But you can't have legal dictate 100% of the response of a crisis any more than you can have communications dictate 100% of the response.
That's why having that core crisis team that practices is so important because, in the end, the CEO is going to have to make a judgment. If he looks around the table and his lawyer and his CCO are yelling at each other, he's in a world of hurt.
Michael Krigsman: Bill, we have another question from Twitter, a really interesting, related question. This is from my colleague Lisbeth Shaw. Lisbeth says, "What happens when company behavior is at odds with the crisis communications plan and messaging?"
Bill Wohl: Well, then you run the real risk that everybody gets in a world of hurt. I think it's very easy to say it's important that your crisis response be consistent with the culture of the business, but I don't think you can underline it more.
The character of the company is the character of the company. If your crisis response is out of step with that character, or your character is out of step with the response needed, you're in a very, very difficult place.
This is really an important topic because companies that are sort of rotten to the core will always be rotten to the core. I always say that good communications can't solve bad business strategy. Even a good crisis response cannot resolve a complete failure of a company to operate itself in a solid fashion.
Let me go back to Oracle for just a second. I have some good friends who worked at Oracle, but if I can take us all the way back to the 2000s and the 1990s, what did people know about Larry Ellison? Larry would pull any dirty trick in the book he could to build his business. His people famously rooted through the trash at Microsoft at some point.
Look. Everyone understood that Larry was willing to do whatever it took to grow his business and that's why he's one of the biggest brands and one of the biggest Wall Street successes that occurred. People would excuse Larry's behavior if he and his people were just a little bit on the edge.
As a competitor to Oracle at that time, working for SAP (a German-centered business), business ethics and the way we conducted ourselves were really important. There was always that contrast between SAP and Oracle in that battle. In the end, good behavior matters in business, and companies that cannot step up to good behavior will find themselves in crisis on a repeated basis.
I think it's important for crisis leaders to always make sure that there is a gut check, that the way they're responding to the crisis feels like it fits with the business that has been done. This is really important because industry analysts (like you and others) will immediately suspect a business if the way they're responding to a crisis feels very different from the company they've gotten to know through the years.
There's another lesson in this. Pardon me while I just extend the answer.
You cannot build relationships of trust in the midst of a crisis. Part of good communications planning for crisis is to develop relationships with industry analysts, with reporters, with your stakeholder audiences. If you don't have a good reputation with those audiences, a good working relationship with business press, you can't develop those relationships in the midst of a crisis.
For example, if you're a public company, you're worried about activist shareholders. If you don't know the guy who writes about shareholder activism at the Wall Street Journal and you've not talked to him before, trust me, you don't want to have your first conversation with him 3 o'clock on a Sunday morning saying, "Hey, I'm about to push the button on a story that will feature your company tomorrow morning."
I'll tell you how I experienced this, Michael. This is a really important lesson for crisis.
When I worked at Hewlett-Packard, we were in the midst of a crisis almost every day of Leo Apotheker's tenure. I can remember getting a call from a Reuters reporter. I won't name him, but somebody that I worked with very closely through the years.
He called me and told me about something that he knew had happened at HP. He was prepared to issue a story.
I asked him to give me an hour to find out if it was true. It turned out that it was true. If he published the story, it would require us to issue earnings earlier and would have been really disruptive to the business.
Because I had a relationship with that writer over many, many years, I was able to put context on the story he was writing because he trusted that I would be honest with him because I was willing to say to him where we had screwed up as a business. You can't build those press relationships when the crisis is already taking place. That all has to be done in advance.
That's why SAP got through the Tomorrow Now crisis because, over 30 years, it had convinced its customers, the media, and analysts that they were a business that conducted itself ethically and appropriately. When they got a body blow of being guilty of theft on a scale, people were willing to forgive them and look beyond what was happening.
Michael Krigsman: You've mentioned media and analysts a number of times. What's the role of media and analysts when responding to a crisis?
Bill Wohl: Well, they've got a job to do. I think good crisis communicators and CEOs will understand that there is a conversation taking place about your brand everywhere: in the press, online, among industry analysis, in social media.
Whether you're in a crisis or not, that conversation is happening about your business. You can't stop that. In, fact, we're way past the days where communicators could actually control that conversation.
What we can do is influence the conversation. Because reporters and social media is a way to reach audiences that you need to communicate with during a crisis, it's important to use those channels appropriately to send the right messages.
For example, if your company is facing a business crisis, you may not want to talk to the Wall Street Journal but, guess what, most of the Wall Street analysts who watch your company, and most of the people who own millions of dollars of your stock, read the Wall Street Journal, so you really want to make sure that the Wall Street Journal's coverage of your crisis tells your side of the story. If you set them aside because, "Well, I don't want to talk to the press. We're in a crisis," well, then someone else is going to write your version of the story and you might not like what they have to say about you, so engagement is really important.
Michael Krigsman: We have another question from Twitter. This is again from Arsalan Khan. Arsalan is a regular listener to the show, and he asks great questions. Thank you for listening, Arsalan.
Arsalan asks, "What about a crisis within a particular department that can affect the whole company? Do we need crisis response teams for internal departments to effectively communicate rather than just finger-pointing?"
Bill Wohl: What's in the midst of the question is that the department crisis could impact the whole company. When it does, it does involve a potential crisis response.
The challenge with crisis situations is, as much as we can practice and prepare for them, you never quite know what a crisis is going to be until you get into the middle of it. That's why you need a group of leaders who can use their experience and their training to ascertain the depth of the situation and the potential broadening downstream of the risk.
This is where I think people, to an earlier question that was brought up, get in trouble about data breaches and phishing incidents. They often occur down within a business unit or at a particular location. Smart people understand that they will typically cascade into something much broader and much larger.
The tough questions you need to ask within the first hour of a crisis is, what's going to happen next? Do we really understand that it stops here or are we really not sure?
Typically, in a big corporation, people are always looking to save themselves in front of management, so they hold back information and say, "Oh, this is no big deal. It'll go away. We've got this under control."
Where people in corporate headquarters have to ask questions is to really probe and say, "Well, what do you mean by under control and what has really happened?" I don't think it makes sense to set up crisis teams all over the place.
Certainly, if you're in a large corporation with big business units—let's say you're in General Motors and there's a truck division, there's a car division, there's a China division, and there's a South America division—okay, they're very separate and disparate, probably billion-dollar businesses on their own. They certainly need a communications infrastructure.
But in the end, there is a core team that thinks about the GM brand overall. It really is a sort of "it depends" answer to that question.
Michael Krigsman: We have a question from Twitter from Constance Woodson. She asks, "What's the difference between chaos and a crisis?"
Bill Wohl: In the end, you still have to come back to whatever is going on. How does it directly impact the business?
I think crisis situations can lead very quickly to chaos but chaos doesn't always happen to lead directly to crisis. How do I put that in context? I think emotion can overrun businesses pretty quickly. Faced with a crisis like labor unrest, a lawsuit, or something, ill-prepared executives can bring a lot of emotion in and, suddenly, a situation that should be easy to control sort of falls into chaos.
On day three, a large customer cancels. On day four, the head of sales says, "All the deals that we have in play have been canceled. Our year has been destroyed." Very quickly, it feels like the wheels are coming off. That's a crisis decaying into chaos.
There are certainly situations where chaos doesn't necessarily have to turn into crisis. Let me use the pandemic as an example.
None of us really understood on March 1st that what was happening in China would shut down the American economy but, as the weeks progressed, it became clear that the chaos of COVID was going to have an impact on all of our companies.
The companies that were well-prepared did not let the chaos overrun their business. They very quickly took sound business decisions and communicated on how they were going to adjust their business models in anticipation of the chaos, but they never let it become a crisis for their business. Not all companies can say that. More than a few really faced the chaos of the situation.
The two are related but they don't necessarily follow each other. It ultimately goes back to situational chaos does not have to be a crisis for the business if you're well prepared and practiced. But a real crisis can devolve into chaos if you also have not well-practiced and prepared.
Michael Krigsman: As we finish up, let me ask you just finally for two, three pieces of advice on crisis management, what you think are the most important takeaways for folks that are listening.
Bill Wohl: We've talked extensively about preparation. While I don't think most companies need to spend hundreds of thousands of dollars on crisis planning, I do think any smart business should have a communications leader.
It's amazing to me. I still run into publicly traded companies that don't have a chief communication officer, but they need a crisis plan and they need to do tabletop exercises at least once a year to flex those muscles. Preparation is the first lesson.
The second lesson is, there is nothing about asking for help that is a sign of weakness. We didn't talk about this earlier, but I'll touch on it briefly.
As the head of communications, I don't really like to go to the CEO and say, "I don't know what to do here. I need help," but in fact, during a crisis, this is exactly when you should turn to help.
There are agencies that specialize in crisis just like there are lawyers that specialize in law. No general counsel goes into court to defend an employee on a criminal charge. They hire a criminal attorney.
Why would a communications person be uncomfortable asking for help in the midst of a shareholder activism situation? There are firms that specialize in that. Ask for help because you may need that help.
The third thing I would say is, don't forget to run the business. Right?
Go back to the SAP situation. We understood that the Oracle matter would be with us for at least 36 months, so we dedicated a team of business leaders, lawyers, and communicators like me to focus on the Oracle crisis.
We told everybody else in the company, "Please go back to work and take care of our customers. We still have numbers to make for Wall Street. We still have deals to close. We still have software to build and deliver, and we have customers to take care of."
To the question about chaos, if you let a crisis dominate you to the point where you stop running the business, why fight the crisis? The whole thing will implode.
Don't forget, in the midst of a crisis, to still run the company. That's the expectation of your employees, your customers, and your shareholders. Those are three lessons that I think would be at the top of my list.
Michael Krigsman: All right, Bill Wohl, very sage and very practical advice. Unfortunately, we are out of time. I want to thank Bill Wohl. He is a great marketing leader and I hope that folks listening have enjoyed this show.
Thank you, everybody, for watching, especially the folks who participated and asked questions.
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Published Date: Jan 08, 2021
Author: Michael Krigsman
Episode ID: 686