Posts Tagged ‘crisis’

Crisis Analysis, SocMed Use, Get Globe/Mail Attention

Friday, June 11th, 2010

Canada’s outstanding The Globe and Mail has two stories today worth noting.  Vancouver, B.C., retailer Lululemon is using Twitter to gather intel from its customers about what sizes and colors to stock; British Petroleum gets second-guessed in its crisis communication strategy under the headline, “Lessons in Leadership Spill from BP.”

BP’s feckless communication strategy, especially demonstrated by company CEO Tony Hayward’s frequent gaffes when speaking off the cuff, deserves to be pilloried. Hayward and company were obviously led by lawyers in this regard, minimizing the potential impact of the disastrous gusher, appearing too rarely in public and pointing blame to subcontractors. Hayward’s “I’d like my life back” rang especially tone-deaf in the wake of 11 deaths and the potential for catastrophic wildlife impact (not to mention the economic peril for the gulf fishing industry.) Several communication experts get quoted in Wallace Immen’s excellent piece, including Michael Stern (Michael Stern Associates), Prof. Julian Barling (Queen’s University School of Business), and Guy Beaudin, (RHR International).

Lululemon sells athletic ware, and by all accounts does a bang-up job of it. Some of the success, according to CEO Christine Day, is due to its use of social media — Twitter and Facebook.  Reporter Marina Strauss quotes Day: “We learn more about [which items are in demand] on Facebook and social media: what are the guests really screaming for, and so we use [the feedback] to get a little bit more indication.”

Keeping an eye on its 127,000 Facebook fans and 32,000 Twitter followers gets Day and company a faster view than its store performance metrics (and offers perspectives from people who are just thinking about going to the store, rather than having bought something there — that’s an interesting view on potential demand, the pipeline, some call it.)

The social media use has two purposes, according to the article — to gather information, and to drive traffic to the company website. When we’re looking for ways to measure the effectiveness of social media, website traffic is more often cited than the research value, which is a pity.  Going back to the ROPE method of communication planning (Research, Objectives, Programming, Evaluation), you don’t have anything without the research.

If social media served no other purpose than market intelligence, it’d still be worth the investment, no?

{P.s., my Canadian sojourn is nearly complete – back to a more regular schedule next week.)

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Big Banks Get Whipped: 2008 News Coverage

Monday, April 26th, 2010

Think back two years. The financial crisis hit its gallop around this time in 2008, when the U.S. government sold Bear Stearns to JP Morgan Chase before its wrecked hull could breach and take the global economy down to Davy Jones’ Locker.  But that was just the beginning of a wicked huge bear market brought on by inflated real estate prices, preposterous mortgage loans, complicated and unregulated investment vehicles, and a collapse in confidence by everyone from global investors to your local school custodian.

Those of us who watched from a courtside seat (and wished we were in the bleachers, one bank CEO said) remember it all too well.

That’s why I thought twice about hearing University of North Carolina-Chapel Hill’s David Remund, a doctoral student, present his paper, “Crisis of Confidence: News Coverage of America’s Largest Banks During the 2008 Financial Crisis” at the 13th Annual International PR Research Conference.

Remund did a content analysis of news releases and national and local newspaper coverage of the 10 largest American banks for the second half of 2008, looking for some kind of systemic understanding about how these banks used crisis communication techniques to spray some pain-killer on the daily parade of negative information marching down Main Street.

Two crisis communication theories applied: Image Restoration Theory, which holds that if you’re at fault, you admit it and share the steps you’re taking to address the situation and prevent it from recurring. Situational Crisis Communications Theory says that you need to show concern for people who’ve been hurt by your crisis. Remund’s hypotheses offered that banks that acknowledged the financial crisis and showed concern for consumers in their media relations efforts would enjoy a higher proportion of confidence-building news coverage as a results.

Whoops. Remund’s findings were the exact opposite, with neither hypothesis supported.

Instead, the media pretty much held that banks’ actions contributed to the financial crisis, and the quietest banks got the greater proportion of positive coverage.  So, what happened?

As I wrote in my own research covering one company, the crisis had so many contributing factors, was so broad and so extensive that we got to the point where facts and data simply didn’t matter. It was a mob, running headlong down the street screaming, “Run! Run!” Everybody had to run, even as they asked what what happening. Secondly, Remund’s research drew from a rather small batch of news outlets and from only the largest banks.

Finally, by the third quarter of 2008, the news media wasn’t about to trust pretty much anything that banks had to say. Washington Mutual raised capital and swore up and down that it was solvent, even as its capital dwindled away toward federal seizure. Lehman Brothers didn’t think it had any problems in the summer and was dead by September. IndyMac, Countrywide, Wachovia, National City… all positioned themselves as in good shape — but what else could they say?

We PR people are always recommending the most transparent approach — the article of crisis communication faith seems to be , “Tell it first, tell it fast and tell it all.” Aside from a recent study, all the literature calls for that type of approach.  I believe it’s far more situational — once you’re in a systemic crisis that reaches past you and your world, your ability to affect its course gets a lot more difficult. Sometimes, you just have to wait it out.

The Remund study reveals more about the limits of crisis communication, than about bank public relations in a crisis.

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Amazon’s Recovery from Kindle Content Deletion Crisis Evaluated

Wednesday, March 24th, 2010

In the middle of 2009, owners of e-reader Kindle got a nasty surprise when Amazon snatched back e-books that it turned out were supplied illegally. Amazon’s supplier didn’t have the rights to distribute the content, so Amazon accessed Kindles and deleted it.

Seems like no problem to me, but then, I don’t have a Kindle. Amazon got to enjoy seven days of flame and shouting for its trouble.

Drs. W. Timothy Coombs and Sherry J. Holladay of Eastern Illinois University (kind of a hotbed of pithy PR scholarship), presented a paper about Amazon’s week from hell at the 13th International PR Research Conference.  Dr. Coombs is a preeminent theorist on crisis communication, the author of several books and papers about it, and a good presenter who carries a quick wit with his slide rule.  He a smart dude.

Apparently, the “Kindle Community” was pretty angry about having “their” stuff unceremoniouslyyanked. Amazon’s notification statement lacked complete information, or ordinary human compassion, according to those who read it:

“The Kindle edition books Animal Farm by George Orwell, published by MobileReference (mobi) and 1984 by George Orwell, published by MobileReference (mobi) were removed from the Kindle store and are no longer available for purchase. When this occurred, your purchases were automatically refunded. you can still locate the books in the Kindle store, but each has a status of not yet available. Although are rarity, publishers can decide to pull their content from the Kindle store.”

Commenters went ballistic, and before you could blink, there were boycotts threatened. So Amazon CEO Jeff Bezos posted an abject apology, saying in part: “Our ‘solution’ to the problem was stupid, thoughtless, and painfully out of line with our principles.” He beat on his company pretty hard.

Coombs and Holladay found that the florid, nearly over-the-top apology worked very well. 71 percent accepted the apology, nearly 16 percent accepted it conditionally, and just 13 percent rejected it.  More important, more than 21 percent indicated they were more likely to buy from Amazon versus 10.5 percent said they were less likely to buy.

So what’s that mean? It means that Coombs’ main theories of crisis communication are holding steady in the online world — the process of admitting you’ve done wrong, taking steps to rectify the situation and ensure it won’t happen again, and beating yourself up a bit in the process result in restoring positive feelings among your stakeholders.

There surely are crises where this won’t happen — some things are just too bad — but this study gives additional support to the basis for advice during crisis times.

Watch for the complete paper in May when the IPRRC proceedings are released.

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‘Dr. Doom’ sees $3.6 trillion in bank losses

Thursday, May 7th, 2009

NYU’s econ maven Nouriel Roubini hasn’t yet glimpsed any sign that the system financial crisis is abating.  In the WSJ Tuesday, the “professor who called the housing and credit collapse” and his co-writer paint a horrifying picture of bank losses yet to come, and call for an interesting solution for the government to apply.

  • Getting toxic assets off of bank balance sheets is essential, Roubini writes.  It’ll be a bloodbath for the firms, which will need to reduce dividends as well as cut salaries and bonuses, and there will be failures. Of course, how this is really different from last year, I don’t know.

  • The public relations issues that the ongoing crisis foment are legion — not the least of them will be the tendency of companies to clam up during a time when they most need to speak up. Transparency isn’t situational — it carries myriad risks at any time, but opaqueness also is a risky play.

  • Here are three things the banks should do immediately:

    • 1. Recognize that their employees can help manage the significant customer impacts arising from bad news. Prepare them and their managers and call upon them to reach out to customers all of the time.
    • 2. Take your medicine: The news media is going to focus on the worst aspects of the crisis and its impact on your firm — don’t be surprised by this and don’t try to talk them out of it. The best you can hope for is that your most urgent message (sometimes two or three) can be included in the story.   Don’t ignore “bad press” with either customers or employees — you need to have ongoing dialogue with your stakeholders anyway, so talk about the story and where you felt it went wrong. (but don’t throw rocks at the media, it’ll never work…) The stories are a pretext for conversations.
    • 3. Consistently remind your stakeholders of your commitment to them — and your plans for working through the issues. You gain much more from talking about these things than not.
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