Category Archives: Social media

Managing Corporate Crises in the 21st Century

Published in the Telegraph-Journal 5th October 2012

What have corporations learned about communications and public relations when it comes to negative publicity? Continuous media coverage, aggressive reporting and a relentlessly unforgiving public have made it much more difficult for firms to manage negative perception, even in the absence of a crisis. But has media – social and conventional – altered the dynamics of corporate crisis management? Are corporations under greater pressure today than before the Internet? Conventional wisdom has it that the rise of social media is responsible for today’s increased pressure on corporations to manage bad press. Reviewing two of the most prominent corporate disasters of the last thirty years provides a useful context.

BP was suddenly involved in a major crisis in April 2010 when a pipe broke during deep water drilling in the Gulf of Mexico. An explosion aboard the Deepwater Horizon drilling rig resulted in a fire in which 11 workers were killed. Huge volumes of crude oil began spewing into the Gulf of Mexico from far below the surface. The oil spill would turn out to be the worst in U.S. history.

BP’s disastrous communications and public relations worsened an already bad situation. The company was accused of insensitivity to those who were negatively affected by the spill. At the outset, BP’s CEO Tony Hayward appeared defiant. He succeeded in further angering the public when he said “there’s no one who wants this over more than I do. I would like my life back.” He admitted not long after the spill began that BP should have had a better emergency plan in place. Hayward finally apologized for BP’s actions in June 2010, and said that “the Gulf spill is a tragedy that never should have happened. I’m sorry.” By that time, Hayward’s days as CEO were numbered and he quietly resigned a short time later.

In stark contrast, Johnson & Johnson’s CEO James Burke was called to manage a looming public relations disaster in the wake of the 1982 Tylenol poisoning tragedy which killed seven people. Burke’s reactions are for many a high water mark in corporate crisis management. When it became clear that the seven deaths were the result the tampering of Tylenol containers, Johnson & Johnson issued urgent warnings to people not to use Tylenol products. Production and advertising of Tylenol were immediately suspended. All Tylenol that was already on shelves was recalled at an estimated cost of $100 million to the company. On the news program 60 Minutes,Burke made an impassioned plea for consumers to return their Tylenol.

However, the contemporary response was that Burke’s reaction was unnecessarily extreme. Media accounts of the day focused on how the company would suffer from Burke’s over-the-top reaction. Today’s analysis underscores a very different conclusion. Burke’s handling of the incident, with his perceived honesty, was directly responsible for saving the Tylenol product and Johnson & Johnson’s brand.

In the case of the BP Deep Horizon oil spill, social media played a relatively lesser role than would be imagined today, even though the event took place only two years ago. But the outrage over Hayward’s perceived insensitivity and BP’s slow reactions played broadly across all media, with social media providing support for journalists’ analysis.

BP had no effective systems in place to deal with the oil spill crisis and it showed little ability to move quickly once the problem had occurred. But BP’s failure was not only in communications. Its handling of the crisis was a failure on many fronts. Members of the management team demonstrated little leadership after the event. They were unconvincing in their commitment to ensuring such problems would be prevented in future. They appeared indifferent to the environmental destruction and showed little evidence that they cared about what had happened.

In contrast, James Burke clearly understood the enormity of the crisis his company was facing and reacted in a way that remains the gold standard in crisis management. One can only speculate how he would have fared under the hot lights of contemporary media scrutiny.

Advertisements

Leave a comment

Filed under Media, Risk Management, Social media