HURRICANE SANDY AND THE MARATHON

Posted in Crisis Communication Failures, Crisis Management Strategy, Crisis Management Success Stories, dealing with a natural disaster, DECISIONS IN A VACUUM, Doing the right thing, Hurricane Sandy, negative publicity, New York City Marathon, Poor crisis management on November 12th, 2012 by mnayor

One of the most evident communications failures in the aftermath of Hurricane Sandy involved the ING New York City Marathon. Unquestionably the success of the Marathon paled in comparison to the misery heaped on New York (and New Jersey and Connecticut) residents who should of course have received and should continue to receive immediate and effective relief.

 

However, I cannot understand why the Marathon could not have been transformed into a major vehicle for focusing attention on and creating relief efforts for the residents of Staten Island, and The Rockaways, the areas ofNew Yorkthe most severely damaged.  I believe that the event could have been salvaged and made into something extraordinarily constructive instead of seemingly distractive and frivolous.

 

During the week of the storm Mayor Bloomberg kept announcing that theMarathonwould go on. He justified the decision by saying it would be good for New Yorkers. It  would bring the City together and lift everyone’s spirits. He also stated that no resources would be diverted from the relief effort. This comment, although true, was weak in light of the dozens of generators seen being transported toCentral Park  for the traditional pasta dinner, and the numerous port-a-potties being installed near the starting line. Granted these resources were private but it all seemed so selfish. This was crisis management and crisis communication at its worst.

 

What might have happened if the following had occurred? Mayor Bloomberg and Mary Wittenberg, president and CEO of the New York Road Runners (NYRR) jointly announced that theMarathonwas being renamed the Sandy Relief Marathon. The prize money was being donated immediately to the relief effort. The pasta dinner was cancelled and all generators and other private resources were being transferred to stricken areas. All port-a-potties were available immediately to the public. A telethon was being established for call-in donations during the race. All runners were being encouraged to donate their time in the coming days to support efforts. And so on.

 

The perception and the reality of theMarathonwould have been transformed into a humanitarian effort. That’s the way it should have been, instead of being billed as a cheer-leading, feel-good effort. Good crisis management in the Mayor’s Office and the NYRR was lacking. They had the time to make it happen but not the imagination or creativity. The resulting cancellation on the Friday before the event was a fiasco. An embarrassment for both the Mayor and the NYRR. The financial loss to the City is in the untold millions. The damage to the reputation to the event and the Road Runners organization remains to be seen. Certainly the thousands who travelled from abroad to participate now have a bitter taste in their mouths. The most common reaction was – We understand cancelling the event but why wait until Friday. If you had cancelled earlier in the week we could have saved the trip and our airfare.

 

We can only hope that nothing befalls the tri-state area again likeSandy, but if it does more intelligent and creative minds should grapple with a situation like theMarathonand utilize the notoriety of such an event to good and productive use. Obviously it is easier in hindsight to come up with ideas, but doing what’s right, sacrificing certain elements of an event and willingly taking two steps back in order to take one step forward would have burnished the image of the Marathon instead of tarnishing it. Trying to salvage an event in its entirety was and is perceived as putting yourself first. Placing the needs of those devastated bySandyfirst, and sacrificing some of theMarathon’s bells and whistles might have just garnered a lot more respect and kept a version of the race intact. Now NYRR has to renegotiate with product sponsors, ESPN and local affiliate WABC, and the participants themselves. It difficult to envision it coming out a true winner.

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NICKEL DIMED AND FIGHTING BACK

Posted in Anticipating A Crisis, Bank of America, Banking Industry, Business Crises of our own making, Business Crisis Management, Crisis Management Consulting, Crisis Management Response, DECISIONS IN A VACUUM, Excessive consumer fees, negative publicity on November 6th, 2011 by mnayor

The first time I noticed the flagrant imposition of an additional fee for a business service was when ordering Broadway tickets on line. It was a six dollar “service fee” per ticket. I paid the fee but was puzzled. I was paying the company for a service which they were in business to provide. Strange. Do architects charge an extra fee for putting their plans on paper?

Since then of course things have gotten much worse for American consumers. Airlines seem to charge for everything except the air you breathe, and probably don’t, in order to avoid a debate on how inferior that air is. Everywhere you turn there are extra fees for services and “things” that were once free. Understandably businesses and industries are trying to maintain their financial positions. Many want to bring back the good times when they were flush. Because of the weak economy, and the higher cost of resources, they must extract more from the customers who keep them in business in the first place. Obviously, much analysis has gone into the “cost” (interpreted to mean loss of customers and bad press) of implementing new fees. It is clear that most businesses are willing to sacrifice a certain percentage of customers who will bolt in anger, if the economics work.

But it appears as if we are entering into a new phase of business/customer relations. Customers are fighting back, asserting essentially that business has to have skin in the game too. In bad times business cannot expect to maintain the same level of profits or to ride on the backs of consumers in order to do so. Case in point: Bank of America’s announcement in September that it was going to impose a $5.00/month fee for debit card use. A debit card fee is a charge for you to access your own money for commercial or other financial transactions. It is the same money you have deposited with a bank and the same money it needs to conduct its lending business.

Some analysis definitely went into the Bank’s decision. New regulations have reduced the payments merchants pay the Bank for processing debit card payments and BofA didn’t want to just absorb the loss of income. Fair to say that many other banks also entertained the idea of customer debit fees. Some have implemented them. But, after witnessing the backlash from BofA customers, many backed off. BofA itself announced at the end of October that it would allow customers to avoid the fee if they maintain a minimum balance, or arrange for direct deposit of paychecks or use BofA issued credit cards. But just a couple of days later, it fully capitulated to the pressure and scraped the plan in its entirety.

Unlike Netflix which lost 800,000 customers after announcing a 60% price increase a couple of months ago, BofA will likely weather the storm without a major loss. Why? First, it announced its new fee well in advance and wasn’t the only bank contemplating debit fees, so it didn’t look like the only bad guy. Secondly, many of its customers are locked in to BofA with automatic bill paying, multiple accounts and complicated relationships. Unraveling a bank relationship can be complicated. Finally, BofA certainly calculated the loss of customers it would have to endure if it implemented the plan and decided it was worth it. Now that it has jettisoned the fee, many fewer people will transfer their banking relationship. But unquestionably, some damage has been done. There is a strong movement currently underway in the country to pursuade the public to withdraw from national banks and transfer business to community and regional banks and local credit unions.

People are no longer rolling over. They are fighting back, and businesses should realize that weathering an economic storm (or a regulatory reversal) is something to which all segments of society are subject. One segment is not entitled to be made whole at the expense of another. Profits made in good times cannot always be sustained – especially if they can only be sustained on the backs of others who are suffering just as much. Businesses and industries should be rewarded for innovation and creativity, for new and better goods and services, not for figuring ways of squeezing the hand that feeds them. The moral of the story is quite simple: a business can create its own crisis by being too greedy. Before making a dramatic decision that could adversely effect one or more of your stakeholders analyze both the short-term and the long-term costs. Many of your investors may also be your customers. Aiming for profit maximization may not necessarilly please everyone, especially if bonus maximization is the underlyiong motivation and result.

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SONY’S RESPONSIBILITY FOR CYBER ATTACKS

Posted in Anticipating A Crisis, Crises Communication, Crisis Communication Implementation, Crisis Communication Response, Cyber Attacks, negative publicity, Responsibility for date losses, Sony on May 22nd, 2011 by mnayor

Sony has been raked over the coals these last few weeks. Has there been just cause? And has Sony exercised good crisis management and crisis communication skills?

Between April 17 and April 19th the Sony PlayStation Network and the Company’s Qriocity service which streams video to Sony televisions and Blu-ray devices were hacked and knocked offline. Besides knocking out service, unauthorized persons obtained access to personal information including credit card numbers. An estimated 77 million PlayStation users and 12 million of their credit cards were affected, plus 24 million Sony Online Entertainment customers and over 10,000 of their cards. The services have just recently come back on line (Japan itself is an exception because the government is not yet sure they is secure) as of approximately May 14th.

There are two main issues that have gotten the public very agitated. First, did the Company handle its communications well? It took almost a week to publicly acknowledge the attacks and advise its customers that credit card information could have been compromised. This length of delay surely provided hackers with a large window of opportunity to utilize the information it had mined to the obvious detriment of millions of customers.

One of the basic tenants of crisis communication is to act quickly and have as much control of the dialogue as possible. The basic problem was evident, even if a great deal of operational research had to be done to identify the extent of the damage. The first goal should have been to minimize the vulnerability of its customers through immediate notification. By delaying, Sony allowed speculation to build up and therefore it positioned itself defensively, instead of taking vigorous proactive steps.

The other communications gaff came directly from Sony’s CEO, Howard Stringer. In a discussion with reporters on May 17th, he defended the actions of Sony when asked why it took almost a week to notify customers. He observed that the Company reported quickly, noted that many companies don’t report these breaches at all or only after a month, and then said “you’re telling me my week wasn’t fast enough”. This sounds a bit defensive and imperious for a CEO. Most customers would probably disagree with him, especially those whose credit cards could have used by the hackers, or those whose personal information may now be used for identity theft purposes.

The second main issue is operational. Sony must quickly tighten its security and provide safe and secure networks for its customers. The U.S. Congress and the New York Attorney general almost immediately jumped on the bandwagon to “investigate” this technological lapse, but hopefully these actions will not drain efforts away from identifying vulnerabilities and making data protection paramount. Customers need to be confident of Sony’s ability to protect them. Otherwise, it will lose out big time to Microsoft and Nintendo. That should be motivation enough to make Sony create one of the most secure networks available out there in cyberspace.

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CHRISTIAN DIOR – MEET CHARLIE SHEEN

Posted in Charlie Sheen, Christian Dior, Crisis Management, Crisis Management Consulting, managing your reputation in good times as well as bad, negative publicity, problem employees, reputation management, THE RHODELL GROUP on May 11th, 2011 by mnayor

Ah, to be blessed with an employee as talented as John Galliano. The problem is the more creative and (in)famous an employee is, the larger his head becomes and the more difficult it is for a company to reign in the beast.

What to do with an uncontrollable employee who is as much or more in the limelight as the company itself. The first rule of thumb is that the COMPANY is more important in the scheme of things than the employee (unless they are one and the same. See Martha Stewart). Certainly a Company can turn a blind eye to little things if those things do not really reflect poorly on the Company. After all you can’t go around canning every employee who gets a speeding ticket.

Nevertheless, there are very visible employees who act out in public and when such actions reflect poorly on the Company, emphatic, decisive action must be taken. The public for the most part applauded the actions of Christian Dior. John Galliano, its head designer, was canned on February 28th for making racist and anti-Semitic remarks caught on video. But prior to that, on February 25th, he had been suspended (pending the results of an inquiry into the matter) for assaulting a couple in a Paris bar, using similar anti-Semitic and racial slurs.

Now, here’s the rub. Did it take a venomous and outrageous video to get Dior to take its final action or was Dior at that point already. Perhaps the Company had already chosen the guillotine for Galliano. And if so, good for them. But the small time lapse brings up the real issue which should count as a lesson for most companies.

Most corporate executives when faced with a crisis like the Galliano affair want to accomplish two things: 1. Look like they are doing the right thing and 2. Salvage the talent in order not to harm the company. It’s the old slap on the wrist routine with fingers crossed that no one is really watching. In the case of Dior only a few days elapsed from the time of the first reported incident to the announcement of his firing. Assuming Dior had no prior information that executives chose to ignore, let’s give the nod to Dior, for realizing that there are thousands of talented designers out in the world waiting to be discovered and for decisive action that reflected very positively on this venerable house.

Contrast this with the affaire Charlie Sheen. On March 7th it was announced by CBS and Warner Bros. Television that Sheen had been fired from the hit TV show Two and a Half Men. It is not necessary to catalog the antics of Sheen over the last months to the present. Suffice it to say that the drunken rampages, coked up babble and other extraordinary behavior reflects a troubled, delusional mind and reflects poorly on both CBS and Warner. But what reflects even more poorly on them is their handling of the crisis. Inaction and vacillation seemed to have guided them until they were backed against a wall. The most telling comment to be made on behalf of the companies was that he was a good employee, was never late, knew his lines etc.

Having your cake and eating it too, is not always possible. A more respectable and man-up approach would have been to at least put Sheen on indefinite suspension from the onset until he got the help he needs. This would have shown more concern for the actor as an individual and would have shown that doing the right thing was more important than squeezing out as many episodes as possible before the implosion. Look where it got CBS and Warner. Egg on its face as well as a suit.

But that’s human nature. No one wants to self immolate. Companies almost always want to salvage what they can. But the moral of the story is that when you do take the right course of action, you almost always live to see another day. Perhaps bruised but with more dignity and respect. Just make sure your employment contracts allow you to make subjective judgments about the injury to your reputation that an employee is creating. An employee’s job description should always contain the obligation not to undermine, and even to bring honor to, your institution. Christian Dior – what would you have done?

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THE NEGATIVE PUBLICITY ENIGMA

Posted in Anticipating A Crisis, Business Crises of our own making, Business Crises We Create, Business Crisis Management, Corporate Crisis Management, Crisis Communication Strategy, Crisis Management, Crisis Mitigation, negative publicity on December 1st, 2010 by mnayor

Robert Walker wrote an article recently in the New York Times Magazine section entitled Good News, Bad News, about the negative publicity the GAP received over its attempt to change its iconic logo; and, in general, the fallout or lack thereof that can be expected from negative attacks.

He’s got a point. The old adage that any publicity, negative or positive, is good publicity is certainly not always true. But some forms of negative publicity don’t always do harm. Such is the case with the GAP logo fiasco.

What forms of negative publicity can hurt an organization? Clearly, reports of poor goods and/or services can be harmful. Reports of Johnson & Johnson’s tainted products over the last year have not helped its image. Reports of poor airline service have the effect of customers shopping for alternatives. A hotel devastated by a hurricane or earthquake or a terrorist incident has the same effect.

Stories about poor management will also turn customers off. Look at the banking and investment banking industry. All of these kinds of negative publicity have the effect of creating a crisis, and require skilled crisis management to counter the effects. The crisis management needed has to tackle two fronts: operationally to truly “fix” the problem and crisis communication to inform the public.

But there are other forms of negative publicity that don’t affect products, services or management, such as the GAP logo situation. True, some people were offended or reacted poorly to the proposed change, but what of it? It would take an extraordinarily sensitive GAP shopper or potential GAP shopper to boycott GAP because of this event.

A business crisis is one that effects a company’s reputation or bottom line. Did an unpopular proposed logo change genuinely affect GAP’s reputation? Did it affect the company’s bottom line? I think not. If it did, it was very short-lived and very ineffective. In fact, most stories about the incident stressed the many attributes about the business, its clothing products and its branding success. While GAP would most likely have opted for no publicity over its logo, no harm was done.

The moral of the story? Manage well. Provide excellent products and services. You may still be unable to avoid negative publicity or a crisis that is beyond your control but if your base is solid you will weather the storm.

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