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Crisis Communications as a Prerequisite to Change

Crisis Communications

Two great reads – one on business strategy and the other sage advice on crisis communications.

by Frank Strong

The difference between good companies and great companies may well be the difference between those that avert potential crisis and those that react to a crisis.

It is the difference between being “committed-to-excellence” rather than only demonstrating that commitment only when someone important is watching.

There’s a second problem with reactionary thinking: the company forgoes the ability to choose the space and timing of the crisis.  Like Murphy’s Law, crisis happens when you can least afford it and siphons away resources and wastes valuable time.

Sometimes companies can do a lousy job on crisis communications and survive; Exxon and BP come to mind.  Sometimes companies can do a lousy job with a crisis and sink; Eron and Anderson Consulting for example.  

Eron was an incredibly complicated case which Malcolm Gladwell covers extensively in his book What the Dog Saw.  Gladwell argues that the deals Eron was making — buying and selling assets from itself for accounting’s sake — were so complex, even the leadership could not possibly have possibly understood the extent. Anderson Consulting spawned Accenture, which was in part, a collection of fragments from a dissolving company.

The outcome of these two ventures are of course related, since Anderson Consulting was responsible for auditing Enron.  Enron ran out of cash, what assets it had left were sold off, and investors were lucky if they saw a fraction of their money back.  Some lost their life savings, a disastrous event, which at a certain age, cannot be corrected.

Accenture on the other hand is now one of the largest companies in the world by revenue and is counted among the Fortune 500. Even a reaction to a crisis can lead to a positive outcome.

 

Negative Attention Drives Change

Poynter pointed to a research study that found negative media coverage can drive change.  It links to a more complete article (registration required) that summarizes the findings.  The authors randomly selected 250 companies from the S&P 500, kept tabs on them for five years and analyzed 40,000 articles that were published in that time span.

The study found negative media coverage impacts corporations in three ways:

  1. Exposes news companies attempt to downplay, like layoffs or unsuccessful initiatives
  2. Raises awareness about an issue or point of contention
  3. Uncovers wrong doing

Coverage of such events in volume sometimes, caused a change.

In their analysis, the authors found a link between the volume of negative media attention that a firm experienced and the likelihood that the company would subsequently undergo a strategic shift that was responsive to at least some of the problems that the press had cited.


Why Wait for a Crisis?

Business is by definition leaderships’ ability to manage finite resources to generate a profit.  This can only be done by setting priorities, and avoiding crisis, that being committed to excellence, in the true sense of the phrase, is a better leadership technique.  As the article concludes, the media’s role is often one of scorekeeper.

The media is neither an enemy nor an ally to upper management, according to the authors, but one of a number of key stakeholders that can significantly shift a firm’s direction, often for the better.

Ten years ago, maybe even five, a corporation might have been able to keep less complimentary news quiet. Today it’s virtually impossible and a losing strategy. If negative media coverage is going to force change, isn’t it simply better to avoid the ringer and address the issue long before the groundswell boils over?

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