Crisis! How to plan for and deal with it
03 July 2016
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Hello and welcome to another edition of Old Mutual Live Business, my name is Chris Gibbons. Most people who have spent time in the business arena will agree that it’s not a case of ‘if’ you or your company will face a crisis, but ‘when’ and how severe. Are you prepared for that moment? Alan Hilburg is CEO of Hilburg and Associates.
He’s one of the world’s leading advisors in the field of crisis management and brand trust communication and he’s recently opened a Johannesburg office. He’s been called the very first person a CEO must call in a crisis when reputations are being threatened, in fact, he managed the Tylenol crisis in 1982.
It’s Harvard Business School’s platinum standard case study and he managed most of the news making crises of the past 30 years or so. He also broke new ground in 1985 when he was the first to align marketing and communications with winning litigation strategies. Alan Hilburg, welcome to Old Mutual Live Business. I guess the most fundamental question is, what does a company really need to have in place? Is it a disaster communications plan or is it something more?
What a crisis is really about
Alan Hilburg: That’s a great question Chris. The reality is that a disaster communication plan is a very small part of what they need to have. Because you have to ask yourself, what’s at risk in a crisis and what is really the objective. Because a crisis is not about the crisis. It’s not about reputation and it’s not about PR.
A crisis is kind of what I would call a ‘crisis-tunity’ and what I mean by a ‘crisis-tunity’, it’s about protecting the trust that your important stakeholders have in you and the brand and in leadership. I kind of look at it like trust is like a tree and reputation is like a shadow.
The shadow is what you think of, but the tree is the real thing. When you look at the issue of crisis, crisis is about protecting operational continuity, keeping the lights on. There’s no CEO in the world that was ever hired to manage a crisis, they were hired for business continuity.
I think the second is protecting brand trust and brand resonance, loyalty, protecting brand advocacy and protecting the trust and leadership and the decision culture. Your question is a great one because a crisis response strategy as opposed to a crisis communication strategy is what every company needs to have in place.
What should be in a crisis response strategy?
CG: What should be in that strategy?
AH: I think that, you know, the strategy needs to recognise that protecting your most essential institutional organisational asset which is your brand relationship capital. So, you look at a crisis, the world of crisis, there’s three parts.
There’s crisis avoidance, crisis mitigation and crisis recovery. A plan needs to put an enormous amount of energy and effort into crisis avoidance. If you can’t avoid the crisis, at least you’ve prepared for it and it’ll never be as costly or severe or as damaging as if you hadn’t prepared.
Then, of course, the third part of your plan has to be crisis recovery, how effective can you recover? Sorting out, what did you lose, how much of the community’s trust was affected. Then your crisis recovery strategy, that component of your crisis plan focuses on that.
CG: All right, so when the issue strikes, what needs to happen?
How best to respond to a crisis
AH: I think that if you have a plan, there are fundamentally ten steps for surviving and thriving in a crisis. One is understanding what is at risk. What part of our brand is being threatened? I think the second part beyond the crisis avoidance is to really recognise that the plan must have a very deep component of aligning with those people who can speak on behalf of the company or the institution.
No one believes anybody who says ‘trust me’. How do you build up a cadre of, what I would call The Triple A’s, which are advocates, allies and ambassadors? A plan must include not only how does the company or institution respond, but how quickly can you engage your allies, ambassadors and advocates to begin speaking on behalf of the company.
CG: So speak of response is critical.
AH: No question! I mean in this day, in this digital age Chris and you see it every day. We all see it every day. What’s changed here is 20 years ago the traditional news media, on a good day, would take 30 minutes to respond to a crisis.
Now with Smart Phones, a crisis can be brought to the world in seconds and so the speed of response, as you put it, is so essential. Because you need to know how quickly, you need to be prepared, you can’t wait for the crisis. The crisis response strategy has language that’s been prepared.
It has action steps that have been prepared and you really need to respond to a crisis from a social media and digital standpoint within 30-60 seconds of learning of the crisis. You can only do that if you’re prepared.
Who should be the driving force?
CG: Who should be driving this process? I ask that question as a journalist because it seems to me, 99 times out of 100, control sits with the company’s lawyers.
AH: Well, I think the threat, obviously, is so significant that the company lawyers feel like they have to be. But the company lawyers are part of the crisis team. The crisis team needs to be the senior communication person, the senior legal person, the senior safety environmental person, the senior marketing person, the senior HR person.
The make-up of the crisis response team is absolutely essential, but it has to be more than just a traditional hierarchy because companies don’t work that way. In a crisis plan you need to operate on a horizontal access as much as a vertical access. So, the lead on this is likely not the attorney, but the attorney plays a key role and the legal department plays an essential role on the crisis response team itself.
CG: Alan, as you’ve demonstrated with Tylenol, when Johnson & Johnson recalled every single capsule right across the United States. Re-launched about a year later with a radically re-designed, tamper-proof container. You can actually take your customer trust levels and marketshare as well, higher, but only if you get it right.
How to turn a negative into a positive
AH: You’re absolutely right and think about that. When we did Johnson & Johnson, we didn’t have what we call today a Value Statement. At that point they were still using very 1940’s and 50’s language, they had a credo. The credo said; we have to do what’s in the best interest of our customer.
The underpinning of any crisis response strategy is the creation of the company’s value statement. Because the value statement defines how that company makes decisions and how you respond to the crisis. Is a total reflection on who you are and the character of the company and the institution.
Character genuinely matters and so we work with senior leadership and exco’s in really re-evaluating and providing a value statement. That’s behavioural and can be activated and lives on a daily basis. That then becomes the basis of any crisis strategy.
The other point I’d make is this, that it’s essential for companies to have simulations. One of the reasons that companies succeed or fail in crisis response, and I’ve been involved in over 220 crises; the ones that respond well are the ones that have practice.
Those that make the response routine, practicing the behaviour that you want imbedded and to become second nature. An essential part of every crisis response strategy is the whole need for at least annual or semi-annual simulations.
CG: And it is so easy to get it wrong, as Tony Hayward of BP found out when he remarked so casually, just off the cuff, that he just wanted to get his life back.
AH: Everyone who is involved in a crisis wants it to end and unfortunately he shared with us what he was really thinking. The reality is, the better prepared you are, the shorter the crisis. The less impact and the less likelihood that trust will be lost and trust is everything.
I think particularly in South Africa today where there’s such a, the most important point to remember is there’s a high cost to low trust. Because there’s a high cost to low trust, protecting the trust component of every relationship; whether it’s an internal employee driven relationship or an external relationship with one of your external stakeholders. Nothing is more important than trust and that’s what’s being threatened in any crisis.
CG: Alan Hilburg, CEO of Hilburg and Associates, thank you for joining me on Old Mutual Live Business.
AH: Thank you Chris.