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The PR Hurt Locker: Ten Land Mines to Negotiate in a Crisis (six through ten)

Monday, March 8th, 2010

Bye Bye Reputation

Posted by Tom Gable

The previous post covered the first five of ten land mines to avoid in a crisis: guilt, no plan, lack of culture and core values, big hat (no cattle) and CEO ego. The following delve more into hazards to negotiate during implementation.

6. Attorneyitis – This land mine occurs when otherwise good messages and communications that the CEO and crisis team have approved get handed off for legal review and come back bruised, bloated and infected with the deadly disclaimer virus. Short, compelling copy turns fuzzy around the edges. Statements of fact become weighted down with convoluted clauses and abundancies of redundancies (In one set of Frequently Asked Questions that Gable PR crafted to explain a law suit our client filed against a magazine for libel and slander, a sharp 19-word sentence nailing the editor for deceit was turned into 100 words of circumlocution without a verb). The test: read a sentence out loud and if everyone’s eyes glaze over like you were reading from C-Span transcripts or they laugh so hard they herniated, start over.

7. Torpor at the Top (also called Coagulation in the C-Suite) – The media are almost always on deadline and pressed to complete their rounds of interviews with sources from all sides. Many have preconceptions that will drive the coverage, often in a way not appreciated by the target organization. With a well-rehearsed crisis plan and message strategies in place, an organization can dedicate itself to responding as quickly as possible to the media call instead of setting it aside and agonizing what to do while waiting for the lawyers to return your call. The process includes knowing the time zone where the media call originated so you don’t stuck in a time warp between west coast and east coast and lose the opportunity to respond. Providing solid facts and evocative quotes ensures more balanced coverage. If the organization is in the right, its fast response and candor can lead to establishing positive media relationships that can be of major benefit for decades.

When crises hit, companies without plans or facing some of the other land mines outlined here can struggle internally in determining a course of action. Some advisors tell the CEO to delay, which can be brilliant or fatal, depending upon the crisis. Copy often gets written by committee. In situations such as these, communications professionals or outside consultants brought in at the eleventh hour need to light fires under the corporate derrieres of those in the executive suite and loosen the clotted communications channels. Getting back to the media with even a short statement (“We are checking all the facts and will get back to you as soon as we have an answer.”) can help mitigate pending disaster. By not responding or responding after deadline, you get immortalized with the regrettable line that usually appears as the last sentence in the story: “The company was unavailable for comment.” A speedy response, on the other hand, generates a positive impression; the guilty don’t return media calls or have the lawyers call.

8. Dueling Fiefdoms – We’ve seen warring factions fire off random shots of bad advice within the corporate halls in hopes of furthering their own interests in internal turf wars rather than contributing energetically and without guile to the master crisis plan for the overall good of the organization. Lack of corporate alignment and certainty of purpose have broader ramifications in preventing an organization from achieving its business and marketing goals. In a crisis, the problem is exacerbated and accelerated. Good organizations exhibit grace under pressure through positive, consistent communications. For the unaligned and contentious, disaster looms. The media find the inconsistencies among dueling factions and probe deeper, confronting one faction with the claims of another and repeating the process until the inside story unfolds with conflicting voices from every corner.

9. Stuck in Jargon or Legal Land – This isn’t necessarily fatal, just annoying and a potential roadblock to getting your compelling messages through the clutter and promoting good media relations. Speaking in a sincere, human voice will help build bridges with the media and the ultimate target audiences on the other side of this filter. As noted in Attorneyitis, 100-word sentences without a verb don’t cut it. Jargon in a particular niche and working with trade journals can be acceptable. In a crisis, when broader financial, business, consumer and investigative reporters are involved, one needs to apply what some media call the “Bozo Filter.” This methodology came to light during a Media Relations Summit in New York featuring journalists from a wide range of leading publications, news services, on-line sources and broadcast. One noted technology journalist with one of the world’s most respected publications said he had set up Bozo Filters on his email to automatically delete messages from certain agencies or individuals and those containing words he felt were useless or meaningless. For creating compelling messages, start with the evidence developed for your crisis communications plan. Analyze the background information, input from outside resources and historical coverage of the industry, company, organization or related topic. Think big picture. Envision perfect coverage. A trick Gable PR uses to help clients focus on the goal is to have them imagine the perfect headline for this situation. What would it say and where would it appear? Then, can we work backward from perfection and align all our plans, themes, core values, evidence strategies and tactics to bring it to life.

10. No comment – This often springs from some of the considerations listed above (guilty, attorneyitis, torpor at the top). Avoid this nuclear land mine whenever possible. Even providing a comment that you will get back to the media as soon as you’ve had a chance to conduct an internal review, analyze the complaint or get input from those outside the organization is better than saying “no comment,” which comes across as “guilty as charged.” Armageddon may seem eminent, but there will be a future. Salvaging a small part of the reputation during difficult times can provide a starting point for building a new one for the future. Work with your crisis team to analyze your different message strategies and what you hope to achieve for the long term.

A Final Word

Some experts estimate that less than five percent of all crises are fatal to an organization or individual. CEOs reinvent themselves regularly, particularly in industries with high failure rates (technology, biotechnology, Internet). Companies and organizations go through constant change, deal with major public issues and keep moving forward. The path becomes much easier with a continuous investment in image as a part of corporate strategy, developing strong core values, having crisis PR plans in place (and rehearsed) and avoiding potential land mines when your next crisis erupts.

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Ten Land Mines to Avoid in Your Next Crisis (one through five)

Monday, March 1st, 2010

Tred Lightly!

Posted by Tom Gable

Crises come in all forms and sizes, from global product recalls to local political scandal, the nuisance law suit about spilled hot coffee at a fast food restaurant, corporate malfeasance, alleged embezzlement in a not-for-profit, sexual harassment issues, hazardous waste spills, to manufacturing, transportation or other accidents that take human lives.

Skilled public relations professionals have been dealing with these issues and more for decades. They have honed best practices and tempered them under fire, increasing the odds of success in any crisis program. Good advice and case histories abound. But advances in how the world communicates instantly and in living color (photos Tweeted from cell phones, drive-by videos of transgressions, amateur news casts, rumors in the blogosphere, a consumer issue going viral via Twitter, etc.) have added new complexities to the art and science of crisis communications. The race is increasingly to the swift and, as detailed later, the trustworthy.

But extreme dangers are hidden along any path to success in managing a crisis. In analyzing failed or derailed crisis programs in over 30 years in public relations and journalism, certain approaches and characteristics stand out.  The list could go on forever. For focus, we’ve narrowed the key reasons for failure down to the top ten (or bottom ten as the case may be) most threatening land mines to any crisis program. Individually, not every land mine can be fatal. But one blast can lead to another, making the goal of getting through the crisis unscathed unlikely or impossible. Almost all can be dealt with honestly and strategically. Knowing they exist is a start. Start tip-toeing here with the first five of ten landmines to avoid in your next crisis, with six through ten to be posted next week:

1. Guilty (or not completely innocent) – The evidence exists – against the company, CEO, employee, organization, product, or service – for an illegal action, horrible occurrence, affront to humanity, threat to public safety or other transgression. The crisis management team needs to implement its plan, starting with a quick review of your crisis check (click here for a Gable PR example). The team analyzes the crisis in context and with a host of factors before determining the response, including developing a clear understanding of the legal ramifications and liabilities. Being totally guilty requires a different response than being guilty on some counts or a single count, not totally without blame or possibly the victim of circumstance. There is also intent. A major fast food company didn’t intend for its customers to be felled by e coli. The crisis was an aberration. The company had solid food preparation processes, procedures and rules in place, so was able to turn the tide fairly quickly after an initial 30-percent decline in its stock. Another food preparation company that had poor processes in its plant and a history of  being cited regularly by health inspectors for unsanitary conditions hired the most expensive crisis counselors in the country. It tried to spin its way out of the harsh light of media scrutiny with pledges of future adherence to the law, firing people and even giving portions of future sales to minority training programs.  It lacked the culture, history, core values and other attributes (see below) to escape. Customers fled, contracts were cancelled and it soon filed for bankruptcy.

2. No Plan – When issues arise, the best organizations pull out a well-rehearsed crisis plan and implement quickly, confidently and successfully. Should any uncertainties or ambiguities exist, the crisis team and its consultants deal with them effectively as additions to the plan, rather than as another set of distractions for the unplanned and clueless. In the halls of the unprepared, staff is usually found ricocheting off walls in search of enlightenment in between panicked calls to the lawyers or searching local directories for crisis communications counselors. Plans include proven processes, clear marching orders, strict lines of communication and access to an array of supporting evidence. The above mentioned food company with the good reputation, culture and core values had built but not launched Web sites to deal with worst case scenarios in its industry, including e coli outbreaks. The sites included an overview of each area of potential concern, their history of managing in each area and abundant evidence to support each claim, plus links to outside resources, such as government agencies, academicians and independent consumer groups. Crises happen. If an organization is ready with its own plug-and-play plan, everyone will sleep a lot easier before the crisis, during and through the post mortem when the team gives high-fives around the room and pops a cork of bubbly to toast its success.

3. Lack of Culture, No Core Values – Authentic culture and values contribute to reputation for the long term. If you haven’t thought about your reputation, exhibiting positive core values and demonstrating proof of principle over time (walking the talk) as a part of organizational strategy long before the crisis hits, you will start below ground zero when the bomb lands, no matter how good your plan. Positive reputations aren’t spun out of air or the CEO’s frontal lobe on short notice. They are built over time. The leaders in any niche or category determine what they stand for and then provide ongoing evidence over time to support the position. Good companies operate in the no-spin zone, relying on corporate culture, solid facts, quality people, honesty and integrity to carry the day (week, month, year, decade).

4. Big Hat, No Cattle – Do you have a corporate history of hype or muddled communications strategies?  In a crisis, the media will launch quick database research to see how you’ve been covered in the past, by whom and in what context. The sharpest writers will then check with your peers, trade associations, professional organizations, former law and accounting firms. Marginal companies who haven’t dealt with Land Mine No. 2 – core values – often leave a trail of disgruntled professional service firms who served them previously and can now be used as a source in the gruesome discovery process. Lack of credible data and substance become apparent quickly. The first blood is let. With no redeeming values, countervailing evidence from the empty suits at the management level or even a marginal reputation to cast doubt on the charges, the media feeding frenzy begins. Each day brings a new report of chicanery and spin, driving the organization toward Armageddon in the C Suite. At this stage, the organization needs to evoke the Metamorphosis Gambit (sometimes called the Nuclear Option), which involves management change, reorganization, new strategic planning and total repositioning.

Gable PR witnessed this phenomenon when representing a small company with brilliant technology that had been acquired by a billion-dollar company for its stock, which had gone up rapidly based on the company’s regular announcement of exciting new business initiatives into the hottest new markets. However, the company was playing it fast and loose with its business strategies and corporate culture, or lack of same. The media found evidence of bribery by the parent in securing a telecommunications contract with a third world country and almost every one of the much-hyped major acquisitions in pursuit of more revenues and a higher price earnings ratio had turned sour or tanked. Negative coverage ravaged the stock price. Its potential acquisition by a Fortune 500 company was canceled. The company eventually paid huge fines on some of its transgressions, wiped out its executive suite where the transgressions had originated, took huge write-offs on its discontinued operations and announced a new vision for the future. Following its metamorphosis, the company was acquired by another conglomerate, although at a lower valuation than had been anticipated years earlier.

5. CEO Ego – CEOs can have egos as big as the Ritz and think he or she is a natural media star. They refuse to train, rehearse or follow a script or plan. They ignore the gravity of the situation and think they can charm and spin their way out of the morass. Some when CEOs bully their internal staffs into being afraid to provide authentic, sincere counsel. The prototype: MBAs out of central casting, with neatly coiffed presidential hair touched with streaks of grey, a solid jaw, sharp blue eyes, resonant voice and engaging smile, but dumb as a trout when it came to media relations. They are confident they can charm anyone. “I could talk a dog off a meat wagon,” one CEO bragged. Unfortunately, he was already in trouble, having failed two of the earlier tests listed above about culture and providing evidence. The media had done its due diligence and quickly probed into the details of declining sales, escalating administrative costs and high turnover. Without training and having his core messages set, he was caught unawares and folded like a thin tent in a hurricane. He actually started sweating and fidgeting, like the character in a Saturday Night Live skit who was being interviewed by a faux Mike Wallace for selling defective whoopee cushions. Our CEO tried to use his booming voice to make points, then stonewalled and finally tried to change the subject. The reporter kept asking the same question in different ways until she had what she wanted, then hopped off the meat wagon with a little Filet Mignon and hot sauce for her readers.

Next (six through ten): Attorneyitis, Torpor at the Top, Dueling Fiefdoms, Stuck in Jargon Land, No Comment

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Crisis PR: Three Core Principles and Planning Checklist to Guide Your Actions

Friday, February 12th, 2010

Reputation Skewered

Posted by Tom Gable

Most major organizations create crisis plans in advance of need, update them regularly, have a strategic array of tools and tactics ready to go (hidden Web sites, video, audio, fact sheets, media kits) and even rehearse their responses. The better job an organization does before a crisis strikes – or at the beginning to quickly manage a crisis based on sound principles should a plan not be in place – the better the result. These fundamentals came to mind in tracking the Toyota recall, the changing communications strategies and lack of responsiveness early in the game.

In creating a crisis plan and carrying it out in any crisis communications situation, three basic principles should guide your actions:

One – Be honest and stick to the facts. Do not speculate, hypothecate or exaggerate. Those impacted by the crisis deserve nothing less – and your reputation may be damaged irreparably if you aren’t truthful and authentic.

Two – Think strategically about the long-term. It is too easy to be reactionary, get caught up in the grinding short-term pressures of the situation and scurry to respond to those demanding answers from every quarter. What do you stand for? What are your core values? Your culture? Are your responses to the crisis consistent with these values and authentic – no hype? How will your actions today be viewed a year from now? Five years from now?

Three – Maintain unified and consistent communications during implementation of your plan. Nothing will erode your credibility faster than conflicting messages coming from different sources within your organization (be aware that the media – and class action attorneys in some cases – will pursue every angle in search of controversy, unethical behavior or criminal intent).

Another key factor for launching a crisis plan: speed of response. As witnessed with the issues swirling around Toyota as it sank deeper into a crisis PR vortex, lack of pro-active communications resulted in the news media, elected officials and other outside sources taking control of the message momentum. Instead of being fast and responsive, Toyota seemed to adopt the Three S Strategy: be silent, slow and stonewall.

Crisis PR is a team sport that requires a great play book. As a starting point for creating your own plan, Gable PR has developed a detailed checklist (click here) to guide any organization through the essential elements required. Think of it as a critical pre-flight check list. From this start, any organization can adapt it and keep it evolving to keep up with the changing requirements for communicating in the nanosecond news cycle spawned by Twitter, Facebook, Blogs and traditional media embracing 24/7 coverage.

Depending on each crisis, some areas will require more research, planning and action than others. Please take a look at the list and let me know what else might be added, enhanced, edited, deleted or explained more clearly. Crisis PR, to borrow a line from Ernest Hemingway, is something of a moveable feast and the goal is to take charge of the menu.

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Beyond Crisis PR: Can Toyota Change Its DNA?

Saturday, February 6th, 2010

Road to Recall

Posted by Tom Gable

The Toyota crisis PR case is not just about the recent recalls, global media scrutiny and potential Congressional action in the U.S. It has metastasized from neglected issues within the body corporate to impact vital functions in every fiber of the Toyota being.

Possible deeper issues were discovered by Ken Bensinger of the LA Times and others in major media. He started following the case after an off-duty CHP patrolman and three family members died when the accelerator stuck on their Toyota and they crashed in rural San Diego County in August 2009. Toyota’s president, Akio Toyoda, apologized. Soon, Toyota recalled 4.3-million-vehicles, its largest recall ever.

As outlined in an interview with the NPR affiliate KPBS in San Diego, Bensinger and his LA Times colleagues started probing. They found issues going back to 2001, 2007 and 2009. Toyota talked about floor mats as one cause, then the next day said there were issues with a sticking accelerator pedal. Analysts thought the answers didn’t add up and began asking about design flaws in the electronic throttle system. Were there deeper problems that Toyota wasn’t addressing?

Bensinger said Toyota talked about quality and safety but seemed to be ignoring problems. He said they practiced global “obfuscation” and he then walked the KPBS listeners through a litany of Toyota transgressions over the past decade.

The problem from a PR standpoint wasn’t just obfuscation and a pattern of not dealing with the issues in a forthright manner. As I noted in the same interview, the issues go into the heart and soul of the corporation. What does Toyota stand for? What are its values? Those are the first questions corporations need to ask themselves if they are going to position themselves above the competition. Then, can they deliver on the promise?

If Toyota stresses quality and safety, can it relaunch and walk the talk over time? Can it invest in image as a part of corporate strategy, not in stonewalling, silence and slow responses?

The Wall Street Journal in an essay on Feb. 6 identified deep cultural factors to be overcome:

In Japan there is a proverb, “If it stinks, put a lid on it.” Alas, this seems to have been Toyota’s approach to its burgeoning safety crisis, initially denying, minimizing and mitigating the problems involving brakes that don’t brake and accelerators that have a mind of their own. President Akio Toyoda, grandson of the founder, was MIA for two weeks and the company has appeared less than forthcoming about critical safety issues, risking the trust of its customers world-wide.

This has been a public-relations nightmare for Toyota, as its brand name has been synonymous with quality and reliability. Crisis management does not get any more woeful than this and the cost of this bungling so far—the initial $2 billion recall and the loss of 17% of share value since Jan. 21, when the gas-pedal recall was announced—is only a down payment on the final tally. The recall will surely expand, including cars produced in Japan. Lawsuits are being filed and an expensive settlement looms. And then there are the idle factories and empty showrooms to account for.

It is not surprising that Toyota’s response has been dilatory and inept, because crisis management in Japan is grossly undeveloped. Over the past two decades, I cannot think of one instance where a Japanese company has done a good job managing a crisis. The pattern is all too familiar, typically involving slow initial response, minimizing the problem, foot dragging on the product recall, poor communication with the public about the problem and too little compassion and concern for consumers adversely affected by the product.

The New York Times also documented a pattern of slow response on safety issues and detailed engineering issues going back to 1996 and covering almost every model.

Can Toyota change its DNA? At a press conference in Nagoya on Feb. 5, Toyota President Akio Toyoda expressed his deep regret for the inconvenience and concern caused to Toyota customers. He said he would take the lead toward improving quality around the world by establishing a global quality task force and implement a six-point action plan to improve quality in every region.

Turning the Exxon Valdez wasn’t easy. Check back in two years, which is probably the minimum time it will take to make a course correction, set new plans in place, start building a new culture and generating consistent, positive results over time versus navigating through the rubble from a permanently damaged reputation.

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In Crisis PR, It’s Not Always How You Start But How You Finish

Tuesday, February 2nd, 2010

Shrinking image?

Posted by Tom Gable

The news media, auto industry analysts and elected officials have been aggressive in going after Toyota for its delays in responding to a growing crisis about sudden acceleration in some of its models from gas pedal and floor mat issues.

NPR opined that “the carmaker that could end up doing long-term damage to the sterling reputation it has painstakingly built up for several decades.” It cited a slow response time in dealing with the problem and communicating.

Critics in the story noted that “the worst-case outcome for the company would be if any of the investigations uncovers evidence that Toyota has been aware of the problem for longer than it has admitted.” This implied that Toyota may be hiding something.

The theme turned up in a Los Angeles Times story:

The pedal maker denies that its products are at fault. Some independent safety experts also are skeptical of Toyota’s explanations. ‘We know this recall is a red herring,’ one says. Sudden-acceleration events in Toyota and Lexus vehicles have been blamed for at least 19 fatalities and 815 vehicle crashes since 1999.

Critics jumped on quickly to ask for specific timetables. The Toyota CEO was largely silent (a Japanese TV crew caught him at a financial conference in Davos, Switzerland, where he made a short apology). Toyota then pulled its brand advertising, ran public service ads in major daily newspapers around the country, hired a PR firm and started communicating.

When Toyota went public with a PR blitz, they used their head of U.S. sales rather than CEO. Some said this seemed to indicate that Toyota wasn’t dealing with the issues at the highest level.

“We deeply regret the concern that our recalls have caused for our customers, and we are doing everything we can — as fast as we can — to make things right,” Jim Lentz, Toyota’s U.S. sales chief, said in a statement on Monday (Feb. 1, 2010).

Although late in responding by crisis PR standards, Lentz did the classic: recognize the issue, apologize, empathize and then set a vision for the fix.

Over the years, in dealing with crisis communications issues involving everything from religious scandal, to threats to public safety, to corporate and organizational implosions, Gable PR has found that three basic principles should guide your actions in every crisis situation:

One – Be honest and stick to the facts. Do not speculate, hypothecate or exaggerate. Those impacted by the crisis deserve nothing less – and your reputation may be damaged irreparably if you aren’t truthful and authentic.

Two – Think strategically about the long-term. It is too easy to be reactionary, get caught up in the grinding short-term pressures of the situation and scurry to respond to those demanding answers from every quarter. What do you stand for? What are your core values? Are your responses to the crisis consistent with these values? How will your actions today be viewed a year from now? Five years from now?

Three – Maintain unified and consistent communications during implementation of your plan. Nothing will erode your credibility faster than conflicting messages coming from different sources within your organization (be aware that the media – and class action attorneys in some cases – will pursue every angle in search of controversy, unethical behavior or criminal intent).

Toyota can get beyond this crisis, recover from short-term damage to its brand and regain the trust and respect it enjoyed by investing in image as a part of corporate strategy. What will Toyota stand for in five years? Quality, customer care, engineering, design, reliability, value? All of the above? Whatever the vision, the next step is developing a strategy to provide ongoing evidence to support the vision. This goes beyond manufacturing to every way Toyota touches its customers and future customers.

In the era of instant communication, organizations need to take an immediate look at the issues it faces. Gable PR uses a crisis communications check list for starters. In less than an hour, we can work through the issues and determine priorities and critical tasks for action, including the speed of response.

For Toyota, it may have done a fast analysis and then decided to go slow in responding for internal or legal reasons. For the “new Toyota,” it should establish procedures for responding at warp speed to any outside concern. Instead of two days to a week, how about two hours or less, even if it’s to say “we are working on this and will get back to you as soon as the facts are in?”

For energizing every corner of the organization, the management schools have many cases for going beyond PR and establishing operating principles to live by in evolving the culture. What directions will Toyota give to its design and engineering teams to analyze what happened with the pedals and mats and develop new approaches to quality control? For the future, if a problem occurs once a new model rolls out, have rapid response teams with the power to analyze issues and make fast decisions on resolving the problem and then pro-actively communicate the new direction with an integrated PR program.

A pro-active internal approach builds support and understanding, then provides the foundation for launching the pro-active communications program. Educate internal audiences first. Develop a consistent messaging strategy, from the basic level of how dealers will answer their phones and respond in the future. Establish procedures for Tweeting updates as they occur and linking to Web sites for more details. Even if working on the image over three to five years, build a sense of urgency into the culture. Empower people to think about continuously improving every aspect of the business every day. By setting a new standard and vision, Toyota can then set in motion the critical business practices and cultural commitment to walk its talk over time – and finish a lot better than it started.

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Backlash on Gwen, the New “Homeless American Girl”; Can Cause Marketing Trump Crisis PR?

Wednesday, October 21st, 2009

Posted by Krista Rogers

As a little girl I was captivated by the American Girl book series and the accompanying dolls. The books presented a great platform to educate pre-teen girls on diverse lifestyles and challenges and allow them to relate across time to people living in dissimilar situations. The dolls tied into those same periods of history and provided a tangible link to the pre-teen girls living those lives.

After I read a series of books, my parents would reward me with the overpriced doll that I now had a literary connection with. At $95 a pop, these dolls were more than just plastic play figures. In contrast to headless Barbies soon housed in the ice-chest in the garage, my American Girl dolls had personalities. I developed a relationship with them and learned to relate to the various trials and tribulations they faced.

Enter American Doll’s newest addition: Gwen Thompson, the homeless pre-teen whose back story includes being abandoned by her father and living out of a car with her mother. Still priced at $95 for the doll itself, homeless Gwen is causing quite the controversy.

The reason: homelessness is a serious social issue. With over 10 percent of the U.S. categorized as homeless, the new American Doll does embrace an aspect of our culture that needs to be communicated. Gwen’s story allows girls of higher socioeconomic status (read: who’s parents are willing to fork up $95 for a doll) to relate to and understand the lives of the less-fortunate. Gwen can give perspective to privileged pre-teens and help them develop empathy.

However, capitalizing on the unfortunate circumstances of transients without any type of give-back to the homeless community is as the Huffington Post puts it, in bad taste. The Huffington Post article triggered pages of angry comments. Public outrage then went viral. The Twitterverse trended hot and heavy on the topic. Here are a few examples:

Going Viral

Going Viral

Two comments left on a CBS article echoes the general publics’ sentiment on the issue, “Greedy capitalists will go to any lengths to make money! $95.00 for a homeless doll? The wonderful results of a Sick Society!” and “At $95 it’s nice to know that American Girl, LLC can make money off of the homeless children of America. How about giving a few of these dolls out for Christmas. If they get a letter from a shelter from a family a doll goes there. Someone from the American doll company needs to do some goodwill. I won’t be buying an American doll for little girl this year because I am unemployed.”

It may be too late for American Girl to reclaim some of the goodwill lost in what many viewed as a cynical attempt to capitalize on a tragic situation. Something they should have before launching Gwen was to develop a cause marketing program where 10 percent or more of all Gwen sales would go to a national shelter program for the homeless, or some other relevant initiative.

To take it to a higher level and one that built reputation over time, American Girl could have launched an integrated, strategic program to educate more Americans about the homeless issue and generate new sources of income, much as 7-Eleven did for so many years in supporting Jerry Lewis and his annual telethon for muscular dystrophy. All Gwen promotional efforts, materials, social media blitzes and public relations outreach could have supported the effort, providing links to relevant agencies where the pre-teen girls and their families could step forward with their own contributions. The America Girl web site could have added a special educational page on the homeless issue and encouraged visitors to become activists in a national cause and donate online.

Cause-marketing is a proven way for building reputation and goodwill among different target audiences. Studies show consumers support companies that give back to the community. American Girl has a history of connecting positively with their target audiences (and parents!). Perhaps it is time to start connecting in new and more meaningful ways.

 

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FTC to Bloggers: Disclose Freebies, Payments. Blogestapo in the Works? Implications for PR?

Thursday, October 8th, 2009

FTC Finds Blogger Freebie
FTC Finds Blogger Freebie

Posted by Tom Gable

As reported by the Associated Press, The New York Times and others, the Federal Trade Commission on Oct. 5 voted 4-0 to approve final guidelines for regulating anyone who reviews a product, including bloggers. As the AP reported:

The FTC will require that writers on the Web clearly disclose any freebies or payments they get from companies for reviewing their products. The commission also said advertisers featuring testimonials that claim dramatic results cannot hide behind disclaimers that the results aren’t typical…For bloggers, the FTC stopped short of specifying how they must disclose conflicts of interest. Rich Cleland, assistant director of the FTC’s advertising practices division, said the disclosure must be “clear and conspicuous,” no matter what form it will take.

Bloggers have long praised or panned products and services online. But what some consumers might not know is that many companies pay reviewers for their write-ups or give them free products such as toys or computers or trips to Disneyland. In contrast, at traditional journalism outlets, products borrowed for reviews generally have to be returned…The FTC’s proposal made many bloggers anxious. They said the scrutiny would make them nervous about posting even innocent comments.

Consumer advocacy groups were quoted as saying lack of disclosure is a big problem in blogs. They suggested putting more pressure on bloggers to “behave properly,” according to AP.

As reported in The New York Times:

The new rules also take aim at celebrities, who will now need to disclose any ties to companies, should they promote products on a talk show or on Twitter. A second major change, which was not aimed specifically at bloggers or social media, was to eliminate the ability of advertisers to gush about results that differ from what is typical — for instance, from a weight loss supplement…For bloggers who review products, this means that the days of an unimpeded flow of giveaways may be over. More broadly, the move suggests that the government is intent on bringing to bear on the Internet the same sorts of regulations that have governed other forms of media, like television or print.

The buzz on the blogosphere ranged from taking umbrage and pleading First Amendment privileges to those who felt bloggers needed to be held accountable and readers deserved to have all the facts, including those of sponsorship and freebies.

Then there are the concerns about business bloggers and experts who comment on companies, industries and trends rather than products. What type of disclosure is required if they have been paid by the company they are commenting on, or a direct competitor or consulting firm with ties to the company, its competitors or the industry? One “mommy blogger” from the United Kingdom questioned how it would impact those who receive free books to review.

I review books because I love them, and getting some for free is a bonus – now the US is cracking down on us mommy bloggers…They call it blogola – payola for bloggers – the term for free stuff that bloggers get to review on their site and even the cash that some accept for those reviews. Those “offers” can also take place on micro-blogging sites such as Twitter, as exemplified by the recent controversy surrounding the #nestlefamily event – in which bloggers have agreed to take part in a promotional event organised by the multinational company.

PRSA looked at the FTC notice and offered some possible applications of the guidelines:

  • Bloggers who receive cash or in-kind payment (including free products or services for review) are deemed endorsers and so must disclose material connections they share with the seller of the product or service.
  • Any firm that engages bloggers by paying them outright to create or influence editorial content or by supplying goods or services to them at no cost may be liable if the blogger does not disclose the relationship.
  • Advertisements or promotions that feature a consumer who conveys his or her experience with a product or service as “typical” should clearly disclose what results consumers can generally expect or specify how the results were unique to the individual circumstances.
  • If research is cited in an advertisement or promotion, any sponsorship of the research by the client or the marketer should be clearly disclosed.
  • Celebrities who make endorsements outside the context of traditional ads, such as on talk shows or in social media, should disclose any relationship with the advertiser or marketer.

One thing absent from the debate so far: enforcement.

Is the pronouncement actually part of a clever strategy to grow the FTC bureaucracy? After all, government is one of our few growth industries.

Will the FTC create a new Blogestapo modeled after the Transportation Security Administration (TSA)? Staffers in blue uniforms will sit hunched over computers in new facilities throughout the land reading a zillion tweets, clicking through to a million blogs and news Web sites and looking for evil-doers. Next, a press conference featuring the media-savvy President Obama talking about the importance of saving our country from the new Axis of Evil: Twitter, Facebook and Blogging.

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The Sequenom Case: In Crisis PR, No-Hype and No-Spin Should Prevail

Wednesday, September 30th, 2009

Posted by Tom Gable

Can authentic no-spin PR, even in a crisis, help a company maintain a semblance of credibility, protect its reputation on the downside and set a vision for the future that even supports its stock price?

Sequenom Inc. in San Diego won’t know. On Monday, it issued a news release via PR Newswire with the headline: “SEQUENOM Announces Completion of Independent Investigation.”

The lead paragraph:

SAN DIEGO, Sept. 28 /PRNewswire-FirstCall/ — SEQUENOM, Inc. (Nasdaq: SQNM) today announced the completion of the independent investigation by a special committee of independent directors related to the test data and results for the company’s noninvasive prenatal test for Trisomy 21 (Down syndrome). The independent counsel engaged by the special committee interviewed over 40 witnesses and reviewed over 300,000 documents and emails.

Okay, so what’s the issue? Buried in the fourth paragraph is the bottom line of the investigation:

The company has terminated the employment of its president and chief executive officer, Harry Stylli, Ph.D., and its senior vice president of research and development…obtained the resignation of its chief financial officer…and one other officer… (and) also terminated the employment of three other employees. While each of these officers and employees has denied wrongdoing, the special committee’s investigation has raised serious concerns, resulting in a loss of confidence by the independent members of the company’s board of directors in the personnel involved.

How did the news media play it? Here are the headlines and first paragraphs from stories in the San Diego Daily Transcript, San Diego Union-Tribune and Xcomony.

Sequenom fires CEO and others after investigation (SDDT)

Sequenom Inc. says it fired its CEO and its research chief following an investigation into the mishandling of test results for its Down syndrome blood test. A total of four executives and three other employees were terminated or resigned, the company says.

… Sequenom said Harry Hixson Jr., 71, a member of its own board and a former president and chief operating officer of Amgen Inc. (Nasdaq: AMGN), will take over as interim CEO. Another board member, Ronald Lindsay, 61, will be interim CFO, and controller Justin File, 39, will be the principal financial and accounting officer.

…Sequenom’s (Nasdaq: SQNM) SEQureDx test, which screened maternal blood to discover Down syndrome in fetuses, was on track to reach the market in June until the company disclosed in late April that study data had been “mishandled” by employees. That made the data unreliable and lead to delays, hammering the San Diego company’s stock price.

Sequenom ousts CEO, other execs (Union-Tribune)

The San Diego biotechnology company Sequenom said yesterday that it has ousted its CEO and several other executives after an investigation into the mishandling of study data.

The discovery of the data problems in April led the company to postpone the launch of the test and to suspend four research and development employees. The test remains on hold, though the company has not disclosed specifically what went wrong…Now the company says the public should not rely on any of its previously announced data for the test, and it is not disclosing a timetable for development of eventual commercialization.

Sequenom Shares Tank After Executives Ousted Over Data Mishandling (Xconomy)

Sequenom shares plummeted 44 percent today in after-hours trading after the San Diego-based company said it has ousted CEO Harry Stylli and its head of R&D in the wake of an investigation into mishandling of data for its prenatal genetic test for Down Syndrome.

Sequenom shares fell $2.50, or 44 percent, to $3.20 in after-hours trading after the conference call. That’s a painful free fall for investors who bought last year on the enthusiastic news about Sequenom’s test, which drove shares up to $27.76 the day after the original announcement on Sept. 23, 2008.

How could this have been played differently by the company, to perhaps better results? One has to avoid the attempt to try short-term spin and think strategically about rebuilding credibility and creating a foundation to recover long-term reputation and valuation.

On positioning for the future, Hixson has impeccable credentials and credibility. During a conference call, he said the company is instituting new disclosure controls and procedures on all fronts, launching training in ethics and scientific processes and adding a new science committee on the company’s board of directors to oversee its research and development strategy and activities – definitely a positive direction.

The company said the data problems appeared to be confined to the Down syndrome program. It recently launched a separate test to identify parents with increased risk of having babies with cystic fibrosis, so is not a one-compound wonder, as happens with many biotech companies. The cystic fibrosis data, handled by a different unit than the one handling the Down syndrome data, has been validated by outside third-party collaborators. In addition, Hixson said the company still believes it has a valid approach to the detection of Down syndrome through genetic analysis of maternal blood. He said the company hopes to maintain its collaboration with Oxford University researcher Dennis Lo, who licensed his intellectual property to Sequenom for developing and commercializing its prenatal test.

He told the media that he and Lindsay were currently in the midst of strategic planning for the coming year and setting new priorities, with more to come as they get into it.

“We are determined to emerge from this experience stronger,” Hixson told the media.

What could have Sequenom done differently? One approach is to like a news organization rather than an attorney. How will the news be played? Then, be aggressive and pro-active in telling its story and making a few major points:

  • Sequenom has completed an independent investigation of issues involving the mishandling of data and release of results that were not accurate
  • As a result, the board has fired its CEO and removed others in top management and units involved with the mishandling
  • The company and its technology are sound Harry Hixson, former president of Amgen and a board member, is taking over and has announced plans to move forward aggressively in correcting internal issues while also continuing to pursue important research
  • The mishandled data related only to the Down syndrome studies and not to a promising study in identifying parents whose children could be prone to cystic fibrosis
  • The new Sequenom team will be doing all it can going forward to rebuild trust in the company, its people and the promise of its technology and research

Admittedly, there are issues with an ongoing SEC investigation and the raft of class action law suits that will follow, requiring some legal scrutiny of all communications and news releases. But being more candid from the outset and NOT burying the news in the fourth paragraph would probably have enhanced company credibility, started rebuilding trust and shored up the confidence of some investors by setting a vision for future change and, perhaps, success.

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Politics, PR and Promotion: When is it good for business?

Thursday, September 17th, 2009

Attention Companies

Attention Companies

Posted by Erin Koch

As a rule, most companies, from small storefront shops to multinational corporations, try to avoid the appearance that they favor one political viewpoint over another … and with good reason.  If I am a strong supporter of Candidate A, and I see a sign for Candidate B in the window of my regular dry cleaner, I might choose to have my shirts pressed elsewhere.  Likewise, if I am a supporter of progressive causes, but learn that the former CEO of a nationwide pizza company gave millions to conservative groups, I might order my pepperoni pie from a competitor.

So, most businesses remain (publicly, at least) neutral, rather than risk alienating half of their customer base.  Two well-known companies recently contradicted this apolitical strategy – with very different results.

Since it was sold to a major food company in 2000, ice cream maker Ben & Jerry’s has worked hard to maintain its image as a progressive, forward-, and free-thinking company.  Earlier this year, the company renamed one of its ice creams “Yes Pecan” to honor Barack Obama’s swearing in as President (a play on his campaign slogan “Yes We Can”.)  Then earlier this month, the company renamed its popular “Chubby Hubby” flavor “Hubby Hubby” to commemorate the fact that the state of Vermont legalized gay marriage.  (That new name will only be used in Vermont.)

While some may be annoyed at the ice cream maker’s partisan spin, I think their strategy is sound.  Why?  Because it remains authentic to their brand and their core principles.  Their loyal and generally liberal customers will probably love it.  And they’ll get lots of media attention, which means more mindshare and the potential for more customers.  (My favorite flavor is chocolate fudge brownie and, come to think of it, I haven’t had any in quite a while!)

A contrary example comes from similarly progressive mainstay Whole Foods.  Company CEO John Mackey wrote an op ed that was published in The Wall Street Journal critical of President Obama’s health care plan.  The resulting reaction has included storefront protests as well as a growing “Boycott Whole Foods” group on Facebook (now approaching 34,000 members).  There has even been speculation in the financial media that the CEO was going rogue, and acting based on his personal beliefs rather than what is best for the company.

While I certainly agree with John Mackey’s right to self expression, I don’t think the critical op ed was a wise move from a reputation management perspective.  Given the company’s progressive and politically active customer base, voicing a personal opinion that likely runs contrary to what most of his core customers believe could have been strategically misguided, leading to long-term damage to the brand image.

In sum, taking a highly visible political stand is almost always risky, particularly if (as for most companies) “being political” is not part of your corporate reputation and image.  But if you do find your company thinking about making such a leap, look first:

  1. Who is in our customer base and what will they think of this?
  2. Does this align with our core values and principles?
  3. What are the short term risks and benefits?
  4. And what are the long term risks and benefits?

Photo credit: zoovroo

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No Room for Speculation: Accuracy in Crisis PR is Vital

Tuesday, September 8th, 2009

Treat a Crisis Seriously

Treating Your Crisis Seriously?

Posted by Erin Koch

One of the most vexing aspects of crisis communications is the need to overcome the natural human instinct to explain, justify, shift blame, or otherwise make sense out of the chaos that occurs when things go horribly awry. On Wednesday, Sept.2, news broke that a hot creative agency had released a tasteless advertisement exploiting fears and memories of 9-11. You can see the print ad here. A video version (which may not have been created by the company that made the original print ad) can be found here.

The World Wildlife Fund, the conservation group whose logo appears with the ads, immediately denied having ever approved the ad, placing full blame for the fiasco on its ad agency, DDB Brazil. Our initial reaction was that this was good crisis management. It is always wise to get out in front of a story and quash rumors that might harm an organization’s reputation. Then on Thursday, Sept. 3, various media reported that the WWF may, in fact, have approved the ad. And it had even appeared in a small Brazilian publication. A second statement released by the WWF makes this clear:

WWF Brazil has subsequently issued statements that have raised doubts about whether the ad concept was approved at some level within the WWF Brazil organization.

Thus WWF now finds itself in an even tougher crisis communications quandary: the appearance that they either did not do their due diligence in investigating the genesis of the ad, or (worse) intentionally tried to cover-up their responsibility for the ad. A comment at the end of an AdWeek blog post on the crisis sums up WWF’s new communications problem quite succinctly:

  • So, what’s worse? This disgusting and insulting ad being produced or the fact that differing branches of the WWF have no knowledge of what the others do, let alone any institutional control over the entity as a whole.
  • Way to set conservationism back 10 years. Maybe you should stick to actually helping protect the planet versus trying to use advertising to convince people “it’s powerful” … um, duh.

On the first day of the crisis, somewhere, someone at WWF headquarters asked the question: Did we approve this ad? And the answer they received (not surprisingly, given the high stakes involved) was a reassuring, “No, we did not.” But that question should have been asked again. And again. And then rephrased and asked a few more times, such as a very straightforward “well, then where did it come from and why does it have our logo on it?” Key WWF team members should have been given some time to search through their e-mail archives for the process of ad development and anything resembling an approval. Only then, should the conservation organization have gone public with a denial.

A few years ago, I was on the receiving end of the initial “we’d better call our PR firm about this” call for an angel of death healthcare crisis. A healthcare company had discovered that one of its employees had been injecting an unknown substance into its patients’ IV lines. You can read a bit more about the case here. I had to ask my first question literally five different times before I got a comprehensive answer: “Have you informed the rest of your patients about this?” I knew that absolute accuracy on this one point was crucial: every communication going forward would be focused on how … and how quickly, the company had reacted once it suspected the worst.

Lessons to be learned? In crisis communications, three things are crucially important: truth, accuracy and speed. In that order.

(Click here for Gable PR’s full crisis communications checklist or for direct contact please email us at results@gablepr.com)

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