In Crisis Management

It was December 2015 - end of yeara calendar of calamity and a gluttonous feast for those of us who follow crises. As 2015 careened along, it offered multiple lessons to those dedicated to building and protecting reputations.

So, let’s a take a trip down the 2015 Calendar of Shame to see what we can learn: 

January – Brian Williams’ Record-Setting Flame out 

It took a less than two weeks for Brian Williams to go from anchoring NBC’s “Nightly News” to seeing his name removed
from the credits. It started during the Jan. 30 show. That’s when Williams related his oft-told tale of being in a military chopper over Iraq that was hit with an RPG in 2003. The next day, military veteran Lance Reynolds called him out on Facebook saying: “Sorry dude, I don’t remember you being on my aircraft.” Four days later, Williams apologized on the “Nightly News” for “bungling” a tribute to a veteran who protected him in Iraq. After an internal investigation uncovered other instances of Williams stretching the truth, he was first asked to take time off and later suspended. And, although he has since returned to the air, handling breaking news on MSNBC, his credibility is far from restored.

Why the speed and severity of response in this situation? Because this is a crisis that touches on the very product Williams was supposed to deliver as a news anchor – accurate and credible reporting. Had similar circumstances befallen, say, Ryan Seacrest, I daresay the outcome would have been quite different. The lesson that business people can take from the William crisis is this: Stay true to – and transparent about – your brand or suffer the swift and painful wrath of those you’re trying to sell it to. 

May – FIFA – If it’s broke…it’s BROKE

Ah, FIFA where do we start? Football’s world governing body was shaken by multiple scandals in 2015. The show-down in the US came in May of this year, although rumblings about the stinkiness of soccer’s governing body go back decades. In recent memory there was the 2011 conviction of its former president, Mohamed bin Hammam. He was found guilty of bribery and banned from international football activity for life by FIFA’s ethics committee. D-Day in the US this past May came whenU.S. Atty. Gen. Loretta Lynch announced that a lengthy investigation into FIFA had uncovered decades of bribery totaling more than $150 million. Federal racketeering charges were unveiled against 14 people, including nine current and former FIFA executives. Seven others were arrested near the organization’s headquarters in Zurich, Switzerland. Officials were charged with buying and selling votes to deliver the 2010 World Cup to South Africa and soliciting kickbacks from sports marketers. Also on that day, an FBI-led raid resulted in arrests at FIFA headquarters, following allegations of malpractice in selecting Qatar to host the 2022 World Cup. There were also accusations of financial impropriety between high-profile members, and questions over corruption dating back to the selection of Germany as the 2006 host.

On May 29 (in a testament to just how deeply FIFA took the charges) the association re-elected its president, Sepp Blatter for a fifth four-year term. Blatter humbly accepted the election; saying, “I take the responsibility to bring back FIFA.” He resigned four days later.

The trend continued through December when two high-ranking FIFA officials were detained at a luxury Zurich hotel on suspicion of taking kickbacks for selling football marketing rights in Latin America. Ironically, they were there to discuss reforms. In late December, FIFA’s Ethics Committee banned Sepp Blatter European counterpart, UEFA President Michel Platini, from all football-related activities for eight years.

And what can those of us operating in the real world take from all of this? On one hand, I supposed you can conclude what one of my more cynical relatives once told me: “If you’re going to lie, lie big. If you’re going to steal, steal big.” But I prefer a less pessimistic outlook. I suggest that the big lesson is that ethically flawed leadership seeps down to infect every inch of an organization. And that all the crisis management in the world can’t save the reputation of an organization that’s built on a culture of corruption.

July – No Bueno for Chipotle

This has been one sickening year for Chipotle. In 2015, they racked up two of the worst norovirus outbreaks on record. Shares of Chipotle Mexican Grill, Inc. lost 20 percent in the three months after reports of food-borne illnesses started surfacing.

It all started in July, when five people in Seattle contracted E. coli after eating at a local Chipotle and continued through December with customers falling ill from outbreaks of E.coli and norovirus.

In the summer of 2015 customers in Washington, California and Minnesota also started getting sick after eating at Chipotle. Outbreaks of several food-borne illnesses (and the inevitable law suits) spread to 17 different locations. In November, the company closed 43 stores in Oregon and Washington in response to more outbreaks.

On December 9, the company announced changes to its supply chain and an emphasis on food safety. The next day, co-CEO Steve Ells issued a public apology to victims on “The Today Show” and claimed that Chipotle’s new food safety procedures would put it 10 to 15 years ahead of industry standards. “This was a very unfortunate incident and I’m deeply sorry that this happened, but the procedures we’re putting in place today are so above industry norms that we are going to be the safest place to eat,” he said. Unfortunately, the next day, a Boston location had to be shut down when 141 patrons reported “gastrointestinal symptoms” after eating at a Chipotle. Those hit included half of Boston College’s men’s basketball team.

What makes this crisis much more reputation damaging than the Subway situation that cropped up in August is that it speaks to the integrity of the product. It flies in the face of the company’s branding as the source of “Food with Integrity.”

Clearly, the road back to health for the company’s reputation (and its customers) hinges on its ability to address the current food safety problems. Right now, they still don’t understand what’s caused the problem. Which, of course, means they can’t do anything (or say anything) about what they’ll do to fix it. They’ve already started that journey by bringing on their own food-safety consultants and digging into their supply chain.

With that said, they can’t wait to start communicating with customers until they find the root of the problem. At the very least, they need to keep their customers up-to-date about what they are doing to figure out what’s gone wrong. The lesson here is that an organization can’t wait for the results of investigations to begin nurturing customers, even if they have little to say.

Once they understand the causes, they’ll need to formulate a plan to address them. Only then can they dedicate themselves to trudging down that long, hard road toward restoration of consumer confidence.  Ellis has already taken the first steps with his “Today Show” interview when he said, “We’re doing a lot to rectify this and to make sure this doesn’t happen again.” That statement gives new meaning to the old “a journey of a thousand miles” cliché. This will be more than a thousand for Chipotle.

August – Subway rolls by scandal without leaving a crumb 

In August, Subway escaped the whiff of scandal with quick and decisive reputation control after the arrest of their former spokesman Jared Fogle on child pornography charges. By the time the media scrum had gained traction, the fast food chain had already laid the groundwork that would separate their fate from Fogle’s.

The timeline tells the story: In April, Russell Taylor, head of Fogle‘s charitable organization since 2008, was arrested on child pornography charges. Court documents say Taylor produced and possessed child pornography of boys and girls as young as nine years old. Within hours of that arrest, Subway laid the foundation for its strategy of separating themselves from Fogle, even though he hadn’t been charged. They issued this tweet on July 7: “Subway & Jared Fogle have agreed to suspend their relationship due to the current investigation. Jared is cooperating with authorities.”

At the time, many of us crisis mavens saw the move as over-reactive. As it turns out, it was not. Before you could say, “I’ll have guac with that” they had scratched plans to include Jared as part of their 50th anniversary celebration. Those plans, by the way, included rebranding him as a family man who had kept the weight off with a consistent diet of Subway sandwiches. In fact, Fogle had already started appearing in his new Family Man role in a segment with the Muppets.

It turns out the Family Man had something of a track record in the shady tastes arena. Unbeknownst to many of us, allegations of Fogle’s interest in pornography and young girls had been circulating since his college days. An FBI investigation was spawned by claims of a Florida woman who said she had recordings of Fogle making suggestive remarks about middle school girls.

In July, the FBI and local law enforcement officials served a search warrant at Fogle‘s home spending 11 hours searching the premises. In August, Fogle pled guilty tohaving had sex with minors and distributing and receiving child pornography. The night before his plea, Subway took to Facebook and Twitter with this message: “We no longer have a relationship with Jared and have no further comment.” In November, he was sentenced to 15 years, eight months in prison.

While Subway may have its problems with the shifting food tastes of Americans, the Jared incident isn’t one of them. In truth, they did the best they could for their reputation. They quickly suspended their relationship with him, cutting the ties completely when it was clear that they needed to separate their paths from his. In addition, they went right back to business as usual, putting out news on their site and in social media that reminded people of what they do for a living. The site was scrubbed of all Jared references (including the mention of his foundation) and included pieces like a story on Subway’s new Guinness World Record for the most people making sandwiches; a piece on the company receiving an A from the “Eat This, Not That” report and a notice that Entrepreneur Magazine had named Subway as one of the top franchisers for veterans.

September – VW brand polluted by emissions scandal

In September, Volkswagen admitted, that it had been cheating on the pollution trials of its diesel cars. The software that aided and abetted this was installed in 11 million vehicles worldwide. It lowered the level of nitrogen oxides emitted by these cars only when it detected that they were being tested. The crisis of confidence escalated through December when the company’s Chairman, Hans Dieter Pötsch, and Chief Executive, Matthias Müller suffered through a two-hour news conference. They blamed the crisis on a “chain of mistakes” fostered by a “culture of tolerance” for rule-breaking. They cited this environment for encouraging the deception to continue for a decade. Despite its impressive length, those who attended the public lynching came away without the answers to the most pressing questions: Who at Volkswagen ordered the software to be installed? When did it happen? And who covered it up for so long?

The damage to the company has resulted in the resignation of its chief executive and an approximate 13 percent drop in the company’s stock value. With worldwide sales sinking, the company’s been awash in executive replacements including the president and the heads of seven of VW’s dozen brands.

The company has unveiled plans to fix the affected cars by the end of next year and has vowed to improve its compliance measures. But, for students of corporate stewardship, it’s a big time reminder of the importance of transparent, ethical and sustainable business practices. No amount of marketing magic can make up for misbehavior of this magnitude.

We expect the negative reputation fall-out to last for years. Why? Because VW has branded itself as the “clean diesel” and built their corporate persona on its reliability, trust and environmental credentials. When 11 million vehicles are involved, there’s no way a few rounds of executive switching is going to rebuild consumer trust. What will? A complete culture change and the will to talk about it. Transparency, humility and activity. Not only is VW going to have to come clean on how the scandal was able to fester for so long, but it’s going to have to communicate what it’s doing to change things.

They’ve already taken the first few steps. The company is empowering its brands and regional organizations to become more autonomous in decision-making. The new CEO, Matthias Müller, has vowed to stay out of the day-to-day decisions of the brands. “As serious as this crisis is, it is also offering us an opportunity to drive much-needed structural change and we will use that opportunity,” he said.

Müller is empowering Volkswagen’s workers, especially middle managers who were often silenced under former leadership to speak up.  “We don’t need any yes-men,” he said. “The future belongs to the courageous. I am appealing to the curious, to the nonconformists, to the pioneers.”

The lessons here are that your culture is your future and no amount of reputation management can substitute for an environment that tolerates, and even encourages deception.

All in all, 2015 might just be one for the record books when up comes to mess-ups, embarrassing moments and things that make you say, “Are you kidding??” One thing is for sure: if 2016 is anything like it, I’ve got lots of job security in my work as a crisis communications consultant.

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