The year 2016 was a head-scratcher. Nothing went as expected. Elections in the US and Britain left pundits with open mouths. A product that took the social media world by storm – Vine – is headed for the scrap heap. And the Cubs won the World Series. Is there nothing we can count on?
In fact, there is – crisis. Politicians may come and go. Products may catch fire and loveable losers may make it to the top of the heap. But crisis – those “What were you thinking?” moments – will always be with us. You can depend on that.
Here are some of the crisis highlights (low-lights?) that remind me why I love being a crisis watcher:
New Balance’s Firestorm
Talk about a comment catching fire. A mere 24 hours after the election, a remark by Matt LeBretton, New Balance’s vice president of public affairs, inspired customers to post pictures of them setting their New Balance shoes on fire and tossing them into toilets. The remark was made in an interview with Wall Street Journal retail sports reporter Sara Germano.
Germano then tweeted the remark made by LeBretton, and it was picked up by sneaker enthusiast media such as Sole Collector (@solecollector) who shared the tweet to all of the sneaker world. Their reactions caused for a heated conversation online. The process gives new meaning to the phrase “The internet caught fire.”
What caused this (ahem) firestorm? Here’s LeBretton’s quote: “The Obama administration turned a deaf ear to us and frankly, with President-elect Trump, we feel things are going to move in the right direct.” LeBretton was talking about Trump’s dislike of the Trans-Pacific Partnership trade agreement. As the only major company making athletic shoes in the US, the company believed the policy would hinder their business and help overseas competitors. Before you could say TPP, the remarks had gone viral and posts of flaming New Balance shoes were all over social media.
The company’s first attempt to get the crisis under control (saying that it wanted to “make more shoes in the US, not less…” ) did nothing. In fact, the next social media volley came from neo-Nazi blogger Andrew Anglin who dubbed New Balance the “Official Shoes of White People.” He advised his followers that wearing the shoes would help them “recognize one another by our sportswear.” Not surprisingly, the company found itself on the defensive again, putting out a statement that looks like what you see at the end of every employment ad: “New Balance does not tolerate bigotry or hate in any form.” Then came their Instagram statement: “As a 110-year-old company with five factories in the U.S. and thousands of employees worldwide from all races, genders, cultures and sexual orientations, New Balance is a values-driven organization and culture that believes in humanity, integrity, community and mutual respect for people around the world.”
On Facebook, the post has attracted more than 5,000 reactions and hundreds of comments, some lauding the company and others from supporters and detractors of Mr. Trump criticizing its response. Eventually, New Balance tweeted a picture of their full statement which included this: “We believe in community. We believe in humanity. From the people who make our shoes to the people who wear them, we believe in acting with the utmost integrity and we welcome all walks of life. Since 1906, we have carved our own path in being passionately committed to making things at our five factories in New England, even when nobody else did. New Balance and our thousands of employees around the world constantly strive to better our local communities. We always have and we always will.”
So, first they said too little. Then they said too much. The lesson here is this: React quickly and directly. Telling a long-convoluted story that talks around the overriding issues leaves folks confused about where you really stand.
Apple’s FBI Showdown
In February, Apple’s CEO, Tim Cook, drew a line in the sand on building a “backdoor” into the security of the company’s phones. He positioned both his company and his own personal brand as the defenders of privacy in a way that hasn’t been done before. Cook took himself out of the shadow of Steve Jobs with a strong stance against the FBI’s demands that the company help them hack into the phone of one of the San Bernardino shooters.
Apple stance on this matter signaled a change. The company has been known for its secrecy. Reporters often complained that they stonewall most requests for interviews unless they wanted to talk about their latest product.
In this case, though, they went against their past culture to communicate about principles. They sent a letter explaining their stance to their customers; held conference calls with reporters whenever the government or Apple filed new court documents and did interviews with ABC News and political and policy reporters in Washington, DC. All this expanded the company’s PR outreach beyond the tech reporters that customarily follow the company and its product.
It might not be the most popular move but I think it’s worth the risk. While some newspapers ran supportive editorials on its stance, a Pew Research survey a month after the shooting said the majority of Americans were on the other side of this issue. In addition, the upcoming Trump administration has signaled that it, too, may want to jump into the fray. But I believe the idea of Apple as a champion of privacy will, in the end, be a positive for the company. To quote crisis consultant Sam Singer: “It’s a genius marketing strategy to grab the American flag and wrap yourself in the mantle of free speech and privacy…two things Americans value above all else.”
Wounded Warrior Inflicts Its Own Wounds
And speaking about things Americans value, an appalling crisis developed this year that involved a charity organized to benefit veterans. This is one was a crisis that the non-profit will not recover from.
The Wounded Warrior Project was a fund-raising giant, taking in more than $372 million in 2015 — largely through small donations from people over 65. Yet, throughout the year, media accounts and revelations by former employees exposed the group’s lavish spending on administration and marketing. About 40 percent of the organization’s donations in 2014 were spent on administrative and marketing costs, according to the charity-rating group Charity Navigator. By contrast, similar veterans groups, such as the Semper Fi Fund, spent about eight percent of donations on overhead. In January 2016, WWP was the target of twin exposés by the New York Times and CBS News. The allegations were that they spent too much on themselves, often for lavish perquisites, and too little on those they were supposed to help. In March, WWP’s Board fired CEO, Steven Nardizzi, and COO, Al Giordano.
I do not believe the charity will survive. Unlike profit-making companies – which can rebuild trust over time with acts of contrition and support of good work – non-profits are held (legitimately) to a higher standard. Once that trust is broken, you can expect donors to go elsewhere and those who benefit from the charity to suffer. We’ve already seen that. Since the firings, WWP’s annual contributions have withered by a projected $200 million. Nine offices have been shuttered and half the executive staff has been let go. Soldiers and veterans are paying the price for this. For example, the charity’s Transition Training Academy, which prepared service personnel for IT certification, has been cancelled. Its Soldier Ride, which provides cycling to remediate physical and emotional wounds, has been drastically curtailed.
It was one of the saddest crises of 2016 because its outcome will ultimately hurt some of the most vulnerable among us.
The year 2016 showed us just how unexpected, unusual and unbelievable crises can be. There’s one thing I can guarantee for 2017 – there’s more where that came from.
Stay tuned for our Chronicle of Crises 2016, Part 2 featuring Ryan Lochte, Samsung, and EPI Pen manufacturer Mylan.
A version of this post appeared in the Hartford Business Journal on Dec. 19, 2016
http://www.hartfordbusiness.com/article/20161219/PRINTEDITION/312159894
