Where Do You Stand?

When things go wrong, you have an issue to manage.  But, prompt positive action can turn the situation around — or, at least, nip it in the bud.  Circuit City just demonstrated this.

Mad Magazine published a parody Circuit City ad, poking fun at things like the price of flat-screen TVs and hard-to-find Wii gaming systems.  Apparently, someone at headquarters ordered Circuit City stores to remove and destroy the magazines, and the Consumerist Web site posted both the fake ad and the real e-mail.

Jim Babb, in Circuit City’s corporate communications office, fired off a note to the Consumerist, reporting that the censorship directive had been reversed and he’d apologized to Mad’s editors.  By displaying a sense of humor, his quick response and tone headed off an issue:

Speaking as “an embarrassed corporate PR Guy,” I apologized for the fact that some overly-sensitive souls at our corporate headquarters ordered the removal of the August issue of MAD Magazine from our stores. Please keep in mind that only 40 of our 700 stores sell magazines at all…

In addition I have offered to send the MAD Magazine Editor a $20.00 Circuit City Gift Card, toward the purchase of a Nintendo Wii….if he can find one!

“Someone with a brain stopped the madness,” reported the Consumerist, posting Babb’s e-mail.  The site continued:

Let’s evaluate it on the 3-step system for fixing corporate gaffes:

1. Admitted they were wrong
2. Stopped doing the wrong thing
3. Made a material gesture of apology

Check check and check on all three, plus points for speed. You go, girls.

In comments on the post, The Consumerist’s readers also gave the company points for wit, style and speed.  Red faces removed and chuckles all around. 

It’s better not to have the problem in the first place, but when you do have a problem you still have a chance to set things right. 

Serious issues require a serious response, but when the issue is about humor it helps to be able to laugh at yourself.

InBev continues to advocate for its offer to buy Anheuser-Busch, the last big beer brewer firmly planted in the United States.  In an op-ed in Tuesday’s St. Louis Post-Dispatch, InBev CEO Carlos Brito promises to keep the beloved Clydesdales and Grant’s Farm, and repeats previous promises to promote Budweiser and keep A-B’s 12 U.S. breweries.  Brito is also making the rounds on Capitol Hill, where Missouri’s U.S. senators are among his vocal opponents.

Meanwhile, St. Louis’s new on-line newspaper, the Beacon, published an interview with former A-B marketing exec William Finnie.  It highlights the fact that change is coming no matter where things go from here.

• A-B can sell to InBev.  InBev will cut costs to help pay the $46 billion price, although InBev argues they’ve created 12,000 new jobs since their company was formed in 2004.
• A-B can buy the other half of Grupo Modelo, the brewer of
  Corona, which would derail the InBev plan.  Modelo’s owners are in a good position to drive a hard bargain and A-B will have to cut costs to pay the price.
• Or, A-B will have to come up its own compelling plan that offers shareholders enough value to reject InBev’s $65 per share.  Whatever else that might involve, it will include cost-cutting.

Cost-cutting is the common theme in all of these scenarios. Markets inevitably recognize weakness and opportunities, like the ones created by several years of flatter earnings and stock price at a company where double-digit earnings growth used to be the predictable norm.

There is speculation that InBev might be persuaded to sweeten its $65 per share offer, though Brito says, “It’s a fair price, a full price, that’s it.” For the kind of institutional investors who own most stocks, a substantial premium in hand may be compelling enough. However, InBev continues to court other stakeholders through Brito’s op-ed, legislative visits and a Web site, www.globalbeerleader.com.

To get the deal done, Finnie speculates InBev might be persuaded to move its global headquarters to St. Louis and call the combined company by the proud, historic name of “Anheuser-Busch.”

If St. Louis winds up with the world’s largest brewer under a familiar corporate name, it could turn out to be a lot less change – and pain – than some of the other scenarios might bring. The menu of choices is tough, but all involve change. Unfortunately, the options don’t include the status quo that Anheuser-Busch successfully defended … perhaps too long.

Thomas Friedman writes today that the selection of Barack Obama as the Democratic nominee has given more of a bump to America’s overseas image than “the entire Bush public diplomacy effort for seven years.”

He talks about how Obama’s nomination demonstrates that people still hunger for “the idea of America,” which he defines as: this open, optimistic, and, indeed, revolutionary, place so radically different from their own societies.

I would argue that this “idea of America” equals the American brand. The War on Terrorism and other political activities have impacted America’s reputation, but the American brand still lives in the hearts and minds of people around the world. Friedman argues Obama’s nomination reminds people of the America they once respected, thus improving our country’s global reputation.

Companies facing reputational attacks can learn from this lesson. With a strong brand that captures the hearts and minds of stakeholders, reputational damage can be repaired. A brand is who you are, while your reputation is current opinion based on recent behavior. If your company is suffering from reputational damage, look to your brand – the core of your organization’s being – and with bold actions make a bold statement that will demonstrate you are better than recent behavior would indicate. As Friedman argues, America has done so with the nomination of an African-American man.

Belgian brewer InBev has created a new Internet site to communicate directly with several key audiences about its bid for Anheuser-Busch.  The new site - www.globalbeerleader.com includes a 12-minute video interview with InBev CEO Carlos Brito and separate messages for A-B employees, distributors, consumers, communities and investors.  InBev news releases about the bid also are being archived on the site and fact sheets are promised soon.  The site tries to soothe some of the concerns raised by the potential takeover of Anheuser-Busch, an American icon whose prominence in its hometown of St. Louis cannot be overstated.  For example: 

• No U.S. Brewery Closures
• This combination is about growth and investment. InBev has tremendous resources at its disposal as the leading global brewer and would invest in Anheuser-Busch in the U.S.
• InBev would maintain all of Anheuser-Busch’s existing
  U.S. breweries.
• InBev does not expect any significant job losses as a result of the proposed combination.
• InBev expects little or no impact on union jobs.
• As a result of growing the business, InBev has added 12,000 full-time positions since the merger in 2004 that formed the company.
• North American Headquarters and Global Home of Flagship Budweiser Brand to Remain in St. Louis

InBev has proposed to make St. Louis the headquarters for the North American region of the combined company and the global home of the flagship Budweiser brand. InBev understands how much Anheuser-Busch means to the U.S. and the St. Louis community. With 40 percent of the combined company’s business based in the U.S., InBev believes it would be the only logical decision to stay in St. Louis and draw on the collective expertise of Anheuser-Busch’s dedicated and experienced employees.

Meanwhile, opponents of the takeover have also taken to the Web.  A Web site and online petition devoted to maintaining Anheuser-Busch’s independence — http://www.savebudweiser.com — has collected more than 30,000 e-signatures.  St. Louis and Missouri officials also are working to rally support.  A-B says its board of directors will evaluate the proposal carefully in consultation with its financial and legal advisers and then pursue the course of action that’s in the best interests of A-B stockholders. 

When the subject of communications is a “low-trust, high-concern” situation, such as toxic waste or other environmental issues, facts are only the first step. More than 10 years ago, Dr. Vincent T. Covello, director of the Center for Risk Communication, established that competence and expertise provide only a fraction of effective communications.

His research demonstrated that caring and empathy are the most important factors in trust and credibility of environmental communication, as summarized in this chart:

Image source: Center for Risk Communication

The same principles seem to apply to our presidential politics. Analyses of Hillary Clinton’s second-place finish often point out that she effectively communicated messages of competence and experience, but only later in her campaign did she emphasize caring and empathy. In a contest that close, any one factor can be considered decisive. In contrast, Bill Clinton’s appearances during his own successful campaigns usually demonstrated caring and empathy.

No matter what the message, the best messenger is someone trustworthy who cares about our concerns.

In a perfect world, every single one of our clients would have a crisis communications plan. No, the Standing staff isn’t part of some crazed doomsday cult predicting disaster at every turn (although if you flip around our website fast enough, it can look a little psychedelic.) We’ve just had too many frantic midnight or weekend calls from clients (or imminently-about-to-be clients) saying, “You know when you asked us to prepare a crisis plan in advance of a crisis, and we said no? Yeah, we really should have done that.”  

Crises happen. And, being crises, they usually happen with alarming speed and when you least expect it. My children’s preschool just weathered a serious crisis - one of their kitchen helpers was arrested on child pornography and molestation charges. Although not involving any of the kids at the school, it still could have destroyed the stellar reputation this school enjoys.

Fortunately, they had a crisis communications plan ready to go (and no, Standing didn’t write it - I’m not tooting our own horn here). School administrators personally called every single child’s parents a full two days before news of the arrest hit the media to alert everyone. They brought in a counselor to talk to any parents or children who needed one and stayed late every night to talk with concerned parents. They then followed up with a letter outlining their cooperation with the police investigation, a reiteration that no child at the school had been harmed, the cell phone numbers for every administrator to ensure they could be reached at any time, and a list of the additional steps they’d taken to further strengthen school security and employee oversight.

As a parent, I was grateful for their professionalism and comforted by their intensive efforts to work with the police and ensure no child at the school had been harmed. As a communications professional, I was thrilled to see they had a plan, that they worked the plan, and that the plan worked - not one child was removed from the school, and they actually had an increase in new enrollment calls the week after the story broke, with many interested parents saying that the way they handled the crisis gave them even more confidence about the school’s safety.

If that doesn’t convince you, check out author and Fast Company co-founder Bill Taylor’s great blog on the really dumb things that happen to really smart business leaders. Notice I said just “really smart.” The smartest business leaders have a crisis plan ready to go when those really dumb things happen. 

This month’s issue of Public Relations Tactics revisits the Tylenol cyanide tampering crisis of 1982 – an industry standard of crisis PR done right. Times have changed and social media has certainly added an even timelier element to crisis management. However, the main principles of how Johnson & Johnson handled their response are still the cornerstones of successful crisis communications:

1. Being prepared ahead of time.
2. Acting quickly and definitively.
3. Telling the truth.
4. Treating the media with respect and honesty.
5. Meeting media deadlines whenever possible.
6. Following up with answers to questions that may not be readily available.
7. Avoiding speculation on information that is not yet available.
8. Identifying a high-level spokesperson to communicate with the media, as well as other internal/external audiences.

Learn more about what happened during Tylenol’s crisis, which resulted in seven deaths.

What do you do when youth and inexperience trump media training? You activate your crisis plan.

This is exactly what Ryan Seacrest did last night on “American Idol” when a teen contestant who was voted off visibly broke down on stage. “I can’t sing,” Alaina Whitaker said, in reference to the tradition that eliminated contestants sing a song immediately following their elimination and before leaving the show. Oh no! In the mind of a viewer, the question comes to mind, “What are they going to do now? They aren’t scheduled to go to commercial for two minutes.”

With complete ease, and most likely with a plan for this type of situation already in place, Seacrest was able to offer his own commentary to the eliminated teen and solicit feedback from the judges before offering Whitaker one more opportunity to sing (she took it) and preventing a potentially embarrassing situation from unfolding on national television.

The “American Idol” media trainers appear to be doing a good job – training dozens of young, fresh individuals to maintain their cool in front of millions and millions of viewers. When one of the individuals is unable to reference his or her training, it’s nice to see that a secondary plan is put in motion.

As an ice breaker in our quarterly retreat last Friday, we helped determine reputation management strategies for personalities in need of some serious help.  For the team who chose Roger Clemens and anybody else who watched Congressional testimony by Clemens, I thought you would enjoy reading this from comedian Andy Borowitz:

Roger Clemens Named New White House Spokesperson

When the mayor of Detroit sent text messages more than five years ago, he might have been ahead of the social media curve. Now he’s having to engage legal and crisis counselors to deal with the trail.

 A few lessons we can learn from this:

- Don’t text, email or type what you would fear coming out in larger media sources. There are lots of ways to trace electronic signals.

- Think about your tone and your means of communication. (For instance, crisis messages are best received if we see a real, live, warm person delivering the message.)

- Run some exercises with your own team on what emails, blog posts or soundbites might come back to haunt you. Hindsight is 20/20, so use past opportunities to brush up your crisis communications plan, participate in a crisis drill, or add electronic communications guidelines to your employee manuals.

- And, if you’re in a public office, AMPLIFY all of the above.