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May 21, 2012 |
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By Richard S. Levick, Esq.
The Dell saga is as dramatic a case as we are likely to see for some time of how timing bedevils crisis managers. Easy enough for Monday morning quarterbacks to talk about how the company waited too long to announce the largest computer-related recall in history, thereby exposing itself to blaring front-page headlines, including a lead Wall Street Journal story and worldwide media follow-up coverage.
That said, the critical question in crisis communications pertains to preparation. The test is not just how well teams react to crises, but how well they predict them.
Dell’s apparent failure to be predictive is especially unfortunate in light of a material event – the battery combustion at a June conference in Japan that aroused widespread Internet interest, replete with visuals, as bloggers raised the possibility of a similar material event on an airplane. There immediately followed a spate of articles quoting experts on the equally real possibility that the government might ban laptops from commercial aircraft.
Yet Dell should not have needed this material event as an Early Warning Trigger Mechanism. On August 14, the Associated Press chronicled incidents stretching back to 1999, including, among others, a Lufthansa fire in Chicago, a UPS plane in flames in Philadelphia, and an emergency landing by a plane carrying then-Vice Presidential candidate John Edwards, all apparently the result of computer batteries’ spontaneous combustion. It did not require great prescience to anticipate that air flight safety would dominate inevitable coverage of the burning batteries and their subsequent recall.
The issue should indeed have been a main component of crisis war games at Dell. Once the recall was inevitable, Dell can reasonably have anticipated the necessity to talk loud and clear about air flight safety, and it should have been prepared to do so at the earliest possible moment.
By delaying any announcement, Dell harmed its position on multiple fronts. It allowed the Consumer Product Safety Commission to define the story and cloak itself in the garb of public protector. Nor was the agency shy about describing the recall as the “largest computer-related recall in history.” The magnitude of the disaster became an integral part of the story reported in the first few paragraphs of both the Austin American-Statesman and Wall Street Journal Online on August 15th. Dell thus fell victim to the “Law of ST.” Words like “largest” or “first” or “worst” become the story itself.
At the strategic level, there’s a best practice called “Bad News All At Once” predicated on the time-tested wisdom that full and fast disclosure shortens the life of most stories. In fact, the art of both Investor and Consumer Relations supports this best practice almost every time out. Investors want nothing more than closure, a sense that a crisis, no matter how multifaceted, will be resolved in the immediate future. Consumers, meanwhile, can be wooed back, but not so easily if the story drags on indefinitely, a new twist on each front page edition.
Bad News All at Once contains bad news in the exact meaning of the word “contain.” By stanching the flow of revelations, the story is separated from events that may still lie ahead. There are times when major news, like a terrorist plot or a hurricane, can indeed minimize attention to your story. It’s a factor to weigh – but not simply assume. In Dell’s case, the terrorist revelation magnified its crisis to an extent that must have been unimaginable when the company first decided to delay.
Now there’s the SEC account practices probe to further elongate the Dell litany. Unlike the terrorist story, this time bomb has been ticking since last year. There may be good practical and legal reasons why Dell did not reveal this material event, but the fact still remains that, as a material event, it was indeed revealed and at the worst possible moment.
On the positive side, Dell seems to have done a good job working with Sony to coordinate a response to the crisis by avoiding the no-win scenario we’ve seen in the past when major brands blame each other in the national media. Customers do not care who is at fault. They only care that the problem gets fixed.
Even here, Dell’s performance was, unfortunately, imperfect. In the opening grafs of those August 15th stories, we read that Dell “blamed” Sony for the problem. Only further down in the Austin story – and nowhere in the Journal story – does a Dell spokesperson express confidence in Sony.
The fact that many other computer manufacturers may face the same product liability represents an opportunity for Dell to offer some sort of industry-wide support to safeguard products. Such an initiative would underscore Dell’s public safety leadership even as it reminds the world that it is not the only computer company with a problem. It is a company that is resolved to correct the problem and it deserves the recognition for doing so.
As to those other companies, if they’re not working around the clock on a recall and communications strategy right now, they’ll have no excuses when hostile voices tell the tale.
Here are some basic lessons learned from the Dell laptop battery crisis:
- Predict the future. Play war games. Had Dell done so, they might have anticipated that their exploding batteries were an airline disaster story waiting to happen, even without the terrorist plot that ultimately magnified the story.
- In determining when to disclose, watch for material events and early warning triggering mechanisms that compel public disclosure ASAP.
- Disclosing Bad News All At Once shortens the life of a negative story and contains it by preempting substantive links to other stories.
- An industry-wide public safety leadership role generalizes the problem beyond your own company.
Richard S. Levick, Esq., President and CEO of Levick Strategic Communications, protects brands and reputations during the highest-stakes global crises and litigation. Honored as Crisis Firm of the Year by the Holmes Report in 2005, the Firm wins the hearts and minds of key audiences with comprehensive campaigns on behalf of clients targeted by regulators, embroiled in litigation, or confronted by grassroots movements. Find a comprehensive arsenal of vital communications tools at www.levick.com, including books, newsletters, and helpful articles.
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