This month we're looking at two crises that may act as symbols for the crisis of the 21st century. Both are global, both cause us to reexamine the role of the media, and both are aided and/or caused by
the Internet.
The first case, the Bridgestone/Firestone tire recall is truly global, both in its origins as well as its scope. The first blowouts occurred in Saudi Arabia. Problems continued to surface around the
globe, but no recall was announced until a Houston television station began investigating the complaints and aired a story about it.
Sometime after that broadcast, Bridgestone and its customer, Ford, went public, announcing the voluntary recall before any governing body could force the issue. (What about NHTSA and the investigation
it opened 8/3/00? My timeline says the recall came on 8/6/00.) Nonetheless, the crisis quickly built up steam, fueled by customers sharing their issues on the Internet. Now the executives are the subject
of congressional inquiries.
But at the heart of what must seem to Firestone and Ford PR pros a never-ending nightmare is the essential difficulty of a Japanese company attempting to manage media relations, public affairs and
customer relationships from half a world away. Japanese media and customers are traditionally far more polite, so the vehemence of the backlash must have taken some officials by surprise. Add to the
complexity trying to manage a crisis in conjunction with your major customer, who presumably has a slightly different axe to grind, and it quickly becomes apparent why the crisis won't go away. At press
time, what appeared a month ago to be a fairly standard, if large, recall crisis, has mushroomed into what surely will be remembered as the biggest public and customer relations crisis of the year.
On a smaller, but no less illustrative scale, is the story of Emulex, a high-tech high flyer. Just as everything seemed to be clicking for the company, and not long after announcing a record quarter, a
phony press release sent its stock price into a nosedive. The story is interesting in three ways. First of all, the notion that one "press release" could shave 60% off a company's market cap in a couple
of hours is a pretty dramatic development. Second, it speaks to the power of press release distribution via the Internet that the release, which went out via the smallest of the big three news
distributors, would be immediately picked up without question by such a reputable organization as Bloomberg. Third, it says quite a lot about the nature of the news organizations that broadcast the story
without ever contacting anyone from Emulex.
Katharine Delahaye Paine is president of Delahaye Medialink (603/431-0111).
Image Patrol is based on a subjective content analysis of major news sources
covering a crisis. Comments are not intended to criticize the work of the company
in crisis, but rather to illustrate the role the media play in shaping the perceptions
of various stakeholder groups.
Bridgestone/Firestone Inc.
HQ: Nashville
Employees: 45,000
1998 Sales (mil): $7,400
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Criteria
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Grade
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Comments
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Advice
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| Extent of coverage | F | This is a story with very long legs. Not only has there been new news every day - from threatened strikes to more tire blowouts - but it has extensive global reach as well. |
One of the perils of being a global company is that you have customers everywhere in the world, and editors who want to serve those customers. The lesson is, everywhere you have a customer, you have a public image, and a reporter who is just waiting to dig into your dirt. |
| Effectiveness of spokespeople | C | Ford spokespeople are clearly well media trained and the U.S.-based Firestone chief is another good corporate face. Unfortunately, Bridgestone's CEO is not as fluent, and thus can't play the front-and-center role that a CEO should be playing under the circumstances. |
Again, one of the problems of being a global company is that chances are pretty good that your CEO doesn't speak the language of the country in which a crisis occurs. That means that the head of operations in each country needs to be as good or better than his/her peers in that country |
| Communication of key messages | D | While at first the messages were carefully managed by both Ford and Firestone, it is clear a month later that they are no longer in control of the messages. Between potential strikes, demands to expand the recall, and media reports of conflicts between Ford and Firestone, most spokespeople are now in reactive mode. |
Every crisis communications plan should include a "reserve unit" that can be called upon if the crisis takes a turn for the worse. PR people are used to working around the clock during a crisis, but if the crisis doesn't end, and continues to snowball, the team will fall quickly into reactive mode. That's when you need to call in the reserve units for ideas and proactive support. |
| Management of negative messages | F | All too quickly the bad news about additional deaths and burgeoning customer complaints became the focus of media attention. By blaming the "scabs" brought in during a strike in Dayton for shoddy work, they managed to annoy both the workers and the labor unions. |
In this global village, it should come as no surprise that all these negative messages were transmitted instantly around the world. So not only were unions quick to comment on who would take the rap for the disaster, but customers in Brazil and other parts of the world could take their cues from their American counterparts and begin filing suits and complaints of their own. If it's bad news here, chances are it's bad news in some other country. |
| Impact on customers | D | Firestone's site crashed hours after the announcement of the recall, giving a pretty good indication of customer response to the announcement. Pundits are already speculating as to whether this is a crisis that either the Firestone or Bridgestone brand can recover from. From the comments on the Web sites, the outlook is grim. The big question is, What is the impact on Ford's customers and on SUV sales in general? So far it hasn't seemed to have any impact. |
In the Internet age, your IT person is a critical part of the crisis team. Also, in this day of cooperation and alliances, you are known by the company you keep. Ford might take a few lessons from Al Gore and put some distance between themselves and their flailing ally. |
| Impact on employees | D | Clearly there's trouble brewing in Bridgestone's ranks since there have been strike threats during this period. |
Crisis is never good for employee morale, and if things weren't rosy beforehand, a crisis can easily exacerbate employee dissatisfaction. On the other hand, in companies where employee loyalty is high, a crisis can help bring employees together. Another good reason to ensure that employee communications and loyalty remain a high priority. |
| Overall score | F | This is a case of "if anything can go wrong, it will." Between escalating complaints, congressional inquiries and threatened strikes, there is very little "bright side" to look upon. In this day of globalization, it may be a lesson for all global marketers. |
When people are dying because of your product, there's no easy way out of a crisis. The only things that can help are excellent customer and employee relationships. |
Emulex Corp.
HQ: Costa Mesa, Calif.
Employees: 132
2000 Sales (mil): $139.8
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Criteria
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Grade
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Comments
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Advice
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| Extent of coverage | D | Image Patrol is a bit baffled by the extent of coverage of this story. Granted it's another story of media foul up in an Internet age, and it's got the additional juicy angle of Internet distribution. But the widespread pickup of the story is still remarkable. Every paper from the Financial Times of London to the St. Petersburg (Fla.) Times covered the story in detail. |
Sex, politics and money used to guarantee major headlines. Now it's Internet, stock price and money. So if your story involves any two of those three, make sure you have a good crisis communications team in place. |
| Effectiveness of spokespeople | B | In this case there were three key spokesmen. Emulex's CEO, Paul Folino, came across as a smart, savvy, and concerned CEO; Bloomberg's editor-in-chief, Matthew Winkler, did a good job of expressing the mea culpas, but still left us wondering about Bloomberg's management; and Michael Terpin, CEO of Internet Wire, came across as flippant when he said, "It was just our turn this time." |
No matter what the issue is, own it. The position of "this is not an isolated problem, look, everyone else is just as bad" seldom works in your favor. |
| Communication of key messages | C | The major message that came across was that you probably shouldn't trust anything you read. Not exactly what Bloomberg and Internet Wire intended, but probably an awfully good lesson for investors. |
One of the basic tenants of crisis management is that in any crisis affecting multiple companies, you should coordinate messages and speak with one voice. However, in the Internet age, when a minute or two can mean millions in market cap, and you are dealing with different time zones, it is completely unrealistic. In that case, at least make sure that you are true to your own company's ideals and culture. |
| Containment of negative messages | D | By highlighting their excellent financial performance, Emulex clearly kept the negatives to a minimum. The same is not necessarily true of Bloomberg and Internet Wire, which managed to convey the message that maybe you shouldn't trust the Internet. Bloomberg in particular revealed a rather startling lack of judgment when it admitted that it had run the story without ever checking with Emulex. Makes you wonder what other "news" they've been feeding us. |
Again, given the minute-by-minute nature of the Internet, its amazing MORE negative messages didn't come out. Crisis planning and preparation are more critical than ever. |
| Impact on customers | C | Chances are good that the entire episode went unnoticed by the majority of Emulex customers. Whether the same is true for Bloomberg's readers or Internet Wire's subscribers remains to be seen. |
No matter how crazy it gets, remember to keep running the business. What happens in a day may seem chaotic to you, but if a crisis can blow over that quickly, the chances of your customers remembering are slight. |
| Impact on investors | C | The stock price has fully recovered, and as judged by the numbers alone, in the long run the episode was barely a blip on the radar screen for Emulex shareholders. However, in the bigger perspective, investors who sold out in a panic lost a great deal, and it will be some time before their faith will be restored. |
The fact that Folino personally called most of the major investors says a lot about who he is, and probably contributed to the stock's rapid recovery. Whenever possible, involve the CEO in the mop-up operation. |
| Impact on employees | B | As the CEO said, the day of the big plunge, most employees spent their time doing their jobs, and getting the product out the door. If the stock hadn't recovered, there may have been a bigger issue. |
One of the problems with the proliferation of employee stock ownership is that what affects the street now also affects employees and vice versa. |
| Overall score | B | When all was said and done, the impact of the crisis may ultimately be negligible, thanks in part to the fast pace of the Internet and the overloading of our brains, which now tend to forget anything that isn't in our face for at least a couple of days. |
The speed and chaos of the Internet is a two-way street. It can make our lives a living hell for a day or two, but it can also erase the memory just as quickly. |