The bigger the target, the bigger the crisis.
This month we'll look at two crises with far different consequences. Both cases were driven by the inescapable fact that the targets were the largest companies in their industries. Small skirmishes like these are probably a harbinger of many more to come - no matter how well the crises are handled.
The first case is Hotmail, the little company that Microsoft bought two years ago to provide free email to its Microsoft Network. A Swedish trade journal broke the news that a hacker used publicly available code to create a security breach that was posted on many Web sites around the world and allowed anyone to access Hotmail's email accounts. Two years ago, when Hotmail had just 10 million customers and before Microsoft paid $400 million to acquire it, the breach likely would have seen minimal coverage. But last month it made national news.
Now, as part of the mighty Microsoft PR machine, the crisis was handled quickly and efficiently. The network was brought down until the fix could be installed, and within hours, all was back up and running - the biggest damage seemingly to the media's confidence in the privacy of the Web. A number of advertising executives predictably expressed their concern about the privacy issue, but users appeared to take the breach in stride. While most users were predictably perturbed, some credited Micro-soft for acting quickly and their history of improving software once they've acquired it.
On the other side of the consequence spectrum, we have a debate that has occupied the front page of European papers for months but only recently arrived on American shores - the battle over genetically modified food. Major food-related crises like Mad Cow disease and the more recent Coke incident have kept food-related fears at the forefront of public discussion. Here in the States it was only when Monarch butterflies began dying as a result of eating milkweed contaminated by genetically modified corn that the story hit the front pages.
While Dupont and other chemical companies all produce some sort of genetically modified seed, it is Monsanto that has been the leading proponent, and thus the most frequently cited example by the media. Smartly realizing country-specific sensitivities, Monsanto began its PR efforts in the UK. But apparently those efforts have backfired, since Europeans are now refusing to accept U.S. shipments of food grown from Monsanto seeds.
Just as the Hot Mail crisis was a brief skirmish in a bigger battle about privacy, the Monarch butterfly issue is just the beginning of a much bigger debate about genetically modified foods. While Monsanto's spokespeople can not be faulted for their efforts, the counter-measures taken by the opposition are equally effective. Monsanto's communicators will be in crisis mode for a long time to come.
Key=
Criteria
Grade
Comments
Advice
Microsoft
Extent of coverage
C
"Combine two hot topics, ""Microsoft"" and ""Internet security"" into one story and you're bound to get extensive coverage no matter what you do. However it is a tribute to the speed of the fix that the story virtually vanished from mainstream media within a day. "
"Stay on top of the ""hottest"" topics in the media (i.e. on-line security), even if they don't directly affect your business. You never know when they might."
Effectiveness of spokespeople
B
"While Deanna Sanford, lead product manger for MSN, was a credible spokesperson, the ""most effective"" title goes to noted security expert Richard Smith at Phar Lap Software. He did an excellent job explaining the complexities of the issues to the media."
"Watch for good ""experts"" in your field, and make sure they are up to date on your latest developments. Smith was best known for tracking down the Melissa virus, and was probably already on every reporter's phone list."
Communication of key messages
C
By fixing the problem in just a few hours, Microsoft successfully positioned the security breach as a very short-lived problem. However, the company neglected to make any statement about its concern for consumer privacy.
"Microsoft acted by doing (not just speaking) and its rapid fix is a good model to follow. However any company vulnerable to a crisis should pay close attention to other ""issues"" that a crisis might raise and make sure to address them."
Management of negative messages
B
Lack of public attention to broader privacy concerns, left Microsoft exposed on that issue. Otherwise, it did an excellent job of minimizing the damage.
Act first, talk later. In any crisis, the sooner you can take direct action, the better. It gives you something real to talk about.
Impact on customers
A
Aside from the affects on society's technological elite (albeit a growing lot), the ultimate impact on most Hotmail users was negligible. I'm sure MST got its fill of complaints the day the system was brought down, but the complexity of issue was over the heads of most users.
The customer is always right, and Microsoft did an excellent job balancing customer concerns with technological issues. They explained just as much as they needed to about what had happened and they fixed the problem before many even realized their email was down.
Impact on investors
A
"The stock price stalled for a day or two then proceede north again. As long as ""security problems"" do not become a recurring theme with MST products, the company will have weathered the storm on Wall Street."
Analysts who influence the big investors get their information from a multitude of sources. No stakeholder group is unturned in their quest for insight on a company. Remember to deal not only with the business media but with other audiences too.
Impact on employees and prospective employees
A
Potentially, programmers and other technocrats at Microsoft could be motivated by the opportunity to fix such a major problem, but my guess is that the ultimate impact on employees was negligible.
A major opportunity to show Microsoft's concern with privacy issues was missed. In any crisis, watch for those opportunities to come out far ahead of the competition.
Overall score
B+
As usual, the Microsoft PR machine did an excellent job of managing a crisis.
As always, actions speak louder than words, but fast actions speak even louder.
Monsanto
Extent of coverage
C-
Initial coverage of the GM debate was limited in the U.S., but when Europe and Brazil refused to accept U.S. produce, the issue hit the front pages. The threat to Monarch butterflies even moved the story off the business pages and onto TV screens.
"When trying to control coverage, consider how ""visual"" your opposition or specific crisis is. Does it have appeal only in the business community, or is there an aspect that, unless properly managed, will get in into the broadcast arena? If this transition is inevitable, make sure the visual doesn't have your logo on it. "
Effectiveness of spokespeople
B
"Clearly Monsanto spokespeople have tons of experience in crisis management. They expressed caring and concern. But they also came off as typical corporate spokespeople faced with information they didn't like: ""We don't think the data is valid, but we've hired experts to study the problem."
No matter how well you have trained your spokespeople, the press tends to bury the predictable corporate response. Make sure the spokesperson is someone who can establish trust, credibility and rapport with reporters.
Communication of key messages
D
Monsanto didn't appear to have much opportunity to speak in most of the coverage, so it had little chance to communicate key messages. It did come across as a responsible leader in the industry, and cleverly shifted some of the attention to the EPA which approved the sale of BT corn.
Instead of providing a predictable response, try to offer a surprise in the form of new or better data, or simply take an action to solve the problem(without being forced to by a government authority). You have a much better chance of getting your messages across.
Management of negative messages
F
The bulk of the coverage painted Monsanto as the biggest of the bad guys essentially pursuing this technology as a way to sell more seed and/or more Roundup Ready. Which is exactly how the opposition sees the issue.
Invariably the most quotable quotes and sensationalist comments will make it into the first couple of paragraphs -- which is all that most people read anyway. So when the opposition creates your worst nightmare, your response must be equally creative.
Impact on customers
D
Monsanto's customers are farmers around the world, and when consumers stop buying the food you produce, you can bet that farmers will change what they plant. The ultimate impact hasn't yet been felt, but given the sizable increase in demand for certified organic products, chances are consumers will ultimately decide the issue with their pocketbooks. And if Europe is any indication, the issue will not be decided by research studies, but by raw human emotion.
It has been said that the key to successful marketing is keeping your customers' customer happy. In all communications, keep in mind that what drives your customer's decisions is the buying habits of his/her customer.
Impact on investors
D
Investors are spooked about the implications of Brazil's resistance to genetically modified seed, since it was one of the cornerstones of Monsanto's financial growth. The stock has declined since April.
Be careful about what you tell the Street about financial performances -- especially if there's anything at all controversial in what you do. They are relentlessly unforgiving.
Impact on employees
B
No doubt being portrayed as the potential murderers of Monarch butterflies does not enhance morale, but chances are employees have bought into the company line that they knew the corn could harm Monarchs and they decided it was an acceptable risk.
Be sure to monitor employee attitudes during and after a crisis. Crises can have many long-term implications-- especially if you care about attracting and keeping talent.
Overall
C-
Monsanto did a good job under the circumstances. Its responses were solid and reasoned, the scientists were credible, and it will probably make little difference. Once the issue caught on in Europe, it was only a matter of time in this interconnected world before it would explode across the front pages of American media.
"Monsanto spokespeople have joined the ranks of what Christopher Buckley in ""Thank you for Smoking""( his quintessential spoof of crisis communications) dubbed the ""MOD Squad"" for Merchants of Death. Buckley was referring to spokespeople for tobacco, firearms and alcohol companies. You can now add HMOs and genetically modified food producers to the list. The media is increasingly skeptical of corporate spokespeople and traditional responses. They are inevitably more receptive to the more creative approaches that the opposition can afford to take."