Ono the Ostrich CRISIS MANAGER
The Internet Newsletter about Crisis Management
Editor: Jonathan Bernstein

"For Those Who Are Crisis Managers,
Whether They Want to be or Not"

ISSN:1528-3836
2010 Jonathan Bernstein

Volume XI, Number 07
April 15, 2010

JUST A THOUGHT

If you ask them, you'll find that your stakeholders have information needs that might surprise you.  Or, just wing it and surprise them. 

FROM THE EDITOR

Merrie Spaeth graces the pages of Crisis Manager for the first time in an article as serious as her infamous Bimbo Awards are humorous.  Merrie and I have some history together; we had the dubious distinction of being two of the consultants whose advice Arthur Andersen largely ignored.  She's still in business.  I'm still in business. 


In Harmonic Convergence, Merrie makes a complicated subject simple by, de facto, posing the question, "Would you rather have your online reputation be associated with your beautifully written corporate values or with the terms 'vomit' and 'crap'?"


Then Australian crisis management pro Tony Jaques returns to us with an article from his own newsletter, posing the question, "Why Can't We Learn from Other People's Mistakes?"


It reminds me of the definition of insanity popularly associated with Albert Einstein (although I've never been able to confirm that): "Insanity is doing the same thing over and over again, expecting different results."


Next, I wanted to remind you that legal industry giant Steptoe & Johnson is holding their 7th Annual Labor Relations Conference in mid-May, and it will include a crisis management-related presentation by your editor. All attendees will receive a complimentary copy of my new Keeping the Wolves at Bay - Media Training.


Finally, at least I can answer the musical question, "What kind of fool am I?"  I'm a blogging fool.  Not only am I continuing to produce our Bernstein Crisis Management blog, with my son Erik, but I've now taken on management of the Crisis Management blog hosted over at Carter McNamara's Free Management Library, where you'll also find a dozen or more other excellent blogs.


As always, if you like what you see, please share it with others by using the "Forward Email" link at the bottom of the ezine and tell them to subscribe!  IMPORTANT NOTE: If you just "Forward" using your own email program's "Forward" function and your recipient thinks they're being spammed, they can click on the Opt Out link and opt YOU off the list.   So use the "Forward Email" link, please.

BCM

My best to all,

Jonathan



HARMONIC CONVERGENCE
By Merrie Spaeth

If you don't ensure consistency in your company's messages, you could come to regret it.

 

What is "alignment," and why should you, as a C-suite resident or aspirant, care about it? Fundamentally, "alignment"
Merrie Spaeth
BCM
recognizes that there are multiple routes among which information flows to key company audiences such as employees, customers, regulators, the public, and investors. Instead of concentrating only on what the company formally controls - such as brochures, annual reports, web pages, and advertising - the CEO needs to be equally concerned with what's flowing along all the informal routes.

 

This used to be referred to as "water-cooler" talk - all those encounters and interactions that make up the vast majority of communications among employees.

 

But, how can the CEO possibly pay attention to hundreds of thousands of such encounters? You can begin by creating a comprehensive standard or model with set expectations and definitions. While explicating such an approach is beyond the scope of this column, the starting point is extremely simple - and might have saved UBS, for example, intense embarrassment, significant damage to its reputation, and $35 million.

 

Communication starts with the very words chosen to represent a company's mission, products, services, values, and people. Two decades ago we coined the term, "good words," to describe the words you want people to latch on to and repeat. "Bad words" are the words you don't want repeated. It couldn't be simpler.

 

UBS sold hedge-fund customer Pursuit Partners collateralized debt obligations that UBS represented as "investment-grade" securities. However, in internal e-mails, UBS traders referred to the same products as "vomit" and "crap." (CDOs are considered risky. The debate over the past year has been whether the structure of the investment conceals, rather than spreads out, the underlying credit risk.) In this instance, UBS customer Pursuit Partners charged that UBS knew the rating services were about to downgrade the securities and then rushed to unload them.

 

A judge in Connecticut ruled that UBS would have to set $35 million aside as a prejudgment precaution. The judge's written decision is both hilarious and sobering, pointing out that no one could mistake "investment grade" for "vomit and "crap."

 

UBS continues to insist it will "prevail on the merits," and it may well be able to argue that Pursuit Partners should have known CDOs were risky. However, the damage has already been done. There are almost 41,000 web entries linking UBS with the words "vomit" and "crap." The bloggers on this issue are highly sophisticated individuals in financial services. Their general tone is illustrated in a post by Felix Salmon titled, "When UBS sells crap and vomit."

 

"Even if it does prevail, UBS has been revealed as being extremely sleazy at best," Salmon writes in the post. "And it would be fair for anybody dealing with the UBS fixed-income desk to assume that they're being ripped off, and treat any proffered paper with extreme prejudice."

 

Would this have happened if UBS leadership had understood that the words associated with the company - integrity, trust, invest-grade -were sacred, and not just marketing throwaways? We believe someone might have stepped forward to point out the disconnect. UBS is making the mistake of treating this as a minor legal matter. It's not. It's about the soul of the company, and whether future customers will follow Salmon's advice or regard UBS as a trusted partner.

         

This is what we mean when we refer to "alignment." No doubt, it's a strategic matter worthy of attention from the top.


Merrie Spaeth has a unique background in media, government, politics, business and the entertainment industry. She is a pioneer in communication theory and executive training, and is acknowledged as one of the most influential communication counselors in the world. Merrie is the founder and president of Dallas-based Spaeth Communications, Inc.


WHY CAN'T WE LEARN FROM OTHER PEOPLE'S MISTAKES?
By Tony Jaques

A recent Australian marketing blunder highlights the sad fact that companies keep making the same mistakes, and paying
Tony Jaques
BCM
the price in reputational damage. 

The local burger chain Grill'd placed a "two for one" coupon offer in the university magazine Uni Times aimed at Victorian university students during Orientation Week. The company naively imagined it would need to redeem only hard copy coupons from the magazine, but underestimated the speed at which scans would proliferate on the net. Electronic versions of the coupon were initially refused and, amid a flurry of negative publicity, rival fast food chain Nando's opportunistically promised to honour the vouchers, with the cheeky slogan "We'll make sure you're well fed, not fed up."

Grill'd belatedly apologized for the bungle and promised to redeem both the original coupon and any printed copy, describing their own marketing effort as "a massive debacle."

The company said; "Now we'd like to make things better. . . As a small business, we didn't think our staff and local suppliers would be able to cope with such huge numbers of vouchers coming through and we didn't want to give you a bad Grill'd experience. But we should have bitten the bullet and given it our best shot." And their website feedback reveals some sympathy (as well as plenty of criticism).

However the fast food business is littered with coupon fiascos, and Grill'd should have known that it is far better to learn from others mistakes rather than repeating them all yourself.

Less than 12 months earlier, KFC in the US got caught up in a highly publicized reputational crisis which was described by Advertising Age as "one of the all-time blunders."

In order to promote its new line of grilled chicken, KFC used Oprah in May 2009 to announce a downloadable coupon for a FREE two-piece meal, to be redeemed over the next two weeks. The coupon had to be accessed within a 48 hour period, yet the company said there were more than 10 million downloads. And KFC outlets were overwhelmed by a reported 4 million customers queuing to demand their free meal (worth just under $US4). There was even a reported "sit in" in a Manhattan KFC when management refused to honour the deal.

KFC President Roger Eaton quickly issued a YouTube apology (since taken down) and appeared on Oprah to announce that coupon-holders could apply for a "rain check" to be redeemed over a staggered timeframe. But the mainstream news media denounced the fiasco and hundreds of social media websites were flooded with attacks on the company.

Then of course there was the infamous Starbucks "free iced coffee" debacle of 2006, when a coupon offer was emailed to a limited number of employees in the southwestern US, with an invitation to share it with their friends and families. The email coupon "went viral" and millions of copies were made all over the world before Starbucks pulled the plug.

While the misjudgments in all of these cases are obvious, the sad reality seems to be that the same mistakes keep on being made.  And they are certainly not confined to the fast food business. The most effective method of crisis management is to take steps to prevent a crisis happening in the first place.  Understanding the business, and learning the lessons of history, are just two of the steps towards prevention.


Tony Jaques is Director of Issue Outcomes Pty Ltd. This article originally appeared in Tony's new email newsletter, "Managing Outcomes," and he partially blames me for being motivated to start the ezine.  You can subscribe by sending your name and contact details to subscribe@issueoutcomes.com.au.




BUSINESS ANNOUNCEMENTS
(aka blatant self-promotion)

Keeping the Wolves at Bay: Media Training

What has 80+ pages of hard-hitting, entertaining and easy-to-read guidance on how to deal with both traditional and online media during times of crisis?  The answer is
Keeping the Wolves at Bay - Media Training.Book Cover JPG

The, four-color, perfect-bound, 8x10 manual is currently available both in hardcopy ($25) and PDF form ($10). Volume discounts are available; write to Jonathan Bernstein for that information.

Here's a couple of teaser reviews for you:

Jonathan Bernstein's Keeping the Wolves at Bay is an eminently practical guidance for anyone - business leader, celebrity, politician - who must willingly or unwillingly face the glare of media attention. It appears
at a moment in time when the social media and other digital communications have upped the ante exponentially.
Bernstein's practicum on media relations takes on renewed urgency as news, gossip, and opinion now drive
public perception virally and at the speed of light.

 
Richard Levick, Esq.
President & CEO
Levick Strategic Communications, LLC

 
Even if you think you'll never, ever be interviewed by the media, buy this book and read it cover to cover. It isn't a substitute for media training. But it will give you the tools and confidence to go head to head -- and possibly even defang -- rabid reporters, blood-thirsty bloggers and social networking buffoons who are out to besmirch your good name.

Joan Stewart, The Publicity Hound

The book and other products can be found at the
Crisis Manager Bookstore

Want To Blog And Tweet About
Your Organization But Don't Have Time?

Missing out on all the promotional and SEO advantages of doing so? Hire someone to be your voice...like Erik Bernstein, aka "Son of Crisis Manager."

More info:jonathan@bernsteincrisismanagement.com.



GUEST AUTHORS

GUEST AUTHORS are very welcome to submit material for "Crisis Manager." There is no fee paid, but most guest authors have reported receiving business inquiries as a result of appearing in this publication. Case histories, experience-based lessons, commentary on current news events and editorial opinion are all eligible for consideration. Submission is not a guarantee of acceptance.



ABOUT THE EDITOR & PUBLISHER

JonatJB Headshothan Bernstein is president of Bernstein Crisis Management, Inc., a national crisis management public relations agency providing 24/7 access to crisis response professionals. The agency engages in the full spectrum of crisis management services: crisis prevention, response, planning & training. He has been in the public relations field since 1982, following five-year stints in both military intelligence and investigative reporting. Write to jonathan@bernsteincrisismanagement.com.



LEGAL DISCLAIMER

All information contained herein is obtained by Jonathan Bernstein from sources believed by Jonathan Bernstein to be accurate and reliable.

Because of the possibility of human and mechanical error as well as other factors, neither Jonathan Bernstein nor Bernstein Crisis Management is responsible for any errors or omissions. All information is provided "as is" without warranty of any kind. Bernstein Crisis Management and Jonathan Bernstein make no representations and disclaim all express, implied, and statutory warranties of any kind to the user and/or any third party including, without limitation, warranties as to accuracy, timeliness, completeness, merchantability, or fitness for any particular purpose.

Unless due to willful tortuous misconduct or gross negligence, Jonathan Bernstein and Bernstein Crisis Management shall have no liability in tort, contract, or otherwise (and as permitted by law, product liability), to the user and/or any third party.

Under no circumstance shall Bernstein Crisis Management or Jonathan Bernstein be liable to the user and/or any third party for any lost profits or lost opportunity, indirect, special, consequential, incidental, or punitive damages whatsoever, even if Bernstein Crisis Management or Jonathan Bernstein has been advised of the possibility of such damages.

A service of this newsletter is to provide news summaries and/or snippets to readers. In such instances articles and/or snippets will be reprinted as they are received from the originating party or as they are displayed on the originating website or in the original article. As we do not write the news, we merely point readers to it, under no circumstance shall Bernstein Crisis Management or Jonathan Bernstein be liable to the user and/or any third party for any lost profits or lost opportunity, indirect, special, consequential, incidental, or punitive damages whatsoever due to the distribution of said news articles or snippets that lead readers to a full article on a news service's website, even if Bernstein Crisis Management or Jonathan Bernstein has been advised of the possibility of such damages. Authors of the original news story and their publications shall be exclusively held liable. Any corrections to news stories are not mandatory and shall be printed at the discretion of the list moderator after evaluation on a case-by-case basis.


In This Issue
Just a Thought
Harmonic Convergence
Why Can't We Learn from Other People's Mistakes?
Quick Links