Bernstein Crisis Management. Crisis response, prevention, planning, and training.

Crisis Manager Internet Newsletter about Crisis Management

© 2002 Jonathan Bernstein
Circulation: 2,700+


What upsets me is not that you lied to me, but that from now on I can no longer believe you.

--Friedrich Wilhelm Nietzsche


Editor's Note: L.M. "Wooty" Sixel, workplace reporter for the Houston Chronicle, just interviewed me for a column that appeared today about whether the image problems of Enron's Ken Lay have made the CEO job less attractive. That led to a discussion of how CEOs can avoid becoming another Lay...and to my realization that I should write about it, not just talk about it!

How to Avoid Becoming a Ken Lay
by Jonathan Bernstein

In my line of work, I'm often working directly with the CEO of an organization that's either in crisis, or wants me to help them stay out of crises. In the former situation, at some point, I conduct an analysis of why the crisis occurred; in the latter, I engage in a vulnerability audit to see where and how crises MAY occur.

Here's what both processes have revealed, consistently: CEOs, most of whom are honest and have every intent to be law-abiding and ethical, often have no idea what's "really happening" in certain areas of their organization. They know a lot about the operational end of the business, but they don't know what they aren't being told -- and don't realize the need for an internal communication system that makes sure they stay "in the know" even when bad, or unethical managers are trying to block information flow.

ALMOST EVERY COMPREHENSIVE VULNERABILITY AUDIT in which I've been involved in the past two decades has uncovered information that the CEO should have known, but didn't, information that foretold future crises.

Some examples:

  • After a client company was hammered by the legal and PR damage from an environmental incident, I conducted a vulnerability audit preparatory to creating the firm's first crisis communications plan. Vulnerability audits are, ideally, done with the assurance, to interviewees, that top management will not be told "who said what," so that they can feel free to speak. During this audit, I learned that there was plenty of information in advance of the incident which indicated that it COULD occur. But one or more managers at this location, one of a number of company businesses, sat on the information and didn't pass it on to corporate HQ.
  • Conducting a vulnerability audit of another national company, we found that rumors were spreading rapidly via the Internet and, unaddressed by management, were taking on a life of their own which could easily lead to future lawsuits and negative PR.
  • A post-crisis analysis of a serious labor and employment matter indicated that the organization's underestimation of how some of its key stakeholders would respond led to the situation attaining crisis status.

In all of these cases and scores more, proper analysis, ideally done jointly by a PR/legal team, could have identified what I have referred to, in past articles here, as "creeping" or "slow-burn" crises. Knowing that, management could have headed off the crises or at least have had enough advance time to prepare a response for use when and if the situations escalated to crisis status.

Which brings me back to the Ken Lays of the world. I have no idea whether Mr. Lay is or isn't guilty in a court of law, but he is already regarded as guilty in the court of public opinion. Worse, perhaps, he is regarded as foolish. The public expects the CEO to know what is happening in his or her own organization. It is possible to engage in activities such as vulnerability audits, anonymous internal whistleblowing programs and rumor control systems, which will help a CEO get the information BEFORE the press or a prosecutor gets it.

If a CEO takes a blind "I trust my people" approach, he is being imprudent and naive.

If a CEO takes an "I don't want to know, just get the job done" approach, they deserve whatever results the law ultimately doles out.

If a CEO says "I want to know when we're screwing up, I want to know it first, and I want us to do the right thing," then he or she has my professional and personal respect. And has very little chance of becoming a Ken Lay.


Crisis Manager's 2nd Anniversary!

I was so busy enjoying putting together the last issue that I forgot, until after it was distributed, that February 1 commemorated the second anniversary of the launch of "Crisis Manager." In that time we've grown to approximately 2,700 direct subscribers, plus 25,000 who read Media Insider's reprints of at least one article from every issue, plus an unknown number of others who get the ezine passed on to them by friends and associates. Thank ALL of you for reading, giving me feedback and, I've been told, actually using some of the suggestions given in the publication.

Branding Crisis Manager

You can arrange to distribute "Crisis Manager" to your own email list with a "Brought to You By" credit in the masthead. There is no charge and only some reasonable restrictions to preserve the integrity of the publication. Several organizations are already doing this and finding that it is appreciated by their contacts. Write to for more info.

Crisis Manager Presentations & Workshops

Want to REALLY get some of this information into the hearts and minds of your organization? Your ineffable ezine editor and crisis communications consultant and his talented associate, Phil Cogan, are available to make presentations and lead workshops. Their presentations can often be certified for the continuing education credits required by a number of professions. A list of our recent and pending speaking engagements can be found at: For more info: or call (626) 825-3838.


The Starbucks Effect: When a Good Coffee Company Brews Bitter Feelings
by Phil Cogan, Exec. VP, Bernstein Crisis Management, Inc.

Some people would argue that companies' negative practices deserve to be exposed to the public, but what about when embarrassing practices are aberrations, not the norm?

So it was with an unfortunate incident involving the Battery Park (NYC) Plaza Starbucks and ambulance workers employed by Midwood Ambulance Service shortly after the September 11 attacks on the World Trade Center. This incident tarnished Starbucks' otherwise solid reputation.

By most accounts the company is a solid corporate citizen and supporter of coffee pickers, the environment, the communities located around their stores, and the kids in inner city schools. But all that good didn't inoculate them from what I've dubbed "The Starbucks Effect."

On September 11, the Midwood ambulance team stopped at this particular Starbucks shop in search of water to treat shock victims. Midwood's President Al Rapisarda said his employees paid cash out of their own pockets to meet the store's demand for $130 for three cases of water.

When things calmed down somewhat the ambulance company called Starbucks customer service operators and explained what had happened. At that point, reports say, they weren't so much challenging having to pay, but rather checking if they were overcharged. But Midwood says Starbucks said the incident couldn't have happened and, essentially, brushed them off.

Subsequently, the incident was described in various emails on the Internet. The exact chronology of events at this point becomes blurred. The company wrote a letter to Orin Smith, Starbucks' president, which wasn't answered. Eventually the email attracted the attention of journalists. They contacted both Smith and Howard Schultz, the company's chairman and chief global strategist. Again, no response.

On September 25th, two weeks after the attacks, a Seattle journalist wrote about the incident. What resulted is every company's nightmare.

Fueled by an Associated Press story that went worldwide, newspapers, broadcasters and websites across the globe picked up the story. Here is a sampling of headlines and responses:

  • "As If $3.50 for a Cappuccino Wasn't Bad Enough", website headline accompanying a call for a worldwide boycott of the company.

  • Starbucks Charged Rescue Workers at the World Trade Center Collapse for Bottled Water

  • Starbucks to WTC rescuers -- Sorry

  • Starbucks dropped the ball in New York (Charged Rescue Workers For Water To Save Lives)

The issue here isn't whether we should expect Starbucks, or any other company, to screen out employees who are capable of making what may be perceived as harsh, even callous decisions. Mistakes will happen.

Rather, the question is why the company apparently failed, on several different occasions, to respond appropriately. At any one of the points when Midwood, or reporters, made contact with them, Starbucks could have demonstrated the true nature of its corporate soul.

The customer service people might have been trained better to understand that they're in a unique intelligence gathering position, capable of detecting and reporting problems. The people who answered phones and letters for company executives, and the executives themselves, were in the same position. Company communicators can't respond or recommend the proper response to events that go undetected.

Only after the news stories ran did Starbucks apologize, hand-carrying a refund check from the company to Midwood. And Smith called Midwood's Rapisarda to personally apologize. But the damage had already been done.

The many stories covering the apology merely restated the story of the original sin. And its timing conveyed the impression of a cold, money-hungry company that had been caught pursuing the ruthless business policy that has resulted in the proliferation of Starbucks coffee houses around the world.

Only a few stories mentioned that Starbucks gave coffee away to rescuers. Or that it spearheaded an effort an effort that collected, by the time of the negative publicity, around $2 million for victims of the September 11th events. None of them mentioned the company's several corporate social responsibility programs.

And therein lies the danger -- when an essentially decent organization isn't equipped to respond to crisis and communicate in a way that its corporate creed dictates, it runs the very real risk of becoming known not for what it is, but for what it is not.


Q: How can a crisis management consultant know enough about all professional disciplines to effectively analyze a company's vulnerabilities?

A: We can't and don't hire anyone who says they can. The most valuable knowledge I have is an awareness of what I don't know. Between Phil Cogan and I, with more than 40 years of experience between us, we have worked with clients in many industries, and on many different types of crises. We can understand "legalese," "engineerese," "governmentese," "techie," and a variety of other "professional languages" better than the average layperson, but we're not attorneys, engineers, IT consultants, etc. A good crisis communications pro has an intuitive "manure meter" much like that of a good investigative reporter, and the ability to synthesize and effectively employ information from many different sources -- quickly. But there have been MANY times when we have recommended that a client get legal counsel further involved in a situation, or hire a quality control expert, a physical security guru, a human resources consultant or other independent experts.


Bernstein Crisis Management has formal or informal co-promotional and mutually beneficial business associations with PIER Systems, Inc., PR Newswire's ProfNet service and CustomScoop. No, we can't go into details because that's confidential, proprietary, etc. But our relationship is NOT "arm's distance" and you should know that, since we regularly write about how we're using these services for crisis and issues management. That said, you should also know that Bernstein Crisis Management sought the relationships because its staff is convinced that these services are the best of their kind for Bernstein Crisis Management's needs and those of their clients. If you have any questions about these relationships, please contact Jonathan Bernstein, (626) 825-3838.


Jonathan Bernstein is president & CEO of Bernstein Crisis Management, Inc., a national public relations agency specializing in crisis response, issues management and litigation consulting. It is also the only national PR agency able to create crisis- and issues-specific websites for its clients in as little as five minutes by employing proprietary PIER System technology. Information on the firm's services can be found by Clicking Here or by calling (626) 825-3838. Information on its PIER capabilities can be found at


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