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Successful Crisis Management

Robert Riggs: Hi, it’s Robert and Brad with the Clarity Digital Clip of the Week. And we’re at the Texas A&M Campus at the Mays School of Business with Dr. Venky Shankar to talk about how do you respond to a crisis and think about it before it ever happens in a digital age?

Brad Besancon: Yeah. I think one of the things we’ve seen over the last probably couple of months is there has been lots of stuff going on out there with some crises with Starlines, the Starbucks, you’ve mentioned a new – one from 2016 that is re-service with American Airlines. And you kind of have a process of the 6, 7 A’s that you’d like to go through and teach. And we wanted to be sure we give this to our audience.

So tell us a little bit about your 6 A’s in a crisis management situation?

Robert Riggs: And this is research-based.

Venky Shankar: Yes, absolutely. And I’ve been doing a lot of research in crisis management particularly product harm crisis, product recalls, and trying to see what would be the best strategy. And I have the 6 to 7 A’s of crisis management. And before I go into that, let’s take the two examples that we briefly mentioned about.

You have the Starbucks situation and the American Airlines two years ago, the passenger passed away unfortunately because she could not get access to a doctor where the doctor on board asked it to be diverted and the American Airlines decided not to divert.

And the response of American Airlines was that, “We are looking into the complaint.” Whereas the response of Starbucks’ CEO as soon as the hand-cuffing of the African-American, two people happened, immediately apologized and wanted to have a face-to-face meeting with the these two people and also institute a racial …

Brad Besancon: They took control, right?

Venky Shankar: Yeah, they took control of racial profile, racial sensitivity training. They had instituted closing down all the locations. All of this is done very swiftly.

Robert Riggs: They treated them like humans.

Venky Shankar: Yes.

Robert Riggs: Their valued customers.

Venky Shankar: Exactly. And also very swiftly, all of these. And this is where the 6 A’s come in. The first A is to anticipate. Don’t wait for the crisis to really happen for you to act on it. So good firms nowadays in the digital age, that’s a difference between pre-digital age and digital and post-digital age. Social media and age social media where anything that happens, any negative event gets amplified and it gets stored and accumulated and then it gets viral.

And so, you don’t have the luxury of hoping that in the past, people say if crisis happens, wait for some time until you ascertain the facts, until it blows over, until it’s replaced by another crisis in the news. But now, you don’t have the luxury of it. So that’s why anticipating. What does anticipating mean? Having like a social media war room or command center where you monitor each and every thing that is said about your brand, shared about it, and pictures, videos that are being shard about you.

And Dell is a good example. They have a command center in which they 24/7 they monitor that. That’s a good …

Robert Riggs: Minute by minute.

Venky Shankar: Minute by minute, yeah.

Brad Besancon: Well, I think one of the thing we talked about previously was this, what better group to anticipate something going wrong than the people that are in your company?

Venky Shankar: Exactly.

Brad Besancon: To say, all right, here is a crisis.

Venky Shankar: How would you respond? That’s what I would suggest based on the research is that being proactive and anticipatory means that not only anticipating before a crisis hits but also preparing what to do when the crisis hits. By looking at others are teachable moments, right? If you are Dell and you look at the Southeast Airlines crisis, what would you have done if you had experienced that? So that’s the first A.

And then the second A is Acknowledge. Acknowledge something has happened.

It took about four days for the Facebook CEO to even come out of the hiding and say there is a problem that happened. That’s acknowledgment. And before that, it was too late. As you know, Facebook lost about 37 million market cap in the four days.

Brad Besancon: Yeah.

Venky Shankar: And then up to 75 million, and 5 billion later on. But that’s the second A.

And the third A is basically Apologize. Now, a lot of people think, “Wait a minute. My company may not be at fault. Why should we apologize?” But apology here really is the equivalent of empathizing with the affected party. It doesn’t necessarily mean you’re acknowledging liability or you’re saying you’re at fault. Apologies could be heartfelt, sincere, and it should resonate with the affected party.

Robert Riggs: But what if the lawyers write the apology and it is corporate speak.

Venky Shankar: It is unfortunate. And a lot of firms are boxed in by that. They issued very canned responses like, “We regret …”

Robert Riggs: Yeah.

Brad Besancon: That’s not the audience speaking.

Robert Riggs: And is that more harm?

Venky Shankar: That is more harmful because let me talk a little bit about my research. We had two papers published in the last two years in top journals and what we looked at was the impact of product recalls and especially in the automobile industry. What does it do to the brand equity or to the consumer trust in the brand and also the shareholder value of the brand? What does it depend on? And does it depend on not just the severity of the problem, the immediacy of action, and what did they develop voluntarily and come out with the admission? Or did they delay the corrective actions? Did they took – all of these we factored and took on.

What we found was the short time – yes, you can arrest the claim by just stalling it but in the long term, it hurts you more. And these are the kind of be truthful, think like a – when you are in a crisis, think like the customer. Do not think like a firm. That means if you’re CEO, you got to ask yourself, “What if I’m the affected customer or the family? Then how would I respond? What would I want the firm to do for me?”

Brad Besancon: I think you said it best in very business technical terms, “Just do what’s right.”

Venky Shankar: Yeah, exactly. Exactly. As simple as it sounds, people I know understand. And that’s why we did the research to show the long-term effects. This only shows up in the long-term and that sometimes firms do not wait that long to see the effects.

Brad Besancon: Yeah.

Venky Shankar: And corresponding to that is admit. If you have anything to do with that, admit even if – you don’t have to be perfectly at fault, even if you are partially at fault.

So take the example of United CEO, when a passenger, Dr. Dao, was dragged off the plane. First reaction was to say the employees did the right thing without really thinking through the issue. Not only does it not show the empathy but also it shows the lack of willingness to admit.

Obviously, even if there was something wrong with the passenger, nobody should be dragged. At least, that was – you don’t need to do an investigation. You should have admitted it, right?

Brad Besancon: Yeah. We don’t need three days to analyze that.

Venky Shankar: Exactly. So I think that’s – the fifth A is Amend. Make amends. Fix the problem genuinely. Don’t just show superficially that you’re changing something. Show how you fix it. So if it’s a car recall, show how nicely it’s done, how clearly it’s done, how they are compensated, what changes you made to the process.

People want assurance. It’s all about brand trust.

Brad Besancon: Absolutely.

Venky Shankar: Can I trust this brand again whether it’s Southwest, American, Facebook, Equifax, all of these brands that get diluted? And can I trust this brand? The only way you can do that is to show that you fixed the process that leads to this problem.

Brad Besancon: It shouldn’t happen in the future.

Venky Shankar: Right.

Robert Riggs: And are we in a low trust environment these studies online?

Venky Shankar: Very, very. Unfortunately in this digital social media world, people’s trust of brand is very low because they are not listening to the brand messages. They are farming their own messages. And they may actually take over the brand message if the firms do not anticipate that and do the correct thing.

Robert Riggs: And one of the things we say is that if you don’t tell your own story in an authentic, empathetic manner, someone else is going to tell it in a whole different way.

Venky Shankar: Different way.

Robert Riggs: And you would not like it.

Venky Shankar: And you may not have control over it beyond a point in time. And that’s where …

Brad Besancon: And it can happen that quick.

Venky Shankar: Right.

Brad Besancon: That’s the other thing that a lot of clients don’t understand is it can happen in minutes.

Venky Shankar: Right. And that’s where the sixth A comes in, which is really you want basically your affected customers to become an ambassador for the brand, so you want advocacy. So the sixth A is Advocate.

So in other words, get the affected people to come out and say, “Wow! This company really reacted correctly, quickly, fixed the problem. I want to trust this brand for the long term.

Brad Besancon: I mean we saw – I saw that in social media with the Southwest issue and accident that the amount of people that came on to their Facebook pages and in their social media supporting Southwest just saying, “Thank you for doing what you’re doing. Thank you for getting the plane down safe.”

Venky Shankar: Right. I think that’s a great example.

Brad Besancon: That’s a perfect example of right in the middle of a crisis. I mean they would put up a statement on Facebook and then thousands of people would come in and say, “Thank you and thanks for helping out and taking control of the situation.”

Venky Shankar: Right. And I think that leads me to the seventh A is that advertising your brand. Have faith in your brand. Show that signal and do not play hide and seek. A lot of times when firms have crisis, they stopped advertising because they don’t want the brand name to be in the public. I mean definitely by all means, do good promotions and make sure that they are compensated and so on. But maintain a steady level of faith in your brand and show that faith.

Brad Besancon: It’s back to if you stand by yourself, I’ll stand by you. I’ll stay with you.

Venky Shankar: Exactly.

Brad Besancon: And again, you bring up that same process kind of mentality up, if you keep kind of a steady flow, they’ll stay with you along that road trip if you will.

Venky Shankar: Absolutely.

Brad Besancon: They’ll stay with you if you kind of keep steady.

Robert Riggs: So it strikes me, there’s actually an 8th A here that ought to be part of each and every step of the seven and that is Authenticity.

Venky Shankar: Absolutely.

Brad Besancon: Every one of those adds up to authenticity.

Venky Shankar: Right. All the 7 A’s if you do it correctly, your brand becomes very authentic and most likeable, desirable. People will stick with your brand and they will almost internalize and start saying, “Hey, I want to support this brand. It could happen to me.” That’s the kind of empathy that you want, the reverse empathy you want.

Brad Besancon: Rob and I talked about that if you’re doing the right steps, no matter what social advertising, if you’re doing everything that we’re talking about here, it gets you right here.

Venky Shankar: At the heart, yeah.

Brad Besancon: It gets you right there in the chest and the heart. It becomes an emotional connection, not a product or service connection. That’s often really where you’re trying to get.

Venky Shankar: Absolutely.

Robert Riggs: So you as a leader of your business or organization need to be asking, do I have the 7 A’s in place and how do I do that?

We’re going to put some resources online that you can read the doctor’s papers and we want to thank you for hosting us here at Texas A&M at the Mays School of Business. What a fantastic place.

Venky Shankar: Thank you.

Robert Riggs: We really enjoyed it. Thank you.

Brad Besancon: Thanks again.

Venky Shankar: Thank you, Brad. And thank you, Robert.