Leading Through Crisis: Building Trust and Preparedness (Full Transcript)

Speaker 1: I could talk for hours about crisis management, and don't worry, I'm not going to. I've got ten minutes here, and I'm going to focus on the three things I think are most important to bear in mind. And one is this concept of leading through a crisis as opposed to managing it, because the ugly truth about a crisis is you are actually not totally in control. There's always somebody on the other side who is responding to your actions, and in some instances, the levers of power are totally in the opposing side, and I give you an example of this in the BP oil crisis in the Gulf a few years ago, where the video cam on the ocean floor 24-7 reminded us about the terrible crime BP was committing to the waters off the Gulf of Louisiana. You can't control that. So what do you do in that type of situation? The only weapon you have is your behavior and how you respond to those actions. And BP very quickly dove into the situation with an apology, for one thing, but really swift actions. They immediately set up a remediation fund. They got their management team out in the field owning the coordination campaign. They had their employees on the beaches cleaning up the residents, and the other stakeholders in the Gulf states will tell you that BP stood up and did the right thing. And that's the only thing you can do in those types of situations. You can't make lemonade from that type of lemon. But you can judge how people perceive you over time by the behaviors that you take. Really what you're trying to establish with people that you are not a bad company and bad people, because what you don't want people to think is this is simply one example of a systemic issue at the company, so that you're really trying to establish that they should trust you, because in a crisis, trust is the only currency that you have. So it comes down to demonstrating values and the authenticity of those values. The next key point would be build crisis muscle. You would never dream of doing a marathon or an Ironman without training and preparing, and it's exactly the same in a crisis situation. You need to have trained, and what that includes is essentially taking some time to assess what you think your vulnerabilities are. Everybody has them. Every business has them. Know what they are in advance. Assess what your responses might be. Do you have the right infrastructure for that set of responses? And train for it. You'll also need to make sure that you have in place some very basic comms infrastructure. You don't want to be wasting precious time in the event of an issue trying to figure out who's on the decision-making team, and if it's 2 a.m. in the morning, do I have their home phone number? That decision team sometimes includes people who aren't so obvious. It's clearly the communications people, the general counsel, the head of HR, but it can also be the team leader for the engineering team or the operations team, because you may be addressing a security breach or a product liability issue where you really need to make sure you've got your facts straight. You want to make sure you've got all that basic list stuff. If you have to quickly communicate with your customer base, do you have a way of doing that? Do you have a way of getting all employees together quickly to communicate and share vital information with them? Do you have your press lists up to date? Because like it or not, that's an audience you're going to have to deal with. It's putting all of this basic stuff in place and having it so that you do not have to waste time when an event blows up. Finally, this sounds so obvious, but know your environment and calibrate strategies and communications accordingly. Today we live in a very combustible environment for communications. Any of the surveys you may have seen the Pew Institute do show record levels of mistrust in corporations and government institutions among the public on the heels of the financial crisis and several different corporate scandals. In the Valley, that takes on its own unique tones from a number of very high-profile security breaches where personal data has been compromised and all sorts of social issues around income inequality and the perception, particularly among the press, that the technology industry is tone deaf to the social issues of the local community. In that environment, relationships with people who end up being the key messengers, the carriers of the water for you, the press, become critically important. You cannot sit opposite a reporter who's going to write about the story for the very first time. They have no context. They have no history. They don't know whether to trust you or not. Having those relationships established before is really important. That's also true with other influences. If you ever look at a story in the press, the sort of classic structure to them where they always find a third-party expert to validate their point of view or present an opposing point of view, you need to know some of those people so that they can help carry the water for you. Clearly important to understand the media landscape. I'm preaching to the choir here. Many of you have invented and commercialized these services, but we live in a 24-7 media cycle where everybody has a megaphone and an opinion, and it has totally changed the way that we communicate today. The good news is that it also gives you the ability to control the message through your own channels of communication, and you don't have to accept the filter of a reporter at the Wall Street Journal, for instance. You know your audiences. You know who you need to deal with, but you also need to have a sense of prioritization of those audiences. We recently worked with a company that had a healthcare company with a data breach where some fairly sensitive personal information had been leaked into the public domain. As we talked with management, their lead message was all about HIPAA compliance. No question that regulators were important in this context, but the primary audience needed to be the customer to be able to communicate more sensitively about what had happened with their data. I'll close with, and then take your questions, with this comment, a very famous quote from Warren Buffett, you know, it takes 20 years to build a reputation and five minutes to ruin it. I hope that the three points on the screen here will help prevent you from having your ruinous five minutes at some point in the future. Happy to take some questions.

Speaker 2: How do you actually practice for a crisis if you haven't had one or don't regularly have them?

Speaker 1: I'm doing this exercise with a company right now where it's a several step process, but first you have to realistically identify what the vulnerabilities are. There's a due diligence process that we do with the board and company management where we assess what we think are sort of the top three or four vulnerabilities. You can't develop an exhaustive list, it's impossible to fully anticipate, but what you're really trying to do through this exercise is build this muscle so that whatever the situation is, you're ready. So we then pick one of those and we simulate the exercise. Now the point is people have to come to the table wanting to really play the game, Bing may be talking about gamification later on, but you've really got to get into it. You have outsiders, we will play the role of being the prompt and the moderator to try and really simulate what happens. It tests people's reaction times, their instincts for how to manage crisis, and it also exposes where some of your vulnerabilities are in the infrastructure.

Speaker 3: During a time of crisis, what is the responsibility that you have to your internal constituents?

Speaker 1: Hugely important because if you get it right with employees, they become an army of ambassadors for you in your various communities and can really be powerful messengers of the message. So we always will prioritize employees. The key is making sure that what you share with them is obviously information that can be publicly shared. I'm assuming most of the companies here are private companies, but if you're public companies, there are disclosure issues that you obviously have to manage, but it sends a very powerful message of trust when management shares information with employees and keeps them up to speed and in my opinion makes them just an incredible network of messengers.

Speaker 4: What advice would you give these CEOs about building relationships with key reporters and press before there's a story?

Speaker 1: It's really critical. As I said, you can't sit down in front of somebody for the first time when you're in the middle of a storm and expect them to totally buy your side of the story. There's no hard and fast rule of thumb here, but my view is just like you would touch base with your most important customers a few times a year, I think you ought to be doing the same with reporters. It's a two-way street. You're not always selling them a story. Sometimes it's just checking in and sharing information with them, giving them some tips about stories that they could write, really positioning yourself as a resource for those reporters and in that way building the relationship over time. It's not just the press, by the way. I feel the same way about industry analysts and as you become public, obviously, the sell-side analyst community.

Speaker 5: When there's a crisis that's a consequence of a business partner or an outside entity, but that reflects on your reputation, how do you handle that in a way that doesn't degenerate into finger-pointing, but yet doesn't make you look more culpable than you really are?

Speaker 1: I think there's a good rule of thumb in any crisis situation is always to take the high road. I think, again, if you accept this first point that you're leading not managing a crisis and you're leading with behavior that points to the company being a good company with high integrity and ethical standards, you don't want to point the finger at the other side, but by the same token, you have to finesse. It's hard without a specific example to show how you walk that line, but that's exactly what you're striving for, some finesse to put some distance between you and the outside person, but without pointing a finger.