The tactics for stopping a crisis becoming a PR disaster are well known and have been extensively documented, so why do well-resourced companies with lots of bright people (like Toyota et al) make such a disaster of it? Poor tactics may be the end result, but such PR problems are often driven by underlying psychological factors that lead to group-think, denial and disastrous management decision-making under pressure. Overcoming these traits before a crisis develops is needed to ensure great PR tactics aren’t thwarted by your own organisation.

Toyota will go down in the annals of corporate communications as a case study of how not to handle a crisis. There is a lot to learn for businesses of all sizes from the way Toyota mishandled its response to allegations of faulty accelerators.

Many people assume that a crisis is something that appears out of the blue – and certainly businesses can be hit with seemingly unforeseeable events. However, what is foreseeable is the probability of some sort of crisis – oil companies will inevitably have spillages; food companies will inevitably have product recalls; professional �rms will inevitably have their standards criticised; and each year many businesses will �nd their premises burnt or �ooded. There is no excuse for �rms failing to have contingency plans for dealing with sudden emergencies.

By contrast, many crises that become PR disasters, such as Toyota’s accelerator pedals, are issues that have been allowed to fester and

build before they took on damaging proportions. Early action by management would have nipped them in the bud.

The question “how do you deal with a crisis and minimise adverse coverage” is simple to answer – have a crisis response plan based on a worse case scenario; have a crisis communication plan within it that will allow your business to immediately show concern and leadership as it deals with the crisis; rehearse them, and apply a few other commonsense ingredients widely covered in the numerous books on the subject!

Given dealing effectively with communication to the media in a crisis is so well documented and is, in the scheme of things, reasonably straightforward, of more interest is the question “why do organisations frequently mishandle crises and manage to inflict on themselves a PR disaster whose damage is far greater than the initial problem?”.

Why some companies turn a crisis into a PR disaster ....and how not to be one of them

Tim Prizeman of Kelso Consulting (www.kelsopr.com) considers: why do organisations frequently mishandle

crises, often inflicting on themselves a PR disaster whose

damage is far greater than the initial problem?

Media Re la t ions • Thought Leadersh ip • Bus iness Soc ia l Med ia • Cr i s i s Commun ica t ions

KELSO CONSULTINGPR

A crisisA sudden event that has the potential to in�ict long term �nancial harm on a business.

A PR disasterMishandling the communication (often in the �rst few hours) so that the harm from the publicity generated by the crisis is far greater than the event itself!

21 Bloomsbury Way, London WC1A 2TH 020 7242 2272 www.kelsopr.com pr@kelsopr.com

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Insights from behavioural economics (a combination of economics and psychology that considers why customers and, particularly, investors often act irrationally) holds some useful insights to decision-making in a crisis too. For instance, people have a “self-serving bias”. Its traits include:• we typically attribute our successes to personal factors but

failures to factors beyond our control (people with low self-esteem do the opposite). This gives the common human tendency to take credit for success but deny responsibility for failure – think of the heads of big banks after the credit crunch.

• we evaluate ambiguous information in a way that supports our interests (of course you and I don’t think we do....but we do!)

• we believe we perform much better than the average person in areas important to our self-esteem (and, in order to maintain this belief, we will always rationalize-away failures to – again, think heads of banks or Sir Alex Fergusson’s comments when Manchester United gets beaten: it is always the referee or injuries to blame, never a better squad or manager!).

When people hold a view that is demonstrably wrong, do

they change their mind? You’d think so. In fact, in the face of mounting evidence people generally become even more adamant they are right (think of George Bush’s and Tony Blair’s comments on the invasion of Iraq long after the subsequent non-discovery of weapons of mass destruction).

So as a crisis mounts and the pressure builds, management and advisers become even more convinced that they are right and outsiders are wrong. Contradictory information is ignored, and advisers who give contrary views are distrusted.

Media Re la t ions • Thought Leadersh ip • Bus iness Soc ia l Med ia • Cr i s i s Commun ica t ions

As a CEO, when a crisis occurs you will believe:

It won’t happen to us

We can deal with it when it happens

When it happens, you will believe that it is not our fault

The criticism of us is unfair or misguided

The problem is not as bad as is being made out by the media

We are being picked on unfairly

The media is out to get us (paranoia has now set in!)

We can �x it if they leave us alone (which no one trusts you to do – as you have already failed to �x it!)

If I keep my head down it will be okay in the long run

Accelerators - what went wrong Toyota initially refused to acknowledge the problem

After sustained pressure it offered an explanation (badly �tting �oor mats) that was greeted with skepticism and did not address the allegations

After more pressure it changed its position again and agreed to replace the accelerator pedals in affected vehicles

It allowed others to set the agenda, which in the US culminated in a panic over their cars’ safety

As well as seeming indecisive, Toyota’s bosses went to ground as the story erupted – failing to show either concern or leadership in tackling the problem

Public appearances and contrition only happened under duress after months of sustained pressure from the US Congress and media

By this time, Toyota’s shares had lost more in value then the entire value of Ford!

KELSO CONSULTINGPR

21 Bloomsbury Way, London WC1A 2TH 020 7242 2272 www.kelsopr.com pr@kelsopr.com

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Why do organisations go into “no comment” mode when

they know it is damaging? Everyone knows that saying “no comment” and generally refusing to answer legitimate questions is generally the worst thing you can do since it is equated with an admission of guilt. Yet under pressure senior executives suddenly forget all this.

Journalists (whose job involves them dealing with many companies all the time) will judge the company by how professionally it handles the communications during the crisis – and companies are often judged at least as harshly on their

competence in handling the communications as they are about

the crisis itself.

Sadly, there are many companies that have found to their cost that the court of public opinion is both immediate and harsh, and if this aspect is mishandled then the business will suffer far more at the hands of customers and investors then it ever will at the hands of a judge. For instance Andersen, which was embroiled in controversy over its advice to Enron, ultimately won in court.... sadly, all that was left of this accounting giant by then was a handful of employees winding it up. All the clients and employees had walked in the meantime.

HOW KELSO CONSULTING CAN HELP Kelso Consulting helps our clients prevent PR disasters through working with them to develop, plan and rehearse crisis communications plans to ensure their con�dence and preparedness to respond quickly and appropriately when problems, whether small or large, occur.

We work within the grain of human behaviour, using scenario planning and rehearsal, to ensure management within an organisation are ready for their role in preventing crises as well as responding to them. We also help organisations learn from how their competitors and comparator organisations handled crises.

Where clients are concerned about potential negative media interest, we provide experienced counsel on minimising coverage and harm.

For more information, please contact us on 020 7242 2273.

www.kelsopr.com

Media Re la t ions • Thought Leadersh ip • Bus iness Soc ia l Med ia • Cr i s i s Commun ica t ions

What you experience in a crisis Ultra-compressed timescales

Lack of clear information

Rumour and speculation

Events unfolding out of your control

Decision-makers unavailable

The need for fast decisions

Communication becomes more adversarial, more probing, faster paced and less predictable

“News journalists” replace business correspondents (and your problems really begin!)

KELSO CONSULTINGPR

21 Bloomsbury Way, London WC1A 2TH 020 7242 2272 www.kelsopr.com pr@kelsopr.com

PAGE 3 OF 3

The right way to handle a crisisBritain’s top chef, Heston Blumenthal, faced a high pro�le crisis when more than 500 diners, including several well known celebrities, suffered food poisoning in early 2009 at his Michelin-starred Fat Duck restaurant. Not only the restaurant, but his personal brand were threatened.

The celebrity chef immediately acted with direction and concern, closing the restaurant and ensuring it was sanitised from top to bottom.

Suppliers weren’t blamed, the buck wasn’t passed to scapegoats and sick diners’ claims weren’t dismissed. Having done everything immediately and transparently that could be expected, his �agship restaurant re-opened to widespread media interest and the episode was ultimately a non-incident.

The outbreak was investigated by the Health Protection Agency. According to The Guardian newspaper later than year “Their �ndings, released today, established that diners were infected by the norovirus bug, which had spread throughout the country at the time. It is thought to have been brought into the restaurant through contaminated shell�sh, and inspectors criticised food safety standards in the kitchens.”

It goes on to report numerous failings in the restaurant’s food hygiene standards, but an initial strong and responsible reaction ensured the restaurant and chef were well placed to weather this critical coverage.

At the time of writing he is featuring in Waitrose adverts, has a series on the TV, and the Tasting Menu at the Fat Duck, including a course entitled “Sound of the sea” costs £150.