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Damage Control

How to Get the Upper Hand When Your Business is Under Attack

Q. Why is the Tylenol cyanide scandal not a good model for managing most crises?

A. Tylenol was attacked by a murderer outside of the company who poisoned people. Johnson & Johnson was a victim of this crime and people understood this. Today's crises are more about the inherent behavior of the company or integrity of its products and management. It's much harder to get out of a crisis when you're seen as being the cause of it rather than a victim of it.

Q. If not Tylenol, what well-known scandal IS a good model for good crisis management? Why?

A. Tyco recovered from its corporate scandal by quietly tending to its operations and communicating with internal audiences such as employees and customers rather than feeling the need to tell the world what they were doing every step of the way. General Motors effectively defended their pickup truck in the 1990s by demonstrating how a television program deliberately rigged the vehicle to ensure that it exploded on impact. That was dirty pool, and GM called the network on it.

Q. What is the most common mistake companies make when faced with a crisis?

A. The most common mistake is mistaking a fundamental conflict with a communications problem. For some reason, companies are terrified of admitting they have an adversary that wants to hurt them. It's much more comforting to believe the problem is rooted in some sort of harmless misunderstanding and that good communications alone will win the day. You can't begin to solve the problem if you don't diagnose it realistically.

Q. What's an example of a company that was irrevocably damaged because they weren't assertive enough in managing their crisis?

A. Audi was damaged in the mid-1980s by allegations of sudden acceleration. Their focus was understandably on self-defense and educating their customers. It was later determined that the woman who launched the crisis had had her foot on the accelerator, which, of course caused the car to lurch forward and kill her child. Ideally, there would have been a greater focus on challenging the alleged victims' claims, but the media's determination to aggravate this crisis may have rendered anything the company did moot.

Q. Why do you think apologizing was not the solution to Martha Stewart's insider trading scandal?

A. Martha Stewart couldn't apologize because she was facing a judge and jury. When you're caught in a legal predicament, an apology is an admission of guilt, something you don't want to do if your position is that you're not guilty. When Stewart was released from prison, she still didn't apologize. She was feisty and unrepentant, which earned her respect from her core constituency — women consumers who felt she had been railroaded.

Q. What's wrong with the PR adage "A crisis is an opportunity to get your message out"?

A. It's this kind of naïve Mother Goose bromide that earns PR people disrespect in the boardroom where seasoned executives know better. When a company is under attack, nobody wants to hear its message. The public wants blood. Sure, a company needs to communicate, but its message won't resonate until things calm down.

Q. How do redemption and repentance play out in a typical crisis and why is this important?

A. Even if you've sinned, people don't expect you to solve the problem, they expect you to demonstrate that you're trying. The public demands to see that you've suffered for your sins and, only then, will they be open to your redemption.

Q. Do you think Merck's recall of Vioxx was a mistake? Why aren't recalls usually the best solution?

A. Recalls are always a judgment call and only the people inside the company can make that call. When you recall a product, you remove risk from the marketplace, but you also may be inadvertently admitting guilt in court. My objection is not to recalls, but in the hard-and-fast rule that a company should always recall when, in fact, proportional actions are often the better course. If sweeping recalls were the rule of thumb, all companies would be doing is recalling their products all day long.

Q. Why do you consider "reputation management" a farce?

A. Having a good reputation is important to internal audiences like employees and shareholders, but if you find yourself in crisis, there's no evidence that it does you a lick of good with the broader public. If hostile forces believe they've got a legitimate issue with you, they won't pause, scratch their chins and say, "Yes, but they do have a good reputation." Besides, sometimes the business you're in (petrochemicals) determines what your reputation is for you.

Q. Could Arthur Andersen and Dan Rather have survived their scandals if they were better managed?

A. Probably not. Arthur Anderson did mostly everything right and still lost because they were caught up in the larger post-Enron phenomenon. Dan Rather had 40 years of political baggage for having a liberal bias, and the flaws in the Bush-National Guard 60 Minutes story validated that baggage in a big way.

Q. How might HP have handled their recent spying scandal differently?

A. The problem was on the front end not the back end. The real problem here was not the "handling" of the situation once it became public — once the scandal was disclosed, Mark Hurd's leadership was excellent — but the lethal nature of having an internecine boardroom war. The investigation gave some board members permission to frame the chairwoman as the bad actor in the affair, which grossly misrepresented the degree of the board's dysfunction.

Q. Are their different rules for damage control of individuals vs. companies in crisis?

A. Individuals have a greater chance of being redeemed than companies because attacks on companies are considered victimless crimes. People can identify with other people, they can't identify with businesses. With businesses, there is also some sense of responsibility to the community. With individuals — especially celebrities — there is a built-in expectation that they're going to flout conventions.

Q, How is a "marketplace assault" different from a crisis?

A. In a crisis, a bad thing happens largely independent of an agenda. The Tylenol case was a crisis. In a marketplace assault, the controversy is being actively sponsored by a party that has something to gain by aggravating it. The breast implant controversy was a marketplace assault because it was actively sponsored by plaintiffs' lawyers.

Q. Why are businesses almost always declared the villain of a corporate scandal regardless of the facts?

A. We are programmed to understand narratives, stories. Corporations are seen as faceless, soulless entities versus collections of people, which is why attacks on them are seen as victimless crimes. In our culture, bringing down a big entity is also seen as an expression of democracy, David vs. Goliath, scoring one for the individual. You don't need facts to accomplish this.

Q. You say that life-and-death PR battles are not about information but about power. Why is this so crucial to understand?

A. In power struggles, the other side doesn't want to be educated, they want to defeat you. You've got to differentiate between conflicts and communications problems in order to set realistic goals. The desire to make the Islamic world like the U.S. more is a case in point. A segment of that population is heavily invested in its hatred and hasn't the remotest interest in changing their minds, so why not focus on those who can be swayed?

Q. Does your fight back crisis strategy have a chance when your adversary has more power than you do? For example, would it have worked for the companies who fell victim to Elliott Spitzer's "Reign of Terror"?

A. Sometimes an ambitious prosecutor goes too far and concludes he's been appointed by God, which leaves an opening for counter-attack. If an individual or company has the motive and means to exploit the hubris of someone like Spitzer — and understands that not every punch will result in a knockout — then it can be worth fighting back. Dick Grasso, Theodore Sihpol, Kenneth Langone and H&R Block stood up to Spitzer with generally favorable PR outcomes. If you're not the kind of individual or organization that has the constitution for this kind of fight, it's best not to delude yourself that false bravado will take you very far with an adversary like Spitzer.

Q. What aspect of human nature is most often misunderstood in a crisis?

A. The public operates under a "fallacy of evil men," meaning there's a belief that problems are the result of plotting, immoral people. In reality, most crises are rooted in oversight, bad luck or something just going wrong. It's not like drug makers meet under a dark bridge at night and conspire, "We could make a safe product... but let's not!"

Q. How do you evaluate crises in terms of the human instincts for blame and resentment?

A. We demand that someone pay for tragedy and even disappointment. In a culture where we demand to lead perfect lives, we will not tolerate acts of God. It doesn't matter who takes the hit, we cannot process events until we can assign responsibility to someone for making bad things happen or preventing our dreams from coming true.

Q. What does Eric Dezenhall the mystery novelist have in common with Eric Dezenhall the crisis manager? Do similar impulses draw you to each calling?

A. In my day job, I cannot control outcomes. I can do a good job, but still be at the whim of external forces. As a fiction writer, I get to control the narrative. Writing is therapy.

Q. What is it like for you personally to live each day at the epicenter of the ugliest scandals and the nastiest public relations battles?

A. On one hand, I like the high-octane nature of it. On the other, very few cases result in high fives in the hallway, and there is always an adversary pushing for the problem to continue. A win is when a problem is mitigated, which doesn't exactly leave me — or my client — feeling euphoric.