This article was published in the Global-IS-Asian Journal on 26 December, 2011. 

By Viswa Sadasivan

The mishandling of crises around the world boils down to a crisis of leadership, and those in positions of responsibility should demonstrate a higher level of integrity, transparency, empathy and compassion.

The year was 1982. Americans, and indeed the world, witnessed what has since been hailed by corporate heads and scholars alike as the finest example of crisis management.

The company was Johnson & Johnson and the Chairman and CEO was James Burke. The incident: seven people died from consuming extra-strength Tylenol tablets laced with cyanide. Before the crisis, Tylenol was the most successful over-the-counter product in the United States, with over 100 million customers. The successful handling of the crisis resulted in the re-establishment of the Tylenol brand name, in barely a few months, as one of the most trusted over-the-counter consumer products in America. Burke set the tone from the start by making absolutely clear his strategy which was fi rst, “how do we protect the people?” and second “how do we save this product?”

The company’s fi rst actions were to immediately alert consumers across the nation, via the media, not to consume any type of Tylenol product. Even though there was little chance of fi nding other capsules laced with cyanide, Burke ordered a nationwide recall of the tablets which cost the company about a hundred million dollars. This he did, despite resistance from the board and other members of the top management. Burke saw the value of establishing the moral high ground early.

His crisis response strategy focused on gaining “forgiveness” and “sympathy”, which allowed the company to redeem itself in the eyes of the various publics and create acceptance. This not only allowed Johnson & Johnson to deal with the Tylenol crisis in 1982, but also innoculate the company against fallouts from subsequent crises by strengthening trust.

Burke used the company’s credo crafted by the founder of Johnson & Johnson in 1943 as the moral compass for his campaign. In particular, he cited this paragraph, “…We believe our first responsibility is to doctors, nurses and patients, to mothers and fathers, and to all others who use our products and services …” This spelt accountability first to the users and then to shareholders – exactly what the public wanted and needed to hear. It is not that Burke was commercially naïve. He knew that shareholder value would be safeguarded only if public trust was re-established and enhanced. In other words, sustainable market share comes from strong, positive mindshare.

Two instincts underscore leadership in crisis communication: first, accountability to the public and users of your products/services; and second, commitment to doing the right thing.

These values need to be clearly and categorically articulated as strategy guidance to the troops by the head of the organisation, and within minutes of declaring the crisis. Expecting the task to be done by others is super-delegation and an abdication of responsibility.

Sadly, we continue not to learn from history. Since James Burke’s remarkable management of the Tylenol crisis in 1982, we have witnessed too many crises mishandled because of poor or absent leadership.

Barely seven years later, the world witnessed in horror the devastation of one of the most biologically rich places in the world, Prince William Sound in Alaska, USA. Exxon Valdez, a tanker owned by Exxon Corporation ran aground, spilling almost 10 million gallons of crude oil. An official commented: “While viewers (of TV) watched birds and otters die in a river of thick black oil, Exxon was silent.” The company was inept in dealing with the crisis operationally. For example, it took officials more than 10 hours to deploy booms to contain the spill!

But the primary responsibility for the grossly mishandled crisis must lie with the Chairman and CEO, Lawrence Rawl, who appears to have gone out of his way to do everything wrong. There was absolutely no sense of accountability and he was clearly not committed to doing the right thing. He took six days to make the first statement to the media and when asked to explain the delay, he said that as CEO, he had more important things to do! He visited the site only about three weeks after the incident.

Primarily due to the poor handling of the crisis, Exxon not only ended up paying a whopping US$8 billion (in 1989 value), but also seriously compromised public trust and likeability. Public disgust for the CEO shaped the way Exxon was viewed. It is instructive that 10 years later, in a nationwide survey conducted by PR firm Porter Novelli, 54 per cent of respondents said they were unlikely to buy Exxon products.

More recently, the world witnessed what appears to be an uncanny re-run of the Exxon Valdez crisis, not just in form but also in the sheer lack of leadership. The BP oil spill of April 2010 killed 11 men working on the platform and injured 17 others, and caused extensive damage to marine and wildlife habitats and to the Gulf of Mexico’s fishing and tourism industries.

Yet more than all this, what incurred public wrath globally was CEO Tony Hayward’s uncanny knack for saying the most damning things. In fact, one wonders if BP would have been better off if Hayward kept away from the media, as Exxon’s Rawl did 21 years earlier. Apart from saying he wanted his life back, and justifying going sailing in the heat of the crisis, Hayward said two things that are unforgivable in a crisis of this magnitude.

At the onset of the crisis he said, “I think the environmental impact of this disaster is likely to have been very, very modest.” This not only created suspicion that BP was attempting to conceal the extent of the damage, but was also highly insulting to those affected directly and emotionally. Secondly, he said, “…the responsibility for safety on the drilling rig is Transocean. It is their rig, their equipment, their people, their systems, their safety processes….” Regardless of technicalities, moral responsibility has a premium in crisis management, and when delivered convincingly and responsibly, dividends will come.

This point was well understood by the former CEO of Singapore Airlines, Dr Cheong Choong Kong, when he chaired the first media conference after flight SQ006 crashed in Taipei in October 2000, killing 83 passengers and crew members. Learning from the mistakes in handling the Silkair MI 185 crash three years earlier, Dr Cheong saw the need to gain the moral high ground early.

In his opening statement, he said categorically that it was their aircraft and their pilots and that SIA took responsibility. Such a statement was unprecedented in airline crash history, and explains why it had a profound impact on the public and the media that, in turn, took the pressure off SIA in the weeks following the crash. Clearly, Dr Cheong had taken legal advice to ensure his statement pertained to moral responsibility not amounting to culpability. This, and other trust-building actions by SIA’s senior management during the crisis, resulted in the company rising many rungs in public esteem.

While these are all high-visibility crises involving commercial organisations, the lessons are equally relevant to public sector organisations. In fact, one could argue that they are even more pertinent in the public sector because there are no shareholder issues, and the expectation of accountability is higher.

The key lessons are that:

  • Technical rectifications are necessary but not sufficient – Standard Operating Procedures (SOPs) help hold the situation in a crisis, but they seldom provide the solution. Increasingly, they are nothing more than a hygiene factor.

  • Accurate assessment and appreciation of ground sentiment is critical – Organisations should evaluate this from the ground’s point of view (no matter how illogical or irrational) and avoid defensive rationalisation of actions.

  • Public engagement, directly or through the media, should focus on moral suasion – This has to be constant and consistent in conveying a well-considered message. How you say it is as important as what you say.

  • Accountability is a key expectation – The leader has to stand up to the task and without delay to demonstrate honesty, transparency, empathy, and authenticity with a sense of occasion. You don’t need to tell the whole truth, but do not lie.

  • Being seen to be doing the right thing is as important as doing the right thing – Early-mover advantage in building trust is invaluable in right-conditioning the ground to give you the benefit of the doubt during crisis “aftershocks”.

There needs to be a clear demonstration of commitment to doing the right thing that will build faith in the organisation and pave the way for forgiveness and acceptance. This, in turn, will allow it to focus on rectification measures with minimal distraction. In almost all significant crises, real normalisation is possible only when the emotional bugbears are handled well, and early. Otherwise, these issues will be an albatross around the neck long after the technical aspects of the crisis are resolved.

In conclusion, organisations have to gradually gain the wherewithal to operate in the “faith” paradigm – where questions of accountability, transparency and values are paramount. There needs to be a clear demonstration of commitment to doing the right thing that will build faith in the organisation and pave the way for forgiveness and acceptance. This, in turn, will allow it to focus on rectification measures with minimal distraction. In almost all significant crises, real normalisation is possible only when the emotional bugbears are handled well, and early. Otherwise, these issues will be an albatross around the neck long after the technical aspects of the crisis are resolved.

Operating in the “faith” paradigm is more challenging as it is often a fine art, not a science, which many technically qualified CEOs are not adept at. A different set of abilities – values-driven – is required from what is taught in the regular MBA curriculum. Given the growing complexity of crises, especially in a connected space with increased scrutiny, there is a dire need for real leaders, not just managers.

We live in a world in turmoil, wrecked by the contagious effects of the various crises that remain mostly unresolved. Repeat mistakes point to an inability, or an unwillingness, to learn from history. This is the ultimate crisis – a crisis of leadership.

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