Five lessons businesses can learn from a crisis

Every day, somewhere in the world, a business faces a crisis.

Organizations of all sizes, across markets, regions and industries can find themselves the subject of intense public scrutiny, and not always because they have been at fault. Here are five lessons businesses can learn from some of the biggest corporate crises of the past decade.

Reputation matters

There may have been a time when businesses could sweep their wrongdoings under a rug, but today, it’s near impossible to escape public and media scrutiny.

Volkswagen almost fell over – and may yet fall over – as a result of its diesel emissions scandal. The company has been caught manipulating test results to help its cars pass emissions standards. It faces massive fines, the cost of replacing the modified software, and a consumer backlash that could last for decades.

Crisis management requires much more than a press release to apologize for a transgression. Public perception is everything these days, which means companies must be ready to respond to a crisis in a professional, honest, and decisive manner.

Communication is vital

When facing a crisis that could affect your company’s reputation, communication is key. Crisis management consultants have praised the open, honest and highly shared response that Domino’s Pizza produced after two of its employees filmed themselves interfering with customers’ food. The video was uploaded to YouTube and caused an immediate scandal that threatened to affect the Domino’s brand far beyond just the outlet involved.

In response, Domino’s uploaded its own video featuring a visibly appalled president, Patrick Doyle. Within 24 hours of the original prank, the company was communicating its clear and considered response, reminding consumers how seriously it takes hygiene and food quality.

Choose the right spokesperson

The job of spokesperson is an important one, particularly in long-lasting crises. The instinct is to use the most senior face available, but other factors should also be considered.

That’s something BP learned during the 2010 oil spill crisis in the Gulf of Mexico. The company’s UK-based CEO Tony Hayward struggled to articulate the company’s response and, worse, appeared indifferent to the environmental and economic harm the disaster was causing to the local community. His plea ‘I’d like my life back’ was lampooned and reduced the impact of the work BP was doing to mitigate the spill.

Accept fair criticism

It’s important to find an appropriate balance between defending the underlying business and accepting reasonable criticism of it. When documentary filmmaker Morgan Spurlock released Super Size Me in 2004, the film’s subject, McDonald’s (in the US), at first refused to engage with the film or the nutritional issues raised about its menu.

McDonald’s later phased out the controversial supersize portions of soft drinks and fries and introduced a healthier salad range, but struggled to talk about it without also mentioning the film and its criticism.

Know that poor business models dont last

Many crises involve deliberately underhanded activities that aim to give a business an unfair advantage in the market. When exposed, the financial penalties alone can far outweigh any gains. Businesses built on such rocky foundations are almost always better off reforming their models before being caught out.

It’s a lesson 7-Eleven in Australia (a separate franchise organization to the US business) is currently heeding after journalists revealed it was deliberately underpaying staff, and many franchises would be unprofitable if mandated wages were applied.

For any business or large organization, a crisis represents a test of leadership. The key is to be prepared. Have a plan of action in place for when life throws you a curveball. By having a plan of action in advance, it will ensure you can act smartly and swiftly.

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