The Australian census crisis: what can we learn?

One of the highest profile organisational crises in recent times was last week’s disastrous failure of the Australian online census. The Bureau of Statistics website failed on census night, leaving millions of angry and frustrated citizens unable to submit their census information for almost 40 hours.

There are plenty of theories about what happened and who was responsible, but it’s still far too early to make a definitive assessment of exactly what went wrong. We should leave that to the slew of different inquiries and investigations which were rapidly announced.

However, there are already some important broad lessons for crisis managers everywhere about preparedness and prevention. An angry Prime Minister Malcolm Turnbull stated the blindingly obvious when he thundered: “Denial of service attacks are absolutely predictable.”

Of course they are, Mr Turnbull. In fact there could have been no more predictable crisis risk for the online census than a system melt-down. Yet the headlines are full of organisations which ignore the predictable and pay the price. What becomes obvious is that they often had no real plan for how to respond after those predictable crises struck.

Crisis management falls into two distinct categories of action – resistance and resilience. Resistance is the effort you make to try to prevent crises happening in the first place. Resilience is the steps you take to minimise the damage from a crisis, and to protect reputation. Organisations should be committing resources to both.

For the Bureau of Statistics, the minute the system failed, nothing they did or said could have prevented it being a major national crisis. The only uncertainty at that stage was how damaging the crisis would be and how long it would last. From the evidence so far it would seem that the planning and load testing was all about technical issues and not enough about how to explain a failure and how to minimise the fallout.

Effective crisis management demands a full communication contingency plan for the most likely and the worst case crises. A system failure is never “just an IT problem” and the Bureau’s apparent focus on system integrity for the census evidently left them dangerously vulnerable and unprepared when it came to communicating the nightmare scenario. The crucial question here is not what could go wrong and how can we prevent it, but what is our communication plan when it does go wrong?

Moreover, nightmare IT scenarios are certainly nothing new in major government agencies. Think no further than last December when China was blamed for a massive hack attack on the Bureau of Meteorology, which houses one of Australia’s largest super-computers. The predictable crisis risk was well captured by a headline in The Australian: “The hacking of the Bureau of Meteorology shows the vulnerability of all agencies.”

Yes, all agencies. Which brings us back to last week’s census debacle, where the political game began with the Opposition calling for ministerial resignations, and the Prime Minister warning that heads will roll. They were setting the scene for one of the brutal realities of post-crisis management. Investigations and commissions of inquiry are seldom primarily to find out what happened. Their real purpose is to apportion blame, and history shows that “poor communication” is a popular scapegoat.

The Bureau of Statistics didn’t just need load testing for the website. It needed load testing for the crisis communication contingency plan.

Posted in Crisis management, Crisis Prevention | Tagged , , , , , | Leave a comment

An issue management lesson from Lady Gaga?

Picking a fight with China can be dangerous. But singer Lady Gaga has shown how it can be done without creating fresh reputational risks for yourself, your organisation or your sponsors.

When she posted pictures of herself interviewing the Dalai Lama the reaction from China was swift and predictable. Chinese Netizens posted messages such as: “The way the Chinese feel is just like you were shaking hands with Osama bin Laden,” and the Beijing Government promptly banned the singer from visiting the country.

However she had only just been taken off the “list of hostile foreign forces” after a previous three year ban, which may reflect that she is reportedly the most popular Western singer in China. The issue management lesson for dealing with China was that Madam Gaga said nothing, and neither did her sponsor Shiseido, for which she is the face of the brand in Japan.

Contrast this with what happened just a few weeks earlier when cosmetics giant Lancôme (owned by L’Oréal) cancelled a promotional concert in Hong Kong by local pop star Denise Ho, a high-profile advocate for Hong Kong’s pro-democracy movement who recently posted photos of herself with the Dalai Lama. The concert was cancelled for “possible security reasons” after Chinese protesters called for a boycott of Lancôme products, including Listerine mouthwash. The company briefly closed down their stores across Hong Kong as a safety measure (and later dumped Ho from advertising for Listerine, claiming its marketing had “entered a new phase.”)
Unlike Lady Gaga’s model of restraint, Denise Ho reacted with a full-scale media assault on Lancôme, driving an online petition, publicly challenging management to justify cancelling the concert, and accusing them of “kneeling down in the face of a bullying hegemony.” Writing in the South China Morning Post under the headline “Lancôme has only itself to blame for public relations fiasco,” columnist Alex Lo called the singer’s response: “Fine words – and just about every international corporation’s nightmare.”

A nightmare indeed, and hardly new. Think no further than when film star Sharon Stone declared that the devastating Szechuan earthquake was perhaps ‘karma’ for China not being nice to her friend the Dalai Lama. In the face of a threatened boycott, luxury brand Christian Dior had to quickly apologise and remove the actress from their advertising in China. Or when Procter and Gamble’s SKII cosmetics faced similar criticism in China for choosing as brand ambassador a Taiwanese model who supported Taiwanese independence from the mainland.

We have no particular view about the Dalai Lama, or about the political status of Hong Kong or Taiwan. But such cases highlight the critical importance of choosing the right celebrity to endorse your company. Plus of course highlighting the challenge of dealing with Chinese sensitivity, and the risk to reputation when advertising sponsorships go wrong.

When it comes to managing issues in a highly politicised environment, Lady Gaga showed that – sometimes – the right response may not be to reach for a cleverly-worded media statement or a sharp social media riposte, but to maintain a dignified silence.

Posted in Issue Management, Reputation risk | Tagged , , , | Leave a comment

Organisations dropped the ball on McGuire football gaffe

It was no surprise to see broadcaster and football personality Eddie McGuire fumbling to disentangle himself from yet another self-inflicted disaster. But the case highlights the reputational risk to associated organisations when individuals overstep the mark, and their failure to effectively manage the issue.

It started during radio discussion about a charity event where Australian football personalities were to slide into freezing water. McGuire said he’d pay $20,000 to see high-profile sports journalist Caroline Wilson go down the slide, and would make it $50,000 “if she stayed under.”

His fellow football broadcasters guffawed and joined in the “joke,” but it all turned sour when commentators, anti-violence campaigners and politicians of all stripes piled on to condemn the comments. And to make it even worse, the broadcast coincided with football’s White Ribbon Round, designed to focus attention on combatting violence against women.

While McGuire is no stranger to controversy, it took him three attempts at an apology before he finally abandoned excuses and apologised unreservedly.

But as the outcry spread, it became a genuine test of issue management for the organisations drawn into the controversy, and few enhanced their reputation. Opposition Leader Bill Shorten cancelled a scheduled interview with the radio host, branding the comments “unacceptable,” yet the radio station simply said it “had discussion with those directly involved” and apparently saw no reason to take any action against their star.

The Collingwood Football Club, of which McGuire is President, said it took the issues raised by the comments seriously, but accepted McGuire’s apology and, rather surprisingly, used the opportunity to express its “complete and ongoing support for his position as President.”

Meanwhile CEO Gillon McLachlan of the Australian Football League condemned the comments but stopped short of punishing the men involved.  Which in turn triggered even more media and community outcry, given that in the very same week the League had fined a football coach $30,000 for criticising a match referee.

The only organisation to emerge with any dignity was carmaker Holden, a major sponsor of Collingwood, which categorically condemned the broadcast and announced it would be reviewing its association with the club. Holden subsequently said half their multi-million dollar sponsorship would be diverted to Collingwood’s women’s team and community programs.

For Caroline Wilson, the sometimes controversial journalist at the centre of the affair, what seemingly rankled most was her belief that McGuire was forced to apologise. “I think he had to be dragged to that point, kicking and screaming. He was, I believe, pressured to do so and I believe that he is not really sorry personally to me. But at least he’s sorry that he used that language and I think that’s a start.”

Her comments echo the headline on a New York Times essay by Deborah Sontag at the time of the Clinton/Lewinski scandal. “Too busy apologising to be sorry.”  For any organisation or individual facing a serious issue or a crisis, the best way to protect reputation may be to spend less time worrying about the timing and the wording of an apology and more time demonstrating in a meaningful way that they really are sorry.

Posted in Issue Management, Reputation risk | Tagged , , | Leave a comment

Is reputation really like a bank account?

Just about every communication professional has used or heard the expression that reputation is like a bank account.  You build it up in good times and draw from it when things go wrong. But is this attractive notion really as valid as it seems?

Risk guru Peter Sandman says it’s simplistic to accept that events which improve your reputation are deposits, events that damage your reputation are withdrawals, and that the objective is to maintain a healthy balance of “reputational capital.”

The snag is that the metaphor assumes everything is equal – that withdrawals and deposits are in common currency. If you deposit $1,000 worth of reputational credits and then withdraw the same amount in reputational damage (or vice versa) your reputation is somehow back at neutral.

In other words, it assumes that if a company does a whole lot of bad stuff, then doing an equal amount of good stuff will restore its reputation. However it doesn’t work like that.  Sandman argues that “good reputation” and “bad reputation” should be seen as separate variables which exist at the same time. Therefore, he says, if your positives are high and your negatives are low, you have a good reputation.  If your positives are low and your negatives are high, you have a bad reputation.

Yet do the public see it like that?  The problem here lies in assuming that good actions and bad actions are measured in the same currency. It has been proved over and again that years of positive reputation can be destroyed in days or weeks by unacceptable or improper behaviour. Just ask Warren Buffet. And there’s another problem too. When organisations behave badly and then keep repeating the same mistake, the reputational withdrawals are not just dollar for dollar, but multiply with accumulated penalty interest. In fact American academic Harlan Loeb describes what he calls reputational debt as “non-negotiable ballast” which can’t be traded or hedged and which can persist for decades.

So what is the right priority? The reality is that a bad reputation distinguishes an organization from the rest of the pack a lot more than a good reputation does. Reporters, customers and commentators are far more likely to focus on the bad stuff you’ve done rather than the good performance you have been working on. So organizations are best advised to expend effort in avoiding or repairing a bad reputation rather than trying to create a good one.  Any organization which sets out on a programme to build reputation has likely forgotten that old adage that branding is what you say about yourself, reputation is what other people say about you.

The bank account metaphor also suggests that badly behaved organizations can “buy back” reputation with some high profile good citizenship. But it just aint so. When failed Australian tycoon Alan Bond died last year, some of his supporters tried to mitigate his record corporate collapse by emphasising that he helped Australia win the America’s Cup yachting trophy. It made a good story of reputational redemption, but it meant nothing to the investors who had lost millions. They knew the real meaning of an empty bank account. And for them it was no metaphor.

Posted in Issue Management, Reputation risk | Tagged , , , | Leave a comment

13 worst crisis communication mistakes

It’s a sad fact that crisis management case studies are more often about what companies did wrong rather than what they did well.  And some organizations seem determined to follow what NOT to do when facing a crisis.

From the rich buffet of crisis communication disasters, US crisis expert Jonathan Bernstein shared with Managing Outcomes his tongue-in-cheek 13 rules for ensuring your crisis will flourish and grow:

  1. Play Ostrich
    Hope that no one learns about it. Take advice to say nothing, do nothing. And while your head is buried firmly in the sand, ignore the part that’s still exposed.
  2.  Only Start Work on a Potential Crisis Situation after It’s Public
    Even if you don’t play ostrich, you can still nurture your developing crisis by avoiding preparation. Pre-planned and tested key messages would help communication when the crisis breaks publicly.  So always shoot from the hip.
  3. Let Your Reputation Speak for You
    Two words: Arthur Andersen.
  4. Treat the Media Like the Enemy
    By all means, tell a reporter they’ve done such a bad job that you’ll never talk to them again. Or send nasty emails. The reporter is sure to get angry and REALLY go after your organization.
  5. Get Stuck in Reaction Mode Versus Getting Proactive
    When a negative story suddenly breaks, respond with a statement, then repeat the dose for each and every follow up. Don’t initiate messages and make others react to what you say. Always look like the guilty party defending yourself.
  6. Use Language Your Audience Doesn’t Understand
    Jargon and arcane acronyms are great ways to ensure you confuse your audiences, and make most crises worse. Try this real life gem; “We’re considering development of a SNFF or a CCRC.” Naturally the general reaction is “HUH?”
    7. Don’t Listen to Your Stakeholders
    Make all decisions based on your own best thinking. After all, what would your customers, employees, investors, or other stakeholders know about how to communicate with them?
    8. Assume That Truth Will Triumph over All
    You have the facts on your side, by golly, and you know the public will eventually come around and realize that. Disregard the fact that perception is as damaging as reality—sometimes more so.
    9. Address Only Issues and Ignore Feelings
    “The green goo which spilled on our property is absolutely harmless.” “Our development plans all comply with appropriate regulations.” So what if people are upset? You’re not a psychologist…right?
    10. Make Only Written Statements
    Face it, it’s a lot easier to just issue written statements. No fear of looking or sounding foolish. Less chance of being misquoted. Who cares if it’s impersonal and some people think it means you’re hiding and afraid.
    11. Use “Best Guess” Methods of Assessing Damage
    “Oh my God, it’s a front page disaster. We’re ruined!”  Congratulations—you may have just made a mountain out of a molehill. Don’t bother talking to your stakeholders (See item 7) about the real impact of a crisis.
    12. Ignore Social Media
    You don’t have an active Facebook account, and Twitter is just for chattering idiots, yes?  Never mind that no medium in the world can destroy your reputation faster than social media.
    13. Do the Same Thing Over and Over Again Expecting Different Results
    Last time you faced bad news you ignored media calls because whatever you said they’d get it wrong. Of course stakeholders got upset and it took ages to fade away. So next time you’ll do the same thing, right? Because “stuff happens” and you can’t improve the situation by better communications… can you?
Posted in Crisis management | Tagged | Leave a comment

No, Telstra. System outage is about reputation, not technology

You know you’re in trouble when the news media start compiling lists of your failures, and the list gets rolled out and updated with every subsequent issue.

That’s the problem facing Telstra as the supposedly premium telecoms supplier in Australia.  And what’s even more damaging to reputation is not just their repeated system outages but their inadequate communication to hundreds of thousands of angry customers.

In February Telstra suffered a massive outage – reportedly caused by “an embarrassing human error” – followed by two further failures in March which affected up to 8 million customers. CEO Andrew Penn offered users a ‘free data day’ and said: “As CEO I take full responsibility … and I regret the impact on our customers and the fact that we let them down.” It was pretty much a textbook apology, accompanied by a commitment to review the system.

But when the network went down again in mid-May, affecting 10% of the company’s internet customers, the CEO was noticeably quiet. Perhaps it was because the latest failure happened just one day after he boasted at a function that a review of the network showed its “incredible strength and resilience,” and how they were committed to meet, if not exceed, customer expectations.

After the new outage, instead of more public assurances from the embattled CEO, customers saw anonymous messages on the Telstra website – under the unhelpful heading Unplanned Service Disruption – which twice reported the system had been restored, and twice had to admit it wasn’t true. Doubtless Mr Penn was very busy, but it took four days before he returned to social media and tweeted; “pls know I’m reading all your comments and our team is on it.” It’s hard to imagine how anyone thought that message from the CEO would improve the situation.

In fact a whole week was allowed to pass before Telstra finally wheeled out their Chief Operating Officer, Kate McKenzie, to offer an executive apology and to concede that, despite earlier assurances, several thousand customers were still offline.

Predictably there was a technical explanation for the prolonged outage and the premature claims of success. But this was not fundamentally a technological crisis. Any complex system is always going to have outages, but how you communicate about it is what makes the difference.  Reputational damage doesn’t just add up, it multiplies. When your company is repeatedly under fire – and the news media are compiling lists – every fresh problem starts to gain a cumulative importance that it doesn’t necessarily deserve.

That’s the situation Telstra is now in, and it needed a lot more than a confident CEO who took the limelight, then seemingly left it to someone else to face the media. The role of the CEO in any crisis is critical, especially the question of when to use the CEO and when to use someone else. Telstra’s latest experiences surely provide a lesson for how to manage that important decision.

Posted in Issue Management, Reputation risk | Tagged , , , | Leave a comment

Food fault fraud and the risk to reputation

Fraudulent claims about alleged problems with food are a very real risk to reputation, and social media has made it even easier to create fakes. So how should companies respond to protect the brand?

Supermarket chain Woolworths showed one effective response recently, when a woman posted a photo on their Facebook page complaining about rotten avocados she said she had bought from a Sydney suburban store. However some sharp-eyed folks in the Woolworths social media team recognised the photo from a two year old complaint and responded; “Hey (name redacted), we think you may have taken your photo from another customer’s Facebook post in 2014” along with a link to the original complaint (which earned praise at the time for a prompt offline response).

The story went viral around the world, with customers and social media commentators applauding the company and pouring scorn on the failed scammer.

Contrast this with another case in the same week when a self-described gay pastor in Austin, Texas, told a press conference he would sue over a cake he bought from a Whole Foods Bakery. The cake was ordered with the message “Love wins” but he claimed it was handed to him with the homophobic text “Love win fag.” But within a day the store announced it would counter-sue for $100,000 in damages after releasing in-store security footage said to clearly contradict the pastor’s claim.

We know that most law suits never actually end up in court. But one which did was the notorious case in 2005 when a customer at Wendy’s claimed to have found part of a human finger on a bowl of chilli. The company offered a $50,000 reward, later increased to $100,000, and the owner of the finger came forward and said he had sold it to the complainant’s husband for $100. Wendy’s claimed they lost $21 million in business because of the bogus allegations and the couple were sent to prison for extortion.

And we know that copycat cases are a legitimate concern, as was shown in the famous Pepsi “syringe in the can” hoax in 1993. Within a week there were more than 50 allegations of foreign objects in drink cans, and over a dozen arrests for filing false claims. So what should issue and crisis managers do when facing a potential food fault fraud? Probably a balance between a light-hearted “gotcha” response (like Woolworths) and full scale legal action (like Whole Foods and Wendy’s).

A good example is the case in New Zealand in March 2015 involving a woman in Christchurch who claimed she found a one dollar coin in a single-serve packet of Vegemite. Instead of dismissing it as a likely practical joke by a friend, Australian manufacturer Mondelez undertook a week-long investigation, which concluded it was impossible for the coin to get in during production. They said the coin was too big to get through the filling nozzles; production staff are forbidden to carry personal items such as coins; and metal detectors are used throughout the process.

While the elderly complainant argued that making a judgement solely on photographs was not a proper investigation, the case demonstrates some key response tactics when facing a potential reputation issue – act quickly, take it seriously, investigate it thoroughly and report publicly. And maybe, just maybe, think very hard before calling in the lawyers.

Posted in Issue Management, Reputation risk | Tagged , , , , , | Leave a comment