Nothing destroys reputation faster than a crisis. And no crises are more damaging than the obvious ones which should have been predicted and could have been prevented.
The rail disaster which destroyed the small Quebec town of Lac-Mégantic seems to be a perfect example of an organization totally unprepared to deal with the most obvious ‘natural’ crisis.
When a runaway train carrying crude oil derailed and exploded in a fireball in July, it cost 47 lives, devastated the town centre and spilled more than 5 million litres of oil. Yet CEO Edward Burkhardt of the Montreal, Maine and Atlantic Railway waited four days before visiting the site. And when he did speak to the media, it was to mainly blame others – first the fire-fighters who risked their lives to extinguish the blaze, and then a railway engineer.
Little wonder that Forbes called him “clueless as well as careless, not to mention disrespectful in handling a crisis of this magnitude” and Bloomberg described him as “Canada’s public enemy Number One.”
Facing massive losses, lawsuits and a huge clean-up bill, the company has now filed for bankruptcy protection in Canada and the United States. Yet it doesn’t have to be like that.
No company can possibly develop a detailed crisis response for every eventuality. But every organization has its most likely crises to prepare for. These can be called ‘natural’ crises – in other words the industry-specific crises which SHOULD be obvious priorities. For example, a chemical company would be expected to plan for a major fire or explosion; for a food manufacturer it might be a serious product contamination (yes, that means you Fonterra); for a car-maker a large-scale vehicle recall (are you listening VW?); for a road or rail company it would be a serious transport accident; and for a bank it might be men in ski-masks making very large unauthorised cash withdrawals.
The reality is that most crises are not sudden, unexpected events. In fact the Institute for Crisis Management has shown that more than half are what they call ‘smouldering crises’ – where the organization could have and should have taken action in advance. Then there are the ‘natural’ crises – the obvious, industry-specific risks.
The American management expert Karl Stocker once wrote: “When you look at the majority of crises, what happened should have been on or near the top of the list of possible events. Why wasn’t anyone prepared?”
It’s a good question which I recommend every organization should ask. And the Canadian rail disaster reinforces that ‘natural’ crises pose a particular threat to reputation, human lives and even corporate survival.