Crisis management in the digital age

In 2009 alone, more than 9,000 pink slips have already been handed out at newspapers across the country – meaning that, by the time you finish reading this, two more journalists will be exiting the traditional media landscape. As the layoffs mount and investigative budgets are slashed, corporate America is being put on notice that reputational risk management in the 21st century is less about the front pages and nightly news leads than it is about what’s happening on the internet.

While this may not be news to executives with their fingers on the digital pulse, it may come as a surprise that NGOs, regulators and the plaintiffs’ bar are a full internet generation ahead, making them far more web-savvy than the companies they target. From the search engine optimization tactics that are now essential to being found on Google and other common search tools, to blogs, viral video and other forms of social media that increasingly control the narrative, companies are now controlling their destiny on the internet – and the internet is as real and vital as television and broadcast media once were.

At a time when consumers, investors, employees and stakeholders across the board are increasingly turning to the web as their primary source of information, the corporate sector is left with a simple choice: either catch up or join the litany of companies that have already been caught flat-footed on a new and decidedly uneven playing field where speed of information distribution is essential.

Controlling the message
Right now, when internet users search key crisis terms related to your company and its legal and ethical standing, your messages are probably nowhere to be found. For instance, plaintiff firms dominate searches for terms like ‘mass tort’ and ‘class action’. Go on – try it for yourself.

At time of writing, a Google search for ‘securities fraud’ resulted in eight plaintiffs’ firms, government entities and NGOs ranked in the top 10. A search for ‘pistachio lawsuit’ likewise resulted in eight NGOs, plaintiffs’ lawyers and government sites ranked in the top 10. Searches for ‘product liability class action’ and ‘asbestos lawsuit’ were even more lopsided.

As a result of this, the initial perceptions of reporters, politicians and your stakeholders are being shaped during crises not by the corporation, but by potential adversaries who understand that what the public reads first is what it usually believes.

NGOs, regulators and the plaintiffs’ bar are also demonstrating a mastery of social media. They dominate the 118 million blogs, Facebook (which now boasts more than 300 million active users, more than half of whom are over the age of 30) and Twitter (which was visited more than 99 million times in April 2009 alone).

These organizations use the viral nature of such online networking venues to exponentially multiply their reach, recruit class-action litigants – Canada-based Merchant Law has attracted more than 8,000 potential class litigants to a Facebook group targeting cellular providers – and influence traditional media commentary now increasingly reliant on what the new assignment editors of the social media space choose to report.

The lack of understanding and divide between how corporate crisis managers fail to fully use the internet and the robust strategies employed by corporate marketers and advertising honchos is a concern because it demonstrates that some sections of a company are well-versed and skilled in the application of new media communication tools while other sections, such as the legal teams, are not. This is significant because it suggests that crisis and marketing teams aren’t talking to each other, and that the tools for maximum communications effectiveness are readily available internally.

The CEO’s burden
In an online environment where the period of time between the first phase of a brand threat (a recall announcement or the initiation of a government investigation, for example) and the bet-the-company climax can now be ticked off in days or even hours, the responsibility for ensuring that such existing resources are fully leveraged lies squarely on the shoulders of the CEO.

It’s likewise the CEO’s responsibility to ensure corporate response times move at the speed of the internet. Earlier this year, when video of two Domino’s Pizza employees defiling customers’ food was posted on YouTube, the company made the strategic mistake of responding at traditional media velocity. Within 24 hours more than 750,000 people had viewed the clip, and hundreds of blogs had weighed in on the scandal.

Once it realized the scope of the problem, Domino’s reacted effectively with a well-executed strategy that included a YouTube video of its own, but significant damage had already been done. Just four days after the video was posted, Domino’s stock closed the week down more than 10 percent.

To know whether their companies are properly equipped to avoid a similar mishap, CEOs need to ask the right questions of corporate communications:

• Are we watching the web for trends and intelligence as to where our next crisis may lie, so that we have an opportunity to shape the traditional coverage that will follow?
• Are we anticipating our likely reputational exposures and optimizing our web efforts should a crisis happen, so that our crisis messages are found before those of our adversaries?
• Do we know the ‘high-authority’ bloggers covering our industry (those who wield the greatest influence), so that we’ll be prepared to engage them should the need arise?
• Are our marketing, corporate communications and crisis teams talking to each other on a regular basis so they can share their unique expertise?

These fundamental questions are the roots of effective reputational risk management in the digital age. If a CEO hears, ‘We’ve got it all covered, it’s nothing we haven’t seen before’, it’s usually the first sign that the corporate communications department is still operating in the traditional media world rather than the one its key audiences have been living in for years.

Evolving challenges
Each new online corporate disaster – from the false blogosphere reports that sent United Airlines’ and Apple’s stock tumbling last fall, to the bloggers who doomed a multi-million-dollar Motrin ad campaign this spring – underscores a new challenge, and often highlights an emerging new tool that can be deployed to undermine brand credibility and public trust. Not long ago, for example, articles like this one would not have included any mention of social media. Not long from now, we will be discussing the urgency of digital venues that today are in their fetal stages.

As such, digital media management is no mere exercise in checking boxes and moving on. It is an ongoing process that requires daily vigilance to be effective, and it demands the inspired engagement of the CEO. If your firm has not already demanded radical changes in your communications approach, your exposure is likely much greater than your advisory teams appreciate.

Change is never easy, but those companies that make adapting to the new digital reality a priority will soon find that an environment that once teemed with brand threats is, in fact, rife with opportunity for corporate leaders to protect those brands and assume a real leadership position in the process.