Lessons we can learn from Marriott’s Anti-Islam Tweet and Nike’s Iran Boycott Crises

It’s rare for brands to deal with a reputational crisis so openly in the Middle East. Last week, we had two issues happening at once. First up was Dubai’s JW Marriott Hotel, which took the decision to part ways with celebrity chef Atul Kochhar after he wrote a tweet that offended many Muslims (the offending tweet is below, and you can read the back story here at the Khaleej Times). The hotel terminated Kocchar’s deal with its well regarded Rang Mahal restaurant.

“Following the recent comments made by Chef Atul Kochhar, we have taken the decision to end our agreement with him for Rang Mahal. With the termination of our agreement, Chef Atul will no longer be associated with the restaurant,” Bill Keffer, general manager of the hotel, told Gulf News.

Atul tweet

Atul’s tweet was highly criticized, both by individuals as well as the Marriott itself.

The second reputational issue was faced by Nike. Days before the beginning of the World Cup, Nike announced that it would not be providing equipment (think boots) to the Iranian football team.

“U.S. sanctions mean that, as a U.S. company, Nike cannot supply shoes to players in the Iranian national team at this time,” a company statement said.  “Sanctions applicable to Nike have been in place for many years and are enforceable by law.”

Unsurprisingly, the decision hasn’t gone down well with fans of the Iranian football team, as well as the team’s coach, Carlos Queiroz, who criticized the timing of the announcement.

There are two basic lessons that we can take from the situations Nike and Marriott found themselves in.

1. Do/Continue your Due Diligence – While the Marriott moved quickly to tackle the crisis, the question must be asked of the due diligence undertaken on Atul Kochhar’s views. Every time an agreement is undertaken, the in-house team/agency must check the influencer’s/celebrity’s background, including their social media. And they must ensure that they’re on top of anything which may be perceived as being controversial. Many have pointed to Atul Kochhar’s social media posts prior to last week’s outburst, posts which could be seen as being Islamophobic (the below is just one example of this). While hindsight is a wonderful thing, the Marriott team could have developed an insight into Atul Kochhar’s views through monitoring his social media posts before he wrote something that would have caused the brand reputational damage. This month’s crisis may have been averted.

2. Foresee issues and tackle them proactively – Our role as communicators is to understand what is happening in the outside world, and bring those insights to senior management. We have to be social and political analysts, and we have to be able to monitor issues and foresee the outcomes that will impact our organizations, and work proactively to ensure that an issue doesn’t become a crisis. How Nike’s communications team didn’t foresee what could have happened re Iran and US sanctions is beyond me, as is the possibility for Nike to apply for a permission to be able to supply the team with equipment (boots). It was a major miss, and handed rival Adidas an open goal.

Do you have any additional insights from these two issues? What are your thoughts? As always, I’m happy to hear them. Till then, take care!

Lessons from McKinsey on the importance of being seen to be ethical

GuptaMckinsey

McKinsey’s reputation has been heavily impacted by its work in South Africa. Could the same happen in Saudi? (image credit: Ingram Pinn)

McKinsey is a household name, at least in Saudi and South Africa. And not for the right reasons either.

The firm, which consults for governments and businesses the world over, hasn’t had a good time of it lately in these two markets. In South Africa, McKinsey has been embroiled in the Gupta family scandals through its work with the state energy firm Eskom and Trillian, a local company linked to the Gupta family.

In Saudi, McKinsey has been working with the government for years. The company hasn’t always been popular, and has often been blamed by the Saudi public for the austerity measures the Kingdom has enacted. Recent events have shone even more light on McKinsey. An article in the Wall Street Journal looked at the consultancy’s habit of hiring from the elites. To quote:

“The consulting company has employed, among others, at least two children of the man who serves as the Saudi energy minister and head of the state oil company, a son of the finance minister and a son of the CEO of government-controlled Saudi Arabian Mining Co.”

The Wall Street Journal piece describes in detail McKinsey’s company’s hiring practices in the Kingdom, and also notes that there is no allegation of wrongdoing by the firm.

The issue that McKinsey faces isn’t dissimilar to tens of thousands of other firms. It’s the choice between reputation and profit. However, few other firms are as prominent as the consultancy, partly owing to its clients (primarily government in emerging markets) and the quality of McKinsey’s people. To quote the response to the Wall Street Journal article, a McKinsey spokesperson explained that:

“McKinsey is a meritocracy. We hire exceptional people and are confident in the robust policies and practices that underpin our recruiting and development both globally and locally.”

How many exceptional people would it take to understand that working with the Gupta family in South Africa wouldn’t be good for business. Five minutes of due diligence would have thrown up the links between Eskom, Trillian and the Gupta family.

Last year I wrote about Caroline Sapriel’s masterclass on crisis communications. There’s one chart I want to re-share, which should be a guide for all of us.

cm-ladder-copy

CS&A’s crisis management culture ladder maps out where organizations are in terms of their ability to manage and learn from a crisis. At the bottom are organizations who essentially don’t care as long as they’re not caught; at the top are organizations who thrive on and grow with every crisis they encounter. Where are you at?

The question that I have for McKinsey (and every other business leader) is what price would you put on reputation? Even if the firm did work in a legally appropriate fashion, which McKinsey has claimed it did in South Africa, the spirit and the letter of the law are two different things. This question could also be asked of KPMG and SAP, who have also found themselves in the thick of it in South Africa.

If you’re unsure as to where you are on the culture ladder, here’s a stress test you can use to understand how your firm fares. Can your executives answer the following questions relating to any business engagement?

  1. Have they done a due diligence test, including listening to the communications team on possible reputational risks and stakeholder reactions?
  2. Are the executives able to clearly explain their actions? Is their reasoning believable and authentic?
  3. When viewed from the outside, would an action seem to be ethically dubious at best, or illegal at worst?
  4. What are you doing in general when it comes to corporate social responsibility? How do you engage others in conversation?
Writing in the Financial Times in September of this year, John Gapper shared his thoughts on McKinsey’s activities in South Africa:
The firm has a brisk defence to accusations from South African politicians and Corruption Watch that it facilitated state capture by helping Trillian to gain money from Eskom. It says that its own inquiry into its behaviour has not uncovered wrongdoing, nor anything that would require it to report itself to the US authorities under anti-corruption laws. This seems to be setting the reputational bar rather low.
Being willing to charge an entrenched institution in a fractured country so much money looks awfully like rent seeking, especially when payments of up to $700m were to be split with what it should have known was a dubious consulting partner. McKinsey is full of superior intellects but sometimes you only need to open your eyes. None of this occurred in a vacuum.
The group Business Unity South Africa this month bemoaned the “scourge of corruption that is stifling the country” and called for an end to a “culture of immunity”. Each time that a consultant or accountant fails to take a decisive stand, the scourge worsens. KPMG has recognised it but McKinsey is still learning. It could start by confessing that it was wrong and promising not to repeat its failure.
The firm still maintains that it behaved correctly and is walking the tightrope of self-justification. I am intrigued to see how long it will take to fall off.
I wonder if the same will be said of McKinsey’s activities in Saudi Arabia. What price is McKinsey willing to put on its reputation? You tell me.

The 3 issues today’s crisis comms professional needs to tackle

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Make sure that you’re prepared for these three big issues which are shifting the crisis comms goalposts (image source: http://www.bairdscmc.com)

It doesn’t take a genius to tell you that the world is changing, and with it the way that crises develop. I was listening to a very engaging podcast by the Gulf News business team, with communications professional Omar Qirem (check out the post here).

While the conversation touched on a host of crisis issues and triggers, there were three big issues that are relatively new, and which are shifting the crisis communications landscape.

Hacking and Emails

Long gone are the days when whistleblowers would walk out of offices with a suitcase full of papers. Today, information is conveyed electronically, and all it took for Chelsea Manning to leak hundreds of thousands of US military documents to Wikileaks was a single USB drive. Hacking is becoming a real problem for both governments the world over, as well as corporates (just ask Sony).

Hacking is developing from the well-understood concept of the ethically-troubled whistleblower to groups-for-hire who are ready and willing to hack email servers, or public domain accounts in the search of damaging information. Hackers can also attack websites and social media accounts to fake news, or even create fake sites which are mirrored on the real thing.

We’re going to have to become more aware of these threats, and develop mitigation strategies, including better security (at the very least, please use two-factor authentication as much as you can and don’t use the same password for every single account), and also educate executives on the need to communicate differently. What you write can be leaked; are you willing to see that email on the front page of a newspaper, or a website?

The Rise of Values-Based Communication

Consumers aren’t just interested in what brands make and sell. They want to know what we stand for. This public interest has partly been driven by the political climate in the US and Western Europe and by the behavior of millennials and their increasing skepticism of established institutions. For brands, value-based communications is a key point of differentiation, particularly for industries which have been impacted by technology-driven commoditization. Think of Paul Unilever’s Polman and his passionate belief in sustainability.

Conversely, executive behavior which is looked down upon by the public can have serious business implications. Whilst the official reasons for Uber being stripped of its London license were due to questions around passenger safety and drivers’ rights, the behavior and words of former CEO Travis Kalanick haven’t done Uber any good. The apology proffered by the new CEO, Dara Khosrowshahi, seems to have gone a long way to defusing some of the tension between Uber and Transport for London which oversees the company’s license to operate.

Data and Online Regulation

We’ve been living in the internet age for over two decades now, and business has benefited from a relative lack of legislation and regulation about what can and can’t be done online, particularly with data. That has slowly changed as governments have sought to understand how the internet has changed our lives. Upcoming legislation in Europe, the General Data Protection Regulation (GDPR), is going to change how corporations monitor and store data (it’s been covered in some detail by Rachel Miller for the CIPR). There’s no doubt in my mind that the online and social media networks will also have to deal with more governmental oversight. There’s been a string of scandals around issues such as extremist content on YouTube,  Facebook and the Trump election, and Twitter’s lack of action on far-right hate speech.

Whilst I’m certain that more regulation is coming, and soon, it’s far too early to say how this will change how we as communicators operate online. There will be more data-related crises, either due to how data is collected and used, or due to an inability to adhere to these new rules.

As always, I’d love to know your thoughts. What issues do we need to better understand when it comes to modern-day crises? Please do share with me your thoughts.

A crisis of competence or character? How to understand (and prepare for) crisis basics

crisisahead

Are you prepared for the worst? (image source: http://www.adweek.com)

The past 18 months has been a remarkable time for crisis watchers. We’ve watched as global brands and leaders have become embroiled in crises. Some of these have been of their own making (think Sepp Blatter and FIFA, or Volkswagen and emissions). Others have been due to unfortunate circumstances, such as with Emirates flight 521.

As communications professionals out there know, there’s nothing like working on a crisis. In an excellent piece for the Financial Times by David Bond, Rupert Younger, director at the Oxford University Centre for Corporate Reputation, sorts crises into two basic definitions – a crisis of competence or a crisis of character. To quote from the piece:

Examples of competence scandals include Toyota’s 2009-11 recall of 4m of its cars because of defective accelerator pedals, or the battery defaults on some of Boeing’s Dreamliner aircraft. These, according to Mr Younger, can deliver a direct, and in some cases short-term, hit to a company’s sales figures.

A character crisis calls into question the culture and behaviour of a company and its senior executives and often arises out of media scrutiny or criminal or regulatory investigations. Fifa and News International were both crises of character.

The worst type of crisis involves both. The BP Deepwater Horizon oil spill in 2010 is a case in point. It was triggered by a disastrous oil rig explosion that called BP’s offshore drilling competence into question. But the company’s response turned the crisis into a far wider issue of trust.

As communicators, our roles have traditionally covered managing the fallout from a crisis. However, whether we like it or not (I hope the former), we’re also becoming the conscience of our organizations. It’s incumbent on us to speak up when we hear about or see an issue that could harm an organization’s reputation. This is easier said than done. Volkswagen is a great example of a crisis of character – dozens of VW employees must have known about the manipulation of data, and yet no one spoke up (or, if they did, the information didn’t get to the right people).

To tackle such a crisis, communicators need to work with executive management to create an ‘incident aware culture’. Employees should feel that they can report issues without reproach or fear of retaliation. Employees also need to feel that they’re working for and in an ethical organization that cares about doing the right thing. This requires continuous communication from and engagement by the board and management, as well as support from legal and HR teams. If things do go wrong, communicators and management need to proactively engage with stakeholders to explain what has happened and why, a strategy known as stealing thunder. This is best defined as an organization “breaking the news about its own crisis before the crisis is discovered by the media or other interested parties” (Arpan & Roskos-Ewoldsen, 2005).

Unfortunately, as has been noted by academics such as An-Sofie Claeys, this type of self-disclosure is rare in practice. As with the case of VW, organizations are tempted to conceal the crisis rather than make it public.

Crises of competence are easier to deal with. However, many of us still aren’t prepared for what happens when this type of crisis occurs. Here’s a simple crisis communications assessment grid developed by the communications team at US firm Timken, which establishes crisis severity based on the type of incident and the involvement of various stakeholders, as well as who needs to be involved.

timken-crisis-comms-framework

For a more detailed look at how to handle a crisis (pre, during and post), then have a look at this post I wrote after meeting with crisis communications expert Caroline Sapriel. And, if you have any feedback on how do deal with a crisis, please do share. I’d love to hear your views.

Recycle Old News or Stick to Brand Values? How will firms deal with Trump?

trump-brands

Trump’s Twitter attacks have targeted a number of firms. His behavior may not change when he takes up the Presidency today.

Trust me, it’s happening. Today, Donald Trump will be sworn in as President of the United States. And, judging by the past couple of months, Trump will personally run his agenda of making America great again across the entire business community. Shel Holtz has written a fantastic piece about the impact that Trump has when he Tweets about a company which he feels isn’t doing enough to support his American vision.

Companies will have two basic strategies to deal with this new type of political risk; they can either recycle old news, or they can resist Trump’s attacks, and fight back (yes, you read that right, brands will go up against Trump).

We’re already seeing firms come out with a raft of job announcements. This week General Motors said it would invest US$1 billion in its U.S. manufacturing operations, which will lead to the creation or retention of 1,500 jobs, adding that it would also add another 5,000 American jobs “over the next few years” in finance and advanced technology. Fulfilling another Trump pledge, GM announced that around 450 jobs will be returned to the US as GM transfers back parts production from Mexico.

Other firms have also put out jobs announcements. Amazon, whose founder Jeff Bezos publicly rowed with Trump during the election campaign, announced that it’d hire over 100,000 staff over the next 18 months. “It’s a very powerful headline, and the timing certainly makes Trump look good,” Ivan Feinseth, an analyst at Tigress Financial Partners LLC, told Bloomberg. “It’s going to happen in the first year and half of his administration. Bezos couldn’t have set him up any better to look good — timing is everything.”

China’s Alibaba has sought to allay Trump’s Chinese angst by promoting job creation in the US. Last week, Alibaba chairman Jack Ma met with the president-elect to tell him that the Chinese Internet giant would create 1 million jobs for Americans by helping small domestic businesses sell to Asian markets via Alibaba.

Job creation in the US is a tactic that many firms will seek to copy over the coming months as Trump takes charge. How many of these announcements will stack up, who knows. We’ll only know for sure after the space of months or years. However, many brands will be tempted to win favor with Trump’s administration and stay out of his crosshairs by pushing job news. The questions many will ask are, is the news real (for example, will Alibaba really be able to create a million jobs for Americans?), and is the news old? It’s been alleged that the GM announcement was planned as far back as 2014.

The other approach that companies will take is to stand up to Trump. Speaking to the San Francisco Chronicle, Richard Levick, president and CEO of the Levick public relations and communications firm explained why.

“Other companies will realize that the king doesn’t have a lot of clothing here,” he said. “At some point in the not too -distant future, a company will realize that there is greater value in being courageous and standing up to the president.”

To date, the best example of a brand fighting back against Trump is Vanity Fair. The publication, whose editor Graydon Carter has long been a critic, ran a piece in December last year titled, “Trump Grill Could Be The Worst Restaurant In America”. Needless to say, it didn’t go down well with the President-Elect.

The magazine responded  instantly, running a headline banner ad across its own and other sites entitled “The Magazine Donald Trump Doesn’t Want You to Read.” The result was 40,000 new subscribers.

“Vanity Fair played that perfectly,” Scott Farrell, an expert in crisis management and the president of Golin Corporate Communications, told the New York Times. “‘This was the magazine that Trump doesn’t want you to read.’ I think their response was consistent with the brand’s DNA.”

Firms will either have to proactively plan to put out information that will appeal to the new administration. Or they’ll have to plan on how to respond to a potential attach. Whatever they do, brands will have to move with speed, to counter Trump’s use of Twitter. Whichever route brands take, crisis comms experts (and the rest of us) are going to have an interesting four years. Unless someone turns off the WiFi in Trump Towers, that is.

Caroline Sapriel and a masterclass in crisis communications

While I’ve been in the communications industry for a while (read the lines on my face!), every now and then I have the opportunity to meet someone who wows me. I had that feeling two weeks back when I met with Caroline Sapriel. Caroline, who is an expert in crisis management and communications, was invited along by the International Association of Business Communicators to talk about her insights on crises. What with all that is happening globally, it seemed apt to talk about how we can communicate better on issues that have an adverse impact, both on reputations and operations.

First of all, Caroline defined a crisis by three points:

1) Surprise

2) Brevity or shortness of time

3) Threat

What is fascinating is Caroline’s assertion that two-third of crises are smoldering, in other words they’re issues which aren’t tackled properly or which are ignored. However, as Caroline also adds, “most organizations don’t properly understand what a crisis is.”

Now, to the good news. Organizations rarely face true crises, issues which can substantially damage or stop operations and ultimately destroy reputations. However, most crises are still handled incorrectly. Many leaders look to manage a crisis in the same way as they manage through normal times, by forming a consensus and aligning others. However, Caroline states that a crisis needs a different type of behaviour, one that follows a command and control model where one person takes charge and acts decisively, with or without the approval of others. She spelled out five key competencies that leaders need to navigate a crisis.

1) Situational awareness and analysis

2) Sense-making

3) Stakeholder mapping

4) Scenario planning

5) Decision-making in a crisis

Now, let’s come to our role as communicators. Caroline was very kind to share her company’s integrated business contingency framework as well as spell out her 10 commandments of crisis management, which are based on decades of hands-on experience as well as research.

CS&A's integrated business contingency framework seeks to explain how communications and stakeholder management can support organizations in a crisis, through every stage of a crisis.

CS&A’s integrated business contingency framework seeks to explain how communications and stakeholder management can support organizations in a crisis, through every stage of a crisis.

The 10 commandments is also a fantastic read:

#1 Own up to and communicate the problem early on

#2 Recognize that you cannot make what is bad look good

#3 Be prepared for the worst. In a crisis, things get worse before they get better

#4 Prioritize and remember people’s safety is always first

#5 Focus on protecting your credibility and not winning brownie points

#6 Set the course, have a Mission Statement and stick to it

#7 Map and remap issues and stakeholders as the situation develops

#8 Use every available channel to communicate with your stakeholders

#9 If the crisis drags, don’t retreat into a siege. Stay out there!

#10 Manage the aftermath of the crisis. Remember, it’s not over until it’s really over

Caroline adds that in a crisis we can’t control the events, but we can control our credibility.

If you’re wondering how your organization is doing, have a look at the below image which has been developed by Caroline and her organization. The crisis management culture ladder will help you to understand where you are in terms of preparing your organization for a crisis.

CS&A's crisis management culture ladder maps out where organizations are in terms of their ability to manage and learn from a crisis. At the bottom are organizations who essentially don't care as long as they're not caught; at the top are organizations who thrive on and grow with every crisis they encounter. Where are you at?

CS&A’s crisis management culture ladder maps out where organizations are in terms of their ability to manage and learn from a crisis. At the bottom are organizations who essentially don’t care as long as they’re not caught; at the top are organizations who thrive on and grow with every crisis they encounter. Where are you at?

As an additional plus, Caroline has shared a reading list that will help guide you on improving your understanding of crises and what you should do to prepare as a communicator and leader.

On a final note, I’d like to thank Caroline for her time. And if you’re interested in knowing more about Caroline Sapriel, she’s the managing partner and founder of CS&A International, a pioneer and a recognised leader in the field of risk, crisis and business continuity management. For additional information please visit her company’s website.

Keep Calm, Say Nothing – QNB’s response to the customer data hack crisis

Qatar National Bank's reputation has literally gone down like the Titanic according to this visual from a reader of Doha News (source: Doha News)

Qatar National Bank’s reputation has literally gone down like the Titanic according to this visual from a reader of Doha News (source: Doha News)

Like it or not, there will be times when the proverbial @#$% hits the fan. Each and every organization will go through a crisis. What matters is how an organization responds to the crisis and communicates this response.

Before I talk about the bank in question, I want to step to talk a little about crisis communications. Crisis comms is an artform, and some people (who get paid lots of money) do crisis comms for a full time living. When dealing with a crisis, communications theory states that there are three steps. The first is pre-crisis, which involves setting up a team and processes (the who and the how), and then practising for situations that are likely to occur. The second phase is the crisis itself, and the third is post-crisis and fixing the issue.

Last week someone allegedly released a huge amount of customer data which was hacked from Qatar National Bank. The 1.4 gigabyte file was put online for download. A data hack of customer information is one of the worst things that can happen to a retail bank. But it gets worse. To quote from Doha News.

The data included the financial and personal information of thousands people, many of them QNB customers, and is being spread widely on social media and file-sharing websites.

Cyber security experts said as many as 400,000 customers could be affected, in what is being called one of Qatar’s biggest data breaches.

Since yesterday, several customers have reported attempts to break into their bank accounts, although these appear to have been blocked before any transfers took place.

Others have said there have been attempts to access and even alter their social media accounts.

Yes, it was that bad. But instead of communicating and advising customers on what to do and how to keep themselves safe, QNB’s media team didn’t say a thing. Well, almost. Again, back to Doha News.

More than 24 hours after the data breach became public, QNB has not answered questions from Doha News on what actions customers should take to protect themselves and many customers say they have yet to be contacted by the bank.

Online, it has continued to respond to questions by pointing to yesterday’s statement that said it does not comment on “social media speculation,” even though the confidential information about thousands of its customers is online for anyone to access.

According to the reaction of dozens of customers, some of the information is correct. And yet, even QNB’s Call Center and retail branches are holding fast and not saying anything. One customer was allegedly told that the allegations were ‘propaganda’.

All credit to Doha News. The Qatar-based news website has covered the issue from its beginning with a level of thoroughness that should be a lesson for all local media outlets in the region. The last piece it ran was about a website which could help QNB customers check if they were hacked or not.

Doha News has also been doing much of the work which should have been done by QNB itself, namely advise customers on what is happening, tell them what action they should take and why. QNB’s silence on the issue is a classic example of how organizations in the region used to deal with a crisis prior to the advent of social media. You dig your head in the sand and hope it’ll go away. Well, this is what they’ve done and their reputation has gone down with the Titanic.

Instead, they should have been responding through all consumer-focused communications channels, including social media (a digital crisis consultant I respect greatly and ex-head of comms for the BBC, Donald Steel, advises that any online response should take no longer than 15 minutes). By acknowledging the problem, by explaining how their customers can keep safe, and by promising a review of their security setup, QNB would have helped to have turned a crisis into an opportunity to demonstrate both transparency and concern for customers and their well-being.

In their response (or lack thereof) QNB has looked archaic and they’ve compounded the damage by seeming not to care. I hope that others take stock of the online backlash and understand that when it comes to a crisis in the Gulf, silence is never golden.