Twitter as a crisis management tool

We all know that Twitter is great at getting the word out. Celebrities use it to announce new roles, marital breakups etc. Corporations alert people to pending announcements and editorial coverage that puts them in a good light. But the chatty nature of Twitter makes it less suitable to crisis management and more suited to crisis generation. Or does it? We all know that when a crisis breaks, people start tweeting like mad and in no time, thanks to the power of Twitter, the world knows about it. Against this hailstorm it’s hard for people to fight back and ‘get the truth out’. Interestingly having looked at recent crises that have been in the media lately (eg BP), it’s clear that Twitter is rarely, if at all, used to counter a crisis. Conventional crisis management is all about getting control of the message and perhaps many view Twitter as an environment where you can’t necessarily control the message. I’d argue that Twitter offers a great way to get your message across and that it is no less ‘controlled’ than any other vehicle. If anything it offers you the chance to create an authentic, timely mouthpiece for the company. It also offers a way to get important information out quickly. This gives Twitter the advantage of enabling you to show those affected that you are acting responsibly by sharing information they may find beneficial in real time. Of course one of the real disadvantages Twitter has is that most Fortune 500 board members don’t use it and probably never will. It therefore takes a huge leap of faith for them to accept using it as a tool to manage a crisis they are at the heart of. I hope as communications professionals we don’t let that prevent us from giving them the right counsel. IMHO Twitter isn’t just for the good news, it’s also for those times when you really wish your phone would stop ringing.

Bear Market for Bear Stearns

For $234m JP Morgan has bought a bank, Bear Stearns, that was worth $20 billion last year. Either they have got the bargain of the century or Bear Stearns has the equivalent of a football team’s worth of rogue traders. It is more likely they have bought this on the cheap, given the support the Fed has also agreed to give, making it a great symbol of how the banking sector is capable of making money even when times are hard.

What I find striking about this deal is that it reminds us how the banking business is built on confidence and how easily that confidence can be destroyed. I’m sure there are some real problems with the Bear Stearns business but I’m also sure there are many assets (not least their real estate in NY) that are worth considerably more than the $2 a share JP Morgan is paying. I’m pretty sure the brains at JP Morgan will be able to clean up the Bear Stearns business, which then only leaves them with a confidence challenge. That is a classic PR challenge that in this instance is going to run right across their sector. It will be fascinating to see how they respond to this in the short term. As a sector they tend to be fierce competitors but if they want to maintain the confidence they need right now they are going to have to work well together and show the world they can weather this storm. It’s classic crisis management stuff but for an industry as a whole not just Bear Stearns who at this point are the victim.

When good news sparks a crisis

In the last week the major oil companies including Exxon, Chevron and ConocoPhillips have all been announcing record profits and revenues. Good news for those that invested in these businesses. But it’s interesting to see how this relatively good financial news has worked against them. Earlier this week Senator Byron Morgan announced his desire to see a Windfall tax imposed on these oil giants. You can see why such a suggestion has been made but most economists seem to feel it would be counterproductive and only lead to them finding ways of reducing their profits to avoid taxes – such as even higher pay deals for their CEOs.

The other side effect of the news as been a raising of people’s consciousness about how much it really costs to drive a typical car in this country. It’s still a lot less than it costs in Europe but if things continue as they have the gap will be gone in less than 18 months. This is forcing people to rethink their lifestyles and choice of transport. This morning on NPR they ran a feature showing how many people are now looking at car pooling or public transport simply because of the increase in gas prices. In other words, the gas companies are in danger of having customers finding ways to avoid buying their product. That’s not something most businesses want to see.

So if you couple the great earnings news with the CEO pay scandal that emerged around Exxon’s CEO and then add the fact that consumers are starting to rebel you get a great PR and potentially real commercial crisis brewing. It’s rather interesting at that level. Most crises are driven by bad news such as product defects, plunging sales and crime ridden management teams, not businesses that have managed to hike the price of the product and make super profits. Perhaps this is why the oil industry is struggling to deal with an issue even our Pro Oil President is starting to get angry about. Only today in a piece the Associated Press ran entitled “As Profits Soar, Oil Industry Unapologetic,” Bush was said to be “outraged” by the profits the oil companies are making.

Of course the fact that the profit margins being made by the oil giants is actually pretty modest is getting little coverage or sympathy. Why? Because even though they are only generating around $9 of profit for every $100 in sales, compared with the roughly $20 of profit eBay and Microsoft make on similar revenues, the scary part is not the margin but the sheer amount of profit, coupled with the fact that every consumer is starting to feel it impact them directly. Not everyone buys and sells something on eBay every day but most of us get in a car that regularly.

Time for a good old fashioned crisis plan to be brought out by the oil barons I feel. But it needs to start from a very different place of course.

Have you been Abramoffed?

I gather DC’s K Street community is keeping a low profile right now, hoping that the Abramoff scandal will soon blow over and allow them to get back to work. I’m curious to learn whether any PR work has been affected by this affair. There is an argument that PR agencies will benefit as funds are redirected and an argument that they’ll suffer simply because of PR’s association with PA. I’ve seen no evidence yet within my business of either but I’m nevertheless curious. Has anyone yet had their budgets ‘Abramoffed?’

Should we hide the CEO?

Earlier this year I attended a small VC event at which Jim Collins was giving his fantastic presentation on how to build great and enduring businesses. He did a marvelous job of both reminding the CEOs present of the management disciplines they need to adopt if they are to turn their businesses in to truly great companies. Several months have passed since I heard him speak but I was reminded of this speech when I noticed his ‘Level 5 Leadership’ article is being reprinted in the current HBR. What struck me is that if you look at the current leaders of the major tech players there is some correlation with his central thesis, that great companies have Level 5 leaders but not a complete correlation. Of course this could be a warning bell for the future of those that don’t appear to have Level 5 leaders, or it could be that Jim’s analysis doesn’t really apply to them.

Jim’s research suggests that Level 5 leaders have a common set of traits, namely their ability to build enduring greatness through a paradoxical combination of personal humility plus professional will. Now I can’t profess to know the CEOs of the all the major tech firms to the extent where my judgment is 100% accurate but from what I’ve learned over the years and from the insight others have given, I’d say that using media exposure as a guide the following people meet the Level 5 standard:

Sam Palmisano – IBM. Sam does work with the media but it’s clear that he’d rather talk about his company than himself.
Mark Hurd – HP. Has any business publication managed to profile him with his involvement?
Hector Ruiz – AMD. AMD has been slowly but surely gaining ground on Intel while Hector has stayed firmly below the radar
Bill Gates – Microsoft (I know he’s not CEO anymore!). Bill has never loved media attention but accepts its role. As the world’s richest man he can’t escape being on the cover of magazines from time to time
Steve Ballmer – Microsoft. Steve may be gregarious but he’s also not someone to blow his own trumpet.
Paul Otellini – Intel. Since taking over as CEO he has hardly sought out personal publicity

Some may take issue with these choices and I should add that not that all of these are clients. I should add that I’ve not included CEOs such as Steve Jobs, John Chambers, Larry Ellison and Scott McNealy. I don’t know these people but the perception is that these people enjoy the media spotlight which goes against them being so called Level 5 leaders. If my perception is wrong then these guys all definitely count. It is interesting to note that Jim’s Level 5 criteria if used when hiring CEOs would have ruled out hiring someone like Carly Fiorina for the HP role.

If you think about this you arrive at something of a paradox. At one level PR people want their CEOs to do their part to raise awareness of the company and its goals. This often means them sharing some of their personal life with the public to add some human interest to an otherwise dull business story. If they do this too much then they become celebrity CEOs and by Jim’s definition, this would suggest they are falling short of being Level 5 leaders. So the logical conclusion you arrive at is that we can do all our clients a favor and make sure our CEOs stay out of the media.

Or should we? I’d love to see what other PR people think on this subject?

Can Kodak Survive?

It’s interesting to see that Kodak has just hired a former HP exec as CEO. Antonio Perez, takes over from Kodak veteran Daniel Carp. He has perhaps the most fascinating management challenge going. Kodak has been a major part of billions of people’s lives for decades. It is of course in danger of being a piece of pure history unless it can make the successful switch from the old fashioned analog world to the new fangled digital era. The switch is course non-trivial. At a basic level Perez has to get people convinced that instead of buying a small yellow box of film to go inside some expensive piece of camera equipment, they should instead just buy the expensive piece of equipment from Kodak. That would be like Shell stopping selling gas and starting to sell cars. Sure, I trust Shell to produce gasoline that will make my car run but I’m not convinced they can produce a great car. After all it’s a totally different skill set. The challenge is of course even greater than just that. Whereas in the past they sold photographic paper to developers, now they have to convince the public to buy the paper to put in their home printer. What a nightmare. In the good old days they could target the guy at the local camera store and he’d use Kodak paper for his customer’s prints. After all, most customers just want nice prints. If the paper is made by Kodak or Agfa they don’t care. Kodak now needs them to care and keep on caring. This a tough challenge. Of course many customers may buy the Kodak paper because they know the name. But they may also buy paper from a brand like HP or Fuji that they know just as well, especially if its less expensive. As you can see I think Mr. Perez has a very tough challenge ahead. Sadly I’m not that optimistic about his chances given the level of competition he faces. But Kodak is a brand well worth saving, so I truly wish him the best of luck.