Blindsided is the authoritative guide to crisis management. This "how to" handbook gives essential advice that every manager needs to know when a crisis hits. Written by CMI Founder/CEO Bruce Blythe, it's a fascinating, easy-to-read guide that draws on Blythe's 20+ years of experience as a pioneer in crisis management.

  Crisis Management 101
     (Tim Darnell & Michael Pallerino, Business to Business, September 2007)

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The e-mail was simple. The blogger said he could pick the company’s bike lock with a 99-cent Bic pen. The company’s response was even simpler — "No way." So the blogger videotaped his technique and forwarded them a copy. The company didn’t believe it was authentic. So the blogger and biking enthusiast did what any concerned citizen would — he posted the videotape online, serving notice that the Kryptonite Evolution 2000 U- Lock was not the "toughest bicycle security in moderate to high crime areas," as the company proclaimed. Ten days and $10 million later, Kryptonite Locks learned the hard way how fast information and the court of public opinion could be swayed — even if it couldn’t.

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When the images of a laptop that spontaneously burst into flames during a board meeting were captured on an employee’s cell phone, the footage was viewed online by millions of captivated viewers before Sony Corp., the manufacturer of the battery, had any idea what happened. Sony was forced to recall millions of lithium-ion batteries used in models from Dell to Toshiba, while simultaneously working to calm and manage the consumer and media backlash that ensued.

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You would think that Britain’s historic Barings Bank, which financed the Napoleonic Wars, Louisiana Purchase and the Erie Canal, would be immune to crisis. But when a Singapore trader named Nick Leeson left a $1.4 billion hole in the bank’s balance sheet due to his unauthorized derivatives speculation, the bank was left in ruins. Barings was eventually purchased by ING for a nominal sum and the assumption of all of its liabilities.

IT HAPPENS SO FAST. Tylenol. Exxon. Enron. JetBlue. ChoicePoint. The companies will forever be remembered by the crises that redefined them. To the general observer, a crisis appears to be a single moment in time when the wheels fall off without warning. But truth be told, the majority of crises can be tracked to a series of small events that slowly explode without pity.

"We are living in a new age of activism," says Glen Jackson, co-founder of Jackson Spalding, an Atlanta-based public relations firm that has managed its share of local crises, including a salmonella outbreak at the Golden Corral restaurant chain and the bankruptcy announcement of Wolf Camera. "Too many companies within the public spotlight don’t have crisis plans, meaning the reputations of these enterprises are vulnerable." Jackson says vulnerability starts with not having an identified crisis team established and a quarterback for such a team. It continues with the lack of a calling tree – a specific list of people – that can be activated by phone, Blackberry, etc., when a crisis occurs. The most effective plans have a clearly defined team; a calling tree; scenarios addressed that companies deem most worrisome; and the training to handle these situations at least once or twice a year.

The philosophy is unanimous among crisis management experts, who agree while most CEOs can’t predict a crisis, they can – and most definitely, should – pre-plan. "Seldom has a company contacted us to develop a crisis management or crisis communications plan before a crisis occurred," says David Johnson, co-founder and CEO of Strategic Vision, an Atlanta-based full-service PR firm with three divisions. "Companies need to be more proactive. The reason they’re so far behind when it comes to going on the offensive in a crisis situation is because they don’t think about that. They don’t ask themselves, how do I handle a lawsuit, a charge of sexual harassment, a product recall …"

The best offense is …

When a company develops the right crisis management plan, it should be prepared for any crisis that may arise. "The importance of telling the truth is ingrained in the document," Jackson says. "There is uncompromising integrity in the moral sense. The reputation of the company is protected because the path is clear, allowing those outside the team to stay focused on the business."

In addition to helping dozens of companies make it through PR nightmares, Johnson has also done damage control for politicians ranging from state to federal office. "The worst thing you can do is go into defensive mode," he says. "A company that goes on the offensive or deals with crises at the very beginning comes out the very best. We dealt with a technology company in Florida that was basically accused of lifting a product from another company. We handled it with an immediate full court press with technology editors across the country. You can’t allow charges like that to go unanswered or unchallenged for a moment."

On the salmonella case and Golden Corral, the owner of the Kennesaw restaurant was highly ethical and an effective communicator. He responded quickly by closing down the restaurant, and then brought on board a former CDC scientist to analyze the food-borne illness claims, finally rallying his employees by letting them know the restaurant would do the right thing. He also assured them their jobs were secure. It was Churchillian moment. By personifying the credibility of the restaurant chain, he eventually reopened the restaurant with the support of his customers.

One of the turning points was when management allowed the media to tour the restaurant the day before the official reopening. They were able to get a first hand look at what had been done to clean the restaurant. While the strategy was outside the box of corporate policy, the crisis demanded that kind of thinking.

Chuck Wolf also held himself accountable. When Wolf Camera filed for bankruptcy, he took responsibility by being accountable to all his stakeholders. He told the truth, saying the bankruptcy filing was due to a poor financial decision to acquire Fox Photo. Wolf received support, starting with his most important audience, his employees. The situation was not easy. But thanks to his strategy, media calls were reduced from more than 100 on that first day to less than 10 the second day. His demonstrated leadership was visible, genuine and responsive to the media. The company had a second spokesperson available to handle many of the calls to ensure that all calls were returned promptly.

Johnson was brought on board when John Portman & Associates was under allegations of sexual harassment. "The problem with that case was we had lawyers involved as well," he recalls. "That’s the problem every company faces in this day and age. Lawyers want to go one route, and PR practitioners want to go another route. Lawyers want nothing said; the less said, the better, because that’s less information that can be used against the client. PR professionals want to get the clients’ story out."

Johnson says the company took part of his advice. "The charges were instantly denied. Then the lawyers came in and didn’t want to go any further, and it was settled out of court. I wanted the company to fight for its vindication. They were worried about their reputation, and thought settling out of court wouldn’t harm it. But when you settle out of court, people think the charges were true. The stigma you now carry is that you must have been guilty. That’s why we’re seeing a slight increase in the number of companies that want to fight it out."

Is that one reason why the Atlanta Falcons’ Michael Vick seems intent on having his day in court? Perhaps, but the damage has long since been done. "Vick’s handling of this entire affair has been horrendous," Johnson says. "The V-103 radio appearance was too little, too late. And his choice of appearing on that particular station raises the whole black and white issue, which may have been a legal strategy. But the best thing he could have done was proclaim his innocence instead of hiding behind his lawyers, and then hit more mainstream media.

"Usually when you follow legal advice, it hurts your reputation. Over the short term, all the stories being told in the media are one sided. Even if you’re vindicated, you’re reputation is tarnished. You never get that back."

A front row to crisis management

In 2005, James Lee, VP and chief public and consumer affairs officer for Alpharetta-based ChoicePoint, had a front row seat to Crisis Management 101. The data warehousing company acknowledged it delivered thousands of electronic reports containing names, addresses, Social Security numbers and, in some cases, credit histories to people in the Los Angeles area posing as legitimate debt collection, insurance and other small-business officials. Because California law requires firms to disclose such incidents to the state’s consumers when they are discovered – the only state at the time to do so – ChoicePoint sent letters to the individuals whose information was breached.

Pandemonium ensued, elevating the nation’s concerns over the prospects of identity theft to a level at which even ChoicePoint wasn’t prepared. The crisis not only cost ChoicePoint’s shareholders countless millions, but it also attacked the credibility of the company’s Chairman and CEO Derek Smith, who had ironically just published two books about protecting against identity theft. During the first week of the crisis, Smith was unavailable to answer questions, instead requesting that all questions be sent via e-mail. Later, the company said it could not answer the e-mails.

To say that ChoicePoint wasn’t prepared for the crisis would be an understatement. To say that they could have handled things differently in the beginning is as fair as an assessment of the situation as you can make. ChoicePoint wouldn’t disagree.

"It’s one thing to hear all about what happens during a crisis," Lee says. "But it’s another thing to live it. The truth is that there is always a crisis. The best thing to do is to be prepared. [Remember] a crisis doesn’t respect boundaries. It doesn’t respect timing. It doesn’t respect anything. I think that most people tend to forget that."

Along with not being prepared for a crisis, Lee says the biggest challenge companies face when the rails go off the track, so to speak, is the constant reliving of the "what could we have done?/what did we miss?" syndrome. When the security breach hit, there wasn’t anybody at ChoicePoint who didn’t think the situation would merit anything more than a relative minor media story. In fact, the company’s due diligence proved it. "The problem was that ChoicePoint was the ghost in the machine," Lee says. "Nobody really knew anything about us. And before you knew it, the story took on a life of its own. In the end, we spent more time trying to correct every little thing than we did educating the consumer."

That’s when the company asked for help in dealing with the storm the crisis created. Fast-forward to the end of that year and ChoicePoint was able to introspectively address the product, policies and procedures of how they did business. By the end of 2005, the company’s stock came back to within a dime of the time before the breach.

"Today, we’re able to sit down with our critics and discuss the legitimate concerns of what happened," Lee says. "The thing is that we listen to them and they listen to us. Nearly three years later, business is good. We can spend time thinking about compensation issues, marketshare and pricing."

Lee also says the company – and the consumer – understands that identity theft is a long road. He also says that ChoicePoint understands that it has become synonymous with identity theft.

"Information is everywhere," Lee says. "Information travels. And ChoicePoint is in the information business. As one of our critics said, ChoicePoint has gone from ‘poster child to role model.’ It’s been a good payoff."

For all the advice and counsel offered by crisis management experts and PR pros, "too many plans are too thick and too laborious to be implemented," Jackson says. "The plans that work are the ones that are updated frequently, use technology advantageously, are smart and strategic in focus and are embraced by the CEO as a priority. Remember leaders are made. People choose to lead. A crisis situation brings out the best in leaders."

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