Lessons from the front lines of crisis communication
Leo Tolstoy famously wrote in Anna Karenina that happy families are all alike, while every unhappy family is unhappy in its own way. The same is true for organizations. Healthy companies share a lot in common, but every crisis is unique, context-specific, and nonrepeatable. That’s exactly why you can’t manage a real crisis with a generic playbook.
And yet, despite their uniqueness, most corporate crises follow familiar patterns – patterns leaders should internalize long before an emergency hits.
WHERE DO CRISES REALLY COME FROM?
Most crises rarely come out of nowhere. Like in a Hollywood disaster movie, warning signs usually show up well before the catastrophe – yet only one person seems to notice them or wants to. Monitoring breaks down. Risk analysis is skipped. Leadership decisions go sideways. Communication turns evasive or worse, misleading. And eventually, control slips away.
In the movies, Superman shows up just in time.
In real life, he doesn’t.
A Canadian study suggests that many executives still assume crises are mainly driven by product or service failures. In reality, the most damaging crises today are far more often rooted in irresponsible leadership decisions and unhealthy corporate cultures.
Think of BP’s Deepwater Horizon explosion in the Gulf of Mexico. Think of the 2010 red sludge disaster in Hungary. Think of Volkswagen’s diesel emissions scandal. A report prepared for the U.S. President concluded that BP’s disaster was driven largely by a corporate culture and incentive system that prioritized cost-cutting and speed over safety pushing people to do the job faster and cheaper – not better.
Sound familiar?
The same governance and culture failures showed up in the red sludge catastrophe, the VW diesel crisis, the early failure of the Hubble Space Telescope, and even in the chain of decisions that preceded the loss of two NASA shuttles.
WHERE ARE YOU NOW, SUPERMAN?
In real life, there’s no superhero coming to save the day.
When a crisis hits, the company is usually left to face it alone. Media pressure intensifies. Regulators, business partners, employees’ families, and the public demand immediate answers often before leadership fully understands what happened. Internal actors resist accountability, narratives diverge, and in the resulting information vacuum, rumors and misinformation spread at lightning speed.
The crisis quickly goes into free fall.
The reputational and financial consequences can be devastating. Hungary’s MAL Zrt., for example, never recovered from the disaster that claimed ten lives. BP’s share price fell by 52 percent in just six weeks, while the company spent more than $40 billion on cleanup and compensation. Despite years of heavy investment in CSR initiatives, responsible corporate governance didn’t go far enough – allowing a foreseeable, preventable incident to severely damage both reputation and financial performance.
Social media has only amplified these risks. There are no secrets anymore. Sooner or later, sensitive information – true or false – will surface. In 2010, a single Greenpeace viral video was enough to trigger a consumer boycott of Nestlé products and a drop in the company’s share price, driven by the practices of a small Indonesian supplier linked to rainforest clearing tied to palm-oil expansion.
CAUSE MATTERS
From a reputational perspective, it matters a lot why a crisis happens.
If a crisis is triggered by an unavoidable external event – such as the COVID-19 pandemic – and leadership responds decisively and transparently, an organization can even come out with stronger stakeholder support.
The opposite is true when a crisis stems from irresponsible leadership decisions or criminal behavior. In those cases, reputational damage can take years to repair – if it can be repaired at all.
That said, experience shows that a strong pre-crisis reputation can meaningfully mitigate losses. Volkswagen’s reputation took a major hit during the diesel scandal, and the group closed out 2015 with losses of €1.4–1.6 billion. Yet by 2017, VW had reached record revenues and posted €11.6 billion in profit – showing how reputational capital can act as a shock absorber in a crisis.
“THIS COULD NEVER HAPPEN TO US”
Despite all this, many executives still believe crises only happen to others.
Warning signs are dismissed. The growing power of social media is underestimated. Risks created by complex, global supply and value chains are ignored. Monitoring systems are weak or nonexistent. Crisis protocols are outdated and opaque. Organizations are unprepared, under-resourced, and overconfident.
Advisors who raise concerns are often treated like medieval messengers blamed for delivering bad news.
And yet, with the right systems in place, many crises become not only more manageable, but predictable and preventable. These systems include:
- crisis management and crisis communication audits
- ethical corporate governance and organizational culture
- emergency operating structures and decision-making protocols
- company-wide crisis communication policies
- reputation monitoring and risk analysis systems
Crucially, proactive reputation building and crisis prevention cost a fraction of what organizations end up spending once the damage is done.
Sources
CIRANO – Corporate Reputation: Is Your Most Strategic Asset at Risk? (2012)
Reuters (2016)
Volkswagen Annual Report (2017)