Successful companies handle a crisis by planning before it hits: they anticipate worst-case scenarios, build a crisis team with a media-trained spokesperson, know which stakeholders to tell first, keep holding statements ready and review the response afterward. Johnson & Johnson’s swift, transparent Tylenol response in 1982 remains the textbook example.
Handling Crises 危機 (“Kiki”)
危機 (“Kiki”) is the Japanese word for crisis. It is composed of two characters: (危) means “dangerous” and (機) means “opportunity.” Combined, a crisis is both an opportunity and a threat. No matter your company’s age, size, or legacy, it is vulnerable to a crisis. Recently, some of the world’s most prominent brands have come under fire from the media. Like when Uber lost 200,000 customers after the hashtag #DeleteUber trended when they operated during the Trump strike. Or when United Airlines lost $800 million in value in a matter of hours. A 2021 PwC study showed that 35% of respondents had a crisis plan in place when the COVID-19 pandemic hit, and only 20% felt the pandemic positively impacted their organizations. Seeing the consequences Uber and United Airlines faced, companies must have a crisis management strategy.
Why do real estate companies need a crisis plan?
The pandemic brought unprecedented challenges to businesses, not just the real estate market. Statistics showed that nearly 100,000 businesses closed shop permanently. That forced many companies to reevaluate their crisis management strategies. Many developers experienced stoppages and delays in their real estate projects, requiring companies to think outside the box to create safe and smart solutions. Many companies tend to be reactive instead of proactive regarding crisis management, but lacking a crisis strategy may lead to the following issues: ● No designated spokesperson to coordinate communications can lead to a communications breakdown. ● A lack of clear messaging to stakeholders to address the situation can make them confused, scared, and angry, which is bad for business. ● Outsiders looking in will place your company on the list of companies facing a PR disaster in that year. ● Solving the crisis will take far longer, so you may hit some snags. ● If you do not take control of the situation, the company will face negative financial ramifications.
What are real examples of crisis management?
1. Cracker Barrel
In 2017, Bradley Reid posted on the restaurant’s corporate page, asking why they fired his wife, Nanette, after she had worked at the restaurant for 11 years. Soon enough, the hashtag #JusticeforBradsWife began trending online. Shortly afterward, someone started an online petition at Change.org, seeking answers. 17,000 people signed it. The response the restaurant gave to the crisis was silence. They ignored the hashtags, petitions, and firestorm surrounding the situation. Cracker Barrel came through the crisis without so much as a tumble in its net worth. The key takeaway from this is that sometimes silence works best. It is a risky choice, but like Cracker Barrel, it may turn out well. A new video trends every other day, and people are quick to forget and move on. This strategy may just work out if keyboard warriors find something else to focus on.
2. Johnson & Johnson
In 1982, Johnson & Johnson faced a crisis where 7 people in Chicago died after ingesting over-the-counter Tylenol capsules laced with cyanide. To date, the incident remains unsolved. How the company handled the crisis is a textbook example of crisis management today. Following the deaths, Johnson & Johnson immediately responded by stopping advertising for all its products. The company then sent out 450,000 messages to healthcare facilities and stakeholders, informing them of the crisis. Johnson & Johnson also sent out safety warnings to consumers. Evidence later showed that the substance was accidentally introduced through store shelves and that it was not the company’s fault. However, the company still took full responsibility. This incident led to the company eventually manufacturing tamper-proof packaging. Experts roundly regard the response as one of the best in the history of crisis management. The media praised how J&J handled the situation and how it also helped Tylenol recover as a brand. The key takeaway is that integrity and transparency go a long way toward building consumer and public trust again.
How do you create a crisis management plan?
Having looked at how some companies managed their crises using essential principles, below are a few steps to create a successful crisis management plan.
1. Anticipate Crises
Instead of waiting to scramble a team and a plan together after a crisis, plan ahead for the worst-case scenarios. During brainstorming sessions with the team you put together, quickly determine which situations are preventable. You can include variables in the plan that allow tweaking in response to a real crisis.
2. Who should be on a crisis team?
By default, the crisis team should include the management team, the CEO, and the PR manager. If possible, have web and social media managers on the team. Social media managers are on the frontline and can detect the public’s consensus and mood. They can also gather insight from online mentions, hashtags, or posts that the company can use to steer the crisis on the right track. Next, you want to put the right spokesperson in place—one who is comfortable in front of cameras and people. If possible, the spokesperson you select should have some media training.
3. Know Your Stakeholders
The internal and external stakeholders are the first people you should communicate with. Develop communication channels that will resonate with stakeholders individually.
4. What is a holding statement?
With the proactive planning in place, you should already have pre-planned holding statements ready to release inside the company’s online newsroom. The main aim of a holding statement is not to plead for forgiveness or grovel; the idea is to acknowledge the situation and provide contact information that the public can use.
5. Post-Crisis Review
As insignificant as it may seem, this is a step that major companies focus on that helps evaluate and update the crisis management process. Develop, assess, and discuss strategies to update potential scenarios that may happen. This is a crucial process as you now have data and facts regarding how the company reacted to the crisis, the public’s response, and stakeholders’ reaction to the situation. You can use the information to ensure the company creates an even better crisis response.
In Conclusion
Any company can implement the same strategies big companies use for their crisis management. Combine the swift and transparent response that Johnson & Johnson used with the crisis plan outlined above, to ensure your company stays ahead in any crisis it may face. I personally look forward to times of crises, it dramatically improves my returns and allows me an opportunity to test myself against unknowns. The most important thing that crises bring to the forefront are my inherent weaknesses in my structures, it allows me an opportunity to prune dead wood and recharacterize / recast the future. Look to crises as an opportunity, not a threat.
Frequently asked questions
What does the Japanese word for crisis mean?
The Japanese word for crisis is 危機, or “kiki.” It combines two characters: 危, meaning “dangerous,” and 機, meaning “opportunity.” Put together, a crisis is both a threat and an opportunity. A company that plans ahead can limit the danger and use the moment to find and fix weaknesses in how it operates.
Why is the Tylenol case a model of crisis management?
In 1982, seven people in Chicago died after taking Tylenol capsules laced with cyanide. Johnson & Johnson stopped advertising all its products, sent 450,000 messages to healthcare facilities and stakeholders, and warned consumers. It took full responsibility even though it was not at fault, then introduced tamper-proof packaging. That integrity and transparency rebuilt public trust in the brand.
Is staying silent ever the right response to a crisis?
Sometimes. When #JusticeforBradsWife trended in 2017 and 17,000 people signed a petition, Cracker Barrel said nothing, and its net worth did not tumble. Silence is a risky choice, but a new controversy trends almost every day and people move on quickly. It works only if the public’s attention shifts elsewhere.
Why should a company review a crisis after it ends?
A post-crisis review gives you real data on how the company reacted, how the public responded and how stakeholders took the situation. Use it to update your likely scenarios and strategies so the next response is better. Major companies treat this step as part of the crisis process, not an afterthought.
