The New Principle Of Crisis Management: CEO Must Apologize For The First Time.

Not all companies have similar crises, but there are unified principles and methods to deal with them.

First of all, companies should respond within hours rather than days.

The company's response includes the publication of carefully considered apology through various media and some remedial measures to avoid recurrence.

The 3 types of crisis are: not all crises are the same. It is essential to adopt a customized response to different crises.

Walton, Professor of operations and information management at Maris Schweitzer School of business, divided the crisis into 3 categories: customer service, competitiveness errors and irrelevant errors in core competitiveness.

The third kind of crisis mainly refers to Martha Stuart's stock trading scandals.

Although Stewart was eventually sentenced to prison, the incident did not cause her core competence to be affected.

Among them, DELL's inability to fulfill orders for some laptop computers and apple iPhone are all customer service problems.

In response to such crises, the purpose of response is to keep customers from disheartened by the company.

"When Apple unveils the veil of the next new product, they don't like customers to feel like they are being gullible," says Shi Wei.

"Apple doesn't want to wait until they launch new products, and customers will wait and see."

The problem of JetBlue's failure to send customers to their destinations and the problem of MATTEL's manufacturing in China were "mistakes in competitiveness".

The problems encountered by both companies should be prevented ahead of schedule.

In the case of MATTEL, "the most basic consideration for parents when preparing toys for children is safety."

Lisa Bolton, a professor of marketing at Walton business school, said MATTEL safety requires that the company respond to the needs of customers.

In fact, in the statement made by the house Appropriation Committee, the financial affairs department and the government Subcommittee, MATTEL CEO E.

"Like most of you, I am also a parent."

He said, "I am also deeply concerned about the safety of children.

And, like you, recent events have made me very uncomfortable and disappointed.

The problem of lead coating on our products has avoided our entire system and destroyed our standards.

We failed our suppliers, which led us to disappoint everyone.

On behalf of Mattel Inc and nearly 30 thousand employees, I sincerely express our apologies.

We will do everything we can to prevent such incidents from happening again. "

In order to pfer relevant information to customers, MATTEL uses web media, company websites and videos.

More importantly, MATTEL responded quickly.

Orim Jerry Wind, a professor of marketing at Walton business school, said that in all these steps, speed may be the most important factor.

The existence of the Internet brings complete pparency. You have nowhere to hide.

Anything can be spread to the world in an instant.

Management must respond quickly and effectively.

Ron Culp, general manager of public relations triumphant company, agrees.

He said that in the traditional news cycle, the deadline of the daily news determines how the company manages crisis communication, but this situation is no longer there.

In the past, companies would have at least one day to respond to crises, but now the blogs and Internet news are spreading much faster than traditional media, thus greatly reducing the company's response time.

"A few years ago, if I received a phone call at 10 a.m., I knew that I could at least give an answer until 5 p.m. (for questioning)," Culp said.

"But now, I have to respond at 10:05 a.m."

Culp also pointed out that companies must express their apologies through various media.

For example, traditional information channels are increasingly getting news clues from blogs or online journals.

Because blog can directly contact customers, companies in crisis can use this method to convey information more effectively.

"The best way is to publish the response on the company's website and allow bloggers to reprint it," says Mr.

"Traditional media will follow closely."

In view of the new social forces, he suggested that the company continually monitor all news sources, especially blogs, which is where potential problems may surface. Companies must take the Internet as a starting point.

Thomas Donaldson, a professor of law and business ethics at Walton business school, suggests that in order to be alert enough for the right and wrong in the never-ending network, the company must set up a team to specialize in crisis communication as the sole responsibility of the group.

The panel can quickly customize the company's response according to the circumstances and avoid the influence of bureaucracy.

When facing a crisis, the CEO of a company can not ask the company lawyer to provide advice, because that will reduce the speed of the whole communication process.

The company must accept criticism, clear all problems and move on.

That means that lawyers can be involved in the company, but even if the company responds to liability problems, they should say "no" to them.

Finally, companies, especially multinationals, need to consider how to spread information to all parts of the world.

For example, in addition to having to consider carefully how to write safety information, MATTEL must take into account the attitude of American citizens to Chinese workers who take away jobs from the US manufacturing industry. Donaldson said: "MATTEL must make people believe that the company will purchase globally and ensure its safety.

The problem is that many people don't want to believe this. "

The key to any restoration of the reputation is that the apology must be credible.

Lisa Bolton, a professor of marketing at Walton business school, believes that there are 3 key factors to ensure that an apology is effective: the chief executive must publish the information, the problem solution must be worked out, and some compensation measures must be provided.

"The initial response is the most important."

"The basic advice is to admit mistakes and try not to show too much self-protection and shirk responsibility," she said.

Face the problem directly, admit and quell the problem, and consider making money compensation.

At the same time, customize your response according to the degree of error. "

If apology is not sincere enough and there is no solution, the apology will not be effective.

"People must believe that an apology is trustworthy."

Bolton also agrees with the degree of credibility and worth of love, but she also points out that compensation measures may be the most important.

"You must consider both monetary compensation and emotional response."

She explained, "why is Apple's apology effective?

One of the most important reasons is that Jobs provided $100 worth of credit.

Jobs's apology and Apple's voucher were good at "making sure that the company really cares about them."

However, Wendy believes that the compensation measures proposed by Jobs should still be better.

"Apple provides us $100 credit card for future purchases.

This figure is quite arbitrary.

These are your best customers.

They spent the whole night buying iPhone, and what you gave them was just the 1/2 that the new customers got.

Why not 200 dollars?

Why not 250 dollars to show that Apple really cherishes these pioneers?

Imagine how much money the company would get if Apple offered the customers a discount of 250 dollars.

The company must take these crises as a way to win customers, Wendall added.

He mentioned that if DELL's shipment was delayed, the company should provide temporary replacement desktop or laptop computers.

"Most companies do not really realize the amazing value of customers.

They only focus on these events and feel alarmed.

They missed the new opportunities. "

The success of rebuilding the reputation of a company depends on the image of the company when the crisis happens.

"The starting point is very important."

Donaldson said, "as the old saying goes, the establishment of reputation takes years, and destruction is only a matter of a night."

If you have a good reputation, you will be identified without fault before the facts are proved.

If a company has a bad reputation, it will be wrongly identified before it is proved.

Donaldson cited Warren Buffett's Berkshire Hathaway company as an example of the fact that no fault was identified before the fact was proved.

In 2005, Morris Greenberg, the CEO of AIG, was forced to resign because of suspicious pactions.

General Re, a subsidiary insurance company of Berkshire Hathaway, is also involved.

Although Buffett is not directly involved, he may also suffer from his reputation.

"When General Re was hit, Berkshire Hathaway's reputation was very important.

Because of Buffett's reason, the media were ungrateful to Berkshire Hathaway before the facts were proved.

Thomas Dunfee, a professor of law and business ethics at Walton business school, said, in other words, "accumulating a great deal of credibility" is very beneficial to the company.

Deng Fei studied corporate social responsibility (CSR) and whether CSR had an impact on business performance.

"There are differences in whether companies should invest in charities and participate in philanthropy," said Deng Fei.

"My view is that if a company makes a mistake, it can be used to enhance social credit."

The problem is that it is difficult to quantify what social behavior can provide the greatest protection.

"The general view is that CSR behavior can prevent (a possible future crisis) to a certain extent, but no experimental data have been set up at present."

He added that most companies would provide funds to local communities, but it was not clear whether that would help to deal with crises.

Other behaviors, such as donations to the arts, may have less or no effect on crisis management.

Bolton Bolton believes that a major part of reputation management is foresee problems and prevent them from developing into lingering problems.

For example, Disney announced in September 10th that they would separately test whether the paint of their characteristic toys, such as the Mickey Mouse Figurine, was leaded.

"Disney experimentation is hoping to take measures before the MATTEL problem happens."

Bolton said, "that is how to get a good reputation in advance. This test will help.

If problems are identified in the future, at least customers will know that Disney has taken a positive attitude.

It is much better to prevent events and build a good reputation than to make up for it later. "