The New Rules For Crisis Management
Many stakeholder groups now control their own media and sources of information, and they are increasingly setting the agenda for how companies resolve crises.
In executive development, it’s called “the newspaper test.” In a simulated interview or press conference, managers must respond to a crisis scenario; through this exercise, they learn to show compassion and keep their facts straight while maintaining their composure under pressure. That’s fine so far as it goes, but in today’s world, the traditional news media do not always control how crises unfold. Now, executives are facing stakeholder communities that control their own sources of information and their own media and have their own ideas about how companies should resolve crises. These stakeholder groups wield considerable power to influence other stakeholders, organizations, and the public, and executives who ignore them do so at their own peril. On more than one occasion in the past decade, entire divisions of multinational companies were sold off to competitors after stakeholders criticized those businesses through their proprietary media.1 Thus, companies need to know how stakeholders gained this power, how they use it, and what to do about them.
A Growing Trend
Christian conservatives in the United States were one of the first groups to fully grasp the power of controlling their own media. Back in the 1960s and 1970s, they used direct mail to fund their movement and promoted it with their own radio and TV stations.2 By the 1990s, activists as different as France’s extreme right National Front party3 and Greenpeace realized that if they could start their own print, video, online, and/or radio networks, it not only would help them to build a larger audience for their messages, it would also eventually force the traditional news media, businesses, and policymakers to take them more seriously. Their timing was good; stakeholder media were soon filling a hole where the traditional media used to be. In the United States and United Kingdom alone, about 30% of working journalists have been downsized since 2000, and the traditional media that have managed to survive are now providing less-credible information to a declining audience.4
1. See M.L. Hunter, M. Le Menestrel, and H.-C. De Bettignies, “Beyond Control: Crisis Strategies and Stakeholder Media in the Danone Boycott of 2001,”Corporate Reputation Review 11, no. 4 (2008): 335-350; and M.L. Hunter, L.N. Van Wassenhove, and M. Besiou, “Lawnsite.com vs. DuPont (A, B, C),” INSEAD Case no. 06/2014-6071 (Fontainbleu, France: INSEAD, 2015).
2. The classic study of this movement and its media is S. Diamond, “Roads to Dominion: Right-Wing Movements and Political Power in the United States” (New York: Guilford Press, 1995). Diamond’s interest in Christian Right media extended to their printed handouts and other low-tech formats, as she documented in S. Diamond, “Facing the Wrath: Confronting the Right in Dangerous Times” (Monroe, Maine: Common Courage Press, 1996). Stakeholders do not need the production values of CNN to make impactful media.
3. M.L. Hunter, “Beat the Press: How the Extreme Right Runs Rings Around the Media,” Columbia Journalism Review (March-April 1997): 14.
4. Pew Research Center for the People & the Press, “Further Decline in Credibility Ratings For Most News Organizations,” 2012, www.people-press.org.
5. See M. Besiou, M.L. Hunter, and L.N. Van Wassenhove, “A Web of Watchdogs: Stakeholder Media Networks and Agenda-Setting in Response to Corporate Initiatives,” Journal of Business Ethics 118, no. 4 (December 2013): 709-729.
6. See M.L. Hunter, L.N. Van Wassenhove, M. Besiou, and M. van Halderen, “The Agenda-Setting Power of Stakeholder Media,” California Management Review 56, no. 1 (fall 2013): 24-49.
7. See M.L. Hunter and D.A. Soberman, “‘The Equalizer’: Measuring and Explaining the Impact of Online Communities on Consumer Markets,” Corporate Reputation Review 13, no. 4 (winter 2010): 225-247.
8. This quote, and most others related to the Imprelis case, was contained in a member post on the LawnSite.com forum. We downloaded every LawnSite.com thread in which Imprelis was mentioned from 2010 through 2013 and catalogued posts in chronological order under each thread heading. The thread headings fill eight pages of an index created by searching the forum for the term “Imprelis.” Some of the threads are short and narrow, with only a few posters and a few hundred views. But some are gigantic, like “Imprelis Discussion — it’s [sic] damage, DuPont’s Claim Process, Lawsuits filed, Experience,” which had attracted 1,013 posts and more than 230,000 views as of July 29, 2015. See M.L. Hunter, L.N. Van Wassenhove, and M. Besiou, “Lawnsite.com vs. DuPont (A, B, C).”
10. J. Robbins, “New Herbicide Suspected in Tree Deaths,” New York Times, July 14, 2011, p. 1+.
11. Hunter, Van Wassenhove, and Besiou, “Lawnsite.com vs. DuPont (A, B, C).”
13. This Danone story is told in detail in Hunter, Le Menestrel, and De Bettignies, “Beyond Control.”
16. See the case of BP plc, which is described in detail in Hunter, Van Wassenhove, Besiou, and van Halderen, “The Agenda-Setting Power of Stakeholder Media.”
17. See, for example, M. Geyelin, “Benlate Case Won By Parents of Child With Birth Defect,” Wall Street Journal, June 10, 1996; see also “DuPont Halts Sale of Benlate Fungicide,” Los Angeles Times, April 20, 2001.
18. Hunter, Van Wassenhove, and Besiou, “Lawnsite.com vs. DuPont (A, B, C).”
20. Their conclusions were based on a study of several internal crises within organizations. We draw similar conclusions from crises in which organizations battle both internal and external stakeholders. See W.A. Kahn, M.A. Barton, and S. Fellows, “Organizational Crises and the Disturbance of Relational Systems,” Academy of Management Review 38, no. 3 (July 2013): 377-396.
21. Hunter, Van Wassenhove, and Besiou, “Lawnsite.com vs. DuPont (A, B, C).”
22. See, for example, the key EPA documents linked at “Stop Sale, Use or Removal Order and Case Letters: E.I. du Pont de Nemours and Company Imprelis Order,” January 27, 2016, www.epa.gov.
23. The story is told in detail in Y.M. Antorini, A.M. Muñiz Jr., and T. Askildsen, “Collaborating With Customer Communities: Lessons From the LEGO Group,” MIT Sloan Management Review 53, no. 3 (spring 2012): 73-79.
24. E. von Hippel’s work on how customers and their communities contribute to innovation, from the 1980s through the present day, offers deep insight into these processes. For a very brief introduction to his work, see E. von Hippel and M.E. Mangelsdorf, “The User Innovation Revolution,” September 21, 2011, https://sloanreview.mit.edu.
Nik Zafri Abdul Majid