Without question, 2016 was a year full of memorable — or, infamous depending on your point of view — crises. For many of the companies and their leaders who found themselves under the uncomfortable glare of the klieg lights — the well- known names now include Chipotle, VW (a carryover from 2015), Theranos, Wells Fargo, and Mylan — the consequences of lost billions of dollars in market capitalization and heightened customer anger were harsh.
The Mylan saga is illustrative of how the fragile trust that consumer-facing companies have with their customers must be continually nurtured and supported, lest it shatter with devastating results. To compound Mylan’s challenge, its EpiPen literally makes the difference between life and death for millions of Americans, children included.
This article is featured in
O’Dwyer’s Jan. ’17 PR Buyer’s Guide & Crisis Communications Magazine
From the outset, the plot of this crisis could easily have been drawn from any of a hundred TV shows or B-grade cable movies, with the apparently greedy pharmaceutical company putting profits over patients. And the facts didn’t help, given that the company had increased the price for a two-pack of EpiPens to $600 by 2016 from $100 in 2009. Add a confusing — and some would say evasive — narrative offered by company CEO Heather Bresch during Congressional testimony along with the disclosure of her multimillion dollar compensation package and the company’s reputation — and stock price — went into a nosedive.
In its “Top Ten Business Stories of 2016,” USA Today logged Mylan at a tie for Number Four, noting: “By year’s end, Mylan had introduced a generic version of the medication for $300 per two-pack. All of these events drew fire from a Senate committee report in December that warned ‘staggering’ increases in the cost of some prescription drugs threaten the health of patients and ‘the economic stability of American households.’”
For Mylan and Bresch, their future will surely continue to include ongoing litigation on multiple fronts, regulatory investigations, the wrath of investors, and a role as the face of soaring pharmaceutical costs.
Still, there are lessons that every company and communicator can draw from this crisis:
Understand all of a company’s stakeholders and map them to potential levels of exposure and public anger. To put it bluntly, different stakeholders react differently depending on the facts of each crisis. For example, J.P. Morgan’s 2012 London Whale incident, for which it was eventually fined $920 million, was certainly not a positive for the bank — but it never rose to the long-term, reputation-harming results that Wells Fargo’s customer account crisis has. Why? Because the media, politicians, and prosecutors are, almost always, more attentive to those cases where individual investors, patients, and consumers are harmed.
Explore the widest possible range of scenarios during the crisis planning process, being sure to include those eventualities where, while it may not be likely to occur, the impact of such an occurrence would be an existential threat to the organization. While no company likes to think the worst will happen, those who have dedicated resources ahead of time to this imperative are unquestionably better positioned in the event there is a need to act.
To be comprehensive, look at the crisis planning process in two equally important parts. First, put in place a clear architecture for the crisis team, identify its internal and external membership, their roles, their back-ups, along with the requisite contact information for all key stakeholders. Also, include a tool that enables the organization to measure the potential impact of the crisis, understanding that as more information becomes available the severity could escalate or de-escalate. In parallel, provide detailed and customized information for each of the scenarios that are developed, including: key messages (drawn from the company’s existing information, which is why assembling this information now is so important), rank-order of the stakeholders who care most about that specific risk, and expected questions and answers from the media, investors, employees, etc.
Have a clear narrative, and stick to it. Mylan, for example, got stuck trying to explain the extraordinarily complex health care reimbursement system in a sound bite, when all people wanted to hear at that point was that the EpiPen would cost less. Messaging is difficult, takes time, and always has to be accurate and consistent.
Drive strong and lasting relationships with supportive third parties. Today, it’s fair to say there are more cynics and critics than ever before. Empowered by social media, those voices can be amplified many-fold and multiply with geometric intensity. To overcome this challenge with superior reputational firepower, there is an opportunity to build a strong, diverse base of supporters.
To generate the most effective results from this approach, it is important to:
Be relevant. Each third party should have credibility in the company’s primary area of operations (it’s nice to have a former Secretary of State on the Board, but it really helps if he or she has a background that is relevant to the company’s underlying business).
Don’t hide the ball. Overshare information about the company whenever possible (and obviously protect intellectual property) to demonstrate transparency.
Take the feedback. If third parties are reluctant to be supportive, find out why and improve accordingly.
Actively monitor social media. In consumer-facing crises, this is usually the medium that aggrieved individuals turn to first. The undisciplined nature of social media is often frightening for many companies, especially those accustomed to more top-down communications. Nonetheless, organizations that have an existing presence on social media are ahead of the game. Understand that this two-way channel allows for a dialogue (not a monologue) and presents organizations with a direct means of communications outside of the media filter.
From data breaches to product recalls to all manner of health-related issues, consumer-facing companies face a unique set of challenges in crisis communications. Recently, General Michael Hayden (former head of the CIA and NSA) related what he sees as an inflection point in corporate crisis preparation and cyber security, noting that more and more of the companies he interacts with no longer view such efforts as time-consuming expenses, but rather as smart and prudent investments.
Michael W. Robinson is Chairman & CEO of The Montgomery Strategies Group.
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