Thursday, September 30, 2010

HP names another outsider as CEO

Shares of PC-maker Hewlett-Packard fell sharply Thursday after it named as its new CEO Leo Apotheker, the former head of business software maker SAP. HP shares fell $1.46, or 3.5 per cent, to $40.61 in after hours trading. Hewlett-Packard has named Leo Apotheker, shown in January as CEO of German software company SAP, as its new head. Apotheker will succeed Mark Hurd, who left the company on Aug. 6 after an investigation found he falsified expense reports related to a former HP contractor who accused him of sexual harassment.

The company probe concluded that HP's sexual harassment policy was not violated, but that its standards of business conduct were. Hurd received a severance payment worth $12.2 million US. The news of Apotheker's appointment came as something of a surprise. HP was expected to go with an insider for the new CEO after the last two CEOs — Hurd and his predecessor, Carly Fiorina, both outsiders when they were hired — clashed with the board and were forced out.

Read more: http://www.cbc.ca/money/story/2010/09/30/hp-new-ceo.html#ixzz113XaG100

American Wealth Distribution

Monday, September 27, 2010


"The Great Income Shift"

In case you need a reminder of how the distribution of income has changed in recent decades:



Enough Is Enough on Tax Cuts for Wealthy, by Chuck Marr, CBPP: In yesterday’s New York Times, Richard Thaler ... neatly refuted the arguments for borrowing tens of billions of dollars each year to keep President Bush’s tax cuts flowing to the most affluent 2 percent of people in the country. He then posed a central question: “whether we want a society in which the rich take an ever-increasing share of the pie, or prefer to return to conditions that allow all classes to anticipate an increasing standard of living.”

As I’ve noted before, over the last three decades a stunning shift in income has taken place in this country, from the middle class to those few at the very top of the income scale. Back in 1979, the middle 20 percent of Americans had more than twice as large a share of the nation’s total after-tax income as the top 1 percent. But by 2007, the top 1 percent’s slice of the economic pie had more than doubled and in fact exceeded the middle class’s slice, which had shrunk.

This great income shift means the average middle-income American family had about $9,000 less after-tax income in 2007, and an average household in the top 1 percent had $741,000 more, than they would have had if the 1979 income distribution had remained. Here’s how this looks in graph and table form:








































Fully two-thirds of the income gains in the last economic expansion (2001-2007) flowed to just the top 1 percent. This is not a healthy sign for a society. As Professor Thaler urges, we need to decide whether we want to promote still-greater inequality (by extending the high-income tax cuts) or lean against this trend. Each year the average millionaire gets about $125,000 from the Bush tax cuts, according to the Urban-Brookings Tax Policy Center. Now seems to be a good time to say enough is enough.

Let me ask again: Is it possible for an outcome to be equitable when, as in recent decades, nearly all of the gains from growth accrue to one class?



If you want to know why people are so angry, you're looking at a big part of the reason.

Wednesday, September 29, 2010

Price fixing in the Cargo industry

Northwest Airlines agrees to pay $38m price-fixing fine.Northwest merged with rival Delta in 2008 Northwest Airlines is to plead guilty and pay a $38m (£24m) fine for its role in fixing air-cargo prices, the US Department of Justice has said.The department said as part of a plea deal Northwest would co-operate with an ongoing anti-trust investigation.

Northwest Airlines Cargo, which is no longer operating, conspired to fix air-cargo rates from July 2004 to February 2006, the department added. Northwest was taken over by Delta Air Lines in a £1.7bn deal in October 2008. Northwest has agreed to plead guilty to a single offence, said the DoJ.

So far a total of 16 airlines have pleaded guilty or agreed to do so in an ongoing investigation into price-fixing in air cargo, it added.More than $1.6bn in criminal fines has been paid by airlines, and four executives have received prison sentences.

Saturday, September 25, 2010

Levi Strauss and Co. is trying on brand collaborations to grow its business.

The San Francisco jeans maker put together a new collaborations team about a year ago, mixing company veterans on the creative side with new merchandising and marketing hires. The result is a spate of partnerships with other iconic brands like Filson and more edgy designers like Opening Ceremony and Billy Reid. Several others will be announced before the end of the year, including one with Stussy. Still more partnerships will come in 2011 and 2012.
Levi has long done limited partnerships, but never this many all at once or with the bottom line goal of growing the business.“Over the last couple of years we have gotten more strategic about how we partner with brands, individuals and institutions, and integrated it more into our core business,” said Joshua Katz, the senior brand manager who heads Levi’s collaborations. “The value of these projects comes in connecting to a certain community, being able to tell a new and fresh story, and also how these collaborations allow us to create better product and better communicate the brand.”

That reflects a big-picture shift in the company as it fights to regain primacy in the denim world.
“If you are Levi, you are sitting there looking at your situation, and what you are looking at is a loss of market share. … They did $7.1 billion in sales and now they do $3.8 billion,” said Howard Davidowitz, chairman of Davidowitz & Associates, a retail consulting and investment banking firm. “The people they are losing to are people doing private label and developing their own products. Walk through a mall, and who’s got Levi? Nobody.”

Levi once sold to specialty retailers like Gap, which now makes its own jeans. Some key wholesale accounts like Mervyns have gone the way of the dodo, and Levi more or less missed the explosion of premium denim in the first decade of this century during which Seven for All Mankind and its ilk dominated the denim fashion world.

While the business is more efficient than it has been for years, Levi must rebuild its consumer base and sales, Davidowitz said. In that light, these collaborations are smart. Levi has been missing on the merchandise and on the pizzazz side, he said, and these could bring back some of those.

Early signs are that it’s working.

The Levi trucker jacket in Filson’s oil tin cloth sold out in days and had to be re-ordered. They were available only in Filson and Levi stores and at Levi.com, so the partnership gave existing and new customers a reason to go into a Levi’s store. These collaborations may be some customers’ only entry point to the Levi brand. The Filson, Opening Ceremony and Billy Reid collections are all made entirely in the United States and are jointly designed. They retail for more than a traditional pair of red tab Levi’s, but below Levi’s XX premium lines. Katz said these collaborations are profitable while feeding a broader commercial strategy.

“Our objective is to create new and compelling products that certainly push the envelope of what Levi does, but also something that existing customers can use and get them excited about the brand,” Katz said. “That leads to commercial success for us.”

Friday, September 24, 2010

China vs Japan - A war only in commerce

I have been following the issues between Japan and China and I have found the Chinese approach to be very interesting. China wanted its fishing boat captain back from an incident in disputed waters. They did not threaten war. They stated their position. When Japan did not yeild the captain from the incident in the disputed waters, China thought through their position and decided to prohibit the exportation of crucial minerals to Japan for key industries. When there was still no response, China arrested 4 Japanese citizens for spying on their military facilities (when the Japanese claim they were legally there to work on the disposal of WW2 weapons). Japan has now released the Chinese captain.

I am obviously not privy to anything but news accounts of the goings on from half a world away and yet I am kind of thrilled at what I did not hear. There was no posturing about war. There was no world wide disruption. There was only a series of chess moves designed to accomplish and end goal. The only country that I am more proud of is my own for its stance of surrendering the Arctic territorial dispute with Russia to the UN to adjudicate.

China is certainly a country to watch. Where American businesses have always gone abroad and established businesses where they paid workers far less than the American workers were paid, China goes abroad and pays the workers in foreign countries what they would pay at home. In Africa where they have been very successful in moving in when the Americans fled, they come in, get the mines and industries moving without dictating anything about governmental forms and they pay the local workers what they pay at home. In addition, they train the locals and leave them in charge taking their workers back home.

I would never wish to be an advocate for a country when I have so little access to first hand information but I have to say that China's approach to many things in their economic climb is impressive and often balanced. If I have this impression from this side of the world when I probably have to wade through progaganda against China, I am hopeful that China may be a country that will lead the world well in the coming era.

Wednesday, September 22, 2010

How far can one pig stretch?

What happens to a pig?



This TED talk was not really well presented but I am posting it here to demonstrate just how many products can come from one source. It is really surprising and it should spur us to think about what else we can do with our resources.

Sunday, September 19, 2010

Why some economists see a looming US-China trade war

By Peter Ford – Fri Sep 17, 9:11 am ET

Beijing – The storm clouds gathering over America’s trade relations with China darkened this week, prompting some observers to warn of a coming trade war between the world’s two largest economic powers.

As Treasury Secretary Timothy Geithner openly criticized China for keeping its currency undervalued, angry congressmen urged legislation that would punish China for artificially boosting its exports. Adding to the threatening drumbeat, Washington lodged two new complaints against China at the World Trade Organization (WTO), charging that “China is breaking its trade commitments to the United States and other WTO partners,” according to a statement by US Trade Representative Ron Kirk. These are all signs that major imbalances in world trade – where the US has the biggest deficits and China has the biggest surpluses – “make it inevitable we are going to end up in a messy situation,” says Michael Pettis, a professor of economics and finance at Tsinghua University in Beijing. Mr. Geithner spoke more clearly than ever before about US frustrations with the snail-like pace of Beijing’s moves to strengthen the value of its renminbi (RMB) currency.

“We are concerned, as are many of China’s trading partners, that the pace of appreciation has been too slow and the extent of appreciation too limited” he said. “We would have to see a very substantial change over time for that judgment to change.” Since Beijing stopped tying the RMB to the US dollar last July, the Chinese currency has increased in value by about 1.5 percent. Some congressional critics of Beijing have claimed that the currency is overvalued by as much as 40 percent. Geithner cautioned, however, against taking any steps that could spark retaliation from one of America’s most important trading partners.

Some American economists say that boosting the value of the RMB, which would make Chinese exports more expensive abroad and US imports cheaper here, would help shrink the US trade deficit with China.

But the Chinese government warned against outside efforts to accomplish that. Foreign Ministry spokeswoman Jiang Yu said Thursday that “pressure cannot solve the issue. Rather, it may lead to the contrary.” Leading Chinese economists have also cast doubt on US critics’ reasoning. At a conference Tuesday, Ding Yifan – an economist with a think tank that advises the Chinese government – warned that Washington would be unwise to touch off a trade war with its fastest-growing export market. Nor is it clear that even a large appreciation in the value of the RMB would reduce the US trade deficit with China, argues Xiang Songzuo, deputy head of the International Monetary Institute at Beijing’s Renmin University. In the three years before Beijing pegged its currency to the US dollar in July 2008, the RMB gained more than 20 percent against the dollar, he points out, “but the US trade deficit with China did not decrease. It increased. “A policy of currency appreciation will not be of significant value to the US,” he insists.

Still, China is 'reluctant' to enter a trade war.  Even so, Prof. Xiang says, “Chinese leaders would be very reluctant to enter a trade war” with the United States. “America would also lose from such a war, but China worries more”, he adds. That, he says, is because although Beijing is trying to derive more economic growth from domestic consumption, China’s economic performance is still heavily dependent on its export sector. “Export industries employ so many people, and a drop in exports would mean a rise in unemployment which could cause very serious social unrest,” Xiang argues. “Social stability is Chinese leaders’ top priority, and the way to achieve it is fast economic growth to keep people working.”

Monday, September 13, 2010

Thursday, September 9, 2010

WEF competitiveness survey

Davos in Switzerland is the home of the World Economic Forum's annual gathering The United States has been overtaken by Sweden and Singapore in the World Economic Forum's (WEF) competitiveness survey for 2010-11.The change meant that the US slipped two places to fourth in the WEF's latest ranking.

Switzerland, which overtook the US last year, remains the top ranked economy.Germany rose to fifth, and was the best placed eurozone country. The UK, after falling back in recent years, moved up one place to 12th position.The WEF says the rankings are calculated from both publicly available data and its survey, which questions more than 13,500 people in 139 countries.The WEF says the US has lost ground because of what it calls a weakening of its public and private institutions, as well as what it describes as "lingering concerns about the state of its financial markets".

Sweden's second place tops off a clutch of positive rankings for the Nordic countries, with Finland in seventh place, Denmark 10th and Norway 14th.The WEF report reflects the improving fortunes of the developing world, but shows it still has a long way to go before it matches the developed world for competitiveness. China moves up two places to 27th, while India (51), Brazil (58) and Russia (63) remain in the same places as last year.
Klaus Schwab, founder and executive chairman of the World Economic Forum, said: "Policy-makers are struggling with ways of managing the present economic challenges while preparing their economies to perform well in a future economic landscape characterized by uncertainty and shifting balances,"

Wednesday, September 8, 2010

Sunday, September 5, 2010

World population by latitude and longitude

China Is Winning The Economic War

From Forbes, Online magazine by Sy Harding

In recent years, a number of countries have surpassed the U.S. in specific areas, including consumer incomes, standard of living, and health care. The true economic powerhouse, however, has been China. Some of the statistics, and the speed with which they have changed, have been startling.


Over the last ten years China’s economy has surged past those of Canada, Spain, Brazil, Italy, France, and Germany, and is expected to pass Japan this year, to become the second largest economy in the world, behind the U.S. Whether it’s manufacturing efficiency, high-speed rail-line technology, nuclear power plant construction, clean air energy technology, education, China is making impressive global inroads, even in areas where the U.S. still has significant dominance. Much of it has to do with China’s massive population, about which the U.S. can do nothing.

For instance, while U.S. Internet companies dominate global headlines, China now has the world’s largest internet market as measured by the number of users. Yet internet use has only penetrated 22% of the population versus 75% in the U.S. Meanwhile, U.S. Internet giants like Google, Yahoo, eBay, Amazon, Facebook and Expedia are experiencing problems trying to transport their dominance into the Chinese market. Part of it is obstacles placed in their way by China’s government, in support of China’s state-controlled corporations. The result is Chinese internet companies like Tencent, and Baidu, cannot help but become world leaders.

Here’s a statistic of more importance. U.S. universities will graduate 150,000 engineering students this year, while Chinese universities will graduate more than 500,000. I’ve had people tell me that’s an unfair comparison since China’s population is larger by approximately the same ratio. But that’s not the issue. The issue is the degree to which China has moved higher education to the top of its priorities, and the fact that 500,000 new engineers a year will probably come up with more high-tech innovations than 150,000 can.

China’s great leap forward has been going through the same phases the early U.S. experienced as it worked toward becoming the world’s dominant economy.When we criticize China for the treatment of its underpaid and overworked labor force we sometimes forget that in the early years the U.S. also exploited its workers, even utilizing child labor in 14 hour days in garment, textile, and shoe factories, coal mines and crop fields, which gave the country its initial low-cost jump start economically.

It appears China is beginning to exit that phase and enter the next, of treating its workers better. In the past year Chinese workers have been allowed to form unions and strike for higher wages and shorter hours at various auto and electronics plants. The west would probably like to think that is due to the pressure put on China to improve human rights. However, China has never shown any inclination to bow to pressure in any area. The fact is that the next phase of China’s economic development must be, as it was in the U.S., to develop a strong domestic economy. To do so it needs to have a more prosperous population of consumers, rather than depending on low cost exports to other countries.

Meanwhile, it can be said that China is eating America’s lunch, never taking its eyes off the goal, while we squabble among ourselves, paying no attention.That’s unfortunate. As Sam Houston said in the U.S. Senate in 1850, “A nation divided against itself cannot stand.”

Yet, for the last 15 years the U.S. has divided itself in increasingly bitter time and energy-consuming political arguments: the morals of President Clinton, whether or not war should be waged to remove Saddam Hussein from power in Iraq, whether the country’s current problems are due to the depth of the economic hole dug during the last administration, or ineptness of the current administration in pulling the economy out of the hole.
Meanwhile, China has kept its eye on the goal. It not only is making great economic strides, but on the financial side has become the world’s largest creditor nation, even as the U.S. has become the world’s largest debtor nation, with China holding much of its debt.

The U.S. needs to interrupt its angry divisiveness and name-calling long enough to recognize the portent of what is going on. Unfortunately, in this particularly acrimonious mid-term election year, that is not going to happen.

Wednesday, September 1, 2010

Crisis Management

Crisis management probably cannot be distilled into a step by step recipe. Perhaps that is because the first ingredient may be rare. Winston Churchill said, "Courage is the first of human qualities because it is the quality that guarantees all others."

JettBlue's Neeleman exhibited courage and he demonstrated creative thinking during the Valentines Day Crisis aftermath. Every situation is unique. Take for example, the Tylenol crisis that Johnson and Johnson had to bear, the snow storm that plagued Jet Blue and the Taco Bell e-coli incident. The only thing these events appear to have in common are that they are crises. Even so, appropriate tactics must be developed based on certain core principles that underlie successful crisis management for an event that cannot be predicted. This preparation enables an organization’s leadership to remain focused and effective as crises unfold.

At the following web address I found a wonderful listing of the seven basic principles for effective crisis management: :http://www.bioe2e.org/slides/BioE2E_Aug_6_03_handout_seven-principles.pdf

They are listed below with my additional comments added.

Seven basic principles underlay an appropriate and effective response to a crisis. They include:

Understand media interest in your story The media are the prime driver of most crises.... They are very much accustomed to the crisis environment in a way that executives are not. In fact, many reporters delight in the crisis environment in a way that executives do not. It is important to understand the media, much the way you understand your customers and competitors. Never rely exclusively on the media to deliver your message. I would add that it is vital to understand that the media’s mandate and the mandate of those managing the crisis for the company are very different. As long as the crisis is ongoing the media has a story and a motivation to keep it going.

Define the real problem and determine your strategy accordingly An organization must first make certain that it is addressing the core problem and not a vexing but ultimately tangential side issue. Once management has defined the problem, they can best determine the goals of the crisis management process and the strategy to drive it. The chosen strategy must be flexible and tailored to the problem management is trying to solve rather than be an artificially imposed standard of ‘good’ or ‘bad’ crisis management. To this I would add that it takes clear vision and a collaborative outlook along with fresh perspectives to ensure that the problem has been fully defined and that the path underfoot is the right path leading to the right solution. Course correction might be necessary at any point.

Ensure legal/regulatory compliance The appropriate response to a crisis is likely driven by SEC rules and/or guidelines set by other regulatory bodies such as the FDA. Securing in-house or external expertise on legal/regulatory parameters is essential prior to a crisis response. Obviously, the opinion must be solicited and obtained very quickly. Do not waste time consulting anyone on whom you will not feel confident in casting the entire weight of the dilemma. They must be informed of all the facts and then trusted for a reliable response.

Manage the flow of information The media often spread misinformation, deliberately or not. Such misinformation can flow back unchecked to internal audiences and distort internal perceptions and proper corporate decision-making. Therefore, aggressively managing the full flow of information is critically important in a crisis situation. This is a vital point. If the inner workings of your team begin to doubt the message or operate from a different play book the damage to the message and to the outcome could be incalculable. Just as dangerous is information that leaks from the company team in unauthorized versions. Every team member must understand who will do the talking for the company and abide by that decision faithfully.

Assume the situation will escalate and get worse Start with the understanding that the situation is likely to get worse before it gets better. Be careful not to be overly optimistic or make categorical statements early on in a crisis. This is a marathon and not a sprint. Rotation and adequate rest cycles must be implemented and enforced. Tired minds make mistakes and delegation is essential.

Remember all your constituencies Employ the best technology you have at your disposal to communicate directly and effectively to all constituencies. Caught in the pressure of a real crisis, companies often overlook direct communications to affected constituencies, such as employees and advisory boards. This is a key area where advance preparation can help.

Remember those who are most deeply affected and deal with them with particular attentiveness. Also remember marginal groups and those who maybe tangentially affected.

Ensure results in real time: Crises evolve. It is imperative that you continually measure the effectiveness of your crisis management tactics to evaluate the overall impact of your crisis management strategy. For large companies, omnibus surveys, select polling and focus groups can quickly generate useful data regarding the public perception of the problem even within the first 48 hours. For smaller companies, a few quick check-in phone calls with key constituents can provide appropriate feedback.

From the information that I have gathered, one thing JetBlue lacked was a crisis Web site. Neeleman did however, enter the on line conversation with sincerity and humility. JetBlue leveraged new Web 2.0 tools like YouTube in a manner that was unprecedented. Neeleman turned the tide with this approach and started a dialogue rather than a lynching. It is wise for companies to create website to refer those affected by the situation to offline and have them ready to go in case a crisis occurs. An 800 number for customers to contact should be set up in advance and be ready to activate or publicize should the need arise. Ideally, the website would be updated every hour. At the following site I found the valuable information listed below:


Here are six steps you can take to prepare and implement your organization’s “Digital Crisis Management Strategy”—before bad news strikes:

1. Identify your digital crisis management team. Digital crisis management is going to require a team that has technical know-how and digital media savvy. You can rely on internal or external resources, but recognize that the team will need to be made up of writers, digital designers, web developers, audio and video producers, and people with expertise in PR, crisis management and online communications. You should form that team now; don’t wait for a crisis to occur.

2. Prepare crisis information websites around potential crisis topics. Imagine what could go wrong—and get ready. For example, a fast food company might create a website that anticipated a crisis related to a food-born illness, such as an E-coli outbreak. A consumer product company might anticipate that one of its products is recalled for safety reasons.

Such crisis sites should be designed to answer this question: “If a certain type of crisis occurs, what information could we provide right now about that type of crisis that will help to assure the public that we are responsible and conscientious corporate citizens, handling the crisis proactively, honestly and openly?”

hese websites should be designed as templates, leaving open the space that will be filled with information on the “who, what, where, when and why” of an actual crisis. They should contain background information on your company related to the type of crisis the site addresses. Beyond informing the public during a crisis, these websites will help define your company on your terms, so the crisis and the media (new and old) don’t become the only defining factors.



In addition to background information, the sites should include a media center where the press can obtain information related to the crisis. And it should encourage visitors to sign-up for email notifications, keeping people up-to-date on the crisis and allowing you to establish a one-to-one relationship with members of the public, something valuable during and after the crisis.



Until a crisis strikes, these sites will be inaccessible to the public, locked behind a password protected login, but hosted on production level web servers, ready to be opened to the public at a moment’s notice.



3. Perform keyword research. When a crisis strikes, a company’s ability to communicate directly with the consumer is critical. Keyword research with tools commonly used by pay-per-click and search engine marketers will provide you with insights into the language of the consumer as it relates to your industry, your company and your products and services, which may be different from your “corporate” language. You will use that research to populate the content of your crisis website, optimizing it for search engines. And when a crisis strikes, you will also leverage those keywords to get top visibility and traffic from pay-per-click ads and social media sites.

4. Identify your points of distribution. You will need to know in advance where you will be connecting with the consumer and media: Google, Yahoo, MSN (through their pay-per-click and news channels); YouTube, MySpace, blogs, podcast sites and other social media sites; and online press release distribution services. All these, plus whatever new online outlets emerge between now and the time of your crisis, need to be identified.



5. Be launch-ready. The time to learn how to manage a pay-per-click campaign, or post a video to YouTube is now, not in the heat of a crisis. Start using an online press release distribution service for your day-to-day media relations and be sure to pick a service that posts to the news sites of the top search engines. Use podcasts, blogs and video casts now to promote your brand. Regularly review and revise your crisis website’s content. Incorporating these tools and practices into your work now ensures that you and your team will know how to use them before a crisis.



6. Launch! When a crisis strikes, your team rolls into action. The first step is to incorporate information on the actual crisis into the crisis website, including the steps your organization is taking to address it, and then to open that site to the public. You’ll then leverage your knowledge of digital media and your points of distribution to immediately propagate your information on the crisis online and drive people to your crisis website, where you can engage them on your terms. The process or revising, appending and distributing content will last until the crisis is over.



Ed McLaughlin goes on to add: “When a crisis strikes, your company will be on YouTube, on Google News, in blogs, popping up on cell phones and handhelds—emerging wherever digital media can be created and consumed. The question isn’t whether or not digital media will have an impact on a company during crisis—it might even be the cause of a crisis. The question is, during a crisis, will digital media manage your company or will you manage it?”



A Happier Valentine’s Day



The ideal situation would have been to have a plan in place for dealing with an entirely unpredictable and yet inevitable event like a terrible winter storm. It should not have been an unanticipated event that in the winter storms ground planes. Contingency planning is simply responsible management. If they could prepare the customer’s bill of rights (Appendix A) on the spot mid crisis it is clear that it could have been done in advance. Several questions and their answers should have been determined from the start on the premise that excellent customer service is not optional at any time under any condition. These might include:



1. In the event of a delay who will be notified and how?

2. IN the event of cancellation, how will the customer be compensated?

3. How will they be compensated for long delays?

4. Should a plane be grounded with customers aboard, how will we care for those people?

5. How can we arrange for deboarding in such an event?

6. How will we provide for food, beverages, restrooms and medical care?

7. How will we care for the particularly vulnerable such as the frail elderly and the babies?

8. How will we house passengers stranded by our airline.

9. Can we provide any resources to provide communication to loved ones, to entertain or comfort our passengers?

10. Do we have a response team in place with the proper level of authority to ensure implementation of all of the plans that we have made?

11. How will the internal communication system work in the event of crisis?



Right Way and a Wrong Way

In the final analysis there is no perfect way to handle a crisis but there are right ways and wrong ways to handle people and events. Here is a list of some of the most important.

Crises require leaders. Step up to the plate and lead from the top. Any CEO who does not take visible leadership during a crisis should not be permitted to lead at any time in the future. Do not guess at what the problem is. Get accurate information from multiple sources. Make information gathering a priority. Delegate. Ideally there is a contingency plan to be activated. If not, be creative and think on your feet. Take responsibility. Denial, mitigating, justifying or diminishing responsibility in the early stages of a crisis while tempting reduces credibility and increases hostility. Sincerely apologize. No hedging! Silence is NOT golden. It causes people to speculate and catastrophize the situation building tension and anxiety. Tense, anxious people are more angry, more retailatory and less rational. Talk to people. Say it loud, say it proud and then do it! Doing nothing is not an option. Do something in a visible manner to allay people’s fears. Provide for basic needs immediately especially for the vulnerable. Do not leave people in the dark. If help has been initiated tell people. People will wait and they will cooperate if they understand that the company “gets it”, that they understand the problem and that they will address it. Have you identified all of those who are affected by this crisis? Do not leave out or ignore some people. Clearly state how you will make it right. Make the offer concrete. Lofty intangible promises of future changes have no value. Be media wise. You must shape your own message or it will be shaped for you and the outcome could be disastrous. Where possible deal with the vocal and the angry as soon as possible to prevent the building of discontent and hostility. Diffuse difficult situations and people as calmly and as quickly as possible. Are you sure that all of your legal obligations are met? Get advice you trust from someone you trust and do not waste time in consultation with people whose input you are not prepared to go with. Multiple messages are deadly. There should be one unified message coming from authorized speakers. Do not panic if things get worse before they get better. This is the normal course of a crisis and this too shall pass! Crises make it obvious who are the pretenders and who have the right stuff. With an understanding that crises hit most organizations at one point or another and a little advance preparation in thought and deed, you might just prove to have the right stuff on the day you are needed.