Friday, January 28, 2011

Jet Blue Crisis Management

Out of the Blue:A Primer on Crisis Management in the Context of JetBlue’s response

by Debra J. Smith

Executive Summary



On Valentine’s Day, 2007 JetBlue, a company known for stellar customer service was forced by a severe winter storm to cancel 1,095 flights stranding thousand of customers.It immediately became clear that the company had no contingency plan in place to handle such an event. In the first hours of the crisis the company failed on every measure of service quality. Disgruntled passengers armed with today’s technology broadcast their plight on the internet and in the media. JetBlue had a full blown crisis on its hands. This paper outlines the crisis and the delayed but finally quite effective response of JetBlue’s CEO David Neeleman. While acknowledging that every crisis is unique, seven basic principles for effective crisis management are reported along with six steps for digital crisis management. In the final analysis, however, the best solution is to have a contingency plan in place to deal with events which may be impossible to predict but essential to prepare for. In the final analysis a crisis must be defined and met head on.


The Crisis

On Valentines Day 2007 Jet Blue, a company that was known for stellar customer service blew it. They really blew it. When a snow storm hit the East Coast of the United States they were forced to cancel 1,096 flights the result of which was that thousands of passengers and flight crews were stranded. In the first twelve hours JetBlue demonstrated that it had no contingency plan for such an event. People were stranded for up to nine hours on planes with nothing to do. Passengers were literally left out in the cold for hours on end without food, proper rest room facilities or basic necessities. People were not happy and with today’s technology they vented that displeasure onto the world wide web and in the media. Pictures from cell phones and blogs from stranded passengers became immediately available for anyone who wanted to commiserate. This blunder could have ushered in the end of JetBlue. This paper discusses how JetBlue failed its customers and how it redeemed itself. It also considers the methods for crisis management and how JetBlue could have done even better.

A Valentine’s Day Card (A report Card)

On the basis of the Service Quality model (Parasuraman et al. 1985), JetBlue has been rated for the purposes of this paper on the five service quality determinants as demonstrated in the first hours of the snow storm crisis.

1. Reliability: The company did not have the ability to perform the promised service dependably. Grade: failed

2. Responsiveness: The company appeared to have no willingness to provide help or prompt service in the early stage of the crisis. Grade: Failed

3. Assurance: Without a contingency plan the front line employees had no knowledge to share with their passengers and they lost the trust and confidence of the passengers. Grade: Failed

4. Empathy: While individual crew had and attempted to demonstrate great empathy, leaving passengers without information and without alternatives was perceived as indifference. Grade: Failed

5. Tangibles: Insufficient appropriate physical facilities, equipment, personnel and communication materials left passengers improperly tended. Grade: Failed

The White Knight Appears

One might argue that the situation was beyond JetBlue’s control. After all no one can control the weather. However, David Neeleman never took that approach publicly. Just when most CEOs would have been hunkering down behind closed doors or blaming others, Neeleman stepped up to the plate and said and did something surprising and very wise. He took responsibility. He took action quickly and in a highly visible manner. He calmed the storm of controversy by doing something profound. He communicated heart felt apologies on every major media. He diffused the situation with the basic human skill of clearly communicating that he ‘got it’, that he was sorry and that he would make it right. David Neeleman wrote a public letter of apology to Jet Blue customers. The letter was in response to what Neeleman refers to as the worst operational week in Jet Blue's history. It starts ' We are sorry and embarrassed. But most of all, we are deeply sorry.' The letter's last paragraph starts 'You deserved better — a lot better — and we let you down . Nothing is more important than regaining your trust... ' The letter is short, direct and sincerely remorseful. (2)

He promised to make it right. His actions would make it right not just for this time but by introducing a customer’s bill of rights he made it clear that his intent was to make it right for all customers in the future as well. He made it concrete too. He announced a detailed list of how the company would treat passengers in troubling situations including the monetary compensation for delayed flights that escalated with the length of the delay. Neeleman chose the right path to diffuse anger and mend relationships.

Crisis Management

Crisis management 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." Neeleman exhibited courage and he demonstrated creative thinking. 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.

Measure 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:

Ed McLaughlin is vice president of e-business strategy at SVM E-Business Solutions. He can be reached at: emclaughlin@svmsolutions.com.

http://www.bulldogreporter.com/dailydog/issues/1_1/dailydog_barks_bites/6824-1.html

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?”

These 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?

A 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.

• Ensure 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!



Conclusion

cri•sis (krī'sĭs) n., pl.

1.

a. A crucial or decisive point or situation; a turning point.

b. An unstable condition, as in political, social, or economic affairs, involving an impending abrupt or decisive change.

2. A sudden change in the course of a disease or fever, toward either improvement or deterioration.

3. An emotionally stressful event or traumatic change in a person's life.

4. A point in a story or drama when a conflict reaches its highest tension and must be resolved.

[Middle English, from Latin, judgment, from Greek krisis, from krīnein, to separate, judge.]

The definitions above clarify and point to the solutions or opportunities within the crisis circumstance. In the final analysis, how a crisis is handled is how you and your company will be defined, separated from the pack and judged. If it’s a crisis: deal with it!



References



Valerie A Zeithami, and Bittner, Mary-Jo. (1996), Services Marketing

New York: McGraw Hill, ch 2

Cite source of the quote of the open letter to the public

:http://www.bioe2e.org/slides/BioE2E_Aug_6_03_handout_seven-principles.pdf

http://www.bulldogreporter.com/dailydog/issues/1_1/dailydog_barks_bites/6824-1.html



http://www.jetblue.com/about/ourcompany/promise/index.html



























Appendix A

JetBlue’s Customer Bill of Rights



Bill of Rights information







Above all else, JetBlue Airways is dedicated to bringing humanity back to air travel. We strive to make every part of your experience as simple and as pleasant as possible. Unfortunately, there are times when things do not go as planned. If you’re inconvenienced as a result, we think it is important that you know exactly what you can expect from us. That’s why we created our Customer Bill of Rights. These Rights will always be subject to the highest level of safety and security for our customers and crewmembers.





Information
Cancellations
Departure Delays
Overbookings
Onboard Ground Delays





INFORMATION

JetBlue will notify customers of the following:

 Delays prior to scheduled departure

 Cancellations and their cause

 Diversions and their cause



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CANCELLATIONS

All customers whose flight is canceled by JetBlue will, at the customer’s option, receive a full refund or reaccommodation on a future JetBlue flight at no additional charge or fare. If JetBlue cancels a flight within 12 hours of scheduled departure and the cancellation is due to a Controllable Irregularity, JetBlue will also provide the customer with a Voucher valid for future travel on JetBlue in the amount paid by the customer for the roundtrip (or the oneway trip, doubled).



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DEPARTURE DELAYS

1. Customers whose flight is delayed prior to scheduled departure for 1-1:59 hours due to a Controllable Irregularity are entitled to a $25 Voucher good for future travel on JetBlue.

2. Customers whose flight is delayed prior to scheduled departure for 2-3:59 hours due to a Controllable Irregularity are entitled to a $50 Voucher good for future travel on JetBlue.

3. Customers whose flight is delayed prior to scheduled departure for 4-5:59 hours due to a Controllable Irregularity are entitled to a Voucher good for future travel on JetBlue in the amount paid by the customer for the oneway trip.

4. Customers whose flight is delayed prior to scheduled departure for 6 or more hours due to a Controllable Irregularity are entitled to a Voucher good for future travel on JetBlue in the amount paid by the customer for the roundtrip (or the oneway trip, doubled).



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OVERBOOKINGS (As defined in JetBlue’s Contract of Carriage)

Customers who are involuntarily denied boarding shall receive $1,000.

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ONBOARD GROUND DELAYS

For customers who experience an onboard Ground Delay for more than 5 hours, JetBlue will take necessary action so that customers may deplane. JetBlue will also provide customers experiencing an onboard Ground Delay with food and drink, access to restrooms and, as necessary, medical treatment.



Arrivals:

1. Customers who experience an onboard Ground Delay on Arrival for 30-59 minutes after scheduled arrival time are entitled to a $25 Voucher good for future travel on JetBlue.

2. Customers who experience an onboard Ground Delay on Arrival for 1-1:59 hours after scheduled arrival time are entitled to a $100 Voucher good for future travel on JetBlue.

3. Customers who experience an onboard Ground Delay on Arrival for 2-2:59 hours after scheduled arrival time are entitled to a Voucher good for future travel on JetBlue in the amount paid by the customer for the oneway trip, or $100, whichever is greater.

4. Customers who experience an onboard Ground Delay on Arrival for 3 or more hours after scheduled arrival time are entitled to a Voucher good for future travel on JetBlue in the amount paid by the customer for the roundtrip (or the oneway trip, doubled).

Departures:

1. Customers who experience an onboard Ground Delay on Departure for 3-3:59 hours are entitled to a $100 Voucher good for future travel on JetBlue.

2. Customers who experience an onboard Ground Delay on Departure for 4 or more hours are entitled to a Voucher good for future travel on JetBlue in the amount paid by the customer for the roundtrip (or the oneway trip, doubled).



















































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