A 2016 global survey report by Deloitte, A crisis of confidence, reports a notable gap between real and perceived crisis readiness in the eyes of board members and the large companies they direct.
The report looked at board members’ confidence in their organisations’ crisis-related abilities, how well companies are addressing perceived vulnerabilities, and whether the board knows what to do before, during, and immediately after a crisis.
They defined crisis as an event or events that present a severe threat to strategic objectives, reputation and viability. (And noted that not every crisis appears on the news.)
The (very US focussed) 2016 Holmes Report identified their twelve major crises sufferers of 2015 – and many seem to have taken calculated risks or created their own problems. The classic crisis cause in this list is claiming to be something you’re not: VW claimed cleaner emissions; Chipotle built its reputation on great food handling.
Volkswagen’s software ‘defeat device’ helped cars pass emission tests. It was a deliberate attempt to mislead and cost them 5% of car sales. I’m amazed they haven’t suffered more. As governments wake up to the opportunity to reclaim lost emissions revenues, and actions are taken by consumers and regulators, this crisis may drag out further. Ironically, the emissions cover up seems unnecessary. How many people buy VW on green credentials? From the outside their reputation was primarily built on reliability and product quality, meaning that this was probably a completely unnecessary risk to take, and the consequences include damaged trust.
(As a footnote, I would also be surprised if VW was alone in ‘fixing’. Watch this space. If I was leading a car company right now, I’d be looking at my practises and coming clean PDQ – BEFORE someone does it for me.)
Chipotle, by contrast, built it’s reputation with food handling and quality a key part of its brand promises. It needed to take zero risks in this area, so when poor food handling hit the headlines, it was unforgivable. This is a governance and operational issue that could easily have been identified in a basic crisis preparedness audit.
The FIFA and Petrobras cases in the Holmes Report involved bribery risks. There are clear rules on bribery, and the Read more »