What a difference a month makes. Last month Warren Buffett was praising David Sokol, his erstwhile successor who made a hasty departure amid the scent of an insider trading scandal, as a great guy whose purchase of Lubrizol shares prior to the Oracle of Omaha buying the Company “were not in any way unlawful.” At this weekend’s Berkshire Hathaway annual meeting, normally a lovefest for 40,000 Buffett shareholders and devotees, the Oracle used words like “inexplicable”, “inexcusable” and “very damning evidence” to describe Sokol and what now looks like share purchases that will end with a perp walk.

Buffett is legendary for his investment acumen and vigilance regarding his and his firm’s reputation. After a month in the media spotlight regarding the Sokol/Lubrizol affair where questions swirled about what the Oracle knew and when he knew it, whether he was just getting too old and was off his game, or whether he was just a hypocrite when it came to Sokol, Buffett came clean and admitted that he “obviously made a big mistake.” Time will tell whether Buffett’s reputation took a hit. He has built up considerable good will over the years and the Sokol fiasco as well as the big hit to Berkshire Hathaway profits in the first quarter as a result of insurance losses will likely not do lasting damage to the man or his company’s reputation.

The Sokol/Lubrizol affair is just the latest example of the response to a crisis situation creating seemingly more problems for a company and its executives than the crisis itself (think Toyota, BP, Goldman Sachs and Johnson & Johnson). Crisis communications 101 teaches that you take control of the message quickly, be transparent, only release information on what you know and never speculate. From the start, Berkshire Hathaway dropped the ball, whether due to Buffett’s loyalty to a key member of his team or just not knowing the facts. The media jumped all over the issue and for a month reveled in discussing the seamy details and timeline of events, repeating Buffett’s reputation mantra and highlighting the ode to Sokol in the company’s press release.

Now, a few weeks late, Buffett has held forth on the issue and provided a mea culpa. Charlie Munger, Buffett’s right hand man summed it all up nicely at the annual meeting in typical Berkshire Hathaway understatement when he admitted that it “wasn’t the most clever press release in the world.” It also wasn’t the most clever way to respond to a crisis and that should be the lesson for the normally very clever Oracle and the rest of us.

rtauberman Crisis Communications Berkshire Hathaway, BP, Goldman Sachs, Johnson & Johnson, Toyota, Warren Buffett

Einstein defined insanity as repeating the same actions, but expecting a different outcome. If that is true, insanity rules the day when it comes to crisis response.

We all know that the effectiveness of advertising is in a free fall. Yet I keep seeing articles about how companies are responding to crisis issues – from Taco Bell to BP – that are focused on their advertising. Who needs to up their Super Bowl spend. Who needs to launch a campaign. Who is fighting back with advertising.

While an ad campaign can create “air cover” and help unify a story, when it comes to crisis response, advertising alone is about as effective as hiding under a rock. It is expensive, slow and ranges from irrelevant to untrustworthy among your key constituencies, who pretty much discredit it before the spot is even over. Sometimes, it can be a catalyst for something really interesting, like Toyota’s ads for their Ideas for Good campaign, which actually sent me to their website to learn more.

So why do people still rely on advertising so heavily? Because it is safe, and controllable. You design the ad, you control the message. No one ever gets fired for recommending a full page ad or a TV spot. And when a CEO is demanding, we do more…we can buy more of it.

Insanity. But safe insanity.

cwinters Crisis Communications advertising, BP, Super Bowl, Taco Bell, Toyota

I remember this day 25 years ago vividly….there was so much excitement about the Challenger, and the first civilian trip into space. TVs were rolled into our classrooms, and there was serious discussion about the significance of sending a teacher on the first civilian mission (by the teachers, of course.) Then the unthinkable happened.

Today, in a post 9-11 world, watching horror unfold on live TV seems ordinary. In a Whatever, Whenever, Wherever You Want It news environment, we can listen, view, engage and interact with our news with a whole host of devices, in real time. Like NASA, people and companies who suffer reputational implosions do so in the public eye, and can no longer lick their wounds in private.

For the countless companies who’ve suffered catastrophic (or not so catastrophic) setbacks in 2010, there are a number of lessons to be learned from NASA, 25 years after the Challenger:

1. There are no shortcuts – Much has been written about NASA’s errors in rushing this mission, and failing to take safety seriously. Today, the same has been said about BP, Toyota and others who’ve suffered reputational implosions. Communications, even great communications, cannot substitute for good operations.

2. Confidence and trust can be restored over time – The Challenger could have easily been the end of NASA as we know it. Yet they stayed the course, and with a series of successful missions, restored the confidence of America, and the world.

3. After a crisis, what you do is more important than what you say – No amount of conversation about re-upping safety priorities would have corrected the course for NASA. They needed to demonstrate that they could continue their mission, safely. That isn’t to say they haven’t had any other accidents….space exploration is, by design, a dangerous business. Like aviation, mining and others. But they accepted responsibility and learned from it (they didn’t try to minimize it, point the finger at a subcontractor, or blame anyone.). NASA focused on the future and on fixing its own house, restoring confidence along the way (Something that would admittedly be much harder to do in today’s environment.).

Perhaps the most important lesson of all is the power of resilience…a uniquely America quality that enables us to brush ourselves off, move forward and aspire to bigger and better things, even in our darkest moments. When President Obama told America, “We Do Big Things” – that wasn’t arrogance. It wasn’t happy talk. It was his belief in the power of our resilience.

cwinters General Corporate BP, Challenger, NASA, Obama, Toyota

For Johnson & Johnson CEO William Weldon, 2010 was, as Queen Elizabeth put it a few years back, an “annus horribilus.” The Company’s various divisions issued a seeming never ending string of recall notices from pain relievers to cold remedies to contact lens solution to antacids. J&J’s McNeil Consumer Healthcare division, makers of Tylenol, Sudafed and Benadryl captured headlines throughout the year with a series of problems at its facilities.

Through a series of public relations fumbles, belated mea culpas and operational gaffes, J&J, a consumer healthcare icon, whose 1980s Tylenol tampering response was widely seen as the crisis communication gold standard, has seen its reputation significantly tarnished and its sales plummet. Generics and store brands from CVS, Walgreens and Rite Aid have never had it so good.

This track record garnered for Mr. Weldon a place next to the likes of BP’s Tony Hayward and HP’s Mark Hurd a place on list of the worst CEOs of 2010 by Sydney Finkelstein, the Steven Roth Professor of Management at the Tuck School of Business at Dartmouth as reported by CNBC.

Unfortunately, it appears that 2011 is starting right where 2010 left off for J&J as the company issued its latest recall of 43 million bottles of Tylenol, Sudafed, Benadryl and Sinutab manufactured at McNeil’s now infamous Fort Washington, PA plant. Using a time-worn public relations ploy, the news of the recall was released on a Friday evening prior to a long holiday weekend. Mr. Weldon, once again spoke of action plans, quality reviews and commitment to consumer safety.

For those of us in crisis communications who know all too well how reputation is tied to a company’s proactive, transparent and thoughtful response, it is sad to see what has become of J&J. The blogosphere is once again full of chatter with reminiscences of J&J’s gloried past, recollections of its expert management or previous crises and calls for executive changes long overdue.

This past weekend also brought news of another medical leave to be taken by Apple CEO Steve Jobs. The issues of Apple’s history of communications or non-communications about Mr. Jobs’ illness and succession planning at the Company are fodder for another blog post. This latest episode and the quick hit to Apple’s stock price shows the close relationship between corporate and executive reputation at Apple and what may happen with the Company’s visionary leader on the sideline. Conversely, for J&J and Mr. Weldon the reputational issue may be a CEO staying too long in a position.

rtauberman Crisis Communications Apple, BP, CVS, HP, Johnson & Johnson, Rite Aid, Steve Jobs, Tylenol, Walgreens

The HP Mark Hurd saga has provided a nice diversion to BP’s fiasco in the Gulf of Mexico. It has been interesting to follow the debate on whether HP’s Board of Directors did the right thing, the power of various advisors in the decision and whether the woman at the center of the controversy was merely an actress or an actress and Playboy model.

After all the stories and blogs on the incident and its aftermath along with the damage to HP’s share price and reputation, you’d think the company would do all it can to help the story fade away. Once it’s in the past, HP can get back to business, focus on its customers and enhance shareholder value.

When news broke earlier this week that Hurd is joining Oracle as co-president, many of us wondered how HP would react. After all, HP and Oracle are business partners in some areas and Hurd apparently was not subject to a non-compete clause. While California is reticent to impede employees from choosing a new employer, HP is pressing forward with a lawsuit challenging the hiring on trade secret and other concerns.

Legal pundits say the HP case has little chance of success in the courtroom. But in the court of public opinion (shareholders, customers, partners, employees and the Silicon Valley wags), HP is keeping the Hurd discussion alive. Whatever the motivation for the lawsuit (are there real business reasons or just revenge), HP may not have thought through the communications and reputational consequences of its actions.

As a start, Larry Ellison issued a statement that seemingly brings the future of the HP-Oracle partnership into play. More importantly, the lawsuit provides another opportunity for reporters, bloggers, financial analysts and others to rehash the details of the story up to now and speculate anew on HP’s future.

Stoking the controversy and prolonging the story may not be the best thing for HP in terms of reputation and relations with some key constituencies but it does allow the publication of more fetching photos of Jodie Fisher and adds to her 15 minutes of fame.

rtauberman General Corporate BP, HP, Mark Hurd, Oracle

As we mark the five-year anniversary of Hurricane Katrina, another tragic event just occurred off the shore of Louisiana – an oil rig owned by Mariner Energy exploded earlier today in the Gulf of Mexico several hundred miles west of the site of BP’s infamous Deepwater Horizon disaster.

The people of Louisiana have had more than their share of tragedy. For the families of the 13 people on the rig (thankfully, all accounted for based on news reports), this raises questions about worker safety that are tailor-made for union organizing.

So why does an explosion at a rig owned by Mariner Energy spell trouble for BP, which has spent nearly $100MM on advertising in an effort to repair its reputation since the explosion?

It’s simple – BP has become the face and acronym of BIG PETROLEUM.

Today’s explosion creates a legitimate argument for President Obama’s drilling moratorium and increased discussion of regulation … but who really cares about Mariner Energy besides The Apache Corp., its owner? If you read John Grisham’s novels you know that it is the big-name, big-money entity that gets targeted.

Every news story will rehash the BP events. Every call for regulation and investigation will cost them. And every energy company will cite BP for decreases in sector valuation.

Conventional public relations wisdom says today’s event will get BP out of the news and off the hot seat. But I’m betting against the house on that one.

cwinters Crisis Communications Apache Corp., BP, Hurricane Katrina, John Grisham, Mariner Energy, President Obama

BP’s new CEO may be getting more than he bargained for. It seems that he doesn’t just need to clean up a spill in the Gulf….he needs to clean up a culture that accepts, or even encourages cutting safety corners, downplaying problems and only communicating when you get caught.

Apparently, lack of transparency may be a “corporate value” at BP, as is taking shortcuts that shortchange safety. BP’s most recent “gotcha” is happening in Texas, where local families are experiencing respiratory problems after the release of toxic fumes into the air, and a failure to notify residents. These families have filed a $10 billion class action lawsuit. And while BP is denying any wrongdoing – they aren’t exactly starting from a position of strength.

Sounds like something out of a Michael Moore documentary, doesn’t?

If a single event can damage a reputation, what does a pattern of deception, cover up and disregard for safety do? I am waiting for the pundits to start talking about BP’s “PR Problem.”

This is much bigger than a PR problem… I’ve said it before – good communications can’t compensate for bad decisions or bad policies. And believe me, that isn’t an easy thing to tell a client who wants to hire you for PR…

However, the new CEO has an opportunity…while he is responsible for the mistakes of the past and making them right – he isn’t “to blame” – at least not yet.

If BP wants to avoid being the next Enron or WorldCom, it needs to make some changes, and quickly:

• Leadership should immediately launch a review of safety standards and operating standards, and make changes quickly. While some of their operational decisions may be “by the book” – failure to take the most aggressive response to protect safety after these two events will only exacerbate the problem.
• Engage the environmental groups…make them part of the solution – an in the process make it more difficult for them to be critical.
• Engage your employees. They know where the problems are. And they know how to fix them. Use that dialogue as an opportunity to send a signal that BP is upping its game, and elevating its standards, and that there will be zero tolerance for failing to comply.
• Put people before profits. I know that this is difficult for a public company to do. But a few dollars spent on the front end will save millions in legal fees, fines and penalties on the back end.

Once they’ve done these things, then BP can start to think about communications. Otherwise, it is just talk.

cwinters Crisis Communications BP, Enron, Michael Moore, Worldcom

After the level of expectation and coverage around the BP announcement of a new CEO, the actual announcement may seem somewhat anti-climactic. I can imagine the commentary now:

BP’s board of directors felt it was time to effect a transition (gasp), and they’ve selected an American CEO in an effort to repair their image (imagine that). And Mr. Hayward seemingly gets his wish….and gets his life back.

Leadership transitions always present a unique set of challenges and priorities for those of us in the communications and reputation management business. And sudden or abrupt changes can create chaos…like the night I spent in Bethlehem searching for video crews when Bethlehem Steel changed CEO’s shortly before filing for Chapter 11, requiring an entirely new set of communications toolkits, employee videos (with subtitles) and letters to all constituencies because the new CEO had a new point of view and message.

But leadership transitions in the wake of a crisis can be a really positive thing – an opportunity to create a “fresh start” or at least mark a BC (before new CEO) and AD (after new direction) for a company struggling to preserve, protect or rebuild reputation.

It’s sort of like the first day of school…a new teacher, who (in theory) doesn’t know that you were the class clown, the brain or the homework slacker…you can (at least partially) reinvent yourself…if you change your behavior. A fresh start can be a reputation reboot….if the right changes are made to support the new leader and the new message.

BP is facing a massive loss of trust…one that that they earned by their actions and their inactions in the wake of the Gulf spill. I talked to Ad Age about this very topic…and I am optimistic that a new leader will mark the beginning of a new era for BP. But like most of you, I plan to wait and see what comes next.

cwinters Crisis Communications, Executive Visibility, General Corporate Bethlehem Steel, BP, CEO transitions, Tony Hayward

If you’ve followed this blog or tuned in to the webcasts where I’ve been a panelist, you know that I’ve been saying that 60 seconds is the new “first hour” – the textbook window of time when a Company must take control of a situation in order to preserve reputation. And while that is a somewhat hyperbolic statement, the Miracle on the Hudson is my case in point – and was the day that I began to rethink everything I had learned about crisis communications 101.

Today, I heard that BP’s cap may be leaking. An editorial in the New York Times calls Congress to the carpet for not taking detector tampering in the Massey Mining explosion that was the industry’s worst in 40 years. But the furor and public outcry seems to be losing steam.

Certainly, the intensity and speed with which information moves creates some unique and new challenges for crisis communicators….but does it also create opportunities? Are memories shorter? Does interest wane more quickly? Do we move on to the crisis du jour and give reputations a pass?

Has the plethora of “worst events in history” in the past few years desensitized us to the significance of these issues? Or does the pervasive mistrust of all things big – big banks, big companies, big governments caused us to expect the worst?

Big questions for a rainy Monday morning…

cwinters Crisis Communications BP, Crisis Communications, Massey, Mining, Miracle on the Hudson, oil spill, Public Relations

For as long as I’ve been in the PR business, we’ve been counseling our clients to tell their story….and helping them craft the messaging, the platforms and the proof points to do so. I’ve done this for almost 20 years….and I’ve often found myself telling clients that we can’t tell their whole story….that certain items and issues are too inside baseball, too granular or simply not newsworthy or noteworthy enough.

However, it seems that those of us in the reputation business need to ask a new question…

Is this the whole story?

Today’s NYT has a front page story about SmithKline Beecham’s failure to disclose that a new drug for diabetes had a risk of cardiac problems.

It also has a story about BP’s relentless pursuit of growth at all costs prohibiting them from learning from their mistakes.

The Toyota crisis will go into the text books as a classic case of trying to minimize or cover up an issue, making it worse.

When I started in this business, no one talked about transparency…they just did it. Today, there is a lot of talk about transparency, and seemingly less of it than ever before.

There is a difference between putting your best foot forward and hiding material information that tells a completely different story…and counseling clients today is more about being their Jiminy Cricket than their “Spin Doctor.”

cwinters General Corporate BP, Reputation Management, SmithKline Beecham, Toyota, Transparency