The numbers are stunning – 77 million Sony PlayStation accounts hacked, 24 million Sony Online Entertainment accounts hacked, 12.3 million credit card holders information in possible jeopardy, including an estimated 5.6 million Americans.

Unfortunately some other metrics regarding the Sony data breach are also amazing – two days to contact law enforcement, five days to contact the FBI, seven days from the date of the breach for Sony’s U.S. subsidiary to issues a statement, nearly two weeks for the Company to offer more fulsome details of the attack and almost three weeks before Sony’s CEO issued a public apology. So much for learning lessons from Toyota’s long, fragmented and much maligned dance of disclosing details of the issues with its cars and seeking forgiveness.

Corporate bureaucracies, geography and culture aside, the rules of crisis communications are universal, particularly in the digital age of immediacy and no boundaries. Companies, whether U.S., Japanese or from Djibouti all need to get factual information out quickly (days are no longer a relevant measure of crisis response time), take responsibility, be transparent and exert control of the story in a crisis situation.
Sony like Toyota was a well respected company with a loyal customer base. PlayStation partisans are a more rabid even cultish crowd than Toyota drivers and they took to social media with a vengeance to air their outrage and savage Sony. Many are saying that they are done with Sony for good. Time will tell. Toyota has invested much time and resources in trying to win back trust of their customers and things are now getting back to normal for them. Sony will no doubt need to do the same.

The dichotomy between Sony and Toyota is the events that precipitated Toyota’s crisis were manufactured in-house while Sony was attacked by hackers (unless you are one of the conspiracy theorists who believe it was a disgruntled employee). If fact, Sony looks to be trying to make use of this victimhood in an effort to gain some sympathy from its customers as well all the elected officials and regulators investigating the situation. We will have to wait and see how this works out for them.

In the end, the Sony data breach shows once again that a company’s crisis response can be as, if not more damaging than the crisis itself. Toyota’s recall fiasco of 2010 cost it $5.1 billion or 16 percent in brand value according the latest Interbrand’s study of Best Global Brands.

The Sony saga is not over but it will be interesting to see how their brand value is impacted. Also worth watching is whether the next global company facing a crisis in the U.S. or elsewhere will heed the lessons of Toyota and now Sony.

rtauberman Crisis Communications PlayStation Network, Sony, Toyota

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

We’ve all heard the sound bites about the importance of CSR…that doing good is good for business. And the trend to align CSR with the core business and operations of your organization has become increasingly common. And while doing that good, Companies are creating jobs, sustaining communities, and sometimes, even solving major global problems. The most innovative organizations deploy their unique resources toward solving mega-problems…with Google.org’s original mission as an ultimate example. Toyota’s Ideas for Good campaign, which I’ve blogged about before, is a creative example of the use of intellectual property to do good things outside the business.

But maybe the future of CSR will be simpler, smaller and more “back to the future.” Take the example of Pepsi’s support of local farmers, purchasing corn for Central America manufacturing locally – eliminating the middle man and creating economic and operational efficiency for the company while having a dramatic positive impact on the local economies by guaranteeing farmers a price upfront.

This reminds me of the iconic business that built America. Milton Hershey chose his Pennsylvania location to be close to the dairy supply necessary to manufacture milk chocolate. He later built a hospital to provide jobs during the Depression, and serve the community’s healthcare needs. The Big Steel families located factories near the rivers of the Lehigh Valley because they needed water sources to operate. These were basic business decisions that built economies and communities.

When businesses can serve a basic need of a community – and in the process, create a market for their products, that is exactly the kind of sustainability that the CSR experts talk about as the holy grail. CSR? Or just smart business decisions? And does it even matter?

cwinters CSR Google.org, Pepsi, Toyota

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

Consider Toyota, the brand that became synonymous with the word “recall” in recent years. Toyota seems destined to be the poster child for reputation destruction and the subject of cases studies that will be taught for years to come in college PR courses. First, they denied the problems. Then they apologized – well, sort of. And then they apologized some more. They launched campaigns about safety and trotted out customer testimonials.

And none of it was particularly effective. So what now? Toyota is changing the subject.

Exhibit A is the Ideas for Good commercial about Toyota technology and football? The spot I saw features a Mom, talking about how she feels just a little less worried about her son playing football, thanks to Toyota sharing its technology.

The dangers of football have been top of mind for parents and sports fans after the tragic paralysis of the Rutgers special teams player during an apparent routine kick return, plus the recent spate of impact-related head injuries in the NFL.

As a rabid sports Mom who has made those trips to the ER with kids with concussions, the Toyota commercial grabbed my attention, so much so that I stopped doing dishes and came into the family room to watch. Then my PR persona kicked in and I wanted to learn more about this campaign, which ranges from using Toyota technology to improve NASCAR safety to employing LEED building techniques to preserve Yellowstone Park’s pristine beauty. Toyota also is asking the public to submit ideas for new ways to use its technology for the good of the world.

Is Ideas for Good a good idea?

Well, considering that Toyota is mired in a seemingly endless stream of bad news – the company announced yet another recall last month, the strategy of finding a way to play offense is a good one. Focusing on how Toyota is helping the world is smart, regardless of whether the beneficiaries are driving Toyotas or not. It shifts the conversation from the defensive position taken by Toyota loyalists defending the brand to a conversation befitting the leader that Toyota once was and presumably want to be again.
On paper, a textbook formula for reputation recovery looks like this:

At the appropriate time, stop apologizing – check.

Move beyond your self-centered conversation – check.

Engage your stakeholders for collaboration to benefit someone besides yourself – check.

Will Toyota succeed in moving beyond the recall overhang? Some of that depends on when and if the recalls finally end. Even then, only time will tell. But I give them an A for effort.

cwinters Crisis Communications NASCAR, Rutgers, Technology, Toyota

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

We wanted to share this commentary from our CEO, Michael Kempner, which was also published at New Jersey Newsroom

The old rules no longer apply. In fact, they have not applied for quite some time.

As recent headlines made clear, crisis communications is now driven by digital media. Television. Radio. Newspapers. Rather than leading the public discussion of Tiger Woods or Toyota, these traditional – some would say increasingly archaic – mediums seem more like they are trying to catch up with the drama being played out minute-by-minute on Twitter, on Facebook, and on blogs.

To say that the news cycle moves at a frenetic pace may be an understatement. This is the new normal … and it has been for several years. In fact, shrewd companies implemented corporate social media policies years ago and have incorporated them into their daily marketing and communications activities.

This is particularly true for brands in crisis.

Gone is the focus on the evening news or the morning newspaper. Gone is the ability to craft a single, official-sounding press release. Gone is the ability to control the flow of bad information.

When the 1982 Tylenol scare was unfolding, company executives had to deal with a relatively new, relatively challenging phenomenon: a 24-hour news cycle. Information had to flow faster. Stories were harder to control. And crisis communications took on a whole new meaning. In other words, CNN made life a whole lot more challenging for companies trying to do damage control.

Yet, the medium and the message were essentially unchanged. Johnson & Johnson still relied on traditional media and were still able to use the same statements – substantively – for each venue.

Fast forward to 2010 when Toyota and Southwest Airlines were confronted with their own crises, and you have a vastly different, vastly more challenging picture. New venues. New expectations. New opportunities. New challenges.

Without question, Toyota’s response to its growing recall has failed in almost every respect. It has been slow. It has been confused. And it has been premised on the company’s misguided belief that it could control the flow of bad information. These missteps, in turn, have been compounded by Toyota’s failure to effectively use social media – something that is further undermining the company’s ability to tell its story, connect with its customers and maintain its credibility.

Southwest, on the other hand, immediately turned to digital outlets when actor Kevin Smith began tweeting to his 1.6 million followers about his “embarrassing” experience aboard a recent flight. Granted, the airline got beaten to the punch in this case of “he said, she said”, but it moved swiftly across a range of digital mediums — with a host of individually tailored messages — to issue its apology and clarify the situation.

Yet, it is instructive to recognize that this relatively minor story – which started from less than 140 characters on Twitter – almost immediately resulted in over 500,000 Google web results, over 50,000 blog entries, and nearly 2,000 news stories on the matter.

Back in the day, Tiger Wood’s carefully choreographed press event would have largely controlled the story. The evening news would have covered it. The morning newspapers would have covered it. And that would be the end of the conversation until later that evening. No blog postings. No Facebook comments. No tweets. No nothing. Just some water cooler talk among colleagues.

That was then.

Today, regardless of the company or the crisis, the fact remains: Information – real and rumor – travels at lightning speed…literally. The pace and form of information flow is now near impossible to control. The best a company can hope to do is try to manage it. And the best way to manage it is to embrace the new normal with respect to crisis communications.

In other words, go digital … yesterday.

msacks Crisis Communications, General Corporate Crisis, Tiger Woods, Toyota

Despite my desire to avoid jumping on the Tiger Woods and Toyota bandwagons, the events of the past week make it nearly impossible for me to avoid the topics.

First, Tiger Woods sets the example for what not to do with apologies. My colleague Mike has already written about the need for authenticity for apologies to be impactful. Apparently Tiger doesn’t read our blog. So Tiger delivered the canned apology we all expected, with about as much personality and sincerity as a doorknob. The winning personality that matched his golf game, and made him a sponsorship darling, was nowhere to be seen. But at least he re-assured his sponsors that he intended to compete.

But even more striking to me was the artificial, overly managed nature of the event. Press credentials were carefully guarded, and only issued on the condition that the news outlet not ask any questions. Some, like the golf writers, boycotted the event in protest and refused to cover it. But Tiger’s hand selected group of friends was there, creating the appearance of a press event and public appearance, but in reality Tiger’s people could have hired extras from SAG with the same result. Perhaps the ultimate irony is that Tiger used that opportunity to chastise the media for harassing his innocent wife and children – when the media feeding frenzy was exacerbated by the fact that he was nowhere to be found. Does he really think this orchestrated “press conference” will be enough to feed the media beast?

Tiger is presumably a smart guy. (And his extra-curricular love life is certainly the best thing that ever happened to Kate Gosselin since her new hairdo – but I digress.) He certainly had the resources to hire enough advisors and handlers to orchestrate this inauthentic apology. It’s hard to imagine that this approach was originated by these strategists and approved by handlers whose livelihood depends on Tiger’s image rebound. And while the American public is forgiving, and will readily move on as soon as Tiger returns to the PGA tour, it is hard to imagine that the objectionable stalking of his family will stop any time soon.

My grandmother used to tell me, “The only way through something difficult is through it.” And I think that requires legitimately going through it – not creating a sanitized version of through it.

No one knows this better than Toyota as they prepare their leaders for Congressional appearances and some pretty tough questions, particularly in light of documents revealing the cost savings of a phased recall, and the potential perception that the automaker chose profits ahead of the safety of the people driving those vehicles.

Carreen Winters can be reached at cwinters@mww.com.

cwinters Crisis Communications, General Corporate Tiger Woods, Toyota

Saturday’s Business Day section of the New York Times offered an interesting juxtaposition of perspective for anyone who was paying attention. Page B4 featured a continuation of a story on Toyota’s belated apology to customers for the recall of vehicles announced January 21st due to some brake issues and on page B5, a column entitled “An Attempt to Revive the Lost Art of Apology, “ by Alina Tugend. I noticed the latter item when I turned the page of the newspaper while wondering why the CEO of Toyota waited nine days from the day of announcing the recall to apologize and why he did it from Davos as opposed to returning to his company to sort out an issue which is clearly devastating to sales.

It’s understandable that companies do not like to communicate with customers when things go wrong until they feel that have the complete story and can answer the question “what will you do to fix the problem.” It may even be legal counsel that is discouraging a public apology or communications.

But, the equity gained by saying “I’m sorry this happened” first, and then communicating as information and solutions are found, is profound. The need for an apology has even been noted in reviews of malpractice litigation where plaintiffs frequently report that all they wanted was for the doctor to say “I’m sorry.”

The power and value of an apology is clearly pointed out by Professor Jonathan R. Cohen, a law professor at the University of Florida, in Ms. Tugend’s piece. “Saying I’m sorry, or asking forgiveness permits you to have a future relationship,” he said.

While the apology finally came from Toyota’s Akio Toyoda, one has to wonder if it came too late to allow a future relationship with affected customers as they look to take advantage of the trade-in incentives being offered to owners of the recalled Toyota vehicles by competitors such as Chrysler, GM and Hyundai.

Ame Wadler can be reached at awadler@mww.com.

awadler Crisis Communications apologies, reputation, Toyota