Crisis!

On April 9, 2000, a nervous Gary Crigger, EVP of U.S.-based Bridgestone/Firestone, stepped up to the mike at a press conference....

On April 9, 2000, a nervous Gary Crigger, EVP of U.S.-based Bridgestone/Firestone, stepped up to the mike at a press conference.

He announced that Firestone was going to recall 3.8 million tires ‘in the interest of safety and to help strengthen customer confidence.’ Thus began the start of one of the biggest PR disasters in recent memory.

As the media coverage grew to a frenzy, Firestone resisted admitting that the tires were defective and implied that consumers and the Ford Motor Company were partly to blame for not keeping the tires properly inflated.

By early September, Fleishman-Hillard, which had taken over as Firestone’s PR agency less than two months before, suddenly resigned. Public relations agency Ketchum took over.

By late September, congressional hearings revealed that Ford and Firestone had traded blame for months before the public announcement. On October 10, Bridgestone/ Firestone CEO Masatoshi Ono was transferred back to head office in Japan. In late February of this year, Bridgestone announced that its earnings had dropped 80% in 2000 due to the recall, with a fair chunk of that loss attributed to lawsuits. By this point, Bridgestone’s stock had dropped in value by more than 50% since the initial recall announcement.

Last month, Tokyo-based Bridgestone CEO Yoichiro Kaizaki, who has headed Japan’s largest tiremaker since 1993, stepped down, along with three other top executives.

While it could be argued that such a recall would have serious repercussions whatever the PR spin, it’s also widely held that Firestone ignored every rule in the book when it came to damage control.

They say a mistake is worth making as long as you learn from it, so Strategy turned to four leading Canadian PR agencies to find out how to minimize the damage when crisis strikes…

THINK LIKE A CONSUMER

John Wildgust

NATIONAL Public Relations

When you consider the enormous investment required to build a successful brand name, protecting such a valuable asset with good crisis communications should be a no-brainer.

The basic rules in any crisis are fairly straightforward:

1. Take control of the communications agenda as early and as thoroughly as possible – lead rather than react (for example, recall the product voluntarily and make the facts known before you’re forced to do so).

2. Ensure that your messages are credible – based on facts and thorough disclosure from the outset.

3. Most important of all is to align yourself with the public interest – the consumers and others who could be affected by a problem with a product.

Last year’s Bridgestone/ Firestone tire recall is a textbook case on ignoring all the basic communications rules. Still, the tire recall fiasco appeared to be the result not of poor PR counsel, but rather of a head-in-the-sand approach by the tire manufacturer’s senior management.

Witness the relatively last-minute switch to a new PR firm, Fleishman-Hillard, only a few weeks before Bridgestone/Firestone was obliged to announce the recall of millions of tires (although problems had been lurking for years). Then the PR counsellors resigned only eight weeks later, stating that they could ‘no longer be of service.’ Ketchum PR Worldwide came on board on the day that the U.S. Senate began a hearing to examine the recall and the safety issue.

Without knowing exactly what was said and done in the confidence of the client-counsellor relationship, a couple of major gaffes still stand out.

Bridgestone/Firestone tried to shift blame to Ford’s tire inflation instructions. Finger-pointing only undermines consumer confidence and prolongs the media-exposure agony. Remedy: One clear statement accepting responsibility would have been less damaging than sustained media hits about tire pressure and public debate about the integrity of the company.

Firestone’s plan to replace the tires over several months was naïve and only angered consumers who wanted to exchange their ‘deadly’ tires immediately. Firestone ran out of replacement tires (and eventually had to authorize use of competitors’ products). Remedy: Understand what your customers want and plan for the worst case scenario, thinking of the public interest rather than the available supply of replacement tires.

The Bridgestone/Firestone case underscores that PR is a strategic management function and, without the buy-in of the senior executive, even the best PR counsel will fail.

BEWARE OF CULTURAL DIFFERENCES…

Ray Argyle

Argyle Rowland Worldwide

There is no doubt that Bridgestone/Firestone grievously mishandled its response to the crisis over the failure of its most widely used tires, the ATX and ATXII, used mainly on Ford Explorers.

What may be less widely recognized is that episodes of this nature do not merely illustrate failures in communications management. They also demonstrate the consequences of deeply ingrained and conservative corporate cultures that are unresponsive to public concerns.

This was illustrated in the classic remarks of Yoichiro Kaizaki, then CEO of the Japanese parent, Bridgestone Corp. He was quoted in the Wall Street Journal as saying: ‘Even if 80% of people resist me, I don’t care. I’m not a politician, so I don’t need to be elected on the basis of popularity.’

Six months after Kaizaki’s comment to the WSJ, with Bridgestone’s shares having lost half their value and its Firestone division expected to post a $500-million loss for the year, he was gone, along with the head of the U.S. operation, Masatoshi Ono.

Some of the mistakes Bridgestone made – its failure to recognize the problem earlier, its lack of any disciplined plan to deal with it, and its inability to accept responsibility – are shared by many companies. But the conservative culture of traditional Japanese corporations also appears to have played a role.

When Ono appeared before a U.S. Congressional Committee, he provided the time-honoured Japanese response, a heart-felt personal apology: ‘I come before you to apologize to you, the American people and especially to the families who have lost loved ones in these terrible rollover accidents. I also come to accept full and personal responsibility.’

Japanese companies have traditionally dealt with crisis through personal apologies and resignations, followed by a full resumption of public confidence. This may work in Japan, but not in North America.

Many Japanese companies, including Toyota and Nissan, have successfully transformed themselves into truly global companies, not merely Japanese companies operating internationally. By integrating their cultures with those of their host countries, they have emerged as new, global entities.

But Bridgestone is not the first Japanese company to have been impacted by inappropriate cultural response to a crisis. Mitsubishi Motors failed to deal in a timely way with sexual harassment at its U.S. plant, and suffered the consequences in financial damages and loss of public trust.

Having been to Japan, and having worked with Japanese companies, I have learned that they are excellent corporate citizens, with a deep commitment to product quality. But, as well as being extremely conservative by Western standards, their decision-making process can be encumbered by a focus on unanimity as a prerequisite to action. This takes prompt, bold action out of the equation.

It is significant that Bridgestone/Firestone was served by three able public relations agencies before and during the crisis. It ended a long relationship with Burson-Marsteller in July, 2000 and replaced that agency with Fleishman-Hillard, which then resigned that Labour Day weekend. The company then turned to Ketchum, where CEO David Drobus only agreed to take the account after ‘many hours of very direct, frank and honest discussions.’

It is characteristic of traditional Japanese companies to be loyal to existing business partners but slow to adapt to new ones. This no doubt made the working relationship between F-H and Bridgestone difficult.

Given the corporate culture of Bridgestone, and the frustration that must have been experienced by F-H, it is not likely Bridgestone would have accepted outside advice from anyone when the crisis first erupted.

It has been proven many times over that full and immediate disclosure of all relevant facts – along with meaningful corrective action to ensure there is no repetition – is essential to regaining public confidence in a crisis.

Having failed to do this, Bridgestone really has only one option left: to abandon the Firestone brand on the ashes of its burned-out reputation.

BE PREPARED

Kimberly Cohen

and Howard Brown

Brown & Cohen Communications

& Public Affairs

As PR firms know, a sound and effective communications strategy is one of the cornerstones of a well-run business. However, many organizations don’t recognize this, which is why they often encounter problems in conveying their message. The need for a communications plan is amplified in crises, when companies may worsen their situation by sending out confusing and misleading messages.

At Brown & Cohen, one of the first things we do is help clients create a crisis management plan by identifying potential crisis situations and developing strategies to overcome them. Since Ford Motor Company, which used Firestone tires on its vehicles, had been recalling Bridgestone tires a year prior in countries outside North America, it was logical to assume that the tires might eventually cause problems here. Firestone’s ‘wait and pray’ strategy was clearly the wrong one to adopt.

Firestone also took hits for the time it took to respond. At the time of the recall last August 9, the federal investigation was already underway, as was the Ford recall in other countries. Officials refused comment to media inquiries prior to the press conference.

One of the most important elements of crisis management is to take charge at the first sign of contention. By contacting the media immediately and appearing on every news show, Firestone could have told its side of the story first. By going straight to the media, the company might have garnered more coverage for what it was doing to handle the problem, rather than reacting to news about what it wasn’t doing.

Firestone further inflamed the situation by trying to shift the blame to the customer. EVP Gary Crigger even insinuated that blowouts were caused by a combination of under-inflated tires and excessive heat generated in warmer climates. This finger-pointing only made the company look unsympathetic and insensitive.

It is always easier to say what should have been done and what shouldn’t when you’re looking back at a situation. A communications strategy could have mitigated the damage to the Firestone brand, but the impact of the crisis may still have had serious repercussions.

The lesson to be learned here is to always be prepared and respond in a timely manner with solutions, rather than denying, refusing comment or laying blame.

COME CLEAN FAST

Carol Levine

Communications MECA

If MECA had been hired to advise Bridgestone/Firestone before the recall, we would have tried to do things differently.

We would have begun by providing Firestone executives with media training, helping them to develop key messages that were believable and credible responses to the down-and-dirty questions they were likely to face from their stakeholders and the media. Equally important, we would have advised them to respond in a timely manner and to set up mechanisms to facilitate communications with their customers. We would have made sure that there was a toll-free hotline and Web site to keep consumers up-to-date, and we would have actively promoted both.

Given the fact that Firestone had experience working with PR agencies, and still failed to follow standard crisis management procedure, we can only presume that its executives were more concerned about the material impact of their decision to recall the tires than protecting their brand. It appears they expected the matter to blow over without serious impact and, even more telling, they never seemed to quite accept the fact that there was a problem with the tires. Lawyers often counsel their clients not to comment or to speak in legalese. But in the courtroom of public opinion, this can backfire.

PR and legal counsel should be natural partners in the communications process. The words EVP Gary Crigger used were obviously carefully scripted by legal counsel, but were weak in terms of trying to win back the public’s confidence. He stated that Firestone had not determined what, if any, problem there may be with the tires. This hardly evokes any public affinity for the company.

The general rule in these sorts of crisis situations is to be proactive. By confronting a potential crisis early in the game, a company is better able to control how and when it wants to advance its message. While the news may not be positive, points will be won for being timely and forthright.

Tires are marketed on the basis that the precious lives of families rest on them. Firestone should have put its money where its mouth was. Consumers owning vehicles with the suspicious tires should have been able to have them replaced immediately. There was no excuse for avoiding comment, for creating confusion and for weak public statements that assumed virtually no responsibility.

In particular, I would certainly not have issued the joint statement announcing that Firestone switched to Ketchum public relations mid-crisis. That only drew attention to the fact that Firestone may have botched the communications process so far. The statements made by Masatoshi Ono, CEO of Bridgestone/Firestone, regarding the company’s slow response and underestimation of the degree of public sentiment should have been expressed by Firestone alone in the initial August 9 media release. The joint statement from Ketchum and Firestone suggests that the tire company would never have admitted these shortcomings publicly had it not been coached to do so by the agency, and this further diminishes the credibility of Firestone’s management.

The recall has done more than hurt sales in the short term, it has done long-term damage to the Firestone brand. The question that begs to be asked is: ‘Who would go out and buy Firestone tires now?’

To rebound, the company needs to begin the slow and arduous process of regaining public confidence in both its products and its company management. Public relations is often defined as the building of relationships between an organization and its stakeholders. Firestone took this relationship for granted, seemingly believing that it was a tap that it could turn on and off without consequence. The company will pay dearly for that error in judgment.

John Wildgust, SVP at NATIONAL Public Relations in Vancouver, has worked on a number of crisis management projects. jwildgust@national.ca.

Ray Argyle is chief executive at Toronto-based Argyle Rowland Worldwide and a Fellow of the International Public Relations Association. rargyle@argylerowland.com.

Kimberly Cohen and Howard Brown are partners at Toronto-based Brown & Cohen Communications & Public Affairs. kim@brown-cohen.com and howard@brown-cohen.com.

Carol Levine, APR, is co-founder and partner at Montreal-based Communications MECA. clevine@meca.ca.