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PR Solutions for Crisis Management: Case Studies of Boeing, Tesla, and KFC.


week in review

Insights on Design, Marketing Campaigns, Influencers, Brands, and Competitive Strategies.


June 10, 2024


No matter the industry, the size of your business, or the quality and skill of your company’s communication team, public crises are almost inevitable.

With the abundance of media, social communication, and brand interactions, the chances that you will be able to control the narrative constantly across all channels and platforms is damn near impossible.  Whether it’s a small hurdle, a catastrophic event, or a marketing opportunity waiting to happen is entirely up to you and your company’s preparedness for the known-unknown.


Let’s categorize the potential crises that may arise for your brand and what the best practices for tackling them strategically to achieve the solution for your dilemma.


Understanding the Different Origins of PR Crises


Failing to Deliver on Brand Promise


  • Logistical Failures:

    • Disruptions in the supply chain or distribution networks can lead to product shortages and delays, causing customer dissatisfaction.

    • Inefficient logistics management or sudden changes in providers can exacerbate these issues.

  • Faulty Products:

    • Defective products or those that don’t meet the advertised standards can damage a brand’s reputation.

    • Recalls are often necessary but can be costly and erode customer trust.

  • Service Failures:

    • Inconsistent or poor service delivery that fails to meet customer expectations.

    • Examples include long wait times, poor customer service interactions, and unfulfilled service promises.

  • Broken Commitments:

    • Failure to uphold promises made in marketing campaigns or product guarantees.

    • This can include everything from warranty issues to unmet quality assurances.


Communication Missteps: Pitfalls of Public Personas


  • Executive Miscommunication:

    • Unverified or controversial statements by company leaders can trigger market volatility.

    • Miscommunication may result from lack of oversight or impulsive actions.

  • Social Media Blunders:

    • Inappropriate or misleading posts on social media can spread quickly and cause widespread backlash.

    • Lack of a cohesive social media strategy or guidelines for executives.

  • Regulatory Issues:

    • Statements that attract the attention of regulatory bodies leading to investigations and fines.

    • Highlighting the need for compliance and proper communication protocols.


Fundamental Issues: Deep-Rooted Problems


  • Safety Concerns:

    • Products or services that pose safety risks to consumers or employees.

    • Often results from inadequate testing, flawed designs, or ignored warnings.

  • Cultural and Ethical Failures:

    • An internal culture that prioritizes profits over ethics and safety.

    • Examples include ignoring internal warnings or pressuring employees to cut corners.

  • Lack of Transparency:

    • Failure to communicate openly with stakeholders about risks and issues.

    • This can lead to a loss of trust and long-term damage to the company’s reputation.

Understanding these different origins of PR crises helps businesses prepare and tailor their response strategies effectively. By identifying the root causes, companies can implement targeted measures to manage and mitigate the impact of crises when they occur.  With this categorized diagnostic, let’s analyze a couple of brand crises in recent years and how executive teams have dealt with their public relations fallout.


 

Elon Musk's Tweets: When CEO’s Get Carried Away.

Elon Musk, Tesla's charismatic CEO, found himself at the center of a significant PR crisis in August 2018. His tweet claiming that he was considering taking Tesla private at $420 per share and that funding was secured led to immediate market volatility. The SEC filed a lawsuit against Musk for securities fraud, alleging he misled investors with his unfounded claims. The share price, Musk later admitted, was a playful nod to marijuana culture meant to amuse his girlfriend, musician Grimes, rather than a serious offer. The joke backfired spectacularly, as Tesla's stock plunged 14% the day after the lawsuit was filed, erasing over $7 billion in shareholder value.


The consequences of Musk's tweet were severe.

Under the terms of the settlement with the SEC, Musk agreed to step down as Tesla’s chairman but remained as CEO. Both Musk and Tesla had to pay separate fines of $20 million each. Musk was required to resign as chairman within 45 days and was barred from being re-elected as chairman for three years. The settlement, announced just two days after the SEC’s lawsuit, aimed to prevent further damage to Tesla and restore some measure of stability.


Addressing the Crisis

Tesla’s approach to managing this crisis involved several strategic steps:


  1. Compliance Measures: The company implemented stricter oversight of Musk’s communications to ensure that similar missteps would not happen again. This included the formation of a company committee to review Musk’s public statements.

  2. Transparency: Tesla maintained open communication with investors and regulators, detailing the measures being taken to improve governance and prevent future issues.

  3. Leadership Accountability: By complying with the SEC’s requirements and paying the fines, Tesla and Musk demonstrated a commitment to resolving the issue and moving forward.


Lesson Learned

The Tesla saga underscores the critical importance of responsible communication from company leaders. Impulsive or unverified statements, especially from influential figures like CEOs, can lead to significant financial and reputational damage. Proper oversight and a clear communication strategy are essential to prevent such PR disasters.


 

Boeing's 737 Max Crisis: How to NOT Learn from Mistakes.

In 2018 and 2019, two tragic crashes involving the 737 Max aircraft claimed 346 lives

Boeing’s story is a sobering reminder that, sometimes, the cracks run deep. In 2018 and 2019, two tragic crashes involving the 737 Max aircraft claimed 346 lives, shaking the aviation world to its core. The culprit? A flaw in the aircraft's Maneuvering Characteristics Augmentation System (MCAS). Boeing’s initial reaction was seen as slow and opaque, leading to global groundings and a storm of criticism. Internal documents later revealed that employees had long harbored concerns about the aircraft’s safety, adding fuel to the fire.


Boeing's reputation was dealt another severe blow in January when a portion of the fuselage on one of its planes operated by Alaska Airlines blew out mid-flight. The US Federal Aviation Administration (FAA) swiftly grounded the model for inspections and launched an investigation into Boeing’s role in the incident. This event came on the heels of the tragic crashes involving the 737 Max in 2018 and 2019, which had already left the public skeptical about Boeing’s commitment to safety.


Response and Public Perception

Boeing’s response to this new crisis has been largely criticized as inept. The company announced that it would cooperate fully with investigations and be “100% transparent” about the situation. While these are essential components of crisis management, the timing and tone of Boeing’s statements fell short. The company’s history of mishandling similar crises has eroded public trust, making its assurances less convincing. It’s clear that Boeing has struggled to learn from past mistakes, and this latest incident has only intensified scrutiny. The situation was further complicated by external factors that kept the issue in the public eye. A skit on "Saturday Night Live" parodied the incident, and passenger videos of the mid-flight scare went viral on social media. Although the incident itself did not result in deaths or serious injuries, the continuous media coverage and cultural references amplified the crisis, making it a significant PR challenge for Boeing.


Crisis Strategy

The level to which this crisis has impacted Boeing’s image underscores the importance of timely and effective crisis communication. To achieve and maintain control over such situations, companies must act swiftly and decisively. Boeing’s response, perceived as slow and reactive, allowed the narrative to slip from their grasp, leading to a prolonged negative impact.


A robust crisis response plan, developed during times of relative calm, is essential. This plan should be flexible enough to adapt to unique challenges but structured enough to enable quick action. Boeing, as an aircraft manufacturer, should have been better prepared for a crisis involving a malfunctioning part. Their response, which failed to adequately address public concerns and media scrutiny, highlights a significant gap in their crisis management strategy.


Past Mistakes

Boeing’s biggest failure in its crisis response was not learning from previous incidents. The 737 Max crashes due to defects had already promised changes and improved safety measures, yet this new crisis suggests that the promised improvements were insufficient. It was fortunate that no one was seriously harmed in this recent incident, but reliance on luck is not a strategy. The public’s eroded trust stems from Boeing’s repeated failures to prevent such issues and effectively communicate during crises.


Consistency in Messaging

One aspect Boeing managed correctly was maintaining consistency in its messaging. By deferring to statements made by CEO Dave Calhoun, the company ensured that all communication came from a single source. In times of crisis, it’s crucial for a company to have a clear and consistent voice, often provided by the CEO or a designated spokesperson. This approach helps manage the narrative and provides a sense of control and reliability.


Lesson Learned

Boeing’s failure to respond appropriately to this crisis and its subsequent impact on its reputation offers a valuable lesson about the importance of crisis communications. In today’s interconnected world, where news spreads rapidly through the internet and social media, a crisis can escalate quickly. Having a robust response plan in place, acting swiftly, and maintaining consistent communication are vital for navigating these dangerous waters. For Boeing, the challenge remains to restore trust and prove that they have learned from their mistakes.


 

KFC’s Logistics Nightmare: Turning a Crisis into a Triumph.

In February 2018, KFC faced a crisis that seemed almost comical but had serious repercussions. A change in delivery providers led to a massive chicken shortage in the UK, forcing hundreds of outlets to close temporarily. The public outcry was loud, and the media had a field day. KFC’s PR team turned this potential disaster into a masterclass in crisis management. They ran a bold ad featuring an empty bucket of chicken with the letters “FCK” emblazoned on it, accompanied by a heartfelt apology. This clever and humorous approach resonated with the public and softened the blow.


Addressing the Crisis


  • Transparency and Humor: Acknowledging the problem honestly and using humor to connect with customers.

  • Operational Fixes: Quickly resolving the logistics issues to get chicken back on the menu.

  • Rebuilding Trust: Engaging with customers on social media and other platforms to rebuild trust and demonstrate commitment to improving service.


Lesson Learned


KFC’s story shows that even logistical problems can be managed with creativity and transparency. Acknowledging issues openly and using humor can turn a potential PR disaster into a moment of brand strength. It also underscores the importance of having contingency plans for operational disruptions.


Be Prepared

These stories from Boeing, Tesla, and KFC each highlight different facets of PR crises and the importance of tailored responses. Boeing’s experience teaches us the importance of fundamental safety and transparency. Tesla’s drama with Elon Musk’s tweets illustrates the critical need for responsible communication from leadership. KFC’s chicken shortage shows how creativity and humor can turn a crisis into a PR win.


The overarching lesson? Be prepared, act swiftly and transparently, and always learn from past mistakes. By doing so, companies can protect their reputation, maintain customer trust, and emerge stronger from any crisis.


 



We are a team of experienced PR professionals who can help you develop a comprehensive plan tailored to your specific needs. We will also provide you with the training and support you need to execute your plan effectively.


Don't wait for a crisis to strike before you take action.





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