David Walter

Recently, two major brands have given object lessons in how not to communicate. The first was Toyota, which fatally underplayed the accelerator fault on its Prius model. Then BP even more fatally underplayed the consequences of the deep sea oil leak in the Gulf of Mexico. In both cases, the damage to the company’s reputation was enormous.

Allegations that there has been a cover-up always make for a far worse story than the news of the original error. It is much better to acknowledge immediately if you have been at fault and to over-react rather than under-react. This is one area where politicians have often shown themselves to be more adroit than the world of business. David Cameron, for instance, is currently painting the blackest possible picture of the cuts which will have to be made so that people will be agreeably surprised if and when they appear marginally less draconic.

The model for successful crisis handling is the behaviour of Johnson and Johnson in 1982. A madman had laced a batch of capsules of its drug Tylenol with cyanide. Initially three people in Chicago died as a result. The company immediately recalled millions of bottles of Tylenol capsules from all over the country, even though there was no evidence of contamination beyond Chicago. Johnson and Johnson also spent half a million dollars warning doctors, hospitals and distributors of possible dangers. Even after it was demonstrated that only 75 tablets had been contaminated, the company did not relaunch the product until it had come up with new tamper-proof packaging. By behaving so responsibly, the company actually enhanced its reputation.

The lesson is clear. In a crisis, it is always best to anticipate the worst possible outcome and to act accordingly. It is always best to be frank and honest with customers and the media. It is always best to act quickly. The longer the organisation at the centre of a crisis remains silent, the more chance its critics have to put the worst possible construction on its actions.