Jan 2, 2019, 12:27 AM ETInterview

a16z Podcast | Crisis Time -- What to Do When Things Go Sideways

A crisis is defined by the fundamental belief that an event will damage a brand or reputation, regardless of the specific nature of the incident.
Crises manifest in various forms, including persistent product outages (e.g., Twitter's "fail whale"), personal management errors, leadership shakeups, and hostile takeovers.
Preparation is critical, as data indicates that 75% to 80% of companies with pre-established crisis plans have a higher likelihood of recovery, even if the specific plan is not perfectly on-point.

Successful crisis management requires a pre-existing culture of transparency and honesty that encourages employees to report errors without fear of retribution.
Internal transparency prevents information vacuums where the company loses narrative control to speculation or external actors.
The 1996 IBM Olympic games data failure serves as a key example where rapid internal truth-telling regarding the technical issues was necessary for resolution.
Companies must develop a "crisis team" beforehand that clearly identifies who handles media, finance, and technical communications.

The initial phase of a crisis response involves gathering facts, acknowledging that "truthiness" (what feels true) is insufficient without verification.
Organizations should communicate with stakeholders immediately, even without all facts, by clearly stating known information and the steps being taken to investigate further.
Silence or "no comment" responses are detrimental, as they lead stakeholders to assume the company is hiding the truth.
Social media dynamics require rapid response teams to manage the speed at which narratives can spiral, though not every negative mention warrants a public response.
Distinguishing between legitimate criticism and "internet trolls" requires analyzing the credibility and footprint of the critics to avoid over-reaction.

An effective apology must be authentic, sincere, and delivered personally by the highest authority (e.g., the CEO) when the crisis involves core company values or products.
Apologies should avoid "nibbling" on the mistake; instead, they must be substantial and include a concrete plan to prevent recurrence.
Repeated or diluted apologies are counterproductive; the goal is to own the error once decisively and then move forward.
For individuals, rehabilitation is often harder than for companies because individuals lack a "product cycle" to pivot to a new version of themselves (e.g., new movies or cars).

Jawbone successfully recovered from a crisis involving defective fitness trackers by admitting flaws, spending significant capital to recall the product, and shipping a fully functional replacement.
The Jawbone case illustrates that a "beautiful failure" followed by a substantive, authentic corrective action can restore trust and customer loyalty.
Crisis communication styles must align with a company's existing culture; for instance, Virgin's irreverence differs from GE's reliability, though humor is generally risky in crisis scenarios.

Data breaches (e.g., Target, Home Depot) represent a new class of crisis where the volume of compromised data (millions of users) exceeds traditional crisis parameters.
The prevailing trend is shifting toward admitting that 100% security is impossible, with companies expected to proactively communicate their security strategies as part of their core messaging.
Hiding vulnerabilities is no longer a viable strategy; companies without a recorded security strategy face a "zero credibility" status immediately after a breach.
Global markets differ in their cultural attitudes toward privacy (e.g., Germany), necessitating localized communication strategies for security vulnerabilities.

Post-crisis reviews must assess not only the root cause of the event but also the efficacy of the response process itself.
Common internal failures include the presence of too many lawyers or PR representatives on the crisis team, leading to filtered or overly cautious messaging.
Engaging outside voices is critical for objective post-mortems, as internal employees may lack the incentive or perspective to challenge the status quo or admit to past internal warnings.
The ultimate goal of crisis management is to treat the event as an opportunity to improve organizational systems and perspective rather than simply eliminating the immediate problem.