Reputation in the Age of Media Chaos

MBA programs have been slow to recognize it, but Warren Buffett and William Shakespeare have something in common.

Buffett: “It takes twenty years to build a reputation and five minutes to ruin it.”

Shakespeare: “Who steals my purse steals trash...but he that filches from me my good name robs me of that which not enriches him and makes me poor indeed.”

Both the bard and the sage share an understanding of the value of reputation and the need to do everything possible to guard against damage to it. Those of us who have spent our lives in newsrooms and have dealt with scores of corporations in crisis have long been amazed that most executives caught in a media storm reflexively curl up and wish upon a star that the whole thing will just go away. That wish is rarely granted. Especially when 24-hour cable news will latch onto a story and gnaw it like a dog with a bone until a better one comes along.

As reporters, we worked the phones on many crisis stories and know that attempting to stifle, mislead, or ignore the media is a recipe for public relations disaster. Ask anyone at Hewlett-Packard, where “spygate” rocked the board of directors and toppled the company’s chairman, Patricia C. Dunn.

Given the warp speed of the Internet and the “Ready, Fire, Fire a few more times, Aim” standards of some journalists and many bloggers, the best policy for corporations is to get the fullest possible version of the facts out as quickly and as transparently as possible.

Buffett: "It takes twenty years to build a reputation and five minutes to ruin it." 

The Gold Standard of Crisis Management

Our conviction stems from what we learned from the granddaddy of all corporate reputation crises, the Tylenol affair. It is one of the first nationwide cases where management won praise for handling the threat with immediacy and transparency. Twenty-five years ago this fall, a demented murderer bought bottles of Extra Strength Tylenol, substituted cyanide pills for the popular painkiller, resealed the bottles, and put them on the shelves of half a dozen drugstores in the Chicago area where they were bought by unsuspecting customers. Seven innocent people died.

That was back in 1982, long before the explosion in the number of media outlets. Network newscasts had 50 million daily viewers, twice their audience today and the first night all three led their broadcasts with the Tylenol story.

Owned by corporate giant Johnson & Johnson, Tylenol had a 37 percent market share and accounted for 19 percent of the company’s profit. J&J Chairman James Burke, moving swiftly and decisively, managed to save not only the product, which seemed doomed at the time, but also his company’s reputation. He did so in what has become a textbook case of crisis communication. Acting with what seemed like astonishing speed at that time, he developed a strategy resting on two pillars: protect the public—which he did by getting Tylenol off the shelves fast—and fully communicate what he was doing through the media.

A survey found that within a week, 90 percent of the public had heard about the cyanide killer. Tylenol wasn’t returned to the nation’s pharmacies until new tamper-proof bottles and seals had been developed. The Tylenol response in 1982 is still a classic because even back then Chairman Burke and his Tylenol team realized they didn’t have time to wait for all the facts before jumping out in front of the story. If they had, they’d still be waiting because the cyanide killer was never caught.

Fast forward to this October’s crisis affecting children’s cold medicines. As if following Burke’s playbook, the products were immediately withdrawn from drugstore shelves, while its corporate owner bought full-page ads headlined “Your child’s safety is our number one priority.” The names of two of the medicines? Concentrated Tylenol Infants’ Drops Plus Cold and Concentrated Tylenol Infants’ Drops Plus Cold & Cough. Thanks to adroit handling by Tylenol’s present owner, McNeil-PPC, the fever passed quickly; it was a one-day story.

Corporate crises come in many forms. Think TJX and the 45 million credit-card numbers they allowed to escape from their computer system into the hands of thieves. Consider the New England Patriots, the most successful NFL team of the decade, discovered videotaping the signals of opposing coaches, or toy maker Mattel, whose Chinese suppliers were using lead-based paint on the toys they sell to kids.