When a company achieves a high enough profile, the question isn’t whether you will hit a rough patch or face an unpleasant public incident, but when. No matter when a crisis breaks, the incident itself and how you respond to has the potential to both impact your bottom line, and your reputation going forward.
The best preparation for something going wrong is building up a cushion of goodwill with key audiences when everything is going right, so they give you the space to do damage control and regain your footing.
Take two recent examples that have been in the news lately: Google and Tesla.
Google made news this month by deciding to shut down their social network, Google Plus, because of a security vulnerability that exposed the private data of up to 500,000 users – none of whom were notified about the breach. But, later that same week, PR Week announced that they had the best reputation for corporate responsibility in the world, creating a positive news aura to help blunt their clear miss around Google Plus. This was especially noteworthy after looking at the rest of the study, which found that “the tech industry’s overall corporate responsibility reputation declined the most of all industries.”
Google was at the top of the list, and they got there while the rest of their industry lost faith and trust overall.
Why is that? There are a few reasons. First, Google famously treats its employees very well — and any company’s employees are its best ambassadors and advocates. Second, from the start, Google has famously promised to do its very best to not “be evil,” and promoting that very clear (if somewhat silly-sounding) principle to your customers is a great way to instill a lasting impression in their minds. Third, Google has branded itself as a warm and friendly brand by regularly promoting fun and adorable Google Doodles and also occasionally investing in heartwarming content about how Google’s suite of products can amplify people’s relationships with one another like this video:
or this one, too:
And Fourth, Google.org. Since its inception, the nonprofit arm of company, has committed over $1 billion to initiatives that are making the world and people better.
On the other side of the spectrum is Tesla. While the company and its CEO Elon Musk have made big promises about major technological advances, neither the company nor Musk have made much of an effort to win over public opinion. If water does indeed flow downhill then it’s understandable how Tesla has developed a reputation for arrogance and standoffishness with many of the key stakeholders whose support they need. Also, most notably, while Google’s employee culture tends to put Larry Page and Sergei Brin (the company’s founders) on a pedestal, Tesla’s employees tend to view Musk with something more akin to the weary patience one feels toward a bombastic uncle at the Thanksgiving table.
It’s unsurprising, then, that this past year for Musk has been characterized by him as “excruciating” and “the most difficult and painful year of [his] career.” Here are a few of the major milestone crises of the past 12 months:
- A shortage of battery packs that Musk warned his employees would result in “six months of manufacturing hell” after they unveiled the Model 3 sedan
- A fatal crash of a Tesla Model X that had been in semi autonomous driving mode when the accident occurred
- A downgrade of the company’s credit rating from Moody’s Investors Service, citing concerns that the company was spending too quickly
- A pause in production of the Model 3 sedan, just months after the unveiling, because of continuing manufacturing concerns
- An outburst, by him, on a call with financial analysts who had questions about a particularly large quarterly loss
- A tweet he sent suggesting that he planned to take the company public at $420 per share, which set of its own firestorm ultimately resulting in Musk stepping down from his role as chairman of Tesla’s board of directors.
Tesla touches far fewer people than Google does, and Google’s entire value proposition is built around users trusting the company with their data. So, while Tesla’s crises are more numerous, Google’s is arguably more damaging — a breach revealing the private data of more than 500,000 people has more far-reaching effects than a CEO’s temper tantrum or a manufacturing slowdown of one type of car.
The difference is that people are predisposed to like Google, because it’s a useful product that’s made a lot of elements of everyday life easier, it has a broader user base that cuts across socioeconomic class, and it presents itself as a friendly, caring brand. Tesla, on the other hand, has marketed almost exclusively to a niche market of high net-worth individuals whose loyalty to the brand is based entirely on promises that the company has not regularly kept. But perhaps most importantly, Tesla’s brand is almost exclusively built around its founder and CEO — if the executive shows signs of instability and a lack of substance, so too will the brand and its reputation.
What you’re doing every day as a brand is your insurance policy against what happens on your worst day.