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December 19, 2016 Other Voices

2016 crises offer key lessons for businesses

Andrea Obston

The year 2016 was a head-scratcher. Nothing went as expected. Elections in the U.S. and Britain left pundits with open mouths. A product that took the social media world by storm — Vine — is headed for the scrap heap. And the Cubs won the World Series. Is there nothing we can count on?

Yes — crisis. Politicians may come and go. Products may catch fire and flame out, and loveable losers may make it to the top of the heap. But crisis — those “What were you thinking?” moments — will always be with us. You can depend on that.

Here are some of the crisis highlights (low-lights) that remind me why I love being a crisis watcher:

New Balance's firestorm

Talk about a remark catching fire. A mere 24 hours after the election, a remark by Matt LeBretton, New Balance's vice president of public affairs, inspired people to post pictures of them setting the company's shoes on fire and tossing them into toilets.

And, what caused this firestorm? Here's LeBretton's quote: “The Obama administration turned a deaf ear to us and frankly, with President-elect Trump, we feel things are going to move in the right direction.” LeBretton was talking about Trump's dislike of the Trans-Pacific Partnership trade agreement. As the only major company making athletic shoes in the U.S., the company believed the policy would hinder their business and help overseas competitors.

Before you could say TPP, the remarks had gone viral and posts of flaming New Balance shoes were all over social media.

The company's first attempt to get the crisis under control (saying that it wanted to make more shoes in the U.S., not less) did nothing. In fact, the next social-media volley came from neo-Nazi blogger Andrew Anglin who dubbed New Balance the “Official Shoes of White People.”

Not surprisingly, the company found itself on the defensive again, putting out a statement that looks like what you see at the end of every employment ad: “New Balance does not tolerate bigotry or hate in any form.”

Then came their Instagram statement: “As a 110-year-old company with five factories in the U.S. and thousands of employees worldwide from all races, genders, cultures and sexual orientations, New Balance is a values-driven organization and culture that believes in humanity, integrity, community and mutual respect for people around the world.”

On Facebook, the post has attracted more than 5,000 reactions and hundreds of comments, some lauding the company and others from supporters and detractors of Mr. Trump criticizing its response. Eventually, New Balance tweeted a picture of a full statement, which included this: “We believe in community. We believe in humanity. … From the people who make our shoes to the people who wear them, we believe in acting with the utmost integrity and we welcome all walks of life.”

So, first they said too little. Then they said too much. The lesson here is this: React quickly and directly. Telling a long-convoluted story that talks around the overriding issues leaves folks confused about where you really stand.

Apple's FBI showdown

In February, Apple's CEO, Tim Cook, drew a line in the sand on building a “backdoor” into the security of the company's phones. He positioned both his company and his own personal brand as the defenders of privacy in a way that hasn't been done before. Cook took himself out of the shadow of Steve Jobs with a strong stance against the FBI's demands that the company help them hack into the phone of one of the San Bernardino shooters.

Apple's stance signaled a change for them. The company has been known for its secrecy. In this case, though, they went against their past culture to communicate about principles. They sent a letter explaining their stance to their customers; held conference calls with reporters whenever the government or Apple filed new court documents and did high-profile interviews. All this expanded the company's PR outreach beyond the tech reporters that customarily follow the company and its products.

It might not be a popular move but I think it's worth the risk. While some newspapers ran supportive editorials of its stance, a Pew Research survey a month after the shooting said the majority of Americans were on the other side of this issue. In addition, the upcoming Trump administration has signaled that it, too, may want to jump into the fray. But I believe the idea of Apple as a champion of privacy will, in the end, be a positive for the company.

Wounded Warrior inflicts its own wounds

And speaking about things Americans value, an appalling crisis developed this year that involved a charity organized to benefit veterans. This was a crisis that the nonprofit will not recover from.

The Wounded Warrior Project (WWP) was a fundraising giant, taking in more than $372 million in 2015 — largely through small donations from people over 65. Yet, throughout the year, media accounts and revelations by former employees exposed the group's lavish spending on administration and marketing. In Jan. 2016, WWP was the target of twin exposés by the New York Times and CBS News. In March, WWP's board fired CEO, Steven Nardizzi, and COO, Al Giordano.

I do not believe the charity will survive. Unlike profit-making companies — which can rebuild trust over time with acts of contrition and support of good work — nonprofits are held (legitimately) to a higher standard. Once that trust is broken, you can expect donors to go elsewhere and those who benefit from the charity to suffer.

We've already seen that. Since the firings, WWP's annual contributions have withered by a projected $200 million.

The year 2016 showed us just how unexpected, unusual and unbelievable crises can be. Stay tuned. There's one thing I can guarantee for 2017 — there's more where that came from.

Andrea Obston is president of Bloomfield-based Andrea Obston Marketing Communications.

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