How Startup Can Respond To Reputation Crises

In a startup ambitions are as big as the risks. The teams of such projects are looking for a business model that will quickly conquer international markets. Actually, the term is defined by Steve Blank, “Silicon Valley godfather”: “A startup is a temporary organization created to find a repeatable and scalable business model.”

Such a project is always a risky undertaking, and a reputation belongs to risks. Shares depreciation and loss of potential investors are the startup’s major nightmares. Therefore, each startup founder or communications officer needs to know how to minimize the chances of a media scandal. And, of course, you need to understand how to act if the crisis has already sparked.

The first step is strategic: the role of the CEO in PR 

When developing a strategy, the first thing to do is decide on the CEO’s image or a business owner. Image PR is one of the fastest ways to popularize a project. A brand has a face, a person with a specific name and character. People like these companies more than “faceless” ones. Take, for example, Elon Musk, Mark Zuckerberg: in the news, the name of the CEO often comes first, and only afterward the journalists mention the names Tesla, SpaceX, or Facebook. We hear their names more often than the companies they manage. 

But if the CEO is not ready for a public role, behavior and even mood swings can cost the business billions of dollars in profit or investment. First and foremost, you need to analyze in detail the behavior and leader’s bio. Does he/she have dubious stories in the past? Allows incorrect statements? Will a nervous system withstand scrutiny and criticism? In case at least one point is in doubt, the first-person PR becomes a risky undertaking.

“Red Buttons” of PR Crisis

Even if the personality and “PR-aptitude” of the CEO are doing well, this does not necessarily mean the absence of risks. Both the leader and the team are susceptible to making a mistake. These are the main issues communication crises usually stem from. 

Discrimination

Discrimination of any kind is a direct path to a scandal. Sexism, racism, homophobia refer to dangerous areas, but tracking them is actually the easiest. Things are a little more complicated with ageism (discrimination based on age), ableism (rights infringement of of people with disabilities and other health problems). Last year, H&M, the Swedish clothing company, pulled out an advertising campaign that enraged huge number of people and was simply beyond understanding. Picture this: a cute African-American buy wearing a green sweatshirt saying “coolest monkey in the jungle”. The huge scandal was followed by closing store in South Africa and wrapping up a collab with famous musician The Weeknd. Though the case is controversial for the model’s family, it was explicitly ugly for the public. 

Interestingly enough, there is still “positive discrimination” and its particular example is “benevolent sexism” disguised as care and compliments. In our information space, such things have not yet been noticed, whereas for Western markets this is an extremely sensitive topic. It was finely roasted in the Silicon Valley series when the Pied Piper team hired a female engineer, focusing on gender diversity rather than professionalism.

Public support for odious politicians

Another “red button” triggering an information explosion is statements in favor of scandalous politicians. Moreover, sometimes even inaction and absence of position can be perceived as support for such a politician. A striking example is the latest case of Equinox and SoulCycle, luxury fitness brands. The company’s clients got furious after they found out that Stephen Ross, the chairman of the parent company, decided to hold a fundraiser to support Donald Trump’s reelection campaign. Even though the companies do not relate themselves with that initiative, customers see no other way rather than boycotting the brands. 

Client confrontation or “unfollowing”

Many people take the phrase “the client is always right” as an axiom. And even if the client is objectively wrong, the audience is likely to stand on his/her side in the conflict. Therefore, public feud with the service’s buyer or user is the right way towards a reputation crisis. 

If the conflict has already occurred, it is impossible to act from a position of strength (for example, a threat to sue), to get off with formal apologies and clerical letters about the “internal investigation”.

The best strategy is a company’s leader owning responsibility. In most cases, you need to apologize. Even if the customer is so wrong, aggression is a no-no. On the contrary, do demonstrate readiness for dialogue and concern.

Anti-crisis PR: being ahead of the curve 

Avoiding risky topics and CEO keeping it together is not enough to avoid a crisis. Murphy’s law applies to the world of PR: if something can go wrong, it will definitely go wrong. Therefore, any PR strategy includes risk examination.

Prior to starting a campaign, you need to prepare answers for unforeseen and unexpected situations that can be quickly covered. You also need to identify spokespersons who will give their comments. The rest of the employees should be instructed not to discuss the crisis with outsiders: send an interlocutor to those authorized to speak on behalf of the company. Make sure to pull together a list of loyal journalists to help cover the newsbreak from your perspective. 

A well-handled PR crisis means timely actions being taken, and the word ‘timely’ in this context means ‘immediate’. This year Nike found itself in a midst of a crisis when New York Times published an article by Alysia Montaño, an Olympic runner. Nike sponsored her and other athletes, however, there was something missing: a paid maternity leave. The brand was very quick to release a statement on changing their policies.

What if the crisis did happen?

Apparently, there is no one-size-fits-all script for crisis communications. It is nuanced and depends on the project specifics, the market, and the audience, and how exactly the scandal developed. Here are a few strategies that may be helpful.

Silence

Silence (I mean literally: not silencing a problem, but silence in response to a crisis) can be a good strategy if the opinions are divided, and there are company’s supporters. Oftentimes, the strategy works miracles in black PR. If you do react, the news will only stir it up. In contrast, the absence of a reaction will settle things down in a couple of weeks or when competitors run out of budget. In any case, consider the nature and special character of a situation you find yourself in. 

Rebuttal/denial

When a company is unfairly accused, a refutation is an option. But here, again, it’s worth considering whether this refutation will feed the extra informational noise.

Grammarly displayed a good example of the rebuttal. Google Project Zero team member Tavis Ormandy found an error in the extension code that could potentially lead to data leakage. Grammarly team was given 90 days to fix the bug, afterward, the bug would be made public. Within a few hours, the error was fixed, and on Monday Grammarly spoke out loud about the situation on Twitter with a vote of gratitude. Almost every journalist who covered the situation, spoke positively about Grammarly, especially since Ormandy personally called the reaction “really impressive”. 

But there was one problem. There was a notice the bug compromised all the data that the user provided: emails, Messenger, and much more. The company responded promptly and scrupulously. Grammarly contacted each media and explained that only the documents created directly in the Grammarly app were at risk. Moreover, they assured that a company continues to monitor suspicious activity.

Apology

When there is a mistake, an apology is the best solution. In this case, you should offer affected party reimbursement or a bonus. Apologizing is not shameful. In December 2018, Slack found itself in an unflattering position: it banned the users from the countries included into the US sanctions list. Basically, people were restricted from using an app not doing anything wrong. The effort to comply with the law resulted in great disappointment of clients (given Slack positions itself as being focused on customer experience). Violating law and turning back time were no options for this case. Slack did what it had to: took full responsibility, explained what happened and why, and more importantly, explained why this will not happen again and offered ways to resolve the situation. Moral: if you make a mistake, own it.

Shift the focus

Elon Musk’s favorite drill. Had a row with journalists? Launch your media, call it something provocative (for example, Pravda). Employees complain about poor working conditions, and investors do not like it? Send your Tesla into space. In Ukraine, we can expect something similar to politicians. 

Judging from the experience, almost every business has crises. There is a correlation with growth: the faster, the more exposure to such a possibility. So, if you have big ambitions, start preparing an anti-crisis package for communications.

In this article Veroslava Novosilnaya, Founder and CEO of SLOVA Tech PR  international agency for IT business, co-founder of WTECH community, discussed how a startup can prevent reputation risks and deal with crises in a limited budget.