So now he’s back.
Tony Hayward, former disgraced BP chief, agreed to be interviewed for a BBC2 documentary that aired on Nov. 9. And to think we thought we had heard the last of one of the biggest corporate punching bags in the past 20 years.
Check out these gems from his first major interview since the Gulf debacle: “…I’d have done better with an acting degree.” “You know it’s difficult to hate a company, it’s much easier to hate an individual.” “…the company’s contingency plans were inadequate and we were making it up day-to-day.” “BP was not prepared to deal with the intensity of the media scrutiny it faced.”
These fresh quotes from the man who botched Crisis Management 101 with earlier comments like: “I want my life back” and “The amount of oil which leaked into the Gulf was relatively tiny compared with the very big ocean.”
Maybe it was the relative comfort of speaking to a London journalist that prompted Hayward to get back into the fray. After all, he was demonized and vilified in the United States and abroad until he resigned back in July. So why speak to any reporter? It just relives a very ugly chapter in BP’s corporate history.
Personally, I find Hayward’s latest remarks about as off-the-wall as his earlier statements. Does he really think “acting lessons” are necessary to manage a crisis or that a company can’t be hated as much as an individual? He is living on another planet.
Even worse, admitting that the company was unprepared for a disaster is outrageous for an organization the size of BP that explores and drills for oil and gas in some of the most adverse environments on the planet.
Once again, this points out the need for contingency crisis communications planning. Remarkably, despite all the environmental catastrophes in recent years, major companies around the world seem completely unprepared to effectively plan for and manage a significant crisis. They spend most of their time and energy focusing on financial performance and operating results, which is what they get paid for.
However, in my view, fiduciary responsibility goes far beyond the numbers. A company has a moral obligation to ensure that its top executives use best practices in corporate governance…and that includes crisis management.
Top communications executives (and even trusted outside counselors) need to be part of the senior decision-making process. From many years of experience, I have come to realize that the strategic communications team often “gets its marching orders” after major corporate decisions have been made. This thinking is fundamentally and strategically flawed.
Questionable Communications Skills
A geologist by training, the former BP CEO has a strange knack for off-the-cuff quotes. At his last board meeting, he reportedly said his experience “…was like stepping out from the pavement and being hit by a bus.”
At the time, he also described BP’s response to the oil spill as a “model of what corporate social responsibility is all about.” Tell that to the people of the Gulf who suffer the consequences of this massive leak and will continue to find oil in their vast ecosystem for decades.
One has to wonder if BP has ever heard of presentation and media training. For years, this training has been widely available for CEOs and senior executives willing to invest the time and energy in the process. Communications skills “can” and “should” be taught to executives at companies, both large and small. It’s not rocket science.
Ever since the Deepwater Horizon killed 11 workers, knocked billions in value off BP’s share price, and brutalized a corporate reputation already tarnished from previous accidents in the U.S., hundreds of thousands of words have been written to scrutinize and analyze the company’s crisis response.
Some of the best minds in communications and academia have argued that, because of the nature of the calamity, no crisis plan could have saved BP. Having practiced crisis management for more than three decades, I disagree.
One needs to remember that BP already had a questionable industry track record, including a deadly 2005 explosion at its refinery in Texas City (15 dead), the near-sinking of one of its flagship rigs a few months later, and the huge oil spill from a ruptured pipe in Alaska in 2009. If these problems at the operating level had been appropriately addressed, the Gulf incident may have never occurred.
The Gulf disaster also sits juxtaposed against BP’s decade-long rebranding campaign to position itself as a public-spirited, environmentally sensitive, green energy enterprise. Hayward, who took over as head of exploration and production for BP in 2003, stated in earlier interviews that he “promised to refocus the company and change the culture, emphasizing safety.” In more recent years, many ads depicted BP as “safe and competent.”
BP simply blew it. The company was unprepared to communicate effectively in today’s frenzied media environment. As a spokesperson, Hayward failed the basic tests of crisis management. He did not take responsibility (not to be confused with blame) for the company’s actions. He then magnified the continuing onslaught by developing the communications strategy on the fly and allowing the crisis communications process to manage him instead of taking charge, developing an agenda, establishing goals, and bringing the situation under control.
In my mind, there is no legitimate excuse for Hayward’s poor performance. If you’re an international oil company, you must have a CEO and senior management team that can effectively manage a disaster and steer the company’s public comments in a direction designed to mitigate the inevitable negative consequences. This is not acting or reacting, but working from a disciplined approach to strategic communications and crisis management that can and will make a difference in protecting an entity’s brand and reputation before irreparable damage occurs.
Management Expertise is Key
Why is it that Bob Dudley, the American who took over for Hayward, had much better luck in implementing a communications strategy and has at least been able to calm the waters? Part of the reason is that he does not shoot from the hip or try to be flippant and cute. Instead, he’s taken a more thoughtful, measured, and strategic approach.
Even before he officially took over, Dudley was quoted as saying, “If we continue to meet our obligations, then over time people will say this was a good corporate citizen responding to an accident that has been a wake-up call to the entire oil and gas industry. If we ensure this does not happen again, then maybe we can restore our reputation in the U.S.”
In an October 2010 story on the guardian.co.uk website, Dudley was described as “….intelligent and unflappable. Nothing, nobody could get him angry. He never said anything bad about anybody. Bob can keep focused on the issue at hand when mayhem is breaking out all around.”
Sounds like a new tune from a distinctly different breed of corporate executive. Perhaps BP should have let Dudley manage communications in the U.S. from the beginning instead of parachuting Hayward in.
It will likely take years before we can accurately assess the true damage done to BP’s brand and reputation. Earnings have suffered and the long-cherished dividend has been suspended. But these are financial benchmarks. Only time will tell if the damage, mostly self-inflicted, will heal so that BP is once again viewed as a responsible company practicing good corporate governance and citizenship.
BP’s ongoing nightmare began with its decision to put the wrong person out front from the beginning. It is clear that, by his own admission, Hayward was simply unprepared. His latest interview proves once again that hubris and unbridled arrogance will continue to cost BP dearly, both on and off the balance sheet.
In my view, if Tony Hayward is prudent, he should quietly fade into the sunset.
Richard E. Nicolazzo is Managing Partner of Nicolazzo & Associates, a strategic communications and crisis management firm headquartered in Boston, Massachusetts.
Joe Grillo, Partner, and Linda Harvey, Director-Client Services, contributed to this blog.
Friday, November 12, 2010
Monday, March 15, 2010
Toyota Needs to Find Communications “Throttle”
By Richard E. Nicolazzo
Remember that old Toyota corporate advertising theme: “Oh, What a Feeling?” I’ve got a new theme for the company: “Oh, What a Fiasco!”
There must have been long faces in Toyota’s executive suites when a California man held a press conference to tell the world that his Prius accelerated out of control on a freeway. From the air, it looked like a bad “OJ” moment.
To make matters worse, the California “runaway” occurred only 12 miles from where a deadly crash last year sparked the initial scrutiny into Toyotas. That incident, which keeps finding its way into the national media along with the 911 call, resulted in the death of a former California highway patrol officer and three members of his family.
Just a day later, the crash of another Toyota Prius in New York caught the attention of federal regulators after the driver said the car accelerated on its own, lurched down a driveway, across a road and into a stone wall. Ouch.
When you add it all up, with more than 50 deaths apparently linked to deadly accidents, the Toyota situation has turned into the tsunami of all product recalls.
The numbers prove it: 745,000 Priuses built from 2004 to 2009 recalled; six million other Toyotas in the U.S. and some eight million worldwide recalled; 85,000 lost sales over the past two months.
On top of that, a report in the Wall Street Journal said that the financial impact on Toyota from the global recall could total more than $5 billion over the next year because of increased incentive campaigns, litigation costs and big marketing dollars.
One could certainly make the case that Toyota took its time addressing the issue. In the past decade, at least 3,306 Toyota and Lexus drivers nationwide have reported instances of sudden acceleration, according to the latest numbers from Safety Research & Strategies, Inc., a Rehoboth, Mass. company that monitors safety issues for attorneys and plaintiffs in civil complaints, government agencies, and other clients.
To put it bluntly: The smoking gun was there for a long time.
Catch 22 Situation
What makes the Toyota crisis particularly challenging is the never-ending onslaught of bad news.
When you look at the crisis playbook, what Toyota has done deserves general praise: The company stood up and took responsibility for the vehicle defects.
First, Toyota took the extraordinary step of suspending the manufacture and sale of eight of its most popular models because of the unresolved mechanical flaw in the gas pedal assembly. The lines were not restarted until all the defective parts were destroyed and more testing took place. Additionally, dealers could not sell these models on lots until repairs were made.
To Toyota’s credit, this was a big step in beginning to align itself with consumers rather than protecting its corporate image.
In rapid order, Toyota issued official recalls, brought its senior executives to testify before Congress, placed full-page ads in major metro newspapers, made its top U.S. executive available for interviews, communicated with its dealers, gave those dealers cash to repair vehicles as soon as possible, and even staged a press conference in California to refute an ABC story that showed a tachometer near its red-line when the car was in “Park.”
On the sales side, the company has been aggressive in supporting its dealer network. New Camrys are on sale for as little as $179 a month; the Lexus brand is promoting discounted lease offers; and zero-percent loans are commonplace.
The real Catch 22 is how Toyota moves on from what can only be described as a product and reputational nightmare.
With its long-term credibility and brand at stake, I believe the company needs to continually assess its “communications throttle.”
For example, on the same day the Prius went out of control in California, Toyota was running customer testimonial ads in major markets that talked about the “safety and reliability” of the brand.
In my view, this is pushing the throttle too hard at a time when it remains unclear if Toyota truly has the fix for defective vehicles. Here in the Boston market, I saw a video news clip of the runaway Prius on the California highway followed by a commercial about Toyota’s reliability. The juxtaposition does not work for Toyota.
For the time being, the company should provide customers with relevant information about how to deal with an unexpected event or acceleration of a vehicle they manufactured. They should also consider providing customers with hands-on training about how to deal with a problem when it surfaces. For example, they should consider conducting seminars and distributing instructional videos depicting how a consumer should manage these related problems when they surface.
If Toyota wants to address safety and reliability, it might be better off sending a letter directly to the homes of vehicle owners. This would avoid the clutter on TV, radio and the Internet that continues to sting the company.
Adding to its operational and communications woes, Toyota is now being victimized by people who crash their cars and blame it on unintended acceleration. Although expensive and time consuming, Toyota should inspect every vehicle involved in a crash and extract data from the “black box” installed in vehicles to record the condition of the engine, brakes, accelerator and other components at the time of an accident. Otherwise, it risks being blamed for hundreds of accidents that likely have nothing to do with gas pedal or floor mat problems.
Some Brands Come Back
What happens to a brand in a crisis is always hard to predict. Audi, the last major car company to deal with unintended acceleration, was moribund in the U.S. for nearly a decade, but has made a great comeback. Better engineering and slick marketing have rejuvenated the brand, and it’s now stronger than ever.
About a year ago, Domino’s Pizza was the target of a disgusting video prank that looked like it would seriously damage the brand. But the company recently announced solid 2009 results and an increase in same store sales for the 64th consecutive quarter.
In other cases, such as Arthur Anderson, Lehman Brothers and Bear Stearns, the enterprises collapsed.
Despite negative media coverage since late January, there may be some early signs that Toyota can weather the storm. In February, the company’s U.S. market share slipped to 12.7% from just above 14% the previous month. All-in-all, not that significant a drop. Despite the equally negative press about the Lexus brand, sales are up 5% so far in 2010.
Analysts have predicted Toyota will report a profit of more than $800 million when it announces year-end results at the end of March, reversing a loss for 2008.
What next year holds is anybody’s guess.
In the final analysis, the pressure to get this issue behind the company falls on Toyota’s engineers. It doesn’t take a rocket scientist to see that, despite the floor mat and pedal recalls, there is likely something else wrong with the inner workings of Toyota vehicles.
If the problem is in the electronics, Toyota has backed itself into a corner by publicly announcing that either the floor mats or pedal assembly are defective. Admitting an electronics problem is probably unthinkable because it could mean replacing the entire car…a scenario that could create a major financial crisis for even a company this size.
Like most major recalls, the problem seems to emanate from poor product design, engineering flaws, sloppy manufacturing, problems in distribution, or a host of other factors unrelated to strategic communications.
At Toyota, the crisis management team is left to deal with the fallout, somehow rebuild brand integrity and loyalty, and continue to drive sales for its massive dealer network. This is a Herculean task.
Meanwhile, anybody driving one of these vehicles would be well served to take it slow, learn how to put the vehicle in neutral at highway speeds, and shut the engine off in sequence.
It could save their lives.
Joe Grillo, partner, contributed to this blog.
Remember that old Toyota corporate advertising theme: “Oh, What a Feeling?” I’ve got a new theme for the company: “Oh, What a Fiasco!”
There must have been long faces in Toyota’s executive suites when a California man held a press conference to tell the world that his Prius accelerated out of control on a freeway. From the air, it looked like a bad “OJ” moment.
To make matters worse, the California “runaway” occurred only 12 miles from where a deadly crash last year sparked the initial scrutiny into Toyotas. That incident, which keeps finding its way into the national media along with the 911 call, resulted in the death of a former California highway patrol officer and three members of his family.
Just a day later, the crash of another Toyota Prius in New York caught the attention of federal regulators after the driver said the car accelerated on its own, lurched down a driveway, across a road and into a stone wall. Ouch.
When you add it all up, with more than 50 deaths apparently linked to deadly accidents, the Toyota situation has turned into the tsunami of all product recalls.
The numbers prove it: 745,000 Priuses built from 2004 to 2009 recalled; six million other Toyotas in the U.S. and some eight million worldwide recalled; 85,000 lost sales over the past two months.
On top of that, a report in the Wall Street Journal said that the financial impact on Toyota from the global recall could total more than $5 billion over the next year because of increased incentive campaigns, litigation costs and big marketing dollars.
One could certainly make the case that Toyota took its time addressing the issue. In the past decade, at least 3,306 Toyota and Lexus drivers nationwide have reported instances of sudden acceleration, according to the latest numbers from Safety Research & Strategies, Inc., a Rehoboth, Mass. company that monitors safety issues for attorneys and plaintiffs in civil complaints, government agencies, and other clients.
To put it bluntly: The smoking gun was there for a long time.
Catch 22 Situation
What makes the Toyota crisis particularly challenging is the never-ending onslaught of bad news.
When you look at the crisis playbook, what Toyota has done deserves general praise: The company stood up and took responsibility for the vehicle defects.
First, Toyota took the extraordinary step of suspending the manufacture and sale of eight of its most popular models because of the unresolved mechanical flaw in the gas pedal assembly. The lines were not restarted until all the defective parts were destroyed and more testing took place. Additionally, dealers could not sell these models on lots until repairs were made.
To Toyota’s credit, this was a big step in beginning to align itself with consumers rather than protecting its corporate image.
In rapid order, Toyota issued official recalls, brought its senior executives to testify before Congress, placed full-page ads in major metro newspapers, made its top U.S. executive available for interviews, communicated with its dealers, gave those dealers cash to repair vehicles as soon as possible, and even staged a press conference in California to refute an ABC story that showed a tachometer near its red-line when the car was in “Park.”
On the sales side, the company has been aggressive in supporting its dealer network. New Camrys are on sale for as little as $179 a month; the Lexus brand is promoting discounted lease offers; and zero-percent loans are commonplace.
The real Catch 22 is how Toyota moves on from what can only be described as a product and reputational nightmare.
With its long-term credibility and brand at stake, I believe the company needs to continually assess its “communications throttle.”
For example, on the same day the Prius went out of control in California, Toyota was running customer testimonial ads in major markets that talked about the “safety and reliability” of the brand.
In my view, this is pushing the throttle too hard at a time when it remains unclear if Toyota truly has the fix for defective vehicles. Here in the Boston market, I saw a video news clip of the runaway Prius on the California highway followed by a commercial about Toyota’s reliability. The juxtaposition does not work for Toyota.
For the time being, the company should provide customers with relevant information about how to deal with an unexpected event or acceleration of a vehicle they manufactured. They should also consider providing customers with hands-on training about how to deal with a problem when it surfaces. For example, they should consider conducting seminars and distributing instructional videos depicting how a consumer should manage these related problems when they surface.
If Toyota wants to address safety and reliability, it might be better off sending a letter directly to the homes of vehicle owners. This would avoid the clutter on TV, radio and the Internet that continues to sting the company.
Adding to its operational and communications woes, Toyota is now being victimized by people who crash their cars and blame it on unintended acceleration. Although expensive and time consuming, Toyota should inspect every vehicle involved in a crash and extract data from the “black box” installed in vehicles to record the condition of the engine, brakes, accelerator and other components at the time of an accident. Otherwise, it risks being blamed for hundreds of accidents that likely have nothing to do with gas pedal or floor mat problems.
Some Brands Come Back
What happens to a brand in a crisis is always hard to predict. Audi, the last major car company to deal with unintended acceleration, was moribund in the U.S. for nearly a decade, but has made a great comeback. Better engineering and slick marketing have rejuvenated the brand, and it’s now stronger than ever.
About a year ago, Domino’s Pizza was the target of a disgusting video prank that looked like it would seriously damage the brand. But the company recently announced solid 2009 results and an increase in same store sales for the 64th consecutive quarter.
In other cases, such as Arthur Anderson, Lehman Brothers and Bear Stearns, the enterprises collapsed.
Despite negative media coverage since late January, there may be some early signs that Toyota can weather the storm. In February, the company’s U.S. market share slipped to 12.7% from just above 14% the previous month. All-in-all, not that significant a drop. Despite the equally negative press about the Lexus brand, sales are up 5% so far in 2010.
Analysts have predicted Toyota will report a profit of more than $800 million when it announces year-end results at the end of March, reversing a loss for 2008.
What next year holds is anybody’s guess.
In the final analysis, the pressure to get this issue behind the company falls on Toyota’s engineers. It doesn’t take a rocket scientist to see that, despite the floor mat and pedal recalls, there is likely something else wrong with the inner workings of Toyota vehicles.
If the problem is in the electronics, Toyota has backed itself into a corner by publicly announcing that either the floor mats or pedal assembly are defective. Admitting an electronics problem is probably unthinkable because it could mean replacing the entire car…a scenario that could create a major financial crisis for even a company this size.
Like most major recalls, the problem seems to emanate from poor product design, engineering flaws, sloppy manufacturing, problems in distribution, or a host of other factors unrelated to strategic communications.
At Toyota, the crisis management team is left to deal with the fallout, somehow rebuild brand integrity and loyalty, and continue to drive sales for its massive dealer network. This is a Herculean task.
Meanwhile, anybody driving one of these vehicles would be well served to take it slow, learn how to put the vehicle in neutral at highway speeds, and shut the engine off in sequence.
It could save their lives.
Joe Grillo, partner, contributed to this blog.
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