Facebook: The poor crisis management of the richest social network

An issue ignored is a crisis invited.”
—Henry Kissinger

The story of CEOs burying their heads in the sand instead of facing the media to confront a crisis results in the same bad consequences for organizations time and time again.

Last month, when The Guardian newspaper notified Facebook that they were publishing news of the breach of the data of 87 million users by Cambridge Analytica, Facebook wanted to “kill” the story.

The strategy was to write a timid statement posted on the social network itself, with information less newsworthy than what was to be published by The Guardian, instead of CEO Mark Zuckerberg and COO Sheryl Sandberg making statements to be included in the news story.

The crisis began to spread. But instead of giving a direct statement to the media immediately, like any good crisis plan would advise, the top executives kept quiet for 48 hours.

Then Zuckerberg offered a late apology and an action plan through his Facebook profile, an interview with CNN and shortly thereafter in an unfolding story published in the U.K.

Dispersing its public relations efforts through time, instead of concentrating them on the same day of the crisis, the Facebook CEO granted another interview and a telephone conference with media from around the world over a period of days.

The outcome of this strategy? Facebook lost 16 percent of its capitalization value (about US$11.5 million dollars) as of this writing, walking  the same path as British Petroleum (BP), when it failed in 2010 to respond to the explosion of one of its oil platforms in the Gulf of Mexico.

What caused this poor crisis control? When a brand is damaged in such a way, it is important to do a post-mortem to learn what to do in the future to preserve a company’s value as much as possible.

Failure to understand long-term impact and political context

First, Zuckerberg could have thought that there was no need to address the media right away, because even if the share price was going to drop, it would only be in the short term.

However, this reasoning assumes being able to determine the future of the market, that the crisis would quickly abate, and that damages would be incurred in the short run only, when the truth is that a crisis can hurt investors, depressing the value of a company for years.

Crisis management does not exist to avoid damages, but to minimize them as quickly as possible.

Second, the ineffective management of the crisis is a symptom of the absence of a crisis plan, because Facebook seemed to perceive the consequences of the scandal only as they were appearing, which provoked improvised reactions.

This implies that the organization did not prepare a crisis response in advance or evaluate the political context of the situation—that is, the implications of the political divide following the election of Donald Trump in the U.S. and the discomfort that runs throughout Europe regarding Brexit, and Cambridge Analytica’s role in both issues.

The lack of political analysis was especially surprising, since Facebook was already submerged in a vortex of accusations about its role in allowing Russia to influence the U.S. elections.

This type of analysis would have shown that posting a response to the social network to “kill” the news would had been insufficient, given its political baggage, which could only be contained with an immediate response and the greatest dissemination of key messages to all audiences.

The lack of risk analysis was also clear with Zuckerberg’s decision to attend a hearing only at the U.S. Congress and send his subordinates to explain the situation to the British Parliament, potentially adding political enemies in the U.K.

To give more relevance to its home country than to any other, as a global company, sends the message that some stakeholders are second-class members for the organization.

Crisis exposes weaknesses and blind spots

An examination of the fallout also shows no research on other institutional relations, because the Cambridge Analytica scandal exposed latent business and internal enemies that could be activated at the slightest provocation.

The most obvious case was the risk caused by the departure of Brian Acton, one of the founders of WhatsApp, which could have been controlled by seeking to deactivate the rivalry that led him later to launch his campaign #deletefacebook.

The proposal soon became a trending topic for Twitter. Elon Musk, CEO of Tesla Motors, deleted his Facebook account and Tim Cook, leader of Apple, strongly criticized the breach. Numerous newspaper articles were published to teach users how delete their Facebook accounts.

Minimize the damage—don’t exacerbate it

As if this were not enough, during the telephone interview with the world’s media, Zuckerberg expanded the estimated number of people affected by the data breach from 50 to 87 million people.

As the majority of these users are from the U.S., it means that information of 30 percent of those who have Facebook accounts in the country were compromised.

Why report that and let the press to make the scandal bigger, especially when the solution to the problem still remains to be implemented? Increasing the spectrum of damage is equivalent to expanding the crisis instead of minimizing it.

Worse yet, a statement from Facebook CTO Mike Schroepfer on how the company was addressing data privacy in its search and account recovery features said that “malicious actors” have “abused these features to scrape public profile information by submitting phone numbers or email addresses they already have through search and account recovery” and that “most people on Facebook could have had their public profile scraped in this way.”

This was another self-inflicted wound, not only enhancing the crisis, but leaving investors to speculate whether the reduction in valuation could be greater than 16 percent.

If it’s not possible to calculate the damage yet, publish a calendar outlining the length of the process. It’s also key to give examples of possible solutions and when they will be implemented, and to report the progress periodically to the press.

Poor crisis management speaks either of ineptitude, inexperience or arrogance. It’s no surprise that the U.S. media wondered how the 500–700 public relations executives of Facebook are using their time and whether the management team under Zuckerberg and Sandberg is fit to lead the company.

Written by José Jorge Martinez for CW Magazine.

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