What Could Possibly Go Wrong?

A few years ago I worked for a renewable energy-focused private equity firm, and although the leadership had developed a crisis management plan, they had not developed an accompanying crisis communications plan. So, although they were well-prepared to respond to a crisis, they were not well-prepared to manage any potential fallout among the firm’s stakeholders, including investors, employees, regulators, and the public.

One of my first acts was to create a crisis communications plan that envisioned possible risks to the firm’s operations, which ranged across eight Asia-Pacific countries.

In infrastructure investment, you meet a lot of bankers and engineers, and with a few exceptions, mostly on the banking side, neither group, in my experience, understands much about communications. And to many CEOs, communications is a cost centre that can be called on occasionally to issue press releases and draft speeches, but does not serve much purpose beyond that. “Yes, I suppose we should have a crisis communications plan, but we’re never going to be able to get the management team all together in one place, so let’s hold off on the training.” 

It's not brain surgery, of course. Crisis communications is mostly common sense (to me, anyway!), and can be briefly summarized:

Communicate quickly, appropriately, and continuously
Get out in front of the story. Communicate clearly and succinctly. Try to establish your messaging as the central narrative.

Speak with one voice
This doesn’t mean there can be only one spokesperson; it means that everyone who is empowered to speak should be reading from the same prayer book.

Be transparent
This should be obvious, but to some people, it’s not: if you lie, or try to cover up, people will find out.

Demonstrate empathy and concern
Again, this one is difficult for some people (remember when BP CEO Tony Hayward complained during the Deepwater Horizon oil spill that "I want my life back"?). Be human.

Your actions must match your words
If you say you’re going to do something, do it. Don’t wait a week, don’t wait forever, and don’t overpromise and underdeliver.

There’s a lot more to developing a good crisis communications plan, but as above, most of it’s common sense: collect and analyse information; assess the impact of events on your operations, stakeholders and reputation; figure out how to make things better; and keep doing those things on repeat until things are better.

More interesting for me was the process of identifying the likeliest causes of a crisis that might befall the company.

Of course, a crisis can come from anywhere, but if you sit down for an hour and think about your business and your environment, you can come up with a list of risks that probably closely matches the list that would be produced by William Hill, if they were asked to lay odds on various misfortunes that might befall your organization.

For context, we were in the renewable energy business, building and operating solar and wind power generation plants in Australia, Japan, India, Indonesia, the Philippines, Taiwan and Thailand, with our headquarters in Singapore.

And in that context, I thought the likeliest causes of a crisis would be:

• Terrorism

• Regional/local natural disaster with significant impact on our operations

• Murder, kidnapping, or death threats against one or more of our employees

• Social unrest/riots triggered by our operations/employees

• Corruption (and resultant arrests/prosecutions)

As it turned out, several of our operations came under terrorist attack (in the Philippines), one of our employees was murdered (also in the Philippines), and one of our partners received death threats (again, the Philippines). We also lost several employees to fatal accidents; infrastructure-building is a dangerous business, especially in the developing world.

Undoubtedly some of our people were corrupt (I managed to avert one possible scandal when I talked a project manager out of bribing a Japanese fishermen’s collective), but as far as I know, no one was arrested, and the company’s name was not as a result dragged across the front pages globally.

And we were lucky with natural disasters and social unrest during my time with the company, though obviously in our markets, natural disasters (earthquakes, tsunamis, typhoons, floods) are a regular occurrence.

As I say, we had a crisis communications plan; the problem was management buy-in.

One Monday morning, I got to our Tokyo office early (around 7:00), as was my preference, and the only other person there was the partner in charge of Japan operations. His desk was directly opposite mine in our open-plan office, and after I made my coffee, I started to sort through my inbox.

A story in my feed caught my eye, and I said to the boss, “Hey, a solar plant was attacked by terrorists in the Philippines last week.” He said, “Where?” and I named the place cited in the article.

“Holy shit,” he said, “That’s our plant!”

He scrambled around my desk to read over my shoulder, then said, “How the fuck didn’t I know this?”

The answer, of course, is that although we had created a crisis communications plan, no one was using it.

The attack (automatic weapons fire that had damaged some of our equipment) had occurred on Friday night, and two and a half days later, the number two guy in the company hadn’t heard a word about it.

While we were talking, an email came into the boss’s laptop, and he walked back around to read it. It was from the CEO, informing the partners about the incident. It seems the Philippines country manager had been informed about the attack almost immediately, then informed the (Singapore-based) CEO, who had informed the COO, and there communication had stopped (“You’re on a need-to-know basis, and you don’t need to know!”).

Fortunately, the global media hadn’t picked up the story from the Filipino media (which is where I had read it), and we hadn’t been blindsided by questions (e.g. about the security of our operations, and the risks associated with our investments in the Philippines) for which we had no answers.

I’d like to say the experience was a lesson learned for the firm’s senior leadership, but it wasn’t. Nothing changed (and as sometimes happens, there was no price to pay).

While of course a crisis can pose existential risks to an organization (think about COVID, for example), most of the time the risks are reputational (think about Tokyo Electric Power Company after the Fukushima nuclear power plant reactor meltdown). Warren Buffett said, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.”

That’s a good – and true – line, but one I prefer was written by Hollywood screenwriter-director George Seaton, who wrote, “Any idiot can face a crisis; it’s the day-to-day living that wears you out.”