Managing Crises in t

Environment: Social Media and Their

Domino’s Pizza and United Airlines Case Studies

Roxana Elena Olinic & Valentin Ilie Toia

Supervisor: Steen Michael HejndorfMA in Corporate Communication

Aarhus School of Business, Aarhus University

Managing Crises in the Online

Environment: Social Media and Their

Impact

Domino’s Pizza and United Airlines Case Studies

Roxana Elena Olinic & Valentin Ilie Toia

Master Thesis September 2011

Supervisor: Steen Michael Hejndorf Corporate Communication

Aarhus School of Business, Aarhus University

he Online

Environment: Social Media and Their

Domino’s Pizza and United Airlines Case Studies

Foreword

Although this paper has 92 pages, at a standard page requirement of 2.200 characters per

page and putting front page, table of contents, foreword and references aside, the thesis

counts 182.576 characters and takes up 83 pages (182.576/2.200=83).

Roxana Olinic & Valentin Toia

Table of contents

I. Introduction (R.O.&V.T.)………………………………………………………………………1

I.1. Chapter overview (R.O.&V.T.)……………………………………………………….…………………2

II. Crises and crisis management (R.O.&V.T.)……………………………………………………….……………4

II.1. Understanding crises: definitions and characteristics (R.O.)………….……………………4

II.2. Types of crisis (R.O.)……………………………………………………………………………………5

II.3. Crisis management (V.T.)…………………………………………………………..………………….9

II.3.1. Definitions and origins (V.T.)…………………………………………………...………9

II.3.2. Coombs’ crisis management model (V.T.)………………………..………………11

II.3.3. The importance of crisis management (R.O.)………………………….…………14

III. Corporate reputation and crisis communication (R.O.&V.T.)……………………………...…………16

III.1. Corporate reputation (V.T.)…………………………………………………………………………16

III.1.1. Definitions and characteristics (V.T.)………………………..…………………….16

III.1.2. Advantages of a favorable reputation (V.T.)…………………………………….17

III.1.3. Reputation management (V.T.)………………………………………………………18

III.2. Crisis response strategies (R.O.)………………………………………………..…………………21

IV. Social media and corporate crises (R.O.&V.T.)………………………………………….…………………30

IV.1. The impact of new communication technologies (R.O.)………………...……………….30

IV.2. Social media (V.T.)................................................................................................................................32

IV.2.1. Definitions and origins (V.T.)…………………………………………..……………32

IV.2.2. Types of social media (V.T.)………………………………………...………………..35

IV.3. Social media and crisis communication (R.O.&V.T.)………………………………………44

IV.3.1. Social media and their effects on crises (R.O.)………………………...………44

IV.3.2. Managing a crisis online – Gonzalez-Herrero and Smith model (V.T.)...48

V. Case study (R.O.&V.T.)………………………………………………………………………...……………………54

V.1. Domino’s Pizza crisis (R.O.)………………………………………………………………….…….54

V.1.1. Domino’s Pizza: company background (R.O.)……………………..……………54

V.1.2. Crisis facts and timeline (R.O.)………………………………………….……………55

V.1.3. Crisis type and characteristics (R.O.)…………………………….…………………57

V.1.4. Domino’s crisis management strategies (R.O.)…………………….……………59

V.1.5. Domino’s crisis response strategies (R.O.)………………….…….………………65

V.2. “United Breaks Guitars” (V.T.)………………………………………………………….…………68

V.2.1. United Airlines: company background (V.T.)………………………...…………68

V.2.2. Crisis facts and timeline (V.T.)……………………………………………..…………69

V.2.3. Crisis type and characteristics (V.T.)………………………………………….…….72

V.2.4. United’s crisis management strategies (V.T.)……………………………………74

V.2.5. United’s crisis response strategies (V.T.)…………………………….……………79

VI. Discussion and conclusions (R.O.&V.T.)…………………………………………………………..…………83

VI.1. Discussion (R.O.&V.T.)……………………………………………………………….……………….83

VI.2. Conclusions (R.O.&V.T.)…………………………………………………………...…………………90

References ……………………………………………………………………………………93

1

I. Introduction

In the last decade, no other phenomenon has impacted society as hard as the internet has.

According to the United Nation’s International Telecommunications Union, at the end of

2010 the worldwide internet user population surpassed the two billion threshold, and the

number is continually growing (ITU, 2011). This clearly shows that more and more people of

all ages now use the internet in their everyday life to communicate with friends or colleagues,

to buy products, to read books and watch movies, to perform work activities or to simply

search for information relevant to them.

Corporations have been drawn into the phenomenon just as fast, and the internet has

forever changed the way business is performed. In only a few years, it has unarguably

become the most popular way for organizations to communicate with customers,

shareholders, employees, the media and other stakeholders, radically transforming the field of

corporate communication (Gonzalez-Herrero & Smith, 2008). Research has demonstrated

that two closely related parts of corporate communication, namely crisis response and

reputation management, have been particularly affected by the way people use internet-based

technologies such as social media, and it is this dimension that represents the main focus of

our paper.

The purpose of our work is to determine just how important the use of social media (or

lack of use) really is for companies that face corporate crises and in order to accomplish this

we shall use two well-known crises as case study. Because they both developed almost

entirely in the online environment and because their corporate approach led to significantly

different outcomes, we consider it relevant to analyze the crises that Domino’s Pizza and

United Airlines experienced in 2009. Both crises were triggered on YouTube, one of the most

popular social media platforms, and quickly spread to other online and offline channels,

giving the two American companies very little time to react. The paper focuses on two major

aspects: first, we try to discover just how should the traditional crisis management strategies

be adapted to avoid the risks and grasp the benefits of today’s online environment and

second, what crisis response strategies (in terms of channel, language and tone) should

companies use during an online crisis to successfully reach an ever-growing network of

stakeholders in order to preserve its reputation.

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With this in mind, we will try to find an answer to what we believe is a current and

interesting question: How are social media shaping corporate crises in today’s technology-

oriented society and how can companies use them effectively? To reach a relevant answer to

this main question, we have broken it down into three questions on which we shall rely our

research. First, an analysis of the two companies’ approach will help determine what crisis

management and communication strategies they used and to what degree were social media

integrated within them. Second, we shall try to determine how their efforts were perceived by

stakeholders and how could they have been improved. Finally, we should be able to

determine whether social media channels are important enough for organizations to make the

adaptation of traditional crisis management and communication plans necessary.

The theories that will guide us in our search for answers explore the fields of crisis

management, crisis communication, corporate reputation and social media. Particular focus

will be given to the crisis management model and crisis response strategies of Timothy

Coombs (1995, 2007) as well as to the online-oriented crisis management model of A.

Gonzalez-Herrero and S. Smith (2008), all of which will be used as theoretical frameworks in

the paper’s two case studies.

I.1. Chapter overview

Chapter 1 – Introduction: contains a brief overview of today’s technology-oriented

society which provides the context of this paper; it also explains the motivation and purpose

of our work and sets the thesis’ problem statement, research questions and main theoretical

frameworks.

Chapter 2 – Crises and crisis management: the first part of the chapter offers relevant

information on crises and their definitions, characteristics and types while the second part

deals with crisis management and explores Coombs’ crisis management model.

Chapter 3 – Corporate reputation and crisis communication: offers insight on reputation

and reputation management, showing its tight connection to crisis communication; the second

part of the chapter deals with Coombs’ crisis response strategies.

3

Chapter 4 – Social media and crisis communication: during this chapter we acquire

insight on social media and their various types and examine their relation to crisis

communication; in the second part we also explore the crisis management model of

Gonzalez-Herrero and Smith.

Chapter 5 – Case study: the paper’s case study is separated in two main parts, each

dealing with an individual crisis; the two crises will be analyzed from a strategic (crisis

management) and communicative (crisis response) perspective.

Chapter 6 – Discussion and conclusions: in the final chapter of the paper we present and

discuss our findings and draw the final conclusions, thus answering the three research

questions.

4

II. Crises and crisis management

II.1. Understanding crises: definitions and characteristics

“Crisis is a turning point for better or worse” – Steven Fink, 1986

Society is frequently affected by natural disasters such as earthquakes, hurricanes or

tornados and by man-made crises such as terrorism, industrial accidents or corporate

malfeasance (Ulmer, Sellnow & Seeger, 2007). These crises are becoming common parts of

the social, psychological, political, economic and organizational landscape of modern life.

They affect people more than ever, becoming a phenomenon with tremendous effects on

individuals and communities, on society as a whole. In the last three decades, interest in

crises and their effects on organizations and their stakeholders has brought along tons of

research findings and best practices observations in the field of crisis communication and

management.

In a context of research diversity, we present a few definitions of crisis for a better

understanding and settlement of boundaries. A well-known definition comes from Moore and

Seymour (2005), who view corporate crisis as “an intrusive event such as an accident,

scarce, damaged product or scandal that sparks widespread and critical public attention,

radically disrupts a company’s regular operations, shakes its culture and reputation, at the

very least retards its future prospects, and at the most destroys the company”. In the words of

Barton (2001), a crisis is “an incident that is unexpected, negative, and overwhelming”.

In a classic study, Hermann (1963) found three characteristics of crises, separating them

from other unpleasant events. He argues that an unpleasant event cannot reach the level of a

crisis without the element of surprise, the high level of threat and the need for a short

response time. The urgency of the situation is outlined in Sellnow and Seeger’s (2007)

definition of crisis as “a specific, unexpected, and non-routine event or series of events that

create high levels of uncertainty and threaten or are perceived to threaten an organization’s

high-priority goals.” Thirty years later, Pearson and Mitroff (1993) elaborated five

dimensions of crises which share certain similarities with Hermann’s view: they are highly

visible, require immediate attention, contain an element of surprise, have a need for action

and are outside the organization’s complete control.

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Coombs (2007) tries to capture all the common traits of a crisis, his definition being a

synthesis of various perspectives of researchers: “the perception of an unpredictable event

that threatens important expectancies of stakeholders and can seriously impact an

organization’s performance and generate negative outcomes”. Through his definition,

Coombs introduces the notion of crisis being perceptual, explaining that stakeholders’

perceptions are the ones that define a specific incident or event as crisis. Stakeholder

concerns play an important role in co-creating the meaning of crisis. If stakeholders

(individuals or groups of individuals who can affect or are affected by an organization –

Bryson, 2004) believe that an organization faces a crisis than the crisis really exists and they

will react to the organization as if it is in crisis (Coombs, 2007). That is why it is very

important for PR practitioners to be able to see the events from the stakeholder’s point of

view to properly react to the potential crisis situation.

The impact of crises on organizations has been pointed out by many practitioners and

academics, who argue that corporate crises damage central areas important for the success of

a company, outlining sales, profits or quality procedures. The damages can be assessed in

financial terms, loss of corporate reputation, employee morale or stakeholders confidence and

are usually very hard to quantify and especially, to restore. Intangible resources are damaged

when stakeholders’ expectations are being violated and therefore crises are considered very

dangerous to the company’s reputation. The close connection between crises and reputation

will be further explored in the second part of the paper.

II.2. Types of crisis

Researchers have developed various classification systems of crises, which are meant to

help in the planning process and to reduce the level of uncertainty. Starting with the negative

and undesirable outcomes of a crisis, we can classify them according to the physical nature of

such outcomes, determining that crises can be violent (involving human harm or loss as a

result of explosions, accidents, natural disasters, terrorism etc.) or non-violent (bribes, non-

ethical behavior, management error etc.) (Newsom & Scott & Turk, 1993).

Crises also fall into a great number of distinct “kinds” of crises (Mitroff, 2004) where

accidents, boycotts, natural disasters, chemical leaks, rumors, strikes or product harm are just

a few. Mucchielli (1993) distinguishes between four types of crisis:

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o adaptation crisis – occurs when an organization is overwhelmed by environmental

changes (mergers or acquisitions, retail markets decline, product launches by

competitors at a much lower price, etc.);

o organizational crisis – happens when management becomes improper (wrong

management system, conflicts due to power transfers, ineffective internal

communication, etc.);

o coherence crisis – attacks the organization’s fundamental values, weakening the

organizational culture and questioning corporate identity and objectives;

o motivational crisis – occurs when individuals lack the will to invest personal energy

in the organization. In Mucchielli’s opinion, it represents “a breaking of the tacit

psychological contract, resulting in the shift from satisfaction to dissatisfaction”.

Linke (1989) identified four types of crises according to how much time they allow

managers to respond. The first is an exploding crisis, an accident or a natural disaster with

instantaneous consequences where a reaction time barely exists. The second type is an

immediate crisis, such as a government hearing or TV news report that takes the organization

by surprise but gives some time for a response. The third kind is a building crisis, like major

layoffs, that can be anticipated and gives the organization time to prepare and influence the

crisis situation. Finally there’s the forth type, a continuing crisis which builds in time and

does not quickly dissipate, such as a public debate on issues like stem-cell research.

Coombs (2005) identified four different types of crises an organization can face. He made

a simple division based on two factors, origin and cause, and then placed the factors on two

types of axes: internal-external and intentional-unintentional. The internal-external

dimension sets whether the crisis resulted from something performed by internal stakeholders

of the organization or by another person or group from outside the organization. The second

dimension establishes the level of crisis control – the crisis event can be deliberately

committed by some actor or not. Put together, the two axes describe four types of crisis: faux

pas, terrorism, accidents and transgressions.

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Crisis type matrix (Source: Coombs, 1995)

A faux pas is an unintentional action of an organization that it is transformed by an

external factor into a crisis. A common example of faux pas would be inappropriate

declarations by a politician that through a casual comment marginalizes a minority group,

thus attracting media attention and creating a crisis. In general, faux pas refers to unwritten

social norms and expectations (Cornelissen, 2008).

Accidents are also unintentional actions which occur during the organization’s normal

activities. Examples include product breakdowns that require recalls, workers injuries or

natural disasters. These kinds of accidents are generally random incidents that the

organization is not responsible for. Furthermore, accidents can be divided into natural

accidents (hurricanes, earthquakes, epidemics) and human-error accidents such as workplace

injuries, industrial accidents or product defects (Cornelissen, 2008). The reasoning behind

this division is that stakeholders are less likely to blame an act of nature than a human-error

mistake.

On the intentional axe of the matrix, transgressions are actions taken by an organization

that have the potential to affect or harm its stakeholders. Consciously, organizations break

different rules of behavior like withholding public interest information, distribution of

dangerous products or law violations. For example, Dow Chemical committed a transgression

when the organization withheld safety data about breast implants from the government.

An act of terrorism is an intentional action taken by external actors against an

organization. The purpose of these deliberate acts is to harm the organization directly by

hurting employees or customers and indirectly by reducing sales or disturbing the production

process. Product manipulation, hostage taking, sabotage, workplace violence are just a few

examples of terrorism acts against an organization. Coombs (1995) created the four-type

crisis classification with the purpose of providing a basis for identifying the most appropriate

crisis communication strategy, strategies which will be further explored later on in the paper.

UNINTENTIONAL INTENTIONAL

EXTERNAL Faux Pas Terrorism

INTERNAL Accidents Transgressions

8

Many researchers in crisis management have drawn attention on the fact that crises do not

always have to be perceived in negative terms. A crisis is indeed a rupture that affects the

organization, creating stress and discomfort, but in the same time it represents an opportunity.

Friedman (2002) states that a crisis “is not necessarily a bad thing [since] it may be a radical

change for good as well as bad”. This concept can also be found in Chinese culture, where

the symbol for crisis is interpreted as “dangerous opportunity”, an opportunity for learning

and improvement that can make the organization stronger than it was before the crisis

occurred (Russell, 1991).

Guth and Marsh (2000) quote Gerald Meyers’ (former chairman of the American Motors

Corporation) formula saying that a crisis is a “window of opportunity”, window that opens

only when an organization hits a no turning back point in its lifecycle. Meyer’s formula

outlines several opportunities that an organization can benefit from:

o crises creates heroes – if well managed, public attention is focused on those persons

that made the right decisions; Lee Iacocca, former CEO at Chrysler, could be an

example of a hero that saved Chrysler Group from bankruptcy in the 80’s;

o crises accelerates change – in general, organizations have difficulties in accepting

changes, but under the pressure of a crisis situation, the acceptance of change is

accelerated; a relevant example is the oil corporations being accused of environment

harm (oil spills) by NGO’s that developed research policies in order to find solutions

to reduce pollution and contamination of the environment;

o crises shed light on problems normally ignored – many problems are ignored during

normal times even tough warning signs are present; during crisis situations,

organizations are forced to deal with them and find proper solutions.

o crises change people – a crisis can show reasons to replace employees with new ones,

which might bring fresh ideas and motivation, leading to a better working

environment;

o crises lead to the development of new strategies – after recovering from a crisis, an

organization can discover new paths to reach its objectives, exploring new

opportunities of potential reevaluation;

o crises allow the development of prevention strategies – after the crisis, an

organization learns to monitor more carefully its internal and external environment

and also gains the ability to recognize the warning signs of a potential future crisis;

9

o crises increase competitiveness – after experiencing a crisis and taking different

measures to improve their activities, organizations become stronger and more

competitive on the market.

Meyer highlights the opportunities that an organization can seize by learning from its own

mistakes, and for this reason Ulmer (2007) considers it necessary to add four more, claiming

that if organizations try to be adaptive and focus on effective organizational learning, then

they should also be able to:

o treat failure as an opportunity of recognizing and preventing a potential future crisis

o avoid crises by learning from other companies’ crises and failures

o put emphasis on past experience making the organizational memory a priority of their

actions

o forget their old and inefficient strategies in order to learn new crisis management

strategies.

As mentioned earlier, crises clearly have the ability to harm the organization, its

stakeholder and the general public and share three common characteristics – they represent a

threat to the organization, they have the element of surprise and they impose immediate

action from the management. In order for organizations to avoid dramatic consequences, it is

essential that they adopt various strategies in which prevention, response and communication

play essential roles, allowing them to identify, assess and overcome any serious situation. The

whole process of dealing with the crisis, but also trying to prevent it and coping with its

effects are all activities which summed up form crisis management.

II.3. Crisis management

II.3.1. Definitions and origins

It is unanimously agreed among crisis researchers that no organization, small or large, is

immune to crises. According to Coombs (2007), “if no organization is immune, then every

organization should be prepared for a crisis“. The past showed us that even the biggest

corporations – such as Pepsi, Johnson and Johnson, Nike or Ford, just to name a few – have

been seriously affected by various types of crises more than once throughout their history,

10

despite their strong brands and capable managers. In every case, it was the strategic actions of

a group of people that led to successfully surpassing the crisis, actions which collectively

have been termed crisis management.

T. Coombs (1999, 2007) defines crisis management as “a set of factors designed to

combat crises and to lessen the actual damages inflicted, […] seeking to prevent or lessen the

negative outcomes of a crisis and thereby protect the organization, stakeholders, and/or

industry from damage.” Drawing attention on the evolving nature of a crisis, the same scholar

states that “a crisis does not just happen, it evolves” (Coombs, 2007). For this reason, crisis

management should be thought of as a process with many parts, including preventive

measures, crisis management plans (CMP) and post-crisis evaluations.

Another well known definition comes from K. Fearn-Banks (2002), who defines crisis

management as “a process of strategic planning for a crisis or a negative turning point, a

process that removes some of the risk and uncertainty from the negative occurrence and

thereby allows the organization to be in greater control of its own destiny.” Just like Coombs,

Fearn-Banks also draws attention on the fact that crisis management is a process, adding the

term “strategic planning” to highlight the importance of strategy in dealing with crises.

Crisis management is a relatively new discipline within the centuries-old broader

discipline of management. Although only a few decades old, the field quickly received

massive attention by the professional and academic community alike, and the number of

researchers who now study it has recently increased substantially. Just like all other

disciplines, crisis management was not created from scratch. Instead, it has evolved from

emergency and disaster preparedness, from which it draws a set of four interrelated factors:

prevention, preparation, response and recovery (Coombs, 2007). Prevention represents the

steps organizations take in order to avoid crises (includes the detection of signs which might

warn of a crisis and the actions designed to prevent it). Preparation includes the creation of a

crisis management plan (CMP). It also involves selecting and briefing a crisis management

team (CMT) and spokespersons and creating a crisis communication plan (CCP). Response

consists of the actual application of the preparation components. Given the fact that internal

and external stakeholders’ eyes will be pointed at the company during the crisis, good

communication strategies are essential for successful management. Recovery consists of

efforts to restore business operations to normal. Revision, while missing from emergency

preparedness, is the last factor of crisis management. It involves the analysis and evaluation

11

of the organization’s response and the resulting data should be used in the future to better

handle potential crises.

II.3.2. Coombs’ crisis management model

Coombs and Fearn-Banks are not the only scholars who consider crises as evolving and

who subsequently view crisis management as a process. This view is of course shared almost

universally among scholars. What differs, however, is the way crisis researchers perceive this

process and how they view the ideal crisis management model of dealing with the crisis.

Most models are shaped around the different stages of a crisis, the sum of which has been

termed crisis lifecycle. Three of those models are frequently cited in crisis literature as being

the most accurate and complete: Mitroff’s (1994) five stage model, Fink’s (1986) four stage

model and Coombs’ (2007) basic three stage model.

Mitroff (1994) divides crisis management into five stages: a. signal detection:

organizations identify a crisis’ warning signs and act upon them; b. probing and prevention:

organizations identify the crisis factors and work to reduce their potential for harm; c.

damage containment: organizations try to prevent the crisis damage from spreading into

uncontaminated sectors; d. recovery: organizations work on returning to usual business

operations as soon as possible; e. learning: organizations review and analyze their crisis

management strategies and learn from their actions. Fink’s (1986) model is a metaphor of the

stages of medical illness and consists of four stages: a. prodromal: clues of a potential crisis

emerge; b. crisis breakout or acute: the occurrence of a triggering event along with the

damage; c. chronic: effects of the crisis persist as efforts to surpass it continue; d. resolution:

signs that the crisis is no longer a threat begin to appear and the crisis eventually ends.

Although it has only three main stages, Coombs’ (2007) crisis management model is the

most complex of the three and contains the major characteristics and ideas of the others. In

Coombs’ own words, “Both the Fink (1986) and Mitroff (1994) models fit naturally within

this general three-stage approach.” According to him, the set of factors that constitute crisis

management can be divided into three stages directly related to a crisis’ lifecycle, namely

pre-crisis, crisis and post-crisis (which constitute the macro level), each having two or three

additional sub-stages (the micro level). In this part, we explore the model in more detail, as it

will represent a useful theoretical framework when analyzing our case study’s two crises,

offering a view of the traditional, overall crisis management strategy in addition to Gonzalez-

12

Herrero and Smith’s (2008) more online-oriented crisis management model (which we will

discover in part III of our paper).

First stage: Precrisis

In the first stage, the organization should actively monitor for and deal with warning signs

that could point to a potential crisis. In order to benefit from this process, organizations have

to proactively address the issues discovered by the warning signs, thus preventing an issue

from turning into a crisis. According to Coombs (2007), prevention is the ideal form of crisis

management, as the best-managed crisis is the crisis that never happens. In this stage, the

model comprises three sub-stages: signal detection, prevention and crisis preparation. The

sub-stages represent actions that must be taken to reduce any possible risks in advance, thus

avoiding or at least minimizing the impact of the crisis.

o Signal detection: Signal detection is a three-part process, in which sources of information

to be scanned must first be identified, then collected and in the end evaluated for their

crisis potential. The process represents a measure for reducing or even eliminating the

risk of crisis outbreak (for example, taking corrective action towards a customer

complaint about a product can prevent further complaints or even recalls). Crisis

managers must regularly search for information which might contain warning signs and

both internal and external sources must be scanned due to the diverse nature of crises that

could befall an organization.

o Prevention: During this second sub-stage, the goal is to defuse a potential crisis by

attending to the warning signs previously detected. Prevention is a two-part process, in

which the organization first makes necessary changes to minimize or eliminate the

likelihood of a warning sign becoming a crisis and secondly monitors the changes to

make sure the crisis is indeed avoided.

o Crisis preparation: Considering that a crisis could not have been completely avoided by

following the steps listed above, organizations have to be prepared for the inevitable crisis

that will befall them. This step is necessary because no matter how much organizations

work on avoiding crises, some crises prove unavoidable, showing little or no clear

warning signs. Organizations should prepare for a crisis by addressing six major

concerns: diagnosing vulnerabilities (in accordance to the organization’s industry, size,

location, personnel, etc.), assessing crisis type, selecting and training a crisis management

13

team (CMT) (responsible with creating and applying the CMP), selecting and training a

spokesperson (part of the CMT, representing the voice of the organization during the

crisis), developing a crisis management plan (CMP) and reviewing the crisis

communication system. The crisis management team must be prepared and must have all

the necessary resources when the crisis occurs.

Second stage: Crisis event

The second stage of the model starts with an event that marks the beginning of the crisis

(the trigger event) and ends when the crisis is considered to be resolved (Coombs, 2007).

Communicating with stakeholders is essential during this phase, and crisis communication

(crisis response strategies) represents a large, essential part of both this and the post-crisis

stage. Being particularly important for our case studies, these strategies will be discussed in

more detail in the second part of the paper.

As we have pointed out earlier, crises are influenced by perceptions and organizations

must accept that an event is a crisis if that specific event is perceived by key stakeholders as a

crisis. Therefore, the organization must acknowledge that it is facing a crisis and must take

appropriate actions. However, this is not always easy, as some crises lack an obvious trigger

event and are much harder to spot than others. For this reason, it is essential for the CMT to

first identify the start of a crisis and to convince management that the organization is truly

facing a crisis so it can start dealing with it as soon as possible with full support. This process

is divided by Coombs into two sub-stages:

o Crisis recognition: Once it acknowledges an event or issue as a real crisis, the CMT

begins to collect data, analyze it, and pass it on to internal and external relevant

stakeholders (such as experts or governmental organizations). CMT members will have to

respond rapidly and to effectively communicate with upper managers and other

stakeholders.

o Crisis containment: Once a crisis hits, the crisis team must work to a) prevent the crisis

from spreading and to b) limit its duration as much as possible (Mitroff, 1994; Coombs,

2007). Internally, information must be analyzed and decisions must be taken to end the

crisis while externally, stakeholders must be continuously informed about the progress of

the crisis and about the organization’s actions to address it. Speed and transparency are

two important elements, and the need for both in crisis response continues to escalate as

14

technology accelerates the spread of information, thus reducing the amount of time the

CMT has to respond to the crisis and increasing the level of transparency in

communication (Barton, 2001; Coombs, 2007).

Third stage: Postcrisis

After the crisis is over and the affected organization returns to its usual business

environment, crisis managers must evaluate their crisis management actions so that they can

discover if anything could have been done better and if the organization is able to effectively

face a similar crisis in the future. This stage is divided into three sub-stages:

o Recovery: After the crisis, the organization must take corrective actions in order to return

to a normal business environment. All issues regarding the crisis must be taken into

consideration because its consequences are usually extensive and hard to surpass.

Communicating with stakeholders continues in order to assure them that the crisis is over

and that their expectations have been met.

o Evaluation of crisis management: In this sub-stage, CMT members analyze the actions

taken during the crisis to discover if better decisions could have been made. Data of the

crisis is collected and analyzed and resulting information is stored and taken into account

when handling a future crisis.

o Monitoring of issues related to the crisis: The issues that led to the appearance of the

crisis must still be monitored even after the crisis is over. Monitoring might involve

cooperating with investigators or supplying stakeholders with updated information.

II.3.3 The importance of crisis management

We live in an “era of crises” – Lerbinger, 1997

Today’s environment “seems to be placing higher premiums on crisis management” and

unprepared organizations having more to lose than ever (Coombs, 2007). As Barton (1993)

observed, organizations are becoming more susceptible to crises due to a variety of

environmental developments. These developments, which increase the need for an effective

crisis management strategy, are stakeholder activism (through communication technologies)

and reputational value. Organizational crises are typically associated with an event that has

“actual or potential consequences for stakeholders’ interests as well as the reputation of the

15

organization suffering from the crisis” (Heath & Millar, 2004). If poorly managed, the crisis’

main consequences are a compromised reputation and image and a damaged relationship with

its stakeholders.

Nowadays, dissatisfied stakeholders are more likely to generate crises. Consumers,

shareholders, activists, NGOs and employees are all becoming more vocal when dealing with

organizations (Coombs, 2007). New communication media are empowering them with an

unprecedented degree of information access and public influence (Badarocco, 1998).

Stakeholders are now using the internet as a means of expressing their concerns. Message

boards, online community forums or blogs permit stakeholders to share their thoughts, link

with other like-minded stakeholders, influencing each other’s meaning systems (Coombs,

1998). Collectively, all these internet stakeholders’ expressions are known as consumer-

generated media (CGM). Stakeholder activism is the result of recent major advances in

communication technologies, which for years now have begun to significantly shape crisis

management. These advances make the world more visible, transforming an isolated issue

that could have gone unnoticed a decade ago into a highly visible global crisis. Consequently,

the rise of stakeholder activism through new media leads to a reinforcement of their power to

generate and intensify conflicts and crises (Barton, 1993; Coombs, 1999; Mitroff, 1994;

Moore, 2004).

As we have already discovered, a crisis may have many and diverse effects on a

company, some more serious than others. However, there is one important element that is

usually affected by most types of crises, an intangible asset that all organizations work hard

on preserving and building, and that is corporate reputation. The link between corporate

crises and reputation is undeniable and a much debated topic among crisis researchers. In the

following chapter, we shall point our focus on corporate reputation, exploring its meaning,

identifying the benefits good reputations have on organizations and examining the role of

reputation management in a normal business environment as well as during a crisis.

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III. Corporate reputation and crisis communication

III.1. Corporate reputation

III.1.1. Definitions and characteristics

“Reputation, reputation, reputation! O, I have lost my reputation! I have lost the

immortal part of myself, and what remains is bestial. – My reputation, Iago, my reputation!”

Cassio (Shakespeare, Othello, Act 2 Scene 3)

In its broadest meaning, reputation is defined as “the opinion that people in general have

about someone or something, or how much respect or admiration someone or something

receives, based on past behavior or character” (Cambridge Dictionary). Because it directly

influences basic human emotions such as trust and confidence, reputation is considered to be

one of the most valuable assets a person owns. In their everyday social and professional lives,

people go to great lengths to build up and maintain a good reputation in the eyes of others, be

it family, friends, colleagues or bosses. Corporate reputation is no different in this regard, and

organizations as well work hard on earning and maintaining a good reputation, knowing that

this will lead to more clients, to satisfied employees or shareholders and to a sure path

towards competitive advantage.

According to Wartick (1992), corporate reputation is defined as “the aggregation of a

single stakeholder’s perception of how well organizational responses are meeting the

demands and expectations of many corporate stakeholders”. A more recent definition comes

from Gotsi and Wilson (2001), who view corporate reputation as “a stakeholder’s overall

evaluation of a company over time. This evaluation is based on the stakeholder’s direct

experiences with the company, any other form of communication and symbolism that

provides information about the firm’s actions and/or a comparison with the actions of other

leading rivals.” Both definitions show two important aspects of corporate reputation. First,

the way a company communicates with its stakeholders has direct influence on reputation.

Information about a company reaches stakeholders through various channels and from many

sources, including traditional media (TV, newspapers, magazines, radio, etc.), new media

(websites, blogs, forums, social networks, etc.) or simply by word-of-mouth from friends or

family who have had past experiences with the company. Second, a good reputation leads to

17

corporate differentiation. For an organization, reputation is a way of distinguishing itself from

competitors because it represents an asset that cannot easily be imitated or replicated

(Fombrun, 2001).

Reputation building is a long-term effort, and corporate reputation is the result of a shared

judgment socially expressed by stakeholders, judgment based on the actions of the

organization and on its ability to satisfy stakeholder needs and expectations (Fombrun, 1996;

Weiss et al., 1999). So reputation is built on the trust established with stakeholders through

direct and indirect interactions. Positive interactions build a favorable reputation while

unpleasant interactions lead to an unfavorable reputation (Coombs, 2007). It is the

perceptions of stakeholders that shed light on the differences between two terms often

wrongly used as synonyms or variables of reputation, namely image and identity. While

reputation is identified as being both internal and external stakeholders’ perception of the

company, image is distinguished as being the “impression that outside stakeholders have of

the organization” (Cornelissen, 2008) (customers, government, media, suppliers, NGOs, local

community, etc.) and identity only the perception of internal stakeholders (employees,

managers and shareholders) (Whetten & Mackey, 2002).

III.1.2. Advantages of a favourable reputation

Many researchers have written about the advantages that a strong, good reputation brings

organizations. In short, a favorable reputation attracts and retains employees, builds strong

relationships with partners and suppliers and increases customer loyalty, thus representing a

firm competitive advantage. According to research by public relations firm Weber Shandwick

and market/opinions research firm KRC Research, 63% of a company's market value is

attributed to reputation. In Fombrun’s (1996) own words, “good reputations increase

credibility, making us more confident that we’ll really get what we’re promised’’. A good

reputation offers organizations the opportunity to distinguish themselves in the era of

globalization, transparency and rising corporate citizenship expectations: “For these reasons,

more and more organizations are recognizing the link between corporate reputation and

competitive advantage. A strong corporate reputation can attract and retain the best

stakeholders – whether they be consumers, investors or employees. It can attract customers,

ensure a license to trade and, in times of crisis, win ‘the benefit of the doubt.’ A sound

corporate reputation allows an organization to achieve its business objectives better.” (Frost

and Cooke, 1999).

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Cornelissen (2008) summarized the major strategic advantages of a favorable reputation

under three headings:

o Distinctiveness: a good reputation helps stakeholders find or recognize an

organization. Externally, a corporate image creates awareness, triggers recognition,

and may instill confidence among stakeholders, as they will perceive the organization

positively. Internally, a strong identity of the organization can help raise motivation

and morale among employees by allowing them to identify with their company.

o Impact: a good reputation provides a basis for being favoured by stakeholders.

Accordingly, this directly impacts the organization’s performance when it leads to

stakeholders supporting the organization in the form of buying its products or services

or investing in the company.

o Stakeholders: in relation to the organization, individuals sometimes have more than

one stakeholder role. When organizations project a consistent, positive image if

themselves, they avoid potential pitfalls that usually occur when conflicting, negative

images are sent out. Employees, for example, are often consumers of the products that

their company produces. When the company acquires a bad reputation or fails to send

out a consistent image, employees’ perceptions of their company are threatened, as

they are told one thing by their managers but perceive something different in the

marketplace.

Organizations know how fragile a reputation is and how much time it takes to build a

favourable one. In the words of renowned entrepreneur Warren Buffet, “it takes 20 years to

build a reputation and five minutes to ruin it”. In 2003, a survey of over 100 large European

companies by multinational Aon Corporation found that loss of reputation was perceived as

the second biggest of 17 listed threats to business, after business interruption and ahead of

more material threats such as product liability, tampering, brand protection or employee

accidents (Moore and Seymour, 2005). For these reasons, organizations go to great lengths to

preserve a good reputation or to repair a damaged one, attributing substantial human and

financial resources to reputation management.

III.1.3. Reputation management

In general terms, reputation management is the sum of an organization’s efforts to build,

preserve or repair its reputation. A more complex definition comes from O’Connor (2005),

19

who defines it as the strategic use of a company’s resources in order to influence in a positive

way the attitudes, opinions and behavior of all of the company’s stakeholders, including

employees, consumers, shareholders, investors and the media. Reputation management

mainly consists of two broad, apparently simple but in fact highly resource consuming

activities: acquiring information about the company and acting upon that information. In the

last decade or so, these activities have become a lot more complex than before, mainly due to

modern society’s lightning-speed technological development. The Internet has substantially

reshaped the process of reputation management and has led to the creation of the term online

reputation.

An online corporate reputation is the reputation an organization has on the Internet, on all

new media communication channels such as websites, blogs, forums, online newspapers and

magazines, social networks and chat rooms, just to name a few. Online reputation lies in

contrast with reputation perceived by stakeholders in the “offline” environment, through

traditional channels such as television, radio and print or direct interaction. Managers

designate people from inside the organization and/or resort to outside professional help

(reputation management firms) to identify relevant issues by tracking and scanning

information about the company on both traditional and new media and by conducting

statistical analysis of its reputation among stakeholders. The constant improving technology

and the increasing impracticability of manually tracking online reputation led to the recent

growth of the online reputation management technology and services sector (E-Consultancy,

2008). According to research published by digital marketing firm E-Consultancy in 2008, in

the United Kingdom alone the sector grew by around 30% in 2008 to an estimated value of

£60 million.

Based upon research on large Fortune 500 companies, leading global PR agency Weber

Shandwick identified several strategies to effectively manage corporate reputation:

benchmarking and monitoring reputation online, assessing the right proportion of online and

offline communications, scanning sources on the internet to detect potential risks and issues,

using search engine optimization (SEO – strategy through which search engine result

rankings are improved), buying all company-related domain names (thus avoiding the

purchase and use of negative term domain names by others who might try to damage the

company’s reputation) and maintaining a constant dialogue with employees, customers and

other key stakeholders before, during and after problems arise.

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Elixir Systems, an American marketing agency specialized in online reputation

management, proposes a three-step strategy to manage an online reputation (Elixir Systems,

Online Reputation Management, 2006):

o Monitoring: organizations must monitor and track what is being said about them

online (using internet monitoring technologies and services);

o Analyzing: organizations must analyze and determine how the new information found

affects its brand and reputation (determining the seriousness of an issue, the influence

of a certain blog author, etc.) and analyze its own online assets (corporate sites and

micro-sites, corporate and employee blogs, partner sites, etc.);

o Influencing: finally, organizations must influence the results by actively participating

in the conversation and, if necessary, take corrective actions (such as eliminating

negative websites, using SEO, using trademark infringement litigation, developing

own online assets, etc.).

According to Cornelissen (2008), an important outcome of effective reputation

management is the alignment between an organization’s vision, culture and image. This

alignment means that the same consistent image of the organization is projected to senior

managers (vision), employees (culture/identity) and all other stakeholders (reputation), thus

ensuring that the organization is respected and accepted as legitimate by all stakeholder

groups.

The strategies mentioned above help organizations obtain and preserve a favourable

reputation, which in turn brings many advantages, as previously discovered. However, these

strategies are mainly fitted for a normal business environment. When facing a crisis, which

disrupts the business environment, an organization must adapt its strategies to a specific

situation to minimize damage to its reputation or to repair a tarnished one. During such tense

situations, organizations focus more than ever on direct and constant two-way

communication with their stakeholders and reputation management mainly becomes what has

been termed crisis response (or crisis communication). In the next part, we shall explore

several crisis response strategies, as they represent an essential part of crisis management

(dealing with the communicative part of the process) and have the power to impact a

reputation even more than the crisis itself.

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III.2. Crisis response strategies

“If the media can communicate the news the instant it happens, crisis communications dictate

that a company must be prepared to respond almost as fast. The inability to communicate

your message skillfully during a crisis can prove fatal. And it would be a totally needless

demise, a wrongful death.”- Steven Fink

Communication is the essence of crisis management, and each stage of the crisis

management process requires an important flow of communication, creating a need to send,

collect and interpret information. Crisis communication can be defined as “the collection,

processing, and dissemination of information required to address a crisis situation” (Coombs,

2010). Fearn-Banks (2002) defines crisis communication as “the dialog between organization

and its publics prior to, during, and after the negative occurrence.”

Technological progress and the capability of media to live broadcast and report to a

global public have forced organizations to reconsider and reevaluate their communication

strategies during a crisis. Therefore, the pressure for effective crisis communication has

grown as crises can create threats to public safety, environmental wellness or organizational

survival.

Communicating effectively during the crisis with stakeholders, employees, customers and

the general public is a vital activity but also a true challenge. Many researchers have shown

that during or after a crisis, the public shows great interest in whether or not the spokesperson

and the organization can understand or empathize with its discomforts. A wrong

communication approach by the company may lead to loss of public trust and to an

unfavorable reputation. Therefore, crisis communication relies on intangible resources that

managers use to prevent reputational damage or to restore an already damaged reputation.

Each crisis characteristic determines which crisis communication strategy needs to be

approached. Hence, identifying and carrying out a series of communication strategies is

essential for effective crisis management (Barton, 2001).

In his work “Accounts, Excuses and Apologies” (1995), Benoit explains that a crisis

response strategy should be based on two main premises. First, communication is an activity

which aims to achieve objectives; people try to reach the objectives that are the most

22

important when initiating the communication. The problem is that they do not always know

what the best means of achieving those objectives are and even if the objectives and means

are clear to the speaker, they may still remain unclear or hidden for the listener. Second,

maintaining a favourable reputation is a major purpose of communication. People are afraid

of negative images and social position loss and therefore they normally use explanations and

excuses to improve that image.

Many researchers have worked on the creation of different types of crisis communication

strategies that could help managers cope with a crisis situation. Coombs (2005) claims that

crisis communication strategies are the actual responses used by an organization in the

process of addressing the crisis and names them crisis response strategies. We have chosen

to discuss Coombs’ (1995) crisis response strategies as they also include other relevant

strategies, being a synthesis of Allen & Caillouet’s (1994) research on impressive

management and Benoit’s (1992) work on image restoration. Furthermore, Cornelissen

(2008) made an important contribution by putting Coombs’ strategies on an axis, ranging

from low level responsibility to high level responsibility. The strategies are based on the

degree to which stakeholders perceive the organization as being guilty or responsible for the

crisis and are in tight connection with Coombs’ four-type classification of crises that we have

mentioned earlier above. On one hand, when stakeholders perceive that the organization is

not responsible or guilty for the crisis, the organization attempts to distance itself from the

crisis or even deny its existence, adapting low level responsibility strategies. On the other

hand, when the organization is seen as being fully responsible for the crisis, the organization

will then have to protect its position, apologize for the crisis or change its behavior, adopting

high level of responsibility strategies (Cornelissen, 2008). In the following, we shall explore

Coombs’ (1995) crisis response strategies – which have been slightly adapted by Cornelissen

(2008) – since they will be used as theoretical framework in part of the paper’s two case

studies.

Crisis response strategies

Organizations that use nonexistence strategies

and the negative events, claiming the denial of

strategies:

o denial – a statement saying that

o clarification – an extension of denial which attempts to explain why ther

(one example is Pepsi’s revelation that the syringe scare was a scam

o attack – a rather aggressive strategy

wrongly report that a non

attacking TV broadcasting network

(Coombs, 1995);

o intimidation – the most aggressive

organizational power against individuals or groups (

two forms of intimidation

Distance strategies acknowledge the existence of a crisis by

but at the same time they distance the company

purpose of this strategy is to minimize

reputation as much as possible. The two distance str

Low level of responsibility

High level of responsibility

23

Crisis response strategies [Source: Coombs (1995) & Cornelissen (2008)

nonexistence strategies seek to weaken the linkage between them

, claiming the denial of the crisis. There are four types of nonexistence

a statement saying that a crisis does not in fact exist;

an extension of denial which attempts to explain why ther

one example is Pepsi’s revelation that the syringe scare was a scam);

ggressive strategy that confronts the individual or group who

t a non-existent crisis exists (Exxon Mobil chose this strategy,

TV broadcasting network CBS for a fabricated story about price “gouging”

the most aggressive nonexistence strategy, it threatens to use

organizational power against individuals or groups (lawsuits and physical violence are

two forms of intimidation).

acknowledge the existence of a crisis by expressing public acceptance

at the same time they distance the company from responsibility for its occurrence

minimize the chance of tarnishing the organization’s image and

. The two distance strategies are:

• Nonexistence strategies

• Distance strategies

• Ingratiation / Association strategies

• Suffering strategies

Low level of responsibility

• Mortification / Acceptance strategies

• Accomodative strategies

High level of responsibility

Source: Coombs (1995) & Cornelissen (2008)]

seek to weaken the linkage between them

crisis. There are four types of nonexistence

an extension of denial which attempts to explain why there is no crisis

the individual or group who

Exxon Mobil chose this strategy,

CBS for a fabricated story about price “gouging”)

it threatens to use

physical violence are

public acceptance

its occurrence. The

the chance of tarnishing the organization’s image and

strategies

strategies

24

o excuse – minimizes the level of responsibility and includes denial of intention and

volition by scapegoating others for the crisis; this tactic is hard for the organization to

control even if the crisis is caused by a third party;

o justification – strives to minimize the damage caused by the crisis, denying its

seriousness and convincing stakeholders that the situation is not that bad compared to

other previous crises; Benoit (1995) gives the example of some oil companies that

compare their spills to other previous similar accidents, thus apparently minimizing

the damage of the actual crisis.

Ingratiation strategies, also called association strategies by Cornelissen (2008), are used

to gain the public approval of the organization, connecting it with things that are positively

valued by the general public:

o bolstering – informs or reminds stakeholders of the positive aspects of the

organization in order to offset the negative impact of the crisis; past charity works or

a history of fair worker treatment are just two examples;

o transcendence – places the crisis in a more desirable context (Benoit, 1992), forcing

the attention of the public away from the current situation and into a more abstract

view; the negative aspects or loss arising from the crisis are associated with higher

and desirable goals; for example, after the explosion of Apollo I stakeholders were

asked to accept the death of three people as part of a legitimate search for knowledge

on the universe.

o praising others – is often used by organizations that want to win approval from the

target of praise, leading to an improved image of the organization.

The suffering strategy is considered to be a rather unique crisis response strategy in which

the company claims that it is suffering as a victim of the crisis:

o victimization – the purpose is to gain sympathy from the public, portraying the

organization as a victim of a malicious external factor; Johnson & Johnson’s playing

as victim after a well-known product tampering incident is a tactic of victimization.

Mortification or acceptance strategies involve a high level of responsibility, accepting

full culpability for the crisis:

25

o remediation – gives some form of compensation or help to the victims of the crisis

(money, goods, aid etc.);

o repentance – involves apologizing and asking for forgiveness for the crisis and for the

organization’s misdeeds;

o rectification – involves prevention mechanisms to avoid future crises and protect

stakeholders against potential future harm.

Cornelissen (2008) considered it necessary to make a separation between acceptance and

prevention as strategies. In this respect, he added a second category to the high level of

responsibility strategies – the accommodative strategy. He claims rectification as part of this

strategy, being a tactic of taking corrective action to prevent a reoccurrence of a future crisis.

As we have discussed in the previous chapter, Coombs’ identified four types of crises

based on two dimensions, internal/external and intentional/unintentional. We will further

analyze the process of strategy selection using only two of these crisis types, both of which

are relevant to our case study – accidents and transgressions. Considering stakeholder

perception of the level of responsibility an organization has when dealing with a crisis

situation, natural accidents are unintentional and lead to attributions of minimal

organizational responsibility (Coombs, 1995). The organization has no control and therefore

such accidents can be approached with a distance strategy, reinforcing the weak link between

the organization and the crisis cause. Human-error accidents are more difficult to explain and

require an acceptance strategy where repentance and remediation tactics are meant to protect

the organization’s reputation.

Transgressions are intentional actions taken by an organization that “knowingly place

publics at risk or harm” (Coombs, 1995). In this kind of situation, nonexistence or distance

strategies are considered useless since the crisis already happened and stakeholders are aware

that the organization is responsible for it. Instead, organizations should adopt a mortification

strategy by accepting blame and an accommodative strategy by taking corrective actions. As

a result, the organization has to remediate the crisis by offering help and compensation to

stakeholders involved, should publicly ask for forgiveness and should also adopt a long-term

strategy of repentance that will help the organization prevent future crises. For example, after

being found responsible for fraudulent bookkeeping, the Dutch retailer Ahold chose to

apologize for the crisis and started to make important changes to its corporate governance.

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According to Coombs (1995), apart from typology, a crisis situation has three more

important variables that impact the final choice of an effective crisis response strategy:

veracity of evidence, damage and performance history.

Veracity of evidence refers to proof that a crisis situation has occurred or not. It can be

true, false or ambiguous. Physical evidence like an explosion or oil spill indicates that a crisis

did really happen. False evidence develops when crisis reports are mistakenly made public.

For example, rumors can create serious problems and must therefore be fought by clearly

presenting the truth to the public as soon as possible. Ambiguous evidence is found only with

the faux pas type of crisis and involves questions of morality and ethics. Nonexistence

strategies can be used in cases of false and ambiguous evidence.

Damage can be classified as minor or severe. Minor damage involves negligible injuries

or property damage whereas serious injuries, death or massive property destruction constitute

severe damage. Furthermore, damage can be done to the organization itself or to its external

stakeholders. The severity of a crisis is in fact a matter of interpretation, since stakeholders’

perceptions of the incident are directly influenced by their cultural background and by what

the media covers. Therefore, damage represents an important feature in crisis situation

typologies and it is related to a significant amount of organizational responsibility. Coombs

outlines that the strategies used must fit the damage done by the organization. Mortification

strategies can be use since they all seek to straighten things up, accepting responsibility for

the crisis even if this means jeopardizing the organization’s image. Contrary, Burke (1966,

1970) sees this acknowledgement of responsibility as a “foundation for repairing the

organization’s image”. The impact of the crisis on stakeholders is another important aspect

when it comes to crisis damage. Stakeholders can be divided in victims (physically, mentally

or financially affected by the crisis) and non-victims. Mortification strategies are often used to

provide closure in different ways for the victims of the crisis. Non-victims seek assurance

that the crisis will not affect them or other persons and that the crisis will not repeat itself.

Therefore, rectification strategies are the key to prevent reoccurrences, and mortification and

distance strategies assure stakeholders that the crisis is over and cannot spread and harm

anyone.

Classified as positive or negative, performance history of an organization is also very

important during a crisis. A positive history performance means credibility and trust in the

eyes of its public. Stakeholders are more willing to forgive an organization with positive past

27

performance than an organization with a history of problems (Barton, 1993; Griffin, Babin &

Attaway, 1991). Therefore, a positive reputation helps the organization overcome the crisis

more easily. Sometimes, the public does not know anything about the company’s past and

this represents an opportunity to transform a neutral history into a positive one by citing past

good actions. A history of similar crisis makes the cause of the crisis more obvious, while a

positive performance history makes the cause of the crisis more ambiguous and stakeholders

are less likely to perceive the organization as being the cause. On the other hand, a negative

history performance means negative attributions assigned to the organization. Performance

history influences the process of strategy selection in two ways. First, as a form of credibility,

positive performance history enhances the effectiveness of a source, making stakeholders

more willing to accept claims made by the organization. Therefore, nonexistence and distance

strategies are considered effective if backed by a positive past performance. Second, having

positive performance history is essential for ingratiation strategies since past or present

actions are used to create positive impression of an organization with the purpose of

minimizing the negative effect of the crisis.

After analyzing every range of response possibilities to a crisis and the main factors that

shape the public perception of a crisis situation, we will further explain the decision process

in terms of these crisis variables. Starting from the crisis type, evidence, damage and history

performance, we will also use Coombs’ (1995) decision flowchart to visually present which

response strategy best fits a particular crisis situation.

In case of accidents, the evidence can be true or false. In case of true evidence, damage

and history performance must be evaluated. So, if the damage is considered severe, than any

form of mortification strategy is relevant for the victims. A positive performance history

requires the use of mortification strategies together with ingratiation ones for victims and

non-victims while an excuse strategy is used mainly for non-victims. An organization with a

negative performance history makes mortification strategies relevant for non-victims, in order

to assure them that no other crisis will happen again. Based on the organization’s credibility

in the eyes of stakeholders, ingratiation and excuse strategies are receptive to non-victims

while in the case of a negative performance history, these strategies would be ineffective.

Minor damage imposed distance strategies. Victims and non-victims are more likely to accept

excuses and justifications is there is no severe damage. In this case as well, a positive

performance history provides the necessary credibility to use ingratiation strategies. In case

the evidence is false, than the organization should adopt a nonexistence strategy where

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clarification explains the situation. Coombs (1995) draws the attention on the fact that the

difference between acts of nature and human-induced errors matters in case of accidents.

As with accidents, the evidence can be true or false for transgressions. If the evidence is

true then the damage and history performance should be taken into consideration. A crisis

with severe damage requires mortification strategies for victims as well as for non-victims. If

the organization has a positive performance history then an ingratiation strategy should

couple with the mortification ones, evidencing its positive qualities while apologizing for the

harm done. Even if the damage is minor, mortification strategies should be used because of

the fact that the crisis event is intentional. A positive performance history adds justification

and/or ingratiation strategies to further minimize the damage. Mortification strategies are

unnecessary for non-victims because they do not see a potential reoccurrence or spreading of

the crisis if the damage is minimal. In case of negative performance history, ingratiation

strategies are used for both victims and non-victims while justification is used only for

victims. Mortification is also used as response strategy for victims since the organization has

intentionally performed actions that have harmed them. Minimal damage can be proved to

29

non-victims through justification strategies. Finally, in case of false evidence, the

organization should follow the same process outlined in accidents cases by choosing

nonexistence and clarification strategies to eliminate the crisis.

To conclude, crisis response strategies are meant to shape stakeholders perception of

responsibility for the crisis and to maintain a good relationship between them and the

organization. As we have seen, choosing a good strategy involves taking into account many

factors related to the crisis. However, effectively employing these strategies is just as

important and other factors need to be considered. In the next part of our paper we take the

theoretical foundations of crisis management and reputation already explored and we place

them in today’s much debated online environment with the purpose of observing their

connections.

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IV. Social media and corporate crises

IV.1. The impact of new communication technologies

“A powerful global conversation has begun. Through the Internet, people are discovering

and inventing new ways to share relevant knowledge with blinding speed. As a direct result,

markets are getting smarter – and getting smarter faster than most companies”

(Levine, Locke, Searls & Weinberger - The Cluetrain Manifesto, 1999)

Communication studies have been concentrating on interpersonal communication until

the first mass-media technologies have been introduced. The term mass-media appeared in

1920 when the radio was invented and some of the first mass-circulation newspapers got

printed (Laughey, 2007). Being a message-driven communication, traditional mass-media

was considered a single-way or one-to-many communication channel witch targeted isolated

groups. In the 1990s, we experienced a complete digitalization of all forms of information

transmission. Thanks to the development of the internet and its widespread usability, new

forms of social interaction and activities (new media) have been made available to the public.

New media definitions are still evolving and are focusing primarily on computer technologies

and digital content production.

Dewdney & Ride (2006) define new media as a range of media practices that employ

digital and computer technologies. One key feature of new media is that they are often

portable and facilitate mobility in communication due to recent wireless and digital

improvements. This mobility in communication leads to the conclusion of Terry Flew (author

of the book Understanding Global media, 2007), who believes that the evolution of new

media is one of the key factors that facilitated globalization. The author argues that computer

generated communication lifted previous restrictions which required physical machinery, thus

shortening the distance between people and creating a “shrinking” world. Croteau & Hoynes

(2003) strengthen this idea stating that new media “radically break the connection between

physical place and social place, making physical location much less significant for our social

relationships”. Moreover, new media allows people from all over the world to express

themselves though the availability of email, text messaging, online chat, blogging, websites

and other consumer-generated media, radically transforming the rather unidirectional social

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interaction available technologically over a decade ago into a complex symmetrical

communication.

Therefore, traditional single-way communication is now replaced by many-to-many

communication channels in a dynamic communication system where information is

transmitted through computers, where sound, image, voice or text can travel at a speed almost

unimaginable a few years ago. In 2007, more than one billion people had internet access,

which represented 244% more than in the year 2000 (Internet World Stats, 2007). For

companies, this undoubtedly makes the internet the most popular peer media platform today

to communicate with customers, employees, shareholders and the media.

The Cluetrain Manifesto was one of the most important works which drew attention on

the effects of the internet on human interaction and on the significant differences between

traditional and new media. Written in 1999 by Levine, Locke, Searls & Weinberger, the work

is a set of 95 theses organized as a manifesto (initially a website and later a book), which

aims to examine the impact of the internet on both consumers and organizations. The

manifesto argues that the internet is very different from traditional media, as it enables people

to interact more with each other, thus having the potential to completely transform traditional

business practices. According to the theses, internet users have developed their own

communication language online, “language that is natural, open, honest, direct, funny and

often shocking. Whether explaining or complaining, joking or serious, the human voice is

unmistakably genuine. It can’t be faked.” (Levine et al., 1999). This, the four authors claim,

lies in strong contrast with the communication language of most organizations, who “only

know how to talk in the soothing, humorless monotone of the mission statement, marketing

brochure, and your-call-is-important-to-us busy signal, […] same old tone, same old lies.”

Because of the contrast present in corporate-social interaction, it is argued that if

organizations will not adapt their communication tone to the one used by its stakeholders,

providing a “human face in some way”, they will acquire a hard to correct reputation for poor

customer service (Newson, Houghton & Patten, 2009).

The use of the internet as an interactive platform of communication is a topic that has

received tremendous attention by PR practitioners, who now see new media channels as

standard aspects of PR practices. Yet, many practitioners are struggling with the impact of the

internet – research shows that they are not fully prepared to embrace digital environment, that

they are “ill-equipped or have a fear for technology” (Alfonso & de Valbuena Miguel, 2006).

Research findings have shown that new communication technologies have in recent years

32

started to be perceived just as important (if not more important) as traditional ones and are

now deeply affecting all business practices. Information now travels “astoundingly fast from

an astounding number of directions” (Stephens, 2007) and anyone with an Internet

connection has access to global information and in the same time the possibility to express

his opinions because he sees the internet as a place of free social interaction. As a result,

practitioners will have to be able to cope with these revolutionary changes and to analyze

how new media can help or hinder their business practices in different fields such as media

relations, reputation management, stakeholder relations, marketing communication, investor

relations and issues and crisis management (Taylor & Kent, 2007).

IV.2. Social media

IV.2.1. Definitions and origins

Before exploring the definitions of social media and the role they play in crisis

communication, we must first understand where the phenomenon originates from and how it

evolved. In order to do this, we have to draw our attention on the bigger picture, on one of the

most important technological breakthroughs of the last century, namely the internet.

The history of the internet dates back to the late 1950s, when the United States

Department of Defense created the Advanced Research Projects Agency (ARPA), an agency

responsible for the development of new technology for use by the military. One of the

agency’s main goals was to develop a technology that would interconnect computers between

strategic headquarters of the US military. After years of development, the world’s first

network of digital communication (ARPANET – the precursor of the internet) was created in

1969 to serve military and research laboratories but also universities in the United States.

However, it took many years before the internet would become available to the general

public. This happened in 1991 at the European Organization for Nuclear Research (CERN) in

Switzerland, when two scientists created the WorldWideWeb (WWW), a system which

“allows all links to be made to any information anywhere”, using the internet as channel

(Berners-Lee, one of the WWW’s creators, 1991).

The web represented an innovative method of quickly accessing and sharing information

from different parts of the globe and for this reason its usage spread rapidly, particularly

throughout the developed world. However, in the first years following its creation, the syste

did not offer the full communication liberty it offers today. Creation of content on the web

was limited to information technology (IT) professionals, who presented it in a rather static,

unidirectional way to users, often using an official, rigid langua

known as Web 1.0. In the past decade, technological development as well as the always

increasing interaction between internet users at a global scale led to the second stage of the

WWW, the current Web 2.0.

In contrast with the first stage of the web, during which internet users were limited to

passively viewing content created

In Web 2.0, applications offer their users the possibility to collaborate and interact with e

other in a virtual environment, promoting

dialogue in a natural tone and the sharing of

user-generated content (UGC). T. Flew (2008)

described the evolution of the web from 1.0 to

2.0 as a “move from personal websites to blogs

and blog site aggregation, from publishing to

participation, from web content as the outcome

of large up-front investment to an ongoing and

interactive process, and from content

management systems to links based on tagging

(folksonomy).”

Folksonomy (also called social

social indexing), a defining characteristic of

Web 2.0, is a method of classifying and finding

user-generated content by collaboratively

creating and managing tags (Peters, 2009). Through tagging, web users attribute their own

words and expressions to content created by themselves or by others (such as pictures and

videos) so that it can be retrieved later or easily found by everyone else. The practice is a

major characteristic of the current stage of the web, showing the important role that the

internet has acquired in recent years, namely to act as a true channel of social interaction and

collaboration and not just a means of obtaining information. It is this stage of the web that

saw the creation of many services for social interaction, aimed at bringing

33

throughout the developed world. However, in the first years following its creation, the syste

did not offer the full communication liberty it offers today. Creation of content on the web

was limited to information technology (IT) professionals, who presented it in a rather static,

unidirectional way to users, often using an official, rigid language. This stage of the web is

known as Web 1.0. In the past decade, technological development as well as the always

nternet users at a global scale led to the second stage of the

e first stage of the web, during which internet users were limited to

passively viewing content created for them, Web 2.0 focuses on content created

In Web 2.0, applications offer their users the possibility to collaborate and interact with e

other in a virtual environment, promoting

dialogue in a natural tone and the sharing of

generated content (UGC). T. Flew (2008)

described the evolution of the web from 1.0 to

2.0 as a “move from personal websites to blogs

, from publishing to

participation, from web content as the outcome

front investment to an ongoing and

interactive process, and from content

management systems to links based on tagging

social tagging or

), a defining characteristic of

Web 2.0, is a method of classifying and finding

generated content by collaboratively

(Peters, 2009). Through tagging, web users attribute their own

ent created by themselves or by others (such as pictures and

videos) so that it can be retrieved later or easily found by everyone else. The practice is a

major characteristic of the current stage of the web, showing the important role that the

s acquired in recent years, namely to act as a true channel of social interaction and

collaboration and not just a means of obtaining information. It is this stage of the web that

saw the creation of many services for social interaction, aimed at bringing together people

throughout the developed world. However, in the first years following its creation, the system

did not offer the full communication liberty it offers today. Creation of content on the web

was limited to information technology (IT) professionals, who presented it in a rather static,

ge. This stage of the web is

known as Web 1.0. In the past decade, technological development as well as the always

nternet users at a global scale led to the second stage of the

e first stage of the web, during which internet users were limited to

them, Web 2.0 focuses on content created by its users.

In Web 2.0, applications offer their users the possibility to collaborate and interact with each

(Peters, 2009). Through tagging, web users attribute their own

ent created by themselves or by others (such as pictures and

videos) so that it can be retrieved later or easily found by everyone else. The practice is a

major characteristic of the current stage of the web, showing the important role that the

s acquired in recent years, namely to act as a true channel of social interaction and

collaboration and not just a means of obtaining information. It is this stage of the web that

together people

34

with similar interests from any corner of the world, services which together form social

media.

According to Kaplan and Haenlein (2010), Web 2.0 acted as a platform for the evolution

of social media, which they defined as “a group of internet-based applications that build on

the ideological and technological foundations of Web 2.0, and that allow the creation and

exchange of user-generated content.” A second definition comes from Newson, Houghton

and Patten (2009), who view social media as “online tools and utilities that allow (1)

communication of information online and (2) participation and collaboration.” In other

words, social media are media for social interaction, focusing on information that users create

by themselves and share with others. Because social media are continually evolving, it is

nearly impossible to develop an exhaustive list of all their types, but common forms of social

media today include blogs, social networks, wikis and media-sharing websites.

Social media have had a strong impact on human interaction in the past few years,

significantly changing the landscape of both social and corporate communication, and it is

agreed by many researchers that there are three major characteristics which together

contributed to their huge impact (Rainie, Purcell & Smith, 2011; Lenhart & Fox, 2009;

Madden, 2010):

o Immediacy: all forms of social media facilitate instantaneous information sharing

through the use of various technologies connected to the internet (such as personal

computers, laptops, tablets or mobile phones);

o Ubiquity: a 2011 study of the United Nations’ International Telecommunications

Union (ITU) concluded that the number of internet users worldwide has surpassed the

two billion mark at the end of 2010 and that the number of mobile phone

subscriptions worldwide reached 5.28 billion at the end of the same year. Since a

great number of those users are also users of social media, it’s very clear that social

media are practically everywhere, making it very easy to spread information to

massive audiences all over the world;

o Availability: as most social media platforms are free and require only an internet

connection, they are available to everyone, regardless of social status or IT skills.

35

IV.2.2. Types of social media

As previously mentioned, it’s very difficult to categorize social media given their

evolving nature. However, many authors have created classifications based on various

factors, insisting on the non-exhaustive nature of their lists. Newson, Houghton and Patten

(2009) have proposed one classification of social media and elaborated on a few examples

from each category, noting that although they placed some media services in a particular

category, these often contain features from other categories as well. According to the three

authors, social media can be roughly classified in: blogs, professional networks for

businesses, consumer-oriented media (which contains social networking sites, consumer-

content distribution sites and virtual worlds), wikis, online office applications and podcasting

and videocasting. In the following part, each category will be further explored and some of

the most popular services at the time of writing (and relevant to our paper) will be briefly

examined.

Blogs

According to Newson, Houghton and Patten (2009), blog is a term derived from web log

and is defined as “a website where information is displayed in date order, with the most

recent information at the top of the page”. A similar definition is advanced by Kaplan and

Haenlein (2010), who state that blogs “represent the earliest form of social media” and are

“special types of websites that usually display date-stamped entries in reverse chronological

order”. Becoming extremely popular in the early 2000s, blogs have had a massive impact on

the internet and are today extensively used under many variations, from personal diaries

written by a single person to corporate blogs managed by organizations in order to engage

employees, customers or shareholders (Newson et al., 2009; Kaplan & Haenlein, 2010).

Blogs have led to the appearance of several terms very often heard today: maintaining a

blog by adding information to its content is called blogging, the information is usually shaped

as individual articles called blog posts (also simply posts or entries), while the person who

posts the entries is called a blogger (Newson et al., 2009). Blogs can be categorized in many

different ways, but most blog directories divide them according to subject matter, and major

categories include: personal, business/professional, academic, entertainment, gastronomy,

technology, sports, arts, politics, etc. A trait common to almost all blogs is the frequent

connection to other blogs and websites. Most bloggers often use content (such as text,

36

pictures or videos) taken from other sources and mention this by directly linking to them.

This allows the reader to discover new blogs and other sources of information on similar

topics.

Writing a blog can bring organizations many benefits. Newson, Houghton and Patten

(2009) have listed some of the most important:

o Blogging offers the ability to reach a huge number of people instantly over the

internet, as the blog’s content is accessible directly or through web searches of the

company’s name or brand names;

o Not having to understand HTML code or requiring specific IT skills means that

companies act as their own publisher and have full control over the information they

send out;

o In tone with the message of the Cluetrain Manifesto discussed earlier, companies are

able to communicate directly with their stakeholders in a social environment using a

simple, natural language. In contrast with communication performed through PR or

marketing firms, blogging does not dehumanize the message. For example, the CEOs

of Sun Microsystems and General Motors maintain personal blogs to improve their

companies’ transparency and give them a humane side;

o Blogging is a great way of networking with people and businesses from the same

industry. Frequent online interaction may lead to strong connections being formed

between people who would probably not normally meet offline;

o Blogs represent a powerful tool for internal communication. Employees and

shareholders can be constantly kept up to date with information on past and future

activities or events of the company;

o A major benefit of blogging is the feedback received from stakeholders. Blogs offer

readers the possibility to comment on posts, which means that customers and other

stakeholder groups will feel comfortable to share their opinions and concerns in a

warm, non-corporate environment. As a result, their views can be taken into

consideration when creating new products and services or when making corporate

decisions, thus acquiring competitive advantage.

37

Professional networks for businesses

Professional networks are services designed to allow businesses and business people to

network online with each other (Newson et al, 2009). Professional networks are widely used

today by organizations from all industries, by freelancers and increasingly by young

graduates who work on establishing a strong network of contacts from the same industry.

Popular professional networks include LinkedIn, Xing, Ryze and Inventube.

LinkedIn (www.linkedin.com) is currently the most popular business-to-business social

networking website (Newson et al., 2009). In the 2007 Webbys web awards, it was awarded

best social networking site as well as best services site. Launched in 2003, LinkedIn claims it

has over 120 million members from over 200 countries and territories (LinkedIn, Aug. 2011).

The official website states that it serves members from all 2011 Fortune 500 companies and

that 75 of the Fortune 100 companies use its corporate hiring solutions. Newson, Houghton

and Patten (2009) list several key uses of LinkedIn, which also apply to the majority of

professional networks: it offers an accurate and up to date list of professional contacts (as

users update their information themselves), it helps establish contact with potential partners

and clients through existing contacts, contacts can recommend a user to others, good way to

publish a CV online, answering LinkedIn Answers (website feature) correctly can help

increase a good reputation, research a person or organization and probably most important, it

offers a specific service for job searching, advertising and head hunting.

Similar to most professional networks, LinkedIn is available to its users free of charge in

its basic version (which offers the majority of features) and requires payment for the premium

version.

Consumer-oriented media

In the words of Newson, Houghton and Patten (2009), consumer-driven websites “have

become the rising stars of the internet in recent years” and are among the most popular sites

on the web, many innovations in social media having originated in this category. Consumer-

oriented media lead to the creation of large online communities that can be constantly shaped

by the user, who has freedom over what content he views and control of personal content that

others view. This type of media is of particular importance for companies whose target

audience uses them, and because they represents an easy way of reaching massive

stakeholder groups many organizations have nowadays started to use consumer-oriented

38

services. Consumer-oriented media can further be classified in three major categories, which

will be briefly explored in the following.

Social networking sites

Kaplan and Haenlein (2010) define social networking sites as “applications that enable

users to connect by creating personal information profiles, inviting friends and colleagues to

have access to those profiles, and sending e-mails and instant messages between each other.”

User profiles normally include a short biography and photo albums, but also videos and audio

files. Many popular sites offer their users a wide range of features (such as blogging, gaming

or instant messaging), thus blurring the boundaries between different types of social media

(Newson et al., 2009).

Facebook (www.facebook.com) was launched in 2004 and is currently the most popular

social networking site on the web, with over 750 million users worldwide (Facebook

Statistics, Aug. 2011). Facebook is a privately-held company headquartered in California, US

and defines itself as a “social utility that helps people communicate more efficiently with

their friends, family and coworkers, […] facilitating the sharing of information through the

social graph, the digital mapping of people’s real-world social connections”. The service is

one of the best examples of the massive influence that social media have on human

interaction at a global scale, as official statistics on the website show: out of the 750 million

users, about 70% are outside the US; the average user has 130 friends and is connected to

over 80 community pages, groups and events; more than 30 billion pieces of content (web

links, blog posts, notes, photos, videos, etc.) are shared each month; over 300.000 users

collaborated on translating the site (more than 70 translations available); over 2.5 million

external websites have integrated with Facebook using the site’s platforms (including over

half of comScore’s Global Top 100 websites).

Facebook’s success was assured by a combination of powerful networking facilities,

entertaining features and ease of use (Newson et al., 2009). Although during its first years the

service was mainly popular among American college students, it is today widely used around

the world by teenagers and adults alike. According to Kaplan and Haenlein (2010), social

networking sites are of “such high popularity […] that the term ‘Facebook addict’ has been

included in the Urban Dictionary, a collaborative project focused on developing a slang

dictionary for the English language.” Facebook has recently started to play an important role

39

in the business environment as well, as more and more companies are very attracted by the

huge business potential of an online service with nearly a billion users. For some of the same

advantages that blogging also brings, nearly all large organizations have now created

corporate Facebook pages, through which they actively interact with large stakeholder groups

in a natural, social environment. A Facebook page is a great opportunity for companies to

acquire feedback from existing customers and to attract potential ones, but also to network

with fellow-professionals and partners in a non-corporate environment.

Business advertising on Facebook is another opportunity for companies to enforce their

online presence. Many well-known companies have created large Facebook campaigns to

promote their products or services. An example is Warner Brothers who, in order to promote

its 2007 comedy movie “Fred Claus”, created a Facebook profile through which visitors

could watch trailers, download movie-related content and play games (Kaplan & Haenlein,

2010).

Twitter (www.twitter.com) is a service worth mentioning in this category, although it is

often described as a “micro-blog” and could therefore be placed in the blogs category.

According to Kaplan and Haenlein (2010), Twitter is a “micro blogging application that

allows sending out short, text-based posts of 140 characters or less” (called tweets). While

many social networking sites available today tend to get more and more complex by adding

lots of features to their service, Twitter is characterized by simplicity and it is probably this

aspect that makes it so appealing to many users. The service saw a massive increase in

popularity in recent years, growing from 1.5 million users in May 2008 to around 200 million

in March 2011 (BBC News, Mar. 2011). Because many people use Twitter from mobile

devices and due to its ease of use, it is often called the “SMS of the internet” (Business

Standard, Aug. 2011). Just as other popular social media platforms have, Twitter has caught

the attention of the business world and many companies now use it frequently to keep their

stakeholders (e.g. employees, customers, shareholders) updated on various issues, praising its

ability to reach large numbers of people instantly. Examples include UK newspapers BBC

News and The Guardian or IT giant Dell.

Consumer-content distribution sites

As stated by Kaplan and Haenlein (2010), who name them “content communities”, the

main purpose of consumer-content sites it to share media content between users. There is a

40

large number of consumer-content sites available today, the majority being focused on a

specific media type such as videos (e.g. YouTube, Vimeo, Metacafe), text (e.g.

BookCrossing), photos (e.g. Flickr, Photobucket, Picasa) or music (e.g. Last.fm,

SoundCloud).

YouTube (www.youtube.com) was launched in 2005 and has in recent years become by

far the most popular video-sharing website. A quick look on the statistics page of the site

helps explain why YouTube is today a social phenomenon and one of the best examples of

social media’s true power: around 3 billion videos are viewed every day; 48 hours of video

are uploaded every minute, resulting in almost eight years of content per day; 70% of traffic

comes from outside the US; YouTube reached over 700 billion video playbacks in 2010

(YouTube Statistics, Aug. 2011). The service offers its users many features, including instant

communication with other users and integrated video sharing on other social media

platforms. Since its launch in 2005, YouTube has helped many regular people become

internet celebrities after their uploaded videos turned viral (term commonly used to describe

internet content that is massively popularized through user sharing). From a business

perspective, the platform offers the already discussed advantages of reaching mass audiences

instantly, obtaining feedback from user comments and easily spreading information through

content sharing. That is why small and large companies alike now use YouTube campaigns to

attract new customers, in which users are invited to view company videos, upload clips of

themselves singing about or using products (e.g. Procter&Gamble’s 2007 “Pepto-Bismol”

campaign) or even participating in interactive videos (e.g. Tipp-Ex’s “Hunter shoots a bear”

and Hell Pizza’s “Deliver me to hell” campaigns).

For the news and entertainment industry, consumer-content sites may present the risk of

being used as means of sharing copyright-protected materials (such as TV shows, music

videos or film extracts), and YouTube is often in the spotlight when it comes to such issues,

having been sued by large corporations several times (Newson et al., 2009). However, many

media companies have recently understood the great potential that the service has as an

entertainment channel, often being considered a direct competitor to regular television

(Newson et al., 2009). MGM, Lions Gate and CBS, among others, have all created

partnerships with YouTube to offer full-length films and television episodes directly on the

site, usually accompanied by advertising.

41

Virtual worlds

Virtual worlds are defined as “platforms that replicate a three-dimensional environment in

which users can appear in the form of personalized avatars and interact with each other as

they would in real life” and come in two main types: virtual game worlds and virtual social

worlds (Kaplan & Haenlein, 2010). Virtual game worlds (also called massively multiplayer

online role-playing games or MMORPGs) require users to behave according to strict rules

and in a predefined context (such as in-game missions or campaigns) and are often accessed

via game consoles such as Microsoft’s X-Box and Sony’s PlayStation. Popular examples

include “World of Warcraft”, which had over 12 million subscribers worldwide in 2010

(Blizzard Entertainment press release, Oct. 2010) and “Final Fantasy XI”, which counted

over 2 million subscribers in 2009 (Square Enix Co., Apr. 2009).

In contrast to MMORPGs, virtual social worlds give users more freedom to choose their

behavior and are allowed to “live” a virtual life similar to real life (Kaplan & Haenlein,

2010). As in virtual game worlds, users create an avatar (a graphical representation of

themselves) and interact in a 3D environment with other users, but they are not required to

act within a specific context, choosing instead social activities normally performed in

everyday life, such as dancing, shopping, swimming or going to work. The most popular

virtual social world today is “Second Life”, a service that counts around 20 million registered

users (Forbes, Apr. 2011).

Just like all other social media types, virtual worlds have also caught the attention of

companies, drawn by their business potential. Many organizations have created virtual offices

in Second Life to ensure a constant communication channel with the world’s “residents”,

including news agency Reuters or IT companies Cisco, Dell, IBM and Sun Microsystems

(Newson et al., 2009). Other companies have targeted virtual world users in marketing

campaigns, a recent example being Toyota, who used World of Warcraft content in its

Tundra commercial to reach the game’s fan base (Kaplan & Haenlein, 2010).

Wikis

According to Newson, Houghton and Patten (2009), a wiki is “a type of website that

allows its users to add, remove and otherwise edit and change the content of the website”.

Wikis are tools that focus entirely on user-generated content and for this reason they could

also be placed in the consumer-oriented media category. However, wikis differentiate

42

themselves from other types of social media because their content (which is primarily text) is

made possible only through a great degree of collaboration by users, who participate using a

simple text editor. Common wikis include community websites, corporate intranets or note

services.

Wikipedia (www.wikipedia.org) is a free online encyclopedia and the world’s most

widely used wiki. The service defines itself as a “multilingual, web-based, free-content

encyclopedia project based on an openly editable model” (Wikipedia About, Jul. 2011). Since

its creation in 2001, Wikipedia has rapidly become one of most accessed websites on the

internet (7th place, Alexa Internet, Aug. 2011), attracting around 400 million unique visitors

each month (ComScore, Aug. 2011). Wikipedia counts over 19 million articles in 270

languages, written collaboratively by mostly anonymous volunteers who have access to

modify almost any article on the site (Wikipedia About, Aug. 2011). Because of this aspect,

the service has been the subject of controversies regarding the reliability of its articles, but a

2005 research conducted by the science journal “Nature” on articles from Wikipedia and

“Encyclopaedia Britannica” concluded that the 4-year old online encyclopedia written by

internet users was just as accurate as its 237-year old counterpart written by full-time editors

(Newson et al., 2009).

Wikipedia and other wikis are tools that present several advantages from a business

perspective. Although as a public wiki, Wikipedia is firmly against corporate participation in

its online community (it does not allow advertising or other corporate presence), companies

can still benefit from the service by using it as a general information source when researching

a particular subject. However, other private wikis may be actively used by organizations as

great tools for internal communication and knowledge sharing. Employees and managers can

use corporate wikis to write notes or even larger content, which would instantly be accessible

throughout the company’s intranet or a secure internet website.

Online office applications

Online office applications are tools that allow online access to applications such as word

processors or spreadsheets (Newson et al., 2009). Suited for both personal and professional

use, they are the online equivalent of traditional software-based office applications such as

Microsoft Word and Excel, with the obvious advantage of being easily accessible from any

place that has an internet connection. Another advantage is the fact that they require no

43

installation and provide safe keeping of content on internet servers. They are considered a

valuable social tool because in contrast to traditional office applications, they allow multiple

users to collaborate simultaneously online on the same piece of content and then share that

content with anyone on the internet.

Popular online office applications include Google Docs and Spreadsheets, Adobe

Buzzword, Zoho and Microsoft Office 365, all of which are used for both private and

corporate use.

Podcasting and videocasting

According to Newson, Houghton and Patten (2009), podcasting and videocasting are

means of sharing sound and video recordings over the internet. The “casting” of music and

video files is made possible through RSS feeds (software used to provide internet users with

frequently updated content), which are received using tools called RSS readers (or

aggregators) (Newson et al., 2009). RSS readers help users get access automatically and in

an organized manner to online content such as text, images, videos and music files.

A type of podcast very common today is the “internet radio station”. Using podcasting,

people are able to create online radio stations by sharing content that any internet user can

find and subscribe to. Similarly, videocasting enables individuals to easily share video files

online with massive audiences. In recent years, organizations have started to show strong

interest in business podcasting and videocasting. Companies from many industries have

successfully incorporated podcasts and videocasts into their corporate websites or blogs to

keep internal stakeholders updated on various activities or to communicate relevant issues to

customers and other external stakeholders. Using podcasts and videocasts provides many

advantages, as they are instantly accessible to anyone with an internet connection on many

devices, even portable ones such as media players and smartphones (trait common to most

social media services) and can be successfully integrated with other social media types (such

as blogs or social networks).

We have discovered the major categories of social media and some of the most popular

services available today, highlighting their main features and several benefits that they bring

for both personal and corporate use. In the next part, we focus only on the corporate usage of

social media, exploring their main advantages and disadvantages and their role in crisis

communication.

44

IV.3. Social media and crisis communication

IV.3.1. Social media and their effects on crises

“Most real crises have an important and central communication challenge” – Pines,

2000

Until recently, organizations used TV, radio, newspapers and magazines to address their

audiences. The information was “filtered” by media, determining which information to

publish and the audience had almost no chance to respond. Nowadays, the internet changed

this practice and companies switched to peer media platforms such as blogs, social

networking platforms or content-distribution sites. According to Forrester Research, 75% of

internet users used social media in the second quarter of 2008 by joining social networks,

reading blogs or writing reviews on shopping websites (Kaplan & Haenlein, 2010).

Compared to 2007, this meant a significant rise of 57% of internet users, mainly due to the

fact that social media are no longer limited to young people – older adults are now

increasingly populating the ranks of joiners, spectators and critics.

In this online business landscape, as the Cluetrain Manifesto also outlined, audiences

expect transparent and honest conversations with organizations. Stakeholders now have the

possibility to express their opinions and respond to the information they access trough peer

media.

Due to this growing popularity across generations, social media represent a revolutionary

new trend that should be of great interest to organizations operating both online and offline.

According to Kaplan and Haenlein (2010), social media is now positioned at the top of every

business executives’ agenda.

Therefore, social media are becoming very popular in many business fields, but one

important area that shouldn’t be overlooked is crisis communication. This trend definitely

changes the outcome of a corporate crisis, where the speed of communication and the power

of stakeholders have serious implication. “The explosion of social media – everything from

social networking websites, to blogs, to broadcast text messaging – has changed the way in

which anyone involved in risk communication must look at overall communication plans.

Especially in times of emergency, social media can and should be employed to transmit

critically important information immediately to as many people as possible” (American

Public Health Association, n.d.). Hughes (2008) mentions the connection between social

45

media and crises, observing that more and more people participate in disaster responses due

to the disappearance of temporal and geographic barriers.

Leysia Palen (2008), a researcher in the field of crisis informatics (area of research that

examines the technical, social and information aspects of crises and disasters) at the

University of Colorado, argues that investigations of recent disasters showed that online

social media were used as an “emergent, significant and often accurate form of public

participation and backchannel communication”. Moore & Seymour (2005) conclude that

social media is gaining power “both in times of disaster and over active but yet erupting risks

or threatening issues”.

Today, some organizations are starting to accept the communication shifts and understand

that they create urgent issues in the field of crisis management. They are focusing on finding

new ways in which they can use internet applications such as Facebook, YouTube or Twitter

to communicate during crises. Many researchers have outlined the fact that PR practitioners

who use new media are perceived within their organizations as having more power, in that

they are “willing to be leaders in the industry and use new tools to better reach target publics”

(Porter et al., 2007).

Moore and Seymour (2005) outline two important aspects that entail changes in the

traditional crisis management:

o social media affect the way groups, individuals and societies communicate and it

reshapes their global attitudes towards organizations that affect them;

o social media are not only about information exchange on global issues but they are

also the “cause, participant and agent” of corporate solutions (Moore & Seymour,

2005).

They also suggest that social media impose radical changes in organizational culture and

that the reinvention of crisis communication strategy should be a priority for any

organization. Being a “double-edged sword for crisis communication” (Crisis communication

& Social Media Summit report 2009), social media offer PR practitioners a unique

opportunity to collect information, to monitor public opinion on different issues and to

engage in real-time interaction with their public. First, social media can help crisis

communicators conduct environmental scanning to detect potential issues that can transform

into crises and second, they represent a valuable resource since they can help organizations

communicate their decisions very quickly to stakeholders and get feedback from the public,

preventing the escalation of a crisis (Perry, Taylor & Doerfel, 2003).

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During crises, stakeholders seek to understand what is going on around them – Weick

(1998) names this tendency “sensemaking”. As a result, social media users often take pictures

or videos of interesting events and, due to mobile technology and photo-sharing websites,

make the information accessible to the world very quickly. An example of stakeholder

“sensemaking” happened during the Katrina hurricane or the shooting at Virginia Tech when

a group called “image aggregators” has been set up on Flickr as a way to help stakeholders

cope with the crisis.

Another advantage social media have on crisis communication is that they serve as a

means of expanded communication in times of disasters, enabling survivors, observers or

people who simply wish to help connect with each other and actively participate in peer-to-

peer events (Palen & Liu, 2007). Stakeholders affected by the crisis are the first ones to have

knowledge of the event and they act as communication facilitators, linking people and

information through social media platforms. For example, in 2007 when wildfires began

destroying Southern California, people used Google mashups (web client applications that

use and combine data or functionality from two or more sources to produce new and enriched

results) to create maps that showed evacuated areas, burn areas, destroyed homes and other

important information. These mashups where created by groups of volunteers that used the

latest news sent via Twitter as information source (Sutton, Palen & Shklovski, 2008).

Apart from the many ways in which social media can positively impact the development

of a crisis, they undoubtedly also present some risks. According to Gonzalez-Herrero and

Smith (2008), the internet, through the use of social media, can affect business in two ways: it

can act as facilitator but also as trigger of crises. On one hand, the authors explain, social

media can facilitate the appearance of a crisis by acting as channels of communication and

spreading information on various issues. Having the same role as mainstream media such as

radio, television or print, social media can merely transmit information of a negative event

that happened offline to massive audiences, although obviously in a much faster and viral

way, thus leading to an issue becoming a real crisis. A famous example is Kryptonite’s 2004

crisis, started when posts on a small blog stated that the company’s high-end locks could be

opened with a ballpoint pen. Because Kryptonite ignored the issue and the blogosphere’s

power, it was soon faced with a serious crisis which cost the company millions of dollars

when the issue spread to both new and mainstream media.

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On the other hand, social media can also directly lead to the appearance of a crisis and not

just help its escalation. In other words, it is the existence of social media and the web that

permits a crisis to appear, and such a crisis would not be possible otherwise. Examples

include hacking, web security breaches or copy-cat websites. Many large companies were

targeted by copy-cat websites in recent times, including Mercedes-Benz

(www.mercedesproblems.com.ar), United Airlines (www.untied.com) or Ford

(www.flamingfords.info). The websites are often more than annoyances for companies and

can pose serious problems if issues are left unattended, as they have the capacity of reaching

millions of people worldwide (Gonzalez-Herrero & Smith, 2008).

Another risk that social media present is their ability to spread misinformation about the

organization. In this regard, social media act like traditional media but in a faster way and

crisis communicators have trouble controlling this negative information. Furthermore, social

media are capable of creating lots of “noise” among stakeholders, forcing companies to cut

through the noise in order to send out useful information. Palen and Starbird (2010) present

Twitter as a possible solution to this, which can be used to send relevant information online

in a direct and clear way.

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To sum up, social media represent an important method of receiving and transmitting

information, transcending time and space. Even if social media can sometimes play a

negative role in crisis situations, their advantages outweigh the disadvantages and make the

difference between overcoming the crisis and sinking even deeper. Because their worldwide

usage can no longer be ignored by any organization, regardless of its size or brand power,

social media must play a key role in dealing with crises. Several ways in which social media

should be incorporated in crisis management and communication are explored in the next

part.

IV.3.2. Managing a crisis online – Gonzalez-Herrero & Smith model

Although the current phenomenon that is social media greatly influences crises of all

kinds, whether social or corporate in nature, traditional crisis management strategies must not

be completely changed and replaced with brand new ones. Instead, just as A. Gonzalez-

Herrero and S. Smith (2008) explain, “the tools to apply them need to be revised and adapted

to today’s digital environment”. The two crisis researchers agree that the basic principles that

stood at the foundation of traditional crisis management, principles such as issues monitoring,

preventive planning and quick, credible crisis responses are valid today and must still

represent the focus of any organization dealing with a crisis. However, organizations must be

aware of the absence of time and geographic barriers introduced by the internet and by the

importance of constant two-way communication with stakeholders, who expect companies to

use a more honest and human tone in communication. Because of this, they must adapt their

traditional corporate communication strategies and channels to the current needs of

stakeholders, including their crisis response strategies.

In 1995, Gonzalez-Herrero and Pratt proposed a four-stage model for crisis management,

tailored on the different stages of a crisis. But the passing of time also meant the progress of

technology, which brought along the already discussed shift in social and corporate

communication. As a result, in 2008 Gonzalez-Herrero and Smith adapted the model to the

online environment, placing great emphasis on social media. This new model is very similar

to Coombs’ (2007) three stage model of crisis management presented in the first part of the

paper, and even though it has an extra stage (issues management), this phase is basically the

same as Coombs’ signal detection sub-stage of pre-crisis. What differs, however, is a much

stronger focus on internet technologies and an overall web-orientation, due to “implications

of the new digital ecosystem” (Gonzalez-Herrero & Smith, 2008).

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Just like many other models of crisis management (including the one of Coombs),

Gonzalez-Herrero and Smith’s model is built on the crisis’ lifecycle. As a result, its four main

stages are issues management, planning-prevention, crisis and post-crisis. The following

visual representation was created to offer a better understanding of the model and presents

readers a quick way of identifying each stage if later required.

A. Issues management

The purpose of this stage is to identify and manage any issues that might pose problems

to the organization before they turn into crises. As social media are very effective tools for

stakeholders to express their dissatisfaction and share it with the world, more and more

corporate crises now occur and/or develop in the online environment. Additionally,

disgruntled customers or employees can easily find others online who share their discontent

on a certain issue and use social media to organize and coordinate actions from anywhere in

the world. In the words of Gonzalez-Herrero and Smith (2008), “an individual writing a blog

that has several links to other sites can have as much influence as a communications

department of a major firm”. Because of this, issues management and constant monitoring of

signals online should be high on the agenda of every organization.

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Since people are now more vocal and powerful than ever, organizations must have a clear

picture of their stakeholder groups and must identify their biggest online influencers. A

frequent, clear and honest communication with them helps prevent issues from aggravating

and rumors from spreading. Organizations must always be up to date with key influencers’

blog posts or tweets. Obviously, traditional media channels must not be forgotten, and radio,

television and newspapers must also by scanned for potentially negative issues (together with

their online websites, podcasts and videocasts).

As we have seen in previous chapters, organizations can resort to outside help to preserve

and build their reputation online and many companies today offer a wide set of monitoring

services, including filtering and analyzing newsrooms, blogs and micro-blogs, social and

business networks, consumer-content sites, etc. However, just monitoring issues is not

enough, and organizations must also engage with stakeholders to prevent issues from

aggravating. Participating in discussions with stakeholders on forums and consumer websites

helps maintain a good reputation as a transparent and communicative company. As Perry

(2003) observed, “an organization’s attempt to maintain relationships with its various

audiences via the internet while under intense scrutiny may minimize the potential damage of

a crisis with its stakeholders and maximize recovery.”

Specific actions that should be taken during this stage include:

o Assigning human and financial resources to issues management and using an external

monitoring agency if required (especially for larger organizations);

o Training a team from inside the company to be familiar with the online environment

and to think globally;

o Establishing an efficient online monitoring system that includes all relevant websites

and social media channels (blogs, social networks, etc.);

o Drawing a full map of key stakeholders and online influencers;

o Setting up corporate social media services (company blog, podcasts, social network

profiles, etc.) to actively engage stakeholders;

o Drawing up guidelines on the approach, tone and language used while engaging in

online conversations – non-corporate, honest and often informal tone.

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B. Planning-prevention

This phase of the model is the equivalent of Coombs’ (2007) “crisis preparation” sub-

stage. Similarly, the goal here is for organizations to prepare for the worst-case scenario in

which an issue identified and acted upon unsuccessfully in the previous stage becomes a

serious corporate crisis. During this stage, recommended actions include:

o Developing a crisis manual online, as it is easier to write and update collaboratively

and offers the possibility to include various links to other sources of information and

to databases;

o Checking that both regular and online media are monitored effectively to stay up to

date with relevant issues;

o Registering all possible domain names, including the ones with negative

connotations, to prevent harmful use against the company;

o Drafting guidelines for internal stakeholders to respond quickly to the potential

crisis;

o Creating an intranet, wiki or chat room to allow CMT members and employees to

communicate effectively;

o Evaluating and preparing own online resources (corporate website, blog, etc.) for

crisis response-related material hosting such as videos, podcasts, images, etc.

o Including web experts and bloggers in the CMT and identifying potential allies

(partners, NGOs, etc.);

o Testing the online crisis plan.

C. The crisis

The crisis stage includes all of the actions that organizations must take to overcome the

crisis once it started. Most of these actions should have been clearly established by the crisis

plan, along with the people in charge, so that they can now be performed. Organizations must

react as fast as possible in both the offline and online environments (especially online) to

contain the crisis from spreading. They must actively communicate throughout the crisis to

all relevant stakeholders on all channels available to avoid being perceived as secretive or

uncommunicative because as Taylor and Perry (2005) note, “no response online may become

synonymous of no comment”. Apart from the actions already established by the crisis plan,

other recommended measures include:

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o Using search engine optimization (SEO) to ensure important content is visible at the

top of a search;

o Placing visible links for crisis information on own online channels (website, blog,

etc.);

o Blogging and being active on social media channels to minimize reputation damage;

o Using interactive tools such as surveys to gather stakeholder feedback on the

management of the crisis;

o Sending out personal messages (apology, assurance, etc.) from CEOs on various

offline and online channels;

o Combining the use of traditional media with new media to ensure full coverage.

D. The post-crisis

Once the crisis is over, the organization must take actions to ensure a full recovery and

learn from its successes and mistakes so that it can better prevent future crises. Although in

traditional media news of the crisis normally disappear with the crisis itself or soon

thereafter, in the online environment signs take much longer to be forgotten as videos, text or

images may still be viewed by web users years after the crisis ends. However, if companies

demonstrate that they learned from the crisis and took clear measures to prevent future ones,

stakeholders will prove forgiving and show their support. Some actions that need to be taken

post-crisis include:

o Continuing to track the issue by actively monitoring social media long after the end of

the crisis;

o Thanking supporters of the company who played a role in its recovery (e-mails, blog

and website messages, etc.);

o Updating the company’s own online channels;

o Defining strategies to rebuild corporate reputation and evaluating the organization’s

actions before, during and after the crisis.

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Applying the theoretical frameworks

In the previous chapters of this paper we have explored the theoretical concepts behind

crises and crisis management, reputation and its management as well as social media and

their impact on crisis management and communication. We can now use these theories to

analyze two corporate crises that gathered massive public attention in 2009, both being crises

in which social media played an essential role. Each case study will be separated into two

main parts:

o the first part will consist of an analysis performed on the company’s crisis

management strategies from a strategic perspective, and Gonzalez-Herrero & Smith’s

(2008) online-oriented crisis management model will be used as main theoretical

framework, with relevant references to Coombs’ (2007) more general model (with

which the first model shares many characteristics)

o in the second part, the company’s crisis response strategies will be analyzed from a

communicative perspective, using Coombs’ (1995) crisis response strategies as the

second theoretical framework.

Previously explored theories on crisis types and characteristics as well as on reputation

will also be used to offer better understanding of the crises and thus allow a thorough

analysis.

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V. Case study

V.1. Domino’s Pizza crisis

V.1.1. Domino’s Pizza: company background

Founded in 1960 by Tom Monaghan and his brother James, Domino’s Pizza started, like

most corporate success stories, as a small pizza shop in Ypsilanti, Michigan, US. After 38

years of ownership, Tom Monaghan announced his retirement and sold his entire stake to a

Massachusetts investment firm called Bain Capital Inc. (LA Times, 1998).

The business expanded rapidly throughout the following decades and today, Domino’s

Pizza is a successful worldwide known pizza delivery corporation. According to its official

website, Domino’s Pizza is the world’s leader in pizza delivery, operating a network of

company-owned and franchise-owned stores in the US and international markets. Domino’s

international expansion started back in the 80s, when the company opened its first

international store in Canada, and now reached to more than 9000 stores in over 60 markets

around the world. Domino’s international restaurants and over 90% of its US ones are

franchise-owned and operate in compliance with the standards of the Domino’s brand

(Domino’s Pizza Annual Report, 2008).

The company operates in a highly competitive food service industry market in the Quick

Service Restaurant (QSR) sector. Competition in this business sector is very intense with

regard to product quality, service and price. Pizza Hut is the main competitor of Domino’s

Pizza and together with Papa John’s, the three represent 47% of the pizza delivery market in

the US (Domino’s Annual Report, 2008).

As stated by Domino’s, its growth strategy focuses on values such as:

• putting people first

• demanding integrity

• striving for customer loyalty

• delivering with smart hustle and positive energy

• winning by improving results

The company has one simple mission – to be the best pizza delivery company in the

world. With a motto like “Sell More Pizza, Have More Fun”, Domino’s guiding principles

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combine the concepts of work and fun even if many people consider the two words as being

in antithesis. According to Domino’s corporate culture, the company values the contributions

of its customers, team members, suppliers and all other stakeholders and views diversity as an

important competitive advantage. The company considers diversity at the workplace as a

stimulation of the working environment and in the same time, encourages innovation and

creativity – “we believe we are stronger, more effective and more profitable because we use

all the human resources our society has to offer” (Domino’s website, Aug. 2011).

Along the years, Domino’s continued to expand its product line and strengthen its brand,

receiving much attention and positive reviews from different industry trade publications and

financial newspapers. In 2003, Domino’s Pizza was rewarded for the quality of its delivery

systems and named “Chain of the Year” by Pizza Today magazine, a pizza trade publication.

As main driver behind the company’s growth, the strength of its franchises was recognized

by Forbes magazine in 2011, who placed the Domino’s on the first position of “The Top

Franchise for the Money” (Forbes, Jan. 2011).

V.1.2. Crisis facts and timeline

“We all have our secret ingredients…and in about five minutes they will be sent out on

delivery where somebody will be eating these. Yes, eating them. And little did they know that

cheese was in his nose and there was some lethal gas that ended up on their salami. Now,

that’s how we roll at Domino’s!” – Kristi Hammond, creator of prank video (April, 2009)

We have created a timeline of the relevant facts relating to Domino’s crisis, on which we

shall develop a detailed exposure of the events that lead to the outbreak of the crisis. The

facts are mainly taken from The PR Strategist article “Domino’s delivers during crisis: The

company’s step-by-step response after a vulgar video goes viral”, an interview with Tim

McIntyre, Vice President of Communications and spokesperson of Domino’s Pizza.

Domino’s Pizza: crisis timeline

Sunday, April

12, 2009

Two Domino’s employees shoot several amateur videos of themselves

violating serious food safety standards

Monday, April Videos are posted on YouTube

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13, 2009 goodasyou.org and consumerist.com repost the videos on their blog

Domino’s is notified about the videos by a blogger

Tuesday, April

14, 2009

“Domino’s Pizzas Special Ingrediants” video reaches more than 250.000

views

Domino’s identifies the location and contacts the franchise store owner,

local health department and local police

Domino’s fires the two employees

Wednesday,

April 15, 2009

The same video reaches more than 1.000.000 views

Domino’s creates a Twitter account (@DPZinfo)

References to videos are in 5 out of 12 results on the first page of a Google

search for “Dominos”

YouTube removes the videos

Domino’s officially apologizes on YouTube

Friday, April

17, 2009

“Domino’s” search in Google yields prank videos as third result while

apology video fourth

The incident happened on Easter Sunday, April 12 2009, when two employees of

Domino’s Pizza shot four videos of themselves during their working hours in the kitchen of a

pizza restaurant, doing unsanitary things to the food they were preparing for delivery. The

first and most popular video “Domino’s Pizzas Special Ingrediants” (sic) shows a male

Domino’s employee inserting pieces of cheese in his nose, waving pieces of salami behind

his backside and violating other health code standards before placing them on sandwiches

(The NYTimes, Apr. 2009), while his fellow female colleague provides narration (she was

laughing and joking in the background about that being a usual behavior at Domino’s). The

other videos “Sneeze Sticks”, ”Poopie Dishes” and ”Dominos Pizza Booger” were also

showing the male employee violating multiple food service industry hygienic rules.

The next morning, on Monday April 13th, the two employees decided to upload the

videos on the online video-sharing site, YouTube. In the evening, Tim McIntyre, Vice

President of Communications at Domino’s Pizza received an e-mail from an influent blogger,

alerting him of the existence of some vulgar videos on YouTube. He also mentioned in the e-

mail that, for the public interest, he reposted the videos on his website.

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The next day, after checking the videos online, McIntyre realized that the videos were not

a hoax and that the most popular video had already received more than 250.000 views on

YouTube. “We got blindsided by two idiots with a video camera and an awful idea. Even

people who’ve been with us as loyal customers for 10, 15, 20 years are second-guessing their

relationship with Domino’s, and that’s not fair”, declared McIntyre for The New York Times

(Apr. 2009). Within a couple of hours, Domino’s managed to identify the employees and

their location – Kristi Hammond and Michael Setzer – two full-time employees at Domino’s

Pizza franchise store in Conover, a small town in North Carolina. After locating them,

Domino’s contacted the local police to arrest the two felons and the local health department

to sanitize the restaurant. The same day, McIntyre received an apologetic e-mail from Ms.

Hammond, who said that “it was all a prank and me nor Michael expected to have this much

attention from videos that were uploaded. No food was ever sent out to any customer.”

(AdvertisingAge, Apr. 2009).

In the beginning, Domino’s took the decision to not respond publically, hoping that the

crisis would blow over but by Wednesday, propelled by Twitter and other social media

platforms, the YouTube post turned viral, reaching more than one million views. Under these

circumstances, Domino’s decided to post an official response on its website and uploaded a

video on YouTube of Patrick Doyle, CEO of Domino’s Pizza, apologizing for the situation

and saying that “the two workers have been identified, fired and arrested under a felony

warrant”. The company also took legal action to have the original videos removed from

YouTube and created an official Twitter account to address the comments of its stakeholders

(TimeUS, Apr. 2009).

According to the Emerging Media Research Council, two days later, on April 17,

“Domino’s” search in Google yielded prank video as third result while the apology video

fourth, with almost as many views as the remaining copy of the prank video. With the rise of

social media, Domino’s found itself in a middle of a serious online crisis situation with more

than one million disgusted viewers and a badly damaged reputation.

V.1.3. Crisis type and characteristics

Before moving on to the analysis of Domino’s crisis management and its response

strategies, we must first identify the incident as a real crisis situation according to definition,

then determine its type and main characteristics.

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In the first chapter of the paper, we have seen how well-known crisis management

researchers such as Moore and Seymour, Sellnow and Seeger or Coombs define a crisis.

Taking into consideration elements from all these researchers, we consider that the events

that occurred at Domino’s Pizza in 2009 represent a real crisis situation for three reasons.

First, the incident triggered intense social media coverage, attracting massive attention from

the public. Second, both internal and external stakeholders perceived the incidents as a

serious violation of their expectations. In this case, Domino’s failed to meet the first and most

important conditions of the food service industry – food safety and customer trust. This

violation led to the loss of public trust, thus weakening the relationship between the company

and its customers.

As McIntyre stated in an interview with Vaughn and Peeples (2009), “if a customer

perceives a problem in product quality, price, service or convenience, the implications to

future business success could be serious. For this reason, there is nothing more important or

sacred to Domino’s than the trust of its customers”. This important aspect is also outlined by

Patrick Doyle, CEO of Domino’s Pizza, in his apology video on YouTube. Third and most

important, the videos had a significant negative impact on corporate reputation and many

effects on the company’s activities, altering its normal business environment.

Relating to Linker’s crisis typology theory, the posting of the videos took the organization

by surprise but allowed management some time to react and respond to the incident. In this

sense, we can consider Domino’s crisis as an immediate type of crisis.

Coombs’ theory of crisis typology, as we have seen earlier in the paper, identifies crises

based on two dimensions – internal/external and intentional/unintentional, setting the cause of

the crisis and its origin. Therefore, according to theory, we consider Domino’s incident an act

of transgression that places on the intentional/internal axis of the crisis type matrix.

Knowingly breaking public health rules and tampering customers’ food, the two Domino’s

employees were unarguably responsible for intentionally harming company customers and

the company’s image.

Another factor of organizational crises, as we have noted earlier in the paper, is the

impact that they have on organizations. Domino’s crisis obviously had a negative effect on

the company’s reputation as well as on the stakeholders’ confidence: “the reputation of a

brand that’s nearly 50 years old […] has been ruined” (McIntyre reaction on the impact of

videos).

According to BrandIndex, a tool for tracking public perception on thousands of brands

across the world, after the videos have been posted on YouTube, Domino’s buzz ratings

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started to fall from 22.5 points (before crisis) to 13.6 points (after crisis). Quality ratings,

normally more stable, dropped from 5 to 2.8 within just 24 hours (AdvertisingAge, Aug.

2009).

V.1.4. Domino’s crisis management strategies

Issues management

The first stage of Gonzalez-Herrero and Smith’s model is the same as Coombs’ signal

detection sub-stage of the pre-crisis stage of his model. Issues management can therefore be

considered an active search and interpretation of warning signs, the purpose being to identify

and manage any issue than might cause problems to the organization before turning into a

serious crisis situation. Of course, retrospectively speaking, it is easier to identify the specific

actions that could have helped Domino’s prevent the crisis.

When the the crisis occurred, Domino’s was not very familiar with the vehicles of online

communication nor with any social media strategy (Stull, 2009). Of course, even if Domino’s

would have already had a strong online stakeholder engagement approach, the company still

could not have stopped the employees from posting the videos but it could have definitely

reacted to the videos much quicker, preventing the videos from going viral. Thereby, the lack

of online presence led to the transformation of an isolated incident into a serious crisis,

affecting the customers and its reputation. Judging by the number of viewers the video had,

we can see that Domino’s management failed to scan negative issues online and thus

permitted the videos to escalate into a crisis. Domino’s found out about the videos from

different bloggers who felt obligated to notify corporate headquarters as soon as the videos

were found (Peeples & Vaughn, 2009).

As Perry (2003) observes, in this stage, the Internet has the purpose to minimize the

potential damage of a crisis and maximize the process of recovery after the crisis. The actions

that Domino’s could have taken during this monitoring stage are numerous and are supposed

to be effective in preserving the online reputation and brand (Gonzalez-Herrero & Smith,

2008). With a trained team and an efficient online monitoring system that covers all relevant

websites and social media platforms or with the external help of a monitoring agency to

constantly scan for issues, Domino’s could have been prepared to approach this issue in

different ways, addressing the issue faster so that the video would not have spread to so many

people. As we will see in the next stage, McIntyre’s internal communication team partnered

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with an external agency for future new media strategy work to ensure the online presence of

Domino’s.

As McIntyre concluded in an interview, “nothing is local anymore. That’s the challenge

of the Web world. Any two idiots with a video camera and a dumb idea can damage the

reputation of a 50-year old brand.” (USA Today, Apr. 2009).

Planning-prevention

Just as in Coombs’ crisis preparation sub-stage, the planning-prevention stage focuses on

actions made by the organization in order to be prepared when the crisis occurs. It mainly

consists of selecting a crisis team and an online crisis plan that helps the organization in the

process of dealing with the inevitable aspects of any crisis. According to Tim McIntyre, in

2009 Domino’s was actively working on the creation of a social media team and had already

created a strategy to launch the company in the online social environment: “we were building

a plan to introduce Domino’s to Facebook, to Twitter and to some of the other relevant social

media sites”. The two major aims of the online strategy were to engage in an open dialogue

with stakeholders and to allow the company to efficiently monitor mainstream and social

media, thus staying up to date with relevant issues. Ironically, Domino’s was planning to start

implementing their online strategy just as the crisis occurred. McIntyre declared for The PR

Strategist that “[…] we didn’t want to just jump in without a strategy. We wanted to do it

right. […] so we ended up having to jump in during the crisis, which was the opposite of how

we wanted to do it. And our timing was off by a week.” (The PR Strategist, Aug. 2009).

In this context, Domino’s was aware of the advantages of using the internet as an

information resource. The company was already asking itself what actions it could

proactively take to avoid a potential online crisis and minimize the negative consequences of

such a crisis (Gonzalez-Herrero & Smith, 2008).

Evidently, Domino’s could have been much more prepared to deal with the challenges

of an online crisis if the social media strategy would have been implemented at least a few

weeks sooner. The experience gathered in the online environment, even if only for a short

period of time, could have helped prepare the company better for the challenges of an

unexpected online crisis that it was soon about to face.

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The crisis

After the crisis outbreak, organizations need to put in practice all of the actions

established by the crisis team in the planning-prevention stage. As Gonzalez-Herrero and

Smith (2008) outlined in their model, the existence of the internet made Domino’s crisis

possible, acting like a triggering factor. The negative role of social media in this case was that

within hours, the videos had been taken from YouTube and embedded or reposted on other

sites, including popular blogs “GoodAsYou” and “The Consumerist”. Once this occurred,

Domino’s, as well as the two original posters, lost the ability to control the spreading of the

videos or who viewed them (Peeples & Vaughn, 2009). McIntyre was obviously aware of the

ability of online content to turn viral, as we can see in his response to the blogger who alerted

him about the prank videos: “the ‘challenge’ that comes with the freedom of the Internet is

that any idiot with a camera and an Internet link can do stuff like this […] and ruin the

reputation of a brand that’s nearly 50 years old”.

As a result, the posting of the videos on YouTube reflected some of the worst fears

consumers have about food purchased in restaurants and represented the trigger event of

Domino’s online reputational crisis. Powered by social media, the videos and related

discussions have quickly moved to Facebook, Twitter and many other social networking

platforms. As we have mentioned earlier, Domino’s did not have a well prepared crisis plan

with actions ready to be performed after the outbreak of the crisis, but despite being

unprepared, Domino’s crisis team took some strategic measures to “put the fire away” and

restore their online image.

Once the organization realized that they were facing a real crisis situation – the moment

when McIntyre received the e-mail from the webmaster of GoodAsYou warning him about

the presence of negative company-related videos – McIntyre’s first reaction was to send the

links to the videos to different Domino’s key persons (social media team, head of security

and senior management), informing them that “This has been posted, we need to do

something about it. Let’s begin” (The PR Strategist, Aug. 2009). According to theory,

Domino’s made sure that all its internal and external key stakeholders were aware of the

crisis situation so that they could monitor and report all crisis outcomes from that moment on.

When McIntyre’s social media team was alerted about the videos by a second blog, this

time the well-known consumer affairs blog, The Consumerist, they immediately realized the

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dramatic impact on their stakeholders and on Domino’s reputation. In this regard, McIntyre

and his team began taking immediate actions to contain the crisis, identifying the employees

and their location as soon as possible. Domino’s captured stills of the videos and identified

employees’ faces and distributed them to all of its US restaurants through the company’s

internal network. With the help of two readers of The Consumerist, who used different clues

from the videos, innovative geo-mapping and other investigative tools, the company managed

to find the location of the videos’ creators the same day.

Next, Domino’s contacted the local police and district attorney to investigate the incident

and worked closely with the franchise owner to fire the two Domino’s employees responsible

for the crisis and bring in the local health department to sanitize the restaurant and discard all

open food containers. Even though McIntyre received an e-mail from Kristi Hammond

informing him that the food they had tampered with never left the store, he checked the

orders system to make sure that none of the food had in fact been delivered. This way he

found out that during that Sunday, no telephone calls had been registered, meaning that the

sandwiches had never actually reached any clients. Both employees that appeared in the

videos were now facing serious felony charges for violating multiple food health standards

and were therefore arrested (TimeU.S. Apr. 2009). Taking note of legal implications in their

strategic actions, Domino’s acted according to law and made efforts to remove the videos

from YouTube only after having obtained the copyright claim from Ms. Hammond, two days

later after the initial posting.

During the crisis, Domino’s constantly used the internet to engage in two-way

communication with its stakeholders in order to keep them informed on the development of

the events, activity performed by only 44% of companies according to Perry and Taylor’s

(2005) study on the use of new media tactics. At first, McIntyre and his team selected only

readers of the two blogs that initially covered the incident as target audience for their crisis

response, motivating his choice by stating that “there are a lot of people who don’t know

about it; let’s focus on talking to the audience that’s talking to us.”(The PR Strategist, Aug.

2009). The team kept the audience informed about all its ongoing actions and decisions by

sharing updates and messages with both GoodAsYou and The Consumerist blogs. Domino’s

used the two popular blogs as communication channel to foster dialogue between the

company and its audience.

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The decision to not issue a public press release right away was motivated by Domino’s

with the intention of not escalating the crisis by alerting even more people of the incident.

This way, the company hoped that the crisis would soon blow over and considered that a

public response to the videos would only attract more attention.

However, the decision to not go public was in fact an unfortunate one because by

Wednesday, just two days later, propelled by Twitter and other social media platforms, the

first YouTube video turned viral and reached more than one million views. TV, radio and

Web news stories “ricocheted” around the world and Domino’s found itself right in the

middle of “the toughest situation […] in terms of a digital crisis”, as stated by the managing

director and head of the United States crisis practice at the PR firm Burson-Marsteller (The

NYTimes, Apr. 2009). McIntyre’s social media team soon discovered that discussions of the

incident spread on Twitter and that most reactions were now not about how terrible the

videos were, but more focused on the company’s reaction to them, as observed in comments

such as “Does Domino’s know about this?”, “What is Domino’s doing about it?” and “How

come they [Domino’s] are not talking to anybody?” (Twitter, Aug. 2009). As a result,

McIntyre acknowledged that Domino’s initial crisis management strategy was inappropriate

in terms of social media potential, admitting that “what we missed was the perpetual

mushroom effect of viral sensations” (The PR Strategist, Aug. 2009).

This so-called mushroom effect had spread the crisis very far in a very short period of

time and the company learned that news outlets from Peru, China, Greece and United

Kingdom were running the story and that “Dominos” as a search word had surpassed Paris

Hilton for the first time ever (The PR Strategist, Aug. 2009). Moreover, references to the

videos were in five out of twelve results on the first page of Google search for the same word

(The NYTimes, Apr. 2009).

Under these circumstances, Domino’s took the next strategic step and adapted its strategy

to include a much wider audience. As a result, the company posted an official statement on its

corporate website, called “Update to our Valued Customers”, in which it explained the

situation and the effect it had on the company. Additionally, an apology video was created

and uploaded on YouTube and a visible link was added to it on the company website. The

video had all of the elements required by an effective crisis management strategy, as theory

suggests: it featured Domino’s Pizza CEO, Patrick Doyle, who personally addressed

stakeholders and described in detail the actions that Domino’s had already taken and would

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take in the future (employees fired, warrants issued for their arrest, store shut down and

sanitized, re-examining hiring practices). The CEO also apologized for the incident and

thanked the online community for its support and for bringing the issue to the company’s

attention. To make the message spread even faster, Domino’s asked all employees to use their

own Twitter accounts to tweet links to both the video and website response. Later that day,

Domino’s created its first corporate Twitter and Facebook accounts in an attempt to engage

as many stakeholders as possible in an open and honest dialogue (TimeUS, Apr. 2009).

The post-crisis

Eventually, all organizations return to their usual business environment after the crisis

comes to an end, but even though the crisis is no longer the main focus of management, it still

requires some attention.

As recommended by crisis theory, Domino’s took action and engaged its stakeholders in

follow-up communication to keep them informed and to respond to inquiries, even though the

crisis was no longer in public attention. Domino’s thanked its customers for the support

shown during the difficult moments on their corporate website and sent personal “thank you”

e-mail messages to the bloggers who helped McIntyre right from the beginning of the crisis.

Since stakeholder perceptions are very important during a crisis, an evaluation of what

happened and how the organization responded was necessary. After an in-depth analysis of

all internet content related to the events, as theory suggests, Domino’s understood the huge

importance of social media, especially during a crisis, and created a social media specialist

position at the company’s headquarters in Ann Arbor, Michigan to “be the eyes and the ears

of Domino’s in the social media space” (The PR Strategist, Aug. 2009). McIntyre’s social

media team strengthened Domino’s online presence by actively using the newly-created

Facebook and Twitter accounts, in an effort to stay connected with all stakeholders: “we’re

using this to answer consumer questions - to promote new products […]. And then when

things happen, we’re aware of them”, the Vice President of Communications noted (The PR

Strategist, Aug. 2009).

A crisis that happened in the online environment has long lasting effects that are almost

impossible to eradicate (Gonzalez-Herrero & Smith, 2008). Negative publicity remains on the

web even after the crisis ends – even today, people can still view Domino’s videos on

GoodAsYou and The Consumerist – but companies that clearly showed that they have learnt

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from their mistakes and changed their communication style, like Domino did, will be able to

prevent and protect themselves from a similar future online crisis.

The data collected and used to analyze Domino’s crisis management strategy in relation

to Gonzalez-Herrero and Smith’s (2008) online crisis management model helped us realize

the strengths and weaknesses of the company’s strategy. They will be identified and

discussed later on in the paper, but not before Domino’s approach on the crisis response has

also been analyzed.

V.1.5. Domino’s crisis response strategies

The following section explores, from a communicative point of view, the response

strategies Domino’s used during and after the crisis in its attempt to rebuild the damaged

reputation, using Coombs’ (1995) crisis response theory as point of reference.

As we have already seen, Domino’s found out about the videos on Monday and officially

reacted only 48 hours later, after the incident had already become viral and was covered by

mainstream and social media all over the world. At that point, Domino’s was confronting

with a serious reputational crisis in the eyes of the public. Since the two employees

committed what customers of the food industry fear the most – sanitary and health standard

violations – Domino’s realized that it needed to adopt excellent response strategies to repair

its stained reputation and regain its customers trust.

According to Coombs (1995), an organization can respond to accusations of wrongdoing

in many ways, ranging from complete denial to acceptance of blame and asking for

forgiveness. Since we have already established that Domino’s crisis is a transgression type,

positioned on the intentional/internal axis, we will now consider the other factors that

influence the approach of crisis response. The videos posted by the two employees represent

proof of evidence that a crisis really exists, acting as testimony of the incident. When

assessing the level of damage, it becomes obvious that the two employees did major damage

to the organization’s image. Reactions such as “Oh, My God. I’m never eating at Domino’s

again” or “My children eat at Domino’s, I hope this is a bad joke” (GoodAsYou, Apr. 2009)

clearly demonstrate that stakeholders perceived the crisis as being severe, since customer

health might have been affected. However, as the contaminated food never got delivered to

customers, the incident did not have any victims. Judging by its worldwide success and its

trustworthy brand, we observe that Domino’s has a positive performance history, being

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perceived as a company that gained credibility in the eyes of its stakeholders by delivering

quality food for many decades.

According to what Coombs (1995) explained in his decision flowchart, a transgression

action where the evidence is true, with major damage and a positive performance history

requires a mortification strategy coupled with ingratiation. Just as theory suggests, Domino’s

took these aspects into consideration when choosing a response to the crisis and rightfully

adopted ingratiation and mortification strategies. The company’s first official response to the

crisis was to post a statement on its corporate website. In it, Domino’s used bolstering as

tactic and reminded their “valued customers” of the positive history performance of the

company: “a couple of individuals suddenly overshadow the hard work performed by the

125.000 men and women working for Domino’s across the nation and in 60 countries around

the world.” (dominosbiz.com).

The company combined this ingratiation strategy with two mortification tactics –

repentance and rectification. Domino’s assured its stakeholders that corrective measures had

already been taken in order to prevent a similar situation: “Since the videos first surfaced

yesterday, the two workers have been identified, fired and the affected franchisee has filed a

criminal complaint against them, and there are warrants for their arrest.” (dominosbiz.com).

At the end of the statement, Domino’s asked for forgiveness and apologized for the crisis:

“We apologize for the actions of these individuals, and thank you for your continued support

of Domino’s Pizza.” (dominosbiz.com).

Shortly after posting the statement, Domino’s realized that adopting the same

mortification strategies, but this time using social media platforms, would reach even more

stakeholders and would help restore a stained reputation. Therefore, Domino’s posted a video

on YouTube in which the CEO publicly apologizes for the crisis. The CEO used the same

tactics of repentance, rectification and bolstering just as in the statement, adding that “there

is nothing more important or sacred to us than our customers’ trust” (official YouTube

apology video).

Even though the CEO accepted blame and took responsibility for the crisis, he also

adopted a suffering strategy and portrayed the company as a victim of the crisis. He separated

the company from the two wrongdoers, emphasizing on the fact that their actions were a hoax

and that this is not how things “roll” at Domino’s. In an interview for AdvertisingAge,

McIntyre explained that there’s a limit to the things that a company can do to prevent a

situation like this: “you can be the safest driver, you know” but “there is going to be that

Friday night someone’s drunk and comes out of nowhere; you can do the best you can, but

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there’s going to be the equivalent of that drunk driver that hits the innocent victim”,

concluding that “Domino’s didn’t do this, it was something that was done to us” (Jaffe,

2010).

Domino’s considered that the apology video was not enough to regain its customers trust

and in order to rebuild the strength of its brand, it created corporate Twitter and Facebook

accounts in which it placed links to the video and issued bolstering statements such as “we

care about our customers” and “Domino’s Pizza does great things for your community”

(Towner, 2009). Regarding the store in which the incident happened, McIntyre told a local

TV news outlet that “The franchise owner is responsible for his actions, and he will be held

accountable” (Independent Street, Apr. 2009). This response came right after Domino’s

executives found out from the local police department that the female employee was a

registered sex offender. The company claimed that, according to law, the franchisee owner

has autonomy in setting menu prices and hiring employees and that it was up to him to ensure

that all operations and employees met the standards of Domino’s brand. In accordance to

Coombs’ (1995) theory, after finding out that the restaurant owner had hired a registered sex

offender against Domino’s standards, the company distanced itself from full responsibility

and excused the company in the eyes of customers by partially scapegoating the franchisee

owner for the incident.

Domino’s managed to find a suitable approach during the whole crisis and maintained a

tone of customer gratitude and care throughout. The choice of accepting responsibility and

culpability for the crisis ensured Domino’s a successful crisis communication strategy.

Benoit, researcher in the field of image restoration, generally applauded Domino’s approach,

by stating “People do not like to admit they’re wrong, but they do like to hear other people

admit it. When someone does fess up, people tend to respect you for having the courage to

admit it.” (The Washington Post, Jan. 2010).

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V.2. “United Breaks Guitars”

V.2.1. United Airlines: company background

United Airlines Inc. is one of the largest and oldest commercial airlines in the world,

headquartered in Chicago, Illinois, United States. It employs around 48.000 people

worldwide and has a fleet of 359 aircraft (UA press release, Aug. 2009).

United’s history dates back to 1926, when a small airmail company called Varney Air

Lines was founded in Idaho, US. Varney steadily increased its operations and in 1934 it

merged with Pacific Air Transport, Boeing Air Transport and National Air Transport to form

United Airlines (Davies, 1998). In the 1930s the company made history when it became the

first airline in the world to introduce stewardesses on its flights, thus opening up the aviation

industry to women (Chasing the Sun, PBS, 2011). A second merger followed in 1961 with

Capital Airlines, turning United into the world’s second largest airline.

In the coming decades the airline grew, increasing its fleet, destinations, number of

passengers carried and subsequently its financial revenue. From the 1960s until the 1990s,

United Airlines was highly cherished for excellent customer service and its famous slogan

“come fly the friendly skies” was a well-known and well-deserved motto (Lawrence and

Teinowitz, 1996). However, the 1990s marked the start of a period of decline for United and

the airline experienced a decrease in employee and customer satisfaction (Johnsson, 2009). In

the mid 90s, pilots and other employees went on massive strikes, resulting in the cancellation

of over 30.000 flights and thousands of delays (Arndt, 2000). Although the 2001 September

11 terrorist attacks were a serious blow to the entire airline industry, they represented a true

challenge for United’s future, as two of the four hijacked planes were UA flights. Because of

the attacks and an overall company decline, United Airlines filed for bankruptcy in 2002 and

managed to survive until 2006 when bankruptcy ended, although it had not fully recovered

(Johnsson, 2009).

According to the United States Bureau of Transportation Statistics, in 2007 United ranked

next to last among 20 of the largest US airlines in terms of on-time performance and had the

second most frequently delayed flight (a route that was late 97% of the time). The year 2009

brought United even more blows to its already damaged reputation, when the airline was

seriously criticized for raising checked baggage fees from $5 to $20 as well as for the arrest

of a UA pilot who intended to lead a transatlantic flight under the influence of alcohol

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(Bunch, 2009). The same year the airline confronted with the “United Breaks Guitars” crisis

and with even more negative press coverage when the singer’s luggage – which ironically

contained CD’s of his song about United – got lost on a UA flight four months after the first

song was posted online (Soule, 2010). These and many other events led to a serious decline in

United Airlines’ once favourable reputation, fact confirmed by the University of Michigan’s

American Customer Satisfaction Index in 2009: United’s customer satisfaction rates ranked

last among American airlines in two of the three years examined (Johnsson, 2009).

In the following part we focus on one particular event that greatly contributed to United’s

decline in corporate reputation, namely the 2009 “United Breaks Guitars” (UBG) crisis,

named this way by the media after the three songs which drew massive public awareness of

the incident online.

V.2.2. Crisis facts and timeline

In order to understand why the incident is truly a crisis and to properly analyze the way in

which United managed it we have drafted a brief timeline of the events that led to the crisis

outbreak and of the airline’s subsequent response. Introduced in chronological order, the data

was taken from Dave Carroll’s own recollection of the events as written on his official

website (http://www.davecarrollmusic.com/ubg/story/). We shall then use the timeline to

build a short description of the events, which will represent the starting point of a thorough

analysis of the crisis and of the company’s crisis management and communication strategies.

United Airlines – crisis timeline

March 31, 2008 Dave Carroll and his band “Sons of Maxwell” board a UA flight from

Halifax, Canada to Omaha, USA via Chicago and witness guitar cases

(including Carroll’s) being thrown on the tarmac by United baggage

handlers

Carroll notifies the flight attendants but is told to discuss the issue with the

ground crew in Omaha (who is nowhere to be found after the plane lands)

April 1st, 2008 Carroll discovers that the neck of his guitar is broken

April 8, 2008 Carroll takes up the issue with a United employee, who tells him to start a

claim at the Halifax airport

In Halifax, an Air Canada employee acknowledges the damage and starts a

claim but denies Air Canada’s responsibility

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April – June 2008 Carroll has several telephone discussions with United customer service

agents from India regarding the claim but they are unable to help him

July 2008 Carroll is eventually directed to the Chicago baggage offices of United and

is asked to bring the guitar for inspection to Chicago (from Canada)

The musician is told to contact the UA Central Baggage office in New

York and then faxes United all of the documents relating to the issue

August 2008 Carroll calls United again but is notified that no fax had been received

The fax is eventually found and Carroll is told to call back in a few days,

but when he does the number is no longer in service

The musician pays $1200 to have his $3500 guitar repaired

Carroll calls customer service agents in India again and is promised that a

Chicago representative will contact him

September 2008 Carroll receives a letter notifying him that he will soon be contacted

regarding the issue

October 2008 The singer receives an email from a United representative (Ms. Irlweg)

who denies his claim

November 2008 Carroll and Ms. Irlweg exchange a series of emails which conclude with

the musician unsuccessfully asking for a settlement of $1200 in flight

vouchers and promising to share his negative experience with the world

using social media

July 6, 2009 “United Breaks Guitars” (song #1) is uploaded on YouTube and gathers

over 150.000 views in its first day (CBC News, 2009)

July 7, 2009 News of the video and incident appear in traditional and new media

(including The Wall Street Journal, USA Today, ABC News, CNN, etc.)

United Airlines tries to contact Carroll and issues the first statements about

the incident on Twitter

July 10, 2009 Carroll is contacted by a United representative, who apologizes and offers

him money and flight vouchers

United donates $3.000 to charity, as asked by Carroll, and tweets about the

donation

August 14, 2009 United Vice President of Customer Contact Centers gives an interview on

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a blog (elliott.com) regarding the incident and first video

August 17, 2009 “United Breaks Guitars Song 2” is uploaded on YouTube

August 18, 2009 United spokesperson comments on elliot.com regarding the second video

August 21, 2009 United spokesperson makes two comments on a National Post article that

covers the incident

March 1st, 2010 “United Breaks Guitars Song 3 – ‘United We Stand’ on the Right Side of

Right” is uploaded on YouTube

In March 31st 2008, Dave Carroll, a professional musician from Canada, was traveling

with his band “Sons of Maxwell” from Halifax, Canada to Omaha, Nebraska US as part of a

concert tour in the United States. In Chicago, after having boarded a connecting flight,

Carroll and other passengers witnessed how United baggage handlers were throwing guitar

cases (including his) on the tarmac. The musician notified three flight attendants and was told

to discuss the issue with the ground crew in Omaha, who was in fact nowhere to be found

upon landing. The second day, Carroll noticed that despite having been packed into a padded

hard case, his $3500 acoustic Taylor guitar had been broken around the neck. After their tour

ended, Carroll and his band returned to Omaha where he brought up the issue with a United

representative but was told to file a claim in Halifax. At the Canadian airport, Air Canada

employees acknowledged the damage and helped Carroll file a claim, although they denied

responsibility and instructed him to contact United.

A long and unsuccessful period of around four months followed in which Carroll

exchanged many telephone calls with customer service agents from United’s outsourced

Indian offices, who eventually directed him to the baggage office in Chicago. He was then

told to bring the guitar for inspection to Chicago and after explaining that the very long

distance made him unable to fulfill their request, he was once again passed on to another

office, this time in New York. This office was as well unable to help him and as the telephone

number he was given got disconnected a few weeks later, Carroll had no chance but to once

again contact the representatives from India. Around six months had already passed since the

incident and the full-time musician was forced to have his guitar repaired for $1.200.

Unwilling to give up, Carroll continued to correspond with United employees and after

about a month he received a letter with no contact information informing him that a

representative will get in touch soon. An additional month passed and a United employee

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named M. Irlweg sent Carroll an email rejecting his claim for the following reasons (Dave

Carroll Music, Aug. 2011):

o The incident was not reported to United employees upon landing in Omaha (although

Carroll tried but could not find any)

o He failed to report the damage to the Omaha airport within 24 hours (even though the

musician had a tour schedule to follow)

o Someone from United would still need to see the damage (despite the fact that Carroll

had been forced to repair his guitar in the meantime and that the damage had already

been acknowledged by United airline partner Air Canada)

After having exchanged several emails with Ms. Irlweg, Carroll was denied permission to

contact her manager and his final offer of settlement (consisting of $1.200 in flight vouchers)

was irrevocably denied. In a final email to Ms. Irlweg, the musician promised to write three

songs detailing his negative experience with United Airlines and to upload videos on

YouTube for each song, aiming to reach one million views within a year. He then completely

gave up contacting United Airlines but started working on the songs and as a result about

eight months later, in July 2009, Carroll uploaded the first promised music video to

YouTube, naming it “United Breaks Guitars”. The video quickly turned viral and drew

massive attention from both social and traditional media, gathering over 2.5 million views

and 13.000 comments on YouTube alone in just six days following its upload (Social Media

Today, Jul. 2009).

In the following part, we demonstrate why the incident qualifies as a corporate crisis and

we continue by analyzing United’s crisis management strategies.

V.2.3. Crisis type and characteristics

According to Coombs’s (2007) definition, which encompasses the views of several other

well-known researchers, a crisis is “the perception of an unpredictable event that threatens

important expectancies of stakeholders and can seriously impact an organization’s

performance and generate negative outcomes”. With this in mind, we believe that the incident

between Carroll and United Airlines represented a crisis for the airline for three major

reasons. First, United clearly violated the expectations of many of its stakeholders

(particularly customers) as it resulted from the huge number of comments to Carroll’s first

song (over 13.000 in under a week): content analysis performed on a sample of around 400

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comments concluded that an overwhelming 83% of commentators supported the musician

and criticized United and the airline industry in general (Soule, 2010).

Second, the massive media attention that the incident received had a significant impact on

the company, who was forced to promise a revision of its customer service practices and take

action to minimize damage to its reputation. And third, the event had serious negative

outcomes for United, including financially, as reported by The Times (Jul.2009): “[…] within

four days of the song going online, the gathering thunderclouds of bad PR caused United

Airlines’ stock price to suffer a mid-flight stall, and it plunged by 10 percent, costing

shareholders $180 million” – although this statement was later questioned in the media, as the

huge stock price decrease was also attributed to other factors (The Huffington Post, Aug.

2009).

The UBG crisis perfectly matches the characteristics of Pearson and Mitroff’s (1993)

crisis dimensions theory, which states that crises: are highly visible – Carroll’s videos drew

massive online and offline public awareness of the incident; require immediate attention – the

issue was immediately placed on United’s agenda as they realized that the first video was

turning viral; contain an element of surprise – the airline did not anticipate the huge number

of people and media channels that the video would reach; have a need for action – United

was forced to contact Carroll and to apologize, promising a remediation of the issue; are

outside the organization’s complete control – United had no choice but to observe how the

video was rapidly spreading on traditional media and especially on new media platforms,

despite having promised to change their practices.

Depending on various theoretical classifications of crises, UBG may be placed in more

than one category. After a synthesis of several typologies explored in the first chapter of our

paper, the event can be identified as a non-violent, organizational and immediate crisis.

According to Coombs’ (2005) four-axis typology, UBG lies in the human-error accidents

category, since Carroll’s guitar was accidentally broken due to the negligent behavior of

United baggage handlers, who are internal stakeholders of the airline. As it was triggered in

the online environment, with social media acting as main distribution channels, the event may

be viewed as part of the rather recent phenomenon of online corporate crises, which affected

many organizations during the past few years. Additionally, since Carroll’s purpose was to

attract public attention on United’s defective customer service practices, thus weakening its

already stained reputation, we identify the event as a reputational crisis.

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Having established the nature and characteristics of the UBG crisis, we can now try to

shed light on its strategic dimension, analyzing United Airlines’ crisis management and

communication strategies so that we can later conclude whether the airline employed

effective actions or not and decide the role played by social media in the entire issue.

V.2.4. United’s crisis management strategy

Unlike Domino’s crisis, which had no clear warning signs and was therefore very difficult

to anticipate, United’s crisis was triggered more than a year after the broken guitar incident

first appeared. Because the incident happened and developed in the offline environment

(except for email exchanges), we shall analyze the airline’s actions relating to both Coombs’

and the Gonzalez-Herrero & Smith models. Recognizing the potential of social media,

Carroll chose to upload his videos to YouTube in order to share his experience with the

general public, which meant that the online environment instantly became the “main

battlefield” for the UBG crisis. Due to this aspect, United’s actions taken after the crisis blew

will be mainly analyzed with reference to Gonzalez-Herrero and Smith’s online-oriented

theoretical recommendations.

Signal detection/prevention (issues management)

According to Coombs (2007), during the signal detection sub-stage organizations must

actively scan for issues that have the potential of turning into crises and then properly

evaluate their risks. During the prevention sub-stage, these issues must be then acted upon so

that a potential crisis is defused. The purpose of both sub-stages is the same as Gonzalez-

Herrero and Smith’s (2008) issues management stage, who agree that companies must scan

for such issues on both traditional and online media channels as well as in everyday company

operations. In United Airline’s case, it is obvious that Dave Carroll’s claim to have his guitar

repaired became a clear warning sign the instant it was started and continued to become even

clearer as his efforts were increasing. However, United employees did not consider it

necessary to treat it as such, especially since the airline (and basically all other airlines) often

deals with similar claims.

The fact that United completely ignored the crisis potential of the issue was made evident

right from the start by the way several employees responded to Carroll’s first efforts to draw

attention on the seriousness of the incident. Seconds after the baggage handlers were spotted

throwing his guitar case and dropping it on the tarmac, Carroll notified three United

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employees: a flight attendant, who told him to contact the lead agent, the acting lead agent,

who refused to discuss the matter and a boarding gate employee, who told him to notify the

ground crew in Omaha (Dave Carroll Music website, Aug. 2011). In other words, two

company representatives denied responsibility, passing it on to others, while a third (who was

probably in the best position to take measures) completely ignored him. After his plane

landed, Carroll tried to notify United ground crew members of the incident, but was unable to

find any so he left Omaha for his band’s tour.

A week later, the issue became even more serious after Carroll contacted United again

upon finding out that his expensive professional guitar had been broken in the fall. Despite

the fact that a relatively minor incident involving negligent employees turned into a legal case

of property damage, United once again failed to properly assess the seriousness of the

situation and passed their customer, who had already started a claim and showed the damage

to Air Canada employees, from one representative to another. Throughout the following

several months, United continued to demonstrate the inability to properly assess the issue as a

potential crisis, even though Carroll insistently tried to obtain financial compensation for his

loss but was clearly ignored on multiple occasions.

Another clear opportunity for United Airlines to recognize the issue’s potential to damage

the company came when a customer relations representative (Ms. Irlweg) eventually

contacted Carroll as a result of his continuing efforts to have his claim fulfilled. A series of

emails with Ms. Irlweg concluded with Carroll’s claim and subsequent settlement offer being

denied. The final and most obvious warning sign was Carroll’s promise to Ms. Irlweg to

share his entire negative experience with as many people as possible using social media.

Even though the musician expressed his direct intention of damaging United’s reputation

using a method through which many large companies had already been affected, the airline

completely failed to consider the direct threat of a dissatisfied customer as the warning sign

of a potential crisis.

Crisis preparation (planning-prevention)

Because United failed to properly assess the incident as a warning sign, the airline did not

take any measures to prepare for a potential crisis. Coombs (2007) explains that in the crisis

preparation sub-stage, organizations should prepare for an upcoming crisis by taking several

measures: diagnosing vulnerabilities, assessing the type of the crisis, creating a crisis

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management team (CMT), designating and training a spokesperson, developing a crisis

management plan (CMP) and finally reviewing the crisis communication strategy. Gonzalez-

Herrero and Smith (2008) agree and add several recommendations: develop a crisis manual

online, check both online and regular media, evaluate and prepare company online resources

for the crisis (website, blog, social and professional network profiles, etc) and create and test

an online crisis plan.

While acknowledging and implementing all recommendations would have proven

beneficial to United, the more online-oriented ones would have especially helped since the

crisis developed primarily on the web. However, United was caught completely unprepared

when the crisis finally erupted.

The crisis

As previously discussed, every crisis starts with a trigger event (Coombs, 2007). In

UBG’s case, the trigger event was the upload of Carroll’s promised first song to YouTube.

As the video turned viral almost instantly, United soon understood that it was facing a crisis

and decided to take action in order to minimize the damage. According to crisis management

theory, speed and transparency are two very important aspects that every company has to be

aware of while managing crises. United has indeed shown speed in its initial response,

although the single communication channel the airline initially chose proved insufficient. The

second day following the video’s upload, United posted four tweets on their Twitter page,

which as resulting from their website at the time, was the company’s only official social

media channel (Soule, 2010). The tweets were all posted as responses to users that followed

United’s Twitter page, informing them that United representatives had already tried to

personally contact Carroll to “make it right” (UnitedAirlines, 2009).

In less than 24 hours after Carroll posted his video on YouTube, the song had already

spread on YouTube, Twitter and blogs and it was just a matter of time before it would start

spreading to traditional media. This happened the same day (July 7), when news of the video

and incident got covered by major publications, including the Los Angeles Times, USA

Today and the Chicago Tribune (Social Media Today, Jul. 2009). United acknowledged that

the issue was gaining more and more attention and that the crisis was escalating. As a result,

United’s spokesperson R. Urbanski issued a statement which appeared on several traditional

media channels, explaining that efforts to contact Carroll had been made and that his video

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had provided the airline with a “unique learning opportunity” (CBS News, Jul. 2009).

However, it remains unclear whether United was approached by the media for the statement

or if they issued it themselves.

Contrary to what the Gonzalez-Herrero and Smith model suggests, the airline did not

issue press releases or any other forms of information regarding the ongoing crisis on their

website (Social Media Today, Jul. 2009). Although United had started a corporate YouTube

channel one year before the crisis (http://www.youtube.com/user/uniteditstimetofly), this

communication medium was not used by the company in its crisis management strategy. A

third opportunity to engage with stakeholders who were actively searching for information on

the incident was a United Airlines unofficial Facebook fan page (which counted over 9.000

fans in July 2009), but this channel was also ignored (Social Media Today, Jul. 2009).

On July 10, when the video had already been viewed by over 1.3 million people on

YouTube alone, United’s Managing Director of Customer Solutions personally contacted

Carroll to apologize for the incident, admitting that the incident should have been resolved

much sooner, and offered him $1.200 to cover the costs of the damage and a matching

amount in flight vouchers (Rolling Stone, Jul. 2009; Dunne, 2010). This action was basically

United Airline’s main strategy to combat the effects of the crisis, namely to fulfill the request

Carroll had made over a year earlier and to apologize for its poor customer service. However,

the musician declined any financial compensation and suggested that the money should be

donated to charity. As a result, United donated $3.000 to a music institute for children and

posted three tweets informing of their actions, one of them in response to a user’s previous

tweet (The Times, Jul. 2009). Interviewed about the incident, United’s spokesperson told

reporters about the donation and declared that Carroll’s video will be used internally as

training for customer service agents in order to avoid future similar incidents.

During the following days (July 13-14), United posted three more tweets on their Twitter

account, replying to users that the airline had apologized to Carroll and that it has learned

from its mistakes (United Twitter page, Jul. 2009). These tweets as well as several

declarations in mainstream media (newspapers) – reminding about their actions and

promising to improve their customer services – basically represented the airline’s final efforts

to stop the crisis from spreading.

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The post-crisis

After the crisis ends and its effects start to diminish, crisis theory suggests that

organizations must take several measures to ensure a full recovery, evaluate their strategies

and monitor the issues that led to the crisis outbreak (Coombs, 2007). Specific

recommendations include the monitoring of crisis-related issues on social media, continuing

to engage stakeholders about the crisis, updating the company’s own online channels and

creating clear strategies to rebuild the damaged reputation (Gonzalez-Herrero & Smith,

2008). However, when dealing with crises that developed primarily online, it is almost

impossible to determine their ending, because information on the events that led to their

outbreak remains on the web and may be accessed years after. This is particularly true in

United’s case, as Carroll’s first video continued to gather views and information of the

incident was still shared online many months after its upload. We could consider that the

crisis started to die down in intensity after United made the donation, apologized to Carroll

and promised to prevent future incidents from happening.

However, the public attention given to the entire issue did not disappear that easily. In

August 2009, Carroll uploaded his second promised video, which placed the spotlight on his

negative experience once again. Of course, the effect of this video was not as powerful as the

first one and it received significantly less media coverage and thus public attention. United

Airlines did not make any official statements regarding the second video on their website or

other social media platforms (YouTube and Twitter), although some efforts to reach

stakeholders were made. The main action in this regard was an interview given by the United

Airlines Vice President of Customer Contact Centers to a well-known consumer advocate and

journalist on his website (www.elliott.org). In the interview, United’s VP stated that the

airline regretted the incident, had taken measures to change their customer service strategy

and had learned about “the power of social media and the implications it has on reputation”

(Elliott, 2009).

The day following the second video’s upload, the airline’s spokesperson commented on

the same blog to remind stakeholders that Carroll had been contacted and to assure of the fact

that the incident had been an isolated event (Soule, 2010). Several days later, the

spokesperson commented once again on an online article of the Canadian newspaper National

Post, in which she reminded readers that the airline regretted the incident and had already

taken action to prevent similar ones from happening (National Post, Aug. 2009).

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Although United assured stakeholders that actions had been taken to prevent similar

incidents from happening, the airline never issued any information regarding specific steps it

had allegedly taken to change internal practices. In March 2010, around eight months after

the second video appeared, Carroll uploaded his third and final music video to YouTube. This

time, however, the video received even less public attention and was mainly seen as the

promised final update to the entire issue, which had already reached its peak of audience a

year earlier with the upload of the first clip. Even though the video and recollections of the

events appeared on some media channels, United took no action as it had probably

considered the issue long closed.

V.2.5. United’s crisis response strategy

In previous chapters of our paper we have seen that communication, under the form of

crisis response strategies, is an integral part of crisis management. Because it obviously has

different characteristics than Domino’s crisis, “United Breaks Guitars” classifies in a separate

category when placed in Coombs’ crisis typology and as a result a different response strategy

may be required. Having already established that UBG is a human-error accident type of

crisis, we draw our attention on Coombs’ three other factors to decide which strategy should

United have used according to theory.

The first factor, veracity of evidence, refers to the existence of proof that the incident

which sparked the crisis occurred or not. In United’s case, the fact that Carroll’s guitar had

been broken was never denied by the airline, as evidence had been presented by the musician

to Air Canada employees in the shape of damage acknowledgement and the subsequent

filling of a claim. As damage is susceptible to perception, we consider the opinion of external

stakeholders as relevant in this case, and damage worth $1.200 to an expensive, custom-made

$3.500 guitar was mainly viewed as serious in the eyes of the public. As a result, Carroll

rightfully posed as a victim of the airline’s negligence, asking for financial compensation.

The final factor, performance history, played an important role in the issue, as in recent years

United Airlines had acquired a poor reputation for customer service. This was made evident

by the mostly negative feedback stakeholders gave during the crisis, many of whom had

suffered similar experiences with United.

Given these factors, United should have theoretically chosen a mortification strategy,

since this type of crisis response proved successful in the case of companies with a negative

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performance history that had been through accident-related crises with significant financial

damage (Coombs, 1995; Cornelissen, 2008). Mortification (also called acceptance strategies)

includes remediation, repentance and rectification, tactics used by companies perceived as

being responsible for and that accept full culpability of the crisis. Considering the various

messages (in tweets, comments and interviews) sent by United during and after the crisis, we

can observe that the airline had in fact used all three tactics in their response strategy, but also

several others.

Remediation

As previously mentioned, remediation is a tactic through which an organization promises

some form of compensation or help to victims. This tactic was used right from the beginning

by United, who wrote on Twitter the day following the upload of the first video:

“@Kelly_MacD This has struck a chord w/ us and we’ve contacted him directly to make it

right” (UnitedAirlines, Jul. 2009). The same tweet was reposted a few hours later, but United

did not specify what “make it right” meant. The airline’s spokeswoman, R. Urbanski, gave

the same message on traditional media, in statements that appeared in several large

publications (CBS News, The Globe and Mail, Los Angeles Times, etc.). Urbanski, who was

quoted in most of the articles, added that a meeting had been scheduled with Carroll so that

United could find out how to properly compensate him (Los Angeles Times, Jul. 2009). On

July 10, after the meeting between Carroll and United representatives had taken place, the

airline issued statements for reporters and tweeted twice that the musician had been offered

financial compensation for his loss, but as he preferred a donation to charity instead of

accepting the money, $3.000 had been donated to the Thelonius Monk Institute of Jazz

(UnitedAirlines, Jul. 2009; The Times, Jul. 2009).

United’s donation was mentioned in the media for the next several days, both online and

offline, and represented a first attempt to gain public sympathy by compensating Carroll.

Repentance and rectification

While the first message sent out only announced that Carroll had been contacted to be

given compensation, this response tactic was used in parallel with others. On several

occasions, the airline expressed its regret for what had happened and apologized, first on

Twitter and then on traditional media: “@rockitdev Love your client’s video. Not all r as

honest as he. That is why policy asks for claims w/in 24 hours. No excuse; we’re sorry” and

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“@jtkola Nope. That was a mistake that we made, have apologized for, have fixed, and most

importantly, learned from too.”(UnitedAirlines, Jul. 2009). This was a tactic of repentance, in

which blame is admitted and apologies are made, and was coupled with rectification

(promising to take corrective action to prevent a similar crisis from happening): “@JRGarcia

It is excellent [the video] and that is why we would like to use it for training purposes so

everyone receives better service from us” (UnitedAirlines, Jul. 2009). The intention of using

Carroll’s video as internal training for better customer service was expressed again in a tweet

and several times in a statement for journalists: "While we mutually agree this should have

been fixed much sooner, Dave's excellent video provides us with something we can use for

training purposes to ensure that all customers receive better service from us" (National Post,

Jul. 2009). United’s VP of customer service reinforced the promise to make internal changes

in the interview given on August 14, but even when asked about specific details, she only

gave an ambiguous answer (Elliott, 2009).

Apart from all three mortification tactics, United also used bolstering (drawing attention

on positive aspects of the company) and praising others (seeking approval from others by

praising them), both being ingratiation strategies.

Bolstering and praising others

In several occasions, United tried to minimize the crisis’s damage by drawing

stakeholders’ attention on positive actions and statistics of the airline. In one online comment,

the company’s spokesperson stated that “99.95 percent of our customers’ bags are delivered

on-time and without incident, including instruments that belong to many Grammy award-

winning musicians” (National Post, Jul. 2009). The statement was mentioned in mainstream

media several times as well (The Globe and Mail, Jul. 2009; National Post, Jul. 2009). This

tactic was again used by United VP in her interview, who said “I think people would be

amazed at our track record in which more than 99.95 percent of our guests’ bags are

delivered on-time and with no damage whatsoever” and added that “we ranked No. 1 in on-

time performance among the five major U.S. network carriers year-to-date through May and

though we did slip a bit in June, we are back to fighting it out for the top spot in July”

(Elliott, 2009).

Aiming to gain public sympathy, United applauded Carroll’s efforts several times in its

messages, praising his talent and integrity. On Twitter, United wrote “love your client’s

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video. Not all r as honest as he”, “can’t wait 2 make music w/Dave” and called the first video

“excellent” (UnitedAirlines, Jul. 2009). Additionally, United VP mentioned the “musical

talent and expertise demonstrated by Mr. Carroll” and the airline’s spokesperson was quoted

in mainstream media to have “loved” the song, which according to her was “excellent”

(Elliot, 2009; USA Today, Jul. 2009; National Post, Jul. 2009). The spokesperson took this

tactic even further, claiming in a comment that she and the musician have in fact become

“BFFs” (best friends forever) since the incident: “As Dave's new BFF at United, I look

forward to making music w/ him on video three!” (National Post, Aug. 2009).

Surprisingly, United made use of another tactic in one of its messages, when the

company’s same spokeswoman tried to deny that a crisis still existed (using clarification),

this time showing no sympathy towards the musician’s negative experience with the airline:

“He has made his point, we have since worked with him directly to fix, and in addition to

unfairly singling out one of our people, the second video is suggesting we do something that

we’ve already done – and that is to provide our agents with a better way to escalate and

respond to special situations. While his anecdotal experience is unfortunate, the fact is that

99.95 percent of our customers’ bags are delivered on-time and without incident” (Elliot,

2009). The statement came after the second video was uploaded, and United was obviously

trying to convince stakeholders that the crisis was over, insisting on the fact that it had

already contacted Carroll and taken measures to fix the wrongdoing.

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VI. Discussion and conclusions

VI.1. Discussion

The analysis performed on the two companies’ strategic and communicative efforts in

managing the crises has given us interesting insight. Before drawing any conclusions, we

consider it worthy to mention an obvious difference between the two crises regarding

perception of responsibility for the events. In Domino’s case, the incident that led to the

outbreak of the crisis, namely the actions of the two employees, was not perceived as being

primarily the company’s fault and thus Domino’s – which also had a favourable reputation –

benefited of a somewhat supportive public. This does not mean, of course, that Domino’s had

an easier task in managing the crisis, as stakeholders were still expecting partial admittance

of blame, clear corrective actions and openness to dialogue. In United’s case, however, the

incident that sparked the crisis was different in nature and was entirely perceived as the

company’s fault. Coupled with the fact that in recent years United had acquired a reputation

for poor customer service, it was evident that the airline would have to deal with a criticizing

audience right from the start. This meant that United was expected to show full transparency

and honesty in its crisis approach if it wanted a good chance of regaining public trust.

Looking back at the overall strategy used by Domino’s Pizza in its crisis management

approach, we consider that the company made proof of good strategic efforts to successfully

end the crisis and preserve a favourable reputation. The popular fast-food chain took most

measures that Gonzalez-Herrero and Smith’s model recommends, and its strategy was met

with mainly critical acclaim by the general public and corporate communication practitioners

for several reasons. First, Domino’s decision to use its CEO to personally address

stakeholders was very well received by the public and media and was one of the initial

obvious attempts to connect to stakeholders on a non-corporate, more personal level. As

Stock (2008) mentions, although unfortunately few companies choose to do so, using the

CEO to address the public is a good first start in regaining public trust. Moreover, the

company’s unconventional decision to name the official apology video using bad grammar

(“Disgusting Dominos People – Domino’s Respond”), just as the two employees had named

theirs, was another attempt to reach stakeholders in the same non-corporate manner.

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Second, Domino’s took effective actions during and after the crisis using resources from

both the offline and online environments. In accordance to any traditional crisis management

theory, the company took quick action to find out who the perpetrators in the videos were,

took legal action against them, made sure that no customer had in fact received the food and

sanitized the restaurant, all through close cooperation with internal (employees) and external

stakeholders (web users, police, health department, etc.). Online, Domino’s took many

actions recommended by theory: placed visible crisis-related links on own online resources,

sent out personal messages to supporters, engaged stakeholders for feedback, kept them up-to

date and combined the use of traditional media with new media.

Third and probably most important, Domino’s acknowledged the power of social media

to reach stakeholders and emphasized heavily on online communication. Even though it was

already planning to use social media for everyday activities, the company understood that it

had to hurry the process and created accounts on popular social media platforms sooner in

order to combat the crisis’ effects. This ensured contact with all stakeholder groups in the

same online environment in which the crisis had developed. With the same intention,

Domino’s chose to not only place a public apology on their website, but also on YouTube, to

directly reach the same people that had viewed the videos of the two employees.

From a communicative point of view, Domino’s successfully chose an adequate response

strategy by admitting blame, apologizing, promising corrective action and thanking

stakeholders for their support. However, the approach was successful not only because the

company chose the right tactics, but also because it made proof of transparency, informality

and openness. A clear example was the apology video, in which Patrick Doyle, Domino’s

CEO, filmed an unrehearsed apology in one take (Peeples & Vaughn, 2009). “The credit

we’re getting and the comments we’re seeing [show] that we didn’t hide and we haven’t been

‘corporate’, but responding like real people”, stated McIntyre about the video (PR Week US,

Apr. 2009). The fact that Domino’s innovative communication approach had been efficient

was made clear when the crisis died shortly after the company’s response. McIntyre

discussed the end of the crisis in The Consumerist: “During the first week when this

happened, awareness and chatter about Domino’s just spiked. It was unprecedented. But then

24 hours later, bang! It fell right back down to normal levels. There was an incredible spike.

People look at it [video], heard about the story, made their comments and went on.” (The PR

Strategist, Aug. 2009). A confirmation that Domino’s had effectively responded to the crisis

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came a few months later, when Tim McIntyre, Domino’s VP of Communications, was named

Crisis Manager of the Year by PR News (The Realtime Report, Dec. 2009).

Although Domino’s was generally praised for the way it managed the crisis, it did

however make two significant mistakes in their approach. In our opinion, as well as that of

many PR practitioners, Domino’s waited too long to respond to the crisis and did not

effectively use search engine optimization for their YouTube apology video. The decision to

initially not respond to the crisis hoping to contain its effect was, according to many

communication experts, an unfortunate one and the 48 hours it took Domino’s to respond to

the crisis was too long in today’s world of constant online communication. At first, Domino’s

underestimated the power of social media and permitted the prank video to receive more than

one million views in two days, which may seem like a lifetime in the online environment.

Just as the chief marketing officer of the social media firm Lotame put it, in social media, “if

you think it’s not going to spread, that’s when it gets bigger” (The NY Times, Apr. 2009).

Apart from the slow reaction to the crisis, the other main problem with Domino’s

response was the apology video’s ranking in Google search after its YouTube upload. As

observed by a US search engine marketing firm, the video did not initially appear on the first

page, which led the president of the firm to comment “how effective can a crisis response be

if it doesn’t show up on the first page of a Google search?” (Upsize Magazine, Aug. 2009).

The company was also criticized for not having purchased ads to cancel out the negative

reinforcement in Google results. “If you searched for ‘domino’s and disgusting’, the whole

first page of results dealt with the incident. One link screams ‘Never Eat At Dominos

Again’”, observed a brand strategist from Nielsen Online (TimeUS, Apr. 2009). According to

Gonzalez-Herrero and Smith (2008), the use of SEO is an important action that every

organization should take, especially when dealing with an online crisis.

Looking back at United Airlines’ efforts to deal with its reputational crisis and taking into

account the mostly negative feedback received from stakeholders, we consider that the airline

made proof of an overall poor crisis management approach, although we did notice several

good points in the company’s strategy. Unlike Domino’s, United responded much faster to

the crisis and issued its first statements on Twitter and mainstream media during the first 24

hours of the events. In this regard, the company seemed to understand right from the start that

the crisis would spread fast and that a quick official response was required. In addition,

United made a good decision by choosing to use Twitter and the blog of a popular consumer

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advocate as communication channels online, although unfortunately social media use did

mainly stop there. From a crisis communication perspective, United initially chose a good

response strategy, by admitting blame, apologizing to Carroll and promising to take

corrective actions. Although considering the evidence that the musician had presented and the

negative corporate reputation, the airline had no choice but to choose this response, as not

using these tactics would have probably had dramatic consequences for its reputation.

Despite having taken some good choices, United did too little when compared to the

many important aspects it had overlooked. One of the major weak points of the company’s

strategy was its inability to effectively use social media in combating a crisis that was

developing primarily online. This was one of the main reasons for which United got criticized

by many PR and social media specialists, as observed by the Social Media Today

professional network in a cover of the incident: “companies need to take videos and their

online response very seriously. [United] did speak to reporters, […] but key social media

channels were neglected” and “United Airlines did follow the first rule of crisis

communications by apologizing and trying to make amends. It's their failure to leverage and

integrate their online channels that is at issue” (Social Media Today, Jul. 2009). Even though

it had already created an official YouTube channel in July 2008, United did not mention it on

its website and did not use it during or after the crisis. Nor did it use the United Facebook fan

page, which even though was unofficial would have represented an excellent opportunity to

engage the over 9.000 users who were searching for answers. Using at least the most popular

social media platforms, United could have engaged stakeholders, who were actively

expressing their opinions on Facebook, YouTube, blogs and Twitter throughout the crisis.

One month after the upload of the first video, media and marketing online magazine

Sparksheet analyzed United’s YouTube profile to find out if the airline had engaged its

profile visitors and reached the following conclusion: “No airline today needs a first-class

YouTube presence more than United Airlines. […] So far United Airlines has failed to

respond in kind and its YouTube channel is littered with comments from angry musicians

vowing to boycott the airline. We know we’re not the only ones waiting to hear an equally

tuneful apology performed by musically-inclined United employees” (Sparksheet, Aug.

2009).

The second major mistake United made was to adopt response tactics towards the end of

the crisis that differed from initial ones, which led to an inconsistent overall communication

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strategy. In addition, the way the airline responded to the crisis was heavily criticized for lack

of transparency, honesty and openness. Although at first United admitted blame, apologized

to Carroll and promised to improve its customer services, it also used a tactic of attack

(confronting the person or group who claims that a crisis exists) when the company’s

spokesperson tried to deny the existence of a crisis by criticizing Carroll for “singling out” a

United employee and for repeating himself in his second video (Elliott, 2009). The statement

was negatively received by most internet users, who expressed their discontent with the

company’s response in web comments: “Mr. Carroll has every right to DRILL THIS

MATTER HOME. Resolved or not”, “No, I don’t think Dave Carroll has finished making his

point yet”, “United needs to sit back, shut up, and fix their problems. Then they can say ‘we

have had enough’.” (Elliott, 2009).

Because United had a long-running poor reputation for customer service, it was

absolutely necessary for the company to show full transparency and openness in dealing with

the crisis. However, although many signs were showing that the public was expecting

specific details regarding United’s promised strategy to change customer service policy, no

details were ever given: “When then Ms. Urbanski will United publicly disclose these

changes? It is extremely easy and convenient for you to say this and not act or pretend to act”

(National Post user comment, Aug. 2009). Even when directly asked about the strategy

during the only interview she gave regarding the crisis, United’s VP of customer service only

gave an ambiguous, standard corporate answer (Elliott, 2009):

Q: “How, exactly, would a video like this be incorporated into training?”

A: “It will provide all of us – regardless of where we work or in which department – with

an example of how we can be more empathetic to our guests when situations suggest we

should. In our business, how we conduct ourselves is important, and our employees

understand that treating each other and our guests in a courteous and respectful manner

is a vital part of running a good airline”.

Furthermore, United’s response demonstrated the company’s inability to assume

responsibility for the true problem that led to the crisis, and thus stakeholders were very vocal

in stressing this out on many occasions, as one online comment out of many similar ones

clearly shows: “BUT miss Urbanski, you still miss the point. It wasn't THAT an accident

happened, it was how the customer was dragged around for over 9 months before being told

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‘sorry-now scram’.” (National Post user comment, Aug. 2009). The general public and media

were also critical of the airline’s choice of words and language in several statements,

accusing it of treating the serious incident lightly. For example, the United spokesperson’s

expression “has struck a chord with us” to relate to the impact of the video, which was quoted

in many mainstream and social media channels, was considered sarcastic and a “too-punny-

to-be-accidental response” (CRM Magazine, Jul. 2009). The same spokesperson’s tactic of

praising Carroll was also criticized on several occasions, along with her intention to show

that the musician had in fact become her friend: “I think it is bold of you to assume that you

are now ‘BFF’s’ with Dave Carroll […] How about stepping up to the plate and acting like a

grown up mature adult for your airline and post a real Press Release on your website.... do a

news conference and stop hiding” (National Post user comment, Aug. 2009).

By making the above observations we have hopefully managed to answer the paper’s first

research question. In order to present answers to our second research question, we propose

several additional actions that, according to theory and field professionals, the two companies

could have integrated into their strategies. Although the overall crisis approach of Domino’s

Pizza was praised by the public and the media, anyone would agree that there is always room

for improvement. With this in mind, we believe that a broader social media presence right

from the start would have definitely helped Domino’s stop the crisis even faster. If the

company would have implemented their already planned social media strategy sooner and

adapted it to combat the risks of an online crisis, it could have gained valuable time and it

could have responded officially in the first 24 hours. A proactive media monitoring service

together with an intense activity on all relevant social media platforms would have helped the

organization anticipate and dissolve the issue faster. For example, the web director of Node, a

social media and reputation management firm, suggested that Domino’s could have used a

web content monitoring service, such as Google Alerts, to monitor what was being said about

the company on blogs, YouTube, Twitter or other social media platforms (Upsize Magazine,

Aug. 2009). Many PR and marketing professionals mentioned the creation of a blog on

Domino’s website, which can always “serve as a powerful rapid response vehicle” (TimeUS,

Apr. 2009). Finally, Domino’s should have used SEO more effectively to ensure that the

CEO’s apology video appeared on the first page in search result, ahead of the two employees’

videos.

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United’s crisis approach, however, was nearly unanimously criticized and was perceived

by many as being just another corporate effort to shed light away from the real problems of

the airline, namely poor customer service. An obvious first suggestion is that Domino’s

should have made better use of social media, especially since it already had four corporate

online channels active (website, Twitter, YouTube and Facebook), three of which were

completely ignored. The company should have made constant use of all of these and

additional tools to inform stakeholders, including sending out press releases and placing links

on its website to other crisis-related sources. Internally, United could have promoted active

communication to detect any similar incidents, using for example internal wikis to allow

close collaboration between all employees. Given the fact that all of Carroll’s videos had

been uploaded to YouTube and that this was the main platform that popularized them, thus

triggering the crisis, it was evident that United should have placed a video apology (just as

Domino’s did) on the same popular video-sharing site. This was also stressed by the president

of the Social Media and Online Consultancy Group Harbrooke, who stated about the incident:

“Don’t just tweet your apology. Make a YouTube video as response to Dave’s first video,

and have your CEO (yes, your CEO) say he’s sorry about the treatment and the run around”

(Greenstein, 2009).

A social media expert of the Social Media Today professional network commented on

United’s crisis: “I would advise them to examine their YouTube Channel for content and

their response policy for comments.” (Social Media Today, Jul. 2009). This statement leads

to our next recommendation (which lies in strong connection to the first), namely that United

should have placed strong emphasis on stakeholder engagement during and after the crisis.

After the first video surfaced, tens of thousands of web users started writing comments

regarding the incident, many of them sharing similar negative experiences with the airline

(just one week after its uploaded, the first video counted over 13.000 comments on YouTube

alone) (Social Media Today, Jul. 2009). The airline should have created a social media team

to respond to stakeholders, using both personal text replies and mass video messages.

Another statement on the same Social Media Today network advised United: “have more

videos on what you are doing to improve service and instructional videos on what to do if

your baggage is damaged or lost, […] use this experience as way to monitor and respond to

customer service complaints, and reach out to the people who tweeted” (Social Media Today,

Jul. 2009).

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A final suggestion is aimed at United’s response strategy, which was accused of being too

corporate, dishonest and not transparent enough. United Airlines should have kept using its

initial response tactics and not try to deny that a crisis still existed just because it had

promised to take corrective actions against it, especially since the airline had failed to present

any specific strategic actions in this regard. In addition, although United did use a non-

corporate web-specific language tone in its tweets (as theory recommends), the overall tone

and approach should have been better adapted to both the audience and situation, as the

airline’s spokesperson was many times criticized for her praising and attack tactics as well as

for her language tone.

VI.2. Conclusions

The paper’s two case studies have presented us with insight on the close connection

between corporate crises, reputation and social media, insight which allows us to now draw

several conclusions.

As Meyers (2000) points out, in addition to the many risks a crisis poses, it can also

present companies and stakeholders with various benefits. This was indeed the case with both

the crises we analyzed, and each crisis event had its positive aspects. In Domino’s Pizza case,

the crisis accelerated change by forcing the company to speed up its adoption of a social

media strategy, which turned up to play an essential part in overcoming the crisis. According

to Meyers (2000), crises “create heroes” by focusing public attention on key persons that

made good decisions and Domino’s crisis definitely shed light on McIntyre’s strong crisis

management capabilities. At the same time, the crisis helped Domino’s acknowledge the

power of social media and understand their huge potential as communication tools. After the

crisis, McIntyre stated in an interview for The Consumerist (Apr. 2009):

“If there’s a crisis happening in the social media realm, or if there’s a fire in the social

media realm, there’s a segment of the population that wants you to put on a microphone and

a webcam and describe what you’re doing as you’re doing it. They want you to describe how

you’re putting out the fire. And that’s an interesting phenomenon.”

In United Airlines’ case, the crisis did not appear to bring any clear benefits or changes,

and the public sensed and expressed this aspect. However, a person that got to massively

91

benefit from the crisis was Dave Carroll, as his musical career skyrocketed after millions of

people witnessed his talent and charisma. The musician appeared on popular TV shows and

his songs become downloadable hits on iTunes, thus joining the constantly growing number

of regular individuals turned internet celebrities with the help of social media. In conclusion,

the two crises had clear, measurable effects on both companies and their stakeholders,

impacting their reputations – for Domino’s, who acknowledged the potential of social media,

the crisis represented a way to maintain and reinforce its favourable reputation, while for

United, who failed to integrate social media effectively into its strategy and showed no

openness in communication, the crisis had a negative impact on its already stained reputation.

The two companies’ crisis strategies and their overall reception by the public helped us

notice three major dimensions in which social media directly affect crisis management and

communication:

1. Timing. A fast response has always been one of the most important aspects of crisis

management. However, recent technological development and an always increasing

access of most of the world’s population to constant online communication made the

already short crisis reaction time even shorter. Just as Domino’s VP of

Communications mentioned, companies are now expected to communicate their

actions online just as they perform them, continually feeding stakeholders’ hunger for

information;

2. Communication channels. While merely a decade ago companies had to only select a

few communication channels to just send information during a crisis (which consisted

of mainstream media platforms such as television, radio and newspapers and maybe a

website), they now have to select multiple popular social media channels (including

the one that triggered the crisis) to ensure active, two-way communication with as

many stakeholder groups as possible. This is essential for a successful strategy in the

online environment and sets the foundation of the next aspect;

3. Language. As demonstrated by The Cluetrain Manifesto, the internet has a massive

impact on corporate communication, and crisis communication is no exception.

Domino’s is an excellent example to demonstrate that direct and transparent

communication with stakeholders (during both good and bad times) is essential in

order to effectively overcome a crisis and protect reputation. Stakeholder trust is

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obtained only by reaching out to them using a non-corporate, honest and human tone

of language.

This paper’s findings have led to our final conclusion and subsequent answer to our third

research question: social media truly represent essential tools for managing and responding to

a crisis and companies definitely need to actively integrate them into their strategies.

Domino’s crisis and “United Breaks Guitars” are both clear examples for why it’s necessary

for crisis managers to rethink their traditional crisis management and communication plans.

While social media may present some risks for organizations, they also represent perfect tools

to effectively end crises and rebuild reputations. Whether they act as the former or the latter

is up to each crisis manager and his team.

93

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Cover page photo: www.technorati.com

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