Crisis communications in the
YouTube Age
Why you need to leverage on social media
in your investor relations strategy
Presented by Julian Matthews,
Director, Trinetizen Media
The Asia Business Forum, March 24-25, 2008,
JW Marriott, Kuala Lumpur, Malaysia
Case study 1: Dell laptop explodes
at Japanese conference
By INQUIRER.net newsdesk: Wednesday 21 June 2006
An Inquirer reader attending a conference in Japan was sat
just feet away from a laptop computer that suddenly
exploded into flames, in what could have been a deadly
accident.
Gaston, our astonished reader reports: "The damn thing was
on fire and produced several explosions for more than five
minutes"…
For the record, this is a Dell machine," notes Gaston. "It is
only a matter of time until such an incident breaks out on a
plane," he suggests.
Our witness managed to catch all the action in these
amazing pictures….
Dell to recall 4 million laptop batteries
CNET News.com, August 14, 2006
Dell and the U.S. Consumer Product Safety Commission plan to
recall 4.1 million notebook batteries on Tuesday, a company
representative confirmed.
The recall affects certain Inspiron, Latitude and Precision mobile
workstations shipped between April 2004 and July 18, 2006.
Sony manufactured the batteries that are being recalled, the
representative said.
This looks like the largest battery recall in the history of the
electronics industry, said Roger Kay, an analyst with Endpoint
Technologies Associates. "The scale of it is phenomenal."
Good news, get it out fast
Bad news, get it out faster
Sony delays response,
problems deepen…
• Aug 15, 06: Dell recalls 4.1m batteries
• Aug 24, 06: Apple recalls 1.8m batteries
• Sept 15, 06: Virgin Atlantic, Qantas and Korean Air ban
use of Dell and Apple laptops on board its planes,
unless the battery removed.
• Sept 28, 06:Lenovo/IBM: 526,000 batteries
• Sept 29, 06:Dell increases recall to 4.2m
• Sept 29, 06:Toshiba recalls 830,000 batteries
ThinkPad explodes in LAX airport
“So we're waiting for a flight in the United lounge at LAX, this guy
comes running the wrong way, pushing other passengers out of
the way and quickly drops his laptop on the floor. The thing
immediately flares up like a giant firework for about 15 seconds,
then catches fire…,” posting on Gizmodo.com, Sept 16, 2006
Crisis escalates, spreads virally
Sony finally responds…
Sept 30, 2006: Sony announces global
recall of 9.6 million PC batteries. The recall
and replacement would cost as much as 50
billion yen (about US$423 million).
Dell’s Response
1. Determines cause – battery supplier.
2. Works with U.S. Consumer Product Safety
Commission to announce global recall of 4.1
million laptop batteries.
3. Sets up recall website for customers to check
affected units.
4. Guarantees replacement batteries are safe.
Sony’s crisis post-mortem
• Was slow to take blame, disclose information
and coordinate global recall
• Let clients make multiple announcements first,
escalating crisis
• Only worked with US Consumer Product
Safety Commission (and Japan’s Economy,
Trade and Industry Ministry) to coordinate
recall and replacements with clients, after
clients did so themselves
Sony execs’ bow not deep enough?
“We want to put this behind us.
I take this problem seriously
and I want to finish the
replacement program as
quickly as possible for the sake
of our users and corporate
customers,” Corporate
Executive Officer Yutaka
Nakagawa, Oct 24, 2006
Oct 26, 2006: Battery snafu leads to massive loss
Sony posted a 94 percent loss for its July to September quarter. Net
profit dove to ¥1.7 billion (US$14 million) from ¥28.5 billion (US$240
million) a year ago.
The Internet train has left the station
Social Media
Consumers = producers:
Anyone can publish text,
pics, audio, video and
interact within that space
Many ways to snack:
Blogs, podcasts, RSS,
wikis, social networks,
mobile networks,
YouTube, Twitter.
Amplifies virally:
Two-way, lean-forward
media, searchable,
archivable, infinite replay,
timeshifting
Growing influence:
24/7, places higher
expectations on speed,
transparency and
accountability
The Internet circa 1993
Internet in 2008
Case study 2: Kryptonite
Bike Lock Fiasco
• Cyclist posts that circular bike
lock that costs US$35 – US$90
can be easily picked with a
ballpoint pen on bikeforums.net
• Manufacturer was silent online
and ignored bloggers “because of
higher priorities.”
• Bloggers rail at company until it
finally announces replacements at
the cost of US$10m – only 10
days later
Blogger posts video online
Mainstream media picks up story
Source: Fortune
Ingersoll-Rand Endures
Kryptonite's US$10 Million Hit
OCTOBER 25, 2004, MONTVALE, NJ -- Kryptonite delivered a $10
million hit in unanticipated costs in the third quarter to the Security
and Safety division of parent company Ingersoll-Rand.
Kryptonite's financial drubbing began in early September after
Internet video clips demonstrated the apparent ease in cracking its
tubular locks with the shells of ballpoint pens.
Kryptonite launched replacement programs for consumers and
retailers, and accelerated retail delivery of new product. Those
moves, however, hit the security division's operating margin.
"Operating margins of 16.5 percent (in the third quarter) declined
compared to 2003, reflecting approximately $10 million of estimated
costs related to Kryptonite cylindrical bicycle locks," the NYSE-listed
company reported Oct. 21 in a filing with the Security and Exchange
Commission.
Slippery slope of investor adulation
Eg. of local companies in crisis
• Accounting irregularities: Transmile,
Wimems Corp, Megan Media
• Mismanagement: Proton, MAS
• Immigration snafu: Top Glove
• Health Ministry raid: High-5 bread factory
• Pollution: Carotech
Managing a crisis in YouTube age
 Openly and quickly share available facts with the
public, create crisis webpage and direct press
there
 Crisis management unit can use new media tools
to engage affected customers, search for details,
verify and counter allegations
 Show you care online and accept responsibility
when you are at fault
Feed the shark, before it feeds on you
Use social media tools
• Blogs: Short for weblog, instant, push-button, selfpublishing system with increasingly powerful feedback
features. eg: Blogger, Wordpress
• Podcasts: Pre-recorded audio or video dispersed
through the Internet via subscribed feeds. eg:
YouTube, vlogs, moblogs
• Social networks: eg: Facebook, Bebo, MySpace
• Wikis: eg: Wikipedia, pbWiki
• RSS: Really simple syndication or rich site
summary, a news feed of a blog or website
Blogs
double
every six
months
Japanese and English, leading languages
Companies blogging
internally or externally
Apple Computer
Avon
Boeing
Cisco
CitiGroup
Dell
Disney
FedEx
GM
Google
Halliburton
Hitachi Data Systems
HP
IBM
Intel
Lockheed
McGraw-Hill
Merrill Lynch
Microsoft
Mitsubishi
Motorola
New York
Times
Nike
Oracle
Pepsi
Radio Shack
Raytheon
Shell
Starbucks
Sun
Microsystems
Texas
Instruments
Time Warner
Toys R Us
Wells Fargo
Yahoo!
Dell sets up IR blog
Dell’s IR blog
“We let the vast majority of posts through. We want this to
be a free and open means of communication,” Dell's IR
director Robert Williams.
Some of the news it shared:
• conclusion of an accounting investigation.
• a US$10B share repurchase plan.
• new partnerships with retailers.
“We feel very strongly about the democratization of
information, specifically financial information. The
information should be out there, available and usable to all
types of investors.”
Link: http://dellshares.dell.com
Make your online IR section count
Nielsen Norman survey of 20 sites by 42 users -- professionals
ranging from financial journalists to individual investors:
• 35% couldn't find the companies' most recent quarterly
reports
• 77% were unable to find the high/low stock prices for
previous quarter.
Suggestions:
•
•
•
•
Update daily, start a blog and use RSS
Make it searchable, fast to download, accessible
Post quarterly, annual reports not just in PDF format
Simplify content, navigation, charts: Investors, reporters
want it in layman’s terms and easy to figure out.
CEOs are blogging
Bob Lutz, GM
http://fastlane.gmblogs.com/
Jonathan Schwartz, Sun
http://blogs.sun.com/jonathan/
ROI of Blogging*
*Note: Forrester estimates that GM's Fastlane blog generated US$578,000 in value on an
investment of US$291,000 in 2005
http://www.tengkuzafrul.com/
Blogging can be an IR tool
• Understand how blogging works and its growing
influence
• Counter by starting your own blog eg. employee
blog, customer blog or IR blog
• Show personal side, become a thought leader
• Can be powerful media and investor relations tool
Why blog?
 Opens line of communication, engages customers,
builds brand loyalty, encourages conversations
 Provides insider views of company direction, promotes
upcoming products/services
 More personal, opinionated, flexible than press
releases
 Creates a knowledge database for staff, investors,
suppliers, partners
“In the world of the Internet, you don't
own your brand. Your customers and
your users own your brand,”
David Sifry, founder Technorati, leading
search engine for the blogosphere
Using Facebook to reach global customers,
Personal Money Mag, March 2008
Links: http://www.facebook.com/group.php?gid=4629441044
http://www.shoesshoesshoes.com.my
Ung Yiu Lin, shoe entrepreneur
“Before Facebook I relied solely on emailing our
catalogues…with files being too large and slow to
download. We are start-up and we do not have a big
budget for marketing. Facebook allows us to reach out
to overseas customers for free.”
Jonathan Teoh, trulylovingcompany.com
“Facebook allows people the freedom to voice their
suggestions and grouses, and we can respond to
feedback in a transparent way. While this may sound
scary we gain immediate insights on the
sentiments of our products.”
Chris Tan, lawyer, Chur Associates
“Legal services are commoditised and as a small firm
we need to stand out among the big boys. So we
must be different. We use it to communicate our brand
values in a personal way. ”
Summary: social media and IR
Challenges:
• Fear of change, individualistic nature of management
• Lack of training in new media skills
• Perceived lack of resources
• Lack of management commitment, don’t see ROI
Opportunities:
• Those who embrace change will thrive
• Successful IR in the 21st century will require both online
and offline engagement
• Go where investors are: Social networks, blogs, mobile
networks, video networks and build your brand and
investor confidence there