Steven Fink: An interview by Bob Morris

Posted on: November 8th, 2013 by bobmorris

FinkSteven Fink has often been called the Dean of Crisis Management for his pioneering work in the field. His seminal work on the subject, Crisis Management: Planning for the Inevitable, still the most successful and widely-read book on crisis management ever published, not only explains how to manage a crisis when one occurs, but was the first book to introduce proactive crisis management strategies designed to help businesses forecast and avert crises altogether.

His latest book, Crisis Communications: The Definitive Guide to Managing the Message, published by McGraw-Hill, lays out in clear language the critical importance of public perception in crisis situations. As he asserts, in the pitched battle between perception and reality, perception always wins. The book also contains a road map for proper and effective use of social media as a valuable arrow in a company’s crisis communications quiver. During the infamous Three Mile Island nuclear crisis, the nation’s worst commercial nuclear power accident, he served on the famed crisis management team, which skillfully averted a potential deadly disaster and staved off panic among the population of South Central Pennsylvania — and the rest of the nation.

An earlier book, Sticky Fingers: Managing the Global Risk of Economic Espionage, is a comprehensive eye-opening look at economic espionage and the rampant theft of America’s trade secrets — the single biggest business crisis facing American companies today. It is the first book to critically examine the government’s lackluster efforts to crack down on this epidemic crisis.

As President of Lexicon Communications Corp., the nation’s oldest and most experienced crisis management firm, he counsels some of the world’s largest and most prestigious companies – as well as small and medium sized companies – in crisis management and crisis communications, strategic public relations, corporate communications, and high level, confidential issues relating to economic espionage. He has been a strategic advisor and consultant to some of America’s leading chief executives, senior management teams and corporate boards on a wide variety of critical and confidential crisis matters, and has been asked to consult with various branches of government, foreign and domestic, on highly sensitive crisis issues, some involving matters of national security and international diplomacy.

A highly sought-after speaker, he has been invited to lecture at major universities and leading business schools and conduct crisis management seminars, workshops and training programs for companies, organizations and industry groups throughout the world. He is frequently featured as an expert crisis management commentator on leading news outlets around the world, and some of his observations on current crises can also be found on his blog.

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Morris: Before discussing the two Crisis works, a few general questions. First, what had the greatest impact on your professional development? How so?

Fink: When I wrote my first book, Crisis Management: Planning for the Inevitable, it was endorsed by the American Management Association, and consequently was read by America’s top corporate leaders, and overnight put me in high demand as a consultant and as a speaker. Also, that book forever changed the way businesses look at and deal with crises by giving a tangible feel to an otherwise intangible subject. It showed managers and executives that they no longer had to be the hapless and unwitting victims of the capriciousness of a crisis. They could gain control and manage a crisis, should one occur, from a position of power and control, thereby taking a proactive role in shaping the event’s direction, duration and destiny.

Morris: Years ago, was there a turning point (if not an epiphany) that set you on the career course you continue to follow? Please explain.

Fink: During the infamous Three Mile Island nuclear crisis, the nation’s worst commercial nuclear power accident, I served on the crisis management team in the administration of then-Pennsylvania Governor (and later U.S. Attorney General) Dick Thornburgh. By its remarkably calm handling of that potentially devastating and deadly crisis, this team was widely credited with having averted a panic among the population of South Central Pennsylvania — and the rest of the nation.

But the utility company, Metropolitan Edison (MetEd), did an abysmal job, and I wanted to know why. Specifically, I wanted to know how we, who were brand new in office and not experts in nuclear power, could have done such a good job in managing the crisis and keeping the population calm, while the utility company “experts,” who built and operated the reactor, did such a poor job in mismanaging the situation, and scared the hell out of people to boot. I set out to find out why, starting with national research into companies that had suffered crises in the past. The insight I gleaned led to me first book.

Morris: To what extent has your formal education been invaluable to what you have accomplished in life thus far?

Fink: Unfortunately, today’s colleges and universities, and especially our business schools, do not offer pragmatic crisis management teachings. Theory, yes; hands-on teaching, no. But, I did receive a great liberal arts education, which opened my eyes to many things, and that education has proved invaluable to adapting my crisis management and crisis communications skills to a wide variety of companies in different industry groups throughout the world.

Morris: From which non-business book have you learned the most valuable lessons about business? Please explain.

Fink: I have probably learned more about business strategies from reading military books. If you think of business as a “battle” (e.g., battle for market share, etc.), there is much to be gleaned from strategies that go into military planning and execution that is transferrable to businesses. The planning for D-Day, in particular, was meticulous on paper…until the troops landed. As Napoleon presciently said, “All the plans of war go out the window after the first shot is fired.” In other words, you can plan – and you should! – but the unexpected will still happen. It is the same with business crises, and it is the companies that are nimble, quick-thinking, and quick adapting after the first crisis shot is fired that usually prevail.

Morris: Here are several of my favorite quotations to which I ask you to respond. First, from Lao-Tzu’s Tao Te Ching:

“Learn from the people
Plan with the people
Begin with what they have
Build on what they know
Of the best leaders
When the task is accomplished
The people will remark
We have done it ourselves.”

Fink: This quote describes the way we create crisis management plans for clients. Too often, clients want us to give them a one-size-fits-all crisis management plan from off the shelf. Some of our competitors do this because it’s fast and cheap. They build a plan once and keep using the same plan over and over with other clients. But we know it never works; it is a recipe for disaster. The only way to build a crisis management plan that will work is to guide the company through each step of building their own organic plan. They need to establish ownership and trust that the plan will work or else they won’t ever use it. But when they can say, “We have done it ourselves,” they are ahead of the game.

Morris: In Tom Davenport’s latest book, Judgment Calls, he and co-author Brooke Manville offer “an antidote for the Great Man theory of decision making and organizational performance”: organizational judgment. That is, “the collective capacity to make good calls and wise moves when the need for them exceeds the scope of any single leader’s direct control.” What do you think?

Fink: I often say that good crisis management is good decision-making under stress. In our workshops, we teach executives how to make vigilant (read: good) decisions using a proven Seven Step Matrix for decision-making under stress. And it all begins with a group approach.

These are also known as “defensible decisions,” and lawyers love us for this because when executed properly, these decisions made in the heat of a crisis can be defended as the best available choice at the time the decision was made. It is a winning strategy in depositions and trial testimony, as well as with probing reporters and government hearings or investigative bodies.

Morris: Here’s a brief excerpt from Paul Schoemaker’s latest book, Brilliant Mistakes: “The key question companies need to address is not ‘Should we make mistakes?’ but rather ‘Which mistakes should we make in order to test our deeply held assumptions?'” Your response?

Fink: After we complete a crisis management plan for a client, we strongly recommend testing it with a realistic crisis scenario. I always tell my clients that we are not testing the plan to find out if it will work, but to find out where mistakes were made and fix them before the real crisis comes along. In other words, mistakes are good provided you learn from them, and correct them promptly.

Morris: The greatest leaders throughout history (with rare exception) were great storytellers. What do you make of that?

Fink: That’s an interesting observation, and if it is true, I can only speculate that people (read: the public at large, employees, stakeholders, etc.) enjoy listening to people who have something interesting to say. Thus, if people gravitate to a good storyteller, such an individual could grow by osmosis and a ground swell of popular support into a great leader. All of which begs the question, which came first: the storyteller or the leader?

Morris: Most change initiatives either fail or fall far short of original (perhaps unrealistic) expectations. More often than not, resistance is cultural in nature, the result of what James O’Toole so aptly characterizes as “the ideology of comfort and the tyranny of custom.”

Here’s my question: How best to avoid or overcome such resistance?

Fink: I occasionally experience resistance from some corporate leaders when their subordinates ask for my proactive services in building a crisis management plan. Some macho-type leaders – especially those self-made types — think they don’t need our services, but when we take them through some realistic crisis scenarios in our workshops, they see they don’t know it all. There’s an old saying: There are no atheists in a foxhole. The same can be said for “non-believers” in a crisis. Resistance melts away fast in the face of a crisis…or a realistic crisis inoculation exercise.

Morris: In recent years, there has been criticism, sometimes severe criticism of M.B.A. programs, even those offered by the most prestigious business schools. In your opinion, in which area is there the greatest need for immediate improvement? Any suggestions?

Fink: As you know, there is a chapter in my most recent book called “The Failure of Business Schools,” and I am one of the biggest such critics you cite. It’s simple: M.B.A. programs impart a lot of wisdom, some of which is useful, some of which will never be used. But the one thing anyone in business can count on is that a crisis in business today is as inevitable as death and taxes. So why don’t leading business schools teach their M.B.A. candidates how to actually manage crises, given that the chances are excellent it is a skill set they will need one day? Too often, business schools teach academic crisis management theory, if that, but given the diverse and unique nature of crises, all the theory in the world will not help you manage an actual crisis unless you know the basic mechanics. Years ago, the former dean of Stanford University’s Graduate School of Business, the late Gene Webb, asked me to help him create the nation’s first-ever crisis management curriculum for a business school, and then I helped teach the course with the dean. He taught theory, I taught pragmatic crisis management and it was a successful partnership program. Unfortunately, when Dean Webb died the course apparently died with him. I am astounded that business schools do not recognize and fix this missing link. And it is why I have said, and again in my book, that business schools are needlessly and senselessly failing their M.B.A. students.

Morris: Looking ahead (let’s say) 3-5 years, what do you think will be the greatest challenge that CEOs will face? Any advice?

Fink: The challenges will not necessarily change but the heat will be turned up exponentially. Here’s what I mean: crises and the need for CEOs to be crisis-savvy will still exist. But as stakeholders continue to see good and bad examples of crisis management and crisis communications, they will demand better performance by companies in which they have a vested interest. Those CEOs who haven’t fully entered the 21st century and embraced social media will have a harder time coping.

Morris: Here are a few questions based on Crisis Management. First, how best to develop contingency plans to accommodate crisis management and crisis communication?

Fink: I firmly believe that those plans need to be built from within the company. My role in this critical task is to guide the team through the process to come up with the information needed to protect the company. I will never know as much about any of my clients’ businesses as they do. They know better than I where potential prodromes exist. My job is to help extract the information based on my 30 years of experience, and then turn that into a workable plan – a plan in which the company has the critical element: ownership, which leads to a rock-solid belief the plan will succeed under fire.

Morris: To what extent have the nature and extent of organizational crises (as opposed to natural disasters) changed since you wrote the book? Please explain.

Fink: It seems to be cyclical. When I authored my first book, Crisis Management: Planning for the Inevitable, and it was then endorsed by the American Management Association, American companies seemed to spend time working on crisis management plans in advance of trouble. Then, scores of unqualified and untested firms, seeking a perceived business opportunity, put “crisis management” on their business cards. This created problems when the plans they created failed under real world applications. One of the reasons I wrote Crisis Communications: The Definitive Guide to Managing the Message was to try to educate the business world about what they should be doing, since it seems the business community has in recent years fallen victim to a lot of bad advice.

Morris: Here’s a related question: To what extent have the nature and extent of impact of the news media changed since then? Please explain.

Fink: When I wrote my previous book, the mainstream media were dominant. However, in recent years, lack of advertising revenue, cutbacks in editorial staff, newsprint space and clout – all driven by the arrival of the Internet and social media – have made “old” media less impactful than they once were. This is not to say that a news story in The New York Times is not still powerful; it’s just that there are fewer news outlets available. Also, social media give savvy businesses the opportunity to leapfrog over mainstream media and take their stories directly to their constituents without going through the filter of a reporter and editor.

In “olden” days of the mainstream media monopoly, if a client was immersed in what we call an “oppositional crisis” — meaning, no matter they said or did there were opposing forces with opposite points of view – reporters were obligated to include all sides in a fair and balanced news story: a level playing field, in other words. I’m not saying that’s wrong; I’m merely noting its occurrence as fact. In those instances, I would always warn my clients in advance that they wouldn’t like a story when it appeared because human nature would have them focus on the opposing (read: negative) arguments and quotes to the exclusion of all that was positive. But now, social media allow companies to take their unfiltered, unedited, unopposed messages directly to their constituents and key stakeholders. And that has made all the difference in terms of leveling the playing field.

Morris: In your opinion, how can use of social media improve the response to an organizational crisis?

Fink: In my new book, in a chapter entitled, “Social Media and Digital Communications—or, Truth/Lies at the Speed of Light,” the first two sentences read, “The good news: YouTube is here! The bad news: YouTube is here!” I then go on to write that both statements have huge implications for crisis communications. Thus, in a crisis situation – say a product recall for safety reasons – the company has the capacity to reach key constituents literally with the push of a button. And if companies are not prepared for this eventuality, they will be vilified in all media, social and mainstream.

Morris: To what extent can social media weaken that response?

Fink: Opposing forces in a crisis also have the same right to take their message directly to their constituents. Thus, you could argue that the playing field is still level, but a skilled social media director can still find ways to make sure your message breaks through the clutter.

Morris: In your opinion, which organization today is best prepared to respond to a major crisis, whatever its nature and extent may be?

Fink: Those that are flexible, understand and welcome out-of-the-box thinking, and are not mired in the past. Also, companies whose crisis management teams are properly stressed. As I explain in my book, in a chapter called “Crisis-Induced Stress,” and in an illustration called “The Performance/Stress Curve,” too little stress in a crisis means you don’t understand the situation and the risks involved and are not taking it seriously, which leads to poor performance in the crisis. Too much stress means you are overreacting and bouncing off the walls, which also leads to poor performance. But a moderate amount of stress – not too much, not too little – generally means you understand the problem and are psychologically stoked to solve it. Moderate stress yields the best, most optimum performance in a crisis.

Morris: In your opinion, what is the proper role of the federal government when a natural disaster occurs?

Fink: Ronald Reagan once famously quipped, “The nine most terrifying words in the English language are: ‘I’m from the government and I’m here to help.’” Nowhere was that more true than in FEMA’s criminally inept response to Hurricane Katrina some years ago.

The Federal government can and should play a vital role in natural disasters, provided response agencies are led by experienced professionals, not political patronage hacks.

Morris: Now please shift your attention to Crisis Communications. When and why did you decide to write it?

Fink: In my earlier book, Crisis Management: Planning for the Inevitable, I included two entire chapters on the important subject of crisis communications. But that was written before the Internet revolution and the invention of social media, like Facebook and Twitter and so many more that the list keeps growing day-by-day. Social media has dramatically changed the playing field in terms of crisis communications – and any company that does not effectively use social media to take the pulse of its constituents on a constant basis, and know how to communicate with them in a crisis, is breaching its fiduciary responsibilities to its stakeholders.

Coupled with the fact that in recent years I have seen so many otherwise well-run companies shoot themselves in the foot by putting forward an inept crisis spokesperson, I thought it was time to write a book exclusively on the art of crisis communications.

Morris: Were there any head-snapping revelations while writing it? Please explain.

Fink: The so-called “head-snapping revelations” occurred before writing the book, not during it. I can remember distinctly how my jaw dropped open when BP CEO Tony Hayward actually said before a horde of reporters and TV cameras, “I want my life back.” Whatever he meant to say, his comment smacked of insensitivity of the highest order in the midst of one of the greatest environmental crises in history. Here was the head of (at the time) the world’s fourth largest company, who displayed his abject ineptitude at crisis communications, and I knew something was amiss. He had never received any training in crisis communications and that dearth of knowledge was severely hurting his company. If Hayward, with his company’s unlimited resources, was so ill-informed on the subject of crisis communications, how many others were there just like him? The book was the next logical step.

Morris: To what extent (if any) does the book in final form differ significantly from what you originally envisioned?

Fink: Not too much, really, except the original sub-title was “The Art of Survival.” That’s very telling, in that it describes how serious crisis communications is, in my view. Companies that do not actively practice, study, and plan for crisis communications – as well, of course, crisis management – are doomed to fail when a crisis befalls them. Crises are, in a word, inevitable, and those macho companies that think, “it can’t happen here,” or if it does, “I can handle it,” will suffer the hardest failures.

Morris: As I indicate in my review for various Amazon websites, there are dozens of passages throughout your narrative that caught my eye. For those who have not as yet read the book, please explain what you view as the key take-away in several. First, a suggestion: never “pick a fight with anyone who buys bandwidth by the geobyte.”

Fink: Some wag (credit has variously been attributed to Ben Franklin, Mark Twain, Will Rogers and H.L. Mencken, among others) once said, “Never pick a fight with anyone who buys ink by the barrel,” which was a reference to the power of the printed press. Today, due to the immense power of social media, and the decline in the clout of daily newspapers, that phrase is obviously obsolete. I simply updated it to reflect the times in which we live: “Never pick a fight with anyone who buys bandwidth by the geobyte.”

Morris: What specifically must be done so that an organization can react immediately to a crisis with effective communications?

Fink: Stop being afraid of the truth! So many companies today, when first confronted by a crisis, go into a bunker mentality. They either say, “No comment,” or they lie as a knee-jerk reaction. Neither of these sins, I believe, is generally committed on purpose. Rather, companies often panic when first confronted with a crisis and either say nothing, which looks like they’re covering something up, or they speak what they wish was the truth.

In my experience, the public will forgive mistakes, provided they are acknowledged promptly and a remedial course of action is articulated. Lawyers often get in the way of this, which is a subject I cover in my book: how to deal with obstructionist lawyers in a crisis.

Morris: Long ago, John Hill (a co-founder of Hill & Knowlton) defined public relations is “truth well-told.” What is the relevance of that to crisis communications?

Fink: Excellent advice, which has even more applicability to crisis communications than to public relations.

Morris: What are the worst mistakes made when attempting to manage internal  perceptions of the given facts? Please explain.

Fink: A company’s workforce should be one of its greatest assets during a crisis. Internal crisis communications – keeping all employees informed – is critical in terms of disseminating accurate information to the outside world. When a friend or relative asks of someone whose company is mired in crisis, “What’s really going on?” the power of an informed reply from the worker cannot be overstated. The person asking the question is getting “inside information” from a trusted source, which will then be passed along to countless others by the person who asked the question in the first place.

Morris: When attempting to manage external perceptions of the given facts? Please explain.

Fink: There are too many to list, but lately I find that companies that do not engage in proactive crisis communications by means of effective use of social media are missing an important vehicle. Such a lapse can allow “oppositional forces” to gain the upper hand, especially in a crisis of confidence in the company, its management, or its products.

Morris: You and other experts on crisis management strongly recommend that assignment of blame, guilt, etc. be delayed until after the given crisis has been either resolved or contained. Why?

Fink: I never assign blame in a crisis. There is no benefit to doing so. I prefer marshaling an arsenal of facts, which will allow me to lead a reporter to an inevitable conclusion as to what happened, why, and who might be culpable. But my fingerprints are nowhere to be found. The kind of blame you are talking about is best articulated in litigation.

Morris: What is your advice concerning the use of updates, progress reports, press releases, etc?

Fink: Years ago, I advocated twice-daily updates to the media during a crisis: one at 10:00 a.m. and the other at 3:00 p.m. This was an accommodation to morning and afternoon print editions of newspapers, as well as the evening news. Now, with the advent of 24/7 news “cycles,” updates as they become available should be disseminated at once. Failure to do so proactively and unnecessary delays will allow opposing forces to shape the message themselves, and you won’t like the way they present their version of the “facts.”

Morris: Which stakeholders should be kept within the communications “loop”? Please explain.

Fink: All. Digital communications makes it so easy today to cast the widest net possible and be as inclusive as you can.

Morris: When to deploy spokespersons? Which ones? To accomplish what?

Fink: Whenever there is a crisis there should be a spokesperson, but who it should be is never ironclad. When we create crisis management and crisis communications plans we include built-in, agreed-upon thresholds that determines who the spokesperson should be. For example, assume one threshold is a crisis that involves a fatality. In such instances, the CEO or highest corporate officers often should be the spokesperson. The same with a product liability issue that causes serious injury or worse. But in a crisis involving a product recall for precautionary safety reasons, for example, the spokesperson could just as easily be a safety engineer or the head of communications and no one will question why the CEO was not visible.

Morris: What are the critically important do’s and don’ts to keep in mind when attempting to cope with crisis-induced stress?

Fink: There is little to be done if it happens during the crisis. That is why, during our crisis inoculation exercises, we test for that and try to select team members who can handle the stress. It is also important to remember, as I touched on earlier, that a moderate amount of stress during a crisis is a good thing.

Morris: How best to prepare for and then conduct a post-crisis evaluation?

Fink: After the dust has settled, we conduct crisis post-mortems, or evaluations, where we take the team members through the crisis, step-by-step. Together we assess why certain decisions were made, why others were not. This should not be done by anyone working for the company because of any number of built-in biases. Often we are retained by law firms to conduct crisis post-mortems for their clients where we were not involved in the crisis. Our observations and analysis can then be used to provide expert witness testimony in depositions or at trial.

Something else that I offer are Private CEO Sessions, always conducted one-on-one, just the CEO and me. The sessions are conducted behind closed doors, without lawyers and without anyone taking notes. The reasons for this are simple: the CEO wants to know how he really performed under fire, and he can’t get an honest answer from his subordinates. She may want to share how scared she was, and may be second-guessing her decisions in the heat of the moment. So, some years ago I began to offer this service and it has been well received.

Morris: In my review of the book for various Amazon websites, I cite a situation that occurred years ago. It involved Ann Mulcahy after she had been named president and CEO of Xerox. She asked several of her closest friends and mentors for suggestions. She said the best advice she received was that she had three tasks: “Get the ox out of the ditch, find how it got in the ditch, and then make certain that it never happens again.”

Your own response to the situation and the advice?

Fink: I disagree, and here’s why. As Lexicon Communications practices crisis management, we place much emphasis on proactive crisis management strategies, more so than probably any other company. It simple: It’s cheaper and less painful if you can avert the crisis from happening in the first place. Thus, I would argue Ms. Mulcahy’s first (proactive) task would be to erect a barrier or alternate route that prevents dumb animals from wandering into open and unprotected ditches. Ms. Mulcahy’s analogy has this question addressed last, not first, and she is focusing exclusively on reactive crisis management. In crisis management planning, we engage in a lot of “what-if/worst-case scenario” planning, and I’d like to think if Xerox were one of our clients, we would have spotted – and addressed – the poor ditch design as a prodrome.

Morris: Although Crisis Communications develops in much greater depth that is provided in Crisis Management (Chapters 13 and 14), I think that C-level executives should read both. Do you agree? Please explain.

Fink: I’d be crazy not to agree, but let me elaborate so my response does not come across as purely self-serving. My book, Crisis Management, deals with the reality of the situation: the crisis, and how to proactively prevent it from happening, and how to manage it if it does occur. Since, as the subtitle says, crises are inevitable, I believe anyone in business should read this book, starting at the C-level and on down to vice presidents and division heads and so on. But if crisis management is the reality of the crisis, crisis communications is the ­perception of the same event. And, as I say, in the pitched battle between perception and reality, perception always wins. So it is important for those in business to read both books.

Morris: Let’s say that a CEO has read and then (hopefully) re-read Crisis Communications and is now determined to formulate and have in place a cohesive and comprehensive plan by which to “control the message” and “handle a hostile press” effectively. Where to begin?

Fink: With a team of seasoned communications professionals, trained in the art of crisis communications. In my book I explain how companies in crisis often pay much attention to their lawyers, to the regrettable exclusion of any other advice. If a company really wants to control its message, they need to elevate the communications position and pay more heed to what those professionals have to say.

Morris: For more than 25 years, it has been my great pleasure as well as privilege to work closely with the owner/CEOs of hundreds of small companies, those with $20-million or less in annual sales. In your opinion, of all the material you provide in Crisis Communications, which do you think will be of greatest value to leaders in small companies? Please explain.

Fink: My firm, Lexicon Communications Corp., has been privileged to represent some of the nation’s largest and most prestigious companies; but over the past 30+ years, most of our clients have been small- to mid-sized companies. They, I believe, are most in need of sound crisis management and crisis communications counseling since they have so much to lose should the crisis “go south.” The Fortune 500 companies, on the other hand, can absorb the losses often associated with crises and still come out OK. As a result of its crisis in the Gulf of Mexico, BP, as I observe in my book, “lost $17 billion just in the second quarter of 2010, on top of the more than $32 billion it was forced to set aside for spill-related costs. At one point, BP’s market share declined more than 40 percent and the company was forced to sell off valuable assets to help pay its mounting costs.” What small- to mid-cap company could sustain that kind of hit and still be in business? We believe we provide a very valuable service to all companies, large and small, publicly traded or privately held, and we have represented our fair share of Fortune 500 firms; we just think the medium sized firms need our services more only because they have less additional resources upon which to call.

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