Podcast

Episode: 340 |
Helio Fred Garcia:
Crisis Management:
Episode
340

HOW TO THRIVE AS AN
INDEPENDENT PROFESSIONAL

Helio Fred Garcia

Crisis Management

Show Notes

Helio Fred Garcia is a writer, speaker, educator, and consultant on the topic of crisis communications and crisis management.

Fred will be leading a live, interactive training session as part of the Umbrex Presents series, November 12, 11 a.m. – 12:30 p.m. EST.

Register free here:

https://us02web.zoom.us/meeting/register/tZEqf-qoqzkvGdVyug7Z8KScb8wDRIil51vc

After November 12, email unleashed@umbrex.com to get a link to a recording of the webinar.

Fred leads Logos Consulting Group. Learn more about his consulting firm here: https://logosconsulting.net/

And follow Fred on Twitter: https://twitter.com/garciahf

One weekly email with bonus materials and summaries of each new episode:

Will Bachman 00:00
Hello and welcome to Unleashed. I’m your host Will Bachman. Our guest today is Elio Freda Garcia, who is an expert in crisis communications and crisis management. He is the author most recently of words on fire, the power of incendiary language and how to confront it. He is also the author of four previous books, including the agony of decision, mental readiness and leadership in a crisis published in 2017. And that was named one of the best crisis management books of all time by book authority. He’s also the author of the power of communication skills to build trust, inspire loyalty and lead effectively. And that book was one of eight leadership titles on the United States Marine Corps Commandant’s professional reading list. Fred has taught at NYU Stern School of Business, Columbia engineering school, Wharton and the US Defense Information school. In addition to writing and teaching, Fred is also a practitioner, he runs the logos Consulting Group, which helps companies prepare for manage through and recover from crises. Now, on Thursday, November 12, from 11am to 12:30pm, Eastern Time, Fred will be teaching an interactive webinar on communicating in a crisis, which is part of the Umbrex presents a series of live talks that are free and open to the public. So a link in the show notes to this episode is to that session. And so if you’re interested, go ahead and sign up. And if you are interested, but you cannot attend, go ahead and sign up anyway. And we will send you a recording afterwards. Now, if you’re listening to this episode, after November 12 2020, go ahead and email me at unleashed@umbrex.com. And I will send you that recording. Now. Now let’s jump into the discussion with Fred. Fred, welcome to the show. Thank you. Well, delighted to be here. Give me that overview of all your different activities.

Fred Garcia 02:10
Well, thank you. And there’s a symbiotic relationship among the apparently disparate things that I in my firm do. Our mission is to equip people to become the best leaders that they can be by inspiring them to make their organizations and by extension the world a better place. We do that in a number of ways. In our firm biologos Consulting Group, we have three primary lines of work. The first is a crisis management practice, which helps clients develop protocols, procedures, this response teams, templates for things that are foreseeable, and the alignment of that crisis management process with their risk management with their cybersecurity with their physical security plans. All of that is about operational readiness. The second area of our practice is crisis communication, planning and execution. And that’s more about being ready to engage stakeholders when things are going wrong in order to maintain their trust. The third area of our practice is leadership, communication and leadership, decision making, coaching and classroom work. And that grew out of the need for leaders to be able to face the music when things are going wrong, but now it is a standalone operation independent of things going wrong. Our clients are some of the biggest banks, investment firms, insurance companies, pharmaceutical and life science companies, hospital companies, software companies, food companies, and also elements of the United States military, primarily the United States Marine Corps, although we’ve also done work with the Air Force. And we’ve also done work in joint commands. We supplement our coaching and executive education work by teaching in graduate and professional schools and all of my colleagues teach in some capacity in graduate and professional schools. I’m on the faculty of New York University where I’ve taught for 33 years, and I teach crisis management in the Executive MBA program. And I teach crisis communication in the Master’s in Public Relations and corporate communication program. I’m also on the faculty of Columbia University’s Graduate School of Engineering, where I teach ethics for engineers crisis for engineers, and leadership skills for engineers. We also have contracts with other educational institutions to teach on contract. So for example, for 21 years I’ve taught in the Wharton Executive MBA traditional MBA program as a contract lecturer. We are also on contract with the Mount Sinai School of Medicine in their master and Health Leadership Program. We are also on contract with the Defense Information school where I teach Ethics and crisis to senior public affairs officers. And there is an interplay between the work we do in classrooms, and the work we do with our clients. And that is in the classroom, we have to dive deeply in systematize our content in then we can turn around and repurpose that with clients. And one of the things that we think differentiates us is we take a deep dive into the systematization of content for clients. And they are accustomed to seeing that level of granularity and of system wide content. They are more use to the ad hoc advice on this or that but we work to equip our clients in a broader way. The other thing we do is we publish and write books and other kinds of content. I personally written five books in the last 20 years. But our firm also publishes books on leadership, we actually have one coming out in November, on authenticity and trust, and how authentic leaders who are paired, blue pair their authenticity with respect and with good coaching and with behavioral consistency, end up being far more trusted than others. That is written by one of our clients. And we’re going to be publishing it in November. We’ve also published a book on corporate culture, and how to make sure that the culture leads to competitive advantage. And to quote Peter Drucker, culture eats strategy for breakfast. And if you don’t get the culture, right, you’re not going to get the business results you can. So that is the range of things we do. I’m fortunate that we have a great team that that does all of those things with me. And as you noted before, COVID, we were active over the last 19 years and 42 different countries. on right now, whatever we do, we do remotely, I’m actually doing a workshop for Tokyo, at 10 o’clock in the evening, my time today. So we still have a global practice, we just do it from wherever we happen to be sheltering in place.

Will Bachman 07:04
All right, so you’ll need a nap this afternoon. What let’s let’s start with a definition. What is a crisis?

Fred Garcia 07:13
One of the patterns we find is that all too often leaders define crisis as something horrible has already happened. We actually don’t accept that view. And we think that’s a dangerous view. We see crisis as the moment where the trust of our stakeholders is at risk. And the sooner we recognize that our the trust of our stakeholders is at risk, the more likely we are to be able to make smart decisions when we have the maximum control over the outcome. And that’s before something horrible has happened. So we actually take the word crisis. And we look at the word in ancient Greek from which the the English word crisis is derived. And it was a word in ancient Greek that would have been pronounced something like pdcs. And an ancient Greek, the word PCs did not mean something bad it happened. It meant the moment where you have to make a choice that determines your destiny. And we have this idea that crisis means choice in English still in the word criteria, which is the basis of choice, or in the word critic or critique. And those have to do with making human judgments about something. And we define crisis management as the rigorous process of managing our choices, when trust is on the line. And trust is on the line in a way where if we make smart choices and execute them, well, we can end up with greater trust than we would otherwise have had. But if we fail to make smart choices work, we make dumb choices, we will find trust falling. And we study patterns of crisis and one of the patterns we study is, it is much harder to restore trust after it has been lost than it is to maintain trust before it has been lost. So there’s a premium in recognizing when trust is on the line, and being able to make smart choices to maintain or enhance trust, rather than allow trust to fall. And when you look at the failed crises of the last decade, whether it’s BP or Volkswagen or Equifax, or United Airlines, you find what they all have in common is at the moment when trust was on the line, the company’s failed to act. And as a consequence, they suffered mightily when they lost the trust of their stakeholders.

Will Bachman 09:38
Let’s talk about some of your work with the military. I think I heard you mentioned that. With that you lead a training session for all new commanders love to hear about your kind of what you’re teaching military officers about crisis communications, and I imagine there’s some lessons for communications to the public or the press. And perhaps you’re also teaching them about communications to the troops or to their, you know, chain of command. Tell me a little bit about the type of short lessons that you’re giving to military officers.

Fred Garcia 10:15
For the last 29 years, I’ve had the good fortune and the honor of being able to teach people in uniform, mostly Marines in mostly marine officers and senior NCO. Although I’ve also taught in joint commands, and I’ve also taught directly for the Air Force as well. I teach exactly the same conceptual frameworks as I teach my civilian students. I just teach it through a military lens and a little bit of autobiography, although I’m a civilian and never worn the uniform. My father was for 25 years, a civilian professor at the United States Military Academy at West Point where I grew up. So I grew up around people in uniform, and I grew up around people who are deploying to combat overseas, some of them did not come back. And so for the first 25 years of my life, I was around people in uniform just about every day. And then starting about 29 years ago, and I’m 63. So more than 40 bits of my life. I’ve been around people in uniform. I started working with Marines. And that’s because one of my new york university students was a marine just back from Operation Desert Storm. And he had gotten too old to fly helicopters, he was going to wind down his career in a public affairs billet. And so he took my communication strategy course as a way to figure out how he was going to do his next job. He introduced me to his commanding officer, the next you know, I’m teaching crisis to marine commanders in the annual commanders public affairs symposium in New York City, that led to a bunch of other Marines wanting to come out and work in their command. So I’ve worked with first Marine Expeditionary Force and capital June 2, I’m sorry, in Camp Pendleton second Marine Expeditionary Force in June. I’ve taught in the School of infantry, I’ve taught many times in Quantico in the Command and Staff College, and in the Officer Candidate School, and for the last six or seven years. In the general officer warfighting program, I used to teach in the Brigadier General select orientation course, where else US Navy admirals in that. And those are then new, that are going through would be a general way to get Admiral Corps. And one of the things I’ve admired about my students in uniform is they take this really, really seriously. And they know that the trust of their own troops, the trust of their own sailors, the trust of their own Marines, matters a lot, as does the need to win hearts and minds in a contested environment. And it’s not just about the bullets. It’s also about the discussions in the town square and maintaining the trust of our allies and maintaining the trust of those who replied to our left and our right in different commands. And so I have been fortunate in being able to repurpose a lot of my civilian content to the military, but I also have repurposed a lot of my military content to my civilian students. So for example, General Nellore, when he was Marine Corps Commandant told the story of losing it on a Christmas morning, when he was feeling sorry for himself being in Fallujah, in Iraq, instead of being with his family. And a sergeant, a female sergeant, look, the general in the eyes, he was losing it. It’s a genuine, you gotta knock this stuff off. And she didn’t say stuff, says, this is this is where we are, we are your family. So suck it up, sir. And he tells the story of just looking at his boots and not knowing what to do and then realizing she was right in saying, Yes, ma’am. You’re correct. This is my family, I’ll do everything I can to make sure we have a good Christmas together. I teach that in my Columbia University leadership for engineers course, as a demonstration of how leaders are supposed to care for the people under command. And even if they feel sorry for themselves, that’s not enough, they have to suck it up. And then they need to do it as necessary to protect their people that that military lesson I would not have had access to if I hadn’t had the good fortune to work with Marines. But now 1000s of civilian engineers have gone through that course and had been exposed to general Nellore. And those values, which are we protect the people in our command.

Will Bachman 14:14
Yeah. So let’s have a little Crash Course here for for me and listeners. We, you know, we know, we may never become, you know, crisis communications experts. But let’s say that we’re advising a client. And there’s a kind of crisis brewing. And before we can call in the crisis communications experts, what are some of the immediate actions and steps that we should be advising our clients to take?

Fred Garcia 14:44
The most important leadership attribute in responding effectively, to call to crises is to have the mindset that avoids making any decision based on personal preference? So it’s never What do I want to do or what Do I want to say, but it’s always to think of your stakeholders and to recognize the trust is the consequence of expectations that are met. And so we begin by asking thinking of those who matter to us, what would reasonable people among those who matter to us appropriately expect a responsible organization to do when facing this kind of problem? And that’s the single most important question to ask. And, and, in my 40 hour crisis communication course, we spend an hour on the word reasonable and an hour on the word responsible in our old word, appropriate, but we don’t really need to hear. So let me give you an example. So let’s assume, for example, that you’re an airline and one of your planes crashes. reasonable people don’t appropriately expect a responsible airline to know in the moment of crash, what caused the crash. And trust won’t fall simply because you choose not to discuss the cause of the crash. At the moment of crash, even though the media will ask and social media will speculate. But we can only expect what reasonable people would appropriately expect of a responsible airline, and that is first to acknowledge the crash, to express concern or empathy for the people on the planet, the people on the ground, do have some mechanism to reach out to the families of those on the plane, to work with first responders to get to the scene and to help with any investigation. And to commit to getting to the cause of the crash. If it’s a human judgment to fix the human judgment. If it’s a system error to fix the system, if it’s mechanical failure to replace the mechanical parts, in other planes, those are all things we can anticipate in advance that reasonable people would appropriately expect. So we don’t play to the trolls. We don’t play to the people who don’t trust us and never will trust us. We play to the people who matter to us. And then we strip personal preference out. And we ask what would reasonable people appropriately expect now, there we can get to a granular level of understanding of expectations, at the level of all employees are only those employees who are in this facility at a certain time. All customers are only those customers who bought a certain product on a certain date at a certain store. And we should be granular in our inventory of expectations. But there’s a common expectation that applies to all stakeholders, in all forms of organization, across all forms of crisis. And that’s the first expectation that we need to be able to fulfill. And that is in a crisis. every stakeholder expects the organization and its leaders to care. And failure to show we care is toxic, it is indifference that causes trust to fall. What it means to care may be different for employees than it is for investors, what it means to care may be different from a physical crisis to an intellectual property crisis. What it means to care may be different early in the crisis than later in the crisis, but that we need to care doesn’t change. And the biggest predictor that trust will fall is the perception that we don’t care. And so the strategy for effective crisis response for any form of crisis is a timely demonstration that we care, paired with a persistent demonstration that we continue to care. And that persistent demonstration of caring has to continue for as long as the expectation of caring continues to exist. And the best handle crises are those that demonstrate that level of care. The worst handle crises are the ones that never get around to caring for get around only after we’ve been seen to be indifferent. Yeah. So take, for example, United Airlines. Three years ago, there was an incident on a plane where a passenger was horribly injured, being forcibly removed from the airplane. And he had done nothing wrong other than to sit in the plane, but they were they needed to get more and more people on the plane. So they forced removed a couple of people and he was injured on the way. It took 18 hours for united to respond, even though there was massive visibility on social media of the passenger being injured. When united finally responded, they responded with a tweet from the CEO that said, this is a really upsetting day for all of us here at United, which is not how you ought to begin that right. And second, I apologize for having to dot dot dot, I’d like you to try that on your spouse. If you’re apologizing for having to do something. You are not apologizing for the thing that you did. And what is it that the CEO united city had to do? re accommodate these passengers. As soon as the CEO of United said I am apologize for having to re accommodate these passengers. The world went crazy, because they did not have a real accommodation crisis. They had a passenger was horribly injured, concussion, broken nose, broken teeth knocked unconscious. That’s not a real accommodation. And that was perceived to be indifferent. And ultimately the CEO issue a second apology, a better apology, that wasn’t enough yet to go on TV and talk about his shame. And ultimately, United had to redo a number of its policies. Because it is so badly mishandled that one crisis. Yeah, the perception that we don’t care is toxic.

Will Bachman 20:42
So, yeah, I think we’ve kind of watched enough television or read enough news reports that, you know, some of what you’re saying is, is pretty intuitive. Right? Like, unfortunately, we’ve seen enough of these sort of airline disasters over the years. I mean, the rare enough, but when you see them, it’s the same thing. It’s like, We’re so sorry, for the victims. We know, we have a search party, you know, we’re reaching out to, to, you know, the, the families of the victims, we’re, we’re gonna find out what’s wrong. So those things are kind of obvious. And what are some of the things that are counter intuitive, or that are surprising to people? Like, it seems to me that what the United Airlines CEO did, is not incredibly surprising, because I can imagine there was an army of attorneys kind of writing that statement and trying to make it like, so they wouldn’t be liable. But it’s kind of obvious to most of us that that was pretty, pretty dumb. But what did they reliable anyway? Yeah. Right. Well, anyway, like, you know, they don’t want to like, you know, announce it. And he should have just said, like, this was terrible treatment, like, no one should be treated this way. I feel incredibly ashamed that like, we did this, where there was a second statement, I mean, exactly those words in the second stage. Yeah. Like, we’re gonna look at, like, he should have hired me to write this. I mean, we’re gonna look into this, you know, figure out what in our culture is like going wrong, and we’re gonna fix it, and I’m gonna commit, it’s not gonna happen again, etc. And I’m so sorry, I’m gonna like call up that guy and send him some like flowers or whatever.

Fred Garcia 22:16
And here’s why that didn’t work. You ask what is counterintuitive? What is surprising, and it’s this? When we ask the question, what should we do? Or when we ask the question, what should we say? Although they seem to be questioned, responsible, people would ask, we almost always misfire on the response. And that’s because any sentence that begins, what should we trigger is a self referential frame. And we end up making choices based on self protection. And that’s what happened with United. That’s what happened with BP. That’s what happened with Volkswagen. That’s what happened with Equifax. That’s what happens when leaders make choices that are self referential, even if they don’t seem to be evasive. There’s a material difference between who do I blame? And what do we do? But the one do we do is not the right question. the right question is what would those who matter to us expect a responsible organization to do? That’s the question. So the surprise, is even responsible leaders who make decisions based on personal preference, misfire, and we need to make decisions based on the needs of the stakeholders who matter to us.

Will Bachman 23:31
Wow, Fred, that is a for me, truly, you know, significant, a mind blowing, reframing, right. I mean, you see people wearing the bracelets of, you know, what would Jesus do? Or what would whoever your hero is do? And we’re often told, like, oh, imagine your dad or your mom or some hero, and what would they do? But this is really interesting. It’s changing it from that to instead, what would like a rational customer of ours expect us to do and right. And then that changes it from like a very, you know, person’s like self centered thinking, Okay, what’s my next step to more thinking about, hey, if I was the customer, what would I expect someone like me to do? And that’s very different reframing that’s

Fred Garcia 24:22
in and of all of the things that I teach in crisis management, that is the biggest lesson, that it’s never about us. The leadership burden is never about us. It’s about them. Yeah. And it’s about what they need. And when we respond to their needs, they trust us. When we respond to our own emotional desires. We alienate the very people whose trust we need to keep. That’s the big takeaway.

Will Bachman 24:51
What are some of the I’m curious to get back a little bit back to the military here. You’re just having Been a military officer myself, but never receiving, you know, public affairs training. I’m curious for the either the public affairs officers or the generals and admirals who are communicating to the public or to their troops or to the chain of command. What are some of the mistakes that you’ve seen made in the over the years and kind of case studies that you probably have? And like what’s the, you know, like the wrong way to present something where you lose trust and and the lessons learned from this?

Fred Garcia 25:36
So one of the things I teach it Defense Information school is the Abu Ghraib case study, the Abu Ghraib prison torture scandal from 2004. And and one of the things that I find really interesting is you had these prison guards sexually humiliating prisoners for their own amusement over the guards own amusement. This was allowed to happen for about a three month period the Red Cross had figured it out. It took a soldier in the chain of command, who was not assigned to the prison to notice what happened. And he did all the right things. He alerted his chain of command. He provided the evidence the photographic evidence of the abuse within three days. The head, the three star in charge of Iraq, had relieved the commander of the jail of her command had done a memorandum of admonishment took her out, put in a new commander of the prison they they began the general Taguba investigation. He did a thorough investigation, he recommended the removal from service of the entire chain of command within the jail down to the sergeant level. So the Commanding General left the colonel left the lieutenant colonel left, the major left, the captain left the first sergeant left, the sergeant major left the civilian contractor left. They put in new procedures, they did all the things that reasonable people would probably expect a responsible military unit to do when they discovered this kind of abuse. In their command. The people in uniform behaved exactly right. General Taguba wrote a brilliant report that in my crisis management course would have received an A, he named the problem clearly he addressed the underlying issues. He had the the recommended that the soldiers be arrested, they were they were court martialed or pleaded guilty, they went to jail. They did all of the things that are responsible military unit would do. And then 60 minutes called, and the people in suits got involved. And they instead of saying, hey, something horrible happened, that should not have happened. We found it, we fixed it, we changed it. It’s not happening anymore. Here’s the report. They instead prevaricated and and the first comment by the US military, which was on 60 minutes, was don’t judge an entire army by the behavior of those few. No, it shouldn’t have happened. We found it. We fixed it. We changed it. And then they double down on that and the President of the United States, talking to other foreign leaders apologized to the leaders for what had happened but nobody apologize to the people of Iraq. It wasn’t until 10 days in when the US government had mishandled the Abu Ghraib scandal that finally Secretary Rumsfeld, who had just been on the cover of The Economist magazine, with the picture, resign Rumsfeld. The Secretary Rumsfeld went to Capitol Hill and he apologized to the people rack but on day 10. And by day 10, it was seen to be a tepid forced apology to keep his job. That is one of the worst handled crises in the US military. And it didn’t have to happen because the US Army did all the right things. But the civilian leadership of the government failed to step into that and instead tried to prevaricate.

Will Bachman 29:09
So we’ve talked some about what to say, and taking what David A. Fields talks about a right side up thinking thinking about it from the perspective what people would expect a decent organization to do. Let’s talk now of some of your tips about organizationally. Let’s, let’s take a let’s take a fortune 500 firm that’s, you know, just identified some crisis of some type, you know, right. It’s either the, the CEO had some kind of metoo moment or that, you know, it doesn’t matter some crisis. What is your recommendations around organizationally? What should be happening the board do they convene? Do they appoint a single spokesperson should the CEO be the talker I mean, assuming the CEO is not involved, like What sorts of things should be in motion?

Fred Garcia 30:03
So there are decision criteria for every one of those questions. And a well functioning crisis process inside a big corporation, has already thought through those things already has a crisis protocol in place already has a crisis team in place. There is clarity and accountability of role who does want there is clarity and accountability of process? How do we do it. And there’s also mental readiness that says when these things happen, here’s what we do first. And here’s what we do. Second, and here’s what we do. Third, the best functioning crisis organizations inside big companies, big universities inside big military, it is, have already thought that through you can’t improvise in the moment. But there are foreseeable things, it is foreseeable that there will be executive misconduct, it is foreseeable that there will be a cyber attack, it is foreseeable that there will be a product failure. And we need to think as much as possible in advance. Because it’s really hard to think clearly in the moment. And I said, We need both clarity and accountability of role who does what, and clarity and accountability of process, how do you do it? What you want to avoid is what I sometimes lovingly call six year olds playing soccer. And that is when the entire leadership team is trying to figure out all at the same time. And it’s like the adorable thing of 21 Kids chasing a ball, and nobody actually playing soccer. And what role clarity and process clarity is intended to do is to identify what are our lanes? How do we stay in our Lane? And how do we get through this without alienating the very people we need to keep. And and the best functioning companies do simulations. And a big part of our crisis practice is we train the leadership team. we equip them with the crisis plan that works for the organization. But the key is to test it. So for example, last week, we tested the crisis plan for for a liberal arts college, in particular on the question of COVID contagion. And it happened to coincide with the White House super spreader event at but we followed the fact pattern of COVID pandemics. And that is a single student posts on social media. What a fun time she had at the party off campus. And there’s a picture, nobody’s wearing masks. And then we introduce stimuli that said, Okay, now seven students have reported symptoms. Now two professors are in the hospital. Now. 11 students now 42 students. Now several students have been diagnosed as positive. And we press them, how do you make decisions? Who’s got the decision authority? When do you go back to virtual learning? When do you close the campus? And it takes that kind of stress test to make sure that the leadership team can follow the crisis plan? Well, very little of this is left to chance. And here’s what I find fascinating. Crisis Management is a rigorous management process that is as rigorous as every other management process. But even deeply rigorous people when it comes to a crisis, throw their rigor away, and improvise. Yeah. And that doesn’t work. That’s what happened to Bob abrade. That’s what happened with BP. That’s what happened with United.

Will Bachman 33:24
So this is this is really fascinating. And it kind of makes me think of my military experience in a draw mentioning that again, which is on the submarine every day, we’re training for fire drill, steamline rupture flooding. So, you know, to your point about these predictable types of events, do most fortune 500 companies actually have some kind of dossier of, hey, here’s our action plan. If there’s an executive misconduct, we don’t know who what executive it is fill in the blank. But, you know, if someone senior is accused of financial impropriety or lying that they went to, you know, certain college or whatever, boom, like we have the action plan, and we know the immediate actions.

Fred Garcia 34:11
The short answer is most well managed companies have such a plan. The best actually keep it up to date. And there’s a difference in yield appreciate this as a military man. Eisenhower famously said, I’ve always found plans to be useless, but planning to be essential. Right, right. And so when clients come to us and say, We want you to write a crisis plan for us, we say, No, we’ll write a crisis plan with you. Because the process of doing the planning has stickiness. I could do the planning, sit on the shelf, you’ll never use it, right. But if you are engaged in the planning process, and the team is equipped and well trained and drills frequently, then you’ll be able to use your crisis plan very, very well. The difficulty is the more complex the organization more things get siloed. And people in one part of the company may not even know that there’s a crisis plan and the other part of the company, who typically

Will Bachman 35:10
owns this crisis planning in a fortune 500 company, is it like the board’s risk committee? Or is it the CFO,

Fred Garcia 35:18
under the Glass Steagall act, publicly traded companies are required to attest that they have a risk management process in place that can manage foreseeable risks, and that’s at a at the board level, they make that attestation. And the CEO is typically charged with implementing it, if they have an enterprise risk management department. It’s typically in that department, sometimes it’s the general counsel. And sometimes it’s operation, sometimes it’s even the public relations department, although that’s the worst place for it to be because they typically don’t have authority to direct actions. So what we advise the fortune 500 companies that were our clients to do is to create a multi disciplinary function that has three things in it, it has stakeholder perspectives, so the perspectives of the stakeholders matter employees, customers, investors, regulators, that has subject matter expertise, you need the lawyers, you need the manufacturing people, you need the security people, and that has implementation capacity, who could actually get things done, when that central group makes a recommendation, and the CEO approves it. So so you have this multi disciplinary function that that wrestles these questions to the ground, ideally, before the crisis happens, so that they have clarity, here’s what we do with employees. Here’s what we do with regulators. Here’s what we do with investors. Here’s what we do with customers. Here’s what we do with distributors here, we do what we do with the rating agencies, here’s what we do with the banks. All of that has to be thought through in advance so that when the crisis happens, you have an implementation capacity that can simultaneously get the word out to each of those in whatever form is necessary to be a phone call. From the general counsel to the regulator, it could be a conference call with investors, it could be a recall of a product that can be retooling of the assembly line. Time is your enemy in a crisis. And the more you think that through in advance, the more likely you are to get through the crisis well.

Will Bachman 37:18
So when when you run drills, or what is the simulations, let’s call it or drills are they typically scheduled,

Fred Garcia 37:30
typically are typically half day? Yeah, we have one person on the inside, who knows everything that’s gonna happen. They’re not allowed to talk during the simulation. But they but they help us make sure that what we’re going to replicate is actually close to what they would actually experience. But then we go in there, they they know that there’s going to be a crisis simulation. Okay. crisis is Yeah. And then we usually begin with in this direction, we make them think that the crisis is this kind of crisis. And it’s really this other kind of crisis. Yeah. So they think that it’s a social media embarrassment thing, but it’s really a product failure thing. And it takes about an hour into the simulation for the people to realize, Oh, my gosh, this is more complicated than I thought. Yeah. Because that’s how crises play out in real life. Well,

Will Bachman 38:19
yeah, kind of question about that is, I mean, I suppose just for practical purposes, scheduling it, make sure that the relevant executives can participate. I mean, in real life, crises don’t happen when you

Fred Garcia 38:33
fill that in with that when they say this, executives not available, see great, he wouldn’t be available in real life anyway. So let’s go through the simulation. And then what do you do? So we actually we factor that into the into the equation.

Will Bachman 38:45
Okay, interesting. We

Fred Garcia 38:46
also have a particular learning outcome that we seek. So for example, we have one client is an Alcohol Beverage distributor, one of the largest in the world they make and they distribute alcoholic beverages. We first did a simulation to make sure that they would follow the plan, then we did a simulation to make sure that they could deal with a natural disaster, in this case, a weather event for their employees. Then we did a simulation that had to do with a drunk and disorderly sexual assault at a concert that was sponsored by the company. Then we did one that was essentially social media embarrassment. And, and we were testing different parts of the company involved in different decision making processes. What I just described that over the course of a year and a half, okay, but but that was intended to equip the company for whatever might happen next. And then they had crises that were very similar to what they just done the simulations on. And they were able to resolve those crises with very little negative visibility and very little harm to their competitive position in the marketplace.

Will Bachman 39:50
So do most big companies have a crisis communication firm kind of selected and on retainer.

Fred Garcia 39:57
Some have a firm like us, which especially alliances exclusively in crisis and leadership decision making. Some use their public relations firm or their consulting firm, all of the big consulting firms have some kind of practice in that in that field. So so Accenture will have such a practice and to NATO has such a practice. And, and they will sometimes use those, one of the things I find is the public relations firm typically have a bias for media and social media, but not for operating processes in business decisions. The big consulting firms typically have a bias for operating processes, and big decisions, but not the execution. And we are somewhere in the middle. We’re not a public relations firm. We’re a crisis management firm. We’re not a management consulting firm that does non crisis stuff except for leadership development. So we don’t we don’t do what McKinsey does. And we don’t even do what an Accenture would do. But we’re somewhere in the middle between those two, we focus on stakeholder trust and relationship, and how to manage those relations when we don’t do it ourselves. That’s that’s for the client to do, because the client needs to own those relationships.

Will Bachman 41:04
Amazing. So Fred, this has been so eye opening, and really shifted my thinking on on some issues, particularly love this idea about thinking about, what would people expect you to do? It’s such such an obvious thing. And in retrospect, as opposed to thinking about, oh, what should I do? Let Wow, love that. So for people that wanted to follow up with you find about your firm, maybe reach out to where would you point them to,

Fred Garcia 41:31
we have a lot of content that we give away for free. And it’s on our website, it’s logos, consulting, ello, GLS consulting.net. We have a blog we have we all on Twitter, we will soon be launching the logos Learning Center, which will be virtual courses and live courses that people can take at a very low price point. And we also have the ability to subscribe to our content. So that when when we publish something new and we’re publishing all the time, somebody can get a notice and if they’re interested in it, they can get it can also follow me on twitter at at Garcia h f.

Will Bachman 42:11
Fantastic. So I will include those links in the show notes. So the link to Fred’s firm and his Twitter. So Fred, this was amazing. Thank you so much for joining today. Thank you so much. Well

Related Episodes

jay-altizer-bain-alum-dallas-tx

Episode
440

Food Industry 101

Jay Altizer

Episode
439

Craig Beal on the Travel Business

Craig Beal

Episode
438

Rob Ristagno on Customer Segmentation

Rob Ristagno

Episode
437

Equity Research

Neeraj Monga