Temin and Co.


"Life is a storm... You will bask in the sunlight one moment, be shattered on the rocks the next. What makes you a man (or woman) is what you do when that storm comes.” — Alexandre Dumas

The Wall Street Journal's "Crisis of the Week"

Each week, The Wall Street Journal features a "Crisis of the Week." Temin and Company's CEO Davia Temin is one of the experts who is asked to comment regularly on those crises.

Following is a compilation of her comments since the feature's inception, starting with the most recent.

Crisis of the Week: Hacked Twitter Account Gives McDonald’s Indigestion

Ben DiPietro, The Wall Street Journal's Risk & Compliance Journal, March 27, 2017

The crisis magnifying lens puts it focus on McDonald's Corp. after a message was sent on the company's Twitter account calling President Donald Trump "a disgusting excuse of a President" and trolling him by saying he has "tiny hands." The White House did not comment, but some supporters of the president called for a boycott of the burger chain.

McDonald's said it was notified by Twitter that its account was hacked. McDonald's deleted the tweet, secured its account and said an internal investigation found the account had been hacked by "an external source." The company put out a statement apologizing that "this tweet was sent through our corporate McDonald's account."

The experts evaluate how well McDonald's handled this crisis.

Davia Temin, chief executive, Temin and Co.: "The fake tweet sent from McDonalds' Twitter account on March 16 that disparaged President Donald Trump catapulted the company into the land of alt-tweetdom. Today, as companies and individuals alike struggle to delineate truth from fiction in public discourse, McDonalds had an immediate imperative to let the public know it had not officially sent the insulting tweet. It had to act quickly to set the record straight, before it even knew what really had happened. It couldn't let a lie stand.

"It did an excellent job. I usually say you have 15 minutes to respond to a crisis these days. McDonald's took the tweet down within 20 minutes, issued an apology that was just right, announced it had 'secured its account' and was investigating what happened. It followed up by saying Twitter had informed it to say its account had been compromised. It was a perfectly done, two-step response. Immediately the company acknowledged the problem and acted, promising an investigation. It followed up, as promised, with results saying its site was hacked. Not too much, not too little.

"Plus, it rightly knew it couldn't control the Twitter responses from the public, which ran the gamut from jokes and hilarity to a threatened boycott. So, it didn't even try, though [it's likely] the company monitored it closely and was prepared to act if needed. But it was an essentially small matter and McDonald's let it play itself out within a day or two, with no further comment; it didn't let itself get 'twitterpated.' Had it continued to talk about it, it would have kept the issue alive even longer. McDonald's deserves a break today on this one: its communications team gets an A-plus."

To read the full article, CLICK HERE.

Crisis of the Week: Qualcomm Chips Away at South Korea Probe

Ben DiPietro, The Wall Street Journal's Risk & Compliance Journal, January 9, 2017

Chip maker Qualcomm Inc. takes crisis center stage this week after a regulator in South Korea said it would fine the company $853 million for alleged antitrust violations related to its patent-licensing business.

Qualcomm denounced the decision by the Korea Fair Trade Commission, calling it "inconsistent with the facts and the law" and vowing to appeal. "For decades, Qualcomm has worked hand in hand with Korean companies to foster the growth of the wireless Internet," the company said in a statement. "Qualcomm's technology and its business model have helped those companies grow into global leaders in the wireless industry. This decision ignores that win-win relationship."

The experts evaluate how well the company is handling this crisis.

Davia Temin, chief executive, Temin and Co.: "Qualcomm's press release response to the ruling of the Korea Fair Trade Commission threaded the needle very well. It is cogent, nuanced, well-stated and argued, and persuasive without being overly aggressive or over-wrought. The communication had a number of goals: to respond to the markets and investment community, to put Korea on public notice that it will appeal and begin to frame the elements of that appeal while trying to not antagonize the Korean government or the court, since Qualcomm is relying on the court's favorable hearing of the appeal.

"Qualcomm is facing a severe threat to its business model worldwide with this ruling, and in answering it appears to be setting its defensive arguments for many countries to come. Given the importance of a nuanced response, Qualcomm could not offer up a marketing or PR-like overstatement; it needed a clear but lawyerly response, delivered by its general counsel–and that is exactly what it provided. The right person is quoted, and Don Rosenberg's pull-out quote is effective.

"Will it win the day? Yet to tell, but the response is thoughtful, strategic and understatedly persuasive. [The company has not] answered questions from the media...but it will have to answer questions from analysts on its next earnings call, and the media will be listening in, so they will need to be consistent and additive as this story unfolds.

To read the full article, CLICK HERE.

Crisis of the Week: Tyson Finds Itself in Game of Reputation Chicken

Ben DiPietro, The Wall Street Journal's Risk & Compliance Journal, October 19, 2016

Food processor Tyson Foods Inc. takes crisis center stage after being accused of rigging poultry prices. Lawsuits filed against Tyson allege the company and other producers engaged in fixing prices for its poultry products, prompting one analyst to issue a report suggesting the issue could become a big problem for Tyson—news that sent the company's stock price lower. Other reports struck a different tone about the company, and the stock rebounded the next week.

Tyson sent out a statement in which it vowed to defend itself against the allegations, saying: "While we don't normally make substantive comments regarding pending litigation, we dispute the allegations in the complaints as well as the speculative conclusions reached by the analyst, and we will defend ourselves in court."

Using the company's statement, the experts break down its response, how well it communicated its message, and what it should do next?

Davia Temin, president and CEO, Temin and Co.: "Tyson Foods felt it had to respond when an industry analyst advising hedge funds issued a report that sent the company's share price into a dive. And probably, to its lawyers, it did seem like a spirited and substantive response–but not really. In reality it was a three-sentence statement that said almost nothing."

"Terse corporate responses to lawsuits have turned into an art form. Less is almost always more. Usually words like 'frivolous,' 'we intend to defend ourselves vigorously' and 'without merit' are invoked. But old hands in this game can learn a lot by what is said and what isn't. For example, Tyson did not say the lawsuit was without merit...only that it 'dispute(s) the allegations.' Without merit means it's totally untrue. Saying we dispute allegations doesn't quite mean it that strongly, it's one step less severe and means we will dispute some of the allegations but possibly not all of them–which could mean there might be some elements that are true. In reality the company made a denial that isn't completely a denial–which only raises more questions. This breaks crisis rule No. 1.

"Moreover, in repeating the allegation in its denial, it broke crisis rule No. 2: Never repeat the allegation, otherwise, the denial only serves to convince folks the allegation is true. What should Tyson Foods do, then, as the issue is clearly not dying down as quickly as it might like? Ideally, it should come back with an even stronger statement that is a little less expected–one is often far more believable when one's denial is unique and authentic. Or, its lawyers could craft a persuasive legal response and then quote parts of it in the company's public response.

"Or, if neither of those two strategies is practicable, Tyson should–like its fellow defendants–hunker down, say nothing further, fight in court or settle and soldier through it. After all, the business is not going away, it has experienced challenges like this before and the public still likes its chicken."

To read the full article, CLICK HERE.

Crisis of the Week: Delta Grounded After Computer Crash

Ben DiPietro, The Wall Street Journal's Risk & Compliance Journal, August 22, 2016

Delta Air Lines finds itself in the crisis spotlight following a power failure that led to a crash of its computer network that prompted the cancellation of more than 1,000 flights on the first day alone, with around 1,000 more flights canceled on the second and third days of the event.

The company's chief executive, Ed Bastian, apologized in a video statement and took full responsibility for the system meltdown, saying in a second video statement the snafu was a one-time event started by a power outage and a small fire. "We realize we've let our customers down," said Mr. Bastian. The company provided updates, offered travelers $200 vouchers, waived flight-change fees and put hundreds of fliers up in hotels.

Using the statements made by the airline and the comments of Mr. Bastian, the experts evaluate how well Delta handled this crisis.

Davia Temin, chief executive, Temin and Co.: "Delta did not improve its reputation for trustworthiness with its early statements about its recent computer system crash causing thousands of cancelled flights. First, it said it had experienced a power outage but that was rebutted by local power authorities. Then it said there was a fire, but that small fire seemed not to be the full reason for such a broad-scale failure. Delta appeared to be more worried about minimizing its damage first, only [later] acknowledging the full severity of the situation–during which time social media was ablaze with customer rage and protest.

"Had Chief Executive Ed Bastian's second video of explanation and apology–issued two days later–been his first, Delta would have been better off. That apology felt somewhat sincere. His earlier one seemed forced, badly edited and still in denial. Yet, even his later statement–'This isn't who we are'–immediately rang false because furious flyers saw this was exactly who Delta had just been.

"We all know a company in crisis can't find out all the details immediately, but in this kind of predictable crisis, Delta should have been far more prepared to apologize immediately, communicate what it did know incessantly, over-compensate those disadvantaged from the outset and take full responsibility in a non-trite way–no 'The buck stops here' nonsense.

"It needed to stay in the pain longer and explain what it was going to change so it wouldn't happen again. And it needed to do this in a way that the public would believe them. Delta was far too eager to control the damage of this failure before, during and after it transpired–and in so doing may have exacerbated it."

To read the full article, CLICK HERE.

Crisis of the Week: Signet Confronts Diamond Debacle

Ben DiPietro, The Wall Street Journal's Risk & Compliance Journal, June 13, 2016

The crisis this week involves Signet Jewelers, which is battling allegations employees substituted premium diamonds with cheaper, man-made substitutes. The company's stock price declined following the reports.

Signet—which owns national jewelry-store brands Jared, Kay Jewelers and Zales—issued a statement strongly refuting the allegations. "Signet Jewelers' entire team culture is directed toward ensuring that we earn and maintain customer trust," the company said. "Incidents of misconduct, which are exceedingly rare, are dealt with swiftly and appropriately."

Using only the statement issued by the company, the experts break down the effectiveness of its communications, highlighting what's good about its messaging and tone and delivery, and what's not so good. How should the company proceed?

Davia Temin, chief executive, Temin and Co.: "Disparagement of a company's reputation these days can come from all sides, including Wall Street and social media. Signet has just experienced incoming on both fronts, with Wall Street's questioning of its credit business far more worrisome, as it appears to have some validity and can affect share price valuation immediately, necessitating real business-model changes. It is very difficult to respond publicly to such a situation, as it is changing rapidly, and one can never make assertions that might need to be taken back later, as more information comes to light. Signet has done what it can, so far, although a more fulsome statement will have to be forthcoming at some point.

"As to attacks on social media regarding gem swapping, Signet has done many things quite right in its response, but it just did not go far enough and was not quite as earnest as it could have been in my opinion. The statement it issued was comprehensive, specific and acknowledged what consumers are looking for when buying a diamond. Wisely, it did not mention the specific allegations against it until the second paragraph. I might not have mentioned them at all. Moreover, I would not have relied on trite phrases that, when used, serve to fuel disbelief because they are so trite, such as 'take seriously,' 'earn trust,' etc.

"Trust is a hard thing to claim you have earned: You earn it or you don't. Signet says rightly it 'seeks' to earn trust, which speaks to its intent, and that is good. But what it does not do is speak to the specifics of whether there is any merit in the reports of its detractors, and what it has done about it. It needs that one element added to its proclamations of good intent to be really believable, and not to be viewed as press release double-speak.

To read the full article, CLICK HERE.

Crisis of the Week: NFL Goes for Knockout Against New York Times

Ben DiPietro, The Wall Street Journal's Risk & Compliance Journal, April 4, 2016

Crisis of the Week this week jumps into the fight between the National Football League and the New York Times, looking at how the NFL responded to a story alleging the league under-counted the number of players who had suffered concussions.

The NFL issued a statement calling the story false, and saying the league had spoken with journalists working on the story to explain to them why their premise was incorrect. The league then ran a series of ads refuting the story—even putting those ads on the Times website, sometimes with the ad running inside the story the league was contesting. This week it had attorneys send a letter to the newspaper demanding a retraction, which the newspaper refused to provide.

Using only the comments made by the NFL, the experts evaluated how well the league has done so far in defending itself, and spell out how it should proceed. In addition to breaking down the actual comments, analyze the methods the league took to disseminate its message and explain whether they were effective or not, and why.

Davia Temin, CEO, Temin and Co.: "If the NFL would not go on the offense in its own defense, who would? Its response to the NYT is testosterone-driven, using every play in the reputation defense playbook and originating a few more. It also ups the ante, and may not help them in the long run.

"The NFL's goal, in the face of such a devastating take down by the Times, had to be not only to refute the allegations point-by-point but to cast doubt on the entire article, its writers and the publication's motives. It did this semi-successfully in its rebuttal, but went too far, allowing the Times to refute its refutation. Not good to wage all-out combat. But its immediate placement of banner ads touting what it is doing to keep players safe–on the very pages containing the negative story–was brilliant. Clearly the NFL was prepared for the story, and deployed every response possible in traditional and social media; some were on-point, others overblown.

"The real mistake? A truism in my business of crisis management is to never repeat a negative allegation. Instead counter with a positive truth. Every time you repeat a negative, people believe it a little more. So, the more times the NFL said in its statements that it is not affiliated in any way with the tobacco industry, the more the public believes it is. Instead, it should have said: 'This is a totally untrue allegation: our research and communications are completely independent of any other organization. We have never affiliated with anyone like that, ever.' And that had better be the truth."

To read the full article, CLICK HERE.

Crisis of the Week: OSI Fights Back In China

Ben DiPietro, The Wall Street Journal's Risk & Compliance Journal, February 8, 2016

Food processor OSI Group is this week’s crisis candidate, as it has taken an aggressive stance to fight a court ruling in China finding the company sold “inferior products” to fast-food chains. U.S.-based OSI called the ruling inconsistent and said the charges against it were part of a “smear campaign” by the Chinese authorities. OSI, by going public with its criticism of the Chinese justice system, is going against the norm for how western companies solve disputes in China.

Saying it can “no longer accept injustices against our people and our reputation,” the company said in a statement it is considering an appeal of the verdict. The company also is considering legal action against Dragon TV, which it said made “false and incomplete accusations” against the company.

Using only the statements made by OSI since the verdict was announced, the crisis experts evaluated the decision to challenge the government publicly—is it one they would have advised the company to take? Did the company’s response strike the right tone? If not, how could it have been better? What are the next steps you would advise the company to take?

Davia Temin, president and chief executive, Temin and Co.: "Occasionally you have to fight back. That is where OSI finds itself–and with good reason. There is a formula that has emerged among non-Chinese companies accused of wrongdoing in China, whether with or without reason: First you apologize, then you negotiate, then you make reparations, you make some changes and then come back gingerly from the brink. Companies privately bridle at needing to give in to what they see as blackmail to retain operations in the country but they do it anyway.

"OSI is different in several ways. First, it is private and thus has more financial latitude. Second, 10 of its people have been jailed or sentenced to jail, some for up to 17 months, with more jail time to go. This can be life-threatening. Third, it tried the formula and it hasn't worked, so what option is left when the company feels it was set up, unfairly accused and unfairly judged? Either capitulating totally or fighting back. They have, courageously, chosen to fight.

"Its press statement is very well done–strong, clear, unequivocal. OSI doesn't repeat the allegation, nor does it seem unreasonable or overly emotive. It just will not accept proceedings they find seriously wanting. In so doing, it is raising an issue that really must be raised. OSI is doing every company doing business in China a favor–it is taking on the fight, publicly. And the timing may just be right to see some kind of positive result.

"While there are some crisis counselors who believe that an organization's first response in crisis should always be to fight back, that is not my belief. I believe response needs to be based on the circumstance. In this one, OSI has shown it will no longer be backed into a corner, docilely. It is doing the right thing, and in the right way."

To read the full article, CLICK HERE.

Crisis of the Week: Tesla Slams the Brakes on Seat Belt Problem

Ben DiPietro, The Wall Street Journal's Risk & Compliance Journal, November 30, 2015

The crisis this week deals with Tesla Motor's decision to recall all Model S cars—about 90,000 of them—because of a problem reported with a seat belt in one of the vehicles.

The company said even though the car in question wasn't involved in an accident, and no one was hurt—and the problem wasn't found on 3,000 other vehicles it inspected—it decided to proceed with a full recall nonetheless. "We have decided to conduct a voluntary recall as a proactive and precautionary measure to inspect all front Model S seat belts and make absolutely sure that they are properly connected," the company said in a letter sent to every Model S owner.

Tesla's stock price dropped following the recall announcement, which comes a few weeks after shares slid following a Consumer Reports story calling into question the reliability of the Model S.

Using only the public statements made by the company, or the comments it sent to owners, we asked the experts to evaluate whether the company is doing the right thing with a total recall, or overreacting to a minor problem in one vehicle. Is there more to the company's response than just dealing with a seat belt issue?

Davia Temin, chief executive, Temin and Co.: "At last someone is finally modeling what great customer care looks like in the new, hyper-connected era. Tesla's reaction to the seat belt connection problem found in one car in Europe could be called an overreaction by many. But in the face of the totally failed, less-than-truthful public strategies seen from Volkswagen, General Motors and Takata, what Tesla is really doing is setting a new–and much needed–standard for addressing product failures and recalls, especially in the automotive industry.

"Tesla has taken it very seriously indeed. Its voluntary action resets the norm for industry recalls, particularly around issues that could cause loss of life. Tesla's apparent 'zero tolerance policy' is even more powerful because it could have gotten away with doing nothing. Compared to VW, GM, or Takata, certainly the seat belt problem of one Model S does not seem that grave. But Tesla's reaction shows trustworthy business practices in action.

"In this highly unstable world of social media–where anything can catch fire or be totally ignored–Tesla has wisely understood that overreaction can keep problems from going ballistic. Throw every wise solution you have at an incipient problem, especially if human life is at stake, and no one will ever doubt your trustworthy intent."

To read the full article, CLICK HERE.

Crisis of the Week: United Airlines Faces Turbulence Amid Federal Probe

Ben DiPietro, The Wall Street Journal's Risk & Compliance Journal, September 21, 2015

This week we look at the statements and actions of United Continental Holdings Inc., which replaced its CEO and two of his top executives amid a continuing corruption investigation by federal prosecutors. The ouster of Jeff Smisek comes as investigators look into whether former Port Authority of New York and New Jersey Chairman David Samson used his position to demand favorable treatment or personal benefit from the airline.

In a statement, the company said it decided to replace Mr. Smisek and the other two executives as a result of its own internal investigation into its dealing with the Port Authority. The airline's board apparently decided to cut ties with Mr. Smisek a few weeks before the announcement of his departure. During a conference call discussing its latest quarterly results, the company said it wouldn't comment further as the investigation is ongoing.

Looking only at what the company has said publicly in its statement and on the conference call, we asked the crisis experts to gauge how well United has handled this crisis.

Davia Temin, CEO, Temin and Co.: "'By the book,' is how United Airlines said it conducted its investigation of former CEO Jeff Smisek, and by the book is how its board and new CEO have handled every communication regarding management changes. Communications have been textbook–word-perfect, well-vetted and bloodlessly on message. But there are times when 'by the book' is simply not enough to do the job, and this is one of them. Extraordinary measures are needed.

"United Airlines, especially since its merger with Continental, has systematically destroyed customer trust and taught the public to disbelieve its rhetoric. Dead last in customer satisfaction rankings, it still said its skies were friendly. Before his ouster, Mr. Smisek was featured on the in-flight safety video telling fliers how much they were valued. Yet, just having gone through the boarding and flying experience, customers knew that wasn't true. So, it will take extraordinary action on the part of United to rebuild trust, not just words. And the new CEO's letter to customers simply promised that United would reach the floor of acceptable service, not the ceiling.

"To rebuild trust, new CEO Oscar Munoz will have to reinvigorate the United brand and demand that every interaction and communication made by United personnel lives up to that brand. It will take a 180-degree reversal. United will have to write a new book, and prove to us all that its words are backed by action."

To read the full article, CLICK HERE.

Crisis of the Week: Accounting Problems Hobble Toshiba

Ben DiPietro, The Wall Street Journal's Risk & Compliance Journal, July 27, 2015

The crisis this week involves the actions taken by Toshiba Corp. in the wake of an accounting scandal that saw the company overstate earnings by more than $1.2 billion over seven years. The fallout from the scandal escalated last week, when the company announced the resignation of Chief Executive and board Vice Chairman Hisao Tanaka and a reorganization of its board in which half the members are stepping down. A report from the company into the overstatement said its three most recent CEOs all played roles in inflating the company's operating profit.

Looking only at the statements of company officials, and the actions taken in removing the CEO and reshuffling the board, we asked the crisis management experts how well has the company handled this crisis? Where has it done particularly well? Where has it fallen short? What should it do next?

Davia Temin, CEO, Temin and Co.: "It is extraordinarily difficult for a company to buck its own tradition and culture. Japanese companies have always been opaque and less than communicative, and are not known for admitting to misdeeds until they are absolutely forced to–and sometimes not even then. Much pain could have been avoided had they owned up to their problems quickly, rather than doubled down through denial. Now is the time to show it is serious about changing corporate culture. Nothing less will quell the massive crisis of confidence Toshiba has created.

"To be sure, in the face of incontrovertible evidence, Toshiba has acted more quickly and decisively to show 'accountability' after the fact than almost any other company in a Japanese corporate scandal. The CEO and other leaders, plus half of the board, have stepped down immediately, issuing authentic-sounding apologies. But that is hardly enough. Not only must heads roll, and practices change, but it is time to turn corporate culture on its ear.

"[The] business needs to take a page from the playbook of Pope Francis. This new pope is turning Vatican tradition and culture–easily as entrenched as Japanese culture–upside down, systematically breaking every 'rule' of papal behavior. My suggestion to cure [Toshiba's] crisis of corporate culture–follow Pope Francis' lead. Take immediate steps to make glaring, symbolic change, the kind no one thinks it can. Then create a new code of conduct, at every level of corporate life, and begin to communicate it broadly and enforce it strongly. That is the only way I know to stop a series of crises that has been going on for years."

To read the full article, CLICK HERE.

Temin & Company | Website by Temin & Co.