An Evolving Object Lesson on How NOT to Repair Your Company’s Image

Mark Zuckerberg’s handling of the evolving crisis at Facebook, and its relationship with the voter-profiling company Cambridge Analytica, is providing us with a live object lesson in how NOT to repair damaged trust in your CEO or your company!

For those of you who haven’t seen a newspaper or TV news show in the last week, here’s the summary: Almost four years ago, Cambridge Analytica (CA) allegedly contracted with a researcher to gather ‘privacy-protected’ data from 50 million Facebook users to be used to support a US political campaign. Moreover, CA may have kept the data long after they promised Facebook that they would delete all of it in 2015.  Until the last three days, Facebook’s leadership has remained silent on the situation, in spite of a $50 billion (!) drop in the company’s market value and calls by Congress to investigate what Facebook officials knew about this breach of user’s privacy-protected data, and when they knew it.

After five days of silence, Facebook CEO Mark Zuckerberg issued a post on the social media platform and was interviewed on CNN[1]. In that interview, he acknowledged that there had been a ‘major breach of trust’, said ‘I’m really sorry this has happened’, indicated that the company had not responsibly handled user’s data, and that ‘our responsibility is to make sure that this doesn't happen again.’ He outlined a series of broad, nonspecific plans that Facebook officials will pursue in the future to restrict access to user data and monitor those who are grooming user data for inappropriate purposes. While the stock price continued to drop following the apology, some Wall Street observers indicated that ‘this too shall pass’ because of the company’s strong fundamentals.

https://youtu.be/kSyMKL4DmnQ

Facebook’s handling of this crisis thus far is a textbook example of how not to manage a crisis that threatens your company’s fundamental brand image--and particularly when your company is known by the face of its CEO! Here are some of the major breakdowns in crisis management:

• Multiple reports indicate that Facebook knew about the breach weeks before it was made public, but said or did nothing.
• When the scandal broke on March 16, Facebook took limited action by suspending the accounts of Cambridge Analytica but not commenting publicly on the larger problem.
• Even after the scandal went public, Zuckerberg—the highly visible CEO and ‘face’ of Facebook who has engineered Facebook’s success—did not respond for five days.
• Watching the ‘apology’ on CNN, Zuckerberg conveys almost no emotional connection to the problem or his audience, and provides only the most modest apology. The apology does say that he was ‘sorry’, that he ‘accepted responsibility’ for the breach of trust to its customers and that a broad series of ‘planned changes’ would be studied—but he’s talking to the interviewer, not the camera.

Those of us who study how CEOs respond to company crises, and deal with breaches of trust, find the ‘apology’ flawed on numerous fronts. In a world where information travels instantaneously through electronic media, and in the world of the 24-hour news cycle, the crisis blindsided Facebook. In this world, five days of delay is equivalent to five years.  Facebook’s history of failing to address other data privacy scandals compounded the problem. Zuckerberg’s words and delivery lack any serious, personalized empathy for the trust problem his company has created with its users. Finally, there is no real explanation from Facebook’s leadership, including Zuckerberg, about how the company’s leadership allowed user data to be so vulnerable, or that they were going to take quick and significant actions to fix the problem (not ‘plans’ and ‘studies’)—elements which we have found to be absolutely critical to an effective apology. [2]

The actions of Facebook’s leaders in handling this crisis have shifted the company’s brand image from a perception of almost unquestionable trust to a perception of suspicion and distrust. While the stock price may be one measure of Facebook’s current problem, the number of users who drop the social media platform will be the more important question. There are only two benefits to come out of this crisis:

• be far more careful of any web-based company which promises to preserve and protect the privacy of your data, and
• readers who get all their news from any single source, particularly an uncensored news feed, should actually begin to question the accuracy of that information.

[1] http://money.cnn.com/2018/03/22/news/companies/facebook-stock/index.html

[2] R Lewicki, B. Polin & R. Lount, (2016) An Exploration of the Structure of Effective Apologies. Negotiation and Conflict Management Research, 9, 2, 173-192.