best communications practices

A New Look at “Chaos is Our Brand” in Light of the Coronavirus Crisis

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When Audacia Strategies CEO, Katy Herr, originally taped this interview with Dan Doran, CEO of Quantive, for his podcast The Deal—Unscripted, we had no idea just how relevant it would be now during the current crisis. A year later, we are living a case study in crisis communication and thought it was a good time to revisit some of the takeaways about best communications practices from that conversation.

1. Don’t Wait to Create a Strategy for Best Communications Practices

This recommendation applies as much to a wide-spread crisis situation like the Coronavirus pandemic as it does to a big company transition like a merger or acquisition. It never pays to procrastinate on creating a communications strategy.

If you find yourself without a clear strategy, you’re likely feeling the pain acutely in this moment. As far as we know, no one has invented a time machine, but there are some things you can do to develop a stop gap strategy:

  • Stay calm and present as you weigh your options.
  • Figure out who needs to hear from you, when.
  • Develop straightforward messaging that doesn’t promise more than you can deliver.
  • Make sure you have a designated team with assigned roles to streamline communications.

For more ideas, check out 5 Lessons from our Crisis Communications Playbook. 

Many of our clients contact us when they’re facing one of two situations: times of crisis or times of transformation—hence our unofficial tagline: “chaos is our brand.” This makes a lot of sense, but too often what we find is that if an organization hesitates to develop best communications practices and a communications strategy early enough, things can go off the rails quickly. 

At the risk of sounding too sales-y and mindful of the many hardships experienced during this time, here are a few of the benefits of using an outside communications firm:

  • An outside set of eyes gives you transaction experience, critical perspective, and unbiased advice when communicating your message to the outside world.
  • An outside firm is in a good position to place your organization in a broader context (i.e., the competitive set, the market, and your financial stakeholders), while you focus on running day-to-day internal operations.
  • An outside firm isn’t influenced by the “groupthink” or silo-ed communications that can be an obstacle to projecting the strongest public image.

Whether or not your organization ultimately decides to enlist the help of a firm like Audacia Strategies during this crisis or the next one, the most important thing you can do is start strategizing ASAP.

2. Think About Who Your Stakeholders Are 

In this moment of uncertainty, you are right to worry about accidentally leaving stakeholders off of your list of communications. One of the first rules of communications is to control the narrative. But if you hesitate to reach out to stakeholders or skimp on the stakeholder analysis, this is precisely the risk you take.

Remember that at its core communications is about storytelling. What is the best story you can tell to a particular set of stakeholders? Suppose the governor in your state has decided your industry is among those allowed to reopen, but you disagree with the reopen policy for your business. Your best bet is to be honest with your employees, customers, and investors. State your case and speak your truth.

Depending on whether you are a publicly or privately held company, stakeholders could include any or all of the following sets:

  • Employees
  • Customers
  • Financial stakeholders: 
    • Public debt holders and ratings agencies
    • Private equity companies and banks
    • Investors or shareholders
  • Community partners
  • Contributors (for non-profit organizations)
  • Business partners and service providers
  • Strategic partners
  • Government regulators and political community (local, state and federal) 
  • Media and industry influencers

3. Understand the Difference Between Marketing and Communications

This is especially important now when best communications practices may require a very light touch. If you think you can “get by” using your internal marketing department to craft crisis communications, you may want to reconsider. 

Marketing and strategic communications are different tools. Whereas marketing primarily focuses on telling the story of how your product or service will help your target customers, strategic communications partners can knit together the entirety of the business story to give investors and other stakeholders a comprehensive picture. As the experts in helping clients weather chaos, we have developed best practices over many transactions, crises, and change events.

Now is the time to ask big picture questions about how your market may respond to this crisis, how resources should be optimally redirected, and how investors, customers and employees should be engaged throughout. This is a great time to consider what has changed for your customers and employees and what you can offer as we begin to feel our way through life post-lockdown.

4. M&A Tips and Tricks

As we hopefully begin to see COVID-19 infection rates peak over the next several weeks and markets start to stabilize, many predict that M&A (mergers and acquisitions) will start to pick up in certain industries. This is, of course, assuming lawmakers on Capitol Hill don’t place a moratorium on big mergers—a conversation we’ll be monitoring closely.

There are still a lot of unknowns here, but if a merger is in your future, we work with corporate development teams, in-house financial teams, lawyers, and investment bankers helping them think through the market and storytelling from an M&A perspective. At its core, M&A is about risk, the ability to manage risk, and telling the story of how the acquisition fits into your broader business strategy and culture.

For example, if you’ve been working on a deal that has been in the preparation stages for months, should you call it off or push forward to completion? One thing is for sure: for companies that have built a healthy balance sheet during the economic boom of the past ten years, declining valuations create opportunities to pursue deals that create long-term value. While we can’t help you decide whether to hold or fold, we can help you communicate your decision.

Finally, we’ll leave you with some pitfalls and opportunities to consider when it comes to best communications practices during a merger or acquisition: 

M&A Pitfalls:

  • Companies that overpay: We have another blog post dedicated to this topic. Suffice it to say, if you overpay for an acquisition, it can create credibility issues with your investors, your Board of Directors, your employees…the list goes on. Negotiations can get emotional quickly but consider that the business strategy will have to support the valuation.
  • Cultural fit failure: We’ve seen it happen: a small start-up firm develops an amazing technology and gets bought by a huge firm looking to prove it’s innovative and “hip.” Then, within a year, all the original start up employees are gone. Avoid this kind of cultural disconnect by having an air-tight integration strategy from the beginning. Make sure you are walking your walk, so you can deliver on what you’re promising. (Pssst! Hot tip: Audacia Strategies has a new service rolling out to help avoid just this problem. Make sure you’re signed up to be among the first to get the details!)

M&A Opportunities:

  • Integration is key: The best M&A success stories are those where the merging leadership teams think about integration all the way along. When companies have a successful communications strategy that includes communicating the big vision well for both internal and external audiences, the proof is in the stakeholders’ response.
  • Customers see opportunities: Ideally, when two companies merge, customers say “this is exactly what I needed.” Rather than seeking out two solutions, for example, the customer gets one-stop-shopping from the new hybrid. It’s your job to help communicate this feeling across your stakeholder groups.
  • Employees see opportunities: And if you can also pull off a merger where employees in both companies see the transformation as good for their own careers, you’ve developed a winning communications strategy. Often employees of the smaller firm may feel anxious about being acquired. But if you can honestly demonstrate opportunities for career mobility, earnings potential, and other benefits of working for a larger company, it will go a long way toward easing transition tensions.

The above is only a sampling of the insights and best communications practices gained from Dan and Katy’s conversation. You can watch and listen to the 30-minute interview in its entirety, here. 

As everyone keeps saying, this crisis is unprecedented. Still, there is something to be said for working with a team that faces down chaos and keeps walking through the fire. We are here to help you figure out your next step and keep you moving forward. If you want to talk, we’re ready to strategize about your best next steps. 

Photo credit: https://www.123rf.com/profile_deagreez

timing corporate communications

How to Think About Timing Big Announcements in the Age of Uncertainty (3 Questions You MUST Ask!)

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I first shared my thoughts about timing corporate communications back in December of 2016. The world looked very different then. We were still in the midst of the longest economic bull run in history. We were still shaking hands, going into the office, and not thinking twice about getting on a plane.

Yes, the corporate world looks very different today as we navigate the choppy waters of COVID-19. But best practices for when and how to make big announcements remain largely the same.

While it’s important to get the messaging right, when and how you say it matters as much—if not more than—what you say. So, let’s consider the big questions to ask before you drop a big announcement. 

1. Is your announcement subject to regulatory restrictions?

Markets may be a bit topsy-turvy at the moment, but you can assume that the existing federal regulatory rules of your industry still apply. There are rules regarding what you can communicate, to whom, when, and how. So make sure you brush up on the SEC disclosure requirements and the law relevant to your industry concerning timing corporate communications.

Also, make sure you stay up-to-date on the latest developments affecting your industry and any SEC statements about how they’re responding to the pandemic. This is especially crucial for firms subject to rules governed by The Division of Trading and Markets. 

Example: Material Announcements

Speaking of regulatory restrictions, Regulation Fair Disclosure (Reg FD) requires all publicly traded companies to release material information to all investors at the same time. Ideally, leadership would communicate the changes during a scheduled conference call with investors or a town hall meeting. Staying in touch with investors is critical.

In addition, to stay clear of Reg FD violations, remind directors, officers, and other corporate insiders that they should refrain from trading in the company’s securities until any risks that would be material to investors have been disclosed. The unknowns of COVID-19 put us in a fluid situation, so it’s even more important to stay vigilant here.

However, as always, if word of a material event or material information is inadvertently leaked to some investors or analysts (i.e., an “unintentional selective disclosure”), as soon as a senior company official learns of the disclosure, she is required to disclose the information publicly. Companies must make the announcement either (a) within 24 hours or (b) by the start of the next day’s trading on the New York Stock Exchange.

2. What are your competitors doing?

I know that you’re juggling a gazillion balls. But one of those balls has to be keeping an eye on the competition. I’m not asking you to be obsessed with your competitors—that’s not likely to be helpful either. Still, how much of a splash your announcement makes, whether positive or negative, at least partially depends on the behavior of your competition. So do pay attention.

If you have good news to share, you want to time the announcement carefully to capture as many likes, comments, and eyeballs as you can. With bad news, you want to be as transparent and complete as possible in your initial communications to avoid continually referencing the issue and detracting from your broader corporate strategy. 

Example: Product or Service Launch

Let’s say you have pivoted and are ready to roll out a new offering that will address an emerging need in your market. Sure, you are excited about the product or service. But if you rush to make the announcement without a solid strategy, you risk being overshadowed.

For example, suppose you suspect your competition might be working on a similar offering. Should you rush to beat them to market? While you might manage to steal their thunder by announcing early, you also need to think through the consequences of such a play. Could you lose credibility by putting out a product or service that hasn’t been thoroughly tested? Do you have a plan for dealing with a shouting match should your competitor start one?

While there’s no crystal ball to predict what opportunities are on the horizon, waiting a bit to make that big announcement can pay off. This is doubly true if your industry is experiencing extra volatility during this time.

In addition, if waiting to announce gives you time to gather crucial information about what your customer needs, this will ultimately result in a more successful launch. The benefits to rushing corporate communications here are few, while the costs can absolutely be a reputation killer.

3. Does your corporate communications policy respect your staff?

Communicating in a way that expresses empathy toward employees is key. Again, this isn’t just about the language of your messaging. It’s about timing corporate communications too. Some announcements affect your internal staff more than shareholders or the general public. Your employees and staff don’t deserve to hear bad news from external sources or through the rumor mill.

Example: Corporate Restructuring

When making an announcement like a corporate restructuring, it’s important not to take your staff for granted. Relationships internal to your company are as important, or even more important, than external partnerships if you want to come out of this reorganization with your corporate culture intact. If you focus on the interests of one group to the detriment of others being affected, you risk looking callous and insensitive.

So, follow this general rule: put as much thought into announcing corporate restructuring as you would into announcing a corporate acquisition. If layoffs are part of the strategy, be as transparent as you can about how you came to decisions about whom to let go and what this means for the company as well as individuals.

As with any external message, be mindful of how your internal announcement will affect your audience. Don’t let emotions get in the way. If you are the head of a division, the corporate restructuring might be bad news for you as well. But when you make the announcement to your team, be considerate of their feelings in hearing the news for the first time.

Having the right overall strategy for timing corporate communications takes a blend of planning, finding the right words, and practicing authentic human engagement. At Audacia Strategies, we have helped companies like yours find the right timing strategy for big announcements. Schedule a consultation to discuss your specific needs.

Photo credit: Canva Stock Images

business communications

The 7 Deadly Sins of Business Communications: How to Stay Out of the Marketing Rat Race

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For brands—as with celebrities, politicians, and CEOs—scandals and PR nightmares, like the Airbnb scam that recently came to light, are nearly impossible to hide from today’s connected consumers. As a result, the best approach to business communications is operating with transparency and trust.

This poses a challenge for marketers: how to navigate the trends, meet customers where they are, and ensure the messages being communicated are genuine and in alignment with their brand’s core values. The challenge is all the more difficult when we consider marketing as an all-out arms race where brands compete to showcase their products and services. 

Yes, it’s easy to get caught up in the rat race (with apologies for the mixed metaphor). So, let’s talk about how to stay out of it. The rewards will be waiting for you. When firms make an effort to avoid the seven deadly sins of business communications below, they often find customers do the marketing for them.

1. Pride – Lack of consideration for or understanding of your audience

We all know people who make everything all about themselves. When pride reveals itself in an individual, we distance ourselves from the individual. When pride reveals itself in a business, we tune out completely. 

To avoid the sin of pride in business communications, show your audience that you are listening. Do your research. This is Communications 101. But I get it. When you’re under pressure to respond to a crisis or you need to get your marketing campaign up and running yesterday, it’s tempting to believe that you know best. 

PRO TIP: Remember, the failure to hear your audience could easily spell failure for your firm.

2. Envy – Trying to ‘copy and paste’ another organization’s communications strategy or message because, hey, it worked for them

Whenever we’re developing a communications strategy, it’s natural to draw inspiration from other organizations. But remember that your organization, your stakeholders, and your situation are unique. If you simply borrow from what you see competitors doing, you risk missing out on the authentic connection.

And with all the data available to anyone with a website and a little ingenuity, there’s really no excuse for firms not to attempt some form of targeting and personalization. Of course, you’ll want to use caution here. Personalization can go too far. Make sure you don’t cross the line trading authenticity for ultra-creepy.

PRO TIP: Instead of ‘copy and paste’, try ‘customization and personalization’. 

3. Gluttony – Sometimes too much is just…too much

Strong business communications are direct and to the point. When executives, whether speaking to the internal team or speaking to the public, use extra words, include too many buzzwords, or belabor a point, they take the focus away from the core message. 

PRO TIP: Trim the fat by offering communications coaching or training for those in core leadership positions.

4. Sloth – There are few shortcuts in life (despite the astounding number of promised life “hacks” all over social media)

It’s hard work to step into the shoes of your audience (customers, employees, investors, etc.), to think about what matters to them, and to honestly consider how your message will resonate. But there’s really no getting around doing the hard stuff. 

Also, just because you put a lot of time and effort into building out customer personas, doesn’t mean your ideal customer will stay the same for decades. You need to constantly re-evaluate your message and tweak it for each audience, circumstance, or business goal.

PRO TIP: Good communicators make business communications look easy. But there’s nothing easy about effectively communicating with a variety of audiences.

5. Lust – It’s easy to fall in love with the buzzword of the week, the fancy communications tools, or new social media channels

It’s easy to become enchanted with shiny new things because we’re always looking for ways to take our companies to the next level. Indeed, I’ve referred to some business communications buzzwords (e.g., authenticity, customization, personalization) in this very article. And they can all be useful in some form or fashion, but without the scaffolding of a bigger strategy, they are simply distractions or crutches.

The next time you feel yourself lusting after the latest and greatest, pause and ask yourself: what’s in it for my audience? And, will it help me better engage with my audience? If the answers are ‘nothing’ and ‘no’, you may be leaning on lust to keep from doing the hard work of communicating (see above: Sloth).

PRO TIP: Forget about lust. Fall in love with buzzwords, fancy communications tools, and new social media channels only if you can clearly see how they help you better engage with your audience.

6. Anger – We’ve got a lot of conflict in our communication channels these days

While there is something to be said for playing to the emotions of our audiences to invoke feelings of urgency, anger is not always the most effective way to motivate action or provoke conversation. Generally, anger is more of a monologue than a dialogue and when every communication is perceived as angry, it all sounds the same. Conversation, engagement, and attention work better for long term progress.

Non-profit organizations may especially want to take note here. You can establish a sense of urgency, while opening the door to a path where you can move forward together. It’s important to display your passion for issues and causes you care about, but passion without direction results in lost opportunities. 

PRO TIP: Beware of anger, the sugar high of business communications. It might give you a quick hit, but it will evaporate quickly.

7. Greed – It’s okay to make an ask! But ask yourself who will benefit

It’s perfectly okay and even encouraged for every communication to include a call to action—heck, we all need a good call to action, particularly in business. But when the ask is aligned to the benefit of a few (or perceived to be for the benefit of a few) the conversation falls flat.

Additionally, remember that not every CTA needs to be “buy my stuff.” When you think about generating leads, try thinking in terms of how you can help your customers, rather than how you can get more people to click on your link.

All the SEO and marketing tricks you can buy won’t replace the success that comes from following these three steps:

  • Do what you say you’re going to do
  • When you say you’re going to do it
  • Exactly how you said you would do it

PRO TIP: Business is the ultimate team sport. If the ask doesn’t also provide a “win” or a meaningful trade (of knowledge, services, etc.), then it’s hard to elicit champions for your cause.

As your company grows and you become more successful, business communications will become more complicated. Don’t let success cloud your vision of what’s truly important in your business: your customers and your employees.

If you notice any of these seven deadly sins creeping around your business practices, it might be time for a change. Audacia Strategies is ready to step in. We won’t give you absolution or assign you penance for your sins, but we can put your business communications back on the path to transparency and trust. Let’s Talk!

Photo credit: https://www.canva.com/robertkneschke/

crisis management strategy

Your Crisis Management Strategy When You Need to Walk Through the Fire…and Keep Walking

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Your company can’t seem to make money, your executives are constantly in the news for the wrong reasons, and your plane still isn’t flying. Yeah. It’s been a rough few weeks/months/years. 

Recently, I talked about what to do at the onset of a crisis, but what happens if you can’t immediately get a handle on the crisis? What is your crisis management strategy for living through the day-to-day of a crisis that seems to go on forever? The initial response with employees and customers requires getting to the ground truth quickly and relaying as many of the facts as you can, while taking action. 

Some of these same elements continue to be relevant in dealing with the fallout of a long term crisis. But what’s crucial for an effective crisis management strategy is being perceived as a company that is moving forward and not one hoping that maybe after enough time passes, everyone will forgive or at least FORGET. When facing damage from a crisis that just will not die, you need a plan for resolution and rebuilding.

Putting Out the Fire vs. Leading Through the Fire

One of the most challenging tests of a great leader is how they deal with a crisis. To pass this test, it takes two skills: knowing how to put out fires and knowing how to lead through fire. 

Every executive has to deal with surprises and being in business likely means you’ll have to put out some fires eventually. Especially as your company expands, those fires will seem bigger, or at least the potential for fires gets bigger. When it comes to putting out the fire of a PR crisis, the name of the game is regaining control. 

For example, you may remember that back in 2016, after the shooting in San Bernardino, the FBI demanded that Apple build a “backdoor” giving the authorities the ability to circumvent Apple’s data encryption and unlock any iPhone. In response, Apple’s CEO, Tim Cook, effectively took control of the story writing this letter: ”A Message to Our Customers.” Tim Cook knows how to put out fires.

However, there are times when you cannot expect to turn things around so quickly or the fires you thought you put out actually continue to smolder. In these cases, leaders must develop a crisis management strategy for continuing to lead even through the crisis. 

Here are some tips for moving forward through the fire: 

1. Continue to focus on transparency and the truth.

While it can be tempting to say whatever you believe will finally put an end to this crisis, resist the urge to “whitewash” the truth. Keep in mind that following your gut and making quick, impulsive decisions is not a valid crisis management strategy and won’t likely get you through this crisis any faster. Impulsive decisions often result in a further loss of power.

Instead, you’ve got to slow down. It will be uncomfortable to tell the truth and only the truth. The media, your employees, your stakeholders, and your customers will likely push for more information. This is difficult to deal with, especially day in and day out. But if you haven’t worked out all the details, do not speculate. Remember that you are engaged in a game of chess here—not rock, paper, scissors. 

2. Work with your team to identify how the firm is preparing to resolve the crisis and (hopefully) prevent another in the future. 

One way to relieve the discomfort of having to stick to the facts, when you don’t have many facts to offer, is to take action so that you have more to talk about. Of course, I’m not suggesting you take any random action that comes to mind. Again, impulsive decisions are almost never the right move.

Instead, work closely with your team to come up with new policies and processes that help your company is ready to move forward. If new training would prevent a similar problem in the future, take steps to implement new training programs as part of your crisis management strategy, for instance. Also, consider what would improve both internal and external communications in the future.

For example, Stanford University recently changed their leave of absence policy for students facing a mental health crisis in the wake of a class action lawsuit alleging discrimination. In her message to students, Vice Provost for Student Affairs, Susie Brubaker-Cole, said, “my colleagues and I have learned from our conversations with you, and our campus community is stronger because of your advocacy.” She went on to say, “together, we are making significant progress, and this new policy is a critical component.”

3. Do NOT stop communicating, either internally or externally. 

No matter what crisis management strategy you ultimately choose, remember to continue communicating as much as possible. Hiding away and hoping you can weather the storm without facing questions from your employees or the public will only cause more problems. 

Instead, keep your leadership visible and ready to answer questions. Have top leaders communicate internally through regular town hall meetings, Zoom meetings, pre-recorded videos, manager talking points, or even just walking through the cafeteria. 

By the way, communicating does not mean you have to take every accusation “on the chin,” but certainly continue to address the issue(s) with employees via your identified channels. Also, be sure to proactively offer appropriate updates to customers, regulators, investors, etc.

Communicate, both internally and externally:

  • What’s the latest 
  • What has changed 
  • What remains the same

Remind your leadership team not to say anything to employees that they wouldn’t say outside the company. This can be controversial, but it’s a reality. Memos leak. Video and audio can be shared. Be transparent and be prepared for what that means inside and outside the company.

4. Focus on sharing your strategy—value proposition. 

This final point is perhaps the most important aspect of any crisis management strategy: go back to the heart and soul of your company wherever possible. It’s a good idea to look at this crisis from a 360-degree angle. Remind your customers why you do what you do and emphasize that you are looking at this issue as only a blip on the radar. 

The point is not to dazzle or distract from the crisis, but to provide context about what your firm does, why, and how you remain committed to that strategy/mission. Ideally, any new processes, policies, actions are in support of continuing to advance the vision of your organization. With surgical precision, you are removing an imperfection and you will be stronger following this recovery. 

Keep this message close at hand, no matter how bleak things look. And always know that every crisis comes to an end eventually. I know that cliches sound so empty when you’re standing in the middle of the chaos and I know you’ve heard them all, but maybe you can take comfort in the words of one great American entrepreneur, Henry Ford, “Failure is only the opportunity to begin again, this time more intelligently.” 

If you’re standing in the middle of a crisis right now, don’t go it alone. Find your tribe. Gather your advocates. And build your crisis management team. Fear might leave you feeling paralyzed at the moment, but you can trust the experts at Audacia Strategies. We’ll help you find the right crisis management strategy. Chaos is our brand, so you can bet we know how to walk through the fire. Contact us and let’s get to work!

photo by Authentic Images

crisis response strategy

The 5 G’s for Walking Through Fire Without Getting Burned–Your Internal Crisis Response Strategy

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We’ve all had those days. You know, the days where you are forced to pull your IPO and your CEO gets fired, or Congress launches an official investigation into your safety procedures, or your company is the target of whistleblower claims. 

No? You’ve never experienced a business crisis like this? Then, you’re one of the lucky ones. But keep reading because even if it’s not to the scale of the situations above, you may someday find yourself in a sticky business credibility situation. 

We’ve talked before about preparing a crisis response strategy from a PR perspective. Now I’d like to take a look at what to do inside a business. How do you handle your response with employees and customers?

How to Respond to a Business Crisis

When a challenge to your firm’s reputation arises, it’s important that you meet the challenge with a crisis response strategy not only for rebuilding your brand’s outward facing reputation, but also for addressing the crisis internally. You can’t expect your team or customers to read between the lines of your external messaging. Plus, you owe it to them to communicate beyond the “party line.”

As always, I recommend creating your crisis response strategy well before you find yourself walking into the chaos of a crisis. Consider the following 5 G’s as you build your framework:

1. Get to ground truth.

When a crisis happens, it’s important to keep two things in mind: you need to respond promptly and you need to respond truthfully. Surviving the crisis is all about how you balance these two factors. There can be a tendency to sacrifice truth for the sake of speed and vice versa. Ideally, you will avoid both pitfalls.

DO NOT SPECULATE. Your internal crisis response strategy should be informed by what you know, but you cannot wait to respond until you have absolutely all of the facts in front of you. So what can you do? Be transparent about what you know, where you are in the process and what you are doing. It’s important to acknowledge the credibility challenges (all of them), allow any legal processes to proceed, and identify and explain the steps you are taking.

2. Gather your team.

Even if you are the only person in your particular department, you will need a team. Whether you’re in finance, legal, communications, HR—as the saying goes, “look for the helpers.” Remember, it takes time to gather your team. So plan ahead and notify the relevant parties that you may call on them and what roles they will play in the crisis response strategy.

Once you’ve gathered your team, listen to them. It can be tempting to be reactive, but try to get a well rounded perspective before making any big decisions. Otherwise, you run the risk of overpromising in the hopes that you can make the whole thing go away. 

Instead, get a baseline. Get perspective. And give context.

  • Did your numbers tank this quarter? Focus on the data, not drama. Look at firm-wide numbers, the market, and get a line on how competitors are faring. You need a clear baseline before you can respond realistically.
  • Is there a government investigation? Get to ground truth (see above). Work closely with your legal department, but also encourage as much transparency as possible. The appearance of concealing or stonewalling is not a good look either inside or outside the firm.
  • Is someone accused of misconduct? Again, get to ground truth (see above). Also, consider re-emphasizing policies, values, and company culture within the firm (assuming they are not the cause of the misconduct).

3. Give employees the support they need.

Employees are most likely to end up on the frontlines during a crisis. They will be communicating with customers, other employees, regulators, etc. Do not leave them “swinging in the wind” as they try to clean up the mess they didn’t create.

Arm them with the facts and engage them in an ongoing and transparent conversation about what the firm is doing to repair or recover its reputation. Use the channels appropriate for your organization—email, text, newsletter, video, Slack, person-to-person meetings, etc. 

Meet employees where they are—during a crisis they should not have to search for answers. Part of your crisis response strategy should include resources for employees on the frontlines. Communicate with employees early and often.

  • Whenever possible keep the touch personal. For example, answer questions during a town hall, Zoom meeting, or video conference.
  • Create manager talking points ahead of time and distribute them as soon as you’re ready after a crisis hits.
  • Don’t say anything to employees that you wouldn’t say outside the company. This can be controversial, but it’s reality. Memos leak. Video and audio recordings can be shared. Screenshots can end up in the wrong hands. Be transparent and be prepared for what that means inside and outside the company.

4. Go on the offensive with customers. 

If the crisis impacts customers directly or has been/will be in the press, go on the offensive and own the issue. Rather than trying to totally control the crisis, though, let your mindset be one of getting your version of the facts out first. Again, make sure you explain to employees what your crisis response strategy looks like with regard to customers. 

Keep in mind, this doesn’t mean sugarcoating anything. Be transparent about next steps and honest about the potential impact (if any) on clients. Also, be sure that your customer communications are consistent with employee communications. As you consider these messages, your tone may differ, but the overall message should be consistent. The same goes for investors.

5. Grant trust. 

Follow the above 4 G’s and this last G should come naturally. When you create your crisis response strategy ahead of time, you’ll have the luxury of being able to fallback on your process. In the midst of a crisis situation, when it feels like everything is burning all around you, don’t underestimate the power of being able to trust in your people to execute on your process. 

How can you be so confident? Well, the confidence comes from having a strategy, knowing your audience, and believing in the human response to truth-telling. There’s a lot to be said for a company that owns up to mistakes and expertly pivots when crises arise. 

Whether you’re facing a small-scale crisis or a crisis of epic proportions like those recently faced by WeWork, Boeing, or GE, it’s helpful to remember other leaders have walked through the fire of chaos themselves. As Abraham Lincoln—no stranger to facing a crisis—once said, “I am a firm believer in the people. If given the truth, they can be depended upon to meet any national crisis. The great point is to bring them the real facts.”

At Audacia Strategies, we’re no strangers to facing a crisis either. We’ve walked with our clients through the fire using the 5 G’s and we can help your firm develop the crisis response strategy that works for you as well. Schedule a consultation so we can talk about your needs.

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failure communications

How To Do Failure Communications Right—3 Communications Lessons Learned About What To Do When We Fall

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We naturally spend a lot of time thinking about what a successful communications strategy looks like. This a good thing. Communicating your company’s message and values is crucial for standing out amongst your closest competitors. But have you also thought about a failure communications strategy?

<INSERT> Awkward silence.

failureRight. Let’s get uncomfortable today. Let’s talk failure. If you’re rolling your eyes now because you think you know what’s coming, keep reading. This isn’t going to be the “Failure is an amazing teacher!” pablum that we’ve all grown so tired of hearing. No. This is real talk about what to do when the sh*t hits the fan, when we disappoint ourselves and others, or when we just fall flat on our faces.

Rothy’s and How to Do Failure Communications Right

I recently received an email from shoe startup, Rothy’s, that stopped me in my tracks (Yes, Rothy’s is a favorite brand of mine. But don’t worry, this is not an endorsement or a sales pitch. It’s just an example of an excellent communications strategy). 

For months, Rothy’s had been teasing its latest shoe, a summertime slide with a vegan leather sole. The day before the shoe was supposed to launch, Rothy’s told its customers that the shoe’s launch was off. Apparently, scaling from prototype to production resulted in quality issues that couldn’t be fixed in time for the summer season.

The email they sent wasn’t a sale announcement or a giveaway begging customers not to leave. The subject line was: “Ouch.” The first line included the words “truthful and transparent.” It was an apology. But not the kind of lackluster corporate apology you might expect from a CEO who is clearly following instructions provided by legal. It was the kind of apology that left me feeling a greater respect for Rothy’s and its leadership.

What Rothy’s apology got right:

  • They took responsibility both for the mistake and for the decision to cancel the launch of a new product
  • They explained why they made the decision to cancel the launch
  • The reason they gave was all about looking out for the customer
  • They referred to their company values (i.e., “we pride ourselves on making the right decision—even when it’s really hard”) and their quality standards (i.e., “we will only launch product when every piece is perfect”)
  • They acknowledged how disappointing this decision is, but reiterated their confidence in making this difficult decision

They sent this email the day before the launch. 

Think about that—consider the time and money invested in design, marketing, production. Consider the sales expectations already baked into the firm’s annual plans. Think about the discussions that were likely happening behind the scenes to make the decision to pull the launch just hours before it was scheduled. Yet, they went through with the apology because leadership believed it was right.

3 Lessons Learned From Rothy’s Apology

If you stay in business long enough, failure is inevitable. Every seasoned business leader has “war stories.” Failure hurts. It hurts to consider the financial impact. It hurts to consider the customer impact and the blow to your brand (or personal) credibility. And, let’s be honest. It’s an ego blow. 

What sets apart those who master the art of turning lemons into lemonade from those who just leave customers with a sour taste? Let’s look at 3 lessons we can learn from Rothy’s literal failure to launch.

1. Failure can humanize your brand.

Failure sucks—there’s no getting around that—and doing the right thing can be incredibly painful. But as you work through the failure, acknowledging the pain humanizes your brand and aligns your goals with your customers’ expectations. 

When you fail, make it right if you can. But when you can’t, acknowledge the human aspects of disappointment and talk openly about how you will do better going forward. Trust your customers enough to put it all out there.

2. Transparency works.

Whether you’re communicating with customers, investors, or media, prioritize simple honesty. We don’t have to martyr ourselves or get too far into the weeds of how and why we failed. But we should be honest about the situation and what we’re doing about it. At the end of the day, this is all anyone can expect after a crisis. You can’t turn back time as much as you might wish you could.

3. Live your values. 

Failure is the greatest test of your values as a company. This really is where the “rubber meets the road.” After Facebook admitted to selling our data, one of the biggest criticisms was really a question about the company’s values. The “apology” ad reminding us of how much we all love Facebook felt like a sham after everything that came out. 

Communicating about failure, when done right, gives us a chance to remind others about our values, why they are important, and how they provide a better experience. That’s what I liked the most about Rothy’s communication. They acknowledged the failure right up front and they explained their highly personal calculus behind pulling the launch: that the poor quality shoe would be a bigger hit to their brand credibility than not launching the shoe at all. 

It was a fantastic example of transparency, honesty about business decisions, and a real example of living your corporate values. I’m sure that behind the scenes at Rothy’s HQ there are some heavy discussions taking place to understand why they failed on this product launch. But, they lived to fight another day and made their customers feel prioritized. 

Rothy’s launch fail is an excellent example of making lemonade out of lemons. You can perfect your brand’s lemonade recipe with these other blog articles:

And you can always work with a pro like Audacia Strategies to establish your failure communications or crisis communications strategy. We can also help create a strategy for successful communications, of course! Contact us today to talk about your unique needs.

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working with a communications specialist

Audacia’s Guide to Working With a Communications Specialist—Fabulous Business Transformations Begins With Smart Preparation

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You have a glimmer of a change in your mind…a transformation. Perhaps you’re considering an acquisition, a new product launch, a fundraising round, or implementing a new, game-changing internal system. You’re excited, but you’re also practical. You know big, bold moves that lead to transformation require time, energy, and money.

What can you do today to set yourself up for success down the road? You need the A-team onboard to make this work and that means you need some external expertise—lawyers, financial specialists, technology specialists, and yes, even (or dare I say, especially) communications specialists.

Business TransformationsAnd if you’re extra ready to be wildly successful, you will want to be as prepared as the professionals you’ve gathered. So, here’s everything you need to know when working with a communications specialist.

Where to begin and how to set yourself up for success?

1. Find the right consultant early in your process.

Often, finding the right external talent takes time and effort up front. But keep in mind that you don’t need to save this task until crunch time. Just as you prospect for clients, you should always be prospecting for external talent. This way, when you’re ready to make that big move, you won’t lose momentum searching for the right consultant.

Have a conversation before you think it’s time. Most consultants are more than willing to sign a non-disclosure agreement (NDA) to ensure that you can have a candid conversation about your goals and expectations without the risk of giving away anything precious (And if consultants aren’t willing to sign an NDA, you should run).

In addition, starting the conversation and integrating the team early in your planning process allows you the benefit of their expertise as you build your strategy.  Working with a communications specialist early on can help you shape your plan to be even more likely to deliver the ROI that we all seek.

2. Ask for recommendations.

Prospecting for consultants can extend to prospecting for other business partners and strategists. Who has your consultant worked with before and are they willing to speak with you? I LOVE connecting my clients. Success stories sound best coming directly from happy clients and word-of-mouth is a great way to find those hidden gems who can really propel your business forward. Plus, you never know when clients might find some business opportunity together in their conversations. So, spread the love!

3. Consider company culture.

It’s also smart to consider company culture—yours and theirs. Diversity of thought and experience is critical, but if your organizational culture and theirs are 180-degrees different, chances are that you will have a hard time communicating effectively and that will make your interactions less efficient. Look for any clues about how working with a communications specialist could support or clash with your company culture and strategize accordingly.

4. Be ready for an in-depth conversation.

A good consultant asks lots of questions and really listens to your answers so that they can provide their best counsel. As advisors, our role is to hear you and help to accomplish your Big Idea. And, a good advisor will ask a lot of follow-on questions to get to the heart of a challenge.

For working with a communications specialist to be worth your while, it’s important that you can answer your expert’s questions to the best of your ability. So, you absolutely will want to treat every conversation like you’re entering the Shark Tank. Okay, it probably won’t be that bad, but be ready to have your assumptions challenged.

Remember, you can ask questions too. Do they have examples of their work available? A blog? Do they post on LinkedIn to share their knowledge? These are good places to start getting to know your consultant.

Also, don’t be surprised if that first conversation or two results in your consultant saying, “I don’t think that our firm is right for you at this time but you should really speak with ABC Consulting because they’ll knock this out of the park. I’m happy to make an introduction.” Don’t take it personally. This is how professionals do business.

5. Be ready to talk $$$.

Yes, I’m going there. Have a budget in mind. Be ready to discuss that budget. Budget guessing games waste everyone’s time. Communicate your budget requirements and expectations upfront. With budget guidance, a consultancy will offer you a plan that will get you to your desired outcome in the most efficient way, while staying within the budget you have. It will also save you from wasting time talking to the wrong consultants.

By the way, this means more than finding the cheapest vendor. An inexperienced consultancy who is cheaper, but takes a longer time to reach your goal and requires more time to get up to speed on your company or market, may be more costly in the end. It might make better sense to hire an experienced consultant who can reach your goal more quickly, but with higher bill rates.

6. But don’t fall into the trap of thinking only about money.

On a personal note, I find that some clients spend a lot of time thinking about the finances of a transformative event, but very little time thinking about how they’re going to communicate this event to customers, shareholders, employees, etc.

It’s easy to get swept up in the new idea and believe that everyone will think it’s a great idea too. But the reality is that change is change. Not everyone is going to be onboard. So, the sooner you start to think about how to communicate this Big Idea beyond the conference room walls, the better.

7. Focus on the outcome, not the time needed to deliver it.

No, this isn’t consultant-speak for “let me charge you more.” This is straight-talk. I want you to be successful as much as you want to be successful and I really don’t want you to feel like every minute you spend talking to me will cost you money. By focusing on the business outcome, rather than on the hours, you’re holding the consulting firm accountable for the results within the timeline and the budget that you have.

8. Set realistic expectations for working together.

Working with a consulting firm is not a one-way street. Do not expect that your consultant will hit the ground running on Day One and come back to you when the project is over. The best way to get as much as possible from your advisors is through collaboration where both parties are taking an active role.

You will want to think of your consultant team as an extension of your team. Invite your consultant to be present on-site, get into the weeds with you, and get integrated within your team. That’s the only way they can get a deep understanding of the challenges you’re facing and, ultimately, identify the best solution. Without making such allowances, working with a communications specialist will be frustrating for everyone involved.

If 2019 holds a glimmer of change for your firm, make sure your team is set up for wild success. We’ve consulted on transformations from product launches to CEO transitions and everything in between. Would you like to know how working with a communications specialist could propel your work forward in New Year? Schedule a discovery session and let’s discuss!

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successful M&A deal

Let’s Make a…Successful M&A Deal! 5 Keys to Landing A Deal You’re Proud Of

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Deciding to embark on a merger or acquisition (M&A) is one of the biggest transformations during the lifecycle of any business. Thinking in terms of resources alone, your money, time, and credibility are all on the line here. To land a successful M&A deal, you’ve got to be on top of your game.

If you focus too hard on all that’s at stake, though, you may not be in a position to make the best deal. In other words, don’t miss the forest for the trees—go in with your eyes wide open. Although it can be nerve-wracking to jump into an M&A deal, keeping the below 5 key points in mind should help you get through the process with your nerves firmly intact.

But first…let’s consider what not to do

Pushing through a successful M&A deal like acquiring a competitor or joining forces with a powerful peer is invigorating. But what’s invigorating on the day you sign on the dotted line can quickly deteriorate into something akin to buyers’ remorse if you haven’t thought things through.

Here are just a handful of the mistakes we’ve seen get in the way of a successful M&A deal:

  • Companies WAY overpaying for what they’re buying
  • Leaders forgetting that cultural fit between companies matters just as much (if not more) than securing cutting edge technology or getting a contract
  • Too little too late: companies being slow to consider market shifts and jumping in too late to address their gaps with M&A
  • Not considering the bigger corporate story—big, expensive “surprises” that don’t obviously fit are a tough sell and put you on the defensive with investors, customers, etc.
  • Failing to communicate with all shareholders. Remember, those little shops can band together to become an activist consortium

To avoid adding to this list, consider engaging a team who can lead you through any necessary course corrections. At Audacia Strategies, our core competencies revolve around helping clients consider their bigger corporate story and communicating with shareholders when making big, bold moves like this. You can also make sure everyone checks her ego a the door, by considering the following:

5 Keys to a Successful M&A Deal

1. Deal Fever Is Real.

You and your team have spent late nights, long weekends, blood, sweat, and tears pursuing this deal. You have done all that great valuation work to come up with a fair acquisition price. And now, you’re at the negotiating table (you can almost hear “Eye of the Tiger” playing in the background). And, you’re bidding against other firms… and the price is going up, and up, and up. It’s very easy to get caught up thinking, “I’ll show them. We’re going to win this thing at all costs.” It happens All.The.Time.

Successful M&A DealThe reality is while it’s good practice to come to the negotiating table with a valuation range that you’re willing to pay, it doesn’t pay to start warping your analysis just to “win.” This is how companies end up with massive write-downs a few years after a deal when they can’t achieve the value they needed to make the price they overpaid work.

It may be obvious, but even large companies are susceptible to deal fever. Want an example? See also:

Why does this happen and how can you control for it? Well, the short story is: all business deals are closed by human beings and the decisions human beings make are often influenced by emotional and psychological factors. Executives on both the buy side and the sell side can get caught up in their perception of the company and the management, for example. So, if you feel tensions running high and fear that you or your team are losing touch with your real goals, don’t be afraid to step back from the negotiating table to catch your breath or even walk away from the deal entirely.

Ask yourself:

  • What are the stories we’re telling ourselves?
  • How can we challenge these stories to get to the real story?

And remember Dan Doran’s advice: “Value is analyzed. Price is negotiated.” It’s crucial that you build your own valuation model, one that you’re completely comfortable with and can explain to stakeholders if (or when) challenges arise. One of the worst things you can do is rely on a target’s (very pretty, but very likely) biased projections. Do your own research. Do the work.

2. Due Diligence Is A Lot Like Going To The Dentist.

It is not glamorous, but it is necessary. Due diligence can be the difference between a successful M&A deal and one that feels like getting a root canal. To make this work for you, go beyond the financials (after making sure they work and are coherent, of course!) to really understand the logic behind the deal on every level. You need to consider carefully the reality of your team’s ability to create (or “unlock”) value in bringing two (or more) firms together.

3. Customers Matter.

Once you have your head wrapped around the business valuation and the inner workings of this new mash-up of a business being born, you’ve got to think about relationships external to the organization. Get into the weeds about how strong the current customer relationships are and how they affect the bottom line.

Ask these questions:

  • How much of current revenue depends on repeat customers vs acquiring new customers?
  • What is the cost of acquiring a new customer?
  • How strong is the current business pipeline?

4. Get Real About Your Competition.

You definitely want to take a look at where your target stands when it comes to market share, revenues, and profit, but also dig more deeply. Keep in mind, you are proposing a potential shake-up of the market here. Even if they’re tough to predict, consider all the ways in which this bombshell of a deal is going to have significant ripple effects outward.

Ask these questions:

  • Where in the value chain is your target excelling? Failing?
  • What changes can you realistically make to capitalize on strengths or cut the dead weight?
  • How do they stack up against their peers?
  • How do you expect competitors to react to a combined firm?
  • Will you have the wherewithal to combat a price war for example?

5. The Problem With “Synergies.”

I can’t really remember if Professor Mariann Jelinek shared this pearl of wisdom with us on the first day of my strategy class at The College of William and Mary, but she definitely shared it early and often: “When someone says ‘synergy,’ hold onto your wallet.” Throughout my MBA program and even to this day, I think no truer words have ever been spoken.

As a buzzword, synergy is overused and honestly, a red flag in most cases. Like pretty wallpaper covering an ugly stain, “these teams have a lot of synergy” is a pretty-sounding way of saying very little. As easy as it is for deal participants to get caught up in the possibilities and truly, badly, deeply underestimate the time it will take to achieve whatever they’re dreaming of, it’s equally as easy to overestimate the value of both cost and revenue synergies.

In the rush to eliminate redundancies and expand market share, a lot of details can get overlooked about what the new procedure will look like. Slow down and think things through at each stage.

Ask yourself:

  • How are we going to make more money by putting two firms together?
  • Do we have a crackerjack post-acquisition integration team ready to put our plan into action?
  • Do we have a good sense of what might go wrong in this integration? What’s our worst-case scenario?

Yes, there is a lot at stake when you’re spearheading what could easily be the biggest deal in your company’s history. But you can handle it. You’ve done the work and now you’ve got these 5 keys in your pocket. So you’re ready to seal that successful M&A deal.

Have questions? Want to talk through your deal with an experienced team? Audacia Strategies is here for you. We’ve helped businesses successfully navigate M&A deals and other big transformations. And we’re fun to work with! Contact us at info@audaciastrategies.com or give us a call at 202-521-7917 to schedule a consultation.

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damaged goods

Damaged Goods: The Top Gun Problem and Crisis Communications

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If you’ve been following our blog series on damaged goods and crisis communications, you have considered how to handle a firm or your company during a crisis. Hopefully, the probing questions and recommendations have convinced you that you need a crisis communications plan both for assessing the damage and for controlling the damage.

And just for good measure, in this post, we discuss one type of damage that can arise from poorly managing a crisis—damaged credibility as a result of over-promising. Let’s look at some examples of damaged goods and consider how to avoid over-promising during a crisis.

Damage Caused by Over-promising

As a successful professional, you’ve heard about under-promising and over-delivering. While we understand this principle intellectually, during the chaos of a crisis, our fight or flight defense mechanisms (AKA the lizard brain) can takeover and we’ll do or say almost anything to to change the narrative.

Here’s why over-promising is a really bad idea whether or not your company is in the middle of a crisis:

damaged goodsThe Top Gun Problem: Consider what IR professionals like to call the Top Gun problem: “your ego is writing checks your body (or in this case, your business) can’t cash.” I received an analyst note the other day that should be exhibit A for companies that are considering over-promising and the long-term damage to credibility that can follow.

The analyst was discussing a new spin-off transaction lead by a CEO who recently completed another major spin-off in the same industry. Here’s what the analyst wrote:

“We think [Company A’s] management team set overly ambitious, inflated, and sometimes outright untrue targets during the separation…while [Company A’s SpinCo] is doing their best with the hand they were dealt, we think [Previous CEO of Company A] is setting up [the next SpinCo] and potential investors for a similarly hard road.”

Oof. Now that hurts.

In short, a reputation for over-promising can turn your company into damaged goods for future deals. Yes, this all goes back to the credibility issue we’ve talked about before. Keep in mind too that over-promising is one indicator that skilled analysts are looking for as they report back to investors. While it may not be a deal-breaker, over-promising can certainly impact your company’s perceived valuation.

How Not to Deal with Sucky Earnings: Or consider what might happen when a financial advisor, who after conducting several weeks or months of research finds a stock he believes is primed to deliver his clients tremendous gains. While he knows there are no guarantees in the stock market, all evidence points to nothing but growth, so his optimism is high.

If he tells his clients the stock should deliver 15 to 20 points of ROI over the next few months, but knows that 10 to 12 points is more realistic, he has over-promised. Now consider what happens if a crisis occurs and the stock only delivers 5 points or even drops because of an unanticipated supply chain issue. By over-promising he sets himself up for failure.

It can be really tempting in the case of sucky earnings to double-down and over-promise (again) in order to calm investors’ concerns. But over-promising in the first place has harmed your credibility and left the impression that your firm is damaged goods, so you risk digging yourself an even deeper hole if you continue down this path. Remember that nothing happens in a vacuum.

Of course, it’s important to recognize that we rarely have control over all aspects of a crisis situation. So there are cases where CEOs walk into a challenging situation and are forced to do the best they can with what they have. This is completely understandable. However, there is a difference between wittingly and unwittingly overpromising and this is precisely where honesty is a CEO’s best friend.

How to Avoid Over-promising During a Crisis

One of the best things you can do during a crisis is figure out how to avoid over-promising. If you keep the following 5 simple tips in mind, you’ll go a long way toward keeping that lizard brain in check.

1. Triage

During a crisis, not everything can be handled at the same time. Your credibility and how your company comes out on the other side depends on making crucial decisions about prioritizing different aspects of the crisis. When the building’s on fire, it does no good to worry about last month’s financial statements.

Over-promising can occur when teams try to fix an entire crisis by, for example, blaming the victim or scapegoating. Papa John’s recently found themselves in trouble for this when, during an earnings call, they blamed their slow earnings on the NFL’s controversial player protests. Essentially, Papa John’s was promising better earnings after all this “nonsense” ended—classic case of the Top Gun problem.

Triage is one area where hiring an investor relations professional with experience specific to crisis communications can make a huge difference. In the same way that medical professionals arriving on the scene of an emergency know exactly how to sort victims for the optimal outcome, the right professional can help you figure out which problems need immediate attention.

2. Be Transparent

Credibility hinges on performance. And during a crisis, your company needs to outperform expectations just to repair credibility and get back to zero. Repairing the damaged goods reputation is all about re-setting those expectations and re-building the perceptions that have been compromised during the crisis.

The perception of performance hinges on setting appropriate expectations. So, if investors are making demands that you know to be unreasonable, push back. It’s better to be honest from the get-go than to find your company in a jam later on.

Be honest and up-front about issues that you know could arise and get in the way of fulfilling your promise. This will allow you to control the narrative and address issues on your terms.

The goal here is to get to the point that you can set or reset rational expectations for corporate performance.

3. Continue to monitor the situation closely.

Once you have put out your official statement, the work of righting the ship is just beginning. Next you have to put the implementation plan in motion making sure that whatever promises were made actually are accomplished. The absolute worst outcome after a crisis is for a new crisis to develop as a result of mishandling the original crisis.

This is why it’s so important for your crisis communications team to continue to monitor the situation and make sure the promised milestones are being accomplished. If you run into roadblocks along the way, you’ll be in a good position to transparently (see #2) address issues and constantly adjust expectations.

4. Keep Internal Communications Open

This tip is key to making sure your staff or spokespeople don’t undercut you or each other. Unwitting over-promising can happen because well-meaning team members feel pressure to respond to questions from investors or media that they aren’t really qualified to answer. They may try to pass the buck to other departments or make promises on behalf of the whole company, which they don’t have the authority to offer.

It’s critical to maintain an open dialog within your company regarding what can and can’t be done, especially during a credibility crisis. CEOs also need to be mindful of making promises that put unnecessary stress on the entire team. Having strong internal communications is the biggest part of successful crisis communications.

Concluding Thoughts

When a brand experiences a hit to its credibility, there is a strong temptation to over-promise in an effort to deflect criticism or to repair its damaged goods reputation ASAP. But overcoming the appeal of over-promising and trusting your crisis communications plan is more likely to get you the results you’re after.

Follow the above recommendations and the only question left will be what to say when investors realize you’ve over delivered on your promises. Whatever you say, don’t leave the impression that you’re punching below your weight. Say that you always do your best and sometimes your best even surprises you. If you practice skilled crisis communications, your audience will remember how you delivered in the end and this final impression will replace the original crisis as the dominant perception.

Do you have a question about crisis communications? Want to get on our consultation schedule? We’re booking 2018 clients now. Start your year off right!

This is part 3 of our 3-part series on damaged goods and crisis communications. If you missed part 1 on damage assessment and part 2 on damage control, read them here and here. It totally counts as being productive!

Photo credit: andreypopov / 123RF Stock Photo

 

Reg FD

5 Ways to Prevent Unintended Disclosure From Ruining Your Firm’s Holiday Season

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As we head into the busy holiday season, it’s a good time for your annual reminder about Reg FD (i.e., the SEC’s Fair Disclosure Act). Take it from your friends at Audacia Strategies: You don’t want an offhand comment to your niece’s boyfriend over pumpkin pie to lead to a six-month cleanup for the legal team at your firm. Read on to understand smart preventive measures you can take.

Reg FD: Potential Liabilities

fair disclosureIf you’re reading this article and you work for or with a publicly traded company, you’re probably already aware of Reg FD, but you may not be aware of all the potential liabilities that could result from violations of the rule. Here are some basic points to keep in mind:

  • Regulation FD is a fair disclosure rule, not an anti-fraud rule. This means that only conduct that is intentional or reckless can be considered a violation.
  • Both companies and individual personnel can be held responsible and be subject to SEC enforcement actions.
  • Such enforcement actions can include injunctions, fines, and obligations to disclose the violation.

For more information about Reg FD and the SEC’s enforcement of the law, check out this list of frequently asked questions. But always remember that nothing you read online, including this article, is a substitute for qualified legal counsel.

To avoid liabilities resulting from an executive or other individual acting on behalf of your firm, there are some preventive measures you can take.

1. Understand the Federal Rules and Regulations.

Simply speaking, Reg FD prohibits companies from selectively disclosing material information to analysts, institutional investors, and others without at the same time making the information widely available to the public. This rule reflects the idea that all investors should have fair and equal access to information that could influence their investment choices.

For example, when the story broke in September about the cybersecurity breach at Equifax, there was a question about whether senior executives had unfairly traded away shares in the company because of insider information. The executives have since been exonerated. A special committee found that the executives pre-cleared their trades making them without prior knowledge of the security breach announcement.

It is important for executives and all employees to be aware of Reg FD as well how it applies to your industry, your company, and their specific positions within your organization. Even if employees are required to go through HR training around SEC rules and regulations, they may not truly understand their responsibilities under the law.

Given the influx of holiday mixers this time of year bringing together a variety of stakeholders (i.e., CEOs and other executives, brokers, analysts, and investors), the risk of a violation increases. Does it make sense to ask Legal to present some do’s and don’t’s during a company-wide meeting coming up? Think of the headaches it could save going into 2018.

2. Review Current Disclosure Policies.

Now is also a good time to review your firm’s current disclosure policy and write a policy if you don’t yet have one. What is your process for disclosing information to analysts, institutional investors, other shareholders, and the public?

Evaluate that policy in light of Reg FD. Are there any gaps? Do you see any potential issues? Does this assessment suggest any obvious changes?

Once you have identified any potential issues, prepare and start following a comprehensive disclosure policy. Make sure to emphasize the severity and potential consequences of Regulation FD violations. This policy should be made internally available to senior officials, investor relations personnel, and anyone else responsible for speaking with analysts or investors.

3. Make the Written Policy Publicly Available on Your Website.

Reg FD requires that companies make material disclosures available to the public. When the SEC first enacted the law, they had a more narrow view of what qualified as “public disclosure.” However, in 2008, the SEC stated that putting information on a company website could satisfy Reg FD under certain circumstances. We encourage you or your legal team to check into whether your firm falls under these circumstances.

But regardless of whether your firm uses a website to make public material disclosures, your company’s own disclosure policies ought to appear on your website. Transparency increases credibility with investors and other stakeholders. Making your policies available demonstrates an institutional commitment to keeping all interactions on the “up-and-up.”

4. Better Safe Than Sorry.

As for what counts as “material nonpublic information,” there is some disagreement among industry experts. But our advice when it comes to the SEC is always err on the side of caution. If you are tempted to talk about potentially material company gossip during the corporate dinner party, maybe find some juicy celebrity gossip to discuss instead.

If you want to really play it safe, take a “chaperone” with you whenever speaking to an analyst. This should be someone familiar with making determinations about materiality, who can listen for any unintentional disclosures that might trigger the need to prepare a Regulation FD disclosure and serve as a witness (for example, your Investor Relations Officer). Private meetings with analysts or institutional investors are particularly risky.

5. When in Doubt, Contact Finance and Legal.

If all else fails and you or someone on your team ends up disclosing something questionable, the next best action you can take is to talk to someone in finance and legal. The law itself is complex, so it’s wise to go over all possible violations with a lawyer specializing in SEC regulations.

Still, in many cases, the fix is simply to make the information in question publicly available within 24 hours or before the next opening of the market. Where you can get into more trouble is when someone tries to cover up a leak of information and it isn’t discovered until too late. This makes it especially important to ensure that your employees know the next best action to take if they happen to slip.

Now that you know the top 5 things you can do to prevent a Reg FD crisis at your next holiday party or Friendsgiving, you are free to enjoy the season! Want to know more about Regulation FD and how to speak your investors’ language? Schedule a consultation, contact us at info@audaciastrategies.com, or call us at 202-521-7917. We love to trade secrets over a mug of peppermint tea.

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