Month: April 2010

There’s just no way to avoid it. You might fail with your social enterprise. Lose your shirt. Wish you’d never started it. There’s no safety net for social enterprise, and there never will be.

The U.S. Census Bureau reports that half of business startups with employees are gone five years later. Social enterprises probably do a bit better than that. So perhaps your odds are a bit better than 50-50. But it’s still risky business.

Yet all is not lost. There are things you can do to reduce risk. Write a business plan. Need help? Review the Free Management Library and blog on business planning. (Full disclosure: I’m the author.) The blog is currently running a series about feasibility testing, a central part of good business planning. That means lower risk.

Also, don’t forget the “enterprise” part of social enterprise. Many nascent social enterprisers behave as if awareness of their social impact will translate into sales and profitability. While in certain circumstances people will purchase, and even pay extra, for something that creates a desirable social impact (think Girl Scout cookies), most of the time they won’t. Or if they will, it’s only if the product meets or exceeds their expectations. Fair trade coffee sells if it tastes great, but if it doesn’t, no matter how much the other stuff exploits indigenous Latin American farmers, it sits on the shelf. That particular social premium ends at their taste buds.

Finally, failing isn’t as bad as it’s cracked out to be. Most successful entrepreneurs hit their stride after failing a few times. But each time they learned important lessons. So my final tip for this risky business is to decide that you’re OK with failure. Stuff happens.

Welcome to Crisis Management in the 21st Century and to Internet: The Ultimate Medium. A cross between tabloid journalism and a gladiator competition, between Pollyanna and Pandora, where minds meet and merge, clash and clamor, and where you can get more of anything you want than was EVER available at Alice’s Restaurant.

The Internet has become the largest media outlet in our known universe. Interactive print, audio and video communications are all available, with the line between “amateur” and “professional”, “traditional” and “untraditional” media blurred almost beyond ken. This massive medium has spawned what I have been calling “The I-Reporter” since long before CNN started using that term.

Consider these realities:

• Anyone can be an I-Reporter.
• While some I-Reporters compete for commercial gain, others compete simply for the joy of recognition. Just as traditional media reporters want to show up on page one of a newspaper, or at the top of the broadcast news, I-Reporters want their material showing up on page one of a Google search and – better yet – staying there for a while.
• Often, I-Reporters are also their own publishers and site promoters, or work in small teams to provide these functions, and through their skill can get better search engine placement and more attention on the Internet than “competing” entities.
• Search engine ranking has very little – and sometimes nothing – to do with quality or accuracy of content.
• Information posted on the Internet propagates virally – it finds a “home” via links or reprinted pages on websites run by people of like mind, and even misinformation is blatantly re-reported at websites operated by supposedly legitimate organizations.
• Some I-Reporters are constrained by the conditions of their employer, some are constrained by a sense of ethics, and some are completely unconstrained except by law – where it can be enforced.

Throw into that cauldron the fact that the general public still hasn’t fully realized how easy it is to misrepresent information on the Internet, and the witches’ brew has now become the most difficult environment challenging many ethical and honest organizations.

Organizations have always had individuals who disagree with their policies, dislike their products or services, are disgruntled former employees, or just had a bad experience with a receptionist. In the past, unhappy individuals could call or write letters to the company, contact the Better Business Bureau, or even seek the help of their local Consumer Reporter. Today, as or more quickly, they can just launch their own website.

Try this fascinating demonstration, given to me by a client recently. In a Google search bar, enter the word “socks” only substitute a “u” for the “o.” I am being obtuse so that readers’ spam-filters don’t delete this article! There were something like 23 million results as I write this article, and almost all of the first 20 Google pages – 200 entries (which is as far as I looked) – were complaints about companies or products.

How does today’s crisis manager deal with this when his or her organization is under fire? Here are some strategic considerations, offered as do’s and don’ts:

• Do not depend solely on the Web-based tactics to correct information that has been misreported on websites of any kind (Web pages, blogs, wikis, etc.) Use direct-to-stakeholder communications.
• Do your best to balance the results of a search for the keywords important to your organization, but remember that a totally balanced search – just like a totally balanced traditional news story – may be, at best, only 50 percent “your side” of a story when there is any controversy already brewing.
• Do not automatically think that you have to respond to every Internet critic.
• Do monitor critics to see if they either (a) draw the attention of your stakeholders and/or (b) start to achieve high search engine ranking. Then have your crisis team meet to discuss the pros and cons of PR and legal responses which could force inaccuracies off the Web or demonstrate to concerned stakeholders, on your own Web pages and/or through off-line tactics, why they have no reason for concern.
• Do not engage in debates with critics on “neutral” sites which allow such interchanges. There are ways to defuse those bombs that don’t make you a target for yet more negativity.
• Do consider getting more aggressive from a PR and legal perspective if allegations have already propagated widely, with considerable damage and the promise of worse damage.
• Do insist, as the top executive officer of any organization, that legal actions against hostile websites not be implemented without professional consideration of the PR implications, and that PR actions against hostile websites not be implemented without legal consideration.
• Do be sufficiently aware of the thoughts and feelings of your stakeholders – internal and external – that you know when and how severely Internet-centered negativity is impacting them. If you do, you will also know when they think you’re doing a good job responding to such negativity.

Virtually all of the crises to which I’ve helped clients respond in the past five years have had a Web-centered/Internet component, with the impact of the Internet on crisis management strategies and tactics growing exponentially every year. While many organizations have “IT people” on staff or on-call, IT expertise often does not translate to “Internet Communication” expertise. With the growth of the Internet, companies were very quick to experiment with it and sometimes learn how to use its capabilities to PROMOTE their products and services, to build brand awareness and enhance their reputation.

But now, just as it was “pre-Web,” the purpose of crisis management is to PRESERVE what has been gained through promotion. To, ideally, prevent crises from happening but, when that isn’t possible, to minimize damage. In the 21st Century, crisis managers need a new paradigm and an expanded skill-set to help their organizations or clients achieve that critical goal.

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For more resources, see the Free Management Library topic: Crisis Management
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What do September 11, Enron and the news about sexual molestation by Catholic priests have in common?

They were all what I’ve previously termed “creeping crises,” vulnerabilities, bombs (literally and figuratively) waiting to explode. There were people — the American intelligence community, some employees of Enron and Church leaders, respectively — who had information that could have prevented or reduced the damage from these situations. And who perpetuated and exacerbated the crises by acts of commission or omission.

They were all terrorism if you define it as “parties inflicting suffering on innocent victims as a means to an end.”

They are all the tip of massive icebergs of creeping crises. Who dares to say that there aren’t other terrorism groups poised to wreak unprecedented damage, corporations whose fiscal and legal practices will lead to Enron-like ruin, and criminal sexual behavior by clergy of possibly every major world religion?

They are all crises which strike at our emotional infrastructure: our desires for physical, psychological and financial security.

Human beings have an immense capacity for enduring pain individually and as organizations. And an immense resistance to change. That’s a bad combination, because for most individuals, and most organizations, it seems to take a great deal of pain to motivate change.

There is a psychological concept called “hitting bottom” that refers to the point at which an individual feels so much pain from what he or she has been doing that the fear of continuing “as is” is greater than the fear of change. At that point, the individual is willing to take some direction from someone other than him- or herself.

It has been my experience that organizations, too, usually have to “hit bottom,” to feel enough crisis-related pain from their actions, or lack thereof, that they’re willing to realize that their own best thinking isn’t making them crisis-resistant, versus crisis-prone. And that’s when they start getting proactive about crisis management.

Here’s the catch, however. Sometimes, that willingness to change comes too late. Sometimes, for an individual or an organization, that delay is fatal.

So ask yourselves at your next board meeting: how much pain does it take?

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For more resources, see the Free Management Library topic: Crisis Management
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