Tag Archives: Andrew Ross Sorkin

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How to Apologize: Best Practices from AOL, GM & Sony

Last February we wrote about the launch of “Apology Watch,” noting that the new Dealbook column would “monitor and report on the actions of CEOs and other public leaders after they have publicly apologized for…[fill in the blank].” That blank was filled in countless times over the course of the year. By looking back at some of 2014’s most high-profile apologies, we can learn quite a bit about what does and doesn’t work.

Be prepared and transparent When the Guardian reported in October that anonymous messaging startup Whisper was tracking users without their knowledge, the company’s disorganized response only made the situation worse. “Whisper’s responses have seemed scattershot and poorly considered” and “leave the impression that the company is attempting to cover its tracks without in any way effectively addressing the core issue–their breach of their users’ trust,” we explained in the Wall Street Journal’s Crisis of the Week column. “Management should have started with a simple statement that they are reviewing their terms of service, avoiding additional controversy.”

Listen to critics and take action One of Dealbook’s first “Apology Watch” columns, which we wrote about in March, focused on AOL CEO Tim Armstrong’s apology for an insensitive comment linking employees’ “distressed babies” to a cut in the company’s 401(k) benefits. While acknowledging that the CEO’s apology wasn’t perfect, author and corporate consultant Dov Seidman praised how Armstrong listened intently to those that he offended and acted on his apology by reversing the 401(k) cuts. “With these two actions, Mr. Armstrong took important steps toward restoring faith in personal and corporate character,” Seidman wrote for Dealbook.

Show that you are sincere After their embarrassing and inappropriate emails about President Obama were leaked in December, Sony co-chairwoman Amy Pascal and film producer Scott Rudin both issued well-considered and heartfelt apologies. While the Sony Hack has grown into a larger and more complex crisis, Pascal and Rudin understood the gravity of their leaked exchanges and responded by taking responsibility for them.

Social media and Crisis Communication 2.0 The series of rash tweets by Whisper’s editor in chief demonstrates some of the dangers of social media. But we can look to General Motors to see how social media can be a powerful tool for apologizing and rebuilding trust. In the wake of recalling millions of cars in early 2014, the automaker employed a number of strategies to help manage the fallout. As we described in March, GM customer service staff monitor and respond quickly to comments and complaints on Facebook, Twitter and online auto forums. The company also shared a video in which CEO Mary Barra directly addressed the recall. This 2.0 crisis communications strategy, which we examined more closely in a Forbes.com article, helped set the stage for what Bloomberg Businessweek called an “unusually bold” and “full-throated apology” by Barra in June.

Be quick and measured Best Buy’s ill-considered tweet making light of the murder case featured in the popular podcast Serial could have caused more damage to the retailer, but this quick and concise response helped prevent that:

We deeply apologize for our earlier tweet about Serial. It lacked good judgment and doesn’t reflect the values of our company. We are sorry. — Best Buy (@BestBuy) December 11, 2014

This tweet-sized apology was sincere and appropriate in scale—for a tweet-sized misstep. With it, the company nipped a potential crisis in the bud. Stay tuned, as there will surely be more apologies to examine and learn from.

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“It seems that just about every day a chief executive, politician or other prominent figure is apologizing for something,” Aaron Sorkin observed in a Dealbook post announcing his new “Apology Watch” coverage and hashtag, which we mentioned a couple weeks ago. This “personal and public exploration of the authentic apology,” as Sorkin’s collaborator Dov Seidman describes it, will be a fascinating project to follow. They’ve decided to focus on the “apologizing,” but that’s only half of the equation. The other half is the “something” that made an apology necessary.

Behind the stream of apologies that Sorkin references are statements and actions that expose some CEOs and other leaders as out of touch with the opinions—and feelings—of the people their companies target as consumers. Tweeting about venture capitalist Tom Perkins’ much-criticized Wall Street Journal letter, economist Justin Wolfers describes this problem as the “rich-dude bubble.”

Perkins, a Silicon Valley pioneer who commissioned the world’s largest private sailing yacht and authored a romance novel titled Sex and the Single Zillionaire, has continued to defend his letter, but that’s a perilous position for many other leaders.

The human element

Take AOL CEO Tim Armstrong, for example. In linking changes in AOL’s 401(k) plan to the health care costs of “two AOL-ers that had distressed babies,” Armstrong focused on the bottom line while overlooking the important human element, which was later described in detail by Deanna Fei, one of the babies’ mothers. And last year Armstrong faced extensive criticism for firing an employee during a conference call while around 1,000 others listened. Sorkin’s “Apology Watch” analysis found the CEO’s most recent apology to be sincere. His article’s concluded with a quote from Fei. “I think it’s legitimate and necessary to have a public discussion about health care expenditures, but this has to be done with sensitivity and mindfulness of the human lives at stake,” she said.

Echoing Sorkin, Bloomberg.com’s Jeff Green says Armstrong “is on a long list of corporate bosses who put their trust in an apology to contain fallout from an embarrassing public statement.” Green offers a list of similarly problematic episodes. They included AIG CEO Robert Menmosche “equating congressional criticism of the insurer’s bonuses during the financial crisis with lynchings in the Deep South.”And Google’s Eric Schmidt, who suggested “that people who worried Google Street view was invading their privacy by taking pictures of their homes should ‘just move.’” Fortune’s Claire Zillman observes that business executives seem to be replacing politicians as “the ones who seem to be truly disconnected from everyday Americans,” citing astronomical executive pay and how wealth can distort one’s outlook as the likely cause.

Fallout

“If the CEO is getting mostly negative publicity, it is very hard to get positive coverage on the organization as a whole,” according to a study by the Institute for Public Relations. Given that connection, today’s CEOs may be well advised to cultivate an outlook that addresses the values and concerns of the broader public. In stark contrast to Tom Perkins, for instance, venture capitalist and early Amazon investor Nick Hanauer has advocated for raising the minimum wage. And, in Zillman’s Fortune article, Harry Kraemer, clinical professor of management and strategy at Northwestern University’s Kellogg School of Management, offers some practical advice for staying grounded: “You better have a few people—a spouse, best friend, or sibling—who won’t let you forget who you really are and where you came from.”