The New York Times
Sunday Business Forum
Prepare for Crisis, It's Part of Business

Learning From Exxon

By Steven Fink

Many critics have faulted Lawrence Rawl, chairman of the Exxon Corporation, for not taking the first jet to Alaska upon hearing about the massive oil spill. While his public response time was woefully inadequate given the severity of the crisis, those who say Mr. Rawl should have gone to faraway Valdez just because "it is the thing to do in these type of crises" are overly concerned with symbolism and naïve about the exigencies of crisis communications and management.

These critics say that Mr. Rawl should have followed the crisis management example of Warren Anderson, chairman of the Union Carbide Corporation, when he flew to Bhopal, India, in 1984 after an accident at a plant there poisoned thousands of people. But Mr. Anderson's mad dash across the globe was by no means sound crisis management. Instead, it was a foolish, knee-jerk reaction which removed him from his essential management and communications responsibilities for nearly a week and landed him in jail. Union Carbide was leaderless when it needed direction the most.

From my own experience working on the crisis management team at Three Mile Island, I have learned that there are certainly times when a chief executive needs to be at the scene of a crisis. But a chief executive must think twice about entering a hostile environment just to serve the interests of photojournalists. While it is vital for an executive to consider how a story plays in the media, in a war generals manage the battle, not the reconnaissance.

The only time James Burke, chairman of Johnson & Johnson, the health care products manufacturer, visited Chicago during the Tylenol poisonings in that city in 1982 was when he appeared on the "Donahue" TV show. Mr. Burke is widely -- and correctly -- lauded for his crisis management technique. But Mr. Burke did not earn his laurels by posing in front of empty store shelves at the scene of the disaster. Instead, he maintained his authority by remaining at the helm of his company, going to where the media were located and communicating his message in an effective, controlled and less volatile atmosphere than in Chicago. In the Alaskan disaster, the problem was not where Mr. Rawl spoke from, but rather that he was slow to speak at all. He was right to stay put but wrong to stay silent.

Exxon's management of the crisis in Alaska contained other flaws as well. Within hours of becoming aware of the nature of the crisis, Mr. Rawl should have established a 24-hour crisis-management command center in New York as a centralized repository for fact gathering and rumor sifting. He should have set up a governmental liaison office to brief appropriate agencies about the company's efforts and to ask for -- nay, demand -- governmental assistance.

Just as quickly, Mr. Rawl should have established a news center in New York as a clearing house for authorized statements, briefings and status reports from the company. Doing this would insure that the company speaks with one voice and avoids conflicting statements. The New York clearing house should have presented a minimum of two briefings a day to accommodate news cycles. At least one daily briefing should have been handled by Mr. Rawl personally. The other daily briefing should have been a telecommunications satellite press conference with the heads of Exxon U.S.A. and Exxon Shipping at Valdez.

More than anything else, the running aground of the tanker Exxon Valdez underscores the fact that crises in business are inevitable and companies must have crisis-management plans in place well before disaster strikes. Forward-thinking chief executives know that crisis management must be practiced as a strict corporate discipline.

While Exxon had a crisis-management plan that boasted that an oil spill could be contained within five hours, the critical flaw in the plan was that it was untested. As a result, when the tanker's hull ruptured, nearly two crippling days elapsed before certain rudimentary elements of the plan were put into operation. Had Exxon previously conducted appropriate crisis-simulation exercises to test its plan -- and acquaint its various crews with the rigors and stresses of crisis situations -- the plan's weaknesses could have been discovered before the real crisis hit.

With proper monitoring and updating, Exxon's plan might have been able to deliver on its five-hour promise. The spill then could have been just an insignificant gurgle on Exxon's bottom line, and on Alaska's pristine waters.

Because Exxon's plans were untested, its action-reaction time was far too slow. As a result it failed to gain the upper hand in the critical opening moments of the crisis. The company was simply overwhelmed by the rapidity and the magnitude of the events. Now, more than a month later, Exxon still finds itself in the midst of the crisis.

For a pragmatic chief executive viewing the problems in Alaska, the lessons are clear: accept that a crisis is inevitable and prepare the company accordingly. Test and refine the company's crisis-management plans. And, when the inevitable happens, take swift responsibility for being the voice of the company.

A chief executive must also decide what messages are to be presented and determine how and where to present them most effectively, striking a delicate balance between symbolism and substance, perception and reality. He must act with all deliberate speed to let the public know that he is in charge and that the crisis-management process -- and the company -- is firmly under control. In all of these areas, Exxon's performance fell short.

Exxon should now begin the process of resurrecting its stained -- but salvageable -- image. One way it can do this is by combining symbolism with substance: establish a permanent fund (financed by a percentage of the profits from each gallon of gas sold at the pump) to help preserve and protect the environment. Proceeds from this fund could be used to preserve ecologically sensitive land areas, oceans and fish and wildlife regions of the United States. If Exxon does this, after the crisis ends, it can begin the cleanup of its image.

Steven Fink served on the Governor of Pennsylvania's Three Mile Island crisis management team.  He is president of the Lexicon Communications Corporation and author of "Crisis Management: Planning for the Inevitable."