How to spot the next corporate crisis

About the author

Chris is a lecturer, media trainer, crisis communication consultant and coach. Her in-house roles have included the global position of Director of PR for Barclays. Chris leads the CIPR PR Diploma and Crisis Comms Diplomas. BA Hons, CAM, MCIPR

There is a parlour game played by watchers like me of City events. It consists of compiling a list of indicators of big companies about to crash and burn. One of the items on the list is the installation of Italian marble in palatial head offices. I remember after watching the film “Enron – the smartest guys in the room” about the spectacular collapse of US energy giant Enron, adding displaying the company’s share price in the lift only to get back from a business trip to discover the company I then worked for had done just that!

Another and by far the most obvious indicator is the setting of grandiose financial and market dominating targets. In that case the writing was definitely on the wall for the Volkswagen brand when Martin Winterkorn, the company’s now ex-Chief Executive told Forbes magazine in May 2013 that under his leadership Volkswagen would become “the world’s most profitable, fascinating and sustainable automobile manufacturer.” To be fair VW’s growth under Mr Winterkorn had been impressive: profits had tripled but the question became how would this performance be maintained? The temptation to cheat was obviously there. Such stretching targets announced with such hubris should always trouble communicators.

So whilst the origins of the VW crisis exhibited a number of classic traits the company’s response is not yet clear.   An obvious response would be to use the crisis to transition into an alternative corporate strategy. In communication terms this would mean deploying what crisis academics term as “the rhetoric of renewal.” This is a communication strategy aimed at focussing attention on the future and rather less on the crisis itself (not so easy given the piling up of legal cases and political inquiries.) Expect to see the word “change” a lot. We saw a little of the rhetoric of renewal yesterday with the new VW Chief Executive’s pledge to overhaul strategy to concentrate on electric and hybrid vehicles and revamp all diesel cars and vans to feature cleaner exhaust emissions systems. One thing that we can bet on is that the completely glass VW factory in Dresden is likely to be moth-balled – world domination is now yesterday’s news.