Imagine you are the president of one of the largest car companies in the world, running a multi-billion dollar global organisation, when one day your Google News alert contains an article stating a car driver in the US has died because of a technical problem with one of your cars...
What’s worse, it turns out this was not the first casualty and senior managers have been covering up the problem for many years. Within 24 hours there are more than hundred articles and thousands of mentions on the internet. The next day there is a Facebook page with more than 10,000 fans boycotting your brand, a damaging video on YouTube and angry customers linking hashtags like #safety recall, #brakepedal and #fatalaccident to your brand on Twitter.
What happened to Toyota last year is not unique. Many reputable local and multinational companies have been derailed in the past because of negative PR. The BP oil spill in the Gulf of Mexico in April 2010 is probably one of the most recent examples. Whereas the oil spill itself started out as an environmental disaster, the biggest damage was caused because the CEO and his PR team mishandled the situation.
Whereas many companies have dealt with consumer boycotts before, very few businesses have yet experienced the full force of 'inter-outing', a term used to describe how an organisation or individual is 'outed' on the internet. In the old days, a PR crisis would unfold in traditional media where companies had the opportunity to control the damage as long as they addressed the issue swiftly, honestly and openly. It is safe to say that the emergence in the last couple of years of an interactive web 2.0 and the exploding growth of social media have made it virtually impossible to control a PR crisis.
Social activists will use every (online) media channel available to disapprove of unethical or unsustainable business practices and could easily turn to online activism to punish companies that have attracted their wrath. A good example is the public outcry in the UK over exorbitant bankers’ bonuses at RBS and Lloyds, high street banks that had to be rescued by the tax payer. In this case they successfully fought a public opinion war, but there is no reason why they couldn't take it to the next stage and launch a cyber-attack on one of the banks. The possibilities are endless - if a clothing company runs sweatshops in Asia, dumps toxic waste or mistreats its employees, tech-savvy social media users can take down the corporate website, disrupt their e-commerce business and damage its brand reputation.
This brings us onto the subject of corporate social responsibility (CSR). Very few companies have really embraced the principles of CSR. What’s more, even the track record of companies who have the best reputation for CSR practices is mixed at best.
In a demonstration of how perception can sometimes trump reality, Johnson & Johnson topped a list of companies perceived by American consumers to have the best reputation for CSR practices. However, only months after the survey was conducted, Johnson & Johnson admitted it had misled regulators and consumers by using company-paid contractors to buy defective Motrin painkiller products from store shelves rather than announce a recall.
In Johnson & Johnson’s case, the public first learned of the phantom recall when details of it emerged during a congressional hearing addressing a series of other Johnson & Johnson recalls.
In Toyota’s safety recall disaster of 2010 it was a combination of traditional and social media that put the company on the back foot, suffering massive damage to its corporate reputation and share price as a result.
Despite the examples of companies who seemingly betrayed their own CSR principles, it is difficult to deny that CSR has not played a positive role in making companies more transparent and more responsible. But since it took off in the early 1970s, the CSR movement has remained small in the US and Europe and very much underdeveloped in Asia, Africa and South America.
Thanks to social media, CSR can now evolve from a static report to an interactive experience and reach a much wider audience and potentially engage and motivate all stakeholders, suppliers and customers. CSR can finally become proactive, instead of reactive, with companies benefiting from the results.
So far very few companies have made use of the opportunity. One of the notable exceptions is IBM, who in 2010 led a 72-hour 'Eco-efficiency Jam' during which anyone around the world could give their insight on issues from green IT to improving the company’s environmental performance. Apparel company Timberland is another organisation that is ahead of the CSR curve. Its 'Voices of Challenge' aims to involve one million 'Earthkeepers' who will help the company reduce emissions, reduce waste and improve labour conditions throughout its supply chain.
To help companies build a compelling platform, using interactive technology and social media, Harvard’s Kennedy School has created The Accountability Web offering several recommendations, including the following:
- Adapt, don’t just adopt. Companies should not just view web 2.0 tools like Twitter as an extension of their existing marketing communication channels. They should utilise these tools for a constructive dialogue between companies and stakeholders to improve accountability.
- Build the online community and technology in parallel. Having a LinkedIn group, Facebook page, or Twitter account hardly guarantees followers or interest in your sustainability agenda. A company has to determine goals for social interaction and choose the most relevant technological tools to achieve them.
- Don’t venture into web 2.0 engagement without clear guidelines for respectful and productive communication. One example would be creating rules for critiquing practices and policies - not people.
- Face-to-face communication will never go away and can co-exist with social media. Companies will never do away with annual or even quarterly meetings - and conferences and symposia will still occur. The Accountability Web recommends a 'blended engagement' strategy, in which a company’s management and stakeholders can determine which medium (face-to-face or web-based) is best for a particular circumstance.
Corporate Social Responsibility (CSR) has been around since the 1970s but still has a low adoption rate in Europe and the US and is underdeveloped in Asia. Even the Financial Crisis in 2007 – despite public calls for changes to the financial and capitalist system with its excesses - has not made (financial) companies more accountable or transparent. A recent development however, is likely to change the area of CSR for ever. In the last two years, consumers have started to discover Social Media like Twitter, Facebook and YouTube as the ultimate tools to hold companies responsible for their behaviour. Because of the power that Social Media have now given to groups of consumers, companies are being forced to become more accountable and transparent. However, only companies who do not just bow to the pressure of Social Media, but who make accountability and transparency part of their DNA will continue to satisfy stakeholders and survive in this new era of Social Media.