With a surge in the number of crises companies experience online, you'd think organizations would be clamoring to adopt practices that prepare them for the inevitable kerfuffle and help minimize the damage. Most, though, have failed to take the steps that could diminish or completely avoid a damaging crisis.
That's the conclusion of the Altimeter Group in its new report, Social Business Readiness. The report, released today, found that the incidence of crisis not only increased from 2005 to 2010, but that the number of crises covered by mainstream media doubled.
Crisis is only one dimension of the report, which delves into general preparedness among 144 companies (of more than 1,000 employees) surveyed, supplemented by 62 interviews and analysis of more than 50 crises reported by the press. Lead author Jeremiah Owyang and his team also obtained input from corporate practitioners and representatives of social business experts.
The report defines a socla media crisis as "a crisis issue that arises or is amplified by social media, and results in negative mainstream coverage, a change in business process or financial loss." Increasingly, this is likely to define most crises, since virtually any issue plaguing a company will inevitably become fodder for discussion and dissection in venues from Facebook to YouTube.
In fact, Youtube and online communities tied for the top spot in platforms from which social media crises originated, according to the report, at 22% each. Blogs accounted for 20% of crises, with Twitter at 18% and Facebook bringing up the rear at 14%.
Consumer goods companies have been hit the hardest with six crises affecting the industry, followed by apparel and fashion (five), restaurants (five), Interent companies (four), retail (four), and the airline industry, computer hardward companies and mainstream media each hit with three crises.
A review of the leading catalysts makes it clear that better internal processes and governance could have kept the crisis from happening in the first place or, at least, kept the damage to a minimum. As the chart below shows, most of these crises might never have occured had policies been in place, employees been trained and procedures implemented for addressing worst-case scenarios.
Fully 76% of the crises could have been averted or diminished, according to Altimeter's analysis.
A lack of internal education contributed to crises at 20 of the companies affected, with no professional staff a characteristic of 13 crisis-plagued companies, no triage plan and no empoloyee policies impacting 11.
While debate has swirled around whether social media crises actually have a lasting impact on the organizations that suffer them, there is ample evidence that the damage can be substantial. Altimeter grouped companies into three tiers, the first experiencing only negative media coverage. Fifty-two percent of companies embroiled in a social media crisis wind up having to make a significant change or response (Mattel's adoption of an environmentally-responsible procurement policy in the wake of Greenpeace-led social media activism is one example). Short-term financial loss was the result for 8% of organizations as a result of their crises.
What does it take to avoid or minimize the effect of a social media crisis? Advanced organizations set up governance for social media activities, define real-time processes, have employee social media policies and train employees-notably those active in social media on behalf of the company-and organize social media into organizational structures that ensure consistency and can grow as the organization's social media presence expands.
I'll go one step further than Altimeter did. Companies should have crisis plans, and the social media processes Altimeter defines need to be woven into those plans. Since social media will amplify any crisis and even propel it to new levels, companies must ensure that social media response is a core part of an integrated crisis response strategy. Of course, avoiding the crisis altogether means ensuring that social media is also a core part of the the way the company conducts business. The catalysts for crises like poor influencer relatins, violation of ethical guidelines, inappropriate content, legal violations and a failure to respond quickly could all be prevented by establishing structures and processes that account for social media as an integral component of doing business.
Even advanced companies-which represent only 12.5% of the 144 organizations surveyed-have some ways to go before they're fully prepared for everything social media has to throw at them.The report suggests advanced companies aren't able to tie social feedback to fix root problems, leading to improvement in products and services. They're also not able to integrate social data into existing technology systems. They lack formal measurement strategies, and they employ fragmented and unwieldy sets of immature technologies.
Of course, some companies have overcome some if not all of these shortcomings. Dell leaps to mind, particularly since I just concluded an FIR interview with Dell's chief blogger, Lionel Menchaca. Dell is among those companies that actively monitor social media and act on feedback through a formal process; they also link their social data into other systems and measure consisstently against business objectives.
But the underlying results of the study are clear: organizations need to weave social media into their systems, structures and processes-including crisis planning-if they are going to minimize or avoid the crises that erupt through social channels.
Note: I have one more post in the works based on the Altimeter study. It won't surprise regular readers that it deals with the wisdom of opening social media access to employees.