United stock crash and GM “fact and fiction” site provide lessons

September 11, 2008

Two things caught my eye while enjoying the Napa wine country. Both involve the rapidly changing world of reputation management and instant news. One, United Airlines stock crashed–going from $12 a share to one penny in a few hours–all because someone posted a six year old news story on a website. It bloomeranged from there (pun intended). I wish I had been on the ball and bought some of that penny stock.

The other story is not as sensational but still significant. GM launched a website aimed at confronting directly the numerous myths, attacks and accusations against the company and how it is meeting its severe business challenges. The website called GMFactsandFiction.com is simply constructed, listing a myth and the GM response. The current lead myth is whether GM is seeking a government bailout.

The point is this–life comes at you fast, as the commercial states. The instant news world seems to keep accelerating in part because more and more of the instant news world starts and lives on the internet. Devastation can be wreaked in minutes, not even hours any more. What used to take weeks to spread now is global at the speed of light. But the evidence continues to mount that most communicators and more importantly, their leaders, are not prepared to respond as quickly as this new world demands. The United story is one example. Were they monitoring the internet? Did someone not notice the old story? How soon after it was posted did United have a rebuttal very publicly posted? Did United have the capability to head off the storm before it gathered momentum by proactively releasing a notice about the false information. Did no one contact the Florida paper and inform them of their stupidity and how their irresponsibility was creating huge damage? In short, were they prepared to go to battle instantly, gather intelligence instantly, and get proactive and on the offensive instantly. Quite apparently not.

Not to say that GM is, just by this website, but it does seem to show that someone at GM understands the dynamics of internet conversation. The conversation goes on, like it or not. It cannot be stopped. And one thing is certain about this conversation–a lie repeated often enough becomes the truth. That’s why it is essential for companies at the center of such internet conversations join in on them, have their own clearly identified voice, ALWAYS ALWAYS ALWAYS speak the truth and nothing but the truth, and aggressively counter the lies, attacks, myths and misinformation. This is good stuff. I think I will buy some GM stock.


4 Responses to “United stock crash and GM “fact and fiction” site provide lessons”

  1. Neil Chapman Says:

    Your post about United Airlines’ recent stock plunge from $12+/share to a penny reminded me of a news agency story about the French company Elf that was filed in perfectly good faith. It was based on what the reporter knew at the time, and he had offered the company the chance to comment, which included putting things into context. However, it was in the early 1990s.

    The awful sequence of events began with a bucket fire on an oil and gas platform in the Northern North Sea; a fire caused by some smouldering rags as it turned out. However, it set off an alarm, which automatically alerted the UK coast guard. The resulting radio traffic over the public airwaves was picked up by someone monitoring different radio frequencies, something I used to do as a cub reporter.

    A fire alarm sounding on a platform that processes highly flammable hydrocarbons was bad enough. What made the story even sexier was the fact that the platform was Piper B, the replacement for the infamous Piper Alpha installation that had exploded in 1988 with the loss of 167 lives.

    Alerted to the fact an alarm had gone off on Piper B, the news agency tried to reach a UK spokesperson for owners Elf, only to be told no-one was available It was a national holiday. However, it wasn’t a holiday in France where Elf shares were still being traded.

    While at the time I found it hard to believe that some rags on fire could cause a share price drop for a major company, today it’s not so difficult to believe that an out-of-date story posted on a regional website could lead to shares of a major US airline sinking so dramatically.

    Both incidents demonstrate the importance of speed of response. Reporters cannot wait. That’s the reality whether we like it or not. We have to deal with it.

    And deal with the consequences if we don’t gear ourselves up to respond at the same speed as the media has to move. That means alerts, using tools to monitor many channels, not just waiting for a reporter to call or reading about it in the next day’s cuttings.

    It also means corporate lawyers or financial officers have to be on call-out not just the operations people and the press officer.

  2. Gerald Says:

    Thanks Neil–another great example of huge impacts of the instant news world. As you point out near the end, a big reason that corporations have such a time dealing with the realities of this world is that their processes for dealing with major issues with attorneys, executive team, etc., are so slow in mobilizing that it is too late before they get the right team assembled to respond. The old ways don’t work. The only way it seems is to have anticipated such events and have virtually an automated response mechanism in place, sensitive to minor changes to adapt to the particularities of the event. Instant or nothing.

  3. mickeyscott Says:

    I can only imagine the heat that would have been placed on the junior whose job it was to monitor the web. Do you think we need more people looking online for content about their clients? Or is it something that can be outsourced, to a company who exclusively searches the internet for press on clients?

    Michael Scott

  4. gbaron Says:

    Mickey–there has been a proliferation of new services available to monitor content online–starting with Google Alerts. A lot of good services are available (including that provided by my company PIER Systems–not to get commercial on you.) The point is that monitoring web content is now absolutely essential for companies as part of their reputation management efforts. And a fast response mechanism is also essential–just like today’s political campaigns.

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