From Zomato to Sequoia, different brands have faced crisis just this month. What can they do differently?
Adani Enterprises’ value has fallen by more than 50% over the last few days alone, as a result of the Hindenburg row. All other group companies have also fallen in value. This has to be the quickest fall in the history of mankind for any company, whose promoters are among the richest in the world.
So, this question will definitely come up: could Adani have handled this better?
I firmly believe, yes. The group’s response strategy is what I’d call a classic case study on ‘how not to do a crisis’.
To be clear, I’m not going to talk about politics or the stock at all. I literally have zero investments in stocks, or mutual funds currently. So, there is no bias. This is only about crisis communication and Adani Group’s response.
First, there was a statement by the CFO. Just notice the image and if you do watch it, count the facts versus adjectives.
Then (surprisingly), this newspaper ad appears across all major publications.
And then, this 413-page response:
Here are six key points on what should be done in crisis, but Adani missed these completely.
1. First facts, then emotions: Adani broke this rule and it’s the first thing that Hindenburg jumped on. Giving less defensible facts, or not even engaging, would have been better.
2. Never react, be aggressive, or name-call: The CFO video is full of adjectives, and hardly any facts.
3. Either ignore or engage: Don’t talk about anything else, unless you control the media: Actor Shah Rukh Khan did it brilliantly during the ‘Pathaan’ controversy, by ignoring it. Other brands engage. But a generic newspaper ad was the silliest thing at the peak of the controversy. It just reminded people of the controversy and that Adani hadn’t said anything.
4. Structured response strategy: I’m surprised that an organisation of Adani’s size, sent its response in 2-3 unconnected steps. Crisis communication requires a structured response that was clearly missing. It’s not a question of money or effort. Hindenburg responded with a tweet that was succinct.
5. Emotions, even humour, can be golden, but as ‘icing on the cake’ not the cake itself: Check the last line in Hindenburg’s Twitter response. Smart.
6. Nationalism: It has been a key defence from Adani, from the Indian flag in the background in the video to the report. That’s strange, at best.
And while it will get a lot of people talking, it will raise red flags for the key audience - people who are serious investors.
Always remember that during a crisis, you should never focus on the number of people, but on the key people, whom the message is for. Adani missed the boat on that.
And, this is Hindenburg’s response.
Just a tweet, but brilliant!
It’s polite, focusses on facts, defines a key next step (sue us in the US), and the last line is a smart one.
And then, the response to the document by Hindenburg:
Just reading the headline tells you what this is about.
And, that’s smart!
Then in the post:
“[Adani]… predictably tried to lead the focus away from substantive issues and, instead, stoked a nationalist narrative, claiming our report amounted to a “calculated attack on India.” In short, the Adani Group has attempted to conflate its meteoric rise and the wealth of its chairman Gautam Adani, with the success of India itself.
We disagree. To be clear, we believe India is a vibrant democracy and an emerging superpower, with an exciting future. We also believe India’s future is being held back by the Adani Group, which has draped itself in the Indian flag, while systematically looting the nation.”
Instead of 413 pages, it took two short paragraphs to separate India from Adani.
Communication is always key, but in a crisis, it becomes critical. And remember, today, when communication is not linear, everyone has a voice, and the Internet has a long memory.
It’s key to have an in-house, or external, team for these crisis scenarios. Also, use technology to understand the various facets of crisis better.
Over the last month, we have seen not just legacy corporates, but Zomato and VCs like Sequoia goof up with their crisis response strategy (the GoMechanic incident which was less its fault, but it took most of the blame).
While crisis communication can’t fix issues with any business, but:
1. If you’re right, a structured response strategy can work for your brand’s benefit. Domino’s Pizza turnaround is a classic example of how a crisis was used to build more positive brand awareness. There are many more examples.
2. If your business is in the wrong, a good crisis response strategy gives you time. Often, with time, you can lessen the damage.
A bad crisis response can destroy all the millions spent on brand building. So, get your crisis management workflow in place as soon as possible.
P.S. As a side note, watch this fun film on crisis management with Robert De Niro and Dustin Hoffman. It’s entertaining and has some interesting lessons (also check out our ‘brand in crisis’).
The author is Saurabh Parmar, fractional CMO and strategist.