From ‘The Rise and Fall . . . and Rise Again’ by Gerald Ratner.

 

As inadvisable corporate behaviour goes, an unguarded comment hardly ranks alongside polluting an ocean, harming toddlers or flogging unsafe cars. But try telling Gerald Ratner that spoken gaffes don’t do significant damage.

 

His speech to the Institute of Directors in 1991 was your standard after-dinner fare. But a Daily Mirror journalist who was present saw the potential for controversy and, with the speech splashed across the front pages, the Ratner brand became synonymous with ‘crap’ and a lack of respect for customers. The company’s share price plummeted from £2 to less than 8p, and consumer confidence fell off the chart. Group profits fell from £112 million in 1991 to losses of £122 million a year later.

 

That was almost two decades ago. But even in today’s media-savvy age, ‘doing a Ratner’ is not uncommon. For all the cautionary tales of the damage caused by off-message comments, they continue to come thick and fast, and cause severe harm. The reasons, it seems, are both cultural and technological.

 

Cultural, because modern audiences are turned off by minutely drafted, well-rehearsed comms, meaning that business leaders are encouraged to be more spontaneous and ‘real’. And that’s hard to control.

 

Lowering a brand’s guard to suggest openness and approachability does have benefits - if done properly. The marketeer’s bible, ‘The 22 Immutable Laws of Marketing’ by Al Ries and Jack Trout, cited ‘the law of candour’ which states that, if a company admits a negative aspect about a brand, the consumer will think more highly about that brand by virtue of the company’s sheer honesty.

 

Clearly, though, candour is a minefield. Even Ries and Trout admit, “the law of candour must be used carefully and with great skill.”

 

And not everyone does. In 2001, Anders Dahlvig, chief executive of Ikea, was candid enough in a newspaper interview to admit the obvious: that its service at weekends was “appalling”. Cue a media thrashing that threw his PR team into a flat spin, as they tried to explain away his comment.

 

Similarly, in a 2007 interview with the Independent on Sunday, Sir Richard Branson, made reference to the ageing rolling stock on Virgin’s Trains’ London to Glasgow service, saying: “They’re fucked.” Suddenly, a casual remark was catapulted into the realms of ‘big news’ and his communications team had work to do.

 

Matt Hickley, head of media at PR consultancy Blue Rubicon, has observed this growing mismatch in communications styles “between traditional, formal ‘corporate-speak’ and the much chattier, uninhibited and more emotional way in which ordinary people actually talk.”

 

He says: “Audiences demand authenticity, and can sniff out inauthenticity a mile off. Executives find themselves under pressure to bridge the gap, and to respond to this informal style. When they do, it heightens the risk of a gaffe.”

 

Peter Roberts is a crisis communications expert at Hill & Knowlton. He appreciates that senior executives are faced with a tightrope. “We are forever urging them to be a little more human in their communications and more tightly written corporate speak will only alienate our audiences,” he says. “Good C-suite members listen to their consumers;great ones have the ability to put themselves in their consumers’ shoes.”

 

So while it’s easy to sail into the dangerous waters of crowd-pleasing over-familiarity, attempting to be funny and human is often the root cause of off-message, brand-damaging comments.

 

“Many gaffes stem from ill-judged humour, or turns of phrase which an executive should have tested with their communications teams in advance,” says Hickley. “Tone is notoriously hard to judge across cultures. Tony Hayward has done many things right in his communications, but as an Englishman his slightly self-deprecating, understated tone has played badly in the US. Commentators have likened him unkindly to Hugh Grant’s ineffectual younger brother, when they wanted Clint Eastwood.”

 

What that highlights is the importance of gauging context. An innocuous quip in one situation might play catastrophically badly in another. “Problems come when the speaker loses sight of the audience’s concerns and mindset, and focuses on themselves,” says Hickley. “When Tony Hayward said publicly at the end of May, ‘There’s no one who wants this over more than I do; I would like my life back,’ he’d seemingly lost sight of the 11 bereaved families, or Gulf coast small businesses facing oblivion.”

 

Of course, in hindsight, almost every infamous blooper seems patently ill-advised. But it’s not always easy to second-guess an audience’s reaction. Take the Ratner case. In his book he recalls, the initial reaction to the speech.

 

“I’d not been home long when Charles Saatchi called. ‘There’s a fantastic piece in the Evening Standard,’ he said. ‘There’s a good line about you calling some of your products crap. It works really well. You come across as a really great guy with a good sense of humour. It’s terrific PR.’”

 

Along with cultural shifts, technology has brought danger too. The rise of social media has created a cauldron in which gaffes like this can turn into monsters. Whereas, previously, spoken blunders provided brief titillation for readers and viewers, the internet acts as a magnifier and creates real damage.

 

“It’s no revelation that with the rise and rise of social networking sites, the pitfalls get ever deeper, and the trip wires omnipresent,” says Rebecca Pain, senior consultant at PR company thebluedoor, which specialises in online communications.

 

She warns that the social media realm is populated by people with the time, capability and wherewithal to create havoc. “It’s a dangerous place. The remit of many inhabitants of social networks is to whip up such frenzies and out the disingenuous, failing or unethical. It is the ultimate free press.”

 

The rise of social media has made foot-in-mouth syndrome worse, agrees Hickley. “The stakes are higher. When a leader makes a gaffe their words are tweeted, posted on Facebook or superimposed on damaging photographs, set to music and are soon gaining tens of thousands of hits on YouTube – as with BP’s various recent statements overlaid on images of oil-covered birds.

 

“They spread into the public consciousness faster, more widely and more memorably than ever before. An executive can get 99% of their communications right. The internet is swift and merciless in focusing on the 1%. Gaffes now also live forever. In the days of broadcast, they were heard a few times but then began to fade. The internet can keep them alive.”

That knowledge can frazzle the brains of corporate spokespeople, suggests Jonathan Hemus, a director of Insignia Communications which specialises in crisis communications. “With the rise and rise of social media, it’s easy to think that the role of the media spokesperson is less important than before,” he says. “Quite the reverse. Ten years ago an ill-chosen comment to one media outlet might have caused minimal damage: today the power of Twitter, YouTube and others to amplify and spread these gaffes means that the pressure on the spokesperson is greater than ever.”

 

Encumbered by the knowledge that blunders can be amplified online and awkwardly treading a fine line between robotic corporate-speak and damaging candour, it is understandably tempting for business leaders to clam up.

 

“The risks will tend to discourage leaders – often reluctant performers already - to avoid the media altogether,” warns Blue Rubicon’s Hickley. “But as a rule, the damage caused by the ‘empty chair’ outweighs the risk of a gaffe. If a leader doesn’t turn up to tell their own story, someone else will happily tell if for them, and probably far more damagingly.”

 

Put simply, the threat of publicly mis-speaking is an occupational hazard that business leaders need to accept and handle. As Jonathan Hemus says: “Chief executives have become chief reputation officers and they need to be comfortable with this fact and be capable of fulfilling it. Being an effective communicator is becoming a prerequisite for success as a CEO.”

Of course, this climate of scrutiny and/or ridicule demands that corporate spokespeople are properly primed for public communication. But while Peter Robert suggests reminding senior management of the damage that has been inflicted on businesses following previous gaffes, Hickley warns: “It’s easy to scare an executive half to death, and leave them fearful of engaging at all. Some trainers are more concerned with showing off how ‘tough’ they can be than with building the executive’s skills.”

 

The real challenge, he says, is giving the trainee the ability and the confidence to tell their story well, without constantly worrying about slipping up. the question is: how?

 

“The key is to spend just as much time on developing the message as on preparing the messenger,” he says. “An executive who has a clear idea of who their audience is, what they want to say and of how they can say it in an interesting way is far less likely to put their foot in it. Problems come when people ramble aimlessly, talking just to fill the time or simply discussing things that interest them, and losing sight of why they are speaking in public and what’s in it for their company.”

 

If it’s too much to expect business leaders not to slip up (and it is), organisations can at least understand how to handle the fall out when an unfortunate comment does come to light.

The key, according to Peter Roberts, is a rapid reponse. ““Fall-outs need to be handled quickly,” he says. “A statement from the same senior executive explaining their words in appropriately contrite tones. Speed and fullness of response is a must to ensure that you nip any potential crisis in the bud.”

 

When, in 2001, Topman brand director David Shepherd described Topman’s typical customers as “Football hooligans or whatever” (and added, “Very few of our customers have to wear suits to work. They’ll be for his first interview or court case”) Arcadia Group’s share price fell by 1.5%. The company embarked on a rapid damage limitation exercise, explaining that Shepherd had merely been anxious to show the store’s affinity with the archetypal British male. An Arcadia spokeswoman said: “David did not mean to cause any offence and regrets it if any was caused.”

 

As Hickley points out, that was an approach used to good effect by Gordon Brown and his team in the aftermath of his ‘bigot’ comment. “He and his advisors took the right approach in moving as fast as they could to apologise, to Gillian Duffy publicly and in person, and to Labour Party activists by email. The apology itself was painful to watch, but for Gordon Brown it was a better outcome than days of ignoring demands for an apology.”

 

But according to Hemus, stakeholders look for “decisive and visible action”, rather than mere words – “to demonstrate that the organisation is serious”.

 

He adds: “As a consequence, the removal of a CEO whose comments have created or inflamed a crisis may be the best course of action for a business wanting to protect its long-term future.”

 

Be warned.