ORGANIZATIONAL LEADERSHIP: Crisis Leadership Report

Starbucks CEO Kevin Johnson (left) meets with employees and community members in this file photo. (Photo courtesy Starbucks.)

Johnson & Johnson CEO Jim Burke’s leadership during the 1982 Tylenol crisis is what we at Harvard Business School teach as the standard for handling a high-stakes public crisis. Now, we have a new exemplar: Starbucks CEO Kevin Johnson.

His response to the eviction of two African American men from a Starbucks store in Philadelphia will define for today’s leaders how to respond to crisis. Facebook founder Mark Zuckerberg, who struggled from repeated missteps in Facebook’s current data privacy crisis, could learn a lot from Johnson.

Let’s examine how Johnson and Zuckerberg measured up against what I have identified as 7 Lessons for Leading in Crisis.

#1: Face reality, starting with yourself. Johnson realized immediately that, as Starbucks’ new CEO, he had to take the lead. He understood the incident’s implications went well beyond the specifics, triggering widespread concerns about racial bias in the country and threatening to damage Starbucks’ image as a safe, friendly place to gather with friends or work alone. In contrast,

24 APR 2018 OP-ED

Op-Ed: What Mark Zuckerberg Can Learn About Crisis Leadership from Starbucks by Bill George

Starbucks and Facebook present a contrast in crisis leadership, says Bill George. While Starbucks CEO Kevin Johnson stepped up to take responsibility and met with victims, Mark Zuckerberg delayed action and side-stepped responsibility.

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Zuckerberg characterized Facebook’s issue as a political problem and tried to shift the blame to Cambridge Analytica’s bad actors for violating Facebook’s rules for application developers. He ignored the deeper problem that Facebook users want privacy for their personal information.

#2: Use your teammates. Johnson had the full support of founder Howard Schultz and his team in Philadelphia. Zuckerberg did not seem to rely upon the wisdom of Chief Operating Officer Sheryl Sandberg or lead board director Susan Desmond-Hellmann. Instead, he trotted out his deputy legal counsel at a town hall meeting for all Facebook employees after four days, sending the message that he thought this was a legal problem rather than an issue of consumer trust.

“JOHNSON’S ACTIONS WILL BECOME THE NEW MODEL FOR HOW A CRISIS SHOULD BE HANDLED”

#3: Dig deep for the root cause. Johnson perceived that not all his employees understood the deeper issues of racial bias, so he announced on the second day that Starbucks would close 8,000 stores on May 29 to train all 175,000 US employees about unconscious bias. Zuckerberg failed to acknowledge that the root cause of the data privacy scandal was its model of allowing developers to build their applications around user preferences—without explicit permission from the users themselves. (Zuckerberg says this is not the same as selling user information. You be the judge.)

#4: Get ready for the long haul. Johnson’s planned training sessions demonstrated his commitment to ensure all employees are dedicated to making its stores safe, friendly, and welcoming for everyone. Zuckerberg said that he had known about the Cambridge Analytica problems since 2015 but wouldn’t acknowledge he had failed to correct them. Nor has he announced plans to do so now. This issue will plague Facebook for years before trust can rebuilt with users.

#5: Never waste a good crisis. By immediately flying to Philadelphia and personally apologizing to the two victims, Johnson enabled them to become spokespeople for the broader issue of racial bias and neutralized protesters gathered outside Starbucks. Zuckerberg wasted his opportunity to address data privacy issues; instead, he is inviting government regulators to do it for him. As a result, Facebook’s employees lack direction for using this crisis to rebuild confidence with 2 billion users.

#6: You’re in the spotlight: Follow True North. Starbucks’ Johnson jumped into the spotlight the next day by apologizing for his employees’ handling of the incident and announcing plans for a companywide “lessons learned” meeting and training programs. He affirmed Starbucks’ True North, stating, “The video shot by customers is very hard to watch, and the actions in it are not representative of our Starbucks mission and values.” In contrast, Zuckerberg ducked the spotlight for five days and even then tried to shift the argument away from data privacy. In terms of public support, this tactic backfired because he undermined Facebook’s mission “to build community and bring the world closer together.” In a recent Harris poll, 88 percent of respondents think Facebook should be regulated, with 67 percent favoring requiring an opt-in feature before personal data can be used.

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#7: Go on offense, focus on winning now. Kevin Johnson seized upon the incident to clarify Starbucks’ desire to overcome racial bias and encourage acceptance and integration. Johnson will benefit from engaging all of his employees in discussions about serving customers well and using the company to make a positive difference in its communities. Meanwhile, Zuckerberg remains on the defensive about Facebook’s policies rather than offering clear solutions. One possibility: a premium site for those who want to protect all their information. In the meantime, users may shift to competing social media sites.

The greatest test of leadership When a crisis erupts, the CEO’s actions and attitude in the first 24 to 48 hours sets the tone for the organization’s response. In Johnson’s case, this meant making a clear statement apologizing and accepting responsibility, going to the scene of the incident, and meeting personally with people effected. Facebook’s Zuckerberg did none of these things. After those first days, the moment had passed and other voices were crowding out his company’s messages.

Leading in crisis is the real test for leaders. Zuckerberg failed his big test and will struggle to recover. Johnson has rebuilt goodwill with Starbucks customers and the general public, and has given clear direction to employees about what the company stands for. That will serve Starbucks well for years to come.

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COMMENTS

Deepali Sharma

Almost certainly I’m planning to bookmark your website. You amazingly come with good writings. Thank you for sharing your website page.

Mattwhetzel

“One would think Starbucks shareholders would be better served by leadership that prioritizes sound business principles over so-called social justice initiatives,”

T M CHARI

As a leader one has to assume responsibility and take action. The core issue therefore is "responsibility" and demonstrating that very trait is vital. This will be a good lesson for the future generation of Managers.

Jimmy

I read several comments saying this it not an apple-to-apple comparison, which I find to be quite absurd. Both companies had a public relations crisis, both companies needed to respond, the exact details of the crises may be different, but the core issue at hand is the same, this is about crisis management and how an organizational leader should respond.

Comparing 2 victims to 87 million victims is also completely pointless, the issue isn't how many victims, the issue is there are victims at all. A 3 year old can figure out that it would be impossible for Zuckerberg to personally visit and apologize to every victim. The issue people have with the way Zuckerberg responded to the crisis isn't that he didn't personally visit

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every single victim, it is that he didn't do anything at all for days and even when he did come out, he didn't take responsibility and he didn't take control.

Gopal

This is comparing apples to oranges to put simply..Facebook had a difficult crisis and a crisis at large..The Starbucks crisis on the other hand was local to a particular city and did not have huge implications to the tune of Facebook's.

Phoenix Alexander

Responsibility is, at its core, simply the ability to respond. Taking responsibility does not acknowledge being the cause of a problem, but it does clearly position one to do something (positive) about solving it. One who won't take responsibility has no ability to effect an outcome and is, by definition, ineffective. Good CEOs, including Johnson, grasp that neither clients/customers nor employees want to be associated with organizations with ineffective leaders. For many of us this understanding is inherent in who we are as human beings. For others of us it has to be learned the hard way -- but the point here is that it CAN be learned. I hope that Johnson, who clearly gets it, will also add this into his training for all his employees. It will be a valuable skill wherever they go.

Hamad Sheikh

There are very significant differences between these two cases i.e. Facebook and Starbucks. The later has one pair of victims and an interested audience of millions. So there is an opportunity to communicate a simple and effective message to the audience while also meeting with the victims. In the case of facebook, there are millions of victims and an equally large audience. MZ can simply not meet with millions of victims on an individual level and also has the additional burden of meeting with government officials AND come up with a change of direction in the company regarding security and information rights. Therefore, these two cases have very significant differences and require very different approacahes and solutions. MZ faces a significantly tougher problem.

Ayoub Dfallah

Great business leaders take action seriously and immediately without hesitation to response to crisis by figure out causes and effects in order to find out smart solution this called action contingency plan to response to criss in order to eliminate negative impact . CEO must learn from their mistakes ( lesson learned) by focusing on situations , issues and behavior rather than focus on the personal however make tough decisions based on response to crisis right away to mitigate negative impact by response quickly right away.

Ayoub Dfallah

As a leader in the company you have to take action seriously to face status quo , take risk and make tough decisions to address challenge issues whatever it is , customer issues, users issues and so on . CEO must enable them to accept challenges and take responsibility about any situation associated with customer, employees, shareholders and any others stakeholders.

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