In today’s hyperconnected world, crises break with explosive speed. The Crisis Preparedness Quotient (CPQ) is a powerful diagnostic tool that measures an organization’s ability to prevent, prepare for and respond to survival-threatening reputational storms. In his just-published book, Christopher Tennyson presents the game-changing CPQ approach to crisis management and communications, sharing unique insights to help directors, CEOs, senior managers and communicators answer these crucial questions:
Are you doing everything you can to lessen the risk of experiencing a crisis?
How well is your organization prepared to handle the extraordinary challenges of a crisis?
Are you alert to the common causes, characteristics and lifecycles of a crisis?
What are the most effective communications strategies to use before, during and after a crisis?
Read an excerpt from the Introduction to The Crisis Preparedness Quotient – Measuring Your Readiness to Weather a Reputational Storm:
The idea for this book began to take shape several years ago in a swanky Midtown-Manhattan restaurant. Three business leaders dressed in bespoke charcoal suits were sitting across from me at lunch. Each served on the board of directors of a Fortune 500 company. While the purpose of our lunch was to kick off the planning for a major fundraising gala, something more pressing was on their minds. A large corporation, not represented at the table, was in the throes of a nasty reputational crisis. We’ll call the company XYZ Corp.
“Can you believe the beating those poor bastards at XYZ are taking?” asked one of my lunchmates. “I can’t pick up a paper or turn on the television without seeing more bad news.”
“No question, it’s a train wreck,” responded another. “The company’s management makes things worse whenever they open their mouths. And now Congress is piling on. I can’t see how they survive all this disruption. Tennyson, this is the kind of crap (another word was used at the time) you deal with every day. These guys aren’t bumpkins. How could they be so ill-prepared for something like this?”
Before I could answer, the third executive jumped in: “All I know is, we’re not in the same boat. I spoke with our CEO just this morning and he assured me we have a solid crisis communications plan in place. And I guess just last month our senior management team came together for a crisis drill. Passed with flying colors.”
“You’re not worried about something like this XYZ bloodbath happening to you?” asked the chairman with the grayest hair at the table.
“No company is ever immune from crisis. But we’re prepared. XYZ wasn’t. We’ve got a plan. If the need ever arises, we’ll put it to work.”
“Tennyson, you agree?”
Everyone looked up from their pasta primavera when I pushed back: “My bet is they had a plan in place, just like your companies do, and they followed it to the letter when the crap (I used another word) hit the fan. There are other reasons it’s going so badly for them.”
“You’re not big on planning?”
“Planning is very important,” I said. “The problem is that most companies approach crisis preparedness as an isolated, reactive activity — lots of attention paid to how fast they’ll respond if they get into a jam, almost no time spent on preventing bad things from happening in the first place.
“Unfortunately,” I explained, “when it comes to crisis preparedness, too many companies operate like a fire department that keeps buying new fire engines without requiring smoke detectors in the buildings the firefighters are supposed to protect. Business executives don’t focus enough on breaking the cycle of crises.”
“You don’t buy my CEO’s optimism?”
“May The Force be with him,” I said, “but it’s easy to develop a false sense of confidence based on the fact you’ve prepared dozens of response statements in advance and equipped a very cool crisis war room that looks like the bridge of the Starship Enterprise. Those can be unreliable predictors of vulnerability and preparedness.”
That was the point in the lunch when they lost their appetites.
We didn’t get a lot of work done on the gala that day. But we did discuss a number of historic, high-profile corporate crises and debated the root causes of each. What became very clear to me was that these highly respected public board members, concerned about their vulnerability to an event that would do major reputational harm to their companies, had no idea if their managements were prepared to respond effectively to crisis.
“Tennyson, you ought to write a book about this stuff (another word was used) for CEOs and public company directors,” they suggested. “We need to have a no-nonsense way to gauge our preparedness. That’s our responsibility, and right now we’re flying blind.”
Risk and Responsibility
I took the book suggestion to heart and appreciated the validation that crisis preparedness was a pressing issue worthy of board-level oversight. Since then I’ve found that lots of people agree, including the Securities and Exchange Commission.
Addressing the 12th Annual Boardroom Summit and Peer Exchange in New York on October 14, 2015, SEC Commissioner Luis A. Aguilar stated that, “As the spectrum of risks that companies face has increased, so has the recognition among boards that risk management is integral to every aspect of a company’s long-term well-being . . . Traditionally the purview of company management, the overall supervision of risk management has gradually become part of board agendas.”
The Commissioner continued: “Shareholders have likewise recognized the increasingly important role of the board in enterprise risk oversight, and are taking steps to hold directors accountable for perceived failures in this function.”
On September 28, 2016, as the revelations concerning Wells Fargo’s breathtaking sham accounts scandal continued to mount, New York Times business columnist Gretchen Morgenson observed: “A corporate board has many duties, but three of the most crucial are at the center of the Wells Fargo mess. One is to assess the risks inherent in the company’s business and handle them before they develop into crisis. Another is to dispense compensation that does not encourage bad behavior. And finally, a board must monitor a company’s culture, from top to bottom.”
Corporate attorney Martin Lipton, founding partner of Wachtell, Lipton, Rosen & Katz, on July 28, 2015, posted this guidance on the Harvard Law School Forum on Corporate Governance and Financial Regulation:
If directors do not believe they are receiving sufficient information—including information regarding the external and internal risk environment, the specific material risk exposures affecting the company, how these risks are assessed and prioritized, risk response strategies, implementation of risk management procedures and infrastructure, and the strengths and weaknesses of the overall system—they should be proactive in asking for more.
The Crisis Preparedness Quotient – What’s Your Score?
That’s what the Crisis Preparedness Quotient (CPQ) is all about: providing today’s business leaders with a comprehensive, “no-nonsense” approach to accurately assessing a company’s preparedness to weather a reputational storm.
The CPQ is a powerful diagnostic tool that highlights deficiencies in a range of operational and management areas, not just communications, that if left unaddressed will increase risk and weaken your ability to respond effectively. The CPQ measures a company’s strengths in seven critical areas, weighted to reflect their relative importance to readiness. Earning all available points in each element of the quotient (hard to do) would total a perfect score of 100:
Reputation (25 points)
How is your company perceived today by your employees, customers, investors and community? How’s your Google footprint?
Culture (20 points)
Does your culture celebrate good behavior, reward honesty at all levels of the company and allow early attention to important issues?
Allies (15 points)
Through your actions and commitments, have you nurtured alliances and earned the friendship of influential organizations and individuals who could help you in a pinch?
Voice (10 points)
Do you have recognized spokespeople prepared to be the compelling human voice and face of the company in both good and challenging times?
Digital Diligence (10 points)
Have you embraced social media platforms to both listen to and engage with your stakeholders 24/7, inside and outside the company?
Leadership Trust (10 points)
Do the members of your leadership team, especially the CEO, chief communications officer and legal counsel, respect and trust one another?
Planning & Practice (10 points)
Do you have a current crisis plan understood throughout your organization? Have you tested its effectiveness lately?
Why only 10 points for Planning and Practice — the primary focus of my Manhattan lunchmates, most books on crisis communications and the majority of crisis counselors? All seven elements in the CPQ are important. But, real crisis preparedness is much more than having a good response plan. Your levels of vulnerability and resilience are determined by the way you do business, the people you employ, the priorities that motivate you, the friends you’ve made and the principles you hold dear. Only by considering these broader factors can you confidently measure your risk and readiness.