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Wednesday Wisdom: Bad News and Your Brand

In this week’s Wednesday Wisdom feature, Consultants Collective member consultant Douglas Spencer explores why transparency – even in the face of bad news – is good for your brand, and offers some valuable tips for how to share bad news with your employees, customer, investors and other stakeholders.

During its last earnings call, Walgreens Co-chief Operating Officer Alex Gourlay admitted, “Our execution is lacking where it needs to be.”

Sorry, what was that? Did someone just admit to a sub-par performance? Is he allowed to do that? Surely, Legal was busy watching the Final Four or something to let that slip.

Of course, I jest, because there’s no shortage of executives who provide frank narrative during earnings calls. It’s just that admitting failure seems so rare these days. I once penned a thorough, heartfelt, and honest response to a series of unfortunate events, only to have it sent through the shredder by lawyers. (They’re just doing what we pay them to do, I get it. But sometimes it just seems a little…dramatic.)

Legal issues aside, is it really wise for your brand to share bad news?

The short answer is yes. The long answer is also yes, but since most people (present company included) only have attention spans worth 800 words or less, let’s stick to the short answer. Sharing bad news, if done correctly, is wise for your brand.

Stepping back, remember that your brand is not what the press says about you, not what the street writes about you, and certainly not how your competitors trash talk you. Your brand is how your customers and employees feel about you. When your customers and employees feel good about you, they will buy more, work harder, drive profits, etc. So the key here is to share bad news in line with the emotional connection you want to nurture with your customers and employees.

  1. Provide context. To this end, it’s important to share context along with the bad news. However, it’s equally important not to scapegoat or project blame elsewhere. Setting the stage for how the bad news came about will help engender a sense of empathy from your customers and employees.   
  2. Acknowledge the relationship. Instead of acting like two shy teenagers too afraid to admit they are crushing on each other, acknowledge that you’re in a relationship with your customers and employees. Instead of saying, “We produced a sub-par product,” say, “You trust us to create the best possible experiences and to that end, we let you down.”
  3. Listen up. Depending on the type of bad news, give your customers and employees a channel to share their thoughts, disappointments, and expectations. Do it with sincerity and repeat back what you heard, what you can do, what you cannot, and why.
  4. Paint a picture. Immediately after coming clean, so to speak, paint a picture of how you will make amends for your transgressions. “To ensure we do not again let you down, we have already started to do A, B, and C.” NOTE: Often you will need to share bad news before you have an action plan, and that’s okay. If you can’t deliver one soon, promise to report back with your plan when it’s ready.
  5. Keep the momentum. As life returns to normal, continue to communicate. Notice the word choice: communicate, not apologize. No need to apologize or rehash the bad news over and over. However, it is important to continually demonstrate progress.
  6. Consult a lawyer. It pains me to say this, however, do not start communicating without legal counsel. There’s not much use in having a strong brand if the company is sued into oblivion. Just make certain that that counsel understands and shares your goal of maintaining a strong, emotional connection with customers and employees.

Here’s another tip: Working diligently to create a strong brand before you have to share bad news is the best approach (other than, of course, never having bad news to report). That’s one of the benefits strong brands enjoy: a pass now and then.

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