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Shel Holtz
Communicating at the Intersection of Business and Technology
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Apple press event a lesson in how not to handle a crisis

Shel HoltzMuch has been written about Apple’s press event held last week to address the iPhone 4 dropped-call kerfuffle. Some people were satisfied (especially Apple’s most loyal customers, who melted into gooey puddles when Apple CEO Steve Jobs got choked up over how much he loves Apple customers); others weren’t.

I’ve made no secret about my view of Apple’s business practices while recognizing that the company cranks out some amazing products. But for the press conference, I stepped into my crisis counselor shoes. (I wrote a post on crisis communication fundamentals a few years ago that will serve as a foundation for my comments. You can read it here, but I’ll point to four of the guidelines for responding to a crisis:

  • Treat perceptions as fact—Jobs insists there’s really no problem
  • Acknowledge mistakes—Jobs insists Apple has made no mistake
  • Tailor messages to address the aggrieved or angry party—The message to the aggrieved parties: “There’s really nothing wrong with your phones that isn’t wrong with all phones”
  • Note the other side???s concerns; don???t be dismissive—“Dismissive” characterizes Jobs’ remarks
  • Make no public confrontations—Jobs took on every other cell phone manufacturer

Let’s explore these points in more detail.

Dissecting the statement

The free iPhone bumper is the right solution and, on its face, is aligned with the principle of tailoring messages to the aggrieved party. It deals with the problem without going to the extent of a recall, which I don’t think is warranted. Not everybody agrees. Notably, Consumer Reports doesn’t think the free bumper goes far enough. “What we were hoping for was a concrete, this-is-it fix for the phone,” according to Mike Grikas, the magazine’s senior editor for electronics and technology.

Interestingly, a wave of anti-Consumer Reports sentiment has surfaced with detractors insisting the magazine must be biased. Few of these individuals struck me as paragons of objectivity themselves. Each of them cites Jobs’ discussion of reception issues that plague all smartphones, but Grigas notes, “The human hand—the body—attenuates signal on all phones, but we haven’t seen it happen to the degree that it’s happened with the iPhone 4.”

By dragging the entire smartphone industry into the fray, Jobs invited comment from competitors. Both RIM (makers of the BlackBerry) and Nokia cited their decades of experience in antenna design. RIM’s statement noted the company has deliberately avoided designs like that employed for the iPhone 4 “and instead has used innovative designs which reduce the risk for dropped calls, especially in areas of lower coverage.

“One thing is for certain,” the RIM statement adds: “RIM’s customers don’t need to use a case for their BlackBerry smartphone to maintain proper connectivity.”

Nokia focused on the thousands of hours spend studying how people hold their phones for different purposes. ” As you would expect from a company focused on connecting people, we prioritize antenna performance over physical design if they are ever in conflict.”

Wireless networking engineer Richard Gaywood—he has a Ph.D. in wireless network planning techniques—reinforced these points: “No other phone has ever put an electrically active antenna on the exterior of the device,” he told Newsweek.

Deflection as crisis response

It was Jobs’ attempt to suggest that the iPhone 4 suffers no more from reception issues than any other phone—a discussion that occupied the first part of his remarks, long before he talked about solving customers’ problems with the free bumper offer—that rubbed me the wrong way. That and his complaint that the whole issue is nothing more than the media whipping up unjustified hysteria.

To prove his point, Jobs said only 0.55 percent of iPhone 4 users reported problems. Of course, the number of people calling Apple customer service most likely does not represent the total number of those who experienced reception woes when their skin came into contact with the antenna. The issue was widely reported, as were Apple’s responses (hold the phone differently, we’re going to issue a software update). If you already knew what you were going to be told, why would you bother to call customer support?

Jobs also blamed the press for creating “Antennagate” and blowing the situation out of proportion, a bandwagon on which a lot of Apple supporters have jumped. (I got one tweet after expressing my view of Jobs’ dismissal of the issue that read, “You and the media are driving the myth.”) However, it was widespread discussion on Twitter, in blogs and throughout the social media space that made the media aware of the problem in the first place. I can’t remember, nor have I been able to find, any similar flurry of complaints by consumers about any other new-phone release.

Still, my issue isn’t whether Jobs was accurate. It has more to do with the principles of crisis communication. Crises are emotional, not rational, in nature. People are risk-averse. They react to crises based on an understandable desire to avoid being subjected to a risk that an organization has imposed on them. Companies engaging in rational debate when people are upset only look defensive, even if their arguments are sound and accurate.

If you need an example, look to the Exxon Valdez. Then-Exxon CEO Lawrence Rawl rationally argued that he did not need to visit the scene of the oil spill because he was better equipped to manage the situation from his offices in New York. Logistically speaking, that was undoubtedly true, but the emotional reaction from the public was that he didn’t care about the ecological damage the spill was inflicting, leading former Environmental Protection Agency chief William Reilly to proclaim that Rawl “provided a casebook example of how not to communciate to the public when your company messes up.”

Sound crisis principles require companies to (among other things) acknowledge the aggrieved party without dismissing their complaints. When Jobs shrugged off the problem as typical of smartphones in general, he did exactly that. And while the millions of iPhone 4 users who have not experienced the problem may have smugly nodded in agreement, I’m sure those who had suffered dropped calls on their iPhone 4s—but not on their 3Gs or 3GSs—felt belittled.

Excuses, excuses

By announcing the fix after insisting there’s really nothing wrong with the iPhone 4 from which all smartphones don’t suffer, Jobs essentially said, “This is a tempest in a teapot, there’s really no problem, but we’re going to do something to appease all the whiners and shut up the press.”

I’m not alone in this sentiment. Newseek’s Daniel Lyons wrote of Jobs’ talk:

Part 1: There is no problem. Part 2: Even though there is no problem, we???re going to give everyone a free case, which should insulate the antenna and prevent the interference that we just told you isn’t actually occurring. But if you???re still not happy, you can give back the phone for a full refund. Jobs???s snotty tone made it clear that he was pretty fed up with all the whining about a problem that he says doesn???t exist.

Those rising to Apple’s defense have embraced the media conspiracy theory as well as the idea that the attacks are Apple’s punishment for its success (a notion endorsed by right-wing radio talk show host Rush Limbaugh). You have to wonder where all these people are when Microsoft finds itself under attack. They also point to Jobs’ expression of love for customers, words that aren’t matched by many of Apple’s actions. If the company loves its customers so much, why refuse to engage in any kind of dialogue with them? Apple is notoriously absent from any presence in blogs or other social channels. Why delete references to the Consumer Reports findings from Apple forums? For that matter, why refuse to sell an iPad to a customer who wanted to pay cash? Or start a blog to address MobileMe issues to customers, then abandon it after only three posts (the last of which promised another update shortly)? Or, ultimately, why maintain an exclusive agreement with AT&T as the only U.S. iPhone carrier when those customers Jobs claims to love so much have been outspoken in their desire for an alternative?

I could go on, but you get the point.

Antennagate would have been dealt with easily by dropping the “all phones suffer from this issue” excuse in favor of, “Our external antenna isn’t working the way we though it would and we’re going to give you all a free bumper to address it, and if that’s not enough, you can return it.” Period.

I can’t speak to why Jobs took the approach he did. Newsweek’s Lyons calls it arrogance. Others think it’s sincere denial. But as Toyota and others immersed in crises have learned, the longer you deny the existence of a problem, the longer the story lasts as reports of problems continue to surface.

Jobs could have ended this story. Instead, expect to see it continue for the forseeable future.

Comments
  • 1.There's the old saying, "there's an exception to every rule," and I think we all have to just deal with the fact that people see Apple as a Lovemark (as Kevin Roberts calls it). Their customers are loyal beyond reason. I also don't think that Apple does this to screw their consumer or put out sub-par products into the marketplace. And, by the looks of the outcome, they are being fair in terms of both compensation and refund. And yes, you're right... they are the exception. I feel like anything Apple does is always criticized... but maybe that's just me (and I'm no fanboi). In the end, until I hear or see otherwise, consumers are not demanding refunds or truly complaining.

    Mitch Joel - Twist Image | July 2010 | Montreal, Quebec

  • 2.Your comments are right on. The first thing a company should do in a crisis situation is admit there's a problem (if there is one), address it, apologize and move on. Jobs' handling of this problem was poor.

    Tim Herrera | July 2010

  • 3.It's interesting, Mitch, that some people think Apple is always criticized, while others (myself included) think they always get a pass.

    Shel Holtz | July 2010

  • 4.This was a great post, which I agree with, and a good reminder about handling crisis situations properly, so thanks for that Shel!

    What I keep reflecting on in all of this is the childishness of Jobs' behaviour in addressing the issue. Instead of the founder and CEO of a world-wide multi-billion dollar company, he sounds like a pre-schooler who didn't get something he wanted.

    I also found it interesting how he has attempted to drag other companies into his product issue by saying "all smartphones" have the same problem. As a Blackberry user, I saw this message from the founders of RIM about that attempt, and feel it reflected a clear difference in tone and message from the tantrums Jobs has been having.

    http://blogs.blackberry.com/2010/07/joint-statement-from-rim-co-ceos-in-response-to-misleading-comments-by-apple/

    Kristen Ridley | July 2010 | Toronto

  • 5.Mitch, I'm with Shel here. Apple gets a free pass on most things - and I firmly believe it enjoys its exclusive arrangement with AT&T solely because it gives them the cushion of a scapegoat, or at least a flattering comparison.

    Read the defenses of Apple faithful, and compare it to Stockholm Syndrome.

    Ike | July 2010 | Birmingham, AL

  • 6.Shel- I agree with you, I do believe Apple gets a free pass.

    What I think is more funny, is that this "pr" event happened at an interesting time. With the BP oil spill, we can notice that people are starting to question even a 'good' corporation.

    Yanni - Consultant | July 2010 | Virginia

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