Brand New Story, Brand New Day:
How a Business Crisis Can Become a Business Opportunity

By Richard S. Levick

It was like watching the proverbial train wreck.

AccessTells, Inc. is a publicly-traded software company’s whose flagship product has been successfully tested by the U.S. Navy for certain sea bottom reconnaissance projects. Last year, the company had revenue of $165 million. In April 2004, buoyed by the green light from the government, AccessTells embarked on a key round of financing, its first since the 2000 IPO that launched the company.

Early that month, outside financial advisor Joe Andoretti had called AccessTells’ CEO Curt Attenborough with some concerns. Troubling information had surfaced regarding Turk Sayers whom Attenborough had named Chief Compliance Officer. “Certain aspects” of Sayers’ relationship with CFO Martha Meredith could compromise the integrity of the auditing process.

According to Andoretti’s records, Sayers had responded by saying, “My private life is just that – private.”

To which Attenborough responded, “Ok, but it’s my job to advise you that the situation might be misinterpreted.”

AccessTells is not a real company and Messrs. Attenborough, Sayers, and Andoretti are not real people. But the hole they dug for themselves is indeed a real one. Further, the tools they found to dig themselves out are equally relevant for CEOs and their companies in any industry.  

It Gets Worse

In June 2005, the SEC informed AccessTells that it was looking into a number of disclosure and transparency issues with regard to the recent offering. Accounting misstatements were also mentioned as a key area of concern. Later that month, Sayers learned from his own Congressman that the Pentagon’s Inspector General was advising a powerful minority sub-committee head on the Hill that a few other companies supplying the Navy seemed a little on the iffy side.

In July, three reporters called Attenborough’s office. One was a financial reporter. The other was from a company that publishes defense industry trade magazines. The third was with a tabloid in….well, a very big city.

AccessTells was thus exposed on every front. Its first response was all too typical: It did nothing. When the financial reporter managed to get Attenborough on the phone, the CEO’s response was, “I can’t comment on any of that.”

That week, the financial paper published a story about how the entire industry was waiting to see if Attenborough himself would be a target of the investigation. “The man is as stubborn as hell,” the article quoted an unnamed source. “Once he gets backed into a corner, he just digs in. That’s a personality trait that goes back to his days at Yale.”

“’Days at Yale!’” thundered Attenborough when he read it. “That’s got to be Jack Nathanson talking. We graduated Yale together.” Nathanson was a sometimes competitor and never much of a friend.

“The [expletive deleted] is feeding the [expletive deleted] newspapers,” surmised Attenborough.

The trade publication was meanwhile quoting a Congressional aide who suggested the possibility of a Navy inquiry into past AccessTells contracts. And, the tabloid ran a story entitled, “Office Romance Cited in Latest Financial Hanky Panky.” No names were mentioned but the article hinted at a lurid late-night tryst over the Excel sheets.   

Road to Recovery

The first positive moment for AccessTells occurred the same day the tabloid story appeared. It was when Attenborough turned to COO Bill Miller and said, “We need help.”

Miller, fortunately, had been through a crisis at another company – not, perhaps, as life-threatening as this one, but bad enough so that he knew the options, he didn’t panic, and, in fact, he could even foresee a happy ending to the whole gruesome story.

Miller took charge, first by setting up a war room team that included Attenborough, inside and outside counsel, a crisis counselor he knew from his prior ordeal, and himself. Turk Sayers and Martha Meredith were immediately interviewed by counsel. Yes, they were romantically involved. But there was less likelihood of complicity as neither one was actually aware of any accounting irregularities. At worst, the SEC queries appeared to reflect honest mistakes – but mistakes nonetheless.

The next step was to choose a spokesperson and train him or her to deliver the AccessTells story – not a defense, but an affirmative version of events that would, at least, help exculpate the company and, present AccessTells in a positive light.

It was determined that Attenborough himself should speak for AccessTells, not only because he was the CEO, but because his personality was shaping up as a focal point of negative coverage. Were he to now speak quietly, sympathetically, and positively, he’d have a decent chance to salve or even close the gaping wound.

Certain action points were determined. Both Sayers and Meredith would be dismissed. There would be no admission of culpability. They would be fired because their relationship had compromised an unimpeachably honest company.

An independent auditor was called that day and retained to review all of AccessTel’s accounting practices – and the findings would be disclosed directly to the Board of Directors. Such audits had been performed in the past, but the message now was that the company would take extraordinary measures, despite the cost, and despite the likelihood that such measures would provide nothing new, to reassure investors and the public.

A blog would be quickly posted summarizing the company’s position. As Miller realized, reporters and regulators read these online communiqués. The blog would also be “optimized,” a simple technical process that would maximize traffic. Miller also drew up a list of disinterested parties who could be enlisted to speak for the company. These included Defense Department veterans from both Republican and Democratic administrations.

Outside counsel would maintain daily contact with the SEC to apprise them of what AccessTells intended to say and do in public, and, of course, to be 100 percent responsive to any suggestions from, or vetoes by, Commission staff. 

The outside communications advisor tasked his staff with thorough research on the three key reporters and to identify others who might call. A critical corner was turned when Attenborough called the reporters back himself – against the initial advice of counsel. But, in separate conversations with the lawyers, Miller impressed on them the need to rely on their media counselor as an equal. Based on his experience, Miller believed the very survival of the company could turn, not on a decision by the SEC, or investigation of past contracts, but on the tone and direction of ongoing coverage.

“Today’s marketplace makes decisions much faster than any court or regulatory body,” he advised, quite correctly.

With information in tow on the three reporters, Attenborough was able to promise something to two of them. To the financial reporter, he confirmed that Sayers and Meredith were going to be dismissed, and he unequivocally stated why – but he also provided documents that confirmed the absence of direct malfeasance on their part.

Meanwhile, he assured the trade reporter that AccessTells was happy to provide any documents for any official inquiry. More than that, he volunteered an exclusive on a new product that AccessTells was engineering. Not only did this provide an enticement for the reporter, the offer also sent the message that, despite the current crisis, AccessTells was looking forward to ongoing R&D and had every reason to expect a robust product rollout by the end of 2006 or early 2007.

There was nothing to usefully promise the tabloid reporter. But the crisis team anticipated correctly that the departure of Sayers and Meredith would limit that newspaper’s ongoing interest. In the meantime, Attenborough would politely respond to the reporter’s questions, but in as dry and factual a manner as possible.

At the same time, Attenborough and Miller arranged a conference call with the buy- and sell-side analysts who followed the company. Knowing that the dismissal of the CFO would be a cause of concern, Attenborough took the lead in discussing the company’s finances and spent at least half a day preparing for the call. 

No doubt internal damage had been done by the press reports and AccessTells was remiss by not advising its own employees sooner. Waiting too long was additionally dangerous because, absent clear-cut internal communications, there were no internal controls. A reporter could have run amok at the company, interviewing secretaries and mail clerks as well as the CEO. It was only AccessTells’ dumb luck that kept that from happening. In a situation like this one, anybody who answers the phone instantly becomes an “AccessTells spokesperson.”

Attenborough and Miller resolved to make up some of the time that was lost internally with a forthright email from the CEO, and by scheduling a series of meetings for different segments of the employee population. Candid questions were encouraged and candid answers were given. Individuals were invited to contact the CEO’s office directly with inquiries they preferred to raise privately.

Reversing the Cycle

Withal, there was no easy escape for AccessTells. A sharp dip in the company’s stock price mitigated, at best, the benefits of the financing that had begun the whole mess. Investors called and weren’t always very pleasant.

Mostly, though, the bad press focused on the disastrous office romance. Coverage described the SEC investigation as ongoing but, with time, interest in it disappeared. The independent audit confirmed that the mistakes made were not criminal or malfeasant. Unfortunately, a new contract with the Navy was canceled. But the company survived.

In fact, AccessTells did more than survive. In the midst of the crisis, Attenborough had planted the seed for another story and, this time, a positive one. With echoes of the accounting scandal still audible, the trade media began covering a new sonar device on the AccessTells drawing board.

True, at first, those stories began with language like, “Fresh from its brush with the SEC and a sex scandal in the C-Suite…” But by the third or fourth story, the negatives were all but gone. If anything, the interest in AccessTells generated by the scandal now made it possible to promote a new product that might otherwise have been completely ignored amid the shuffle of other companies promoting their own new products and services.      

Lessons Learned

For everything that’s unique about the AccessTells saga, COO Miller had prescribed a course of action equally practicable for any company in any kind of crisis. In particular:

• Put a human face on the story. As long as Attenborough was an object of speculation by some and attack by others, the potential for harm was limitless. By speaking for himself, as well as his company, he decisively moderated public perception and gave the media significantly more reason to play it fair.

• Fix the problem yourself. The company didn’t wait to be forced to fire its errant executives. And, it aggressively self-audited, sending a positive message to regulators and investors as well as reporters.    

• Draw on all your talent. Thanks to his COO, Attenborough was as disposed to the counsel of his media advisor as he was to his lawyers’ counsel. In any matter involving the Court of Public Opinion, it’s essential that the experts share their expertise in a respectful dialogue. Silos are deadly during crises.

• Leverage the message. Don’t just be proactive. Be aggressive. Use the Internet, rally disinterested supporters, and reach out to the media before they reach out to you. It seems dangerous to call a reporter first and thereby guarantee coverage that might not otherwise happen. Yet the more aggressive you are, the more you get to define the drama and cast the characters in it.

• Individualize the tactics. With three reporters breathing down its back, AccessTells nimbly adopted three separate approaches. The trick is to have enough information to fairly estimate what works best for every separate situation.

• Communicate internally. The sooner staff is prepared, the better. No one likes to hear it first from the media, and that includes trusted employees as well as shareholders and clients.  

• Reverse the cycle. News stories change and reporters need fresh angles. The SEC story will go cold. Even the sex story will go cold. AccessTells will then have a golden opportunity to replace it with a fresh angle that just happens to be to its advantage.

The worst part of a crisis is the emotional ordeal. Never forget the marketing possibilities, and reputation-enhancement possibilities, that would not exist but for the crisis. Those possibilities are very real, and they’ll help you sleep at night.      

Richard S. Levick, Esq. is the President of Levick Strategic Communications, which has just been named the Crisis Communications Agency of the Year by the prestigious Holmes Report. His firm has managed media strategies for many of the world’s highest-profile matters, from the Catholic Church scandals to the major issues arising out of the Middle East. Mr. Levick and his firm have published acclaimed books, including Stop the Presses: The Litigation PR Desk Reference.