1. OpenAI axes its CEO...for less than a week

Talk about a debacle. On Nov. 17, OpenAI’s board made the bewildering move of firing founder and CEO Sam Altman, a beloved Silicon Valley luminary often compared to Steve Jobs and Bill Gates.

Acting a year after the launch of ChatGPT, which has 100 million weekly users, the board offered veiled reasoning for Altman’s ouster. A review by the board concluded that Altman “was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities.” The board no longer had confidence in Altman’s ability to lead the company, it said.

A blindsided tech industry, from OpenAI employees to Silicon Valley superstars, rushed to Altman’s defense.

OpenAI president and co-founder Greg Brockman resigned in protest of Altman being axed. Ex-Google CEO Eric Schmidt called Altman a “hero.”  

Microsoft, OpenAI’s largest investor, offered Altman a job and to match pay of any OpenAI staffer who’d come with him. Most of OpenAI’s roughly 770 employees signed a letter saying they’d take Microsoft up on the offer if board members didn’t resign. 

Less than a week later, Altman had his job back.

Which begs the question: How did OpenAI’s board get it all so utterly wrong?

“Now that we’ve had a couple of months to process the upheaval at OpenAI in mid-November, you can see there were several reasons Sam Altman’s ouster backfired so spectacularly for OpenAI’s board. But maybe the most significant among them was how poorly the plan was conceived and then justified to the public,” said Jordan Rittenberry, Weber Shandwick West president and North America tech lead.

The board’s unraveling started with one of its first moves, issuing the vaguely worded statement attacking Altman’s integrity without backing it up, starting a process that could have tarnished the company’s reputation, Rittenberry said.

“It was a very serious accusation that they never really substantiated. As a result, the board quickly lost control of their narrative, as Microsoft swooped in and hired Altman, OpenAI employees threatened to leave the organization, and some board members even expressed remorse for pushing Altman out. In essence, the board went nuclear, then went dark while people rushed to Altman’s defense,” Rittenberry said.  

The board buried itself further in its handling of the communications around Altman’s firing, said The Hoffman Agency president and CEO Lou Hoffman.

“Even if the OpenAI Board believed that Altman would go quietly into the night, their first mistake was not bringing PR to the table for counsel. How else do you explain the absence of scenario planning?” Hoffman said.

“No one on the board thought to ask the question, ‘What if Altman changes his mind and makes a play to remain as CEO? And if such a scenario does occur, what will this likely look like?’ These are the questions that PR would have asked and guided the board to potential responses,” Hoffman said. “This way, they have a plan locked and loaded and ready to respond depending on Altman’s actions. Instead, Altman’s decision to fight to remain as CEO completely blindsides the board which triggers panic, never a helpful quality when addressing a crisis.”

The board’s decision to issue its announcement in a Friday news dump also showed how “clueless” the board was when it came to communications, he said. “The board essentially telegraphed to journalists that they were trying to hide this news which only amplified the media’s determination to deep dive into the story.”

OpenAI also had vulnerabilities apart from the board’s actions.

“You’ve got the overarching structure of OpenAI as a non-profit with a board governed by the altruistic objective to benefit humanity and this same board overseeing the for-profit entity. And, oh by the way, OpenAI competes in an area that is literally reshaping society right before our eyes. What could possibly go wrong?” Hoffman said. “The real shocker is the OpenAI-fires-Sam-Altman debacle explosion didn’t happen sooner.” — Diana Marszalek

2. The Silicon Valley Bank run

In December 2022, Silicon Valley Bank was flush with assets of $209 billion, making it the 16th largest bank in the US. Some three months later, over the course of a mere two days, the bank collapsed — the largest bank failure since the 2008 financial crisis, and the second largest in US history after Washington Mutual's closure roughly 15 years before.

Pundits have cited a number of reasons for SVB’s failure including the value of its investments tanking and a surge in tech startups (among SVB’s primary customers) withdrawing their deposits amid larger financial concerns, resulting in a bank run that put customer faith in regional banking systems, and therefore their future, at risk.

In a report, the Federal Reserve said fault also rests heavily with SVB management, who failed to manage the bank’s risks and, according to comms leaders, didn’t play by the rules when it came to abiding by their own principles.

“Beyond financial missteps, SVB likely did not stick to its own company values,” said Ethan McCarty, CEO of comms and employee experience consultancy Integral. “SVB proudly states that their values, including taking responsibility, guide their actions. However, it seems that SVB’s leaders did not do so.

“SVB also declared that empowering others is one of their core imperatives. The Federal Reserve ultimately attributed blame for the bank’s failure to SVB’s senior management team for mismanaging risk and its board of directors for not performing its duty as a check on senior leaders,” he said. “The tsunami of finger-pointing in the midst of the collapse was telling. True accountability and empowerment would have not only helped the dust to settle faster on the reputational aspect but might have led to better oversight that would have mitigated or avoided the disaster altogether. If SVB truly empowered others, it would have had more people using better controls to fend off declining market conditions and valuations of its investments.”

The Fed also cited social media’s role in fueling the financial panic, which included SVB depositors urging others to get their money out before the bank went belly up.

“SVB is such a fascinating case study, since it underscores both the centrality and limitations of communications,” said Dan Simon, chairman of financial comms firm Vested. “Limitations because the bank’s problem was fundamentally a financial one, not one of messaging: concentrated overexposure to government bonds against an unexpected and sharply rising interest rate environment. As the credit markets tightened, this set SVB on an unavoidable path of bad news announcements. It’s hard to convince people the ship you’re captaining is seaworthy if everyone can see it sinking beneath you.

“Centrality because so much of what drove the run on SVB was in the realm of ‘communications’: negative word of mouth, social media, even the mobile apps to enable seamless transfer of customers’ deposits — all represented communications challenges for SVB,” he said.

Ultimately, it wasn’t SVB that mopped up its mess but rather the federal government which stepped in to control literal and figurative damage. The government took the dramatic step of making sure that all depositors in SVB (as well as Signature Bank, another failed institution) got their money back in full; In addition to thwarting huge financial ramifications of the bank’s collapse was also a lesson in crisis communications.

“The actions were meant to send a message to America: There is no reason to pull your money out of the banking system, because your deposits are safe and funding is plentiful,” the New York Times wrote. “The point was to avert a bank run that could tank the financial system and broader economy.” — Diana Marszalek 

3. Bud Light and a nation drunk on culture wars

It hardly seemed like an especially controversial move for Bud Light to send a personalized beer can to trans social media star Dylan Mulvaney. The brand has been in a multi-year decline, particularly in terms of its appeal to younger consumers. The short giveaway, devised by two Bud Light VPs and influencer marketing firm Captiv8, aimed to demonstrate why Bud Light is for everyone, including the TikTok generation.

And yet, the move backfired so spectacularly that it stands as the perfect emblem of America’s culture wars. Sales plunged by 28% and Anheuser-Busch’s stock price dropped significantly after the marketing ploy attracted the ire of “anti-woke” Americans including, memorably, the likes of Kid Rock firing his gun at Bud Light cans. According to figures from SenateSHJ’s Crisis Value Erosion Index, Bud Light’s share price dropped 16.3%, and took 245 days to recover.

“For marketers tasked with building new audiences while keeping old ones and balancing product promotion with ESG, Bud Light’s crisis hasn’t just been a PR worst nightmare,” say Bospar CEO Curtis Sparrer and senior content director Racquel Yerbury. “The magnitude of crisis and its stubborn refusal to fade away mirror America’s extreme polarization.”

“Bud Light was dragged into the morass of oppositional politics and culture, and that’s nearly impossible to navigate unscathed, especially at this precarious time when the next election cycle looms large,” add Sparrer and Yerbury. “What do you do when a massive part of your audience is so critical of a transgender life that they rant, shoot and boycott? When their objection is rooted in unmalleable ideology and carries religious fervor? What do you do when that audience is crucial for the company’s revenue, jobs and even its existence?”

In Bud Light’s case, it took 11 days for Anheuser-Busch CEO Brendan Whitworth to release a statement. Not only did that provide plenty of time for others to shape the narrative, but Whitworth’s letter appeared to further annoy all sides in this battle. By June, Whitworth was making the case for the company’s employees that were being hurt by the conservative backlash.

“The brand needed smart, fast and extensive action on multiple fronts to contain the crisis,” say Sparrer and Yerbury. “Its slow-burn response to focus on its employees and friend-and-family fun wasn’t a bad idea and, in a less volatile environment, it might have worked better. But instead, it landed flat in the pivotal months.”

Not only was Anheuser-Busch’s eventual response neither immediate nor multi-faceted, but the company was also hurt by a lack of pre-emptive steps. “Predicting what will go viral is close to sorcery, but you can reliably predict that social media responses will be unfiltered and often vicious,” say Sparrer and Yerbury.

Accordingly, the following steps are advised, starting with a clear understanding of the brand and its core audience. Also required, say Sparrer and Yerbury, is similar clarity around America’s temperature amid heated societal debates. “Pay close attention to what’s happening in the news, what stories are getting traction across channels, and how divisive the climate is. If the nation is at a boiling point, more subtle, moderate and unifying tactics may be necessary. If audiences consider each other “enemies,” campaigns must be optimistic, funny, friendly, and focus on big, relatable life themes that bring humanity together. Big-hearted humor can disarm angry people.”

Finally, vet the idea thoroughly with the worst case scenario in mind. “Was March Madness really the right time and environment for this particular activation?” ask Sparrer and Yerbury. “It’s true that, morally, any time should be right. But is Dylan Mulvaney a sports maven? Since this was an influencer campaign, did the Bud Light team chart out worst outcomes amid the known viciousness and bipartisan cancel culture that plagues social media? A plan must account for that environment’s unpredictable nature.”

Bud Light’s longer term strategy has perhaps been more successful — providing relief funds to distributors and wholesalers, and launching a massive Super Bowl campaign that even has Fox talking about a brand comeback. 

But the situation also begs the question — should Anheuser-Busch have done more to defend Mulvaney from all of the toxicity and hate that she attracted as a result of their campaign? “They didn’t reach out to her, even privately,” note Sparrer and Yerbury. “Mulvaney is an adult who knows the score with society, but she executed her contract for Bud Light in good faith and was left to the wolves. Resilient, Mulvaney was shining like a diamond as she strode the red carpet at the Golden Globes, while Anheuser-Busch’s US CMO Benoit Garbe announced he was moving on at the end of 2023.
 
“Bud Light’s team might have leveraged key truths about human psychology to lead against hate and support Mulvaney. Consider the well-known look-each-other-in-the-eyes experiment brought to life by a Polish ad agency in 2016. Exceptional PR and marketing teams will always recall the power of real emotion and the good that happens when we act with basic human decency.” — Arun Sudhaman

4. The Spanish FA scores an own goal

Keeping your best players happy and motivated to turn out for their country is one of the most important and most challenging aspects of running a national football association. So if you’re the boss and your entire national team refuses to play for you, you have a far bigger problem than just working out who will be in the squad or who the opposition is.

It started with a (non-consensual) kiss: when Spain’s women’s team beat England to win the World Cup last August, Royal Spanish Football Federation (RFEF) president Luis Rubiales (also a vice president of the European football union UEFA), grabbed forward Jenni Hermoso on both sides of her head, on stage, and kissed her on the lips during the post-match ceremony. Hermoso said on a live stream afterwards that she “didn’t like it”, but Rubiales brushed off accusations and global social media outrage that his actions were at best inappropriate, saying it was “spontaneous” and “mutual”.

As soon as 81 Spanish players, including all of the 23 women who had just won the World Cup, released a joint open statement the following week saying that they would not play for their country until Rubiales stood down, it was clear there was no way back. The hashtag that sprang up nailed it: #SeAcabó (it’s over).

The former president not only lost his jobs, he faces a three-year ban by international football association FIFA and, following Hermoso’s complaint, is currently going through court proceedings pertaining to the alleged sexual assault and coercion in Spain’s highest criminal court.

MHP Group deputy CEO Nick Barron – who began his career at the Football Association and Wembley Stadium – says: “It’s hard to see how any communications strategy could have saved Rubiales’ job, but his aggressive stance after the incident escalated tensions and turned it into a totemic issue in a country and a sport where equality, representation and consent are hotly debated issues. By dragging out the inevitable and refusing to demonstrate contrition or accountability, he ensured a wide set of stakeholders had to take a position.”

Barron said the crisis has also exposed flaws in the governance of the RFEF, who “allowed their president to set the agenda for three weeks and completely overshadow the stunning achievement of the women’s team”, before Rubiales finally resigned in September. “They needed to move quickly to show that Rubiales’ fate was not his to determine, setting out a clear disciplinary process and wrestling back control of communications from their president.”

Crisis communications veteran Rod Cartwright describes the Rubiales own goal as a “disasterclass” that was also “a shameful example of individual and institutional misogyny, which largely overshadowed a remarkable sporting performance by an amazing team of athletes.”

Cartwright also outlines broader lessons from the scandal, saying it provides “a salutary reminder of two simple, all-important truths of good (and bad) crisis communication and reputation management.”

He says: “The first is that there is rarely (if ever) any such thing as a ‘PR crisis’ caused solely by poor communication. In reality, reputational crises invariably stem from a combination of operational, leadership, structural, governance, decision-making, behavioural and cultural factors. In this case, it was all of those and more.

“Secondly – and crucially – organisations are defined not by the values they promote, but by the attitudes and behaviours they tolerate or even celebrate. The Spanish Football Federation’s stated values include transparency, respect and integrity. Those were hardly the hallmarks of an institutional approach to the crisis that tolerated gaslighting and victim blaming.”

Cartwright concludes that if there is one lesson to be drawn from the Rubiales affair, it is that “a surefire way of creating a self-imposed crisis is to tolerate the very behaviours that your values should render unimaginable. Culturally a fish may rot from the head down, but it can also erode from the bottom up. It is for you to decide how much of either you are prepared to countenance and to live with the consequences.” — Maja Pawinska Sims

5. Musk deals a near-fatal blow to the bird site

It’s incredibly rare for a corporate brand to so pervade everyday discourse that it becomes a verb, but after millions of users had been tweeting for 17 years, Elon Musk’s rebrand of Twitter to X last summer helped continue the iconic brand's downward spiral.

As we noted in our crisis review last January, Musk buying Twitter for $44 billion in October 2022 sparked a series of self-inflicted crises, not least a mass exodus of advertisers that led to a 50% drop in ad revenue by May 2023, but the sudden and clumsily-rolled-out rebrand in July was far and away the most dramatic development in a saga of chaos at the social media platform.

It was a risky gamble that hasn’t, so far, come close to paying off. The erasure of the familiar blue bird – which had become one of the most recognised logos in the world – looked to many observers to be completely irrational, even narcissistic, from a brand and business point of view; as our op-ed at the time on the obvious lack of love Musk had for the Twitter brand said, “there’s a difference between disruption, and moving fast and actually breaking things.”

When set alongside the reinstatement of previously-banned users from Donald Trump to misogynist influencer Andrew Tate, the September disbanding of the platform’s election integrity team ahead of major elections around the world in the coming year, and the amplifying of extremist views that turned X from a go-to premier digital platform for corporates to the dark alleyway of brand safety, it’s no surprise that the commercials look even worse six months after the rebrand.

By September, year-on-year revenue decrease had reached 60% and monthly active users were also down by something like 15%; X's 2023 ad sales, which make up between 70% and 75% of the platform's revenue, are estimated to have fallen to about $2.5 billion, far short of the $3 billion target.

None of which was helped by Musk's memorable appearance at the New York Times' DealBook Summit, where he told advertisers to "go fuck yourself".

Brand value is complex to measure, but there’s no doubt the destruction of the Twitter name, logo and associated terms “tweet” and “tweeting” also significantly damaged brand recognition and equity, even if negative sentiment had already risen sharply; according to Brand Finance, by the time of the rebrand, Twitter’s brand value had dropped to just $3.9 billion.

When brand tracking company Tracksuit surveyed consumers in Australia, the UK and US in October, it found that 31% of respondents had a negative reaction to the rebrand, compared to 22% with positive views, and 23% of participants said they would use the platform less, versus 10% who anticipated using it more.

George Hutchinson, CEO and co-founder of reputation risk advisory firm River Effra, says events at Twitter and then X are probably the best example to date of “masterful bias” – the idea that the leader is essentially a genius and therefore can’t be wrong – and this is “one of the most difficult biases to break when dealing with an incident or crisis.”

Hutchinson says the biggest problem is Musk’s long-term strategy and whether the X rebrand is a help or a hindrance in terms of brand trust: “Twitter was one of the most trusted social media platforms and the rebrand has massively damaged that trust. And that damage has continued over the course of 18 months as the elements that built that trust have been cut away.”

But he points out that the bigger prize is Musk’s “genius plan” to build the “everything” app, and go into banking and payments, as well as many other areas: “To my mind there are few markets where tech newcomers have failed more in truly challenging the dominance of the incumbents than in banking. The public have voted, saying that trust in their longstanding, traditional banks matters most. This is where the best question in incident management and crisis response comes in – what is your objective?

“I can only see a conflict between Musk’s long-held ambition to brand something X, and the corporate objective for the company formerly known as Twitter to become a super-trusted everything app.”

At Bully Pulpit International, president Andrew Bleeker sums up the position in which X now finds itself: “Ultimately, a confusing rebrand is just one of many examples of Musk’s chaotic leadership: mass layoffs, the check mark debacle, reactivating controversial users’ accounts, allowing disinformation and antisemitism to go unchecked. Add it all up and it’s not surprising users and advertisers alike are turning away.”

And he adds that, like previously-banned user Trump, Musk is testing the idea that all news is good news, but “unlike an election, both users and advertisers get to vote every day. As the platform has deteriorated under Musk’s leadership, users voted with their feet. And advertisers with their dollars. If the goal was always to be king of his own castle, the X rebrand was a smashing success — it’s clearly something different. But if the goal is to build a valuable property, X doesn’t yet mark the spot.” — Maja Pawinska Sims

6. Evergrande, Country Garden and China’s ‘ticking time bomb’

Perhaps nothing is more illustrative of China’s current economic malaise than the explosive financial woes of the country’s two biggest property developers: China Evergrande Group and Country Garden. The two companies’ financial issues, linked to huge levels of debt, raise questions about China’s economic sustainability, putting trust in the entire property sector under significant scrutiny.

“Coverage in international financial media linked the debt defaults and legal problems within China’s two biggest property companies to wider structural issues in China’s economy,” points out Epic Communications founder Ray Rudowski. “Namely, suggestions of an over-reliance on the property sector to boost wealth and maintain the living standards of its growing middle class.”

In August, Country Garden announced a USD$6.7bn loss in the first half of 2023 and warned of defaulting on its debt. At Evergrande, things were not much better, even if Chinese media retracted stories that the company’s chairman Xu Jiayin had committed suicide. By September of last year, Xu’s career remained on life support, with Evergrande’s share price tanking after authorities put the company’s chairman under police surveillance and detained senior staff.

According to the SenateSHJ Crisis Value Erosion Index, the Evergrande Group, listed on the Hong Kong Stock Exchange (HKSE), first started its financial troubles in September 2021. At the start of the crisis, Evergrande’s share price was HKD $2.360. It currently sits at HKD $0.203 – a 91.39% drop with no recovery in sight. It suspended trading of its shares in September 2023 and then a few months later, the Hong Kong High Court gave it until the end of this month (January 2024) to finalise a debt restructuring deal which, if successful, could save it from liquidation.

Country Garden’s share price drop was 76.25% at its worst and it is yet to recover.

Said SenateSHJ partner and head of reputation, Craig Badings: “In the four years we have tabulated the Crisis Value Erosion Index, this is the highest share price drop for any company crisis we have measured globally. The next highest is Country Garden’s at 76.25% followed by the BP Deep Water Horizon explosion and oil spill after which BP experienced a share price drop of 50.4%.

Unsurprisingly, mainland media were more restrained in their coverage of the crisis than their international counterparts. “In a highly polarized global political environment where the collective West is framing China as the latest threat to global security, a story about two floundering property giants takes on much greater significance,” says Rudowski.

The heightened significance, accordingly, requires specific crisis PR measures — none of which appear to have registered with either company. “All key stakeholders must take a broad view to recognize that in a highly politicized global operating environment the fate of two property giants could have repercussions beyond China’s own borders,” explains Rudowski. “This is where the parties involved need to take a much more proactive stance.”

“The companies involved must act transparently and make addressing governance issues a top priority,” continues Rudowski. “Instead of passing these issues off as business-related or relying on the central government to police the industry, these companies themselves must take a more enlightened view to ensure what happened to them does not happen to others.”

In addition, notes Rudowski, China’s regulators and authorities must also accept responsibility to “rebuild trust in the Chinese growth story and put these defaults and the fallout surrounding them into perspective. Investors, analysts and consumers need reassurance.” — Arun Sudhaman

7. Congress vs the Ivy League

As three of the US’s top-ranking academics, you’d think the heads of Harvard, the University of Pennsylvania and MIT would, at the very least, have the wherewithal to read a room — particularly a congressional one.

But, more than a month after Claudine Gay, Elizabeth Magill and Sally Kornbluth were drilled by a US House committee on antisemitism on university campuses, it’s still hard to fathom how the university presidents' testimony was so mind-boggling bad.

Their stilted and evasive responses to whether calls for the genocide of Jews would violate school conduct policies drove intense backlash, inflaming existing concerns about student safety associated with an increase in antisemitic and Islamophobic events after Hamas’ Oct. 7 attack on Israel and Israel’s response.

Neither Magill nor Gay would give a yes or no answer no matter how hard pressed. Kornbluth was not more forthcoming, but she emerged from the probe in better shape than Magill and Gay, both who went into the hearing already under scrutiny. Magill had infuriated Jewish donors in September by allowing the Palestine Writes Literature Festival to take place on campus despite the event including speakers with histories of making antisemitic remarks. Gay, who became Harvard’s president in July, faced allegations of plagiarism.  

All of which came back to bite Magill and Gay with dire consequences, at least as far as their careers go. Under pressure from politicians on both sides of the aisle, as well as big-money donors, Magill resigned four days after her Washington appearance. Gay stepped down from her role at the start of January, capping the shortest presidential tenure in Harvard history.

“It is stunning,” said Group Gordon chief strategy officer Andrew Jarrell, who works with clients in higher education.

The way Jarrell sees it, the university presidents totally missed the mark by offering up “over-lawyerly responses” that failed to properly address the very nuanced topic of tolerance. “The mistake was forgetting that they really just needed to convey some basic, widely accepted values that the university is operating with and that, as a society, most reasonable people believe in and support,” he said.

It's really a larger blow, too. Here were women, including Harvard’s first Black woman president, who could have advanced their institutions not just academically but culturally, too, given the Ivy League’s history of exclusivity and elitism.

And while universities are rightly built to be bastions of free expression and students testing limits, it also is key to remember that schools prep students to function in civil society, which does not include propagating hate and instilling fear in others.

“I understand how they may have been in a room with many, many advisors and lots of lawyers and overly complicated what was a fundamental and basic question that was really an opportunity for leadership and an opportunity to assert their values at a time when people were looking for that leadership and guidance,” Jarrell said. “They really failed at that test.” — Diana Marszalek