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When Is It the Right Strategy to Fight Back in Public? Hill and Knowlton Exec Analyzes Two Corporate Crises

By Chris Gidez, SVP and US Director of Risk Management/Crisis Communications, Hill and Knowlton

Two recent and unrelated events brought to mind the hearing scene from the great 1981 film, "Absence of Malice." In the scene, James Wells, a Justice Department official (played by Wilford Brimley) is questioning a number of people about a criminal investigation gone awry. One of those being questioned is Michael Gallagher, a liquor wholesaler (played by Paul Newman):

Wells: "Everybody’s just doing their job."
Gallagher: "And Teresa Perrone’s dead. Who do I see about that?"
Wells: "Ain’t nobody to see."

Having done crisis management for the better part of my adult life, and seeing companies’ reputations sullied, I can relate to the line, "Ain’t nobody to see."

Too often, companies’ reputations are unfairly damaged — often permanently, thanks to Google — by allegations (sometimes malicious) ultimately proven wrong. Company executives struggle with the question, "Who do I see about that?"

Traditionally, companies have resisted the idea of joining the public fight; choosing instead to maintain a low profile out of fear of exacerbating the situation, or hoping to prevail in the court of law. They believe that they must adhere to Marquess of Queensbury rules, even while their opponents steal from the WWE playbook.

But faced with the prospect of a public flogging at the hands of the media, trial lawyers and/or publicity-seeking politicians, more and more companies are rethinking that approach.

The two events that reminded me of this scene were Taco Bell’s aggressive and deliberately public reaction to the class action lawsuit accusing the company of misleading customers about the composition of its ground beef they use, and last week’s report from the National Highway Traffic Safety Administration (NHTSA) that ruled out electronics problems as a cause for the reported stuck accelerator problems that led to the infamous Toyota recall last year.

Let’s start with Toyota.

Around this time last year the auto company found itself in the middle of a world-class s**t-storm following the recall of millions of vehicles due to accelerator problems. Congressional investigators – helped in part by trial lawyers and auto critics – could smell the blood in the water and Toyota executives were hung, drawn and quartered on live television.

The popular scapegoat for the problem was on-board electronics. And notwithstanding the insistence of the Toyota executives that there was no evidence to suggest the electronics were the cause of any problem, the politicians and the media weren’t about to let go of that theory:

At a February 24 House oversight committee hearing, Rep. Brian Bilbray pressed the question to Toyota CEO Akio Toyoda: "You stated that you had 100%, you were 100% sure that the difficulties with the pedals, with the acceleration, was not electronic, that it was not going to be involved with the data systems, that it was a physical problem. Do you stand by that statement?"

At the same hearing, Ohio Rep. Marcy Kaptur (in her own, fractured sort of way) chose to excoriate the company for issues well beyond accelerator safety: "Mr. Toyoda. I am not satisfied with your testimony. I am being very forthcoming. I do not feel it reflects sufficient remorse for those who have died. And I do not think you have accurately reflected the large number of complaints that have been filed with Toyota for nearly a decade. So I as one member am disappointed… Mr. Toyoda. How did Toyota lose its way? You say in your testimony your company grew too fast. Some smart lawyers gave you those words. I think what happened was your company went from emphasizing long-term quality values and corporate responsibility to fighting against safety regulations, against insider influence inside this city and your own capital in Japan, and environmental regulations and indeed worker rights and card checks inside your company."

And even though Mr. Toyoda told lawmakers that he was "absolutely confident" that the electronics of Toyota’s gas pedal systems were not the source of problems, his word evidently didn’t count for much.

At a March 2 Senate Commerce Committee hearing, Transportation Secretary Ray LaHood said, "We also believe, based on what people have told us, that [perhaps the electronics could be the problem too."

At a May 20 House Energy and Commerce Committee hearing, Chairman Henry Waxman said, "These assurances were baffling." And his colleague, Bart Stupak, added, "Toyota engaged in damage control almost immediately following our hearing by continually asserting confidence that extensive testing proves the safety of the electronics systems and attacking those who disagree with them. But … the record doesn’t support Toyota’s statements that it conducted extensive testing."

Fast forward to February 8, 2011, and the results of the NHTSA investigation (carried out in part by NASA engineers): "NASA engineers found no electronic flaws in Toyota vehicles capable of producing the large throttle openings required to create dangerous high-speed unintended acceleration incidents. The two mechanical safety defects identified by NHTSA more than a year ago – "sticking" accelerator pedals and a design flaw that enabled accelerator pedals to become trapped by floor mats – remain the only known causes for these kinds of unsafe unintended acceleration incidents."

On top of that, Secretary LaHood now concedes that part of the problem may have been "pedal misapplications." In other words, driver error.

And in looking at the tattered remnants of what was once a gold-standard brand, it’s not hard to imagine Toyota executives wondering "Who do I see about that?"

Which brings us to Taco Bell.

After being hit with a class action suit accusing the company of misleading consumers about the nature of the meat it serves, the company decided to hit back – and hard.

Through a special-purpose website, national print ads, social media and other channels, the company denied it was misleading consumers, stood by the quality of its products and said, "Thank you for suing us… We take any claims to the contrary very seriously and plan to take legal action against those who have made false claims against our seasoned beef."

With this strategy, the company moved the discussion away from the merits of the allegation to the merits of the communications strategy, and in the process won by praise and criticism for its willingness to respond to critics in such a public manner.

But will the company’s strategy ultimately pay dividends? Has it reassured consumers? Will it put the brakes on the lawsuit?

It is too soon to answer those questions, but it does raise the broader question, "Under what circumstances is it in a company’s interest to join the public fight?"

Doing so just to make a CEO or employees feel better is not sufficient justification. But I do believe there are times when it makes sense for a company to join the battle, but only under the following circumstances:

  1. When the risk to the company is real enough, and big enough;
  2. When the company is certain the facts are on 100% its side.
  3. When the awareness of the problem is great enough that it does, or could, have a significant impact on the company’s reputation (big enough to justify taking the risk of raising the profile of the conflict even further);
  4. There is solid research to define stakeholder awareness and attitudes, and the messages have been tested to ensure their effectiveness; and
  5. The company is backing up its words with actions — e.g., file suit, etc.

What was compelling about the Taco Bell campaign is that the company promised to take legal action. In other words, walk the talk. Complaining alone is insufficient, as it simply raises the question, "If you feel so strongly about being harmed, why won’t you do something about it?" We’ll see if Taco Bell really does back up its words with action. But in the meantime, the aggressive posture by the company may embolden other corporate leaders to adopt a similar approach.

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