SELINSGROVE, PENNSYLVANIA, UNITED STATES – 2721/01/27: A woman walks past the GameStop store … [+]
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The meteoric surge in GameStop’s share price made international headlines. Given how and why the company’s stock price has risen so dramatically, this story is likely to continue in the days ahead, along with several crisis management lessons for executives.
Elizabeth Christian, CEO of Elizabeth Christian Public Relations, commented: “Whether self-inflicted or in a situation a company has gotten into, a crisis is any situation that disrupts operations or threatens customer loyalty and brand equity. Certainly [this Game Shop] Phenomenon qualified…. “
She said the situation is unique because “… it has impacted not only the reputation of companies that are experiencing dramatic changes in the way they trade their stocks, but also the platforms that facilitate transactions and brands on social media Moment to use. “
While unique, leaders should consider these seven key lessons from this situation in order to prepare, respond to, and manage any crises that affect their businesses and organizations.
The power of the masses
Eric Yaverbaum, CEO of Ericho Communications, said, “Never underestimate the power of the masses, especially when combined with the power of social media. I’ve been saying that in boardrooms for almost two decades – people used to laugh a lot in disbelief, not so much.
“Social media has changed crisis communication,” he said, “and so many struggle to give it the respect it deserves and suffer the consequences.” I always tell my clients that the time to work on their crisis communication plans is long before a crisis occurs. ‘
Yaverbaum noted, “Every business and public figure – no matter how big or small – is imperative to have a plan for a range of social media-based crises (from public cues and shame to meme and beyond ). At this point such things are to be expected.
“I have always believed that every crisis is an opportunity, and this is another great example of that. When you’re ready, you can ride the wave instead of being swept or swallowed by it, ”he said.
Know what you are talking about
“The biggest crisis management tip here is straightforward – you know what you’re talking about,” commented Eric Fischgrund, CEO of Fisch Tank PR. “So many of the speakers who spoke on Fox, CNBC and other networks have been combative and dismissive.” Reddit, its users, and retail investors are trying to roll back the system.
“A lot of these financial institutions were surprised because they weren’t listening properly. They listened to themselves, read the Wall Street Journal and the Financial Times, and ignored the boom and coordination of retail energy. “
Fischgrund noted, “The greatest response to a crisis should always be to listen carefully before developing a plan. Unfortunately, many of these companies have made public reaction worse.
“These traders have found a perfectly legal formula to invigorate traditional US capital markets and stave off those they believe have controlled the market for some time. This week’s events are as much about getting equal as they are about making money, ”he said.
Jamie Gilpin, chief marketing officer for social media analytics firm Sprout Social, said, “In the midst of unprecedented volatility, knowing what is being said about companies on social media before it is reflected in its share price is important to reduce risk and to increase edge.
“Analysts who need the ability to accurately forecast business finances – and quickly change that forecast as the world around them changes – should use social media [media] as an intelligence tool to optimize the risk / return calculation, which is at the heart of most investment decisions on Wall Street, ”she said.
Speed and focus are important
Christian said: “[The] The hallmarks of an effective response to crisis communications are speed and focus as a company [that is] under control proactively explains their part in what created the situation, offers a full apology or remorse and, importantly, explains how they will prevent the crisis from occurring again.
“Too often lawyers and corporate boards are embarrassed on these last two points because they fear admitting responsibility, but the only way to quell outrage is taking responsibility and regaining control of the narrative,” she noted.
Answers determine judgments
Christian remarked, “Executives need to remember that sometimes a crisis is inevitable, but it is the way the company reacts that determines the judgment of its stakeholders, and sometimes even its shareholders. It is important to tear off the patch and come forward [of the crisis] with an answer as soon as possible. “
The power of retail
Benjamin Weiss, CoinFlip’s COO President, said, “There are several lessons executives can learn from this debacle, but ultimately they should use this as a reminder to never underestimate the power of retail.
“It is fair to say that in unprecedented times, Main Street can become more passionate than ever to make a statement. [This] GameStop’s movement against WallStreetBets is the embodiment of physical tension against Wall Street. And it’s clear that if your goal is to make such a big statement, nothing else is more important, especially no reason, ”he observed.
Weiss said that in the digital age, business leaders need to understand the desires of some very passionate actors, which means more than a group of nonchalant people. “Business executives shouldn’t see this as a threat, but rather as a goal of building their brand into one that people can be proud to be passionate about, much like Tesla and Elon Musk did very well,” he concluded .
Be prepared for a crisis
Based on what happened to GameStop and how it happened, Ryan Fox, chief innovation officer at AI software company Yonder, said the following lessons could help business leaders prepare for a crisis.
Don’t overlook groups of little influence
“The internet is no longer organized according to demographics or geolocation, but rather according to a shared passion. These small, hyperactive groups with a common interest, also known as factions, are far more influential than business leaders understand and are often the drivers of the brand crisis.
“Given the impact these groups consistently have on public opinion, brand perception, and even the stock market, it is irresponsible for brands to ignore them or to ignore their influence,” he noted.
Ring the alarm bell early
Fox said, “To navigate today’s internet, business leaders need to attack, not defend, their brands. Instead of waiting to see why a specific group is targeting your brand or what caused a crisis, invest time and resources in proactively monitoring every corner of the internet.
By capturing a potentially harmful narrative at its earliest stages, business leaders can ensure they adjust their response and plan accordingly to prevent a costly crisis. “
Allow your team to see every corner of the web
“Executives cannot make intelligent communication decisions without complete information, and that is becoming increasingly difficult in today’s Internet,” said Fox. “To understand how groups negatively and positively engage and influence conversations about their brands, executives need to look at stocks and likes, not just on online websites.
“As we’ve seen in the past few weeks, fringe channel groups have become masters at driving large-scale narratives and actions that can damage a brand. This knowledge will equip brands with insights into their adversaries and the influence of their allies so they can develop communication strategies that counter the potentially damaging effects on reputation and sales, ”recommended Fox.