Carnival’s crisis mismanagement—Déjà vu all over again

By Lanny J. Davis – 02/20/13

When will they ever learn?

As obvious as are the fundamental rules of effective crisis management, time-tested over the ages, it is amazing how often the same mistakes are made by politicians and companies in the midst of a crisis.

In politics, the most famous case of crisis mismanagement is Watergate; summed up by Nixon presidential assistant John Ehrlichman’s famous wrong-headed strategy that he called the “modified limited hangout,” a little bit of truth dribbled out, but not all of it.

Everyone who has served in the White House has faced the test of either biting the bullet and getting all the facts out proactively or holding back and hoping the story goes away. Unfortunately, the Obama White House chose the latter strategy when it came to the Solyndra loan guarantee. At first the White House referred questioners to the Energy Department and resisted turning over White House emails that might have had political considerations. Then — shocking — the emails leaked, dribble by dribble, and the end result was the also shocking conclusion that this was a matter of poor judgment, not dishonesty or corruption.

Just recently we have seen a classic case of crisis mismanagement in the business world in the way that Carnival Cruise Lines mishandled the travesty of one of its ships, the Triumph, floating helplessly 150 miles off the Yucatan Peninsula in the Gulf of Mexico. The ship left Galveston, Texas, on Feb. 7, for what was supposed to be a four-day cruise. But then it lost its power and propulsion system after a fire broke out in the aft engine room.

For days there was little information from Carnival headquarters in Miami as to what happened or why, or when and where the passengers would be returned to safety. Even families of passengers couldn’t get basic information, complaining to the media at the absence of informed representatives from Carnival. They were never given adequate explanation as to why the ship wasn’t tugged to the nearby port in Presso, Mexico, for example, rather than waiting for days more, while passengers suffered onboard the smelly ship, to be taken to Mobile, Ala.

This was the second time in about a year that Carnival had failed the fundamental rules of crisis management. Back in January 2012, one of it ships owned by a foreign subsidiary ran aground near an island off the Tuscany Coast of Italy. The ship tilted sideways and 32 people died.

Carnival’s reaction back then was, basically, silence. The blame was placed on the captain, who allowed the ship to get too close to the island because — I am not making this up — he said he was distracted because he was on his cellphone. It appeared that their legal position — which appeared to have validity — was that the parent company was not liable because it was not the legal owner or operator of the ship. Was it concern about legal liability that caused the senior management in Miami to avoid visiting the site of the tragedy and giving personal condolences to the grieving families?

The result has been damage not only to Carnival’s brand and business — reportedly 12 Carnival cruise ships have been canceled in the aftermath of the Gulf incident — but to the rest of the cruise industry, which could be damaged by this kind of ostrich-like crisis management by Carnival.

To be clear, effective crisis management is not just about minimizing damage to a politician’s reputation or to a company’s brand or share values when the bad news event is occurring. It is about a more transcendent value, respect — respect for voters, respect for consumers and customers, respect for shareholders.

A company or a politician that chooses the “limited modified hangout” is disrespecting the public and its customers/voters. Such a strategy seems to reflect the attitude conveyed by Jack Nicholson in the famous climactic trial scene in the movie, “A Few Good Men”: — “You can’t handle the truth!”

Oh yes we can.

White Houses, politicians and businesses alike would do well to remember this mantra: “Tell it all, tell it early, tell it yourself.”

Davis, a Washington attorney and principal in the firm of Lanny J. Davis & Associates, specializing in legal crisis management and dispute resolution, served as President Clinton’s special counsel from 1996-98 and as a member of President Bush’s Privacy and Civil Liberties Oversight Board from 2006-07. He currently serves as special counsel to Dilworth Paxson and is the author of the forthcoming book, Crisis Tales: Five Rules for Coping With Crises in Business, Politics, and Life, to be published by Simon & Schuster in March.

Click here to read the column on The Hill.