Anatomy of a crisis: Yahoo!

Brands can never be completely sure of avoiding crisis situations. There are too many variables. Human error, fallibility, corruption, ambition and rivalries can cause considerable damage to a brand’s reputation and sometimes no amount of procedure can prevent this from happening. But the brand can control its response to the evolving situation. It can make a clear statement of the facts, quickly and with good grace – or it can panic.

Search firm Yahoo is in the middle of a reputational storm right now, and there are some things that it could have done to mitigate the situation.

The situation

May 3rd: A Yahoo shareholder (Daniel Loeb) wants a seat on the board and is having a hard time being listened to. After some investigative work he claims to have discovered that Yahoo CEO Scott Thompson, who was reported to have a computer science undergraduate degree, actually did not. He had a business administration and accounting degree only. What’s more, he claims that the Yahoo board member who headed the committee that recommended Thompson as CEO also had an issue with her degree – saying that she had a degree in marketing and economics when it was really in business administration.

On May 3rd Loeb wrote to the board calling for an investigation and swift removal of the board member and CEO if his claims were proved to be true.

Brand Response

By May 4th the press had begun to report on the matter heavily, and Yahoo’s initial response to journalists was to brush off the allegations, leading to headlines declaring that Yahoo cited an ‘inadvertent error’ and remove the educational details from their site.

However, Kara Swisher of All Things Digital posted a recording of a 2009 interview with Scott Thompson where he didn’t deny that he had a computer science degree – which kind of undermines that argument. Other media outlets started to turn to legal experts for opinion on whether or not the CEO would be able to survive.

The Yahoo board met on May 7th to discuss the internal review, and Thompson issued a memo to employees, seeming to apologise more for causing delays in the company moving forward than for anything he may (or may not) have fudged in his CV.

Press Response

Yahoo released the memo to the press, which produced more articles with headlines citing his ‘bogus college degree’ and in the case of USA Today noting that ‘[he was] not remorseful enough to heed calls for him to resign’. Meanwhile the media mulled over the possibility of Yahoo firing another CEO.

Social Media

Industry leaders began to respond to journalists, with Richard Rosenblatt (CEO of Demand Media) tweeting Kara Swisher that if it were him, he would resign for the good of the Yahoo employees.

Rosenblatt Tweets

While other tweeters mentioned that if it had been any other worker the likelihood is they would have been fired by now.

Twitter response

Former board members even took to Twitter to have their say:

Ex-board member Tweet

Meanwhile, over on the Yahoo Facebook page, it was business as usual as Yahoo continued to post the latest celebrity news along with more provocative questions, such as this one from May 6th:

Facebook Wall post

Which prompted a bit of a political argument and an apt reference to CEOs:

Facebook response

YouTube videos are also proving a popular method to ridicule the brand.

How could Yahoo have handled things differently?

Well, let’s skip over the whole – you know – checking your new hire’s CVs before you hire them thing, and head straight to what the brand could have done once the news broke.

– Don’t speak until you’re sure of the facts

– Realise the motivation of the ‘attacker’ is irrelevant if what they say is true

– Don’t issue a half-hearted mea culpa – apologise in full or simply say that you take the matter seriously and are investigating

This isn’t the most pressing problem that Yahoo is facing right now, and some people may not see a shareholder v boardroom spat over a line on a CV as that important. After all, no one was injured or killed, and the CEO must be able to do the job otherwise he wouldn’t have lasted a week in the post. The apparent lack of a computer science degree doesn’t mean he can’t turn Yahoo around.

Yet, reputational damage is being done. The longer this plays out in the media and the more experts come on board with their analysis of the situation, the more negative coverage is generated about the brand.

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