For many companies, 2012 was a sorry year. In fact, it could be called the “Year of the Corporate Apology.”
Apple apologized for iPhone map problems. The Norwegian Cruise Line apologized for initially refusing refunds for cancellations caused by Hurricane Sandy. Time Warner Cable apologized for missing the final seconds of a college football game. Even a celebrity magazine apologized — for the fairly common practice of running an unflattering photo of Britney Spears.
Sometimes good corporate leadership means knowing how and when to say “I'm sorry.” It isn't always easy.
If done properly, a sincere and well-timed apology can help keep a bad situation from exploding into a crisis. If handled poorly, it can spark a fierce backlash with disastrous consequences.
The late James Burke, a former Johnson & Johnson CEO, is often credited with the perfect business apology for his forthright response in 1982 to a crisis involving tainted Tylenol. When panic over Tylenol poisonings threatened to destroy the company's best-selling product, Burke took full responsibility for addressing the problem, pulled Tylenol off the shelves, and told customers to throw away any they had at home.
Although his response is considered a textbook case on how to manage a corporate crisis, there is some dispute about whether Burke actually said, “I'm sorry.” And that's the most important lesson of his example: Deeds matter even more than words.
A corporate apology is not just about expressing regret. It is about taking ownership of a problem and accepting the responsibility to fix it. An apology without action is meaningless.
Apple CEO Tim Cook struck the right balance in his recent apology for the company's flawed Maps application: “We are extremely sorry for the frustration this has caused our customers and we are doing everything we can to make Maps better.” Cook coupled this concern for his customers with a determination to fix the problem. If Apple delivers on his commitment, and history suggests it will, this case is closed.
Here are some other lessons to remember:
A corporate apology is not an endpoint; it's an opening for positive changes, dialogue, and reconciliation. In a personal relationship, an apology is often a chance to put a disagreement or a past wrong to rest. That's much less likely in a business context, which is impersonal and often involves financial grievances. Sometimes a corporate apology leads to more criticism, and no apology can satisfy everyone. How a corporation reacts when an apology fails to get the desired response can be a crucial test of sincerity.
An effective apology reaches all stakeholders. In deciding how to atone for mistakes, a company should address all relevant audiences — customers, suppliers, regulators, third-party allies, and employees.
It can be good to apologize, even if you haven't done anything wrong. Showing concern for another person's problems always helps. Airline ticket agents don't cause storms that delay flights, but they can ease passenger frustration with an apology and a caring attitude. Frustration can easily escalate to anger if a company appears to be oblivious to the problems and indignities faced by customers, suppliers, and other stakeholders.
Some mistakes do not require an apology. Minor errors, misunderstandings, or offense taken by a small group of overly sensitive critics should not be blown out of proportion or given unwarranted validation. There is no need to grovel, and sometimes the best way to protect a corporate reputation is to fight back.
A half-hearted apology is far worse than no apology. This lesson is often lost on politicians, who seem to have even more difficulty with apologies than corporate leaders. Presidents have been using the “mistakes were made” construction since at least as far back as Ulysses S. Grant. Former US Senator Bob Packwood of Oregon lowered the bar for political apologies in 1992 after he was accused of sexually harassing several women.
“I'm apologizing for the conduct that it was alleged that I did,” he told reporters.
Packwood may have been worried that anything he said could have been used against him in court. Legal liability is a legitimate concern that requires caution and sound legal advice. But experience also shows that a sincere apology can avert legal action.
In one high-profile case, actor James Woods settled a 2010 lawsuit he filed for the hospital death of his brother because the hospital president apologized. Woods said he decided to negotiate because the “apology was genuine and not a ploy.”
If delivered with sincerity and backed by action, two words – “I'm sorry” – can have a major impact.
Ron Hutcheson is SVP at Hill+Knowlton Strategies.