SUNDAY BUSINESS SECTION
By Steven Fink
The Dow Corning Corporation revealed itself last week as a company adrift without a moral compass.
It finally released memos showing that for two decades it had known silicone can leak from its gel breast implants into some women's bodies. Accompanied by a shakeup of top management and the long-overdue pledge to cooperate fully with Federal product safety investigations, these mea culpas and the new candor are promising. But putting truth on the bench to be called on only if deception strikes out is a crisis management error of potentially lethal proportions.
By becoming forthright only after obfuscation, denial and rationalization failed, the company demonstrated that honesty had been relegated to a backup position. In admitting that it has not been completely honest for years, the company now faces the conundrum known as the "liar's enigma": If an admitted liar is asked if he is now telling the truth, do you believe him if he says "yes" -- or "no"?
The public's perception of corporate wrongdoing -- in both a legal and a moral sense -- has caught up with Dow Corning. But although the company has brought on a seasoned crisis manager, Keith McKennon, and isolated the crisis from other operations, these actions should have been initiated long ago. Events have moved beyond crisis into calamity and the company's handling of it has shifted from crisis management to damage control. This is always dangerous, and it could be even more so for Dow Corning because it has not recognized that crisis management is not management by crisis.
The company's statement last week that it may pay for implant removal for any woman who wants it done but can't afford it sends a terrifying signal to women: If Dow Corning is willing to foot the bill, how safe can the devices be? The company justified not releasing the memos earlier for fear of panicking women. But what does it think it is doing now? Its behavior looks like the most blatant display of insensitivity to women since the Clarence Thomas hearings.
And that's shameful. The company had 20 years to prepare for this. The memos were crisis prodromes -- warning signs -- that the company intentionally buried for two decades. It did so rather than fix the problem. Similarly ignored memos were the downfall of Three Mile Island, Union Carbide and Morton Thiokol. Those crises provided a lesson: Companies must identify and respond to early warning signs -- proactive crisis management and the best strategy -- instead of engaging in deception or denial.
When the memos were written years ago, the company should have created the customer registry that it is only now contemplating and a database for doctors. It also should have created a crisis management plan guided by a code of corporate ethics.
From the beginning, Dow Corning relied too much on heavy-handed lawyering. Lawyers in product liability crises often take the view that everything revolves around the law and its loopholes. What becomes obscured is the ultimate crisis management objective: to have a company left to manage after -- or if -- the crisis passes.
Early on, the company lost sight of the most basic crisis management tenet: In the pitched battle between perception and reality, perception usually wins. Creating the right perception at the beginning is vital. Crisis management is a well-traveled path with clear trail markings. Dow Corning should have been able to follow it.
Steven Fink, president of the Lexicon Communications Corporation, Los Angeles, served on the Governor of Pennsylvania's Three Mile Island crisis management team.
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