A company embroiled in tragedy must display tact

By John Gapper
Financial Times
March 26, 2014

GM dealt deftly with a fatal fault while Malaysia Airlines’ crisis has become a diplomatic disaster

General Motors and Malaysia Airlines are both in trouble but one is giving a lesson in how to handle a fatal crisis while the other is offering a masterclass in how not to. There is a glaring contrast in the behaviour, and ability to cope with public criticism, of Mary Barra, GM’s chief executive, and Ahmad Jauhari Yahya, the chief executive of Malaysia Airlines – although Ms Barra has a simpler task.

Both face the most critical corporate challenge – how to respond when your customers die because they used your product or service. The GM accident victims were a dozen drivers or passengers of faulty compact cars; in Malaysia Airlines’ case, the presumed victims are the 239 passengers of the missing flight.

Ms Barra, who took over as GM’s boss in January, has so far reacted in an exemplary manner. She has stepped up to take personal responsibility, admitted that GM is to blame and apologised; emphasised her sorrow “as a mom with a family of my own” and promised not only to make amends but to use the crisis as a turning point for GM.

Mr Ahmad oversaw the blunder in which some families were informed of deaths by text message. Having emphasised in a statement that he responded “as parent, as a brother, as a son”, he relapsed into defensive corporate-speak in a BBC Radio interview. Describing the criticism as “unfair”, he insisted that his airline had “given beyond . . . what I call the standard scenario”.

“Thanks a bunch” would be the mildest response of anyone who has lost a loved one in what was far from a “standard scenario”. Some MH370 relatives, tacitly encouraged by the Chinese government, have protested at the Malaysian embassy in Beijing. A flight tragedy has become a diplomatic and corporate disaster for Malaysia Inc.

This contrast is partly down to the evident gulf in personality and skill between Ms Barra and Mr Ahmad. The fact that Ms Barra is a woman helps – a “mom” is more sympathetic than a “parent”, and Mr Ahmad’s retreat into alpha-male tetchiness evoked the response of Tony Hayward, BP’s former boss, to the Deepwater Horizon disaster of 2010.

But Ms Barra is also in a better position than Mr Ahmad by circumstance. She was dealt stronger cards, which she has so far played well. He has a miserable hand, despite the fact that GM is obviously to blame while Malaysia Airlines may not be. MH370 was a Boeing 777 with Rolls-Royce engines and it could have caught fire, been hijacked or many other things.

First, Ms Barra has certainty. The GM deaths had a clear cause – a flaw lurking in the ignition switch of Chevrolet Cobalt and other GM compacts, which can be fixed. The problem has essentially been solved already, even if GM had to recall 1.6m cars and faces political scrutiny and legal action from bereaved relatives. It knows what it has to do.

Malaysia Airlines faces the equivalent of BP’s uncapped well. It has not even found the aircraft, and the accident investigators are nowhere near assigning a cause. Scraps of information have been steadily leaked, creating a free-for-all of speculation and a suspicion that the airline is still hiding things.

“Accident investigators can usually sift through the wheat and chaff in private but that is happening in public. There is such a void of information that they are being forced to release what they have,” says Matthew Greaves, head of Cranfield University’s safety and accident investigation centre.

Second, GM possesses authority. It is being investigated, and the US Department of Justice may accuse the car manufacturer of fraud if it is found to have hidden a fault of which it was aware when the Cobalt was launched in 2005. But Ms Barra has sufficient autonomy to step forward publicly and take the lead.

“If you do not communicate clearly and often, someone else will do it for you,” says Shuba Srinivasan, a professor of marketing at Boston University. “By taking a personal stand, she changed the narrative from the product recall to how she was handling it.”

Malaysia Airlines is trapped in the middle of a vast inquiry involving 26 countries, led by Malaysia’s government, which took a week even to declare publicly who was in charge. “The story kept switching during the first week. One guy would say one thing and another guy another thing. It was very difficult,” says one of the public relations consultants who have been called in to give advice.

Last, GM has a narrative. It went through Chapter 11 bankruptcy in 2009 and emerged with new management, culminating in Ms Barra’s appointment. The Cobalt was a product of a time when it produced cheap, low-quality cars in the US. Although no one would say so publicly, the Cobalt fiasco is emblematic of old GM.

Ms Barra is a GM veteran but she has not been tied to the problem (if she were to be, it would threaten her position). Instead, she had a story to tell – that the Cobalt shows why GM needs to change. She has capitalised on this by announcing three further product safety recalls and telling employees “we will be better because of this tragic situation if we seize this opportunity”.

Spoken as any PR consultant would advise, and with apparent sincerity. The problem with not having a tale of redemption through crisis is that one will be thrust upon you. Mr Ahmad admits that he may resign as a result of the disaster, and his airline and country clearly need someone to take the blame. Both the grieving families and the narrative may demand it.