How To Make A Mistake Even Worse

social license, Size Matters, transparency, reputation management | September 18, 2018

The Damning Bad Actor 

We see it so frequently, it’s almost become an expectation.  When companies, politicians or governments make a mistake, they make the situation worse by trying to cover it up. While the mistake may be painful to admit, it's rarely as damaging as the inevitable discovery of a cover up.  

Consider the most recent Volkswagen scandal regarding emissions compliance standards. The automaker installed devices on its vehicles that would fool emissions testing equipment. The vehicles could pass the test, but in reality, the vehicles on the road were spewing up to 40 times the allowable limit of emissions. 

To deliberately circumvent federal regulations while deceiving customers was the first mistake. But when the issue came to light, the company made it worse. At first, they blamed testing procedures. When it became clear that the cars had been deliberately programmed to cheat the test, executives tried to pass it off as the work of a few software engineers. Eventually it came to light that executives at the highest levels of Volkswagen knew about the cheating and denied it for years. 

This is just one of many examples of the violations of public trust that occurred over the past 50 years. In many cases, public outrage has caused an industry to lose its social license and come under stricter control. 

But why do some issues escalate and cause outrage when others do not? To answer that, The Center for Food Integrity (CFI) looked at 10 factors that could trigger outrage and compared them in “good actor” and “bad actor” scenario. The triggers are: 

  • lack of transparency 
  • intentional wrongdoing 
  • intentionally misleading
  • putting private interest ahead of public interest 
  • insensitivity to public interest (being tone deaf) 
  • callous disregard for public interest (malicious indifference) 
  • historical record of poor performance 
  • failure or unwillingness to accept responsibility 
  • impact on vulnerable populations or systems (people, animals, environment) 
  • negligence in following industry best practices 

If this was a scorecard, Volkswagen would have a near perfect outrage score! 

In CFI’s research, we compared two scenarios that involved a food safety crisis. In the good-actor scenario seven people died and in the bad-actor scenario only three people died. You would think the one that caused more people to die would trigger more outrage. But the opposite was true. Why? The good actor accepted responsibility, acknowledging their obligation to provide safe food. They were also open and transparent about what happened. So even though the consequences were more severe, the good actor maintained a significantly higher level of trust by following proven steps that increase trust.  

In contrast, the bad actor deflected blame, was evasive and defensive in answering questions and put the company’s interest ahead of public interest. 

The social license translates to more than good reputation; it has economic value. The research found that an overwhelming majority (62%) would be very unlikely to purchase again from the bad actor, but only 15 % were very unlikely to resume purchasing from the good actor. In addition, 35% would be very likely to purchase again from the good actor. Even in tragic circumstances, trust can be earned and maintained if the situation is well managed. 

Bad actors often learn too late the true value of social license. Volkswagen has begun the long road back to restoring trust, but the financial cost and the damage to reputation will impact the company for decades. 

Companies and organizations in the food system who take the high road when crisis hits will always be more successful in the long run. 

For more insight into how to build trust, check out Charlie Arnot's book, Size Matters: Why We Love to Hate Big Food, available on Amazon

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