CHAPTER 1: Introduction
There are many reasons for the public to be angry. Business and government leaders have covered up mistakes, concealed evidence of potential risks, made misleading statements, and often lied. Indeed, our leaders have fueled a rising tide of public distrust of both business and government by behaving in these ways. Consider the following:
* After oil poured from the torn hull of the Exxon Valdez, the public found that Exxon had actually reneged on the promises it had made when it was given the right to build the Alaskan pipeline. There was no adequate emergency response plan in place in case of a spill. Clean-up equipment, what little there was, was buried under several feet of snow. To make matters worse, the state had apparently known about these deficiencies since the early 1980s, but had not rectified the situation.
* Only after thousands of lawsuits had been file.d against Dow Corning did it come to light that the company had not only obtained, but had sponsored biological research indicating, as early as the 1960s, that the silicone used in breast implants might impair the immune system. All that time, the company claimed that silicone was biologically inert and wouldn't hurt anyone.
* Citizens speaking out at public meetings to discuss large-scale residential and industrial development projects, who oppose these projects on environmental and other grounds, have been slapped with libel suits by wealthy corporations trying to scare them into silence.
Wouldn't you be angry if you had been hurt, misled, or threatened?
A New Way of Interacting with the Public
We want to challenge the way that many corporations and government agencies interact with the public. Through numerous examples, detailed case studies, logical arguments, and plain common sense, we want to make a case for a better way of handling these interactions -- particularly with groups that are already angry because of the way they have, or think they have, been treated. More specifically, we offer suggestions for avoiding crises when the risks associated with new products or policies come to light, and for responding when mistakes -- even disasters -- have occurred. Furthermore, we suggest ways in which companies and government agencies ought to respond to those who are unalterably opposed to what they stand for.
Our intended audience includes senior executives of large and small companies who must deal with organized public-interest groups, midlevel managers who often face crises first hand, elected and appointed officials who must respond to unhappy constituents, and entrepreneurs who must take substantial risks to bring new products or ideas to market. Moving past the conventional wisdom, we want to suggest to those who advise these decision-makers -- attorneys, issue managers, public-relations consultants, and others -- that there is a different way to successfully interact with-indeed, to negotiate with -- their critics.
Why We All Should Be Concerned About Angry Publics
Some readers might ask, "Why should I care if people are angry? Dealing with them is the responsibility of my company's public relations people. I never have to deal with the public directly." Others might say, "Why do I care? At my company we have been putting out our product for thirty years and we haven't had a problem yet."
There are two important reasons why all of us need to be concerned about a society in which the public's concerns, fears, and anger are not adequately addressed. First, a continually angry public undermines American competitiveness in the international marketplace. That is, it can sap the productivity of corporations and government agencies who must spend inordinate amounts of time and human capital rehashing every action to defend each decision they make. Second, an angry public contributes to the erosion of confidence in our basic institutions. When important decisions must be made, especially in times of emergency, no one will give the relevant decisionmaker the benefit of the doubt if the public's trust has eroded.
They Undermine American Competitiveness
Because the battle lines are often drawn quickly and sharply in a crisis, companies and government agencies do not talk with those who are or might be angry at them. In turn, the public does not communicate its concerns directly to those responsible. Instead, the drama is enacted through the press, and soon thereafter in the courts. The public's anger is all too often translated into lawsuits. Between 1985 and 1991, 107,000 personal-injury suits, 48,000 asbestos liability suits, and almost 38,000 other product-liability suits were filed in the U.S. In 1991 alone, 1,500 product-liability suits were brought in federal district courts against Fortune 1000 companies. These Fortune 1000 companies were defendants in 95 percent of personal-injury cases. These do not include cases working their way through state courts, where a majority of such lawsuits are filed.
While attorneys and their firms gather data, haggle over procedural rules, and prepare for battle, dollars that could fund research and development, additional investment in infrastructure, or wage increases are eaten up in costly legal battles. Fighting fire with fire, so to speak, undercuts the profitability of business and adds to the cost of operations. It's been estimated that U.S. companies spend some $300 billion annually on litigation involving environmental claims, product-liability suits, class-action securities suits, medical malpractice suits, and Americans with Disabilities cases. Du Pont Chemical alone spends some $75 million annually to defend itself against plaintiffs who have brought suit against it.
Resources expended to fight an angry public cannot be used to solve other pressing problems. Money poured into defending past actions cannot be used to improve future performance. Embattled executives, managers, and their staffs are less likely to take risks, think creatively, and perform effectively if they are distracted from their primary responsibilities. Workers who doubt their employer's honesty are likely to work less hard, report more sick days, and generally be less invested in the success of their organization. Furthermore, because each unsuccessful attempt to address the public's concerns leads to increased skepticism and anger, executives, managers, and workers find themselves confronting the same problems in progressively more potent forms.
The expenditure of dollars and efforts to deal with an angry public are eventually folded into the costs of products. In the international marketplace, American products and services cost more. The Organization of Economic Cooperation and Development estimates that direct and indirect legal costs in 1987 amounted to 2.7 percent of the U.S. GDP, compared with only 0.5 to 0.7 percent of GDP for other OECD countries. In a 1994 survey, 800 U.S. CEOs and CFOs estimated that liability-prevention measures increased the price of products and services by at least 5 percent. One former commissioner of the Securities and Exchange Commission has stated that, despite attempts to attract foreign companies to list in the United States, such companies often refuse, citing fears of litigation.
In addition, lost time and effort, as well as ideas left untried, impose incalculable opportunity costs. Companies, cowed by the public's anger at others' mistakes, may be reluctant to introduce new products or ways of working. American companies lose their technological edge, and American workers lose the jobs that innovation provides. In an increasingly competitive and relentless international market, dealing poorly with an angry public means that American business and American workers lose out.
They Erode Public Confidence
It is not just business that loses out when the public is
