Navigating Crisis Management in the Digital Age: Lessons from The Carta CEO Disaster

crisis management

The court of public opinion is always in session, and the gavel can come down hard and fast. With the vast expanse of the internet, a single misstep can escalate into a full-blown crisis, tarnishing reputations and eroding trust at lightning speed.

The Carta CEO incident is a textbook example of crisis management gone awry. When allegations of gender discrimination and sexual abuse surfaced, Henry Ward, CEO and Co-Founder of Carta, a B2B SAAS company specializing in equity management, found himself at the epicenter of a storm. Instead of containing the damage, his responses—ranging from an email blast to customers to a public Medium post intended to guide other CEOs—served only to amplify the controversy and create a major organizational crisis.

This mismanagement transformed what might have been a controllable issue into a case study on how not to handle crisis communications. The aftermath saw an 800% spike in news articles about Carta and Ward, illustrating how quickly and disastrously things can spiral out of control and into an actual crisis. 

It’s not enough to simply react; responses must be carefully calibrated, considering the broader implications and potential fallout. Crisis management planning involves assessing the situation from all angles, considering the perspectives of all stakeholders, and crafting messages that are measured, transparent, and empathetic.

The goal is to minimize negative impacts, not just in the immediate aftermath but over the long haul, preserving the organization’s reputation and its relationships with customers, employees, and the public.

What is crisis management?

Crisis management is the process of preparing for, responding to, and recovering from unexpected events that have the potential to harm an organization, its stakeholders, or the public. Common crisis scenarios can include natural disasters, a financial crisis, data breaches, tech security, product recalls, or any other event that threatens the reputation, financial stability, or operations of the organization.

Understanding the crisis management process

Business continuity planning depends on crisis experts steadily navigating the myriad opportunities for unforeseen events, crises, reputational threats, and other emergencies. For businesses just starting to build their crisis strategy, following a crisis management plan template will outline the three phases of a crisis and provide necessary risk analysis to help curb potential threats.

Pre-Crisis Phase

The first step in effective crisis management efforts is to identify potential threats that could affect the organization through risk management. This can include conducting risk assessments, scenario planning, and monitoring potential issues and threats. By identifying potential crises in advance, organizations can create responsive business continuity plans and strategies that can be implemented quickly and effectively during a crisis.

Once potential crises have been identified, organizations can develop crisis response plans that outline the steps to take. This can include establishing crisis management teams, defining roles and responsibilities, and developing communication strategies. It is also important for organizations to conduct training and drills to ensure that employees are prepared to respond to a crisis.

Response Phase

During the response phase of the crisis management process, organizations must be agile and adaptable in their decision-making process. This involves closely monitoring the situation, gathering accurate information, and making informed decisions based on the available data. It is crucial to establish clear lines of communication within the organization during this acute phase to ensure that all stakeholders are kept informed and updated on the progress of the crisis.

Coordinating with external partners, such as emergency services, government agencies, and the media, is also essential during this phase. Organizations should establish relationships with these partners in advance to facilitate a smoother collaboration during a crisis. Effective coordination between crisis handlers and these partners can help ensure that resources are properly allocated and that all necessary actions are taken to mitigate the impact of the crisis.

Post-Crisis Phase

Once the immediate effects of a crisis situation have been addressed, organizations must focus on recovery efforts and mitigating negative stakeholder reactions. This involves assessing any damage or losses incurred during the crisis and implementing strategies to restore normal operations. Communication plays a crucial role during this phase as well, as organizations need to rebuild trust and reassure stakeholders that appropriate measures have been taken to prevent similar crises in the future.

Organizations should conduct thorough post-crisis evaluations to identify lessons learned and areas for improvement. This feedback can inform future crisis management planning and help build resilience against similar incidents. It is important for organizations to continuously review and update their business crisis management strategies to address new threats or challenges that may arise.

Role of the crisis management team and key stakeholders

During a crisis event, a company’s crisis management team plays a crucial role in navigating through the tumultuous waters of uncertainty and upheaval. But crisis teams are actually equally as important (and far more effective) when they are assembled and trained far before a crisis ever occurs.

A crisis response team is comprised of key stakeholders from various departments within the organization and is responsible for coordinating an effective and timely response to the crisis at hand. But they can also help to identify potential risks, create valuable crisis management strategies, and develop emergency response plans for when normal operations are thrown out the window. 

A comprehensive crisis management plan outlines clear guidelines and protocols for responding to the crisis, as well as assigning specific roles and responsibilities to team members. By having a well-defined plan in place, the team can act swiftly and decisively when faced with a crisis, minimizing the potential damage to the organization.

Key stakeholders within the crisis management team include representatives from the executive leadership, senior management, public relations, legal, and human resources departments. Each stakeholder brings a unique perspective and expertise to the table, allowing the team to assess the crisis from all angles and develop a well-rounded response.

The executive leadership provides strategic guidance and decision-making during the crisis, while the public relations team focuses on managing the organization’s reputation and communicating with external stakeholders. The legal department ensures that the organization complies with all relevant regulations and laws, while the human resources team oversees the well-being of the employees and provides support where needed.

In addition to the internal crisis management team, it is also vital to engage with external stakeholders, such as customers, suppliers, and the local community. These key stakeholders can provide valuable insights and support during a crisis, and their perspectives should be taken into consideration when developing the crisis management plan.

In times of crisis, the role of the crisis management team and key stakeholders cannot be understated. By working together cohesively and leveraging their collective expertise, they can help the organization navigate through turbulent times and emerge stronger on the other side.

Types of Crises in the Digital Age

In today’s digital age, businesses and individuals are increasingly vulnerable to a wide range of crises. From cyber attacks to social media scandals, the types of crises that can occur in the digital age are diverse and complex. It is important for organizations and individuals to be aware of the various types of crises that can occur in the digital age in order to be prepared to effectively manage and mitigate their impact.

One type of crisis that is prevalent in the digital age is a cyber attack. As businesses and individuals rely more and more on technology for their daily operations, they become more susceptible to cyber-attacks and in need of a cyber crisis management plan. These attacks can range from malware and ransomware to hacking and data breaches, and they can have serious consequences for an organization, including increased cyber risks, financial loss, reputational damage, and legal implications. It is essential for organizations to have robust cybersecurity measures in place to protect against cyber attacks and to have a comprehensive response plan to maintain business operations in case a breach or other technological crisis occurs.

Another type of crisis that can occur in the digital age is a social media scandal. With the widespread use of social media platforms, organizations and individuals are constantly at risk of facing a crisis due to something they have said or done on social media. This could include a controversial post, negative customer reviews, or a viral video that portrays the organization in a negative light. Managing a social media crisis requires a prompt and strategic response to minimize reputational damage and restore trust with stakeholders.

Furthermore, digital crises can also arise from technological failures or disruptions. Whether it is a website crash, a system outage, or a malfunctioning app, technological failures can disrupt operations, cause inconvenience to stakeholders, and ultimately damage an organization’s reputation. It is important for organizations to have contingency plans in place for such technological failures to minimize their impact and ensure a swift recovery.

In conclusion, the digital age has brought about a new set of challenges and vulnerabilities that can lead to various types of crises. Cyber attacks, social media scandals, and technological failures are just a few examples of the types of crises that can occur in the digital age. It is crucial for organizations and individuals to be proactive in managing these crises by implementing robust cybersecurity measures, monitoring their online presence, and having contingency plans in place for potential technological disruptions. By being aware of the types of crises that can occur in the digital age, organizations and individuals can better prepare themselves to effectively manage and mitigate the impact of these crises.

Lessons from The Carta CEO Disaster

CEOs must consistently demonstrate their commitment to the organization’s mission and values through their actions and decisions. When they deviate from these principles, it can have a profound impact on the culture and morale of the company.

The Carta CEO crisis situation serves as a stark reminder of the high stakes involved in executive decision-making. Here’s what CEOs can learn from this to avoid similar pitfalls and maintain the trust and confidence of their employees and investors.

Be proactive, not reactive.

Content moves at the speed of your feed. It’s important for companies to be proactive, not reactive when it comes to managing their public image and developing a crisis strategy.

While it may be tempting to react quickly to every article or post, it’s crucial to consider the bigger picture and the impact of a hasty response. Rather than having the CEO take on the media at large, a VP of Comms should have responded in a thoughtful and strategic manner. Reacting impulsively can often make a situation bigger than it needs to be and can create unnecessary turmoil. Being proactive means carefully considering the appropriate time and place to respond to allegations or criticism rather than escalating a situation by making a mountain out of a molehill. By taking a thoughtful and strategic approach to media and public perception, companies can better manage their image and build trust with their audience.

Don’t blame the media.

Blaming or praising the media is ultimately futile. It’s the reality we must navigate. Rather than getting caught up in frustration or adoration, it’s crucial to learn to navigate and excel within the media landscape. The media is far from flawless, but railing against it only exposes a lack of understanding about how to engage with it effectively.

Media training is no longer optional—it’s a necessity. It’s not uncommon to see executives caught off guard by negative publicity or just generally unprepared to face the press, as evidenced by Linda Yaccarino’s nervous and unsteady performance at Code 2023. At Zen Media, we prioritize thorough preparation, bringing in seasoned reporters to simulate real-world scenarios. The bar for media proficiency has been raised, and leaving it to chance is no longer an option. 

Media is a credibility platform, not a distribution channel.

In the past, media platforms provided both third-party credibility and widespread distribution, making them the go-to source for news and reach. However, in today’s landscape, media channels offer limited distribution, leading to potential misunderstanding and misalignment in PR and media relations.

While earned media still holds value in providing credibility in a world where faith in advertising is low, it no longer guarantees widespread distribution. This means that companies must now actively amplify their content to reach a larger audience. It’s essential to have a distribution plan for positive press, as 25% of a company’s market value is based on reputation. Rather than relying solely on traditional media outlets for distribution, it’s crucial to recognize the need for amplification and use platforms like LinkedIn to reach a broader audience. 

The lessons from the Carta CEO disaster remind CEOs and leaders alike of the imperative to embody the organization’s values consistently, to anticipate and prepare for potential crises, and to engage with the media and the public with humility and foresight.


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