No business, regardless of size, is immune from mistakes, accidents, or even crises that can affect day-to-day operations. In extreme cases, these incidents can even threaten the very existence of a company or brand. Although the possibility of such events is not new, the speed at which information travels is ever-increasing. The fact that news can elicit reactions worldwide in a matter of seconds leads to heightened risk and sensitivity when responding to these crises. However, the same social media platforms that amplify and give voice to these reactions also provide the opportunity for quick and constant communications throughout the crisis management process.

One PR management firm suggests that “59% of businesses have experienced a crisis, but only 54% of businesses have a plan in place to deal with them.” While preparation is crucial in managing controversy, the types of crises businesses encounter are unforeseen. Whether it is an exploding shoe on a soon-to-be-pro athlete or a data breach affecting millions of customers, a matter of seconds can threaten the short- and long-term health of a company. When these events do occur, quick-thinking and response times are critical to managing an onslaught of online criticism. A consensus among PR firms recommends that two rules be followed throughout the response: be quick and be human.

The need to respond quickly can be a double-edged sword, however. Respond too slowly and a company risks allowing online reaction to shape the story; respond too quickly and risk making statements before all the facts are known. It can be trickier still to assess whether an event requires a response at all. The last thing a company wants is to extend the life of a story that would have otherwise been short-lived. Unfortunately, there is no clearly defined test to determine which problems are likely to stick around and which are temporary wrinkles of the ever-shifting landscape of social media.

When an event does merit an official response, companies sometimes struggle to respond with an appropriate measure of even-handedness and decency. Sometimes, defensiveness or overreaction can bring on additional difficulty. The routine advice to “be human” means trying to establish some empathy with the people affected by the crisis. While some online vitriol is part performance, some reaction comes from sincere offense or hurt. One of the worst things that a company can do is belittle those expressions. Insisting that concerns are unwarranted or that pushback is an overreaction never helps the healing process and can significantly exacerbate the problem.

There are best practices and strategies for what steps to take in the aftermath of a crisis. While many PR firms and crisis management companies offer slight variations on the theme, the general approach involves these steps:

• Acknowledge. Ignoring or attempting to cover up a crisis will only make matters worse. Speed and transparency are crucial here. State clearly that the company is aware that an issue has occurred and that information will be provided as it becomes available.
• Apologize. Not only is it OK to apologize—it’s a must. Even if there is internal debate about whether the company is to blame for the incident, taking some responsibility is easy to do—and when done quickly, can sometimes nip a problem in the bud. On the other hand, apologizing late can be costly.
• Investigate. People want assurances that steps will be taken to “get to the bottom” of what has occurred. Letting the public know that an investigation into the incident has already begun can also have the effect of buying some time to develop a full response, if needed.
• Act. This final step may be the most important. It’s one thing to release a marketing campaign that promises change, it’s another to actually enact those changes. People will be looking for evidence of it; and subsequent crises that suggest “business as usual” can really set as wave of negative reactions in motion.

It may be useful to see some of these strategies at work. Nike’s swift response to Zion Williamson’s shoe explosion closely follows the first three steps and promises the fulfilment of the fourth. On the other hand, in April of 2017, United Airlines waited a day before responding to a customer being dragged off one of its airplanes. By the time the airline issued a statement, the viral video had already been viewed millions of times, and United had to scramble to try to stay ahead of the story.

Classroom Implications

There are a number of useful lessons that students can take away from this topic. Perhaps the most important for their future success is a lesson about what (not) to share on social media. Business leaders can share countless example of well-qualified candidates who were not offered a job after a quick check of their social media accounts. Furthermore, publically posting negative comments about current employers can easily cost people their jobs. Negative posts like these could create a crisis similar to those mentioned above. Students need to ascertain employer policies about use of social media, whether it be a personal or a company account. One way to teach these lessons to students is to link their current use of social media to the kind of problems that companies have had with these platforms.

Most students today are all-too-familiar with the ins and outs of social media. Many of them will have had an experience online that they felt the need to respond to or make amends for. As long as ground rules are set about respect for classmates and what subjects are in-bounds, it can be a very useful exercise to ask them about their strategies for responding to social-media accidents or the online “crises” that they have seen. How did they attempt to put out the fires of their own mistakes? How did their friends respond? These kinds of questions can really help establish a connection between students’ lives and the business world they encounter.

Have you ever thought: “If I just didn’t have to spend so much time on (insert dull, routine tasks here), I’d have time to really excel at my job”? Soon, many of those mundane activities will become automated. Automation saves time, effort, and money. The ability to automate tasks and processes is increasingly important to businesses’ efficiency and competitiveness. Plus, with advances in technology, it’s becoming much easier to do so.

What does automation look like?

The level of automation varies, depending on technology and the complexity of the tasks. It could be as simple as setting automatic replies to emails, or as complex as programming robotic process automation software to analyze data. About half of the activities that workers do today have the potential to be automated. Current technologies are best suited for routine tasks that require little creativity or higher level thinking. These include physical labor, data processing, and data collection.

Who does it affect?

The first fully-automated businesses have emerged—businesses that have no human employees at all. Read more about these businesses here: https://sloanreview.mit.edu/article/how-organizations-will-produce-in-an-autonomous-future/. While this isn’t possible for most companies, automation has affected or will affect most occupations and industries. Financial services, customer service, manufacturing, and health care will be particularly impacted. Employees at all levels, even at the highest levels, will see their jobs change due to automation.

In a recent focus group with executives from the financial industry in Kentucky, a debate broke out about the future of bank tellers. Some in the group felt the job would become fully automated; others saw an even more important role for tellers beyond automation. The Wall Street Journal frames the issue by identifying a trend in which some bank tellers are getting raises as they deal with higher level consumer issues. OceanFirst now has a “certified digital banker” course to help tellers become more comfortable with automation and prepare themselves to help customers address increasingly complex financial issues.

The idea that jobs will be replaced by automation has sparked fear. It is true that 15% of the global workforce could be displaced by 2030 due to automation. However, only about 5% of occupations could be fully automated with current technology. It is much more likely that certain tasks will become automated, freeing up workers’ time to be more creative and strategic. Less than half of all companies expect to decrease their workforces due to automation in the next five years. Furthermore, many new jobs and industries will be created, leading to labor demand growth of 21–33% of the workforce. The growth will presumably offset any jobs lost. Around 3% of the workforce will need to change their occupations by 2030 to fill the opportunities created by automation.

Benefits of automation

• Improved efficiency
• Reduction of errors
• Better understanding and use of data
• Reduced costs
• Ability to focus on higher level tasks, creativity, and innovation

Challenges to implementing automation

• Mastering the technology
• Retraining workforce
• Cost
• Integration with existing processes and systems
• Resistance to change

What should businesses do to prepare?

• Fully understand the processes that are being automated
• Involve everyone who will be affected
• Plan ahead
• Focus on biggest opportunities for ROI
• Consider security risks
• Stay dynamic and promote growth
• Invest in education, learning, and retraining employees
• Develop employees’ higher cognitive skills, social and emotional intelligence, and technological abilities

For more: https://www.mckinsey.com/featured-insights/future-of-work/ai-automation-and-the-future-of-work-ten-things-to-solve-for.

Classroom Implications

Students should understand the ways that jobs are going to change with widespread automation. This will help them focus on developing the skills that will become even more important in the workforce. These include creativity, interpersonal communication, emotional intelligence, and strategic thinking—as well as the technological skills to work with automation.

Links for further learning:

https://www.forbes.com/sites/forbestechcouncil/2017/05/15/15-smart-tips-for-introducing-automation-to-your-business/#3c2f18e02c71

https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/four-fundamentals-of-workplace-automation

https://www.sage.com/en-gb/blog/ai-and-automation-business/

https://www.entrepreneur.com/article/307286

Rusty Poeppelmeier, A Bond Manager with Liberty Mutual Surety in Cincinnati, Ohio shared the comments below in relation to this Action Brief. Do you have other thoughts, or questions for Rusty? Let us know—we’ll keep the conversation going!

Automation will continue to move into different areas of the economy.  It is important students understand it isn’t all bad.  Some areas of the economy have historical labor shortages that are ripe for the investment of more automation.  I have seen it move into areas such as a farming and customer service. 

There are other areas where automation may create significant cost savings that ultimately could be passed on to the consumer.  The more complex the task the longer it will take to implement but the payoffs could also be larger.  Picking fruit in a variety of conditions is going to be more challenging than painting the same object over and over again in a controlled environment.  

We also have a demographic issue with the baby boomers headed into retirement creating a labor shortage.  So there will likely be job opportunities in this area, as the need for this technology will increase during the coming years.  That said, there is a cost to implementing this technology and one of the items difficult to overcome is change.  It takes the average industry a long time to adapt and change partly due to the cost of development and implementation.  Sometimes implementation does not work out as planned.  Customer service being one example.  Some things are not quite ready for AI but with time and resources those challenges can be overcome. 

I think the biggest piece of advice I have would be don’t let the pursuit of automation or process efficiency undermine the success of whatever business you are in.  It is very easy to start down this path and compromise too much ultimately putting the business itself at risk.  Change is hard but blind change is deadly. 

A supposed great system with a dwindling customer base has the same probability of failure as a poorly managed business.  So don’t let the pursuit of automation or a “better” process cause you to lose sight of the business itself.  If it is truly a great idea, you won’t have to sell it.  People like to finish things and claim success but don’t be blind to the reality of the actual needs of your customers.  Remember, you need the customer, the customer doesn’t need you!

Have you heard the phrase “the Internet of Things” and wondered what exactly it meant? This term has grown increasingly popular in the last five years and is an important one to know. The Internet of Things (IoT) refers to the digitalization and connectivity of any item or device. Your smart phone and laptop aren’t the only things that can connect to the Internet anymore. Anything from your refrigerator to your lightbulbs can be enabled with internet access and controlled wirelessly. These types of devices have been around for several years now: smart watches, at-home security systems controlled via app, and virtual assistants such as Amazon Alexa and Siri are now in millions of homes.

However, the future of IoT goes way beyond what we see today, and that future is coming soon. According to a HubSpot report, there will be 31 billion IoT devices in the world by the year 2020—more than four for every person on earth. Clearly, Internet-enabled devices are here to stay, and the possibilities are endless. Businesses that can capitalize on this trend will be better prepared for a future where everything is connected. IoT is already impacting business in several key areas.

Product development. Almost any business has the potential to add internet connectivity (and, therefore, interactivity) to its products. Appliances such washing machines and dryers, coffee machines, and cash registers are being programmed to sense and respond to the environment around them. Medical devices, factory equipment, and transportation are all areas that are delving into the realm of IoT as well. Businesses that are able to find creative ways to implement IoT into existing products will be a step ahead as consumers start to expect their devices to be “smart.” Technology from companies such as Arduino make it easy for anyone to add interactivity to existing products.

Production and inventory management. Manufacturing and inventory management are already incorporating IoT. For example, sensors on packaging automatically alert employees about changes in temperature, weight, condition, etc. Also, inventory tracking can be automated, which means that companies can more efficiently get products to consumers and keep track of shipments. Order fulfilment is another aspect of the IoT that will likely be prevalent in homes within the next couple of years. The Amazon Dash Button is a Wi-Fi-connected device that automatically reorders products such as soap, toilet paper, and plastic wrap with one press. As these devices become smarter, they will be able to automatically sense when a reorder is needed. Companies will need to have the ability to manage this type of instantaneous order fulfillment.

Data. Data generation is another aspect of IoT that has massive implications for business. Every device that is connected to the internet is constantly collecting data about usage and users. For example, if a washing machine can automatically sense that your family uses a load of detergent every two months, companies could use that to market detergents to you right as you run out, giving you a promotional discount right when you need it. This type of data increases the level of customizability of marketing campaigns and the ability to directly target customers. IoT will help companies get to know their customers better than ever.

Marketing. One example of IoT in marketing is in the retail space. Technology called “beacons” send notifications to shoppers based on their location. A shopper walking by a department store might receive a notification telling her/him that the store is having a 20% off sale this weekend. This can help improve sales and get customers through the doors.

Customer relationship management. The current state of customer relations is fairly passive—customers come to companies when they have a problem, and companies attempt to solve the issues. However, with the Internet of Things, companies will know when service is needed. They can reach out and solve the issue without customer involvement or action. This will build customers’ expectations that their needs will be fulfilled before they become aware of them.

Increased efficiency. The Internet of Things also offers companies improved internal efficiency in areas such as energy savings, employee effort, and productivity. Businesses can monitor processes and operations digitally, determining where productivity and costs can be made more efficient.

Need for employees. If the Internet of Things becomes as prevalent in the workplace as anticipated, most companies will likely see a need for fewer employees than they currently have. Many of the routine tasks completed by people will become automated. Meanwhile, employees who are skilled in IoT processes and knowledge will become more valuable.

Security concerns. The Internet of Things, with all of its benefits, also leaves us more vulnerable to hackers and malware. As the Internet of Things amasses more information about people and businesses, this information becomes vulnerable to hackers. It is important to consider the country (or countries) in which the product is made. Many supply chains are global, but regulations around technology are local. Products are often not made with security features in mind, which can save time and money. This past September, California enacted the United States’ first Internet of Things security law which mandates “reasonable” security features on “smart” devices.

Classroom Implications

Ask students what types of IoT devices they have in their homes. How have these devices changed the way they live, shop, or complete routine tasks? What IoT devices are used in school or in their workplaces? Use these questions to spark a discussion about the potential for new “smart” devices. Ask students to brainstorm products that they think could be effected by the Internet of Things within the next few years. Also, lead the class in a discussion about the ways that IoT can improve business operations and efficiency.

Links for further learning:

https://www.forbes.com/sites/michelleevans1/2017/01/24/5-ways-the-internet-of-things-will-influence-commerce/#76d6184f4a0f

https://www.kidscodecs.com/what-is-internet-of-things/

https://www.businessinsider.com/internet-of-things-definition

https://www.networkworld.com/article/3270961/internet-of-things/10-hot-iot-startups-to-watch.html

https://internetofthingsagenda.techtarget.com/definition/IoT-device

Many companies are struggling to sell material goods to customers—or even to attract their attention. Consumers have too much “stuff” already. The sheer amount of products (and advertisements) are hard to break through. It is difficult to reach customers through traditional media, especially when the product does not offer significant value. Customers can easily and cheaply obtain the material goods they need and want. Unless a company has the lowest price and the quickest delivery, they aren’t likely to be swayed based on the products alone.

So how do brands stand out? By providing a unique experience. Experiential marketing means immersing customers within the product and allowing them to form an emotional connection with the brand. It means selling more than a material item—instead, companies are offering memories.

Over 75% of millennials prefer to spend money on experiences rather than material things. But it’s not just millennials. In the past 10-15 years, consumer spending on cars and household goods has decreased, while spending on travel, recreation, and eating out has increased. Companies such as Airbnb have bloomed because of the desire to travel and experience the world.

Social media is a significant reason why experiences are so powerful. Studies show that consumers are much more likely to support brands that offer value—and they place a high value on unique, social media—worthy experiences. People seek ways to attract attention with aesthetically—pleasing snapshots of their lives. The desire to “keep up with the Joneses” hasn’t gone away. Instead of competing with neighbors’ cars and houses, though, consumers want to show that they are having the best time at the best places.

The companies that have excelled in this area have a unique combination of physical product, experience, and brand power. Consider Starbucks. When customers spend $5 on a cup of coffee, they are getting so much more: the warm, inviting atmosphere of the coffee shop, the iconic cup emblazoned with the logo, and the feeling they get when hundreds of people “like” the photos they post of their decadent drinks.

Steve Weaver, owner of The Candle Lab, who recently spoke to High School of Business educators and MBA Research staff, understands the value of marketing an experience rather than just a product. Steve knew that people wanted candles, but the market was saturated. He decided to do something that he hadn’t seen before—offer candle lovers the experience of making their own candles. Steve has achieved great success by giving people the opportunity to have an enjoyable night out—and take home a candle, too. To learn more about selling experiences and the future of marketing, join us at Conclave 2018 in Kansas City, MO, where Steve will be our closing keynote speaker.

FRANK (which stands for “frankly speaking”) is a new brand and concept of OCBC (Oversea—Chinese Banking Corporation) in Singapore. FRANK is geared toward providing members of Gen Y with positive banking experiences. The FRANK retail store is designed to provide fun and relaxing banking experiences for customers, including the option to design their own debit and credit cards. Customers who bring in three friends to open bank accounts win $50 worth of free Ben & Jerry’s ice cream. Thanks in part to tactics such as these, OCBC already owns 26% of the total youth market in Singapore.

What can companies do to provide more experienced-based interactions with customers?

• Figure out what sets them apart
• Use video to create experiential-value ads
• Engage brand ambassadors (influencers)
• Integrate existing products with experiences

Keep in mind that while it may take a number of positive experiences to build brand loyalty, it only takes one bad experience (in many instances) to lose a customer to a different brand.

Classroom Implications

Have students provide examples of experiences that they have bought into—and shared on social media. Ask them to share why they were motivated to spend money on the experience and whether they felt it was worth it.

Ask students to take an existing product and brainstorm ways that it could be combined with an experience to make it more valuable.

Learn more:

https://www.business.com/articles/the—modern—marketers—guide—to—selling—experiences/

http://fortune.com/2016/09/01/selling—experiences/

https://globaledge.msu.edu/blog/post/53437/millennials—and—the—business—of—selling—experiences—

http://blog.higherlogic.com/customers—buy—experiences—not—products

https://www.entrepreneur.com/article/290848