2023 will be a year many of us will remember. We witnessed an economic boom thanks to Taylor Swift and Beyonce. Thousands rushed to the movie theaters to experience box office hits like “Barbie” and “Oppenheimer.” And Pedro Pascal continued to show all of us why we love him.
Besides American Girl releasing a “Historical Doll” from 1999 reminding Millennials how old we truly are, 2023 was a year we can look back on and (for the most part) smile. While many of us are excited to keep 2024 rolling on a strong note, we can’t close the doors on 2023 without looking back at some of the biggest communication blunders last year.
Silicon Valley Bank Crash
2023 marked the second largest bank failure in the United States when Silicon Valley Bank – the largest bank by deposits in Silicon Valley and the go-to bank for tech boom startups – went from solvent to broke in just two days.
In March 2023, Silicon Valley Bank issued a press release announcing it was raising cash to shore up its balance sheet. However, the release was poorly written, filled with jargon, and left no room for reassurance. In fact, it left too much room for speculation, spooking investors and depositors. On top of it all, the release had abysmal timing, being pushed out the same day Silvergate – the largest crypto bank – declared it was liquidating.
When CEO Greg Becker tried to explain the announcement to ease concerns, it triggered panic. Venture capitalists urged depositors on social media channels to pull their funds. Within hours, depositors withdrew $48 billion, and SVB was toast.
Going from financially sound to insolvent in a single day is not easy. While lack of diversification, the crumbling tech industry following its post-pandemic boom, and high interest rates contributed to the bank’s downfall, its botched communication was the main driver for its total and swift dismissal.
The crisis highlights the importance of maintaining clear, honest and timely communication with stakeholders to avoid reading between the lines. This is also a scenario where old-school PR tactics can be handy. Taking the time to notify the most important and influential stakeholders through personalized phone calls before the release distribution would have helped prevent depositors from losing faith in the bank.
Sam Altman & OpenAI
On November 17, we peered into high-stakes boardroom shenanigans resembling “Succession.” Sam Altman, the well-liked and respected OpenAI CEO and co-founder, was abruptly fired by OpenAI’s board of directors. The news was announced on a Friday without warning, without communication to the staff, and without apparent reason for the termination. President Greg Brockman – who learned of the news minutes before it was announced – resigned soon after, followed by many senior researchers.
Over the next few days, the news dominated social media conversations, and 500 employees of OpenAI threatened to resign due to Altman’s ousting. In a letter obtained by CNN, employees accused the board of mishandling Altman’s dismissal. By November 22, Sam Altman had been reinstated, with a new board of directors joining the company’s ranks.
Overall, this entire situation was a communication failure. If the board had been more explicitly clear about the reasoning for terminating Altman, it would have avoided the hundreds of staffers threatening to quit. While the decision to fire Altman also seemed last-minute, this is not an excuse for a poorly executed announcement. Companies must ensure they align on internal and external communications or risk negatively impacting their brand.
Shein Influencer Trip
We all love a great influencer trip. It fills up our Instagram and TikTok feeds and provides PR professionals with excellent case studies on how top brands can effectively use influencers. But we can also learn many lessons from a failed one, which happened when e-commerce brand Shein hosted an influencer trip that went awry.
In June, Shein took a group of fashion influencers to Guangzhou, China, to see its Innovation Factory, where some clothes are manufactured and sent to warehouses. However, Shein has faced endless controversy surrounding its business practices and history of allegedly abusing workers in harmful work environments. So, it was unsurprising when influencers on the trip received backlash after they posted about their experience at the Innovation Factory, highlighting the “good” working conditions, with some followers calling the trip “propaganda.”
The company is still reeling from the backlash, with Morning Consult reporting that its net favorability dropped 20 points this year, with some in part due to the negative response to the trip. This also negatively impacted the influencers and their future business ventures, highlighting the responsibility that influencers should have when going on free trips and understanding the landscape they could be entering.
A potential alternative would have been inviting influencers who are environmentalists, labor activists, or journalists – not fashion influencers – to come for a campaign directly addressing its business practices. These influencers would be more credible in addressing relevant issues, leading to a more authentic view of the company’s practices.
No one can predict a crisis, but everyone should be ready for one. What actions have you taken to prepare for an unexpected crisis? If the answer is “none,” it may be time to contact us to see how we can help.