The Elements of a Good Company Apology

On April 4, Dennis Muilenburg, CEO of Boeing, faced a near-impossible task: He had to apologize for two 737 Max jet crashes, one in October 2018 and one in March 2019, that together killed 346 passengers and crew. The court of public opinion had already found Boeing guilty; now Muilenburg had to win back the public’s trust. Somehow, he had to own Boeing’s role in the two catastrophes while also convincing the public that the company would do better in the future. It’s an unenviable challenge, and one that other leaders have attempted with mixed success. Too often, these statements come across as empty rhetoric — saying what’s expected without really meaning it, making excuses, or blaming others for what went wrong. Not only do hollow, perfunctory apologies fail to repair relationships with stakeholders, they can make matters worse. Indeed, Muilenburg’s initial response met with resistance and did little to stanch the loss of credibility. (He apologized again recently.) To win back lost trust, it’s important to grasp a fundamental truth about apologies: When something bad happens, you must first decide if an apology is even warranted — sometimes apologizing is not the best strategy. If an apology is warranted, companies must then answer three key questions to properly craft a response: Do we tell the truth? On whose behalf are we acting? How do our actions benefit those who trust us? To help executives be better prepared to speak to stakeholders in difficult and make-or-break moments, we explain this process below. Determine What You’re Apologizing For The first step in deciding whether an apology is warranted is to determine what exactly you’re apologizing for: an issue of competence, or one of integrity. (For this analysis, we’re indebted to Peter Kim of the University of Southern California; Donald Ferrin, then at the State University of New York at Buffalo; Cecily Cooper from the University of Miami; and Kurt Dirks of Washington University in St. Louis.) A competence problem involves a failure of reliability: The product or service either didn’t work or didn’t live up to its promise. An integrity problem involves a failure of responsibility: A company fails to treat stakeholders fairly or doesn’t take responsibility for the results of its actions, whether those actions were intended or inadvertent. (Examples of this include misrepresenting the facts in a situation, prioritizing profits over customer safety, or refusing to honor a commitment.) Kim and his colleagues found that apologies were effective in restoring trust for problems of competence, but denial was the better strategy for integrity problems — if, and we can’t stress this enough, the company really did act with integrity. It turns out that competence-based problems are easier to forgive, because people understand that even the most competent companies and individuals can sometimes make mistakes. A well-constructed apology for a competence problem indicates that the individual or company recognizes that they did something wrong, understands and communicates exactly what was wrong, and can convince stakeholders that they will change their behavior in the future. Integrity-based trust problems are much harder to overcome, because a breach of integrity is assumed to reflect a person’s true character. In the mind of the public, an integrity-based trust issue happens because the individual or company’s leadership is fundamentally immoral. In these cases, Kim and his team found that a denial can challenge people’s automatic assumption of guilt. It can be beneficial to convince others that as a person of integrity, you would never do the act you are accused of. (However, a cautionary note: If there’s clear evidence of fault, the researchers found that denial is never successful in winning back trust.) Correctly diagnosing the type of trust problem you have with stakeholders — competence or integrity — is the first step to an effective response. If you conclude that your trust problem is integrity based, and you believe you are wrongly accused of a failure of integrity, you should issue a denial. If you conclude that your trust problem is competence based, some kind of apology is needed. Making an Apology Work Leaders then need to understand what makes an apology work. Social psychologists Roderick Kramer of the Graduate School of Business at Stanford University and Roy Lewicki of Ohio State University reviewed prior research and found that an effective statement meets three criteria: It’s credible; it works to restore the good will of those who receive it because it is clearly meant to work in stakeholders’ best interests; and it assumes responsibility for correcting the problem over the long term. While this research specifically examined excuses, these three criteria link to three questions we’ve developed in our research, which companies can use to clarify their motives as they consider how to make an effective apology. Credibility: Do we tell the truth? Goodwill: On whose behalf are we acting? Responsibility: How do our actions benefit those who trust us? By tightly focusing on these questions, CEOs have a better chance of delivering an apology that will start the long process of recovering trust. Here’s a breakdown of each question. 1. Do we tell the truth? Apologies can help win back trust in the face of a competence-based problem, but only if they are truthful, can show a clear and evidence-based understanding of what went wrong, and offer an account that corresponds with other publicly available information about the incident in question. Let’s look at each step. Be truthful. A statement must be factually true, both in terms of what happened and what the company is doing about it. This is crucial for convincing stakeholders that they can believe the company’s statements both now and in the future. A good apology also takes into account the context that gives a company’s assertions credibility — or serves to discredit them. This may seem obvious, but leaders often trip up here, sometimes in subtle ways. For example, when Boeing’s Muilenburg stated, “We’ve always been relentlessly focused on safety and always will be. It’s at the very core of who we are at Boeing,” a skeptical person might wonder whether this is truly the case, since two major crashes indicate otherwise. Similarly, after the Equifax data breach in 2017, in which 148 million customers’ personal information was stolen, CEO Richard Smith wrote in USA Today, “We are devoting extraordinary resources to make sure this kind of incident doesn’t happen again. We will make changes and continue to strengthen our defenses against cyber crimes. We will make sure every consumer who wants protection has a full package of services.” However, the company required customers who enrolled in free credit monitoring to waive their right to sue the company, a move that came across as underhanded and geared toward protecting the company’s interests rather than the customers’. (Equifax later amended this and allowed people to retain their right to sue via written notice within 30 days of enrolling in the credit-monitoring program.) Equifax also released a bug-ridden breach-response website and mistakenly tweeted a phishing link instead of the website address. Contrast this with Reed Hastings’s 2011 apology when Netflix ran afoul of customers by raising prices for customers subscribing to streaming and DVD services by 60%. Hastings — who founded and still leads the company — started with a blunt admission: “I messed up. I owe everyone an explanation.” He went on to explain, “I slid into arrogance based upon past success.” Hastings’s apology wasn’t perfect (he was critiqued for apologizing two months too late, as well as for not offering customers anything to make up for the price hike), but he does get points for honesty. Explain what went wrong. It’s vital to provide a full account of what the company did wrong. Researchers Roderick Kramer and Roy Lewicki found that, when apologizing for a competence problem, a full and detailed account of actions committed by a company is much more persuasive than one that, for example, attributes the problem to factors outside the company. Details show a level of understanding of the mistakes that were made, helping concerned parties trust that the company knows what it did wrong. So when Boeing’s Muilenburg noted that “it’s apparent that in both flights the Maneuvering Characteristics Augmentation System, known as MCAS, activated in response to erroneous angle of attack information,” it’s problematic that he neglected to delve into specifics about why it activated, and what could have been done to avoid or compensate for the problem. On the other hand, in 2007, when Apple slashed $200 off the iPhone within two months of its release, angering early buyers, Steve Jobs laid out the rationale for the cut — to make the phone more affordable to more people in time for the holiday shopping season — and why he believed it was the correct decision. He also pinpointed the core problem: “We need to do a better job taking care of our early iPhone customers as we aggressively go after new ones with a lower price.” The apology was all the more effective because Jobs laid out a plan to make up the loss to these stakeholders (more on the importance of plans like this later). Acknowledge information that’s already out there (or may be soon). Leaders should disclose facts they know are in the public domain, or may be revealed by investigative reporters or whistleblowers. In our era of 24/7 information flows and social media, companies are not alone in explaining what went wrong. Accepting — rather than denying, glossing over, or failing to disclose material facts that have been unearthed — reinforces that the company embraces a truthful account of its actions. This did not happen in the wake of the 737 Max crashes. Reporting from outlets including The New York Times and The Seattle Times undercut Boeing by revealing significantly more information than the company was willing to — for example, that Boeing had decided to make the two key MCAS safety features add-ons rather than default features, and neither plane that crashed had opted to purchase these “extras.” Similarly, when United Airlines CEO Oscar Munoz first issued a statement after Dr. David Dao was dragged off a plane in 2017, he referred to it as an “upsetting event to all of us here at United,” all but ignoring United’s role in the man’s treatment. The disconnect between seeing Dao’s bloody mouth in viral videos on social media and hearing the sanitized version of the event that Munoz offered made potential passengers question the company’s truthfulness. Compare United’s approach to that of JetBlue in 2007. During a Valentine’s Day ice storm in which most airlines canceled their flights, JetBlue kept its planes running. Customers paid the price. Only 17 of JetBlue’s 156 flights left JFK, and passengers on nine planes were stranded on the runway for six-plus hours. There was no denying this reality on the ground. CEO Dave Neeleman unsparingly recapped the full extent of the delays and the impact in his apology, saying, “[W]e subjected you to unacceptable delays, flight cancellations, lost baggage, and other major inconveniences.” He went on to describe the “unacceptably long” hold times for JetBlue’s customer service number. 2. On whose behalf are we acting? To help win back trust, apologies should prominently feature the people who have been harmed — and in whose name the company pledges to do better in the future. This demonstrates that leaders understand and care about the impact their company’s errors have had on people’s lives. To do this effectively, we offer three guidelines: Make your apology about them, not you; include specific details about the people most affected; and apologize as quickly as you can. Focus on them, not on you. It’s natural for any leader to feel a sense of guilt and responsibility in the wake of a tragedy; it’s also normal to worry about not only the public but shareholders and employees as well. However, your public apology should focus on those who suffered harm — for example, the friends and family members of people who were hurt or killed in an accident — rather than on what you or members of your organization may feel. Statements like “I cannot remember a more heart-wrenching time in my career with this great company” (Muilenburg) or, more egregiously, “I want my life back” (BP’s Tony Hayward) shift the focus of the apology from the victims to the person most responsible for what happened. Instead, consider Toyota president Akio Toyoda’s 2009 apology at the Japan National Press Club in the wake of crashes that led to the recall of 3.8 million cars. Toyoda took full responsibility: “Four precious lives have been lost. I offer my deepest condolences.…Customers bought our cars because they thought they were the safest. But now we have given them cause for grave concern. I can’t begin to express my remorse.” We should note that the statements you make inside the company can acknowledge the guilt, anger, or worries that those who work for you may be experiencing. But even then, should focus on making the message about their employees and not about themselves. They should also keep in mind that any internal statement may get leaked. Be detailed. Make sure to include personal information about those who were harmed to show their families and friends that you recognize the true cost of your company’s error. This can be as simple as, in the case of Boeing, including the number of people killed in each crash and who they were — 189 in the Lion Air crash, and 157 on Ethiopian Airlines, from 35 countries, including 22 United Nations staff members. The dates of each crash — Lion Air: October 29, 2018; Ethiopian Airlines: March 10, 2019 — are also important. These are not just days of an accident; they are the days families lost loved ones and people lost friends and colleagues. Unfortunately, Boeing neglected to include this information in its April 4 apology. Contrast this with Johnson & Johnson when it had to pull a tampon off store shelves due to distribution problems in 2010. The company sent the 65,000 women in its database a personalized apology song video, with the singer singing their names. It created videos for 10,000 different names, and the apology turned into a viral sensation. Apologize quickly. Research shows that timeliness is a critical dimension on which apologies are judged. Don’t worry that you may not have all the facts yet, though you should be forthright about the facts you do have. What is important is to show that as a company you are aware of, and deeply sorry for, the harm that was caused. An apology on the day of, or even within a week after, the Lion Air crash would have gone a long way to framing Boeing’s response to the 737 Max crashes in a more positive fashion. Instead, the company issued a brief six-sentence acknowledgment of the downing of the plane on November 21, three weeks after the crash had occurred. On November 27, it issued a brief description of maintenance performed on the plane that crashed. JetBlue did a better job of timeliness during the ice storm situation in 2007. The whole ordeal lasted from February 14 to February 20. On the 19th, the company published an apology video on YouTube featuring CEO David Neeleman. PwC managed an even speedier response at the 2017 Oscars when presenters were given an envelope with the wrong movie winning the Best Picture award. It posted a statement within hours of the ceremony. 3. How do our actions benefit those who trust us? Once the facts are laid out, and it’s clear whose interests the company is acting in, this last question helps the company communicate exactly how its future actions will benefit these stakeholders. After all, an apology is just words if the company can’t show stakeholders that it will offer reparations or ensure that the situation will never happen again — or, better yet, both. So how should a leader articulate this in an apology? Boeing’s Muilenburg said he was committed to safety but then said, “Our team is determined to keep improving on safety in partnership with the global aerospace industry and broader community. It’s this shared sense of responsibility for the safety of flight that spans and binds us all together.” The apology didn’t lay out a concrete plan of action, and Muilenburg subtly passed the buck to regulators and the aerospace community. Part of the reason JetBlue’s apology was so effective was because Neeleman didn’t just apologize quickly. He unrolled a plan of action and outlined steps JetBlue would take to ensure that a similar situation would never happen again. On February 20, JetBlue published its Customer Bill of Rights pertaining to cancellations and delays, which is still in effect today (although the current version is not quite as generous as the original). Similarly, when a Harvard Business School study found Airbnb hosts practice racial profiling in late 2015, CEO Brian Chesky incorporated a plan of action in his September 2016 apology email to hosts and guests, including guaranteeing housing for guests experiencing discrimination. Airbnb also created a new nondiscrimination policy and conducted an audit of the platform. Airbnb got dinged for being slow to address these concerns, but it gets points for concrete actions. . . . A failure to understand how apologies work can be costly. In the case of Boeing, the company is already facing a slew of lawsuits from family members of passengers who died in the crash and shareholders. Early indications are that regulators outside the U.S. will no longer allow the FAA to determine whether the 737 Max is safe to fly, as they may have done in the past. And shareholders have reacted to Boeing’s actions by reducing the value of the company’s stock, which lost $13 billion on the first trading day after the Ethiopian Airlines crash on March 10. Not all of these issues are directly related to Muilenburg’s statement, of course. But we argue that a better apology would have put the company on the path to rebuilding the trust necessary to handle each of them. A final note: Leaders also should recognize that even a perfect apology is just the first step. The greater the harm, the more difficult it will be to earn back stakeholders’ trust. No matter how eloquent the apology, people will not forgive a company that does not back up its words with concrete action to remedy the harm it has caused — and prevent it from happening again. The Big Idea

The Elements of a Good Company Apology

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