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Debra Thompson, Vice President, Burson-Marsteller Kelsey Jefferies, Communications Consultant, Burson-Marsteller Crisis Communication Report, Dow Corning Breast Implant case study May 2, 2011

Overview and Evaluation of the Crisis Since 1943, Dow Corning has been known for its success in the development, manufacture, and marketing of various silicone materials, particularly silicone breast implants. By 1995, the company encompassed over 8,000 employees and 45,000 business customers worldwide, while reaching record-breaking projected sales of $2.5 billion dollars. Despite success from its multiple products, Dow Corning faced severe scrutiny after various media programs challenged the safety of its silicone breast implants. As a result, over 16,000 cases against the company were filed in a two-year period, and on May 15, 1995, Dow Corning filed for Chapter 11 bankruptcy protection to handle the pending litigation. Key constituency trust and support dramatically declined, a crisis the company clearly was not prepared for. In addition to multiple external crises, an internal controversy simultaneously developed: The companys manager of internal communications, John Swanson, announced his retirement after his wife claimed the implants were the cause of her declining health. Swanson also took this time to announce his plan to write a book about his take on Dow Corning with Business Weeks John Byrne. The peak of the crisis occurred, however, when the Oprah Winfrey Show invited Dow Cornings CEO, Richard Hazelton, to appear on an episode alongside Mr. and Mrs. Swanson, Mr. Byrne, and activist Sybil Goldrich. Considering the flack Dow Corning has faced, attending the Oprah Winfrey Show could be very controversial. Therefore, while deciding whether or not it should send Mr. Hazelton on the program, it is critical to evaluate the crisis at hand and assess the companys preparedness and ability to communicate successfully.

Jefferies 2 For years Dow Corning reigned as one of the most profitable, and ethical companies on the market. However, the release of the potential dangers of its silicone breast implants quickly put the company under intense scrutiny and instantly lost its constituencies trust. The quick pace of news releases and alleged claims heightened at a surprising rate, and prompted Dow Corning to lose control of its rapidly deteriorating image and reputation. Although the company has high dimension of exposure and thus low control of what the media says, the proposal of doing the Oprah Winfrey Show could give Dow Corning an opportunity to regain high control. Addressing the harmful allegations in a way that influenced how people accepted the message could change their perceptions and begin to recover the constituencies trust and status of the company. With the critical claims of its silicone breast implants, Dow Corning is facing a high dimension, low control crisis. However, the company does have control over reshaping its image and reestablishing constituency trust. Assessment of Companys Preparedness Before Barie Carmichael became Vice President of Corporate Communications at Dow Corning, the company showed many weaknesses that could leave it potentially unprepared to handle the silicone breast implant crisis. First, both internal and external communication severely lacked. Before the crisis, Dow Corning did not often communicate with the media or its various constituencies. Internally, two-way communication rarely occurred and interaction with senior management was very limited. For example, Carmichaels office initially did not exist in the same building, greatly inhibiting communication and increasing chances of crisis severity and duration. Although Dow Corning showed good effort in facilitating annual management forums by its former CEO, they did not present critical or informative data, thus employee attendance dropped significantly. Also, Carmichael found that employees were unaware of the

Jefferies 3 companys limiterspotent groups and agencies that prevent the function of an organization. Dow Cornings key breast plant adversary, Command Trust Network, and activist Sybil Goldrich had actively worked to undermine the company since 1988. Both have the potential to greatly weaken the company, especially if its employees were oblivious of such threats during the time a crisis struck. Carmichael came into Dow Corning finding many weaknesses that could hinder the companys ability to deal with the silicone breast implant crisis. However, she quickly developed and implemented many plans to strengthen its preparedness. One move Dow Corning initiated was its decision to hire Carmichael instead of promoting Swanson. Bringing in a fresh face to examine the corporate communications function allowed for effective reassessment of what the company needed to do to strengthen its preparedness. Carmichael immediately addressed the communication issues, established functional teams, and implemented the use of new media. Although Carmichael greatly benefited Dow Cornings ability to handle such a crisis, ultimately the companys poor communication, relationship with the media, lack of planning and implementation of crisis training leaves the company rather unprepared to handle breast implant crisis. Assessment of Communication Dow Cornings lack of communication abilities played a significant role in weakening its preparedness to deal with the breast implant crisis. In a situation where a companys product is potentially harming its consumers, it is vital to have clear lists of constituencies and communication objectives. Dow Cornings first key constituencies, its employees, could not effectively contribute to handling the crisis because of deficient communication within the company. Carmichael describes the companys initial internal communication function as the

Jefferies 4 dinosaur era as it was not a prominent function in the corporation. Dow Corning released unapproachable and untimely company magazines, and distributed press releases that lagged behind news through local newspapers. Employees play a pivotal role in effectively communicating to other constituencies during a crisis, but Dow Cornings employees did not have a clear protocol of whom to communicate to, when, and by what channel means. Consequently, the companys overall communication abilities greatly suffered when crisis struck. Dow Cornings customers also suffered from the companys limited communication abilities. The breast implant crisis escalated to the extent that it did because Dow Corning did not communicate with its customers after the media released multiple statements of the potential harm of its silicone breast implants. Although our company, Burson-Marsteller, implemented a 1-800 number to answer any questions customers had, Dow Corning did little to warn or reassure its customers about the safety of its product. Carmichael stated how the communication departments of Dow Corning were nave in that most of management saw the implant issue as a scientific issue, not one of communications. The crisis of whether or not Hazelton should appear on the Oprah Winfrey Show would not have scaled into the controversy it did if Dow Cornings communication with its customers had been effective in the first place. Advice on the Oprah Winfrey Show When the media frenzy over the safety of Dow Cornings silicone breast implants escalated in the early 1990s, the company lost tremendous amounts of trust from its key constituencies. Lack of preparedness and communication severely harmed Dow Cornings chances of both preventing and solving the implant crisis, making it difficult to decide whether or not Hazelton should appear on the Oprah Winfrey Show against some the companys most

Jefferies 5 influential limiters. However, because Dow Corning has lost so much support from its vital, key constituencies, it would be very beneficial for its CEO to do the show. If Hazelton were to appear on the show, it would be crucial for him to clearly and empathetically deliver a message that would convince the audience to look at the crisis from Dow Cornings perspective. Appearing on the program would also give the company a chance to be fairly represented and to show its concern for the safety and satisfaction of its customers, ultimately restoring its image and reputation. If Hazelton does take my advice to go on the Oprah Winfrey Show, the next step would be to help Barie Carmichael develop a communication strategy to announce the decision. While putting together a communication strategy, it is vital to keep in mind the two constituencies who have been affected by the implant crisis the most: Dow Cornings employees and customers. Employees may be confused or even opposed to Hazelton doing the show. Therefore, it is essential for him to communicate clearly all the reasons why appearing on the show would benefit the company and the crisis at hand. One method of accomplishing this would be to send out an email to each individual employee of Dow Corning at every level, stating the reasons why and the importance of supporting Hazelton. Considering the companys strong corporate culture, employee support should not be an issue. Because Hazelton will be addressing such controversial issues on the show, it is extremely important to make customers aware of his upcoming appearance. Implementing social media, Facebook and Twitter, would be a great way to capture the audiences attention to tune into the program. Also, making broadcast announcements on both local and national television and radio stations would effectively get the word out that Dow Corning will address its stance on the silicone breast implant crisis. Although my advice would be for Mr. Hazelton to do the Oprah Winfrey Show, there are

Jefferies 6 also some legitimate reasons as to why it would not be beneficial. Hazelton could fail in adequately portraying Dow Cornings stance, and sacrifice any chance the company had of regaining its constituencies support, worsening Dow Cornings crisis altogether. Therefore, it would be very important to communicate such reasons for the decision, especially to its employees. An in-house email from Hazelton explicitly stating why he did not support doing the show would be an acceptable method. However, a better strategy would be if Hazelton took the time to follow up the email and meet with members of each department, specifically explaining the reasons for the decision in person. When communicating the decision to its customers, Dow Corning should release a statement to the press that gives a specific reason as to why he did not want to participate, such as saying the company did not want to support or legitimize the claims in Swanson and Byrnes book. Ultimately, the key idea when communicating to its constituencies on whether or not to appear on the Oprah Winfrey Show is to communicate clearly and often as to why the company made the decision it did. Advice for Future Crises When the silicone breast implant crisis struck, it struck not only Dow Cornings tangible profits, but worse, its intangible constituency trust and image credibility. If CEO Hazelton can adequately represent the company against its limiters on the Oprah Winfrey Show, Dow Corning has a chance at emerging as a more respected company from the wake of a well-handled crisis. However, as reflected by the implant crisis, improvement in preparation and prevention by Dow Corning is imperative. Barie Michael specifically plays a huge role in preparing the company for future crises. Dow Corning did not only have insufficient relations with the media, but it also lacked efficient internal and external communication protocol, a trained staff, and centralized departments. Most importantly, Carmichael needs to put together a formal, written plan of who

Jefferies 7 needs to communicate to whom, when, through which channel choices, and have it equally distributed and accessible at all times. The plan needs to include notification procedures to employees as well as external constituencies such as its customers. It is also suggested for Carmichael to work closely with the human resources department to develop crisis training programs and conduct regular drills so that staff will know what to do next time a crisis hits. Ultimately, Dow Corning needs to assess and eliminate the flaws addressed in this report in order to prepare and prevent another controversy like the silicone breast crisis from occurring again.