How to handle a crisis

Quick question – are you as confident as Alibaba genius Jack Ma when handling a crisis?

If the answer is yes, then there is no need to read on.

If you are still with us and the answer is no, then this is for you.

To explain, after being written in glowing terms for months as the next greatest thing in business, Alibaba has begun to encounter some tough times.

Accusations of counterfeit goods being sold on one of the ecommerce group’s sites, and of pending shareholder legal battles resulting from the group’s huge New York IPO, have brought darker clouds on the horizon.

Mr Ma, who has an estimate wealth of $29.7 billion, adopted a front-foot approach to the crisis.

Instead of refusing to engage, he embraced the situation, using the platform at a speech he gave in Hong Kong that the problems gave his company an opportunity to explain how it does business.

Quoted in the Financial Times, Ma, said: “We are looking at how we can communicate with the rest of the world. We don’t want to be misunderstood by the world that we are not transparent.” He went onto say: “For Alibaba, it means a bad thing has come and we have to face it…we will use it an opportunity for the world to understand Alibaba better and China better; it’s a good thing. My legal team will handle it.”

Ma could have issued a statement which simply used his last line regarding his legal team. That would have been totally understood.

Instead, he chose his moment to turn the “bad thing” into something as positive as he could make it.

Has he stemmed the litigation threat? The answer is no.

Has he stopped shareholders and regulators coming after him? The answer again is no.

But he played the PR game incredibly well, with the feeling after reading or hearing his quotes  that:

  • Ma is confident that whatever is thrown at him will result in a positive conclusion
  • The situation is being dealt with quickly and decisively
  • The company will evolve and grow stronger as a result

Ma effectively set the agenda with a positive reaction to what are negative developments.

There is more to come on that story, but Ma has put his stake in the ground at an early stage and re-written headlines to his favour through his comments. He has turned a positive into a negative.

One of the key words he used in his speech was that of transparency, which he used once, and transparent, which he used later on.

A key word of modern business, Ma deployed it to great effect in handling a crisis has resulted from accusations of centring on the opaque.

Many crisis situations exposes the bare bones of a crisis, not least litigation. And somewhat ironically, the litigation is based on Alibaba’s New York listing of being anything but transparent.

It is rare a business leader will welcome litigation or a related crisis as a chance to provide a window into its world.

It is true to say the particular style he has deployed in the crises discussed is not without risk.

Not all business leaders can boast themselves as being the first mainland China entrepreneur to appear on the front of Forbes or the 18th richest man in the world (and until recently the richest man in China).

But Ma’s approach does give us five takeaways from Ma’s approach:

  • Show confidence in a crisis. Stakeholders – be they customers, shareholders, fellow directors or staff – want to see strong leadership
  • You know your company better than anyone – use this knowledge to stay out in front.
  • There are times to say nothing – but also to speak out. A good PR adviser will help you make this vital decision on whether to attack or defend
  • Leave the legal detail to the experts – you can still exude confidence with top lines which do not go into specifics
  • Stick to the plan – you can be Jack Ma didn’t decide five minuets before he took the podium that this was to be his strategy. Planning is vital.
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