Chipotle is stuck in a 'fiasco vortex'

One of the great myths of crisis management preached by business schools and consultants alike is that of the "trustbank." In theory, a trustbank is a reservoir of goodwill that a company can borrow against in times of crisis in order to recover more swiftly from controversy. It's a wonderful theory — and it makes intuitive sense — but it has a practical snag: It's rarely true in today's crises such as the one Chipotle is now facing.

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In recent weeks, Chipotle has endured an E. coli outbreak on the West Coast and novovirus incidents on the East Coast that have reportedly sickened hundreds. These events have been aggravated by the kind of flashy anecdotes that explode in the media and on the Internet, such as the charges that half of the Boston College basketball team got so sick from eating at Chipotle that they lost a big game against Penn State. The athletic department even sent out a warning to students not to eat at Chipotle.

My experience has been that, when the allegations are severe enough, as they are with Chipotle, platitudes about trustbanks go right out the window. I attribute this to a phenomenon I call the "fiasco vortex," where the "volume, venom and velocity" of new and old media set in motion a runaway crisis where a company has little chance in the short term of reversing the cacophony.

When a company like Chipotle finds itself in the fiasco vortex, nothing it does to try to quell the crisis seems to work. This can lead to cascading allegations where it becomes difficult to differentiate between legitimate hazards and mass hysteria. A similar thing happened a few years ago to Johnson & Johnson, long considered the gold standard of damage control, when the company faced dozens of recalls of products ranging from Rolaids to hip implants.

The compounding J&J challenges begged a broader question: Do companies ever recall a product not because the hazards are real but because the consequences of not recalling it are too severe? Recalls to defuse consumer outrage are happening more and more in order to quell hysteria as opposed to strictly addressing proven dangers.

Not only does the trustbank theory come up short in the fiasco vortex, I have found that the better a company (or individual's) reputation, the more consumers, the media and regulators enjoy savaging it. Indeed, the core of Chipotle's marketplace position has been that it stands alone as a morally superior company that offers "food with integrity" (as opposed to all of the others that presumably don't). This kind of positioning is often beneficial on the upswing, however, as J&J found, when trouble hits, one's critics take venomous glee in a lily white company's hardships.

Chipotle's leaders have taken public relations as far as it will go — apologizing, engaging the media, pledging resolutions — but contrary to conventional wisdom, PR isn't the antidote to systemic crises. Oil spills fall out of the news when ocean floor leaks are plugged; retailers restore confidence when they cease having credit-card breaches; and food companies win back customers when people stop getting sick. All of the apologies and charm offensives in the world don't take the place of an absence of adverse incidents, something that takes time.

None of this is to say that trust is irrelevant, but trust is earned one way and one way only: by personally relevant — and sustained — experience with superior goods and services. Trust, therefore, plays a greater role in building brands than rescuing them from the fiasco vortex. Chipotle's popularity will earn it a second chance, not a "Get Out of Jail Free" card.

Eric Dezenhall is the CEO of Dezenhall Resources, a crisis- management firm and the author of "Glass Jaw: A Manifesto for Defending Fragile Reputations in an Age of Instant Scandal."