It’s time to revisit game theory as a tool in crisis preparedness and crisis communication #longread
The way a company manages the fallout of a crisis can make or break its reputation, and yet two problems persist in the way organizations of all sizes handle crises.
The first is a lack of preparation. A significant proportion of companies are ill-equipped to handle a public crisis. In a Western Union survey of Fortune 1,000 industrial companies and Fortune 500 service companies, only 54 percent of respondents reported having a crisis communication plan in place.
The second is what can best be described as “Fog of War”. When a crisis hits, typically a meeting is held with the crisis communication team to decide the course of action.
Emergency medical services often talk about the “golden hour” in which a person needs to be treated in order to save his or her life after traumatic injuries. In crisis communication however, we often see that the “golden hour” is not optimally used:
- New, often conflicting information comes in and it’s very hard to assess the quality of the information;
- Communication is not always the highest priority for some of the decision makers. They might overrule communication best practices because of irrational fears (“the media is always against us anyway”) or irrational hopes (“this will blow over if we just shut up”);
- Some of the decision makers (like operations management) might be more interested in updates coming in via mail, text and phone than in the meeting;
- Some of the important decision makers may not be on-site but travelling, requiring them to call in during the meeting or after the meeting;
- There is a lot of political capital invested in the outcome of a crisis. Some internal stakeholders might object to any and all response strategies in order to avoid blame in a worst-case outcome.
In the course of our work for clients of all sizes, we have found that principles from game theory (and its cousin, decision theory) can address these problems of crisis communication.
Game theory and crisis communication: "games as a model of the real world”
Game theory’s origins can be traced as far back to The Art of War, the military treatise penned by Chinese general Sun Tzu over 2,500 years ago. In the 1940s, mathematicians incorporated the principles of game theory into economic models, creating the subject as we know it today, and in the 1970s it became established in the academic world, and especially in economics as the leading instrument of studying complex problems.
At its most basic level, game theory was born out of the idea that the underlying principles of strategy games like chess could be applied to real-life situations. In his book The Game of Business, John McDonald summed up the rationale:
“A game is more than a sport, pastime, or amusement. It is also a model of the real world."
Game theorists argue that situations of competition and conflict show the same basic features of a game: two or more players must make decisions within a given set of rules to maximize their own benefit, often at the expense of the other’s (non-cooperative games)
“One player may be an organization, while the other player represents a key public such as the media, customers, legislators, or employees. Each side has certain preferences and dislikes (the payoffs in game theory parlance); each has a set of actions (or moves) for reaching the best result, taking into consideration the other player's actions.”
“A game is more than a sport, pastime, or amusement. It is also a model of the real world."
A few decades ago, game theory was actually quite popular among public relations researchers.
Dr. William Ehling, a public relations professor at Syracuse University, for example, wrote in 1983 that game theory “should permit the user to make rigorous and rational distinctions in areas where conventional wisdom and ordinary thought ways have failed.”
Priscilla Murphy of Temple University was another proponent of using game theory in crisis communication:
“Nowhere is game theory more helpful than in crisis communication, where the stakes are high, decisions irrevocable and each step in the communication process yields highly visible results. Caught in a fast moving crisis, it is a natural reaction to base decisions on instinct and emotion. In contrast, game theory offers a rational structure for strategy analysis.”
The interest in game theory seems to have waned a bit among PR professionals, but we think that it’s useful to revisit, for two reasons: it’s excellent in a crisis preparedness setting, and it can be useful as a tactical tool when a crisis hits.
(Note: some of the concepts in the blog are closer to “decision theory”. Decision theory is related to game theory, but in decision theory, the opponent is not influenced by the ‘moves’ of the player. They are ‘games against nature’. For reasons of readability, we continue to use the term ‘game theory’).
Game theory as a crisis preparedness discipline
For anyone preparing their organization for a crisis, it is useful to learn that game theorists have noticed a few patterns that appear again and again in reputational crises. Here are three of the most common scenarios that a company might have to navigate in crisis communication, as outlined in the Canadian Journal of Communication.