How Firms Should Fight Rumors

What Is a Rumor?

To understand how to fight rumors, we need first to understand what a rumor is and then how and why it circulates.

There are many definitions of “rumor,” but what they have in common is that a rumor comprises unverified, unconfirmed information of uncertain origin and doubtful veracity that has found its way into general circulation. It may contain elements of truth, as well as unfounded allegations. A rumor may be positive (“This stock is going to rocket – they’ve struck oil.”) or negative (“That restaurant serves cat as chicken.”).

Rumor differs from propaganda, which is an organized campaign to promote a doctrine or practice. However, rumor may form part of a propaganda campaign.

What Makes a Successful Rumor?

The originally secret, since declassified, OSS manual Doctrine re Rumors (effectively a “How-To” manual on spreading rumors) described an effective rumor as being “self-propelled.” It described five characteristics of an effective rumor:

1. Plausibility
2. Simplicity
3. Suitability for task – for example, slogan rumors can be short and simple, building on existing situations or beliefs. New “information” may need more narrative.
4. Vividness
5. Suggestiveness

Rumors are spread by word of mouth at informal meetings over coffee or round the water cooler (referred to as the “watercooler effect”). A team of scientists and mathematicians at Rochester University came up with dynamic social impact theory – a model to calculate the spread of rumor. One of the motivations for spreading rumors is the kudos that the spreader gets from apparently being on the inside – “knowledge” is power.

With social media, rumor can be spread farther, quicker, and with more devastating effect. Wikipedia lists over 300 social networking sites, ranging from the well-known (Facebook, with more than 850 million subscribers; Myspace, 30 million plus; and Twitter, over 175 million) to specialist sites and blogs with a few thousand subscribers. Another source lists 750 “top” sites.

Rumors may also spread by e-mail and SMS. In March 2011, an e-mail and SMS about a nuclear radiation rain shower were reported to be spreading panic across the southeast Asian region, including countries like the Philippines that are close to Japan. In Kyrgyzstan, Skype groups were reportedly validating rumors of ethnic disturbances.

The Impact of Rumor

Recent research by Convergys Corp. found that one negative customer review on YouTube, Twitter or Facebook could cost a company up to 30 customers.

The most precious asset a company has is its brand value and reputation. Often, this exceeds – in value – the tangible assets of the firm.

Brands and the goodwill associated with a company name have a real value – which is capable of being severely damaged by adverse rumor. As I wrote in The Definitive Handbook of Business Continuity Management: “That value is created by many years of advertising and good experience by the consumers of the product or service, and it can be quickly eroded. When contamination of Coca-Cola was alleged in France and Belgium a few years ago, the brand value of Coca-Cola was reported to have sunk by $8 billion.”

Other Impacts Can Include:

• Loss of share value
• Loss of sales
• Loss of customers
• Loss of credit rating
• Cash-flow problems
• Vulnerability to predatory and opportunist takeover
• Loss or delay of the capability to market new products or services under the brand name (brand development/ brand extension)
• Increase in public relations, advertising costs and legal fees to counter negative rumor and recover market share

Summary

Rumors can come from any direction, at any time. They are frequently a mix of fiction and fact, but they may also be unconfirmed fact that has escaped control; 360-degree environmental scanning is essential to provide an early warning. A predetermined strategy is needed to ignore or to combat them. A rebuttal needs to be quick and comprehensive.

This is an extract from Hiles, A.N. Editor and contributor, Reputation Management – Building and Protecting Your Company’s Profile in a Digital World.

Resources include: DiFonzo; 2008; Doorley & Garcia, 2010; Hiles, 2010; McKusker, 2006