Crisis Responses
Analysis of the crisis based on Organizational actions and academic literature
Optus Response
The Optus outage began in the early hours of 8 November and lasted for almost 12 hours. Initially, Optus provided limited information, leading to widespread speculation that increased customer frustration. There were three main activities carried out by Optus, on the same day (8th November 2023). Firstly, it tried to identify and rectify the key cause of the issues. Secondly, it started to interact with the government and regulatory bodies and lastly, it interacted with its customers (Gregory,2023).
As the day progressed, Optus issued multiple updates on the situation, through various channels. However, the company received a lot of criticism, due to delayed responses, and a lack of detail and clarity. On inquiry, the flow of events and responses from Optus were (Williams, 2023):
4.05 am: Network crash
On Wednesday morning, the problem arose.
6.33 am: Optus released its first statement
The company ‘s first message stated that they were aware of the situation and working to restore the services.
10.30 am: The Optus CEO speaks on ABC Radio
The CEO was interviewed by ABC Radio Sydney and she said that the company is trying to restore the services and will not rest until it is restored.
4 pm: Optus declared that the outage is over
By 4 pm, more than 99.72% of the network was restored.
November 13: Software Upgrade was the issue
On Monday, the company released a media statement saying the network crash was caused due to a routine software update (Williams, 2023).
November 15: Optus shifted the blame
An Optus spokesperson told ABD News that an internet exchange operated by the telco’s parent company Singtel should be blamed for this outrage (Williams, 2023).
This further complicated the situation and created frustration and speculation in the public. Also, this initiated and involved further investigations from the Senator and communication minister and regulatory bodies like ACMA (Williams, 2023).
Critical investigation using Academic literature
According to (Hegner, et al. 2016), a crisis is an incident that produces challenging and risky results. Similarly, organizational crises can be defined as specific, unexpected, and non-routine events or series of events that create high levels of uncertainty that can directly threaten the organization’s high-priority goals (Coombs, & Holladay, 2014). Crises are risky so they can cause a threat to the reputation of the organization and harm the company’s brand, due to the power of the stakeholders to interact with the organization (Nguyen, 2021). Organizational crises can result in negative publicity, which could harm organizational reputation and sales, as well as they can negatively impact the company and consumer relationship (Hegner, et al. 2016). Reputation is considered one of the most valuable assets for the company and needs to be handled properly (Doorley, & Garcia, 2015).
Many researchers have analyzed the effectiveness of the various crisis response strategies used by different companies (Hegner, et al. 2016). Additionally, there is a need to analyze the type of crisis the company is experiencing. It can either be moral harm or product harm (Botes, 2022). The Optus outlay case was actually product harm, as the service got suspended for 9 to 12 hours, but due to a large number of customers and businesses being affected, due to the suspension of services, the harm turned into moral harm, with many social and ethical issues (Hegner, et al. 2016). Also, this outlay affected the product users but also other people and parties, causing negative emotions in the customers and other stakeholders. Furthermore, SCCT posits that following a negative event, stakeholders make attributions about the cause along its causal dimensions. This is based on information available on social media, media, the company website, and other sources (Hegner, et al. 2016; Coombs, et al. 2020).
According to (Doorley, & Garcia, 2015), social media has transformed and companies have an opportunity to engage, communicate, and collaborate with their stakeholders instantly by using social media platforms. More use of social media helps companies to create more impact on its stakeholders (Jones et al. 2015). Moreover, the evolution of social media has enhanced the sharing of information and word-of-mouth (WOM), where positive WOM can help to build a firm’s reputation, while negative WOM can be a harmful threat to brand reputation and image. Also, it can even cause unforeseen and uncontrollable consequences (Agatha, et al. 2023). Therefore, companies should act promptly and use social media to respond to customers’ queries and complaints, because this may create further speculation in social networks and do bad publicity for the company (Agatha, et al. 2023). Similarly, Optus also employed multiple communication channels to reach its stakeholders as their response strategy. The company used its main website and social media as response mediums to connect with the customers. Still, the information available in the public domain and social media remained unclear for many days, as the company gave multiple reasons for the outrage (Gregory, 2023).
Also, during crises, the stakeholders and the media demand immediate, thorough, and qualified responses from the organization (Hegner, et al. 2016). Dealing with the crisis and saving the company's reputation requires effective communication, during and after the crisis, where the key focus should be on planning, data collection, organization, and transmission. This helps to identify people's concerns, allocate resources, promote safety, and enhance the understanding of risk among the key stakeholders. This information is essential for the company to respond promptly, jointly, and wisely in times of crisis (Karantza et al. 2022). Past researchers have reported that when a crisis is preventable or the company is being held liable for a particular crisis, a good response strategy works better than reducing the reputational damage using strategies like diminishing or denying, etc. (Hegner, et al. 2016). Similarly, Optus first delayed in responding and then used a defensive or diminishing strategy and shifted the blame on the technical network fault to be the main reason behind this outage (Ainsworth et al. 2023). This shows that Optus used ineffective crisis responses, which has caused damage to its reputation, company operations, trust, and competitive position in the Australian market (Agatha, et al. 2023).
Crisis communication is directly linked to the Situation Crisis Communication Theory (SCCT) (Coombs, 2007a), it helps to understand how organizational actions can immediately influence the customer’s emotions, attitude, and behavior. Therefore, SSCT is also linked to attribution theory. The Attribution theory analyses how people look at the causes of the events, especially in case of unexpected and negative events. Most researchers have agreed that the worst thing at times of crisis is not taking crisis responsibility or posing crisis blame on other factors (Coombs, 2007b). Additionally, SST explains that the crisis manager needs to determine which critical response strategy can help to protect the firm’s reputation, the most. This is also dependent on other factors, (1) initial crisis responsibility, (2) crisis history, and (3) prior relational reputation (Coombs, 2007a), as shown in figure:
(Coombs, 2007a).
Based on the above analysis, both theories and literature are relevant to the Optus case. This proves that Optus did not plan and prepared its response strategy, satisfactorily. As discussed earlier, the company used a defensive strategy and later tried to shift the blame to other factors, which backfired for the company. It not only affected its reputation, lost its CEO, and thousands of customers switched to competitor’s mobile networks, causing dropped sales and profitability issues for the company (Barrett, 2023). According to (Agatha, et al. 2023), later when companies realize, they come up with solutions, but it's too late. This shows that the company is unaware of the public outside the organization and tried different ways to restore its reputation, which is a lack of timeliness in its response, which caused public frustration, suspicion, and rumours. This is also considered indifferent or arrogant behaviour of the firm (Agatha, et al. 2023). Similarly, Optus tried to repair the relationship and satisfy 8500 claims of compensation from businesses and customers the company had to pay cash compensations to the affected customers, but did not provide the exact dollar figure.
