When companies split, crisis easily ensues. In this conversation with Paypal VP Kirsten Wolberg about eBay and Paypal’s split last year, she discusses the different ways averting crisis becomes possible if companies take creative steps and have a firm grasp of company values.
It’s rare for companies as large as Paypal and eBay to split, and it should be used as a model for future companies looking to avoid crisis.
Culture
Wolberg notes the most effective way for handling crisis like a company split comes through anticipating crisis before it happens. In the case of eBay and Paypal, the split of the company also brought a split in culture already visible in each company: eBay’s corporate atmosphere ranges broader, whereas Paypal’s culture brings a more freewheeling irreverent attitude.
Integrating and working with the advantages of each separate culture provides one reason why the separation happened so fluidly.
Having a strong CEO offers one way for instilling culture, and companies with a strong leadership presence more likely avoid a crisis:
“Culture always begins at the top and she credits former eBay CEO John Donahoe for continually reinforcing the firm’s values and make cultural aspects of performance a focus of performance reviews. So, in a sense, the crisis management process started years before the company ever had to face the challenge of separating the two companies.”
Conflict
Crisis stems from a conflict, and defining a conflict proves the first step to crisis management.
Security shows as one of the major areas of conflict whenever companies split partnerships. Customers don’t forgive security breaches, and, as a result, eBay and Paypal made considerable effort to increase security leading up to the split. By defining the conflict and managing a new security plan, the companies creatively maneuvered around a possible crisis.
“In the end, Wolberg told me that she felt security was the one area that had improved as a result of the separation.”
Moving Forward
The main objective for crisis management focuses on companies moving forward with as little damage to the brand as possible. The Paypal and eBay split provides a rare example of two large companies splitting without having either company go under, or tarnishing either company’s brand in any major way.
This example of crisis management effectively improved companies in a real way. There’s a lot to learn from eBay and Paypal, and using the situation as a model for future crisis management teams.