Features

4 EXCELLENT CRISIS CASES TO LEARN FROM

History is loaded with different types of crises that have affected companies in different industries. And since crisis is woven into the very fabric of life, it is certain it will not go away anytime soon. After all, humans who run these businesses are not infallible. And there are no guarantees that nature itself will stop its disruptive activities which contribute to crises. The option left is for us to learn much from what has happened in the past to enable us prepare for how to face such if they happen again.

When crisis strikes, whether an organization survives or not depends on how the problem is managed. And managing crisis can be easier if we have learnt enough from others who were in the same situation in the past. We can draw valuable lessons from how they handled their legal or other issues, their PR missteps, their environmental or technological disasters and the rest of it.

But that is not always the case. Several years ago, Paul Shrivastava, a crisis scholar, noted that the one thing more tragic than the crises which occur is the failure of organizations and organizational scholars to learn from them. PR professionals should not fall into that trap. Crises come and go, but the lessons they leave behind should be taken as the guiding lights to follow and the pitfalls to avoid in managing future crisis.

In the next few pages, I will share with you four cases of exceptional crisis management in the pharmaceutical, food and beverage, and aviation industries, which as you may know, are highly prone to crisis.

  1. TYLENOL CRISIS

Johnson and Johnson’s management of Tylenol pain relief tampering crisis is adjudged one of the best in recent history. Today, it is seen as a benchmark, the gold standard of how crisis should be managed. It is also the most widely taught case study of effective crisis management.

In October 1982, a murderer introduced massive doses of cyanide into bottles of Extra-strength Tylenol capsules in some pharmacies in Chicago, the USA. The poisoning claimed the lives of seven victims. What followed was tremendous fear by users of Tylenol capsules, the media and other stakeholders of Johnson & Johnson. It was the darkest hour in the company’s history.

Johnson & Johnson’s Response

  • Writing for Biznews.com, Alan Hilburg, who is credited with the successful crisis management campaign, explained that the strategy revolved around two key questions: how to return a safer product to the marketplace and how to earn back the trust of fearful customers.
  • In line with the company’s credo, which emphasized primary responsibility of the company to those who use its products, the chairman of the board, James Burke claimed full responsibility for the crises, stopped the production of Tylenol and launched a campaign warning the public not to consume the product until further notice. It established a hotline for free flow of information on the crisis.
  • The company cooperated with the Police, Federal Drug Administration and the FBI in their investigations.
  • Against the advice of FDA, FBI and economic advisers, the company ordered the recall of Tylenol Capsules nationwide despite evidence of risk in the direction of only a few pharmacies in Chicago. A total of 31 million bottles were recalled at the cost of over a hundred million dollars.
  • In less than one month after the crisis, the company introduced new tamper-proof bottles into the market, distributing them at a discount.

Less than a year after the relaunch, Tylenol gained 30% of the market share and once again became the top selling pain relief.

Key Lessons

  • It is profitable to run an organization with a clear set of values that determine how things are done both in peace and crisis times. Johnson & Johnson’s Credo helped the leaders take quick and right decisions during the dark hours in which the company found itself.
  • Taking full responsibility when crisis erupts, even when the problem was caused by an outsider, shows an organization is compassionate and can be depended upon. This wins the trust and support of stakeholders.
  • Never look at the cost of a good decision and action. It will be rewarded by stakeholders as seen in the Tylenol case.
  1. PEPSI’s SYRINGE HOAX OF 1993

In June 1993, Earl and Mary Triplett, a couple from Tacoma Washington in the United States of America reported they found a syringe in a Pepsi diet can.  Within a space of two weeks, there was a barrage of reports from about 23 states complaining of items ranging from wood screw, broken sewing needle to bullets found in Pepsi products. Pepsi Cola was in for crisis unprecedented in its history.

An investigation by the Food and Drug Administration followed and Pepsi gave it all the co-operation it needed.

PEPSI’S RESPONSE

  • Pepsi immediately explained that it was not possible for syringes to be wedged into cans at its bottling plants all over the United States.
  • The company granted on-site interviews at their Seattle plant and flung the doors of other bottling plants open to the media.
  • It produced four video news releases (VNRs) covering its high-speed canning process.
  • The third VNR seen by 95 million people showed a 61 year old woman with a record of stealing, forgery and fraud caught inserting a syringe into a can of diet Pepsi by a surveillance camera at a supermarket. This turned the tide of the crisis in favour of Pepsi.
  • The crisis was eventually declared a hoax by FDA and many people across the country were arrested and tried.

Key Lessons

  • Act quickly and responsibly when crisis strikes.
  • Use the media as an ally. Pepsi used the media to show its canning process to the world, and the company was able to convince them of the impossibility of a syringe getting into its products.
  1. CADBURY WORM CRISIS

October 2003 was a tough month for Cadbury in India. Just a month before Diwali, India’s big festival of lights when Cadbury’s chocolate sales was expected to peak, crisis struck. Customers in Mumbai complained of worms in Cadburys Diary Milk chocolate. Immediately, the Commissioner of Maharashtra Food and Drug Administration swung into action and seized the chocolate stock manufactured at Cadbury’s Pune plant, sent them for sampling and commenced investigations of the company.

The next three weeks was hell for Cadbury India. The media made mincemeat of its reputation with tons of extremely disparaging stories, especially as fresh cases of worm infestation were reported in the city of Nagpur in Maharashtra. Apart from cooperating with the FDA, Cadbury had its customers to contend with. And it was determined to win.

Cadbury’s Response

  • Cadbury issued a statement that the worm infestation was not possible at manufacturing stage. That poor storage at the retailers end was the most likely cause of the problem.
  • The company launched an intense communication programme to rebuild the confidence of stakeholders. The key messages were: Infestation could never be possible at manufacturing stage (ii) The problem was retail storage linked (iii) Cadbury products were safe for consumption  (iv) Consumers must exercise care when purchasing Cadbury Diary chocolate, as they would any other food item.
  • It launched “project Vishwas” which involved retail monitoring and education programme. The education initiative had about 190,000 retailers trained in several key states in India.
  • It introduced a new packaging which could ward off worm infestation of the product since the FDA had alleged that improper packaging combined with unhygienic storage caused the problem.
  • The company engaged Amitabh Bachchan, a popular actor as a brand ambassador to make its customers feel safe.

As a clear indication of consumers confidence in Cadbury, sales volume of its products, which had fallen drastically between week 1 and week 10 of the crisis, climbed back to pre-incident period within 8 weeks of the introduction of the new packaging.

Key Lessons

  • Rectifying behaviour rebuilds the confidence of stakeholders. This was the case when Cadbury changed the packaging of its product.
  • Lack of structure in the supply chain of emerging economies means a lot of care is taken in managing it.
  1. AIR ASIA PLANE CRASH CRISIS

The day was December 28, 2014. Air Asia’s flight QZ8501 scheduled to fly from Indonesia to Singapore lost contact with Traffic Controllers, and was eventually discovered to have crashed into the Java Sea, killing 155 passengers and seven crew members on board.

This was a terrible day for the Airline. Luckily they had someone like Tony Fernandes, the Group CEO of the Airline, who took center stage to handle the crisis with much commitment and professionalism.

Air Asia’s Response

  • Tony took full responsibility for the crash, and this is what he said: ‘I apologize profusely. I am the leader of this company and I have to take responsibility. That is why I am here. I am not running away from my obligations. Even though we don’t know what is wrong, the passengers were on my aircraft and I have to take responsibility for that.’

These words by Tony Fernandes after the disappearance of flight QZ8501 gave him away as a man of commitment and compassion.

  • Using Air Asia’s own Twitter account, Tony continued to update stakeholders in real time of the progress made in the search up to his travel to Surabaya, where most of the passengers were from, to meet with their families. Fortunately, prior to the incident Air Asia had accumulated well over 4 million followers in its Facebook and Twitter Accounts.
  • In all of the statements the Airline issued, and in the interviews he regularly gave, to the media, he showed tremendous compassion.
  • The Airline set up room and a hotline for families of passengers
  • Compensations were paid to families of the passengers promptly, and in line with Aviation Standards.

Key Lessons

  • Crisis demands real time response today. It is important to set up accounts in relevant social media and build followers far in advance.
  • Compassion is the name of the game when managing crisis, especially those that involve loss of lives.
  • Taking responsibility wins the respect of stakeholders.

Failure in crisis management is often attributed to some factors; such as: the assumption that the damage is minimal and would soon pass; release of conflicting information; withholding or cover up of critical information; failure to take responsibility, and failure to adopt the right communication strategies. The four cases we looked at overcame those causes of failure and stand out as classical cases PR professionals should learn from in order to do well in managing crises.