COMMENTARY

How to best deal with a giant-size crisis

Dec. 22, 2017 | by Chip Bell
How to best deal with a giant-size crisis

Photo: iStock.com

United Airlines security drags a passenger off a plane in Chicago and the incident becomes overnight viral mania. Sonic, Chipole, Arby's, Equifax and Verizon get hit with cyberattacks compromising confidential information of millions of their customers.  An alligator grabs a child and pulls it underwater to drown inside the Disney World theme park. Uber and Wells Fargo publicly implode as their culture flaws reveal a dark side forcing CEO resignations.

 

Every retailer has an occasional hiccup. But, there is a wide gap between an over-cooked steak and a child falling into the gorilla cage at a zoo. This is the realm where adept recovery can mean the difference between a rising market share and a free-falling stock price. It is an arena where a lack of forethought leads to a crippling loss of public trust. Crisis situations demand an escalated level of recovery response. Retailers that believe they can “wing it” through crisis situations usually end up getting severely wounded in the marketplace.

 

How do you prepare for the unthinkable? Johnson and Johnson's handling of its Tylenol crisis still remains the enduring benchmark for managing catastrophe and emerging stronger as result.  

 

In 1982, seven people died after ingesting cyanide-laced Tylenol. Responding swiftly, Johnson and Johnson quickly canceled all Tylenol TV advertising, activated a toll-free telephone hotline to answer consumer questions, and offered refunds to customers who had purchased Tylenol capsules. The company announced it would no longer sell any over-the-counter drugs in capsule form, a decision that cost it millions of dollars, but sent a clear message to consumers.

 

The Chicago poisonings caused Tylenol's share of the painkiller market to free-fall from 35 percent to 7 percent overnight. But Johnson and Johnson staged what industry experts called a "miracle" comeback when leaders took rapid and forceful measures to ensure public safety and restore trust in the company's top selling product. With full-page ads and TV spots announcing its intentions, the company spent an estimated $300 million to recall 31 million old packages of Tylenol capsules and promote new ones that were tri-sealed to resist tampering. Within three months the company's stock price had regained 95 percent of its pre-crisis market share.

 

How did Johnson and Johnson come out of this torture chamber more highly regarded after the catastrophe than before? Management experts credit much of it to executives' close alignment of corporate values and behavior. Looking down the barrel of lethal product tampering, J&J's leaders quickly turned to their crisis management manifesto: "safety over profit." That document, which instructed executive decisions in far less stressful times, was the company's guiding star for the Tylenol disaster. Company leaders also didn't spend time finger pointing or reacting defensively. Nor did they hesitate to make the financially costly decision to recall product or to go immediately into production with a discernibly different and obviously more tamper-proof product. They stuck by their brand-named product, despite calls from PR experts to change it.

 

Tips for good crisis management


Many organizations believe they're practicing good crisis management when in reality they're only "cleaning up a mess" once a crisis has occurred. When hit with a crisis, your odds of emerging stronger in the aftermath will increase if you use some core crisis planning and management principles:

  • A crisis plan should be guided by values ingrained in the culture.

The values should address the organization's priorities (J&J's "safety over profit" with the Tylenol scares), the needs of its most important stakeholders (stockholders, employees, customers) and the responsibility of individual employees to know and act on the values that communicate the interests of customers come first.

  • Pre-plan responses to an assortment of crisis scenarios.

The most dangerous crisis is one that "blind sides" a company, forcing deer-in-the-headlights reactions from leaders or company spokespeople. Even your top PR spin doctors can lose their ability to think objectively when hit out of the blue. And most executives don't spend much time looking down the road or scanning the environment for potential crisis, only potential opportunities.

  • Craft a plan that addresses each stage of a crisis life cycle.

Most crises develop, escalate, and subside in a five-phase sequence:

1) Signal detection—proactively scan for warning signs of a potential crisis.

2) Preparation—create a crisis leadership team and do dry-runs of hypothetical incidents.

3) Damage control—create planned, thoughtful ways to keep the crisis from spreading.

4) Recovery—devise short-and-long term plans to resume normal business operations.

5) Post-mortems—reflect on lessons learned to apply to future problems.

  • Honesty over evasiveness

Nothing stops the media's feeding frenzy faster than signs that a crisis situation is under control — the result of a solid disaster communications plan. Some companies set up corporate SWAT teams to communicate with the media, customers, shareholders and others during crisis. How forthright should you be with the media and core constituencies?  Warren Buffet said: "First state clearly that you don't know all the facts. Promptly state the facts you do know. Get it right, get it quick, get it out, and get it over. Your problem won't improve with age."

  • A plan isn't enough — you've gotta practice, too.

A highly detailed plan is only step one in helping your organization out of crisis. True preparedness means putting your organization through role-play exercises, simulations, structured walk throughs and drills as well.

When it comes to crisis, experts say there are only two pertinent categories: those who've had ‘em and those who will. But take heart, if companies like Johnson and Johnson, JetBlue, and Southwest Airlines can look into the jaws of disaster and survive — even thrive — so can you and your organization. 


Topics: Customer Experience, Financial News, Marketing, Workforce Management



Chip Bell

Chip R. Bell is a renowned keynote speaker and author of several best-selling books including Take Their Breath Away, Sprinkles: Creating Awesome Experiences through Innovative Service and Kaleidoscope: Delivering Innovative Service That Sparkles. He can be reached at chipbell.com.

wwwView Chip Bell's profile on LinkedIn

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