One takeaway from PWC’s Global Crisis Survey 2019 is that, when talking about permeability, crises can cross over from business relationships, reputation, and human capital to legal and beyond. The unpredictability of crises leaves companies guessing the nature of the next one. What doesn’t change is the need to address them when they arise.
Facebook’s Free Basics crisis cost it almost 45 million dollars before the project had to be shelved. There are two major lessons that PR experts suggest can be drawn from that crisis. The first is that the marketing communication should be consistent with the product. Free Basics was peddled as a philanthropic initiative even when it clearly wasn’t.
The second is that communication personnel need to consider their tactical approach. Sometimes, technical details do, and must, pale before simple messages. Understanding the populace’s emotions is key to riding the death wave.
The Most Disruptive Crisis Isn’t the Most Newsworthy One
PWC
There is another lesson that crises teach organizations — something that the Tata group, a model of corporate integrity, espoused in the way they handled the succession. Even though the Tatas have maintained that the succession spate was outside the public domain, the spillover effects were distinct. Organizations can’t afford to skip communication when dealing with a crisis if the general public knows about it.
Here’s a list of 4 companies that have dealt with a severe crisis and have come out either better or worse serving as great crisis management case studies in India
Nestle
Samsung
Pepsi
Johnson & Johnson
Nestlé’s Maggi
Maggi noodles is an Indian creation for the company. Even though it was a loss-making venture for the first ten years of its release, it commanded more than 60% of the noodle market share that was valued then at more than 5000 crore rupees (770 million USD). Therefore, when in 2015, a referral lab in Kolkata announced that samples tested higher-than-permissible lead levels in the noodles, Nestle was surprised, to the say the least.
Following a public outcry, the noodles was banned in India. Maggi lost about 500 crore rupees (USD 77 million) between April 2015 and August 2015. It had to destroy about 37000 tonnes of noodles. After the Mumbai high court reversed that decision, Maggi managed to regain a remarkable 57 percent of the market share.
Crisis Management
However, in those five months, a lot of things could have gone differently. Maggi was bent on communicating the technical aspects of its testing. It did not take into consideration people’s emotions. The two-minute-ready noodle brand was a household name, going so far as to become analogous to the entire noodle industry — a place companies like Google for internet search, Xerox for photocopy, and the likes have coveted.
Nestle India did not appoint a lobbying firm until the June following the decision. It did not consider public sentiments and opinions when making its case. Nestle was right when it said that the 3500 samples it tested had lead levels below normal, but people aren’t really concerned about the technical elements. When news about the dangers of consuming Maggi was so prevalent, people would hardly care about what randomized testing yielded.
The solution was there, clearly, but the matter needed suitable engagement. Nestle’s complacency about its test results looked like apathy in addressing public sentiments. Nestle’s reserved approach in addressing the media complicated the matter.
Samsung Galaxy Note 7
In August 2017, Samsung revealed its Galaxy Note 7 to record sales. The technology giant known for its innovation soon suffered a major setback when it was revealed that its Note 7 line of phones had an issue where batteries started overheating and exploding. The matter had gotten so worse that travel and aviation departments across the world were issuing a notice saying that Galaxy Note 7 phones were not allowed on the flight. Soon flights also started announcing that Galaxy Note 7 phones were not permitted on the flight.
The matter had become a source of memes as well. Samsung had lost close to 15% of its share in that year.
Crisis Management
As soon as the news reached Samsung, it issued a first-level recall in September. Several crisis experts argue that the way Samsung dealt with the matter is impressive had it not been for the rush to find a fix. Samsung quickly said that it had found a fix and released a patch. Soon customers started finding that the ‘fix’ did not address the problem at all. So, Samsung did a second recall and discontinued the entire line of Galaxy Note 7 phones.
The major problem everyone had was that Samsung wasn’t forthcoming in its communication. While it did announce that it was working towards finding a solution, the rush it was in contributed to the public fear that Samsung phones are now associated with danger. However, the good thing that it did was that it partnered with telecom providers in providing a patchwork that made charging impossible, effectively making the phone unusable. When it eventually did find the fix, it communicated that on its website.
Pepsi
In April 2017, Pepsi released a new ad campaign as part of its “Live for Now” series starring Kendall Jenner. In that ad, Kendall Jenner leaves a photoshoot to join protesters. The ad depicts that the protesters and the clashing policemen have achieved peace when Kendall offers the policemen a Pepsi can. The campaign seemed innocent enough, but the two-and-a-half-minute video went viral for all the wrong reasons.
The advertisement was wrong for so many reasons, and the public made sure that Pepsi knew. The ad was criticized for trivializing the protests, being tone-deaf, and being inconsiderate. Bernice King, the daughter of Marting Luther King, joined the discussion when she tweeted, “If only daddy would’ve known about the power of #Pepsi.”
Within two days of releasing that advertisement, it gained 48 million views. In Pepsi’s defense, its crisis management was quick too.
Crisis Management
Initially, Pepsi released a statement saying, “This is a global ad that reflects people from different walks of life coming together in a spirit of harmony, and we think that’s an important message to convey.” When defending the ad did not yield any results, it pulled the video and plugged the advertisement series.
It then released a second statement, “Pepsi was trying to project a global message of unity, peace, and understanding. Clearly, we missed the mark, and we apologize. We did not intend to make light of any serious issue. So, we are removing the content and halting any further rollout. We also apologize for putting Kendall Jenner in this position.”
Its reaction was swift, and the public appreciated the way it dealt with the crisis.
Johnson & Johnson Tylenol Poisoning
Tylenol was Johnson & Johnson’s most profitable enterprise far surpassing every other painkiller in the US market. However, for reasons unknown, an individual, or a group of people, replaced some Tylenol Extra-Strength capsules with cyanide-laced capsules in Chicago. 7 people died from the consumption of those capsules. An unaware Johnson & Johnson was caught in the middle of a crisis it had no idea about its occurrence. Its market share fell to 7 percent from 37 percent.
Crisis Management
Johnson & Johnson is a case study in how to manage crises. The moment that it knew about the crisis, it issued a public recall of more than 37 million bottles costing Johnson & Johnson about USD 100 million. Immediately, It alerted the country’s population to stop the consumption of Tylenol. Johnson & Johnson also used its PR agencies and paid advertising media to alert the country about the issue.
It created a helpline so that people can contact Johnson & Johnson to know about the safety and security of the issue and also a helpline for the press to get updated information about how it was dealing with the crisis. Eventually, it regained much of its market share, climbing to about 30%. Eventually, the mass agreed that Johnson & Johnson was the victim of an unintentional crime.
Conclusion
Crises are a constant state of any business — businesses know that they can expect crises. However, the way that organizations deal with the crisis speaks volumes about the leadership. This post acts as real-life examples and a validation of two previous posts — Managing Reputational Crisis and managing the risks of shareholder perception after crisis
Transparency in communication is important in crisis management. While companies could make mistakes when addressing crises, admitting their mistakes, and doing actions to repair the situation will go a long way in making sure that companies stay in the public’s good graces.