189
Tylenol was the top pain reliever
in the US when it was hit by a crisis:
lethally contaminated capsules. Over
30 million bottles were recalled at huge
cost, but consumer faith was retained.
See also: Managing risk 40–41 ■ Hubris and nemesis 100–03 ■ Learning from
failure 164–65 ■ Contingency planning 210 ■ Coping with chaos 220–21
WORKING WITH A VISION
walkouts to fraud; sudden supplier
loss or rising prices in raw materials;
and environmental disasters. Every
crisis has the potential to damage
a company’s profits and reputation.
The extent to which it is able to
withstand a crisis and limit the
damage is determined by its ability
to respond fast and appropriately.
Planning and decisions
Effective crisis management
involves careful planning, so that if
a crisis strikes it can be addressed
in a calm, professional way. This
involves quickly establishing the
“who, what, when, where, and how”
of the crisis within the critical first
few hours. Any crisis—no matter
how small—is newsworthy, so a
company’s public response must
be fast. Public perception affects
consumer trust.
Leadership during a crisis is
particularly important, since swift,
effective decision making is critical.
Every company recognizes that if it
handles a crisis well, damage can
be minimized and its reputation
even enhanced. As president John
F Kennedy said, “in Chinese, the
word ‘crisis’ is composed of two
characters—one represents danger
and one represents opportunity.”Handling a crisis
In 1982, Johnson & Johnson reacted
to a crisis effectively when Tylenol
pain-relief capsules sold in the
Chicago, IL, area had been laced
with cyanide. The company recalled
the product, stopped advertising, and
reintroduced Tylenol in a triple-seal,
tamper-resistant package. The
public felt reassured by the move,
and once again trusted the product.
At around the same time, another
US company tried to contain a
similar crisis using a very different
approach. A woman returned a jar
of Gerber Product’s baby food to
her local supermarket, saying that
it contained a shard of glass.
Gerber ran laboratory tests and
found nothing; the store had lost
the shard, and the company
decided there was no problem on
its production line. However,
customers in 30 different states
then said they too had found glass
in the baby food. The company
could find no evidence to support
these claims, so announced that
they were “being had” by people
wanting to file false liability claims.
They did not recall any products.
Public confidence in the company
fell; some states demanded other
Gerber products be removed from
stores. Although the company’s
position was evidence-based, it
seemed callously indifferent to the
welfare of babies. It lost sight of the
essential rule in any crisis: always
show commitment to the safety and
well-being of your consumers. ■Supplier roles in crisis
In their article “The Toyota
Group and the Aisin Fire,”
authors Toshihiro Nishiguchi
and Alexandre Beaudet
demonstrated the importance
of supplier relationships
during a crisis. In 1997, a fire
at the plant of one of Toyota’s
most trusted suppliers, Aisin
Seiki, threatened to halt
Toyota-group operations for
weeks. Aisin Seiki was the
sole source for a small but
crucial part used in all Toyota
vehicles. Only two or three
days’ worth of stock was on
hand. Toyota’s manufacturing
plants shut down but were
reopened after only two days.
The recovery was achieved
through an immediate and
largely self-organized effort
by companies from within and
outside the Toyota group, who
set up alternative production
sites. The collaborative effort
of more than 200 companies
was orchestrated with limited
direct control from Toyota
and with no haggling over
technical proprietary rights
or financial compensation.Effective crisis management
is a never-ending process,
not an event with a
beginning and an end.
Ian Mitroff,
Paul Shrivastava,
Firdaus Udwadia