‘WE HAVE A PROBLEM’ – Handling Business Crises

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Individuals and organisations face crises at various points in their lives. How we handle the crises we face may affect, for better or worse, everything else that happens in the future. At an extreme end, poor handling of crises can actually lead to the demise of a business. As an entrepreneur you are very likely to face a ‘fair’ share of crises in your personal and business lives. How should you handle them?

There are several ‘high profile’ business and organizational crises that as an entrepreneur you should be aware of and learn from. They include the Bhopal, India gas tragedy at Union Carbide India Limited plant in 1984. Another is the Chernobyl Nuclear Power Plant disaster in 1986 in the defunct USSR. Understanding what, typically, causes disasters and what philosophies and practices should be adopted will minimize the likelihood of their occurrence or the severity of the damage they could cause. Let’s us take three cases for review.

In 1982, the curious deaths of seven people in the United States were traced to ingestion of Tylenol which were criminally tampered and laced with potassium cyanide. How did the manufacturers of Tylenol, Johnson and Johnson, handle the massive negative publicity and consequential impact on their business value?

In July 2019, sixteen Marines at Camp Pendleton base, California, were arrested following a human smuggling investigation. The arrests were made only weeks after two Marines were first arrested near their base by a border Patrol Agent. The two Marines were accused of smuggling three Mexicans into the United States. It was the information from those arrests that lead to the subsequent ones. How is the Marine Corps handling the (currently ongoing) situation?

In 1981, prior to the unfortunate deaths, seventeen per cent of Johnson and Johnson net profit was contributed by the Tylenol brand. By the time the incidence happened, marketers predicted that the company would never recover from the sabotage. However, only two months later, Tylenol, earlier withdrawn by the company in the wake of the crisis, was back in the market with tamper-proof package and amidst massive media campaign.

Johnson and Johnson earned public sympathy in the way they handled their respective case. What did they do differently from Chernobyl and Bhopal that were considered poorly handled?

  1. Johnson and Johnson placed the safety and interest of the customers first! The company withdrew thirty one million bottles of Tylenol capsules  from store shelves. Replacement products in safer tablet form were also offered free of charge.
  2. James Burke, the Chairman of Johnson and Johnson, provided great leadership not just in the promptness of the recall and replacement, but in the transparency and forthrightness in dealing with the media and public enquiries. Within a month, the Chairman was, at a press conference able to give a full, transparent and detailed chronology of the what the company had done. It was clear that the Chairman and the company were in control of their affairs.

Consequently, a year later, the company’s share of the analgesics market, which had tumbled from 37% to 7% had recovered up to 30%. That was phenomenal. The growth of the company had continued in various product lines since then. In addition,

Tylenol was re-launched with a tamper-proof packaging seal and introduced caplets. This solution is seen less as an innovation or a great crisis plan but more as a crisis solution that focused on public safety and consumer peace of mind. This philosophy itself was a reflection of an already existing value proposition culture of the company.

Like Johnson and Johnson, the Marine Corps was also very open to the public and indicated full committment to the investigations and due process of law. The 1st Marine Division of the Marine Corps, stated that ‘(It) is committed to justice and the rule of law, and we will continue to fully cooperate with the NCIS on this matter. Any Marines found to be in connection with these alleged activities will be questioned accordingly and handled according to due process’.  Indeed, all indicted Marines were arrested by the Corps and handed over to investigation authorities.

So what can we consider the golden rules of crises management:

  1. First, accept that something has gone wrong: Without accepting that something has gone wrong, you and your team are likely to be in denial and your actions will be discordant and self-destroying. Accepting that things have gone wrong will enable you estimate and appreciate the extent of likely damage, which is key to any control efforts.
  2. Be transparent: Everyone in the team must be transparent on facts and truths of the situation at hand. Crises may be the time to motivate each other but not at the expense of telling the truths as they are. Transparency is both internal and also external. Even if you will face regulators later, good behavior will earn you concessions.
  3. Move fast and move well: Damage control efforts must be fast and robust. You are better off with excess relief materials at the end than with shortages at the beginning or in the middle.
  4. Seek help/Involve others! Quite often, we need help from within or outside organisations to solve an emerging crises. The earlier we realise that and seek the required assistance, the faster we can resolve the challenge.

The U.S Navy SEALs have, also, just come under the spot light for the wrong reasons. A platoon deployed to Iraq has been sent back to the US ‘due to a perceived deterioration of good order and discipline within the team during non-operational periods’, according to the Head of the Special Operators fighting in Iraq, Maj. Gen Eric Hill. Back in the US, the US Navy Seal Commander, Rear Adm. Collin Green has, consequent to the series of unwanted incidences written a letter, captioned ‘WE HAVE A PROBLEM’, to unit commanders. Rear Adm. Green gave the commanders a few days to detail problems they see and provide recommendations on how they will ensure that the troops are engaging in ethical and professional behavior. He stated inter alia, ‘I don’t know yet if we have a culture problem, (but) I do know that we have a good order and discipline problem that must be addressed immediately’.

In this case, the bad behaviors of the SEALs are signs of emerging problems that could cause some much larger crises. As with most crises, such indicators and triggers can be detected early by observant leadership and nipped in the bud decisively by taking proactive measures. So, whilst we can prepare to handle crises if they arise, we can and should work harder to detect likely causes and address them.

A stitch in time…

Feature Image by mohamed Hassan from Pixabay 

About Me

My name is Musbahu El Yakub. I am an entrepreneur, a consultant and an author. I desire to help, guide and support start-up and growing entrepreneurs. I try to do this by providing them with information, tools and guidance..

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