Executive Imbroglio

EXECUTIVE IMBROGLIO!!!* The Oxford Dictionary for English lists “Crisis” as noun (plural crises /- ˌsēz/) a time of intense difficulty, trouble, or danger & “Crisis Management” as noun [Mass noun] the process by which a business or other organization deals with a sudden emergency situation. In our times, i.e. the current era, a social media savant can do more harm than a trial attorney. Never underestimate small news organizations. Social media and newswires can take your story global, fast. You need to be prepared for today’s media culture, in which a tweet can become newsworthy and a news interview can become tweet-worthy. From the managements side one needs to make crisis preparedness and crisis management an integral part of your business planning. The secret of crisis management is not good vs. bad; it’s preventing the bad from getting worse. Today’s business environment requires a robust, enterprise-wide plan to deal with unexpected crises. Company reputation and brand, as well as the trust and loyalty of stakeholders, are all critical factors in the background of crisis management. At the helm, the corporate leaders play a strategic role in organizational sustainability to contribute tangible deliverables through advance preparation, including safety and security initiatives, leadership development, talent management and solid communication plans to support crisis management THE CRISIS: [A] CASE OF THE JAPANESE FROM HONSHU Toyota recalled a total of 88 lakh vehicles for safety defects, including a problem where the car's accelerator would jam, which caused multiple deaths. HOW TOYOTA RESPONDED: Toyota initially couldn't figure out the exact problem, but it sent out PR teams to try and stop the media backlash anyway. The upper management was invisible in the early stages of the crisis, skewing public perception further against the company. Toyota’s response was slow, with devastating results. But it served as a wake-up call for the company, which somehow turned it around in the months following the debacle. The company failed miserably in its initial crisis management, but that's what makes Toyota's case so intriguing. Despite its monumental mistakes early on, Toyota still bounced back. Why? Because it didn't take long for the public to remember Toyota's previously stellar reputation. The company offered extended warranties and pumped up marketing, leveraging its long- term track record and reassuring consumers about safety. Its ads in the following months were more thoughtful and sincere, showing the company's dedication to fixing the problem. Toyota's executives -- especially in the US & Asia -- became more visible, speaking to the media and becoming active in the investigations. THE RESULT: The Toyota brand showcased its resiliency, with its positive reputation built up over decades of good performance. The company leveraged this, focusing it’s marketing once again on safety and its proven track record. It had to show that this disaster -- including its own horrible mishandling of the situation -- was an aberration. [B] CASE OF THE COLA GIANTS We are the worlds largest democracy, has an economy that is now booming with a growth rate of 8% per year and foreign investments of $8.4 billion last year. Coke and Pepsi themselves have invested nearly $2 billion in India over the years, money that their boards no doubt thought was well spent. Imagine their shock when an Indian environmental group leaked a report alleging the soft drinks were unfit for human consumption. The health scare was surreal as farmers emptied cola bottles into their fields. There had already been earlier instances, before the environmental group leaked the report, of farmers using the world’s most valuable brand and its rival as pesticides. Now, one popular TV host was regularly telling his cable-TV audience to use the colas only as "toilet cleaners." TOXIC COCKTAILS The soda kings troubles began, when the Centre for Science and Environment - or CSE - released a report on the results of a lab study that allegedly found 57 bottles of Coke and Pepsi products from 12 Indian states to contain unsafe levels of pesticides, including a "cocktail of 3-5 pesticides" in all samples.However, Coke and Pepsi made an unfortunate timing error. CSE’s accusations had already fired the public imagination and the crisis swept the nation. Subsequent attacks, far from quelled, were unrelenting and ferocious, in some cases led by publicly hostile local bureaucrats. Members of the Hindu nationalist Bharatiya Janata Party called for a nationwide ban, as outraged activists staged mock funerals that focused on "tainted" colas. Problems grew from there. Seven of India’s states refused to lift partial bans on the drinks. One state, Kerala, a left-leaning government, totally banned the production and sale of the drinks (a ban which the Kerala High Court would rule against just a month later). Coke and Pepsi’s troubles illustrate the problem of doing business in an argumentative grassroots democracy, where controversy can spell trouble for big brands and where multinational corporations are victimized by easily slighted nationalism. THE ‘OTHER’ GOVERNMENTS The cola companies first resorted to textbook communications plans, commissioning independent lab tests and working out coordinated public relations responses. So far, so good, but their public response was bogged down in technicalities, waiting for the lab results before aggressively addressing accusations. The delay fanned the flames of suspicion. Not just Coke and Pepsi, other multinationals have gotten caught in the crosshairs of India’s "other government." Fast-food chain KFC was reduced to a single restaurant three years ago after Bangalore farmers ransacked a restaurant and accused the company of selling chickens tainted with carcinogens. (KFC has since made a comeback with a menu tailored for a vegetarian culture. It even has outlets in the vegetarian conservative Gujarati market) Coke and Pepsi were armed with an unprecedented resolve to work with each other. They were both ready to fight. They were both ready to be responsive, and the fact patterns were on their side. They had even started the ball rolling with a colorful and persuasive metaphor. Then came the crucial delay, the loss of momentum, and the proliferation of inimical messages nationwide and Internet-wide. For large companies, acting as rapidly as their own internal decision making and uncovering of the facts will allow, often puts them at a disadvantage in the media. PUBLISH PASSIONATE PICTURES Controversial business stories are ultimately battles involving visuals. Some pictures are worth a thousand words; others millions. While the cola kings did many things right in responding to this crisis, including print ads and commercials; which focused on pictures and emotions -- they lost time at the outset of the story, when emotional opinions were being formed.Pepsi, in particular, allowed a propitious moment to pass when it had the ultimate weapon at hand - its own freshly minted CEO, Indra Nooyi, a woman as comfortable in a sari as in a business suit What’s more, she is regarded as a "people person," a plainspoken executive who isn’t above singing pop tunes and who has merged her Hindu faith with the lifestyle of a busy CEO. The Indian public no doubt would have been fascinated and maybe won over by visuals of her chatting with farmers, hip urban shoppers, Bollywood starlets, and leading bureaucrats. Pepsi could have flown its CEO to India for photo ops of her in flowing sari, drinking Pepsi with farmers or, better yet, children. WHEN YOU ARE EXPLAINING, YOU ARE LOSING Coke and Pepsi executives in India knew consumers would be easily confused, because the subject of pesticides in groundwater and soil is technical and difficult to explain. But explain they did, or tried, for the handfuls of people who cared. By its very nature, the act of explaining is reactive and reaction is always an uphill battle. Human nature determines that only another cannot supplant by argument; an accepted fact, equally prepossessing fact. Indeed, the best practices of crisis management are interlinked. Indra Nooyi talking to children and drinking cola does not explain or argue. It generates a wholly separate fact in the mind’s eye, and it’s only that fact, or equally simple ones like it, that could have won the day in India before the tipping point - the moment when the momentum of evolving news stories take on a life of its own – occurred. If Crisis Management was so simple that people could simply cite case studies & avoid critical situations & prevent a crisis from occurring then drumming up the trade would be so easy but in fact its not, the few reasons why organizations fail in managing a crisis are listed below î Denying that it can happen: “It cannot happen here” attitude î Being reluctant to make crisis preparedness a priority: Competing priorities are allowed to subvert efforts at vital preparedness î Remaining unaware of risks inherent to the business: Without a comprehensive foreseeable risk analysis conducted throughout the company’s operations, the full range of risks is not highlighted î Ignoring warning signs: Organizations often fail to critically analyze their own histories or the disaster experiences of others in their industry or locale  î Relying on weak, untested plans: Unless your crisis plan has been thoroughly constructed and tested, it will not effectively protect your organization in a real crisis There is an increased focus on domestic safety and security and concern for global security. With the aftermath of terror attacks, the economic meltdown etc. the mode for crisis management has become all too clear: sustainability of every aspect of the work- place—including people, company reputation and the economy THE HUMAN SIDE OF CRISIS: One of the errors in crisis management planning is the tendency to focus on systems, operations, infrastructure and public relations, with people last on the list. Organizations need to pay greater attention to the impact of critical events on employees, their families and the community. Business recovery cannot occur without employees. HR plays a strategic role in promoting trustful and prepared leadership throughout the organization to help reassure employees of their safety LEADERSHIP IN TIMES OF CRISIS There is a growing interest in the connection between the importance of leadership and crisis management. According to me leaders with emotional intelligence competencies (such as empathy, self-awareness, persuasion, teamwork skills and the ability to manage relationships) are effective leaders. Such skills would be important in crisis management. During a crisis, one of the roles of a leader is to create and sustain the organization’s credibility and trust among crisis stakeholders (e.g., management, employees, customers, suppliers, partners, communities, investors, media, government, special interest groups). Depending on the crisis situation, a leader’s goal is to assist the organization in returning to productivity. Overall, it is important to protect and sustain the organization’s reputation, brand and value in the marketplace. For example, it may be the CEO who sends the message of personal involvement, honesty and compassion. One of the most positive and successful examples cited, as the corporate standard for excellence regarding crisis management is that of Johnson & Johnson during the Tylenol crisis in the early 1980s. Strong leadership and corporate values made the difference with clear communication to the company workforce and the public, and this helped the company through a difficult time. Today, Tylenol is one of the top selling over-the- counter drugs in the European & American markets. When it comes to crisis communications, if you always focus on building a relationship with your customers, fans and followers, you will always find yourself communicating in the right direction. To be effective in crisis management in the digital age means being able to use social media strategically. There is no crisis management today without a full understanding of how to use new media to listen to conversations around your brand in real-time, and understand what you do and don’t need to respond to. * The Data has been collated from the various websites online