How big brands handled a tragic reputation collapse

In this excursus we are going to analyze some of the most famous crisis management cases in history. We do this in a critical way. Looking for the common patterns, the constants. In the last paragraph we summarize the results achieved. And we look at some general rules. 

Crisis Management ("crisis management") in marketing and corporate communications describes an approach based on processes and strategies to identify and respond to a threat, unforeseen event, and reputation collapse that has the potential to more or less permanently damage the brand and destroy sales.

Johnson & Johnson during the Tylenol manipulation crisis - 1982

September 29, 1982. We are in Chicago, in a quiet American suburb. Mary Kellerman has a trivial flu: a bit of a sore throat, runny nose, muscle aches. One of those that can be resolved with rest and a little tachipirin when needed. In the middle of the night, the mother is awakened by the child's complaints. There is a packet of Tylenol in the house, unopened. One dose of the medicine would have been enough to lower the temperature. And appease the complaints.  

An all-too-trivial episode, a scene from everyday life, that marks the beginning of a series of tragic deaths. Mary will die after the intake, at 7 a.m. And from then on, the deaths follow one after another. 

News of the deaths began to circulate. On September 30, 1982, a call from a Chicago Tribune reporter marks the beginning of a stream of inquiries to J&J that reaches impressive numbers in the thousands. Investigations by the relevant authorities yield an answer: potassium cyanide poisoning.

The company's reputation is jeopardized. The possible image damage is insane. Action must be taken quickly. And well. We need to move in two directions: avoid further poisoning and recover the company's good image. 

A giant communication and organizational machine is activated with the goal of withdrawing all Tylenol packages from the market. 

And so:

• Communication to insiders, including medical and pharmacy personnel;
• Opening of an ad hoc toll-free number for reporting emergencies and answering all user concerns;
• Withdrawal of millions of packages.

Once the acute phase of the emergency had passed, action had to be taken to regain consumer confidence. These were in a state of shock, in collective PTSD. 

No one could guarantee that such cases would not be repeated. By now there was a precedent. 

Unless it made tampering impossible. The technical staff had a brilliant idea: design a tamper-proof, tamper-resistant package. 

It was a success. And we're not saying that. But the numbers: in just 5 months, the recovery is impressive. Equal to 70% of the market share. After a few more months, that percentage reaches 98%. A true miracle. Made possible only by a crisis management operation that borders on the incredible. Perfection and speed of execution are the two key ingredients in the management of this affair.

British Petroleum during the Deepwater Horizon rig oil spill in 2010

April 20, 2010. We are 52 miles southeast of Venice, Louisiana. The mobile offshore drilling unit of the Deepwater Horizon rig explodes, burns, and sinks in the Gulf of Mexico.

The economic, environmental, life disaster is nightmarish. Eleven of 126 workers on the rig are killed, as much as 3.19 million barrels of oil spill into the Gulf of Mexico.

To give an idea of the proportions: just over 20 years earlier, the Exxon Valdez tanker spilled about 257,000 barrels of oil in Alaska. The largest tragedy in history with an oil tanker up to that time: proportionally about 12 times less severe.

Images of the catastrophe quickly begin to circulate. And they make history.  

Symbolic of the tragedy, which has remained etched in the collective memory, are photos of pelicans completely covered in oil. The coat is now pitch-colored. The original one is unrecognizable.

Images that represent not only the environmental damage of the affair on marine species but the defeat of all humanity in the conversation of animal species and biological systems. 

The episode has momentous proportions. Unimaginable. And also unimaginable was the possible economic and image damage to the company.

But as we saw for the Tylenol case, even in the face of the worst of tragedies it is possible to avoid the worst with an efficient crisis management strategy. 

However, this second story of ours does not end with a happy ending. In fact, it is a failure across the board. But not all evil comes to harm. And from the worst of it we can learn lessons about how not to handle a crisis.

Let's analyze the main errors

The first mistake lies in the lack of leadership. 

When such situations arise, coordination is essential: the society group must act in a united, synchronized manner. 

In this respect the operation was bad. And this is evidenced by one fact: following the disaster, several gas stations under the company ended up changing their names. They did not want to be associated in any way with the company. All in all, understandable. 

It is hard to say whether effective leadership could have prevented this collective defection. Certainly, however, the lack of a top-down plan of action did not help at all. 

Second mistake: being completely unprepared with respect to managing, on the ground, the situation. The oil has been free to spill for weeks. Without any levee. Indeed, there was no serious attempt on the part of the company to do so. For such a company to properly manage such an emergency should be the top priority. And abstractly, it is not even difficult to foresee that due to human failure or error an oil tanker could sink. If you will, it is also intuitive.

Lo and behold, what seems obvious to us today was not so at the top. Or, more likely, the scenario was yes considered but considered extreme: probability of occurrence statistically insignificant. However, we are faced with episodes and disasters that do not follow linear-type trajectories. When the possibilities of ecological catastrophes of epochal proportions are at stake, policies based on statistical risk calculations leave, on balance, no time to be found. And this affair is a striking demonstration of that.

Explicative of the approach with respect to the affair are the corporate policies of previous years.

To save on expenses, management had implemented a series of cuts in key areas for handling such emergencies.  

How: 

• communication expenses with the government and the public relations budget: more dialogue with government bodies would have allowed not only better coordination on the ground but also more effective communication with the public;
• cuts to the risk management sector: lack of budgets coupled with a total lack of crisis management models. 

Third factor: lack of effective communication.

This is perhaps the most serious and relevant mistake.

The focus of our analysis is an interview of the company's CEO: Anthony Bryan Hayward.

This states, ""There's no one who wants this thing over more than I do. You know, I'd like my life back. Translated, "There's no one who wants to end this thing over more than I do. I'd just like my life back."

Anthony Bryan Hayward's focus, at a time of crisis, as sensitive as this, is inward: his life, his person, his career. In the face of an affair of epochal proportions that had claimed thousands and thousands of lives, among humans and animals, leading to an unprecedented ecological catastrophe, focusing on his own life and the consequences of the affair on his career was an unjustifiable mistake.

The consequences? A series of fines, in the range of tens of billions of dollars, imposed by the U.S. government of America.

Most importantly, the loss of consumer confidence.

The company finally managed to survive only following a series of restructuring and cutbacks. Without ever returning to the previous set-up. 

Apple in response to the iPhone 4 antenna problem - 2010

Let us now jump forward in our timeline. It is 2010. Steve Jobs is still CEO of Apple. Revenues are skyrocketing. A great year for the company, marked by the release of a new model: the Iphone 4.

Long lines form in front of locations and stores. Customers, excited, show off their purchase. But this release is not like any other.

Soon, something very strange emerges: the phone loses its network connection. And not only that. When holding the phone in the left hand, the call goes dead.

 It is the beginning of the Antenna Gate case. The beginning of one of the most famous cases of crisis communication.

Steve Jobs at the time of the affair is on vacation, in Hawaii.

The vacation interruption is immediate. Interruption which is followed by the preparation of a press conference, which begins with a sarcastic, provocative, brilliant video. The tension is diluted with an irony that has the extraordinary: "there is no Antennagate." A phrase that marks somewhat the approach of Apple and its founder to the affair.

Instead of downplaying the danger posed, instead of attempting futile mirror-climbing, Steve Jobs candidly admits that Apple phones are not perfect, and they are not unique. Like all phones, they can have problems. And this admission comes from a company that has always claimed to be ahead of the competition. And that, in many ways, it was and still is.

From here on, Steve Jobs takes a deeply pragmatic approach.

By resorting to data, to objective numbers, it shows that the situation on the customer service side, number of calls, phones returned was not that bad. For none of these three aspects had there been a surge.

However, this does not constitute a justification. Steve Jobs pledges immediately afterwards to ensure the highest quality to make sure that all users are deeply satisfied. And in the meantime, before finding a solution, all users were offered a completely free Iphone 4 case.

The results of this skillful communication strategy are there for all to see: trust in the brand has been restored, the company has not reduced sales, and Apple's image has even been strengthened.

Can we imitate Steve Jobs? No.

Can we take a cue from his use of data and rationalizations? Yes.

Chipotle Mexican Grill and salmonella

The well-known Mexican fast food chain, with 2,000 restaurants worldwide, is the target of a salmonella outbreak in 2015. It spreads to as many as 14 states with impressive speed and violence. At the peak there are 88 people infected.

The media case breaks out, and action must be taken quickly, in two senses: to restore consumer confidence and to avoid further aggravating the epidemiological situation.

First, the closure of multiple restaurants is ordered. Perhaps, even more than necessary. This signals to the public caution and, above all, a willingness not to take the matter lightly.

Then a program of reviewing security procedures and tests is activated, disproportionately increasing the level of control rigidity. Practical actions are followed by a press conference by the company, where it is stated that control standards are now among the strictest on the market.

The emergency situation is buffered. But one last piece is still missing: restoring trust in the brand.

And, as we have seen with the Apple case, when sales decline because of an emergency, the best way to regain consumers' trust sometimes is to grant vouchers, promotions, coupons.

Bring people back into the mainstream of your business to appease them. The more you use a product, the more familiar you find it, the more positive an opinion of it you have

Another example of excellent market crisis management.

Target Data Breach

Between November 27 and December 18, 2013, one of the most famous cyber attacks in history takes place. To the detriment of the Target chain. 

The proportions are crazy, especially by the standards of the time: 40 million credit card numbers stolen, 70 million customers affected. The attack, however, affected not only credit card data. But also: PINs, customer names, e-mail addresses, phone numbers, expiration dates, and security codes.

Resuming a method we have already used in the analysis of other cases, let us also dwell here on statements in order to analyze the effectiveness of the communication strategy. 

First CEO statement

"Yesterday we reported that there was unauthorized access to payment card data in our U.S. stores. The problem has been identified and eliminated. We realize that the situation was confusing and disruptive during an already busy holiday season. The trust of our customers is our top priority at Target, and we are committed to fixing the problem. We want our customers to understand that the fact that they shopped at Target during the affected period does not mean that they are victims of fraud. In fact, in other similar situations, actual fraud levels are generally low. Above all, we want to reassure guests that they will not be held financially responsible for any credit or debit card fraud. To provide guests with additional assurance, we will offer free credit monitoring services. We will be in touch soon with those who have been affected by this problem to find out how and where to access the service."

In itself as a start it is not bad. Of course, we are far from the genius of Steve Jobs in the Antenna Gate case. And a less formal approach to the affair would have been preferable. But overall the message is clear, concise, and leaves no room for misunderstanding.

What comes next, however, is not convincing:

"We take this crime seriously. It was a theft against Target, our team members and our guests.We stand together, and in that spirit, we are extending a 10 percent discount-the same amount our team members receive-to guests who store at U.S. stores on Dec. 21 and 22."

What stands out? Do you remember the DeepWater case? What do they have in common?

Well: the order of priority, the focus within. When faced with such an emergency, you cannot put the company and then the team as first on the list. This is no small detail. The difference between a good and a bad crisis management strategy is played out on these aspects. 

The user must feel reassured. He must feel that he is the center of attention, that you are working at that moment to solve his problem. In the communication setup, he must play the main role.

But what about the operational aspect? A disaster. Of epic proportions.

First mistake: letting more than a day pass from the time of the emergency before releasing a communication.

Here is the breaking of another rule that we have seen to be peculiar to all successful cases. A rule that we can summarize with the formula: "the bigger the disaster, the faster the communication must be."

Second mistake: lack of organization of request management. If you are such a relevant company, you cannot afford to sin by being disorganized. You have to be able to cope with all the requests that come to you from outside. No amount of volume can keep up. 

And even in this respect, management has been extremely deficient. The relevant staff has been unable to handle the volume of calls from outside. Once again: if you think you're saving money on the budget at risk management, you pay the consequences later.

The crazed employees of Domino's pizza

Remember the scene in Fight Club where Tyler is referred to as the guerrilla terrorist in the restaurant industry? Where our co-star is shown urinating on the lobster gimp?

Well, reality sometimes exceeds imagination. Something similar happened in 2009. If it had happened just 10 years the whole thing would have been resolved in a simple indigestion. One less customer perhaps, but nothing that could compromise the reputation of such a famous brand. But now it is 2009 and in the age of the Internet, such a mistake can cost dearly. Especially if the same employees have the bright idea of filming themselves practicing not perfectly "hygienic" practices on sandwiches.

Let's talk about the Domino's pizza scandal.

Soon, images begin to circulate with disarming speed. Within hours it reaches 1 million views. Videos depicting employees of the well-known fast food chain stuffing pieces of cheese up their noses, sneezing on some foods and emitting flatulence on a slice of salami.

The case had all the potential to permanently ruin the company's reputation. And if it did not happen it was again due to an efficient crisis management strategy.

Domino's strategy

We have seen, in previous case studies,how one of the determining factors is speed.

It is not enough to react well. It must also be done quickly. And the importance of speed in this matter emerges both negatively and positively.

Side discovery of the incident the timing was lightning fast. Thanks to a fan, the company found out almost immediately about the video. And it gained valuable time. Time to take all the necessary measures.

The company immediately contacted YouTube to have the video removed. Then it had the employees involved identified, took the necessary legal steps. In zero time.

There is a but: he did it from behind the scenes. He attempted the cover-up. And that is one of the flaws of this strategy. Domino's should have issued a statement immediately (note the connection with the Target case).

But fortunately he quickly resolved this problem. After a short time on Twitter he tried to reassure users: it had been an isolated error. All necessary measures were being taken, including dismissal. Such cases would not occur again. 

Technology takes away, technology gives. Cleverly leveraging the power of information circulation, the company asked its followersto re-share the Tweet in order to reach the widest number of users.

And, once again, it is a video that saves the company's reputation, This time it is the company's president himself, Patrick Doyle, who speaks. In a calm but assertive manner, he vents his anger against the incident, and reiterates how this is a tragedy for everyone and thanks the web for the feedback.

Proof of the effectiveness of this communication strategy? Well, let's leave room for the numbers again: from 2009 to 2023 the value of the company's shares rose from $9 to $350. We can definitely say that the impact was all in all limited in time. 

Conclusion

We have analyzed some cases of Crisis Management, each with its own specific characteristics.

But we have also seen how in their diversity they share a number of recurring patterns. Let's look at the best strategies when we are in a situation of reputational destruction and an excellent crisis communication strategy is needed:

1. A priori preparation of risk management strategies, before the event occurs, to manage "black swans."
2. Leadership capable of ensuring coordination and management of available resources to resolve the emergency situation;
3. Prompt and effective communication to users, both during and after the emergency;
4. Empathic communication, directed outward (users, population) and not inward (team, company);
5. Implementation of commercial strategies (such as, for example, giving vouchers or discounts) after the emergency to strengthen the brand bond. 

Clearly, we are not looking at a perfect "Bible." Each case lives a life of its own. But these generalizations can be a universal canvas to avoid blatant mistakes and destruction of brand equity and market trust.