Unit 5. Examples and business scenarios
Tylenol Product Tampering Strategic Case
It is still relevant today, the case of Tylenol and its parent company Johnson & Johnson that happened back in 1982.
Seven people in Chicago died from the tampering occurred, as was believed, when someone injected cyanide into capsules and returned them to store selves.
Johnson & Johnson handled the case effectively and the case has become a teaching case study for crisis management.
Fast and Decisive Action
When the first two deaths happened, the company took actionable steps:
•Stopped all product advertising
•Released statements and sent 450 thousands messages to hospitals, doctors and other stakeholders,
•Established toll-free hotlines for consumers.
•Recalled all of the product from store selves, a move that cost them millions of dollars.
Honesty and Integrity
Although it was evidenced that the poison was introduced via store selves, the company’s CEO did not try to evade blame and expressed his regret that they had not moved away earlier from the capsules to a more resistant to tampering caplet.
Outcome
The actions taken were aimed at showing their customers that they value their well-being above their profit margins. Of course, they were also thinking about their reputation in the long term. Although their sales plummeted for some time, they recovered quite quickly and managed to restore consumer confidence and brand reputation.
The company pioneered the development of tamper-resistant drug packaging, which the FDA mandated and changed the way we take pills today. Tylenol was relaunched with revolutionary new packaging and was a logical solution but also an emotional one as it was more of a crisis solution focused on public safety and consumer peace of mind.
§https://www.pbs.org/newshour/health/tylenol-murders-1982
Conclusion
Crisis management is not just a Public relation-based damage control. Business continuity depends on it. A business-focused strategic action plan will help to:
•Focus on the victims of a crisis.
•Maintain consumer confidence in product / service safety
•Build a strong business, culture and reputation
•Act quickly and decisively
Equifax Data Breach
Management Case
•In July 2017, Equifax, a credit reporting agency, suffered a massive data breach by hackers who accessed sensitive personal information of 147 million consumers, including social security numbers and driver licenses. The incident was the costliest data security breach to date.
•The company spent $1.7 billion in legal settlements, fines, fees for consultants, lawyers, and investigators.
•A week after the breach was disclosed, Equifax lost $5.3 billion in market valuation as its stock price declined 31 percent.
Equifax had not made any public announcement of the problem until September.
Meanwhile, a series of events worsened the situation:
•People were unable to get information and sign up for credit protection as Equifax’s websites and consumer hotlines were overwhelmed and took weeks to work effectively.
•Three executives were reported to have sold nearly $2 million worth of stock after the breach was disclosed, but before it was publicly disclosed.
•Equifax twice raised its estimate of the number of consumers affected — by 2.5 million in October 2017 and by 2.4 million in February 2018.
A congressional investigation found that a series of basic mistakes at Equifax led to the breach. For example, the attack occurred through a server vulnerability that was a known issue. Εven though Equifax had previously notified system administrators to fix the problem, they never received the message because Equifax’s email list was out of date.
Proper data governance protocols were not in place, resulting in an expired digital certificate that allowed attackers to run queries to find consumer data for approximately 76 days before the breach was discovered.
One of the mistakes in the company’s public response was to direct consumers to a website that had errors, resulting in a loss of consumer trust.
Given Equifax business, any data breach must have been very high in its potential risks faced.
Nothing in Equifax’s slow and unusual response suggests that it anticipated and planned for such an event.
A crisis management plan would have defined the crisis management team and how they should work together, the steps to be taken, the initial messages and statements – and the process for escalating the response as it worsened.
Conclusion
Create a good crisis management plan to protect your reputation, revenues and business from suffering serious damage. It will help you to react quickly and effectively in a time of crisis.
Customers are becoming more self-aware and don’t like to feel ignored. You can lose customers if you don’t handle a crisis properly.
Monitor the organization’s threats and update strategic decisions on system improvements and upgrades. Test and maintain your crisis management plan on regular basis to be always effective
Business Scenario 1:
Crisis Management Planning for Customer Service – Call Centers
Customer service and support are at the forefront during an outage, so having a crisis management plan can protect the company and offer you the strategy and resource you need to deal with unplanned events such as fire, flood, malicious actions, IT failure or pandemic like Covid-19.
Call centers are the units that can be particularly affected during a crisis. They are the frontline team responsible for serving and satisfying a business’s customers, and these employees are responsible for maintaining high standards during a difficult period without burnout.
(2)
Both management and front-line employees should participate in awareness, prevention and business continuity actions.
The crisis management plan should include:
A succession plan for all executives
Instructions for remote work
A plan to reduce operations to critical functions only
Documentation of all critical processes and procedures
Cross-training for all critical functions’ employees
Distribution of call center plans and agent communication details
An outline of roles and responsibilities (who does what) for different crisis scenarios
Resolution plan for each type of crisis
(3)
Create a Crisis Management Team that will include experts to help the unit and employees stay on target and on task during a crisis and prepare to deal with new threats. The team may consist of:
Crisis Manager who will lead the team and approve the creation and implementation of the crisis management plan.
Crisis Coordinator who will assist and provide direct support to crisis manager, ensuring provision of all resources and tools needed.
Emergency Director who will work directly with the customer service personnel and support their response.
Public Relations Specialist who will handle all public relations during a crisis.
Legal Advisor who will handle all legal matters, should any arise.
Medical/Health/Safety/Security Advisor or other subject matter expert depending on the type of crisis you are dealing with.
(4)
To enable your business to handle any crisis and ensure excellent customer service during it, it is essential to provide management, employees and customers with all the necessary knowledge. To achieve this goal will help to have:
An internal crisis management portal: This should be a central location available to all team members in customer service and beyond. This should contain all key information related to handling the crisis, including a list of members of the crisis management team, updated policies, approved customer communication policy.
Company’s website: Instead of customers having to call your customer service team to find out how the business is handling the crisis they should be able to find this information on your website in an easily accessible way so they can make informed decisions.
(5)
Prepare a crisis management response list ensuring your frontline team members can confidently answer all customer inquiries in a realistic, clear, helpful, compassionate and consistent manner.
Ensure there is no conflicting information or mixed messages Regardless of whether different representatives answer the call center, customers should hear the same messages and the same information from everyone. A sample message template is a great way to ensure consistency and transparency.
Anticipate customer requests and educate them with the most up-to-date information about the crisis and its impact on customer service.
Train employees in providing emotional support by listening and asking the right questions
(6)
Management should be always available via social media, email, text message, internal systems (Skype, Zoom, Microsoft Teams), or phone—to:
•Handle escalated customer service inquiries.
•Assign someone to respond to all social mentions
•Hold frequent team meetings to check on the status of the agents and keep everyone on the same page.
•Be flexible with remote work, sick leave, schedule changes, and more.
•Continually offer skills development training to agents.
Business Scenario 2:
Crisis Management Plan for E-Commerce Company
(1)
Building a successful e-commerce platform is a painstaking process that requires dedication, smart marketing and attractive pricing, and of course time. These elements and the nature of the business itself are capable of prompting the preparation of a crisis response plan.
Some of the main benefits of writing a crisis management plan for such a business include, but are not limited to:
•Correct allocation of available resources in times of crisis
•Quickly identify problems and critical errors in the business model
•Effective internal communication and coordination for crisis resolution
•Extend the lifespan of your e-commerce company with proactive planning and crisis management
(2)
The development of the Crisis Management Plan should consider the following:
Create a Crisis Management Team of like-minded coworkers who will be in charge to create and implement the Crisis Management Plan.
Identify possible scenarios that could lead to crisis your business, such as:
Poor delivery and shipping line
Very high shipping costs, taxes and fees
Complicated process of logging in and entering details to complete a purchase
Public distrust of your platform in terms of payment method
Create crisis plans working on the ‘why’ and ‘how’ to fix the situation as soon as possible.
Create a login backup – such a file contains all critical login information within the company and may be necessary in case of cyber attacks.
Give your team access to toolsand train themso they can contribute as much as possible in a crisis.
(3)
Furthermore, the crisis management plan should include:
•A succession plan for all critical staff
•List of personnel contact information
•Cross-training for team members for all critical functions
•Documentation of all critical processes
•An outline of who is involved in which actions for every crisis scenario
•A resolution plan for each crisis scenario
Test your crisis plans – once you have drawn up the plans and sketched out crisis management scenarios, run exercises and make sure your team members test in a controlled environment and understand their roles and responsibilities in different crisis situations.
(4)
•Consider your employees’ well beingand safety when creating a crisis management plan for your e-commerce business, so they don’t suffer from either mismanagement or any drastic changes in the industry (such as with the COVID-19 situation). Poor staff management during a crisis will expose the brand and potentially make it much more difficult to attract new talent to the business.
Plan to cut unnecessary expenses during a crisis as the worst thing about a crisis is never knowing how long it will last. Although there is the possibility of averting a crisis within hours, it is good practice to temporarily reduce unnecessary expenses for the sake of business stability. For example, some excessive marketing costs should be discontinued during a crisis period.