Expect the Unexpected - Issue and Crisis Management
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Expect the Unexpected - Issue and Crisis Management

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Managing Communications in a CrisisExpect the UnexpectedThree exemplificative cases of crisis:Perrier, Johnson & Johnson, Mercedes “A-Class”

Managing Communications in a CrisisExpect the UnexpectedThree exemplificative cases of crisis:Perrier, Johnson & Johnson, Mercedes “A-Class”

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  • 1. Università Master Issues della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Managing Communications in a Crisis Expect the Unexpected Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A-Class” by Cammarata Vincenzo, Kurucz Veronika, Maj Valentina, Salgirli Seda, Schulte Jan
  • 2. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. What is a Crisis? ‘A crisis is a major occurrence with a potentially negative outcome affecting an organization as well as its publics, services, products, and/or good name.’ Two different views of Crisis: > Traditional view: ‘An event that can destroy or affect en entire organization.’ (Mitroff et al.1996) > Strategic view: ‘A decisive moment, a turning point for a better or worse.’
  • 3. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Crisis are not unusual… 1982 Deaths caused by Tylenol 1990 Benzene in water 1993 Syringe hoax 1996 Suspect for poisoned candies 1997 Woman discrimination 1997 The A-Class failed the moose-test 2000 Privacy & Security on the web 2000 Deaths caused by Baycol/Lipobay
  • 4. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Common elements to all crisis > A rude awakening > The rapid speed an escalation of an event > The presence of panic > The tendency to act irrationally and preciptiously when feeling intense emotions > Chaos in internal commnications (even if they have a crisis communication plan) > The omnipresent press > A threat to the company’s reputation
  • 5. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Crisis Management - Strategic planning to prevent and respond during a crisis or negative occurrence - A process that removes some of the risk and uncertainty and allows the organization to be in greater control of its destiny - Dynamic and enduring process.
  • 6. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Three exemplificative cases in Managing Communications in a Crisis: 1990 Negative approach 1982 Positive approach 1997 A well-known case
  • 7. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Perrier & Benzene - Facts 1989 – Leader in the sparkling water market > High reputation – 13% of the Market share – 1mio bottle sold ’80s High Health Consciousness (Hot spot among consumers) 1990 – Benzene scandal > Presence of the chemical Benzene at levels above standards
  • 8. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Perrier & Benzene - Actions - 7mio bottles recalled from North America > Ronald Davis’ (Perrier America President) declarations problem limited to North America Cleaning Fluid on a production line machine mistakenly used Declaration done before identifying the source of contamination. Three days later… discovery: - 6 months’ worth of production affected - Not only North America but also Global Market
  • 9. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Perrier & Benzene - Actions > Frederik Zimmer (Perrier’s International Division President) “Perrier water naturally contains several gases, Including Benzene.”… “The Benzene entered the water because of a dirty pipe filter at an underground spring at Vergeze in southern France.” It means that “Natural” Perrier was in reality processed.
  • 10. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Perrier & Benzene – Effects on the market > Financial effects - Perrier’s stock price declined - Market share declined (13%>9%) - Price to consumers declined > Plans to restructure - Management structure and bottom line Firing of Gustave Leven (CEO & Founder)
  • 11. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Perrier & Benzene – Analysis 1/3 Lack of internal communication and coordination > contradictory explanations > convey misinformation (credibility & reputation damaged) > no centralized approach Surprise effect & Panic > Irrational behavior > loss of control
  • 12. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Perrier & Benzene – Analysis 2/3 Rely on media for communications 2C > Media controlled the information > Defensive behavior (rather than offensive) > Lack of proactive and clear communication towards customers Scandal became a big media event > Rapid widespread of the news > global level > Emotional component (People scared > betrayed > bad reputation)
  • 13. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Perrier & Benzene – Analysis 3/3 - Inability in gathering information without loosing control - Bad relationship management with stakeholders - Lack of a Crisis communication plan
  • 14. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Johnson & Johnson - Facts - Multinational of health care 1982 – Deaths caused by Tylenol capsules > Seven people died in Chicago 1986 – Second case of death > A New Yorker died
  • 15. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Johnson & Johnson - Actions - 31 mio bottles ca. of Tylenol recalled (a retail value of more than USD 100 mio) - Offered to exchange all Tylenol capsules with Tylenol tablets (other million dollars..) - Production Suspended (until the company could innovate its tamper-resistant bottle)
  • 16. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Johnson & Johnson - Actions - Toll-free telephone hotline - Cancel all Tylenol ads - Immediate Nationwide warning not to use Tylenol (Transparency and honesty towards customers)
  • 17. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Johnson & Johnson – Analysis - Proactive approach (Opportunity to consolidate the relationship with Stakeholders) - Timely PR campaign based on honesty (Ads, videos to newspapers and TV Networks) > Keep the public informed - “Customer-oriented” > Customer safety first (than company profit and other financial concerns)
  • 18. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Johnson & Johnson – Conclusions - How handled J&J the crisis situation? Offensive - Proactive – recalling the product Saving the brand Responsability – care for its consumers
  • 19. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Johnson & Johnson Take care not only the crisis, but also the EMOTIONS. quot;We believe our first responsibility is to doctors, nurses and patients, to mothers and fathers and all others who use our products and services.quot;
  • 20. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Mercedes Benz – “A-Class” case
  • 21. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Daimler Benz AG - facts 1997 - Mercedes Benz subdivison of Daimler Benz AG (now DaimlerChrysler) > annual turnover 124 billion DM - 180 000 employees > Market share 24,4% - on the European luxury car market (BMW 20,7% and Audi 20,5%) - High reputation technological innovations, safety and high prices
  • 22. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Baby Benz - facts > First-ever Mercedes for middle market segment > Goal: reaching new customer groups (young, women) > Risk: weaken Mercedes-brand > Central values: Quality, Technology & Safety !!! > Mercedes strategic and technological bet - Extention of the luxury brand into a lower segment - Implemention of new development process and production plant (2.5 billion DM and 47 month of realization) 18.10.1997 - Launch after an 18 month-marketing campaign ‘A-Motion’ (200 mio DM) and 100 000 pre-booked sales
  • 23. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. “This is what our future customers want. We are working on it.”
  • 24. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. The moose-test - facts
  • 25. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. ‘How to create Crisis out of an Issue?’ a. Detection b. Prevention/ Preparation c. Containment
  • 26. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. From Issues to Crisis
  • 27. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. a. ‘Mis’- Detection 1. PRODOME: Date: 23.09.1997 Location: Tannishus/ Denmark, selection ‘Car of the year’ During the test two wheels of the Baby-Mercedes, a clear favourite, lost contact with the road at the average speed Mercedes sent engineers and The PR Manager to the crime scene!!! Some eyewitnesses claimed the vehicles disappeared overnight and returned back in the morning. Statements that came from PR manager: “These are claims that cannot be proven!”
  • 28. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. a. ‘Mis’- Detection 2. PRODOME: Date: 21.10.1997 Location: Sweden,Test Drive for “Teknikens Vaaerd” magazine The A-class failed the moose-test,more than failing it was topped over at 60 km/h. Journalist Robert Collins and three collegues suffered from minor injuries. The Mercedes Headquarters were in Tokyo Motor Show and only statement from Mercedes was: “…it is not necessary to provide an official statement, simply because somewhere a car has topped over.”
  • 29. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. b. Preparation - Prevention Mercedes: > Failed to see all the prodomes . > Missed out all the opportunities for prevention. > No plan of preparation at hand. Journalists (left in the dark) started to conduct moose-tests: Baby-Mercedes lifted two tires and topped over once gain in Auto Bild’s test. FOR JOURNALISTS IT WAS A TOO GOOD OPPORTUNITY NOT TO MISS.
  • 30. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Humor break :-) “Honestly, we haven’t “Super, the A-class is done anything!” passing the moose test!”
  • 31. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. ‘How to Prepare in Advance a Crisis’ > Brainstorm Ideas (Include the Senior Managers into BS process) > Assess Your Risk > Set Communication Objectives for Potential Crisis: (Flow of Communication at all the times!) > Consider Your Constituencies: (Find out constituencies effected by the crisis) > Analyze Your Channel Choice: (It’s important to find the right channel) > Assign Different Teams to Each Crisis: (Different problems require different kinds of expertise)
  • 32. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. c. Containment - Actions > Jürgen Hubbert (board member – resp. Private Cars) Legal action against “harebrained” journalist > image damaging - Negation of the problem > 29.10.1997 (First press conference and first admitance) - “We have a weakness!” (Goodyear tires – not appropriate test condition in Sweden) A-class would carry on with changed tires and instalation of ESP Auto Zeitung replicate the test with new tires but results were the same…
  • 33. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. c. Containment - Actions > 09.11.1997 (Welt am Sonntag pondered A-Class production stop by CEO Jürgen Schremmp) > Mercedes denied again - “No comment on speculations.” > 11.11.1997 (Press conference by Jürgen Schremmp) - “A-Class stopped for three months.” (He admitted mistakes and the process would be reviewed) Evasive and dishonest communication tactics abondened. (no communication tactic) Admission of the problem > Coming up with the solution
  • 34. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. ‘How to Communicate during a Crisis’ > Define the Problem (reliable info and S.M.A.R.T. communication objectives) > Gather the Relevant Information (Managing many sources of information) > Centralize Communications (The need of a crisis center) > Communicate Early and Often: (Say whatever you can as soon as possible) > Get Inside the Media’s Head (Media looks for a good story with villains, victims and visuals. > Communicate Directly with Affected Constituencies (Internal and external) > Keep the Business Running (The show must go on!) > Make Plans Immediately to Avoid Another Crisis (To be prepared)
  • 35. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. ‘How to get out of a Crisis?’ d. Recovery e. Learning
  • 36. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. d. Recovery > Delivery stop of A-Class strong corporate image > positive impact on media (technical problems of the Baby Benz immediately solved) > 19.01.1998 (workshop with journalists on driving dynamics) - Now I really like this car! ” (R. Collin, Berliner Zeitung) > 28.02.1998 Relaunch of the A-class (Extensive marketing campaign including humor and celebrities)
  • 37. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Humor break :-) “We have reinvented safety. The new A-Class”
  • 38. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. e. Learning A more timely, open, honest and coherent approach to communication saves both face and money. “The A-class has passed the moose test. We have learned from it.”
  • 39. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. ADV Campaign “Strong is the one who does not make mistake. Stronger is the one who learns from “I have learned more out his mistakes.” of my throwbacks than my triumphs.”
  • 40. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. “What happened after” The Crisis cost for Mercedes - 300 mio DM (ca. €154 mio) A-class best selling new car in 1998. (16th overall, best selling Mercedes)
  • 41. Università Master Issues della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Managing Communications in a Crisis Expect the Unexpected Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A-Class” Thank you for your attention by Cammarata Vincenzo, Kurucz Veronika, Maj Valentina, Salgirli Seda, Schulte Jan