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The Big Picture of Business – Achieving the Best by Preparing for the Worst: Lessons Learned from High-Profile Crises, part 3 of 4

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Effective Crisis Handling, Case Studies

Crises can and will happen to good organizations. Most often (85% of the time), they can be heeded, planned for averted. There is an art to Crisis Preparedness. It must be included as part of a formal Strategic Planning and Visioning process. So also should diversity, branding, quality, marketing, re-engineering and other important processes. No single facet of planning should be done out of sync with the others.

There will also be those unplanned crises that nobody could have predicted. The same planning process that nurtures Crisis Preparedness can and must also accommodate for Crisis Management. Many of the elements of planning strategies can be taken off the shelf and implemented when extreme danger presents itself.

The City of New York had conducted planning for multiple contingencies. Having done so put the city in the position of responding to the unthinkable on September 11, 2001.
Some of those events that had profound impacts upon us recently are examined in this chapter. In this section are examples of crises that were handled well, thus increasing public trust and respect for their organizations.

Product Recall, Tylenol. Several deaths occurred as a result of tampered Tylenol capsules. The company’s swift recall of product from the shelves and the timely response of the company CEO were part of the crisis plan that was in place well ahead of the tragedy. Johnson & Johnson quickly put its crisis plan into action and subsequently drew good reviews for its open communication with the public.

Tylenol mobilized public support, with the company also positioned as the victim. Seeking to facilitate U.S. Food and Drug Administration approval of the tamper-proof caplet, a public awareness campaign was waged. The next phase in restoring public credibility to Tylenol was the reintroduction of new product to the shelves, done in such a way as to restore consumer confidence and increase market share. This is regarded as a premiere textbook case of quality crisis management.

Product Contamination-Damage. Unrelated cases but both well handled involved Perrier Water and the Girl Scouts of America. Ground substances in localized batches of Girl Scout Cookies were contained effectively, thus having no adverse effect on the organization’s fund raising activities. Contaminated quantities of liquid resulted in a worldwide recall of product. Activities included crisis communications, grassroots lobbying, dealer relations, issues management, and the recently-completed successful market reintroduction of the product. Perrier utilized media opportunities to advocate for environmental protection and sought to educate consumers about product purification processes.

Reclaim Company’s Good Name, Chrysler bankruptcy. Going to the government and asking for bailout loans is quite chancy, as the airlines have learned recently. Automaker Chrysler was at an impasse in the late 1970s, facing competition and marketplace dominance from imported autos. From top to bottom, the corporate culture was overhauled. Fresh approaches were taken to getting out of the hole, putting emphasis upon quality in workmanship and moving the company forward. When so many companies today put forward a “branding campaign” and call it a change in focus, I laugh. Chrysler was one of the few to totally rethink and retool. Their success should be a beacon to companies striving to make the long way back.

Rebuilding Through Stakeholder Coalitions

Saccharine. In 1977, the federal government banned saccharine, claiming that it caused cancer. Producers of the product teamed together to form the non-partisan Calorie Control Council of America. Its members included physicians, researchers, diabetes support groups and nutritionists. The coalition fostered healthy lifestyles, rather than attack the government bad directly. The national credibility restoration campaign included crisis management, re-educating the public on the need for artificial sweeteners as part of healthy diets and government relations activity. By organizing business groups with citizens into CCC, this effort coalesced grassroots support, which caused Congress to overturn a U.S. Food and Drug Administration ban on saccharine, thus restoring the product to the market. Research denying its link to cancer and other promotional health aspects of the campaign served to return saccharine to credible common usage and create a wider market share for its uses as artificial sweeteners.

Maquiladoras. In the early 1980s, Laredo, Texas, was faced with a 28% unemployment rate. Devaluation of the Mexican peso and slumps in energy and ranching economies had taken tolls on a city whose population was losing faith. The decision was made to unify the community and actively go after manufacturers to relocate to the area.

Maquiladora is a Spanish word which means “made by hand.” The program offered tax advantages to assembly line manufacturers who either left northern factories or added additional installations on the Mexican border.

This unified business community effort, in response to a dire economic crisis, resulted in 63 major factories being built in Laredo, Texas, and Nuevo Laredo, Mexico, occupied by General Motors, Ford, Sony, Hitachi, JVC, 3-M, Stokeley Foods and others. The Maquiladora program lowered the unemployment rate from 28% to 13%. This industrial development program carried the theme, “You Can Believe/Puede Creer.”

Columbine. Following shootings at Columbine High School, the City of Littleton, Colorado, was in the media spotlight. Still a relatively new community, its right hand and left hand still were not fully acquainted. Uniting to bravely face the tragedy, the community found inner strengths and mounted a visioning program. Infrastructures were put in place. Quality of life issues were addressed. Economic development and community stewardship programs emerged. Out of the ashes of a school massacre came a community that created and nurtured strategies for the future.

Anti-Defamation League. Following shootings at a Jewish community center in Los Angeles, California, the Anti-Defamation League of America came together and launched positive community educational initiatives. Random acts of violence are certainly threats to all, and the ADL built broad coalitions in order to sensitize, educate and further bond communities. Inspirational forces like that built by ADL and other groups are most effective when they add constituencies outside their normal scope, building consensus of opinion and the strength of wider resources.

Continue to part 4 of 4.

Return to part 2 of 4.

About the Author

Power Stars to Light the Business Flame, by Hank Moore, encompasses a full-scope business perspective, invaluable for the corporate and small business markets. It is a compendium book, containing quotes and extrapolations into business culture, arranged in 76 business categories.

Hank’s latest book functions as a ‘PDR of business,’ a view of Big Picture strategies, methodologies and recommendations. This is a creative way of re-treading old knowledge to enable executives to master change rather than feel as they’re victims of it.

Power Stars to Light the Business Flameis now out in all three e-book formats: iTunes, Kindle, and Nook.

Lessons The Avengers Can Teach About Leadership

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With the upcoming release of Thor Dark World and amid the success of The Avengers blockbuster movies overall, there are excellent parallel leadership lessons that can be learned from these Marvel Comics superheroes. Namely, knowing when to take the reins and when to call on others for their specialized skills and expertise. Although, in business, we might not necessarily have to restore order to the universe and face unimaginable foes, we do often have to recalibrate our organizations, face strategic issues that seem impossible to solve, and combat pressure from the competition.

Movies like Thor Dark World and The Avengers actually have significant business value in their themes and characters. The plots, obstacles, and how each of the Avengers react can reflect what happens in business, and offers legitimate insight on how managers can handle challenging issues—better ensuring that proverbial good over evil prevails.

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About the Author

CEO Miller IngenuityWith more than three decades of management, executive, consulting and speaking experience in markets all over the world, Miller Ingenuity CEO Steve Blue is a globally regarded business growth authority and ‘turnaround specialist’ who has transformed companies into industry giants and enthralled audiences with his dynamic keynotes. He may be reached at www.StevenLBlue.com.

A Shift in Leadership Can Make a Multi-Million Dollar Impact

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You would think that an Ivy League institution like Cornell University would be a model of the best practices of leadership throughout its organization since Cornell and most universities believe they are growing the next generation of leaders for our country and our world. Well… not necessarily and not always. While Cornell executive leadership can be exemplary, there were and still are times when units within this very large institution needed significant improvement. I was asked to lead a cultural turnaround in a large section of Cornell’s non-academic infrastructure. Over time, this intervention prevented lawsuits and arbitrations, increased customer satisfaction, increased revenues, reduced expenses, personnel problems, worker’s compensation claims, and turnover.

We chose to change our culture from a “top-down, my way or the highway” model to a values-based collaborative one. In any organization, what is rewarded and measured is what you will get. With a giant leap of faith, we invested in our leaders. We required every person who had supervisory responsibilities to attend a nine-day intensive training spread over three-four months.

Our leaders completed the program knowing, not guessing, what was expected of them, as leaders of their teams and as models for our entire organization. The experiential, highly interactive course included intensive exploration and training in 4 core Masteries: Personal Mastery, Interpersonal Mastery, Team Mastery and Culture and Systems Mastery.

They learned a great deal about their impact as a leader on everyone around them, a humbling experience for most. They learned and practiced how to communicate effectively and resolve conflicts, build teams to succeed, lead meetings that didn’t waste time, lead change that would stick, walk the talk with our organizational values, and finally how to engage and manage our talent. They also learned how they would be held accountable to our high standard of leadership behaviors. We began to measure performance for both business and behavioral results. That got everyone’s attention!

After three years of running our program, we had more than 200 leaders on board. We then required our entire staff to attend a week-long intensive program. This involved several more years and another 1,800 people, 60% of whom were union employees. We remained steadfastly committed to having all our staff from custodians, plumbers, and bus drivers to engineers, architects, and finance directors, trained in the culture we wanted to create and the culture we expected each of our people to honor.

Prior to the leadership intervention, our campus customers said we took too long and were too expensive. We also received powerful feedback that customers did not like working with us because of leader and staff attitudes. This of course directly correlated to our proposal win-rate of only about 40% of the bids in our facilities related departments. In reality, we were not any more expensive than others. Our real problem was we were not holding our leaders and staff accountable. High quality service was not a value before we started. We were a mediocre, at best, institutional operation with a sense of entitlement.

The results of our extensive experiment were nothing short of remarkable— and we found that positive, impactful leadership leads to great bottom line results. We managed university budget cuts with grace; we had far less turn over than the university as a whole and even lower than national averages for the same job categories.

Soon after the program was implemented, our internal customers started to notice. Our productivity grew each year and our facility bids were winning over 70% of the time. Because we were awarded more contracts and generated more revenue, we had a positive impact on the university and on our city. It is no accident that millions of dollars were saved because of one and only one intervention—teaching our leaders how to lead their people well in a solid values-based culture. More than 50% of our custodians had perfect attendance and we celebrated them. We received more applications than anywhere else on campus and became the ‘division of choice,’ where people wanted to work.

All of these stunning results were a direct result of the heightened quality of leadership throughout our entire organization. Our colleagues and customers could count on our people to do a great job, as promised, when promised, and with a good attitude—plain and simple.

During this time and over the next ten years, we experienced only two arbitrations, both of which we won. No lawsuits were filed against us by employees and we had very few Step 3 grievances from our four unions. Imagine this—the unions did not complain or file grievances even when their members were, like the leaders, required to receive an anonymous 360o feedback report on their impact in the workplace and required to attend training.

I co-conducted a professional peer review of a nearly identical campus on the west coast (size, structure, unions, facilities, budget, number of staff). They had no leadership or staff training in place, were not focused on customer service or accountability, and spent millions of dollars every year on arbitrations and employee law suits, most of which they lost. The only material differences between our campuses were geography and the quality of the leadership. Their leadership was measurably dysfunctional and ineffective; ours was functional and effective. We spent half a million dollars to train our people and restructure our reward systems over 10 years. They spent five times that on one lost lawsuit in one year.

We learned from our experience in culture change that having the ability to lead others to success does not happen by accident; it takes solid values, a long-term and deep commitment, alignment, accountability, and great leadership.

About the Author

Leadership authority Roxana (Roxi) Hewertson is a no-nonsense business veteran revered for her nuts-and-bolts, tell-it-like-it-is approach and practical, out-of-the-box insights that help both emerging and expert managers, executives and owners boost quantifiable job performance in various mission critical facets of business. Through AskRoxi.com, Roxi — “the Dear Abby of Leadership” — imparts invaluable free advice to managers and leaders at all levels, from the bullpen to the boardroom, to help them solve problems, become more effective and realize a higher measure of business and career success.

All airlines are the same, except for their people.

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As you may know, I’m a regular flyer. About 200 flights a year. Mostly on major airlines, but because I’m more interested in flying non-stop than getting travel miles or points, I take whatever airline is most convenient for my schedule.

This past Friday I found myself flying Alaska Airlines from Atlanta, Georgia, to Portland, Oregon.

There are only a few Alaska gates, and they’re hard to find, in Delta-dominant Atlanta Hartsfield Airport. FYI: Alaska is part of the same SkyTeam co-op airline alliance as Delta. That’s where the similarity ends.

The Alaska ticket agents were amazingly friendly. Actually smiling, laughing, engaging, helpful, and friendly. I hope airline employees at your airport act that way!

NOTE WELL: Yes, there’s an occasional ticket agent or two that are friendly and helpful, and there are some friendly, helpful agents in Charlotte, North Carolina, that I’ve known for more than a decade. But these Alaska people were amazing.

I engaged them in a few minutes of lighthearted conversation and asked them what the hiring criterion was. That’s when the startling admission came, “We’re actually Delta employees who were hand-picked and retrained.”

Hand picked and retrained. What does that tell you?

WAIT A MINUTE! Retrained? It’s the same computer system and the same baggage criteria. Just cross out “Delta” and substitute “Alaska” right? Right.

“We were trained to greet and treat customers in a different way,” said one of the agents. “You know – smile, chat, be friendly, thank customers as you look them in the eye, and not use certain unfriendly words and phrases like ‘policy’ and ‘all set.’”

Wow! There’s a concept.

Yes, I boarded the plane happily and on time. Yes, the flight attendants matched the ticket agent’s and the gate agent’s friendliness. In-flight service – all five hours of it – was excellent. NOTE: These days, flight attendants emphasize they are there for “your safety” and never say the word “service,” let alone the word “friendly.”

These flight attendants were gently professional, and friendly; not assertively demanding – almost rude when telling me and others to “turn off electronic devices.” I fell asleep between ordering and receiving food. Next thing I knew, a flight attendant was gently rubbing the side of my arm, and smiling as she helped me put my food in place. Classic.

Well, that would have been the end of the story had I not spent the weekend with a 10-year Alaska Airline employee. I told him about my experience and he just smiled.

I asked him what makes Alaska different.

Here is his eye-opening response about the big things Alaska does better than other airlines:

  • It starts before training. It’s all about who they hire. It’s about finding the BEST people. They have some process of pre-identifying the right people.
  • No test at time of hiring. Interviews are human to human. They ask questions and go with gut feelings.
  • They select people they believe will be hard workers. People who they believe will go beyond what’s expected. “North” of what’s expected.
  • They select people they believe have a natural inclination to take ownership. People who are caring and friendly.
  • They select passionate people who love what they do.
  • They don’t just train front-line employees, they train all employees. They have found that front-line people are buoyed by internal employees if attitudes are consistently positive throughout the company.

Why is this eye opening? Because it’s not fancy! It’s nothing new.

It’s not complicated. It’s natural.
It’s not costly. It’s human.

You know the rest right? Alaska Airline’s leadership and management is ‘by example’ not ‘by the book.’ All employees feel valued and are happy to serve. And customers love it. It’s humanized and natural. It’s caring people serving traveling people in need.

Well, why don’t all airlines do this? Long list of reasons. Too numerous and way too negative to mention here. This is a business lesson, not an airline reprimand.

HARD QUESTIONS:
What’s your culture?
How consistent is attitude throughout your corporate environment?
How is that affecting your morale?
And more important how is that affecting your customers?

Reprinted with permission from Jeffrey H. Gitomer and Buy Gitomer.

About the Author

Jeffrey Gitomer is the author of The Sales Bible, Customer Satisfaction is Worthless Customer Loyalty is Priceless, The Little Red Book of Selling, The Little Red Book of Sales Answers, The Little Black Book of Connections, The Little Gold Book of YES! Attitude, The Little Green Book of Getting Your Way, The Little Platinum Book of Cha-Ching, The Little Teal Book of Trust, The Little Book of Leadership, and Social BOOM! His website, www.gitomer.com, will lead you to more information about training and seminars, or email him personally at [email protected].

The Big Picture of Business – Achieving the Best by Preparing for the Worst: Lessons Learned from High-Profile Crises, part 2 of 4

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Wrong Actions, Mis-Actions

Ford Motor Company and the Firestone Tire Company had partnered and collaborated for almost 100 years, stemming from ties of their founders. In the 1980s, Bridgestone Tire Company purchased Firestone.

In the 1990s, another international conglomerate purchased Bridgestone-Firestone. Business shift from the retail dealer customer service mentality of Firestone shifted to a high-production tire operation. Not only was this a shift in company focus and customer orientation, but it put high-volume tire production and sales as the only priorities. Along the way, many defective tires hit the market, subsequently causing SUV rollovers, damage and, in some cases, deaths.

Rather than stick together in crisis situations and collectively investigate the problems, both Ford and Firestone distanced themselves from each. Ford blamed Firestone for tires that would not hold up. Firestone blamed Ford for unsafe vehicles. Each blamed the other for losses in quality control. The media circus jumped on all facets of the conflicts, as well as lawsuits filed. Both Ford and Firestone turned the tragedies into shouting matches. This sad chapter is a tarnish on the legacies of two longstanding corporate families. Current management of both companies were ill-advised on handling the crises.

K-Mart closed 617 of its under-performing department stores and filed for Chapter 11 bankruptcy reorganization in 2002. K-Mart, long the dominant discount chain had gotten comfortable with its leads over competitors. During the years while K-Mart did not plan for change, Target and Wal-Mart did plan, change and established defined marketplace niches.

K-Mart had become the odd retailer out but still kept 1,500 stores for its reorganization. Inevitably, when retailers contract, they blame poor performance upon bad locations.

Sadly, the criteria for retail stores opening is the availability of property, not marketplace studies and strategies. That’s why so many chains rapidly expand and subsequently contract so frequently. Real estate consultants are not business strategists, but the retail system gives them the say-so in establishing community presence. This is yet another example of niche consultants skewing the client in the wrong directions. Similarly, it is poor business to suddenly wake up one day and wonder why the marketplace passed you by. Retail stores are about more than just storefront locations.

In 1999, the U.S. economy spent one trillion dollars fixing and treating the so-called Y2K Bug, which we now know was a manufactured “crisis” by technology consulting companies. Certainly, aspects of the bug were treated successfully, and troubles were averted because of professional actions. Overwhelming public hype contributed to a “sky is falling” mentality that made computer consultants rich.

As was discussed in Chapter 8, technology constitutes one tenth of 1% of any organization’s overall Big Picture. Computer activity constitutes less than 1% of the technology picture. Thus, efforts to treat a fraction of one percent took resources away from addressing the other 99.999% of companies’ full-scope planning, training and marketplace development. Money was diverted from most other aspects of organizational wellness toward treating one symptom of one disease.

Among the lessons which we learned from the Y2K Bug exercise were:

  • When they want to do so, company leadership will provide sufficient resources to plan for the future, including crisis management and preparedness (of which computer glitches are one set of “what ifs.”)
  • When they are compelled to do so, company leadership will provide leadership for change management and re-engineering…two of the many worthwhile concepts that should be advocated every business day.
  • People are the company’s most valuable resource, representing 28% of the Big Picture. Today’s work force will need three times the amount of training that it presently gets in order for the organization to be competitive in the millennium.
  • Change is good. If you like change, then don’t fear it. Change is 90% positive. Without always noticing it, individuals and organizations change 71% per year. The secret is to benefit from change, rather than become a victim of it.
  • Pro-active change involves the entire organization. When all departments are consulted and participate in the decisions, then the company is empowered.
  • Fear and failure are beneficial too. One learns three times more from failure than from success. Failures propel us toward our greatest future successes.
  • When we work with other companies and the public sector, we collaborate better. All benefit, learn from each other and prepare collectively for the future.
  • In the future and in order to successfully take advantage of the future, make planning a priority…not a knee-jerk reaction.

What Causes Crises

Crises can have many liabilities upon companies, including loss of profits and market share. Inevitable spin-offs include government investigations, public scrutiny, and a tarnished image. This causes loss of employee morale and, as a result, company productivity.

Based upon research and experience with hundreds of client situations, I have found that seven types of crises exist:

  1. Those Resulting from Doing Nothing. The biggest problem with business, in a one-sentence capsule: People exhibit misplaced priorities and impatience…seeking profit and power, possessing unrealistic views of life, and not fully willing to do the things necessary to sustain orderly growth and long-term success.
  2. Doing Things as We Always Have. Resulting from inflexible conditions, obsolete policies-procedures, procrastination, attitude, resistance to innovation, failure to change.
  3. Those We Bring Upon Ourselves. Don’t have sufficient management skills or resources to do something well. Ignore small problems when they occur. Won’t listen to advice.
  4. Circumstances Beyond Our Control. Miscalculations, manmade disasters, natural disasters, shifting resources, changing marketplaces, regulations, bureaucracies.
  5. Bad Work, Poor Planning. Damage control for what someone else did wrong, sub-standard, behind schedule, in poor taste, without regard for quality or ill-prepared.
  6. Averted. 85% of the time, planning and forethought will avert the crisis. So, why don’t organizations and individuals remediate trouble by planning on the front end?
  7. Intervention. Getting past the current crisis does no good unless you take steps to assure that it does not recur. Planning is necessary to remediate current and future problems.

Crisis management and preparedness can minimize negative impacts of any emergency. Going through the planning and implementation is a quality assurance process that strengthens any company. Crisis communications means banking goodwill for those times when the plan is called to the test.

Continue to part 3 of 4.

Return to part 1 of 4.

About the Author

Power Stars to Light the Business Flame, by Hank Moore, encompasses a full-scope business perspective, invaluable for the corporate and small business markets. It is a compendium book, containing quotes and extrapolations into business culture, arranged in 76 business categories.

Hank’s latest book functions as a ‘PDR of business,’ a view of Big Picture strategies, methodologies and recommendations. This is a creative way of re-treading old knowledge to enable executives to master change rather than feel as they’re victims of it.

Power Stars to Light the Business Flameis now out in all three e-book formats: iTunes, Kindle, and Nook.

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