The Mayans predicted the world would end in 2012. Many people took this warning seriously and stockpiled canned goods, bottled water, and medicine. In some cases, they purchased bunkers and military vehicles. Though the world didn’t end in 2012, those who prepared for it had what we call a “crisis management strategy.” In case of emergency, they knew where to go, what supplies to carry, and what tools to use.
Corporate crisis management strategies look a bit different, but the core tenet remains the same. When markets crash or your CEO violates company policy at a party, you need a crisis management plan.
When a crisis strikes, the results can be devastating. There is no better example of this than what happened to Volkswagen in 2015. In September of that year, the EPA sent a Notice of Violation to the Volkswagen Group of America. The notice claimed that Volkswagen circumvented EPA emissions standards in their 2.0-liter engine diesel cars manufactured between 2009 and 2015. These vehicles emitted 4000% more pollution than the EPA allowed.
Volkswagen’s crisis management strategy only made matters worse:
As a result of the factors above, consumer trust in the brand was negatively impacted. Due to Volkswagen’s 30,000 layoffs, consumers also had to reconsider whether the company’s values and morals aligned with their own.
On the other hand, a good crisis management strategy can propel a company to new heights even in the most challenging situations. Johnson & Johnson proved this after poisoned Tylenol capsules killed seven Chicagoans in the early 1980s. Obviously, Johnson & Johnson did not poison their own medication. An unknown perpetrator poisoned the capsules and returned them to the shelves. The incident raised concerns about packaging and anti-tampering measures.
The key to Johnson & Johnson’s handling of the crisis was a quick reaction and transparent communication. Their crisis management strategy resulted in the following:
Although the recall alone cost Johnson & Johnson more than $100 million, the company’s handling of this incident has become a case study for effective crisis management. In fact, Harvard Business School uses it as an example of highly effective crisis management.
KFC UK ran out of chicken in 2018 and temporarily closed more than 600 of its locations. One of the most successful social media crisis management campaigns in history followed.
Instead of issuing one media statement, KFC began using social media to keep customers informed and up to date about the crisis. One of their Tweets read: “The chicken crossed the road, just not to our restaurants…”. Another featured a bucket of KFC with the letters “FCK” on it and a short statement below it that started with, “A chicken restaurant without any chicken. It’s not ideal. Huge apologies to our customers, especially those who travelled out of their way to find that we’re closed.”
KFC’s crisis management strategy relied on the following elements:
It is best to design crisis management strategies during periods of relative peace. You should not wait for a disaster to strike before you start devising one.
Our consultants are available to assist you if you have questions about succession planning or the effectiveness of your board’s crisis management strategies.
Not ready to call in the experts just yet? You can also watch our webinar on board crisis management here.
Panos Manolopoulos is a Managing Partner of Stanton Chase’s Dubai office and one of the main shareholders in Stanton Chase Dubai, Greater China, and Moscow. He has served as Regional and Global Practice Leader of Consumer Products & Services, Vice Chairman – Regions, Vice President of Europe Middle East & Africa, Vice Chairman – Business Excellence, and most recently Global Practice Leader of our Board and CEO Services practice.