There are classic cases of companies which failed to live up to demands of disaster management during times of crisis. Truth is – they could have avoided both the embarrassment and the wrath of stakeholders easily

The Toyota and BP debacles have once again shown us the consequences of organisations failing to manage a crisis effectively. The tragedy is that it was all so avoidable. In cash terms these crises can be counted in billions of dollars but unfortunately the consequences will ripple on for many years – a high price to pay for failing to manage relatively simple crisis scenarios. It is amazing how much time and money is spent on developing and discussing strategy compared to developing the skills needed to implement it or manage it if things go horribly wrong. The rules of crisis management are really quite simple.

Prepare for the unexpected
It may be an unpleasant thought but if you run an airline (like in the case of the three largest number of passengers carrying airlines in the world: Delta Air Lines – which carried 162.6 million passengers in FY2010; United Airlines – which carried 145.6 million passengers in FY 2010; and Southwest Airlines – which carried 131 million passengers), the chances are that one of your planes might crash one day. You would have definitely heard of plane crashes and emergency landings by now, haven't you? If you make food, you might experience a health scare. If you run a car company like in the case of Toyota, ford, GM and many others, you might have to manage a recall. If you run an oil company, you might have to manage a spill (as was experienced in the case of Exxon Mobil and BP). It is vital to work out how your organisation would react if the worst were to happen and plan and train accordingly. Whilst risk registers and contingency plans are a good start, they can fool you into thinking that you have all bases covered. Planning and training must encourage creative flexible open behaviours. It is important to remember that it is usually the crisis that you never thought of that kills you.

Preselect, train and empower a crisis team
When crisis strikes, things develop at a devastating pace and companies need to react fast regardless of time zones, corporate procedures or internal politics. Individual leaders and teams should be preselected, trained and empowered to react instantly and calmly to the situation. The consensus culture at Toyota condemned them to losing the initiative and being butchered by the media over their recall crisis. Unless you are ahead or on the curve you will always be playing catch up and the crisis will spread systemically.

Put yourself in the customer’s shoes
Toyota customers were happy to pay premium prices for two key things - reliability and safety. When Toyota finally reacted, their crisis spokesmen tried to explain everything in engineering terms. What they should have done is consider what their customers may have been thinking (which is likely to have been whether their car was safe to drive). You have to build trust with your customers before their goodwill turns to anger, resentment and even personal hatred (as with BP).
 
Regret, reason, remedy
First you have to show that you are human by showing empathy for those people affected and express regret for what has happened. Many people fear legal consequences and are often told “never say you are sorry”; but showing that you understand the feelings of your customers is not the same as admitting liability. Secondly, try to explain in straightforward terms what has happened and the reason. “Unless you are ahead or on the curve you will always be playing catch up and the crisis will spread systemically.” If you don’t yet know, then say so and do not hide information that customers need to know. Lastly, get control of the situation by stating what you are going to do to remedy the situation.

Communicate, communicate and communicate
During times of crisis – no matter how big or small – organisations often feel that they are being attacked by a hostile press and the temptation is to close the doors, call a meeting and ignore the ringing phones. While it is important to establish your message, it is vital that you are seen to be openly communicating as soon as possible – speculation fills a vacuum. Communicate to your customers via the media but don’t forget the other key stakeholders including your own employees, suppliers and partners.

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Source : IIPM Editorial, 2011.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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It’s perhaps the right route for this Japanese auto major to ensure a smooth journey in India
 
“Some people even ask us whether Nissan is an American company,” Abhijeet Pandit, VP – Sales, Marketing & After Sales, Hover Automotive India (a company that takes care of the Sales, Service, Parts, Marketing & Dealer Development functions for Nissan in India) tells 4Ps B&M. In fact, such a query from Indian consumers is more than obvious as they have not been engrossed with this Japanese auto major at a level at which they have experienced, let’s say, a Toyota or a Honda (Nissan’s Japanese counterparts) in the domestic market.

While the latter two made their way to the Indian shores in the 1990s, Nissan came in as late as 2005 with the launch of its SUV X-Trail, followed by Teana and 370Z. However, all three models were Completely Build Units positioned in the premium segment and hence attracted low volumes.

But with the launch of its first Complete Knocked Down (CKD) product, Micra, the company has got aggressive with its marketing plans for India and is trying to gain a considerable space in the minds of consumers. In fact, Nissan is targeting to sell close to one lakh units by the end of 2013 in the domestic market, which means a market share of about 5%. Although with sales of 6.1 million vehicles in 2009, the Renault-Nissan alliance ranks fourth in the world, it has somehow not been able to repeat that magic when it comes to India. This makes one think whether Micra really will be able to pull it up for Nissan in India? And that too when everything, from sales to service, has been outsourced to a third party? “For Nissan’s expats to come from Japan and understand the market would have taken more time. So Nissan decided to give the business to someone who understands the country, as vast as India, very well,” says Pandit.

In fact, Nissan has so far used exposure marketing as a very effective tool to increase the awareness among the Indian consumers. Be it the introduction of Ranbir Kapoor as the brand ambassador or the host of BTL activities done by the company, the Japanese automaker is ensuring that it gets up, close & personal with the Indian consumer. For instance, the company used the wired frame of the Micra and several kiosks to create the buzz before the product was actually launched in the market. In fact, the activities paid off well too as Nissan got close to 2,000 bookings prior to the official launch of the product in the domestic market. Going forward, the company is gung ho about its focus on the digital space to raise the awareness. “Digital marketing is a wise option to market the Nissan brand in the country as one can easily get to know how much return he is getting against his investments,” explains Pandit. In fact, the company is planning an online interactive campaign for the Micra in the coming months and will be doing similar campaigns for the other products and for the Nissan brand as a whole as well.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2011.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

IIPM ranked No 1 B-School in India
domain-b.com : IIPM ranked ahead of IIMs
IIPM: Management Education India
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IIPM Proves Its Mettle Once Again....
Arindam Chaudhuri on Internet.....
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management