Crisis Management 101

(Through Rose-Coloured Glasses)

Mr. Toyoda, please take note.

You must have heard about the crises of Tylenol cyanide poisoning in 1982 and the Exxon oil spilt in 1989, History has already judged them, how good or bad they were managed. Today let us revisit a crisis that happened only over a year ago, here in Canada, the Maple Leaf Foods Listeriosis contamination.

More than 20 deaths and dozens of listeriosis cases were linked to meat produced at a Toronto Maple Leaf Food plant in 2008. Maple Leaf Foods immediately shut down the plant in question and recalled approximately 20 types of meat involved. As investigators uncovered more information, the company took precautionary measures and widened its recall to include 200 additional products.

The company also posted prominently on its website detailed information of all involved products that should be avoided.

The site also was updated constantly with press releases and the public were encouraged to check back frequently to find out what the company was doing to win back customers’ confidence.

A full page letter from CEO Michael McCain quickly appeared in the major Canadian newspapers.

The company also ran ads on TV with all the Canadian channels and on YouTube, featuring a sombre CEO, apologizing to all Canadians and promised to clean up the contamination as fast as they can. The company launched an aggressive ads campaign on steps taken (e.g. new installed equipments, procedures and manpower) to prevent similar problems in the future.

The company then spent the past year working to restore its brand reputation.

The company reached a $27-million settlement with plaintiffs across Canada in February 2009, 6 months after the crisis.

The company also instituted new procedures and testing at its plants, and has largely recovered from the damage of the recall, posting a profit in the third quarter of 2009, and making gains in its prepared meats division just one year after the outbreak.

So what can Toyota learn from this example of crisis management?

First and foremost, Mr. Toyoda, you should be the designated spokeman of the company and get in front of the media at all time, to tell your side of the story and progress made.

You should publicly and sincerely apologize through TV and YouTube. No more damaging comments like ‘everyone can make mistakes’.

Move quickly and proactively in all recalls, as soon as legitimate complaints are registered. Thorough investigations should be done simutaneously, but not as an excuse to delay action. This will demonstrate to customers that Toyota does really care about people’s safety.

Identify and fix the problems quickly and efficently. Although that little gadget may really solve the whole accelerator problem, why not change the whole pedal too; such gesture may make people feel safer that more have been done.

Absorb all the costs of loss and settle the court cases quickly. Its your company’s reputation at stake here, cannot nickel and dime now, nor can you let the court cases drag on for long time. With the reputation ruined, you will lose your money making machine anyway.

Be open, inform the public of your every move and progress made, to build back consumers’ confidence, a step at a time.

Good luck.

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