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Unhappy Ford customers asked to sign confidentiality agreements before trading in their cars

Unhappy Ford customers asked to sign confidentiality agreements before trading in their cars | Crisis prevention | Scoop.it
TRADING in your car usually doesn’t involve signing a confidentiality agreement, but that’s what Ford has asked some of its customers to do before agreeing to purchase their allegedly dodgy second-hand cars.
Steve Hather's insight:
Corporate boofhead alert .… Ford fails crisis management 101 (again)! 

Just days after an announcement that a group of consumers had launched a class action law suit against Ford Australia as a result of problems with its “PowerShift” transmissions, comes news that Ford had made some consumers sign a gag order in order to trade in vehicles that were having problems. 

A number of consumers that purchased Ford’s Fiesta, Focus and EcoSport vehicles sold from 2011 with “PowerShift” transmissions reported the transmissions were “jerky” and in some cases just shut down. Rather than acknowledging and addressing the problem Ford has chosen to stonewall leading to a group of consumers taking their own actions to seek redress. 

In the meantime some consumers were able to trade in the affected vehicle – but only after signing a confidentiality agreement. 

Ford, like other companies in similar situations, have failed to resolve a PRODUCT problem which has inevitably led them into a BRAND crisis. 

When a consumer pays $30,000 for a car, it is reasonable for them to expect “acceleration much smoother than a conventional automatic” which is what Ford claimed as a benefit of the PowerShift transmission. For some consumers, this didn’t happen. Rather than fixing the problem quickly, Ford took the corporate bully boy approach, making consumers fight for their choice of repair, refund or replacement – guaranteed under Australian Consumer Law when there is a “major fault” and then forcing them to sign a confidentiality agreement. 

If the resolution was fair and reasonable, what is it that Ford needs to hide in a confidentiality agreement? What’s wrong with it being known that they will actually give the consumer what they are entitled to? What’s wrong with it being known that Ford has actually resolved the problem? 

Unfortunately defence is often the first instinct of a company – and very common when the lawyers walk into the crisis management meeting. Deny, deflect, delay … hope it goes away! While I don’t advocate companies compromising their legal position, it should not get in the way of taking fair and reasonable action to resolve a problem. Consumer goods companies – reliant on consumer trust as a key asset of their brand, must first win in the court of public opinion before overly worrying about the court of law. Winning the first battle often means the second is not required anyway! 

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Thermomix safety risks and customer service issues - CHOICE

Thermomix safety risks and customer service issues - CHOICE | Crisis prevention | Scoop.it
A faulty part on some Thermomix TM31s and 'intimidating' behaviour from Thermomix Australia's customer service has left customers feeling burnt.
Steve Hather's insight:
Thermomix creates its own crisis

The Thermomix reaction to what should have been a simple and straightforward product recall has led to a crisis that not only affects the product but is now impacting its brand. The PRODUCT INCIDENT has become a BRAND CRISIS. Unfortunately this is an all too common response.  

Every company has incidents. There is no such thing as perfect systems, processes and people. While good quality management systems reduce the risk of incidents occurring, they happen. 

In cases where there is a safety risk to consumers and the product is in the hands of consumers, the product must be recalled. There are a number of different approaches to a recall - the product can be returned to the manufacturer or retailer for repair, replacement or refund, the manufacturer can send a replacement part. Whatever the recall process, it is still a consumer recall. Thermomix have continued to deny that the TM31 is subject to a recall. That is despite ACCC - the Australian consumer watchdog, confirming to Choice that the product is in fact subject to a recall. 

If the product creates a safety hazard, it also fails the test of "acceptable quality" under the Australian Consumer Law (ACL). In this case, the ACL gives consumers the choice of repair, refund or replacement. Thermomix have continued to refuse to refund or replace affected products except in a few cases of persistent consumers but then have to agree to sign a gag order. In a case put to the NSW Civil and Administrative Tribunal by one consumer, the judge ordered Thermomix to give the consumer a refund - and no gag order was required!

This makes total sense when you think about it. The onus is on the company to build and maintain consumer trust in its products. In the event of an incident, if the company has done a good job of building trust, has been transparent in its communications on what happened and what it is doing about it, and offers a repair that works and makes sense, the majority of consumers will accept the repair as an appropriate option. If the company has not done that well, consumers are entitled to choose a refund or replacement. 

Thermomix product had a great reputation and loyal following. The problem with the sealing ring in the TM31 was a hiccup that should have been resolved quickly yet the response from Thermomix has led to Choice taking the unprecedented step of collating its own incident report that includes 87 reported problem, 45 of which led to injuries and 18 of those requiring medical attention. It will be interesting to see if ACCC have 18 incident reports - under Australia's mandatory reporting law, companies are required to report all incidents that lead to an injury or illness that requires medical attention.

When faced with a report of one consumer getting seriously burnt, Thermomix implied that the consumer hadn't used the product correctly. 

At the end of the day, Thermomix defensive approach, its bullying and intimidation and its refusal to provide consumers what they are entitled to have led to a crisis of its own making. 

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Burn Out: UK appliances exploding daily - Appliance Retailer

Burn Out: UK appliances exploding daily - Appliance Retailer | Crisis prevention | Scoop.it
Why London Fire chiefs are taking action.
Steve Hather's insight:
Product safety top of mind for fire chiefs. A “code of practice” – or Australian Standard, is needed! 

Recent media statements by Fire and Rescue NSW that they may request a coronial inquiry into Samsung washing machine fires echo concerns UK fire chiefs for faulty appliances. It is estimated that 3,700 fires in the UK are caused by faulty appliances.  

A UK coronial inquest in 2014 into the death of a man in 2010 from a fire caused by a Beko fridge freezer highlighted a number of concerns with how Beko had managed the incident. The inquest was told that Beko knew in 2003 about "maybe 8 - 10 fires" and by 2008 was aware of 32. Despite that Beko did not issue a product safety alert until 2011. The inquest was told that Beko had in fact started repairing affected machines in 2011 but at the rate it was going, it was estimated that it would take 61 years to complete it. The coroner concluded that there were a number of problems with the UK system and called for a "code of practice" given the inconsistent approach taken by manufacturers. It also recommended changes to the way recalls were notified to the public. 

In fact, there is a "code of practice" available in the form of an international standard for product recall and its companion standard for product safety. The ACCC is being urged by people like me to adopt the international standard as an Australian standard for precisely this reason – a consistent approach to recalls. 

A subsequent report into the Beko-related fires is believed to have found a number of problems with the UK product safety system. According to the author of the report, one of its primary findings was that the regulations exist to provide appropriate protection for consumers however they are not enforced. In January this year, the UK government had still not released the report. It was thought that the delay was caused at least in part by the realisation that the government did not have the resources to act on the recommendations. 

There are clear similarities between the UK problems and Australia. 

The Australian Consumer Law provides a wealth of protection for consumers, including the management of unsafe products yet the department responsible - the ACCC, delegates responsibility for recalls to the States who apparently have less than sufficient understanding of the ACL to carry out those responsibilities. In the case of national recalls, the State in which the company is based takes the lead in determining the recall strategy and monitoring the implementation. 

The Samsung washing machine recall provides a good illustration of why the current application is flawed. There have been over 200 reported incidents, including a number of incidents - 22 including 2 significant fires, that occurred after the machines had been repaired. Despite that, the NSW Minister responsible continued to state publicly that he was happy with Samsung's recall strategy in only offering a repair and that Samsung was not obliged to also offer refunds or replacements. The NSW Minister used State legislation that is inconsistent with national legislation. The WA Commissioner however actually stated that he was not happy with the repair option and urged WA consumers to seek refunds or replacements. 

The ACL makes it clear that, in the case of a major fault – and an unsafe product is part of the definition of a major fault, consumers have the right to their choice of repair, refund or replacement. It took a group of concerned consumers to create a Facebook group and a number of media organisations including Choice, to apply enough pressure to the ACCC to announce that the ACL applied and that consumers were entitled to their choice of repair, refund or replacement. Samsung recently announced a change in strategy including a decision to contact all those consumers that had received repairs and offer a review of the repair or a refund or replacement. 

There were, and still are, a lot of problems with Samsung’s recall strategy. At the end of the day, the machines have a design fault that needs to fixed and no amount of “band-aiding” will alter that. The good things that come out of that recall however include the innovative methods of communication – the “urgent detergent” campaign being a good example of what can be done if a company is willing. 

Of particular concern however is that the Samsung recall actually has a comparatively high retrieval rate. A review of the product recall system in Australia conducted by the ACCC in 2010 found the average retrieval rate for electrical products was around 48%.

At the end of the day, like the UK, the Australian Consumer Law provides considerable protection for consumers, including the management of unsafe products. The lack of a consistent approach to recalls in the form of a code of practice or Australian standard however just adds to the confusion on the part of consumers, manufacturers, retailers and regulators and continues to hamper efforts to conduct effective product recalls. Let’s hope it doesn’t take a death like it has in the UK for regulators to act. 

Steve Hather 
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Aussie beef cops blame for US fast-food chain, Chipotle’s E. Coli crisis - Beef Central

Aussie beef cops blame for US fast-food chain, Chipotle’s E. Coli crisis - Beef Central | Crisis prevention | Scoop.it
The Australian Government and industry sources have vigorously defended the food safety performance of Australian beef, after accusations were levelled last week that Australian beef was the likely source of contamination in US restaurant chain Chipotle's E.Coli contamination crisis.
Steve Hather's insight:

When all else fails .... blame your supplier!

 

As mentioned in my last post, it is clear that Chipotle have significant problems with their food safety processes and systems. The latest incident is just one of a litany of problems they have had and that has now attracted the attention of regulators.

 

In this latest gem from Chipotle, its Australian beef suppliers have been identified, using some tenuous logic and despite both US and Australian regulators dismissing it, as the likely source. Of course it couldn't possibly be its own food handling processes and systems given its record is so impeccable in this area!

 

One of the real no-no's in crisis management is blaming someone else. Consumers expect companies to take responsibility for problems and get on with managing them. Regardless if it actually was one of its suppliers, at the end of the day, Chipotle like any other consumer brand, is responsible for making sure it is using suppliers with good systems in place and its own processes are effective. Companies win no friends and certainly no respect by blaming others for its own short comings. 

 

Steve Hather

www.recallmanager.com

 

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The Most Unsettling Product Recalls of 2015

The Most Unsettling Product Recalls of 2015 | Crisis prevention | Scoop.it

When you think of a product recall, it’s usually something like a part in a car that you don’t own, but every once in a while, the recalled products hit close to home. Fo...

Steve Hather's insight:

Product safety management systems protect consumers - but also make good business sense.

 

2015 provided some interesting case studies of product recalls. While some recalls are the result of genuine mistakes, many recalls are preventable with a simple but robust product safety management system in place. This is a list of some of the more interesting recalls of 2015, some of which may well leave you wondering about what the company was thinking at the time. 


I spend a lot of time talking about case studies in my training courses. Sometimes I get the response - "we would not be that stupid". The fact remains however that we continue to get examples of entirely preventable recalls - including some from very reputable companies, that not only threaten consumer safety but also cost the company involved large amounts of management time and money. I'll bet the management teams of those companies didn't think they were stupid beforehand either. The fact is there is no such thing as perfect people, systems and processes.


A product safety management system is a simple but robust set of processes that starts from the product design stage right through to the management of a recall should that become necessary. In 2016 we'll be launching our product safety manager program designed to help companies build and improve their product safety system - including the development of a product safety culture, within their businesses.


So while you are going through this list of recalls, perhaps shaking your head or in some instances having a giggle, ask yourself and your colleagues about your own product safety system. We'll be happy to provide you with a simple checklist to ensure you have the right things in place.


Steve Hather

www.recallmanager.com


 

 

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MP lambasts Samsung in parliament over washing machine recall

MP lambasts Samsung in parliament over washing machine recall | Crisis prevention | Scoop.it
Speaking to the House about the ongoing issues with Samsung’s recall of faulty washing machines
Steve Hather's insight:

MP lambasts Samsung and NSW Government in parliament over Samsung recall

 

Michelle Rowland MP addressed parliament calling on the NSW government to act after an expert report found that Samsung’s plastic bag and tape fix was unlikely to stop moisture getting into the electrical components of the washing machines. There have been over 200 incidents with the machines including over 20 incidents and 2 fires in machines after repair. This includes the Hudson family who suffered over $270,000 damage to their Newcastle, NSW home 3 weeks after having their machine “fixed”.

 

A group of concerned consumers affected by the Samsung recall have banded together to force Samsung to change their strategy. Their Facebook group – Samsung Washing Machine Recall Consumer Support Group, which now numbers over 2,000, has managed to create considerable media and regulator interest in the recall. The key for this group of consumers has firstly been to ensure consumers get what the Australian Consumer Law entitles them to – their choice of a repair, refund or replacement.  While the group has always urged consumers not to accept the repair because of the incidents in machines after repair – a position echoed by two of Australia’s leading electrical retailers Harvey Norman and Good Guys; the independent expert’s report has now officially cast doubt on the veracity of the repair.

 

Is there a problem with offering a repair in situations such as these? Under normal circumstances, a repair is perfectly acceptable remedy – if it meets three criteria. For incidents where a significant safety risk exists, three key questions have to be answered. Firstly, has an independent expert verified the repair will work? Secondly, has the proposed repair been tested under likely use conditions and simulated expected life? Thirdly, does it look right – does it pass the “sniff test”?

 

The independent expert noted that Samsung had in fact had an independent body review its intended repair and had tested the proposed repair – but tested it for the wrong thing! They tested whether the bag would continue to burn, not whether it would stop moisture getting into the electrical components which is the cause of the problem. Secondly the independent expert noted that the tape is unlikely to last for long regardless of how well it was fitted. Thirdly, how was Samsung ever going to convince consumers that sticking a plastic bag over the components was going to be sufficient to address a significant safety hazard in a machine they had paid a reasonable amount of their money for? Edelman, their PR consultants, aren’t that good!

 

As I often talk to my clients about, every company has incidents. Whether they turn into a crisis will depend on how they manage that incident. Samsung’s poor handling of this incident has turned it into a crisis that will likely continue until such stage as they change – or a regulator forces them to change, their strategy.

 

What needs to happen now? Firstly given the significant doubts about the repair, Samsung needs to stop offering the repair and offer only refund or replacement until such stage as it has a valid repair to offer. Secondly, over 60,000 machines that have been “fixed” continue to have a “major defect” and so those consumers need to contacted directly – Samsung know who they are, and offered a refund or replacement. Costly exercise? You bet – but Samsung made that bed when they came up with their flawed strategy in the first place and took no action and have still not taken action to change it despite the incidents in repaired machines, over 2 years later. A crisis of their own making!

 

 

Steve Hather

www.recallmanager.com

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Former peanut company CEO sentenced to 28 years for salmonella outbreak | Reuters

Former peanut company CEO sentenced to 28 years for salmonella outbreak | Reuters | Crisis prevention | Scoop.it
The former owner of a peanut company in Georgia was sentenced to 28 years in prison on Monday for his role in a salmonella outbreak that killed nine people and sickened hundreds, a rare instance of jail time in a food contamination case.
Steve Hather's insight:

Regulators get tough on product safety. Former CEO gets 28 years.

 

The former CEO of the Peanut Corporation of America (PCA), Stewart Parnell, has just been sentenced to 28 years in jail after the largest food recall in US history that caused 9 deaths and 714 people to become ill. Parnell's brother Michael, a food broker was sentenced to 20 years and the former QA Manager, Mary Wilkerson sentenced to 5 years for obstructing the investigation.

 

The company that employed 90 people in 3 sites in 3 different states in the US was forced into bankruptcy and peanut butter sales across the US were estimated to have dropped 25% as a result. One early estimate put the cost to the US economy at over $1 billion. 

 

While this is somewhat of an extreme case - shoddy food safety practices had apparently been an open secret at PCA yet customers still purchased from them; the key to the harshness of the sentence focussed on Parnell and others knowing a problem existed and did not take appropriate action; and when investigated they tried to cover up those poor practices.

 

There have been a number of instances of companies - including some very well known brands, in a number of countries including Australia, that have been accused of not notifying regulators and not recalling products fast enough once they knew a problem existed with a product. 

 

Having systems and processes in place to firstly prevent problems from occurring but then quickly identifying and acting when problem occurs, is a key responsibility for senior executives in food and consumer goods manufacturers, distributors and retailers. While we certainly hope that companies would not knowingly allow potentially unsafe products to remain in the market, its probably a matter of time before an incident occurs and a company - and its senior executives, is held to account for what it should have known. 

 

Steve Hather

steve.hather@entamio.com

 

 

 

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Consumers with recalled Samsung washers entitled to refund or replacement

Consumers with recalled Samsung washers entitled to refund or replacement | Crisis prevention | Scoop.it
The ACCC has said consumers have the right to choose a remedy following the Samsung washing machine recall, even if their machine has already been repaired.
Steve Hather's insight:

ACCC reiterates consumers rights in the ongoing stoush with Samsung.

 

Samsung's washing machine recall has being going on for over two years. To date, Samsung has been offering repairs, but given over 20 incidents reported of fires occurring in machines after they had been repaired, consumers have rightly questioned whether a repair is adequate and whether their washing machines are in fact safe as Samsung has been insisting.

 

Rather than waiting for the technical experts to argue whether the repairs are or are not safe however, a consumer support group, with the support of organisations like Choice, have taken matters into their own hands to raise awareness and force Samsung to offer refunds and replacements as well as repairs. This simple action is the fastest way to reduce the risk of fires and ultimately consumer safety. 

 

Now numbering nearly 2,000 strong this Facebook group have demonstrated the power of social media to galvanise consumer sentiment. They have lobbied Samsung, retailers, politicians, government regulators and the media with one simple message - consumers have the right to choose. This message has now been reiterated by the Australian Competition and Consumer Commission (ACCC).

 

The Australian Consumer Law states clearly that when products are recalled, consumers can choose a repair, refund or replacement. The option of a repair is entirely appropriate in a consumer product response strategy - when it works. If consumers have no trust in that option, the Australian Consumer Law provides for the choice of refund or replacement.

 

When I am working with companies to investigate and assess an incident and develop an effective response strategy including a product recall, there are generally three things I advise companies to think about in relation to a repair if that is to be offered. Firstly to get an independent expert to develop or validate the proposed repair, secondly to test the repair to make sure it is likely to hold up to expected operating conditions for the expected useful life of the product and thirdly, what I refer to as the "sniff test". 

 

In Samsung's case, they have stated that they had an independent expert design and validate the repair. Despite pressure from Choice and others, Samsung have refused to make the report public, however they have shared it with the NSW Department of Fair Trading who validated that it was adequate. Let's give them the benefit of the doubt on that one for a minute. Did they test the repair under expected operating conditions simulating expected useful life? We have no idea. Samsung have never stated anything about testing nor have the NSW Dept of Fair Trading. Given over 20 incidents have occurred in machines that have been repaired however, consumers would be entitled to doubt them on that score. How do they go on the "sniff test"?  

 

The "sniff test" is not a technical concept but one that I find really useful in incidents such as these. In this case, the key question is - would a consumer that just paid $700 for a machine that is then found to be potentially unsafe, be happy with a plastic bag and tape to make the product safe for the next few years that I am expecting the machine to last for? At the end of the day, I am going to struggle with that one. Frankly I want to hear from a credible party that is genuinely going to fix the problem. As is often the case, Samsung will not have the credibility to say "trust me".

Even if they did, the very first instance of a failure reported in the repair should have been the trigger for a change in strategy. Samsung have stated that they are "100% confident" in the repair despite the reported incidents of failure. Unfortunately we have also had a NSW Minister publicly state that he is also happy with Samsung's strategy. He's supposed to be the watchdog.

 

No wonder then that consumers have taken into their own hands to demand action. The message is clear to all consumer goods companies - get your strategy right in the first place and understand clearly that social media is the great leveller when it comes to consumer safety incidents.

 

Unfortunately for Samsung, their dogged insistence on only offering the repair option despite the incidents of failure has escalated this into a crisis that will not only cost them a lot of money but has - and will continue to significantly impact their reputation with consumers. It is starting to spill over from washing machines into other product lines as consumers vow that they "will never buy Samsung again".

 

 

Steve Hather

steve.hather@entamio.com

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Product recalls and safety - CHOICE

Product recalls and safety - CHOICE | Crisis prevention | Scoop.it
Is our product recall system too industry-friendly? And should consumers be demanding more of companies whose products potentially endanger their lives?
Steve Hather's insight:

I was recently asked by Australia's leading consumer magazine, Choice, to comment on Australia's product recall system. 

 

Given what many might consider to be very low retrieval rates, consumers are entitled to ask the question - is the regulatory system too lax? Should regulators be demanding higher retrieval rates and taking action against companies that are not achieving high retrieval rates?

 

Judging whether a product recall has been effective on retrieval rates alone is not as simple as it may seem. The fact remains that retrieval or response rates are higher for higher value items. Consumers are much more likely to take action if there is a problem with their expensive new car than if it an inexpensive food item that they simply throw in the bin. There is simply no way of tracking whether the consumer throws the product in the bin.

 

At the end of the day, the point of a product recall is to manage a health and safety risk. The most effective recalls are those that communicate the risk clearly in terms that the consumer can understand and includes guidance that the consumer is able to comply with and considers reasonable. In considering whether a recall has been effective, communications becomes a critical measure of success. Effective recall communications also receive the best response from consumers - the company really does care about safety.

 

I'm often accused of pointing out flaws in company responses to a recall so let me give a good example of effective recall strategy and communications. Samsung conducted a recall on washing machines recently.  Faced with low response rates, it conducted an email campaign asking consumers to pass on information about the recall and urging people to call them and arrange for a repairer to fix the problem at no cost. I have no idea unfortunately what the response rate was but I do know it garnered a lot of goodwill from consumers that I spoke to, improving their reputation from consumer safety. Samsung had found a way to make lemonade from the lemons!

 

Many companies choose to bury information about product recalls as far back on their website as they can and refuse to engage consumers in any meaningful way on social media. Marketing people try their best to disassociate their brand with what they believe are "negative messages". This is an outdated, misinformed approach. Product recalls are an opportunity if done well to improve brand reputation when it comes to consumer safety. When I assist companies with product recalls, I want to know how many consumers we are talking to and how well we are engaging with them around consumer safety. This is what will help build long term trust in the brand.

 

Steve Hather

www.entamio.com/risk ;

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Blue Bell kicks back to life after international product recall - Fortune - Fortune

Blue Bell kicks back to life after international product recall - Fortune - Fortune | Crisis prevention | Scoop.it
The Texas ice cream-maker shut down after a listeria contamination.
Steve Hather's insight:

One of trickiest things about product recalls is when and how to return a recalled product back to the market. What is comes down is consumer trust in the product and the company that makes it.


We also recommend thinking about your return to market strategy as part of your response strategy. Think about it before your recall and might well cause you to think differently about your response. 


Although they certainly made some mistakes, Blue Bell Ice Cream appeared genuinely concerned about the safety of their consumers and this was evident in fast and decisive action and open and transparent communication. This engendered consumer trust in the brand and the company provided a platform for returning the product to market after the cause of the listeria contamination was resolved and changes were made to reduce the likelihood of it happening again.


Compare that response to the all too common corporate PR speak about consumer safety being the company's number one priority yet it having taken days to respond and only then with a push from a regulator or a barrage of public outcry and long winded, defensive, poorly targeted communications. 


Good incident management systems include fast, effective investigation and assessment and developing a response strategy that takes into account key stakeholder concerns and expectations - both in terms of immediate actions and conditions that would need to be met before customers and consumers can trust the product again. This, followed by well constructed and targeted communications that reflect that strategy will always provide a better platform for returning a product to market.


Many marketing people still see product recalls as a negative and something that they avoid associating with a brand at all costs. I still see even large well known companies bury a recall notice as far back on their website as they can.


Marketing people that really understand consumer trust will instead see an incident or recall as an opportunity to enhance the company's and the brand's reputation. As an old boss of mine used to say "when handed a lemon, you can either choose to complain about how bitter it tastes, or you can figure out a way of making lemonade from it."


Steve Hather

www.entamio.com/risk



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No returning to foods perceived as unsafe for nearly 40%, finds survey

No returning to foods perceived as unsafe for nearly 40%, finds survey | Crisis prevention | Scoop.it
Almost 40% of people said there was no returning to foods they perceive as unsafe, according to a survey by Hahn Public’s Food and Farm communications team.
Steve Hather's insight:

Consumer trust is critical when it comes to food safety.

 

This study reiterates the importance of maintaining consumer trust when it comes to perceptions of food safety. Nearly 40% of consumers simply will not return to a brand they perceive as unsafe. A further 39% will only return to a brand when a third party that they trust convinces them that it is safe. It doesn’t have to be technical experts either. In this day and age, what consumers friends and other "experts" are talking about on social media has a big influence on trust.

 

This echoes some of the findings of an Australian study of consumers in 2009 that indicated that 73% of consumers remain loyal to a brand if their complaints are managed effectively. It noted a UK survey that had very similar results.

 

When managing incidents, maintaining consumer trust is critical in preventing the incident escalating into a crisis. We define a crisis as an incident that is having a significant negative impact on a brand. All companies will have incidents - there is no such thing as perfect systems, processes or people. Some may lead to a product recall. They don't have to become a crisis – that will be determined by how you respond and whether you can respond in such a way as to maintain trust.

 

In fact one of the critical elements of a developing a response strategy when managing an incident or recall that we like to take our clients through is to develop a return to market strategy before they announce a recall. Answer the question “what conditions would need to be met before we could successfully return this product to market?”. This will force you to take a very different perspective – and force you to think about consumer trust and reputation.

 

Steve Hather

www.entamio.com/risk

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Effective social media know how

Effective social media know how | Crisis prevention | Scoop.it
Steve Hather looks at the critical role social media plays when it comes to managing incidents, recalls, and crises.
Steve Hather's insight:

An effective social media strategy is critical for managing incidents and recall and preventing crises. 

 

In this article in Inside FMCG, I talk about some of the reasons that an effective social media strategy will not only help manage consumer safety but can also enhance a companies reputation.

 

Steve Hather

www.entamio.com/risk

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Plans ‘just pieces of paper’ without practice | News | Strategic Risk

Plans ‘just pieces of paper’ without practice | News | Strategic Risk | Crisis prevention | Scoop.it
Crisis management strategies are markedly more effective if they have been continually simulated, according to head of new regional crisis management centre
Steve Hather's insight:

Plan, people, practice. The 3 key things your business needs to prevent a crisis. Together they create a program - and not just a plan.

 

In this article from StrategicRisk Magazine, I make the point as do others that without trained people that understand how to use a crisis management plan and taking the time to practice that plan, a plan is simply more paper. 

 

Reminds me of a time when I was working with a crisis management team on a serious incident. The CEO turned around to me when we had a break and asked "so how do you think we are going so far?". I noted that noone in the room had their crisis management plan in front of  them to which he replied "I haven't got time to read a plan, we're in the middle of a crisis!"

 

Plans should be designed to provide effective guidance in managing an incident. They should contain key questions and checklists to make sure things don't fall through the cracks. They keep the team on track, they help ensure everyone knows what they are supposed to be doing and coordinates activity. In order to make sure everyone understands that plan, their roles and responsibilities and are confident in their role, they need to be trained so they need to have practiced in a realistic simulation. There are really only two ways you will really know whether your plan is effective and your people will perform well in a potential crisis - test and practice in a simulated environment where you can make mistakes and then adjust your program; or have a real crisis and hope for the best!

 

Steve Hather

www.entamio.com/risk ;

 

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Johnson & Johnson Struggles With Brand Image

Johnson & Johnson Struggles With Brand Image | Crisis prevention | Scoop.it
"The parent brand will survive and likely thrive.
Steve Hather's insight:
Is effective crisis management about luck, PR or good management? 

Many western business schools including some of the most prestigious colleges in the world hold up Johnson & Johnson’s handing of the Tylenol crisis in the early 80’s as the template for managing a crisis. What happened? 

Over the past few years, J&J has found itself embroiled in a series of crises that has impacted its brands. In most cases it was accused of being slow to react and defensive. In 2010 for example, it was roundly criticised by the US FDA – and many of the business schools that have been using its “template”, over its eventual recall of batches of its most popular over-the-counter medicines including Tylenol, despite nearly 2 years of consumer complaints. Around the same time the US Justice Department charged J&J for paying kickbacks to companies for promoting prescription drugs to elderly patients. It eventually settled to the tune of US$2.2 billion. It also settled cases of selling faulty artificial hips to the tune of US$2.8 billion after being found to have known about problems for some time but failing to act. Now news of over 1,000 women suing them over links between J&J’s iconic baby powder to ovarian cancer despite warnings dating back at least 45 years that talcum powder could be linked to cancer. 

This is a company that has gone from poster child for crisis management consultants to one of the most crisis prone organisations in the world. What happened? 

The overwhelming failing of J&J is that it either learnt nothing from Tylenol or it failed to embed what it learned into its culture and as we know culture drives management behaviour. Another alternative is that what we are seeing now is simply a display of its over-arching management culture and it just got lucky in 1982. 

In the Tylenol crisis, J&J was a victim and someone died. Its decision to recall immediately was effectively its only option. An army of PR resources did an effective job of getting that message out. Not like J&J’s latest rounds of crises where a number of strategic options were available to it and it chose poorly. 

There is a world of difference between crisis PR and crisis management. There are still many companies that seem to think that a PR company is all it needs when it comes to a crisis. A PR company can certainly help manage communications but the key question is - communicate what? 

No amount of PR will make up for a poor response strategy or worse - bad behaviour. Crisis management is NOT just a PR exercise. 

Crisis prevention in the context of product problems and brand protection is about a company culture that encourages finding problems early and acting quickly to resolve them. It is about having the right escalation processes and bringing the right resources to bear at the right time to investigate quickly and effectively and assess risks to the business and its stakeholders. It is about developing a response strategy that reflects its values, the attributes of its brands and long term business strategy and then it is about effectively communicating that response strategy over a variety of media including social media. 

The only way you can do that quickly in a potential crisis situation is to have a plan, people that have been trained to implement that plan and to have practiced it in a realistic simulation so you can find potential flaws before a real crisis – PLAN, PEOPLE, PRACTICE. Or you can get lucky. 

Steve Hather
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Crisis Management with Product Recall and Contamination Insurance

Crisis Management with Product Recall and Contamination Insurance | Crisis prevention | Scoop.it
As food safety is top of mind for retail customers, distributors, processors and growers, do you know how to effectively use crisis response hotlines during a product recall?
Steve Hather's insight:
Do you have recall insurance - and do you use it effectively?

This is a good article on one of the often overlooked benefits of a product recall insurance policy - 24/7 access to experts in the event of an incident. 

One of the key reasons insurers engage expert consultants like us, is they know that if we are involved very early in the incident - preferably as soon as the company is notified of an incident whether or not it may lead to a recall, we can help the company with the four key activities that prevent escalation into a crisis. 

A crisis – defined as a significant negative impact on the reputation of a brand, is often a "limit loss" event for the insurer. For the company itself however costs often blow out well beyond insurance limits when you take into account loss of future sales and long term cost of a damaged reputation. Indeed, an Australian study shows that the average cost of a corporate crisis is $10m and 25% cost over $100m. Over a quarter of companies don’t survive. 

Companies generally make the call to their insurer as one of the last things they do, generally after the decision is made to recall and really only because the policy obliges them to. Consultants are generally used for damage control at that point. 

Where consultants are most valuable is helping with the four key elements that, if done well help companies prevent incidents escalating into a crisis – investigation, assessment, strategy and communication. Engaging consultants after the decision is made generally leads to a focus on one of the critical errors of crisis management – communicating corporate PR bumph that tries to make a bad situation sound better, rather than what we do well – making a bad situation better and then helping you communicate it effectively. 

Even better, some insurers such as AIG offer pre-incident consulting. This is an insurer-funded service that involves consultants working with clients to help make sure companies have good processes and systems in place for preventing and managing incidents and recalls. This preparation can include plan reviews, training and simulation exercises to make sure management teams are well prepared. 

Brokers - make sure your clients are getting full value from their recall insurance policies. 

Senior executives – ask you broker today about these valuable inclusions and how to access them. Don’t leave it until it is too late and you are in the midst of a crisis before you get assistance.  
Steve Hather 
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Mum’s terrible burns after Thermomix bursts open

Mum’s terrible burns after Thermomix bursts open | Crisis prevention | Scoop.it
A MOTHER has been left with second-degree burns to her chest, stomach and arms after her Thermomix burst open.
Steve Hather's insight:
Thermomix - "cult" product about to feel the wrath of consumers?

Thermomix has built an interesting following in the Australian consumer market. Those that have them swear by them. In fact in some cases, it has built an almost cult following. I know a few people that have them and they often tell me how easy it is to prepare a meal with one. Personally, as a bit of amateur chef, I can't help feeling it's cheating - a bit like buying frozen prepared meals in a way, but I understand that not everyone has the time or inclination to cook from scratch so the Thermomix certainly has its place - unless it breaks that relationship it has with consumers, that fragile element of trust. 

Thermomix had a recall last year after it was found that the lids came off in certain conditions and the company offered to replace the seals. There are strong similarities in its strategy to how Samsung responded to its washing machine recall initially offering only a repair but then being forced by a consumer group to also offer a refund or replacement in accordance with Australian Consumer Law. One strike against Thermomix.

Shortly before the announcement of the recall, Thermomix were lambasted by consumers for releasing without warning a new model with better features at a lower price. This would not be out of the ordinary for many consumer products but given you can only buy them through an in home demonstration, there is a very personal one-on-one relationship in the sales process and consumers believed they should have been informed of the pending release of the new model a day after forking out $2,000 for the old one. Two strikes against Thermomix.

Now we have a situation where someone has been badly injured after the lid came off a Thermomix AFTER it had the seal replaced. In its response to the story, many stories ended with the ubiquitous “no comment”. Thermomix subsequently put out a media statement that said they weren’t able to investigate the complaint as the consumer wouldn’t give them the unit. It went on to strongly imply that it believed the consumer had used the product incorrectly. To give Thermomix its due, it is difficult to investigate without the unit, but under the circumstances it is not difficult to see why the consumer wouldn’t hand over the unit. 

The bigger problem for me is – not even a whiff of concern about the injury to the consumer and blaming them for the incident? That smells awfully like a company that is about to experience a consumer crisis. Strike three?  

We all know that consumers can sometimes use a product incorrectly which is the reason that consumer goods companies provide instructions on its use. Now most consumers throw those away. Thermomix however has a different relationship. You can only buy them after a home demonstration which presumably includes safe use. That doesn't guarantee it will always be used correctly, but you would think most consumers that purchase the product would have a better than average knowledge of it? 

The relationship a food or consumer goods company has with consumers is built on respect and trust. Most consumers understand that mistakes can happen from time to time but if the company responds appropriately, they can generally maintain that relationship. In some cases I have worked on, the company has actually strengthened its relationship with its consumers after an incident. 

Every company will have an incident but whether the incident becomes a crisis is entirely up the company concerned.

Thermomix might want to study crisis management 101 or maybe look at the Samsung case study to see the effects of poorly managed incidents and recalls. 

Steve Hather
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Chipotle reports first sales decline on food safety crisis; criminal probe widens

Chipotle reports first sales decline on food safety crisis; criminal probe widens | Crisis prevention | Scoop.it
Chipotle Mexican Grill reported its first sales decline at established stores in the fourth quarter, but the drop in net income was far less than feared.
Steve Hather's insight:

And so the fallout begins for Chipotle .... and a timely reminder to restaurants about food safety programs.

 

In total over 500 people in the US have become sick after eating at a Chipotle restaurant. That is just the ones that have been officially diagnosed. Many more - some say up to 10 times more, have probably had some form of food poisoning that has not been officially diagnosed. It has led to Chipotle reporting its first quarterly sales decline in its history.

 

Although one mistake might be forgiven, the real problem that will impact Chipotle's reputation, and has regulators talking about criminal charges, is that there has been a litany of problems over time. In addition to the e.Coli outbreak referred to in this article, other incidents with Chipotle include:

 

July 15: 5 people sick in Seattle,

August and September 15: 60 in Minnesota with Salmonella tainted tomatoes, August 15: 230 in California with Norovirus,

November 15: 140 in Boston.

 

This is not a mistake. This is a company that has a problem with its food safety program. That is why regulators are asking for copies of its program dating back to 2013 and looking at pressing criminal charges. While Chipotle’s CEO now appears to be saying the right things, the question remains why Chipotle left it so long – and so many incidents had to occur before it acted, particularly for a company that used the catch phrase “food with integrity”. If a key attribute of your brand is “integrity”, you had better have the systems to back it up!

 

No food service business wants to make people sick. Effective food safety programs – including a commitment to developing a strong food safety culture amongst staff, will greatly reduce the likelihood of an incident occurring. There is however no such thing as no risk and an incident can happen. The real problem comes with companies that don’t have effective systems as it indicates a systemic problem with the business.  

 

Given the spate of food safety incidents and recalls, consumer concerns have grown and in turn pressure is building on regulators to act. In addition, incidents that do occur are quickly reported in social media and can have a serious impact on the companies reputation if not managed well. It is those incidents that reflect a blasé attitude to consumer safety or indicate systemic problems within the business however that quickly escalate into a crisis.

 

Companies in the food service industry should take this as a timely reminder to review their food safety systems, including the actions they are taking to build a strong food safety culture within their business.

 

Steve Hather

www.recallmanager.com

 

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LG slammed over TV claims

LG slammed over TV claims | Crisis prevention | Scoop.it
ELECTRONICS giant LG is in hot water with the competition watchdog over allegations it misled consumers about their rights in relation to faulty products.
Steve Hather's insight:

LG in trouble for misleading consumers

 

The ACCC is continuing its tough stance against consumer goods companies that are not providing consumers with their entitlements under the Australian Consumer Law.

 

The ACCC announced this week that it was taking action against LG Electronics for misleading consumers about their rights after TV’s failed to meet expectations. Although not a safety issue and therefore not a recall, a range of problems were occurring well short of the product’s expected life. They key point being “warranty period” and “expected life” are two different things.

 

This comes after Samsung were reminded in August that offering only repair on washing machines subject to a recall was not in keeping with Australian Consumer Law.

 

Consumer products generally come with a warranty and some manufacturers believe that this is the extent of their obligations to consumers when things go wrong. Australian Consumer Law states clearly that consumers are entitled to a reasonable guarantee of quality which is not limited to the manufacturers warranty period. In the LG case, for consumers with products for which the warranty period had expired, LG told them they would have to pay the costs of assessing the failure, that the company had no further obligations, and any further step they decide to take was an “act of goodwill”.

 

Consumers were also told they were only entitled to have the television repaired, and not to a refund or replacement, and that the consumer was liable for the labour costs of the repair. Under the Australian Consumer Law consumers are entitled to a refund, replacement or repair at no cost if a “major failure” is identified.

 

The ACCC is applying the fair and reasonable test to consumer goods. A TV should at least in the eyes of most consumers and the regulator, should last more a year or two regardless of what the manufacturer wants to offer as a warranty period.

 

There is a clear lesson here for manufacturers and retailers. In the constant search for cheaper components and lower production costs, quality is still a key consideration. When establishing agreements with suppliers or contract manufacturers, you need to look at the true cost of supply. The cost of recalling an inferior quality product may well outweigh any savings on cheaper components!

 

Steve Hather

www.recallmanager.com

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Top VW exec warns emissions crisis could kill company

Top VW exec warns emissions crisis could kill company | Crisis prevention | Scoop.it
But Hans Dieter Poetsch says he thinks Volkswagen can overcome it.
Steve Hather's insight:

Time for the “Big Bold Strategy”

 

Incoming VW Chairman, Hans Dieter Poetsch certainly has his hands full. Just prior to taking on the top job, Poetsch described the emissions scandal as “an existence-threatening crisis for the company”. VW has already set aside US$7b to tide it over the first quarter alone and I suspect Poetsch knows full well it is going to cost his company a lot more than that to repair the damage.

 

How do companies go about repairing the extraordinary damage to their reputation and restoring consumer trust in their brands after such crises? Most commentators believe that VW will survive. They have the resources to withstand the backlash, appoint committees and pay the enormous fines that will be imposed on them. It is currently full steam on a massive PR campaign in an attempt to minimise the damage which is often the first response of a company in crisis.

 

Unfortunately however most people see PR campaigns for what they are – making bad situations sound better. What is needed, particularly for companies in crisis is to make the bad situation better and then communicate its actions effectively.  It’s time for the big bold strategy.

 

Generally there are two strategies that are most common in a crisis. The first, all too common strategy is what I refer to as the bunker strategy which is all about downplaying, making some internal changes, including having some senior execs fall on their swords and riding out the storm. While I have no doubt that in many cases, significant internal process changes are made, and often the company returns to pre-crisis sales, it doesn’t really address the loss of consumer trust that is inherent in the crisis.

 

With due deference to my good friend and guru on competitive strategy, Ben Gilad, doing what everyone does however is actually not a strategy at all. The essence of good strategy is to be different to your competitors. In a crisis situation, you are by definition in a “bet the business” situation. Hence the need for the big, bold strategy.

 

My approach to crisis management response really had its beginnings in the 2003 India crisis faced by Coca-Cola. In a situation very similar to Nestle in India with the current Maggi noodles crisis, Coca-Cola (along with other beverage companies) was accused of having high pesticide levels in its products and around the same time had problems with water usage in arid areas and allegations of heavy metals in waste. I was working in strategy development in Coke’s corporate headquarters in Atlanta at the time and just about to launch the new global Incident Management and Crisis Resolution (IMCR) program which now operates in about 100 countries around the world. India looked like a great place to start! Coca-Cola’s first response – as it is in most cases including the Nestle case and most examples of corporate crises was denial, delay and defence. Get into the bunker, call in the lawyers, turn the fire hoses onto to the worst problems, deny any suggestions of a problem, fight the alligators as best you can and hope that it eventually blows over and we can all get back to work. After products were pulled off shelves, the strategy clearly wasn’t working!

 

What eventually turned it around for Coke was focussing its response strategy around developing some world’s best technology and processes for rainwater harvesting and water purification. It went from being the poster child for all things wrong to being part of the solution! Coke developed a big, bold strategy and did something good!

 

In my view, VW will need to look at two areas – firstly its internal processes including the lack of supervision and compliance but also the cultural issues that made it OK to willingly deceive regulators and consumers. They know that already and, one would hope are already working on it. Simply being able to put their hand up and say “we fixed the problem and we now comply” however, will not cut it if they want to win back the consumer trust it has lost in this scandal. In order to do that, it will need to come up with its own big, bold strategy.

 

It will need to change from being the poster child for cheating on vehicle emissions and a range of environmental problems associated with it, to becoming part of the solution. They will need to direct that brilliant German engineering to creating vehicles that not only meet but exceed the toughest standards and whatever that is will need to be industry leading, not just complying. If they do that, not only might they win back some of that consumer trust, they might even build an exciting new line of business.

 

Importantly also, big bold strategies energise the very talented, well meaning employees of VW and get them looking forward rather than just focussed on the internal navel gazing and scapegoating that is bound to be going on right now.

 

The long term answer to any company that is in crisis is the big bold strategy. As my former manager used to say, you need to figure out how to make lemonade from the lemons you’ve been handed!

 

 

Steve Hather

www.recallmanager.com

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Volkswagen scandal: Even textbook crisis management can't save VW

Volkswagen scandal: Even textbook crisis management can't save VW | Crisis prevention | Scoop.it
As important as it is to manage crises in the correct manner, there are some mistakes that simply cannot be unmade.
Steve Hather's insight:

The culture of a company really comes to light in a crisis!

 

"Textbook" crisis management won't overcome the real problem for VW in this situation. Already lambasted last year for the way it managed the eventual recall of cars globally, including 34,000 in Australia, over problems with its DSG transmissions, it appears that VW has been attempting to deceive regulators in the US - and perhaps elsewhere, for quite some time about its emissions which led to a voluntary recall of 500,000 cars in December last year and ongoing tussles with the US regulators since.

 

Its one thing to make a mistake. There is no such thing as perfect systems and processes when it comes to manufacturing - incidents do happen and will continue to happen.  VW however is in quite a different category. A company that willingly attempts to deceive has a problem with its culture. 

 

Unfortunately there are still many instances of companies that think that "PR" is what is needed when an incident occurs. PR is often designed to make a bad situation sound better. Effective incident management is about making a bad situation better and then communicating that response effectively. That means reviewing the company's systems and processes, its operating environment and culture that allowed the incidents to occur and making significant changes as a result. 

 

While we might have seen a good initial PR response, it remains to be seen whether VW have actually learned anything about its culture from the litany of problems it has had over the past few years. The coming days, weeks and months will give us an indication of whether it really is using effective crisis management or it is all just PR spiel. 

 

Steve Hather

www.entamio.com

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Sorry, but that just won’t wash

Sorry, but that just won’t wash | Crisis prevention | Scoop.it
THE recall of more than 140,000 potentially deadly Samsung washing machines is spinning out of control, with owners rejecting the repair approved by electrical safety authorities — done with a plastic bag and tape.
Steve Hather's insight:

Recalls are not just PR exercises!

 

After I've just finished giving Samsung a pat on the back for some innovative communications around the recall of 140,000 washing machines, it appears that a lot of its key stakeholders - retailers and consumers, are unhappy with its strategy. The company is attempting to rework the affected product with a plastic bag and tape, and that has left major retailers Good Guys and Harvey Norman concerned about the safety of their customers. Angry consumers have started mustering their forces with a new Facebook group gathering over 1,100 members. A social media storm is brewing and Samsung "through their PR agency" have said they are "100% confident" with their rework strategy.

 

It's a crisis in the making!  

 

Just goes to show that attempting to plaster over poor recall strategy with innovative communications quickly becomes just a PR exercise - and makes consumers even angrier about the attempt to pull the wool over their eyes. In these days of social media, companies will just not get away with it.

 

At the end of the day this recall has been going on for nearly two years and yet many potentially dangerous products remain in the market. According to this article 68 fires have been started as a result across Australia and another 140 incidents have been linked to the problem. In any assessment, the risk is significant and deserving of a more robust response. Its now time Samsung took some effective action.

 

The difference between PR and effective recall strategy and communications is quite simple. PR is about making a bad situation sound better. An effective recall is about making a bad situation better and then communicating it effectively. Something that many companies - and many PR agencies, fail to understand.

 

Steve Hather

steve.hather@entamio.com

 

 

    

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Crisis response remains Nestlé's Achilles heel - swissinfo.ch

Crisis response remains Nestlé's Achilles heel - swissinfo.ch | Crisis prevention | Scoop.it
Nestlé’s PR response to accusations of lead contamination in its Maggi instant noodles in India has come under fire. This is not the first time.
Steve Hather's insight:

Its deja vu all over again! Crisis prone Nestle lacks a structured process for managing incidents and preventing crises - so it finds itself in another one!

 

Despite the fact that there is an international standard for managing product related incidents and recalls and an internationally recognised program for training and certifying recall coordinators - both of which are designed to manage incidents and prevent these sorts of crises, companies like Nestle continue to take a reactive "PR response" to incidents.

 

In 2003, Coca-Cola India faced allegations that its products, along with those of some of its competitors, contained high levels of pesticides. Its initial response was the normal defensive reactive corporate speak that we also saw with Nestle. Coca-Cola argued that the testing procedures used by the respected non-government environmental group were not valid. It even intimated that it might to sue the organisation. It argued with State and national governments about its response and internally it rested on its laurels that it had the best purification systems in the world. It simply couldn't happen.

 

Starting to sound familiar? You could almost insert Nestle for Coca-Cola and it would be 2003 almost to the letter!

 

Coca-Cola had got to the point where media articles started with “hot on the heels of a crisis in …., and string of crises in …”  That is when you know you are crisis prone!

 

Nestle is at that point.

 

What Coca-Cola learned from its experiences is that it needed to a structured approach to consistently apply some key principles of incident management. We developed the Incident Management and Crisis Resolution (IMCR) program to provide that structure. At a local level, Coca-Cola developed some world class processes for water purification and rainwater harvesting.

 

It’s been 15 years since I first presented the initial concept of the IMCR program to the senior management of The Coca Cola Company and after many years of training country management teams and helping them implement the program, it is starting to get embedded into its management structure. Coca-Cola is not perfect – I have to admit I still cringe sometimes, but at least it has a good place to start when incidents occur.  Coca-Cola had learned and is learning, as a former manager of mine used to say, how to make lemonade from lemons.

 

The good news is that most of these principles are embedded in the International Standard for Product Recall (ISO 10393) and the International Product Recall Coordinator program (RABQSA-IPRC).  Unfortunately however companies like Nestle and Fonterra continue to ignore structured processes and systems and take a largely reactive “PR response” to incidents.  In the past, large companies thought they could simply bully their way through incidents. Social media, amplifying the role of more traditional media, has become the great leveler.  There are simply no more excuses for the corporate arrogance and PR spiel we continue to see from large companies with the resources to take action.


Australia's primary regulator for consumer goods, the Australian Competition and Consumer Commission, the ACCC is currently leading the push to make the International Standard an Australian standard. That should mean more Australian companies will be developing better processes for managing incidents and product recalls. Who knows, perhaps Nestle Australia will showing its parent how its done!

 

While large companies like Nestle and Fonterra will eventually learn as Coke did - even if it takes a few crises and hundreds of millions of dollars in costs, that it actually needs a structured program and trained people to manage incidents effectively, what about smaller companies that don’t have the resources? While large companies can often weather the storm, for smaller companies its first crisis can be its last. An Australian study showed that 25% of companies that have a crisis won’t survive. A recent US study indicated that figure might be closer to 50% - not surprising given the increased costs of incidents, recalls and crises.

 

The key principles of incident management are just as applicable for smaller companies as they are large multinationals. For a small investment in developing plans, training people and practicing processes in a realistic simulation exercise, effective incident management can and should be a part of normal management practices.  Email me at steve.hather@entamio.com and I’ll send you a free whitepaper on those principles.

 

In this day and age there is simply no excuse for companies like Nestle to continue to make a mess of incidents. What’s particularly frustrating is seeing companies make the same mistakes over and over again when there are simple structured processes that can be implemented to prevent crises from occurring.

 

Steve Hather

www.entamio.com/risk

 

PS. Look out for our new website – www.recallmanager.com where you’ll find a stack of information on managing incidents and product recalls and preventing crises.  

 

 

 

 

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After Jeep Hack, Chrysler Recalls 1.4M Vehicles for Bug Fix | WIRED - Wired

After Jeep Hack, Chrysler Recalls 1.4M Vehicles for Bug Fix | WIRED - Wired | Crisis prevention | Scoop.it
Welcome to the age of hackable automobiles, when two security researchers can cause a 1.4 million product recall.
Steve Hather's insight:

It was bound to happen - when cyber risk and malicious product tampering combine to create a modern day consumer safety risk!

 

Malicious product tampering has been a risk for consumer goods companies for a long time. Thankfully rare occurrences, they do happen and when they do they create significant risk both from a consumer safety point of view and a company reputation perspective.

 

Modern vehicles are very much dependent on electronic controls and increasingly those controls are connected to rest of the world. Some of the risks that we have associated with connecting our computers to the internet are now becoming part of our driving experience.

 

Let's hope that car manufacturers get their act together in ensuring their IT security systems are robust. While modern cars are safer than they have ever been, we are reminded regularly that incidents still occur - there is no such thing as perfect systems and processes.

 

This article notes that Jeep could have done a much better job of notifying affected consumers of the incident rather than burying the notification back on its website. This is just one of the many incidents recently in the car industry that makes it clear that car manufacturers have a long way to go in ensuring their incident management and product recall programs are robust.

 

Steve Hather

www.entamio.com/risk

 

 

 

 

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Consumers seek out ‘natural’, ‘locally grown’ on product labels: survey

Consumers seek out ‘natural’, ‘locally grown’ on product labels: survey | Crisis prevention | Scoop.it
When shopping for food, two-thirds of US consumers look for “locally grown” on labels, while 59% check to see if the products they’re buying are natural, according to a survey from Consumer Reports National Research Center. 
Steve Hather's insight:

Locally produced food - trend or just issue of the day?

 

A number of high profile recalls and crises in the food industry both in Australia and overseas have clearly had an impact on consumers trust in the safety of food.  High profile incidents such as these inevitably trigger the debate on locally grown vs overseas grown produce.

 

The reality seems to be that while consumers say they prefer locally grown, at the end of the day when faced with a choice of cheaper overseas produce and generally higher priced local product, consumers will opt for price. In addition, there are some products that are just not available in sufficient quantity at the right time of year to meet demand in most markets.

 

Interestingly as Australian consumers demand more transparency in knowing where food comes from, Australia's large food retailers are increasingly looking to advertise their "local" credentials. They are looking for closer ties with the farms that grow the product, their displays increasingly focus on fresh produce and the origin of the product. Most will argue that this has pretty much always been the case.

 

The interesting thing will be in seeing how this translates into processed foods. While the trend towards retailer branded product is well documented, the extent to which those retailers will demand more local content from their contract manufacturers will be be interesting to watch. As consumer demand for transparency in country of origin labelling increases, demand for local content will also increase. Consumers - and therefore retailers, will want to see higher percentages of local ingredients in their products. 

 

Economics however will demand that overseas grown and manufactured product will continue to be a critical part of the food industry's offering. To address perceptions of inferior quality systems in overseas growers and manufacturing, perhaps greater emphasis on complying with robust international standards but importantly improving understanding at consumer level will help. At the end of the day, the average consumer does not, nor do they want to understand the complexity of the systems that food manufacturers go through to meet the multitude of standards that are available. They simply want a tick that says it meets a standard they trust. 

 

Until an international standard actually steps up and addresses consumer trust and not just the technical complexity of its systems, consumers will default to the next best thing that they do understand (rightly or wrongly) - grown and produced locally.

 

Steve Hather

www.entamio.com/risk

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Takata's Defective Airbags Become The Biggest Auto Recall Ever

Takata's Defective Airbags Become The Biggest Auto Recall Ever | Crisis prevention | Scoop.it
Throughout the history of automotive recalls, the federal government has focused its efforts primarily on the car companies. It was their job, not that of the federal government, to make sure their vehicles were made from properly made parts.
Steve Hather's insight:

Takata drags its air bag crisis out to the point that it becomes the largest auto recall - and potentially the largest consumer product recall, ever!

 

In a situation reminiscent of the Ford/Firestone debacle many years ago, Takata's refusal to take responsibility for recalling a dangerous product until the regulator - under continuing pressure from concerned consumers, has forced it into the largest recall in history.

 

When Takata entered the US car industry in the 1990's it's strategy was to become a one stop shop for auto parts for US car makers. After its earlier recall of seat belts in 1995 (at the time the second largest recall in the US car industry!) and now airbags, US car manufacturers will be wondering whether it is up to the task. The average consumer does not generally ask about what parts or ingredients are used in products - they generally trust companies to be using safe suppliers. Crises like this change that.  

 

After a number of deaths caused by its air bags exploding, Takata originally tried to limit its recall to cars in high humidity environments as evidence suggested humidity had something to do with the problem. It argued that it was actually safer for consumers not to return its products. It no doubt wheeled in some very clever person in a white lab coat to tell people why this logic made any sense but the average consumer would have seen it as a smokescreen.

 

The problem is that consumers don't want a product that is supposed to save their life being faulty. In fact in six cases the air bag tragically killed someone. 

 

There is no doubt that a recall of this magnitude is a very complex communications and logistics exercise, arguably stretching even the enormous resources of the US car industry. But that does not alter the fact that a consumer product that the manufacturer itself recognises is faulty, is in the market and is causing injuries and deaths must be recalled.


Takata can dance and squirm all they like but eventually someone is going to lower the boom. Instead of being seen as a responsible company that found a problem and took fast effective action to resolve it, it will rightly be seen as defensive, slow and irresponsible no matter how many PR companies it employs.


It will end up in court for years trying to defend it's actions against the inevitable slew of law suits that will ensue, instead of getting on with business. More importantly perhaps, its reputation as a responsible supplier will be in question.

 

The key lesson for consumer goods manufacturers is clear. If you have a problem, get on with fixing it instead of losing control of the incident and escalating into crisis. That requires effective preparation - plan, people and practice, as well as a corporate culture that takes responsibility for problems and acts quickly and decisively.  

 

Steve Hather

www.entamio.com/risk 

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