Crisis Management Process - PowerPoint by mlh14954

VIEWS: 0 PAGES: 18

More Info
									Stages of Crisis & Crisis Management



     Objectives

     • Describe stages of crisis process

     • Identify key principles of crisis intervention

     • Application to classic Tylenol poisonings
       case
   The ―stage‖ approach:
Segmenting complex processes




  • Stages refer to relatively distinctive segments of a more
    complex or lengthy process
  • Stages are differentiated by identifying the beginning or end
    of some important event, reaction, or process
  • Stages enable the user to communicate clearly about
    change over time, adapt interventions to what is needed at
    each stage, & monitor progress across stages.
  • Stages also imply development from one stage to another;
    this enables changing outcomes at a later stage by
    intervening at an earlier one
                              Stages of Crisis Management

Like most human events, crises can be described in terms of stages, or relatively
identifiable sequences of events and reactions. Stages enable planners to monitor
risks, progress, target stakeholders, and take strategic action appropriate to the
stage. There are many models; below are two prominent ones:

Fink’s Crisis Lifecycle
       Prodromal                Crisis breakout          Chronic             Resolution
       Risk cues that           Triggering event with    Lingering           Crisis no longer a
       potential crisis can     resulting damage         effects of crisis   concern to
       emerge                                                                stakeholders




Mitroff’s Five Stages of Crisis Management

    Signal                Probing &              Damage            Recovery              Learning
   detection              prevention           containment         Return to         Review & critique
 Warning signs &           Search risk          Keep from           normal             CM efforts for
 efforts to prevent     factors & reduce       spreading to     operations asap       improvements
                          potential for       uncontaminated
                            damage                areas
The long view…
 Ecomap of Stakeholders

An ―ecomap‖ or
ecological map of
stakeholders can
help to identify all
involved parties in
the crisis. Concentric
circles are used to
set parameters on               Primary Effect
primary or direct
stakeholder involved,
secondary or
―spillover‖ effected,
and tertiary or very
indirect affected.
These help prioritize
response to them and
ensure that no one is     Secondary (Vicarious) Effect
left out of
consdieration.

                              Tertiary Effect
Regardless of the crisis model used, crisis management involves four strategic
considerations, or the ―Four C’s.‖ All plans should include at least these aspects.
       Classic Crisis Case:
   J&J’s 1982 Tylenol Tampering

In this presentation you will cover:

        • stages of the crisis
        • key considerations for intervention
        • constructing an ecomap
        • description of the case
        • impact of the case on the industry
                                                Case Overview
        • what was learned
When the Johnson & Johnson Company faced the Tylenol poisonings in
1982 they applied the Four C’s quite effectively. They relied on the value
and strength of their culture credo which also identified the stakeholders




                                    Four responsibilities:
                                    • To the customers
                                    • To the employees
                                    • To the communities they serve
                                    • To the stockholders
                 Tylenol Case Analysis

Background


•   In the mid 1950’s Tylenol became a needed and popular substitute for
    aspirin for such conditions as flu and chicken pox, since aspirin was
    related to Reyes Syndrome (liver degeneration, brain edema, 20-30%
    fatality)
•   Large market: 100 million users, 19% of corp profits, 13% of year to
    sales growth, 37% market share of painkillers, outselling other top
    analgesics combined
•   J&J was one of the ―Best 100‖ companies to work for
•   Tylenol became a product trusted by physicians and families alike
•   Numerous other Tylenol products were developed for an active
    market
•   J&J strong ―family‖ corporate culture
Tylenol Case


The Crisis Begins…

•   September 1982 Extra Strength Tylenol
    bottles of at least 6 pharmacies and food
    stores were opened, & capsules were
    filled with cyanide (10,000 x fatal dose)
•   Media reporter asked PR Asst. Dir Andrews about poisoned
    Tylenol– then it hit the news!
•   7 people died in the Chicago area
•   CEO James Burke refers to the Credo, alerts to the danger, &
    assigns team to discover the source
     •   Formed 7-member strategy team
         •   Stop the killings
         •   Reasons for the killings
         •   Provide protection & assistance to people
…and snowballs!

 •   Police drove through streets with loudspeaker warnings
 •   Chicago hospital received >700 calls in one day
 •   Immediate stories in major magazines and newspapers
 •   Over 100,000 separate news stories ran in US papers
 •   Hundreds of hours of national and local TV coverage
 •   >90% of Americans had heard of the Chicago deaths
 •   Widest coverage since Kennedy assassination & Viet Nam
 •   Copycat tampering– 270 reported incidents (36 true)

     Tylenol, killer or cure?
     -- Washington Post

 •   J&J stock fell 7 points
 •   Market share dropped from 37% of pain-reliever market to 7%; from
     $400 million in annual revenue to $70
    Initial Response– Phase 1 Crisis response
•   Immediate alert to consumers not to use any type
    Tylenol product or resume use until extent
    determined
•   Live TV satellite feed of press conferences; media
    exposure via 60 Minutes, Donahue, etc.
•   800# Hotline for customers (30,000 calls in Oct-Nov)
•   Toll-free phone for news organizations; pre-taped
    messages and updated statements for distribution
•   Strict production, different lot $, & crisis only in
    Chicago indicated post-production tampering
•   Withdrew bottles from Chicago area; ordered recall
    of >31 million bottles nationally at a cost of >$100 million (against FDA & FBI)
•   It temporarily ceased all production of capsules
•   High public profile and repeated reassurance by Burke
•   Working relationship with law enforcement agencies
•   Notification of health professionals nationwide & FDA
Initial Response—Phase 2, PR Rebound


 Five-Point Plan
 1. Replaced them with tamper-resistant caplets (triple safety seal within 6
    months)
 2. Incentives: free replacement of caplets for capsules, special coupons
    ($2.50 off) easily obtained
 3. New pricing program: discounts up to 25%
 4. New advertising program: national 1 minute commercial, News & talk
    shows,
 5. New presentations by 2250 sales personnel made to medical
    stakeholders
       •   positive press articles regarding J&J, products, & safety
       •   indications of regaining market share
       •   held up as positive example of ethics & responsibility
       •   450,000 e-mail messages
                    Strategies

Most public recovery strategies incorporate
the following five components:



  • Forgiveness: win forgiveness from stakeholders and create
     acceptance for the crisis
  • Sympathy: portray organization as unfair victim of attack by
     outside persons; willing to accept losses
  • Remediation: offer compensation for victims and families
     (counseling & financial assistance)
  • Rectification: take action to reduce recurrence (triple sealed &
     increased random inspection)
  • Effective leadership: clear, visible, consistent role-modeled
     message from beginning by CEO
     Employee Response




•   Strong family-oriented culture, “we care about our employees”
•   Open and current communication with employees; 4 video
    programs on the unfolding process
•   Emphasizing plant workers were innocent
•   CEO speech in a week to employees, “We’re coming back”
    (wearing buttons)
•   Idle employees given tasks to keep involved & reduce rumoring and
    boredom
•   Indications of market recovery bolster spirits
•   Congruence and consistency in demonstrating the Credo
    Consequences– Lessons learned

•   J&J showed that they were not willing
    to risk public safety even at excessive cost
•   J&J could be trusted all the way to the top–
    they lived their Credo & having a functional
    credo worked
•   J&J set a new standard for protection thereby requiring competitors to
    expensively follow suit
•   J&J was viewed as a co-victim of the crime
•   Stakeholder involvement and relationships is essential
•   One must anticipate and prepared for crises; expect the unexpected
•   Cynicism: Be aware that 75% of people don’t believe companies take
    responsibility for crises or tell the truth
•   “No matter what you do in the beginning, in the end you will have to tell
    the truth”
•   React fast, openly and decisively
• 1983 Tylenol Bill by Congress made malicious tampering of consumer
  products a federal offense
• 1989 federal legislation to make consumer products tamper resistant
(learning cont’d)



   •   Report your own bad news– don’t wait for
       reporters to root it out
   •   Speak with one voice
   •   Gather facts and disseminate from one info center
   •   Be accessible to the media so they won’t go to other sources
   •   Target communications to those most affected by the crisis,
       and can affect the media
   •   If you can’t discuss something, explain why
   •   Provide evidence for your statements
   •   Record events via video and documents so you can later
       present your side of the story
        ―Déjà vu all over again‖

In 1982 FDA estimated 270 product tampering
cases. Following the Tylenol crisis, several other
tamperings plagued other companies. Impact
could have been reduced by learning from J&J’s
experience.


   Copycat tamperings:
        •   Lipton Cup-A-Soup (1986)
        •   Exedrin (1986)
        •   Tylenol again (1986)
        •   Sudafed (1991)
        •   Goody's Headache Powder (1992)



   The Tylenol comeback (and how they did it)

								
To top