PoS Jun 2017 | True test of leadership in murder and mayhem
We have all read about the publicity nightmare United Airlines went through in April 2017. What can we learn from it on decision-making in a crisis?
United in crisis
On April 9, at the request of United’s manager, security officials forcibly removed a passenger from an overbooked flight in Chicago airport. Videos of the bleeding passenger being dragged out went viral leading to widespread condemnation of the Airline. In the following weeks United lost a billion dollars in market capitalisation, and cost Oscar Munoz the CEO, the future position of Chairman, among other fallouts.
The ghastly incident on United Express 3411 was aggravated by insensitive manner in which Munoz dealt with the episode. His letter to employees defending their action – it went public – did not even acknowledge the indignity and injury his Company inflicted on the fare paying passenger. In “re-accommodating” (a new word for being dragged out bleeding!) the victim, his employees and he adhered to rules and procedure rather than values. He admitted as much in a belated apology and out-of-court settlement with the victim.
Rules for crises?
Crises may emanate from an error of judgement, not fixing a fault soon enough, unforeseeable external events, or a bewildering variety of causes. That is why they are unpredictable. One can never write rules for every failure or critical incident. That is why it is necessary to provide employees and leaders principles they must uphold when all else is inadequate.
Ostrich syndrome can be costly
Burying one’s head in sand may be a comfortable but costly option. Firestone delayed accepting responsibility for tires that caused SUV roll-over accidents in 2000. Johnson & Johnson paid $158 million to the state of Texas for complaints of wrong marketing of Risperadol, an antipsychotic drug. In 1994 Intel took unduly long to fix calculation errors in the Pentium chip.
How can senior managers and leaders make better decisions in crises? It is necessary to first recognise that crises present opportunities even though it is hard to see them that way at the time.
|J&J and the Tylenol murders
In 1982, Johnson and Johnson experienced a crisis no one could have imagined or prepared for. Seven people died of cynide poisoning in Chicago after consuming Tylenol. One of J&J’s flagship products, Tylenol commanded 35% share of of the analgesic market when it happened. Share dropped to 7% following the deaths. How James Burke, then CEO, handled the situation is a valuable lesson for CEOs and business leaders.Leadership in a cisis
Burke persuaded the J&J Board to allow him to spend $100 million to withdraw 31 million bottles when even the FBI and FDA felt it was not necessary. In a subsequent interview to Wharton School Publishing, he said how he simply followed Company values:responsibility to customers, to employees, the society, and shareholders, in that order.The crisis was the hottest topic on every news channel for weeks. Unlike Nestle in India during the Maggi crisis, Burke proactively kept each news channel informed. J&J quickly relaunched Tylenol in tamper-proof packaging. By mid-1983 the brand had recovered to its pre-crisis share and leadership.
No organisation performs flawlessly every time. How it treats customers, deals with them in product or service failures determines if they will become fans or critics. Customers do not become advocates from everyday satisfactory experiences. Magic happens when you surprise them with your generosity, care, and respect. It does not have to be a crisis; it can be a failure to live up to the brand promise – product quality, an underdone dish, or website malfunction. But yes, it is absolutely critical in a crisis.
A sign of great leadership is when values are held dear and practised because they reflect who you are and what you stand for. In a crisis.