Chapter 46 Chapter 46: When the Crisis Comes Suddenly

After a corporate crisis occurs, destructive events may develop in multiple directions that people cannot predict, and the reputation and prospects of the company are challenged. Recovery is a slow, painful and difficult process.When a crisis occurs in an enterprise, if it is not handled properly, it will often lead to many chain crises such as media crisis, customer crisis, and reputation crisis, causing huge losses to the enterprise, and even disaster. 1. Sudden The outbreak of a crisis is often out of people's expectations. The specific time, actual scale, specific situation and depth of the crisis's outbreak are unexpected.

Shanghai Meiyou Pharmaceutical Factory is an excellent enterprise with a history of 60 years. Since 1995, the flagship product of the factory, "Meiyou Brand" compound licorice mixture, has been rated as a famous brand product in Shanghai for nine consecutive years, and it is also a national reserve drug and anti-SARS essential drugs. On June 29, 2004, the media suddenly broke the news that "Compound Licorice Mixture" contained the toxic ingredient "antimony potassium tartrate". The drug was highly toxic and could cause tachycardia, premature beats, and even acute cerebral ischemia and toxic hepatitis.

Sudden changes in key products have plunged Meiyou Pharmaceutical Factory into deep trouble.The factory's normal sales volume is 5 million yuan per month, but after the news came to light, the factory's sales volume was almost zero.Distributors demanded returns, and by the end of July, the plant had completely shut down. 2. Focus On August 2, 2004, a newspaper published an article titled "Beijing Xinxing Hospital's Huge Advertisement Creates the Myth of "Cure All Diseases"", which claimed to be "currently the largest in China, with the highest medical level" and "professional medical treatment". 'Super carrier' of infertility," Beijing Xinxing Hospital questioned.The report pointed out that Beijing Xinxing Hospital actually concocted a myth of "send a child" with money. The so-called "high curative effect" was blown out by hundreds of millions of advertisements. to doubt.

After Beijing Xinxing Hospital was exposed, the public and regulatory authorities have questioned the hospital’s “overwhelming advertisements with exaggerated elements”, and various media have also continuously received complaints from patients from all over the world. False advertisements created the myth of "giving a child", and more patients, peer experts, physicians, and pharmacists questioned Beijing Xinxing Hospital's high fees, doctor qualifications, examination process, medication process, and treatment effects.This star enterprise, which had broadcast advertisements simultaneously in prime time on more than 20 TV stations, became notorious and precarious for a while.

After entering the information age, the dissemination of crisis information is much faster than the crisis itself.The diversification of information dissemination channels, the speed of timeliness, and the globalization of scope make the crisis situation of the enterprise quickly publicized, becoming the center of public gathering, and becoming the material of various media hype. 3. Destructive On September 11, 2008, the incident that Sanlu's problematic milk powder caused dozens of babies to suffer from kidney stones shocked the whole country.According to a report from the Ministry of Health, as of November 27, a total of 294,000 children with abnormalities in the urinary system have been reported nationwide due to consumption of Sanlu brand milk powder and other "problem milk powder".

A few days later, the General Administration of Quality Supervision, Inspection and Quarantine announced the results of special inspections on infant formula milk powder, showing that melamine was detected in 69 batches of products from Sanlu, Mengniu, Yili, Yashili, Shengyuan, Shien and other companies.All of a sudden, the whole country was panicked, talking about "milk" turned pale, and consumers all over the country had little confidence in domestic milk brands.On weekdays, well-known milk brands have withdrawn from major supermarkets one after another, and investors, suppliers, agents, distributors, etc. directly linked to the interests of dairy companies have also suffered a major blow.In addition to affecting some dairy companies, this incident also affected the upstream links of dairy production. Companies stopped production one after another, causing dairy farmers in some areas to pour milk because they had nowhere to sell.This incident not only severely affected the confidence of domestic consumers in domestic dairy products, but also caused many countries and regions to restrict the import of Chinese dairy products.For example, the U.S. government has expanded inspections of dairy products from Asia at ports and warned domestic consumers not to buy Chinese dairy products online. Myanmar, Malaysia and other countries have also announced "bans".

Crises often have cascading effects, triggering a series of shocks that magnify the situation.For enterprises, the crisis will not only destroy the normal operating order, but more seriously, it will destroy the foundation for the sustainable development of the enterprise and threaten the future development of the enterprise. 4. Urgency Teflon is a hydrocarbon resin material developed by DuPont of the United States. Because of its unique and excellent heat resistance, low temperature resistance, self-lubrication and chemical stability, it is known as "corrosion-resistant and non-stick". Fulong". "Teflon" products are widely used in non-stick pans, carpets, fast food packaging materials, glasses, wires, fiber roofs, medical equipment, aerospace products, etc.For more than fifty years since the invention of Teflon, the technology has brought huge profits to DuPont.became DuPont's most valuable asset.

On July 10, 2004, the U.S. Environmental Protection Agency stated that ammonium perfluorooctanoate, the key raw material of DuPont's "Teflon", may cause cancer or affect fertility.After the news came out, the market moved after hearing the news, and a large number of non-stick pans using "Teflon" were removed from the containers one after another, and some consumers even asked for return.A large number of raw material buyers withdrew their orders from DuPont, and the environmental protection department even threatened to sue DuPont. For enterprises, once a crisis breaks out, its destructive energy will be released quickly and spread rapidly. If it cannot be controlled in time, the crisis will deteriorate sharply and cause greater losses to the enterprise.

For companies operating in today's transparent and high-speed business environment, a corporate crisis can easily have devastating consequences for the company.The more common ones are falling stock prices, shrinking market share, hard to find talent, dissatisfaction in the community where the company is located, and so on. Shares fell.Shares of insurance and professional services giant Marsh McLennan slumped 40% after the scandal broke in the media.Separately, some credit-rating agencies, such as Moody's Investors Service, downgraded the company's bond ratings based on its declining goodwill.

Market share declines.Perrier was once the leading brand in the soda water industry in the United States.However, due to a water pollution scare in the early 1990s, the company lost most of its market share and has never recovered. Talent is hard to find.Companies with deep reputational crises also struggle to attract and retain talent.After the leadership of the US investment bank Morgan Stanley was questioned, leading to the forced departure of chairman and chief executive Hee-Liang Pei, many of the best minds also resigned. The community is dissatisfied.In the end, a company can only operate successfully if it maintains a good reputation in the communities in which it operates.Once the goodwill is discredited, the company becomes a target of public criticism in the community.Chemical plants, nuclear power plants and paper mills have all learned their lessons over the past 20 years.For companies, it’s not just local pressure that is causing problems. Community discontent is likely to intensify, leading to lawsuits or regulatory measures that further limit a company’s ability to operate.

Of course, it is an indisputable fact that any company does not want to encounter a crisis, but for the company itself, it does not have a special self-perception ability at the beginning, and it does not feel the emergence of symptoms.Crisis, the "seed of disease", is often unknowingly "buried in the enterprise body" and grows day by day; and any enterprise in any industry has no innate immunity to it. age, size and quality) have the possibility of spreading; the onset of enterprise disease usually not only has a single symptom, but more often it is a compound symptom of various "complications" at the same time; "enterprise is sick", generally It is difficult to cure completely, but companies often neglect prevention, and often only start treatment when obvious symptoms appear. However, no matter how good the "medical skills" are, it is impossible for the enterprise to fully recover to the state before the "disease", just as "it is impossible for a person to step into the same river twice".Enterprise diseases will always have a negative impact on the enterprise body, leaving more or less sequelae, as the saying goes, "Illness comes like a mountain, and it goes like a spinning thread."Therefore, starting from the cause and mechanism of corporate crisis, paying attention to the source and direction of corporate crisis, eliminating crisis factors and preventing crisis are the key points of corporate crisis management.For example, when the famous Japanese entrepreneur Konosuke Matsushita summed up his business success experience, he especially emphasized that the long-term and unremitting awareness of product crisis is the basis for the company to remain invincible.Bill Gates, the richest man in the world, once said that "Microsoft is only 18 months away from bankruptcy."Ren Zhengfei, president of Huawei, said in his famous "Huawei's Winter" that "Huawei's crisis, shrinkage, and bankruptcy will definitely come." He said that companies must be prepared for danger in times of peace. After a crisis occurs, the crisis management team should play a central role in formulating resolution strategies and steps, supervising the correct implementation of relevant measures, and providing comprehensive guidance to the work of the enterprise.The key steps in crisis management are: 1. Identify the original event Only by clarifying the facts can we prescribe the right medicine.The crisis management team should quickly organize investigations and devote themselves to accurately judging the cause of the crisis in the first place. 2. Senior leadership leads the overall situation In a crisis or catastrophic event, leaders must communicate effectively, and their every word, every look and every expression is very important to the public.At the same time, the leader must ensure that all employees coordinate their actions and maintain consistency during the crisis management process. 3. Keep in touch Communication in a crisis event is different: in a crisis, relationships of trust have been broken, and regaining that trust is critical to successfully surviving tomorrow.Telling all, telling quickly is the key to regaining trust.Late release of information and failure to counter gossip in a timely manner, resulting in public resistance and confusion, can lead to communication failures.To ensure successful and effective communication, it is necessary to develop a solid communication plan, publish information in a timely manner, be a source of information, demonstrate competence and professionalism, and be honest and forthright. 4. Make up for mistakes and take responsibility After a crisis occurs, enterprises must respond quickly and cannot remain silent.Through public relations activities, answer the doubts of the public, express the concern of the enterprise, and take effective measures to minimize the damage to the outside world.Leaders can also visit victims of a crisis and provide financial assistance to enable them to recover as quickly as possible. When a leader handles a crisis, he must adhere to the following principles: 1. The principle of timeliness Every minute and every second after a crisis event occurs in an enterprise is crucial, and any hesitation and delay may expand the situation and increase the loss of the enterprise.Therefore, the enterprise's response to the crisis must be fast and timely, and it must be the first to reach the position as much as possible, whether it is for the victims, consumers, the public, or the news media. In June 1996, Chen Boshun, a retired old man in Hanshou County, Changde, Hunan, died after drinking Sanzhu oral liquid, and his family subsequently filed a claim against Sanzhu Company.The three companies with deep pockets refused to give any compensation, insisting that it was the problem of consumers themselves.After being rejected, Chen Boshun's family took the three companies to court with a pleading paper. In March 1998, after the court ruled that Sanzhu lost the lawsuit in the first instance, more than 20 media bombarded Sanzhu, which triggered an earthquake in the sales of Sanzhu oral liquid. The monthly sales of 200 million yuan dropped to several million yuan, and the marketing force of 150,000 people was forced to be reduced to less than 20,000 people. The production and operation fell into an unprecedented disaster. The direct economic loss amounted to more than 4 billion yuan, and the national tax loss was 600 million yuan. In March 1999, the court finally ruled that the three companies won, but at this time the three companies had fallen into a state of complete paralysis.More than 200 subsidiaries of the three companies went out of business, the vast majority of workstations and offices closed, and national sales basically stopped. The three companies that created the miracle of Chinese health care products were extremely immature in responding to the crisis.After the crisis, time is life, and it is necessary to "make big things small and small things small" in the shortest possible time. However, Sanzhu chose to file a lawsuit, getting stuck in local disputes and arguing with consumers.Three years later, the lawsuit was won and the company collapsed. 2. The principle of authenticity On March 15, 2008, CCTV conducted an unannounced visit to Focus Wireless, a subsidiary of Focus Media, and exposed the process and inside story of its spam SMS production at the "3.15" party, and declared that Focus Wireless is the largest spam manufacturer in China.In addition, CCTV also questioned Focus Media's sense of corporate social responsibility. In the CCTV reporter's unannounced interview, the staff of Focus Wireless proudly told the reporter that they have information on nearly half of mobile phone users in China, including community owners, industrial and commercial business owners, car owners, major mobile phone customers, civil servants, insurance companies, etc. Nine major business areas including bank VIPs and real estate investors.The personal information of these most private mobile phone users has become the source of profit for Focus companies to carry out SMS advertising. On the second day after the incident, in the footage of "News Network", a female vice president of Focus Media denied that Focus Media had information on mobile phone users. On March 18, Ji Hairong, vice president of Focus Media, admitted that he had a database of mobile phone users, but still said that "the data was obtained through legal channels, which did not involve the privacy of individual users, and there was no transaction information." At the same time, Focus Wireless only sent notices to some internal members of the unit Class text messages, no text messages of a commercial nature.Since then, Focus has claimed that "Focus Wireless will send no more than 2% of SMS messages without permission" and so on. These self-talking defenses did not let the public see the sincerity of Focus, and too many lies aggravated the public disgust. Affected by this, the stock price of Focus Media fell sharply by 26.59%, hitting a new low of $29.25 during the year. After a crisis occurs, enterprises should take the initiative to clarify the truth to the public. Covering up will only make it more obvious, which will increase the harmful power of the crisis, which is not conducive to controlling the crisis situation and prolonging the impact of the crisis.Because once the public has a sense of distrust of enterprises, it is very likely to increase the difficulty of crisis management.Enterprises usually have a natural tendency to report good news but not worry to varying degrees, but when an emergency comes, "reporting worry" is a matter of success or failure. It is necessary to maintain smooth information channels and timely delivery of information, and conceal or delay the report for any reason. Reporting or even not reporting will lead to the spread of the brand crisis and slow down the recovery process of the crisis, which will cause serious damage to the brand. 3. The principle of sincerity On March 24, 1989, the giant oil tanker "Valdez" of Exxon Corporation of the United States ran aground near the picturesque Prince William Sound in Alaska, which is rich in fish and swarms of dolphins and seals, causing more than 8 million gallons of crude oil to The leakage formed a floating oil belt 1 km wide and 15 km long on the sea surface of Prince Bay.The incident caused the death of many fish, serious loss of aquatic products and destruction of ecology.However, Exxon did nothing, neither investigated thoroughly nor took cleanup action nor apologized to the government and the public.As a result, the press had a bad attitude towards this and launched all the "anti-Exxon campaigns". The campaign alarmed the then President Bush and sent special personnel to investigate. Old customers in Europe and the United States boycotted Exxon products one after another. Exxon was in a mess, and the company became a typical example of "damage to the environment and arrogance". After a crisis occurs, business leaders must have a sincere attitude and give consumers a good public image.This will help you communicate and coordinate with all parties, and help you get out of the crisis. 4. Scientific principles In September 1982, a serious accident occurred in the Chicago area of ​​the United States where someone was poisoned by Tylenol tablets containing cyanide. At the beginning, the death toll was only 3, but later it was said that the death toll was as high as 250 across the United States, and its impact quickly spread to all parts of the country. . After the incident, under the leadership of CEO Jim Bork, Johnson & Johnson quickly took a series of effective measures.First, Johnson & Johnson immediately sent a large number of people to test all the pills.After a joint investigation by various departments of the company, in the inspection of all 8 million tablets, it was found that all the contaminated tablets came from only one batch of drugs, with a total of no more than 75 tablets, and all of them were in the Chicago area, and would not have any impact on other parts of the United States. Even though the final death toll was determined to be 7, Johnson & Johnson still followed the principle of the company's highest crisis plan, that is, "when encountering a crisis, the company should first consider the interests of the public and consumers", and did not hesitate to spend huge sums of money in the shortest possible time. Recovered all of the millions of vials of the drug from major pharmacies and spent $500,000 to alert concerned doctors, hospitals and distributors. In this regard, the "Wall Street Journal" reported: "Johnson & Johnson has chosen a practice of bearing huge losses and protecting others from harm. If it is done against conscience, Johnson & Johnson will encounter great trouble." Tylenol case success The key is because Johnson & Johnson has a "crisis management plan for worst-case scenarios."The plan's focus on putting the public and consumer interests first was a credo that ultimately saved Johnson & Johnson's credibility. Before the accident, Tylenol had a 35 percent share of the U.S. adult painkiller market, with annual sales of $450 million and 15 percent of Johnson & Johnson's total profits.After the accident, Tylenol's market share once declined.When Johnson & Johnson learned that the situation had stabilized and that the maniac who poisoned the pills was in custody, they didn't immediately put the product on the market.At that time, the US government and local governments in Chicago and other places were formulating new drug safety laws, requiring drug manufacturers to use "pollution-free packaging."Johnson & Johnson saw this opportunity and immediately took the lead in responding to the new regulations. As a result, it squeezed out its competitors in the $1.2 billion painkiller market and regained 70% of the original market share in just five months. . It can be seen that when responding to a crisis, one of the most critical points is: everything must be centered on the public, center on the vital interests of the public, and think about problems centered on the priority order of public concern. order, it is possible to minimize the damage to the department, the enterprise and even the leaders themselves. 5. Concession principle The British Unilife Company has long established large-scale subsidiaries in some countries on the east coast of Africa.This is a very fertile land with abundant and cheap raw materials for soap and peanuts, which are also suitable for cropping and cultivating edible oil raw materials. It is one of the main sources of wealth for Unilife.Over the years, this place has developed rapidly. Due to abundant labor resources and natural resources, low prices, and no competitors, profits have risen rapidly, and the number of employees has grown to as many as 140,000.After the end of the Second World War, the national independence movements in various parts of Africa flourished and were in full swing. As a result, the fertile peanut cultivation lands in Unilever were nationalized piece by piece by African countries. big crisis. At this time, Cole, an experienced general manager, understood very well that if he did not make some concessions, Unilife would be overwhelmed by the rising tide of African people's independence.On the one hand, Cole was determined to make greater concessions in response to the actual situation of the growing African national liberation movement at that time.Cole issued six instructions to African subsidiaries: first, the chief managers of all subsidiary systems in Africa should quickly employ Africans; Third, in order to train African cadres, set up a training center for management cadres in Nigeria; fourth, adopt a policy of mutual benefit between Britain and Africa; fifth, find a way for the company to survive in Africa with concessions; sixth, do not restrict yourself to decency Problems should be based on the principle of creating maximum profits.He personally came to Africa and negotiated with some old friends in African political and business circles, emphasizing that the long-term cooperation between Britain and Africa will bring economic development to both countries. In negotiations with the Guinean government, Cole expressed his willingness to voluntarily withdraw the company. This frank and cooperative attitude moved the Guinean government very much. They held an emergency government meeting to discuss and decide to retain Cole's company. In the negotiation with the Ghanaian government, in order to show that Unilife respects the interests of the other party, the company offered to provide the land where it grows peanuts to the Ghanaian government.Later, the Ghanaian government appointed Unilife as the sales agent for the Ghanaian government's edible oil raw materials. In addition, Cole has adopted a concession strategy in various parts of Africa, and has also obtained benefits to varying degrees. As a result, during the upsurge of the African national independence movement, many large companies in Western countries were forced to withdraw their subsidiaries in Africa, and some of them were acquired by African countries through negotiations, but Unilife was not affected. Overcoming this difficulty safely, and gaining certain benefits, played a great role in the development of Africa in the next few decades.In business negotiations, sometimes you can't be aggressive, and you have to adopt a concession strategy, so that you can gain the trust of the other party and make the other party think that you are sincere, so they are willing to accept your conditions.Of course, the use of concession strategies must be timely and appropriate, and you must fully grasp the opponent's psychological activities so that you can have the confidence to win.At the same time, you must have a correct estimate of your ability to control the situation, and you must never abuse it regardless of time and place. Learning to step back is an important factor in dealing with crises.Because the gesture of tolerance makes it easier for you to gain understanding and sympathy.Sometimes, taking a step back is actually taking a step forward.