1. A decade of brand controversies

A decade of brand controversies

Maggi, Samsung and Uber are brands that have dealt with crises in the recent past — can we infer a lesson or two from their experiences?

Published: October 24, 2017 5:09 AM
brand controversies, activist stakeholders, Maggi experience, Maggi controversy, PR performance, brand PR performance, PR performance of brand, FMCG sector, fmcg industry, Samsung, Uber It is instructive to look at how some key brand crises were dealt with and derive some lessons from these experiences.

Santosh Desai

In the networked world of today, where scrutiny is constant and everyone is a broadcaster with global access, brands will come under fire. The possibility of making mistakes has multiplied, as has the palpability of consequences. Every consumer is a broadcaster, every employee a potential whistleblower, activist stakeholders are legion, making the idea of a crisis a much more real and recurrent possibility. It is instructive to look at how some key brand crises were dealt with and derive some lessons from these experiences.

Two-minute story
The Maggi experience was instructive. It began without warning and quite frankly, without good reason. One laboratory in UP tested the product, declared it unsafe and as a result, the iconic brand was banned nationally. It was an inscrutable and irresponsible act reeking of regulatory carelessness and overreach, which landed the brand in a disastrous situation. The company’s reaction in the beginning was both slow and highly inadequate. It flew in top leadership, but its PR performance was tentative and defensive, and made matters worse.

It was only after the company managed to gather its wits and got in a leader with strong local experience who methodically addressed issues both internally and externally, that confidence in the brand was restored. The brand drew sustenance from the fund of goodwill that it had built over the years and while being absent from the market, invested in communication that reminded people of the bond that the brand shared with them.

Undoing of a Note
The Samsung crisis was an explosive one in every sense of the word. Having your product explode is unlikely to be a healthy sign for any brand. While the company acted relatively quickly in informing consumers about the problem, the information was inaccurate and incomplete. By the time, it made the painful but right call to recall the product and discontinue it, enormous damage was done. But Samsung had two advantages — its track record was strong and the problem was attributed to a single product. The nature of the category ensured that every product had a short lifespan and hence it was possible for the brand to move on. Samsung managed the crisis on the strength of what it did before and after Note 7, even if its handling of the crisis itself was less than perfect.

What a ride!
For Uber, the crisis keeps escalating. A small part of its problem is structural but the larger part is entirely self-created. Uber is a new kind of business that falls outside conventional definitions and its scale makes it a significant intervention, not only in the life of its consumers, but also on the political economy and social ecology of the cities that it operates in. It poses challenges for regulatory authorities of all hues, and its own aggressive posture makes things doubly difficult. The only way forward is through sustained engagement with all stakeholders till a mutually acceptable model is evolved. The leadership problems and its allegedly toxic internal culture have made it a habitual offender on a staggering variety of fronts.

Rampant sexism, obtaining medical records of a rape victim in India and trying to discredit competition, shortchanging cab drivers in New York, being stripped of a license for the ‘lack of corporate responsibility in relation to a number of issues which have potential public safety and security implications’ in London — the list of alleged infractions is an impressively global one. Uber is an example of a very young company dealing with the kind of scale and prominence that it is simply not prepared for.
Lessons

There is no single answer; there is no standard playbook. The old precepts of identifying the key problem — taking corrective action visibly, communicating openly through the crisis and getting the top people in early still work in most cases, but the real issue is one of re-orienting the organisation completely given the radically new context that the business faces. It is critical today to set up a open and transparent dialogue that allows for problems to be tackled as soon as they occur. The best way to deal with a crisis is before it occurs.

Author is Managing Director & CEO, Future Brands

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