Surviving a corporate image nightmare

Past corporate crises teach us that it might be too late for BP to recover from the worst oil spill in U.S. history after initially playing down the severity of it. But history also indicates that the company could still bounce back if the management team do the right things.

Some of the other major PR disasters of the past decade:

Exxon Valdez oil spill

A supertanker ran aground and spewed 11 million gallons of crude into Alaska’s Prince William Sound. The spill killed hundreds of thousands of birds and marine animals and was the nation’s biggest oil spill until the BP catastrophe.

Exxon Mobil quickly came under fire for deflecting the blame and being aloof. The company wound up paying $3.4 billion in cleanup costs, fines and compensation to victims. An Anchorage jury determined in 1994 that Exxon should pay $5 billion in punitive damages, but Exxon spent more than a decade fighting that decision. It argued it shouldn’t be liable for the actions of the tanker’s captain, Joseph Hazelwood. In 2008, the U.S. Supreme Court reduced Exxon’s punitive damages to $507.5 million.

Perseverance can pay for the company. Exxon Mobil is stronger financially than when the spill happened and reigns as the most valuable U.S. company. BP’s spill is far larger and is damaging a much more densely populated area. This calamity also threatens to defile beach communities more interested in money from tourists than oil companies.

Johnson & Johnson’s cyanide scare

Seven people died in the Chicago area after taking Tylenol, a pain reliever that ranked among Johnson & Johnson’s best-selling products. Someone had laced the pills with cyanide.

In what is still regarded as the “gold standard” in corporate crisis management, Johnson & Johnson quickly accepted responsibility and set up a 24-hour hotline to keep consumers updated. Then-CEO James Burke became a media fixture as he stressed that consumer safety was the company’s top priority. That point was reinforced by Johnson & Johnson’s decision to recall all Tylenol products and develop a tamperproof seal to protect its bottles. To lure back leery consumers, the company offered coupons for Tylenol.

Johnson & Johnson had an advantage many companies in turmoil don’t. The cyanide poisonings were the work of an unknown miscreant, which made the company a victim, too.

Always put the public’s welfare before the company’s profits, even though the response cost J & J more than $100 million – considered an astronomical number at the time. Get the company’s CEO in front of the media if he is forthright and affable. And if there is a legitimate sympathy card available, play it.

Bridgestone tires

Starting as early as 1998, Bridgestone began receiving customer complaints about their Firestone brand tires. The complaints involved the tire treads’ tendency to separate, often resulting in car accidents. The company refused to admit that there was a problem until after the National Highway Traffic Safety Administration launched an investigation in 2000. Eventually after wavering in the press, Bridgestone accepted responsibility and announced the recall of 6.5 million tires.

Merck recalls Vioxx

Despite preliminary studies in 2000 that suggested Vioxx posed a potential heart health risk, Mereck executives chose to ignore these results and decided against further studies. Roughly four years later, the company was forced to recall the painkiller because of evidence that it may have caused heart attacks and cardiac deaths in thousands of its users. The recall turned into a huge scandal as reports came out that executives had known about the serious risk, yet continued to market the drug anyways. The company faced an SEC investigation and hundreds of lawsuits and ultimately Merck settled litigation for $80 million.

Math flaw discovered in Intel’s Pentium chip

 A college mathematician disclosed that personal computers relying on Intel’s Pentium chip spit out the wrong answer to some obscure division problems.

Intel initially brushed off the flaw as too inconsequential for most computer users to care. But consumers began to fret about the Pentium’s reliability, especially after the problem attracted media coverage and became a cultural touchstone for ineptitude. IBM, then a leading maker of PCs, also didn’t like the idea of putting faulty chips in its products.

The backlash culminated when a mortified Intel CEO Andy Grove agreed to replace all Pentium chips. The company set aside a $420 million reserve to cover the costs.

The customer is always right and corporate arrogance is always wrong.

Domino’s employees become infamous on YouTube

Domino’s learned firsthand the power of social media after two Domino’s Pizza employees posted videos of themselves doing disgusting things to food that they were getting ready to send out. The results were catastrophic due in large part to Domino’s waiting two days to respond. During their delay nearly one million peopleviewed the videos on YouTube and simultaneously blogs, forums and Twitter were ablaze with discussion of the incident. The company responded by firing the two employees and issuing an apology via YouTube. According to the New York Times, the damage was already done as consumer perception of the brand turned negative within hours and online forums continued to discuss the videos, which were cut, re-worked, and re-posted hundreds of times, long after the apology was issued.

Dealing with a crisis has totally changed because of social media. On a growing scale internet users are tapping social media sites to seek support for political causes and voice consternation over what they see as unfair company practices.

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