Crisis control
Keep a reserve of time and money to deal with the unexpected.
By Fred Koury
September 2007
In 1982, seven people died from Extra-Strength Tylenol capsules that had been
tampered with and laced with cyanide.
The way Johnson & Johnson, owner of
the Tylenol brand, reacted to the crisis
became a precedent for the right way to
handle a crisis. Company executives
made quick decisions that were based in
part on company values that had been
written in 1943. The company recalled 31
million bottles at a cost of more than $100
million. It ceased all production of capsules and replaced them with tamper-resistant caplets.
In the short term, Tylenol lost 27 percent
of its market share, but through its customer-focused actions and quick thinking,
it regained all the market share it had lost.
While this is an extreme example, it
goes to show you that you have to be
ready for the unexpected. At the time,
there was no way for Johnson & Johnson
to even imagine that someone would use
its products as a way to poison people.
Johnson & Johnson executives invested
the time and money needed to deal with
the crisis and make the brand as strong as
or stronger than it was before.
If you’ve been in business long enough,
you know that the unexpected is always
around the corner. A crisis is not a matter
of if; it’s a matter of when.
Could anyone have predicted the
tragedy of Sept. 11 or its far-reaching economic consequences? Anyone doing business in the southeastern United States
probably knows firsthand what kind of
economic effect a major hurricane can
have on the bottom line.
Your next crisis might not even be so far-reaching. It might be a key employee who
falls ill or quits that leaves you scrambling to
fill in the gaps. Or maybe postage costs rise
20 percent, like they recently did, and cut
into your cash flow.
Regardless of the scale of the challenge,
you have to be ready for it. One of the
best ways to be prepared is to have a
reserve of resources — both in cash and
time. Set aside money each month, so that
you have funds to draw on in an emergency.
Just about any crisis will require cash. If
you’ve got funds to draw on, you can
either get the people or supplies you need
to address it, or at the very least, keep
your cash flow going in the short term
until you figure out a long-term solution.
The other investment to make is in time.
Put time on your schedule each week to
deal with the little details. This kind of
investment can often let you extinguish a
small fire before it becomes a raging
inferno. When a big crisis hits, you can
clear your schedule, but a little investment upfront can help you avoid some of
the internal challenges that can get out of
control.
This is also where your advisers earn
their money. If you’ve assembled the right
team of people, when something unforeseen occurs, you can gather them together and, as a team, plot your next move.
They’ll help you avoid blind spots and
resolve things quicker than you could do
alone.
Regardless of whether your crisis started internally or externally, you have to
lead by example. Be resilient in your pursuit of the resolution. Exhibit confidence
so that others can rely on you to get the
job done.
It won’t be easy — things in business
rarely are. But if you have taken the time
to build a rainy day fund and assembled a
solid team, you are well on your way to
handling the next crisis and moving your
company back up the mountain again.
FRED KOURY is president and CEO of Smart Business Network
Inc. Reach him with your comments at (800) 988-4726 or
fkoury@sbnonline.com.
