© 2002 Jonathan Bernstein
JUST A THOUGHT
Only some of us learn by other people's mistakes. The rest of us have to be the other people.
AN OUNCE OF PREVENTION
Editor's Note: prompt response helps to minimize damage, heading off self-perpetuating rumors which out-breed cockroaches in the absence of effective communication by those in crisis. "Dark sites" are a crisis prevention tool you can have immediately at hand. As noted in our disclaimer, my firm has a business relationship with PIER Systems, who offer the system mentioned in this article. I have never personally seen anything better for this purpose, but would be more than willing to review other systems that would allow you to do the same thing.
Dark Sites -- Getting You Ready for Dark Days
by Jonathan Bernstein
"Dark sites" -- websites that are ready for when crises occur, but not made viewable to the public until the crisis breaks -- are becoming more common among companies and organizations with crisis risks. But the standard approach of creating a static HTML website that is held for public launching as needed doesn't adequately meet the needs of today's instant communications.
PIER ReadySites operate on the PIER (Public Information Emergency Response) platform previously discussed in this ezine, which means they are specifically designed to enable the communications team to fully command Internet resources in a crisis.
A PIER ReadySite is fully prepared with all the facts, background information, press release templates, crisis communication plans, images, maps, links and everything else needed to be fully prepared to communicate. Much more than that, a PIER ReadySite also contains databases of reporters, government agencies involved in the response, employees and their families, neighbors, community leaders, elected officials and much more. With a ReadySite, the communications team can instantly respond by not only keeping the crisis website updated continually, but also by emailing, faxing and even sending telephone messages from the system. The team collaborates online, allowing team members or executives or lawyers not physically present to be fully engaged in the response. Inquiries from reporters and others coming in from the public website are automatically tracked and phone inquiries are logged and effectively managed -- even by a widely dispersed response team.
This is the technology that has been adopted by major government agencies such as the US Coast Guard, major oil companies, pharmaceutical firms, and many more. A small hosting fee of $100 per month is applied, but there is no need to purchase a license to use the system until an event occurs, the site is made public, and the Internet communication tools are used. At that time, daily, monthly or permanent site licenses can be purchased.
PIER ReadySites are only available through authorized PIER partners (Bernstein Crisis Management is one), and the only other cost of creating PIER ReadySites is the time required for creation of the site's materials and databases.
CRISIS MANAGER BUSINESS ANNOUNCEMENTS
Branding Crisis Manager
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Crisis Manager Presentations & Workshops
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Odwalla and the E. Coli Outbreak
by Mallen Baker
Odwalla (pronounced "odewalla") is the health-conscious juice company which began a couple of decades ago when Greg Steltenpohl, Gerry Percy and Bonnie Bassett began squeezing fresh oranges on a $200 hand juicer. The company was growing strongly, with annual sales rising 30% per year and approaching $90m. The company had established a strong brand with enormous customer loyalty.
On October 30, 1996, everything changed. Health officials in Washington State informed the company that they had discovered a link between several cases of E. coli 0157:H7 and Odwalla fresh apple juice.
The link was confirmed on November 5. As the crisis played itself out, one child died and more than 60 people in the Western United States and Canada became sick after drinking the juice. Sales plumetted by 90%, Odwalla's stock price fell 34%. Customers filed more than 20 personal-injury lawsuits and the company looked as though it could well be destroyed.
What Did the Company Do?
Odwalla acted immediately. Although at the point where they were first notified the link was uncertain, Odwalla's CEO Stephen Williamson ordered a complete recall of all products containing apple or carrot juice. This recall covered around 4,600 retail outlets in 7 states. Internal task teams were formed and mobilised, and the recall - costing around $6.5m - was completed within 48 hours.
What the company didn't do was to avoid responsibility. On all media interviews, Williamson expressed sympathy and regret for all those affected and immediately promised that the company would pay all medical costs. This, allied to the prompt and comprehensive recall, went a long way towards satisfying customers that the company was doing all it could.
Internal communications were key: Williamson conducted regular company-wide conference calls on a daily basis, giving employees the chance to ask questions and get the latest information. This approach proved so popular that the practice of quarterly calls survived the crisis.
External communications were just as vital. Within 24 hours, the company had an explanatory website (its first) that received 20,000 hits in 48 hours. The company spoke to the press, appeared on TV and carried out direct advertising with the website address. All possible attempts were made to provide up to the minute, accurate information.
The next step was to tackle the problem of contamination. The company's entire approach had been founded on fresh unpasteurised juice because only juice which had been untampered with could have the best flavour. The company decided quickly that this had been wrong. The company moved quickly to introduce a process called "flash pasteurisation" which would guarantee that E-coli had been destroyed whilst leaving the best flavoured juice possible.
Within months of the outbreak, the company had in place what some experts described as "the most comprehensive quality control and safety system in the fresh juice industry." On December 5, the company brought back its apple juice.
Williamson's explanation of how the company found its way is instructive. "We had no crisis-management procedure in place, so I followed our vision statement and our core values of honesty, integrity, and sustainability. Our number-one concern was for the safety and well-being of people who drink our juices." (Source: Fast Company)
Cost and Benefit
Odwalla made a rapid recovery. Much of the good will and trust it had built up over the years remained. Sales picked up again quite quickly.
The company did exactly the right things to achieve this. For instance, during the lean months, Odwalla refused to lay off any of its delivery people. They were sent out to maintain customer relations - an approach that not only earned the loyalty of the employees, but helped to secure the company's reputation with its customers.
Even the most grievous victim of the crisis gave Odwalla credit. "I don't blame the company" the father of the girl who died said. "They did everything they could".
The company did pay a large cost. Odwalla pleaded guilty to criminal charges of selling tainted apple juice and was fined $1.5m - the largest ever assessed in a food industry case by the US Food and Drug Administration.
So Is Everyone Happy?
Not quite - the company still has some critics who say that it was not quite the victim it would have people believe. Business ethicist Jon Entine, for instance, says that "investigators now contend that Odwalla had significant flaws in its safety procedures and citrus-processing equipment was so poorly maintained that it was breeding bacteria in 'black rotten crud'. Before the outbreak, Odwalla had received letters from customers who become violently ill, but had not addressed the problem."
Writing in a 1998 issue of Business Digest, Entine adds:
"Resisting industry safety standards, Odwalla steadfastly refused to pasteurize its juices claiming it altered taste and was unnecessary. Yet, the year before the incident, the head of quality assurance, Dave Stevenson, who was aware of the dangers, proposed using chlorine rinse as a backstop against bad fruit. Senior executives who feared chlorine would leave an aftertaste overruled him. They decided to rely on acid wash although its chemical supplier had informed Odwalla that the wash had killed the E. coli in only 8 percent of tests and should not be used without chlorine."
The overwhelming feeling of people who dealt with the company at the time of the crisis was that here was a community of ordinary people who were devastated at the fact that they had created an episode of poisoning that ended in a loss of life. The company's values spoke of nourishing people - and when the crisis came it was an adherence to honest, straight talking and accepting responsibility that helped to get the company through.
There are critics who refuse to credit the company with any integrity whatsoever - but even these will concede that as an exercise in crisis management, Odwalla stands as an example of best practice that few can match.
The year after the crisis, Odwalla was voted "Best Brand Name in the Bay Area" by San Francisco Magazine. This was the first indication amongst many that Odwalla's reputation had survived.
Mallen Baker of Mallenbaker.net is the publisher of Business Respect, a free email newsletter on corporate social responsibility. You'll find more interesting articles and useful information at his website, www.mallenbaker.net.
CRISIS MANAGER ON THE SPOT
Q: Our company is the focus of a federal investigation that may or may not lead to formal charges, and which may or may not result in publicity. Management is leaning towards not doing any proactive crisis preparedness work because they don't want to spend the time or the money (if we use an outside consultant). Your opinion?
CM: Crisis preparedness in such a situation is damage-reduction insurance. The premium is low relative to the potential loss if the crisis does escalate. It might cost you thousands, even tens of thousands (depending on the size of your organization) to be prepared -- it can cost you millions if you're not. In the not-too-distant past, I helped a multi-location national organization prepare for a very similar scenario -- and ultimately, their investigation was dismissed and no publicity resulted. But I know that their management was VERY glad to have been prepared, because they understood the real cost of
PLAIN ENGLISH DISCLOSURE
Bernstein Crisis Management has formal or informal co-promotional and mutually beneficial business associations with PIER Systems, Inc., PR Newswire's ProfNet service and CustomScoop. No, we can't go into details because that's confidential, proprietary, etc. But our relationship is NOT "arm's distance" and you should know that, since we regularly write about how we're using these services for crisis and issues management. That said, you should also know that Bernstein Crisis Management sought the relationships because its staff is convinced that these services are the best of their kind for Bernstein Crisis Management's needs and those of their clients. If you have any questions about these relationships, please contact Jonathan Bernstein, (626) 825-3838.
ABOUT THE EDITOR
Jonathan Bernstein is president & CEO of Bernstein Crisis Management, Inc., a national public relations agency specializing in crisis prevention, response & issues management. It is also the only national PR agency able to create crisis- and issues-specific websites for its clients in as little as five minutes by employing proprietary PIER System technology. Information on the firm's services can be found by Clicking Here or by calling (626) 825-3838. Information on its PIER capabilities can be found at www.crisiswebsite.com.
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