When the average person makes a mistake, it hardly qualifies as news. But when a multinational corporation falters, the aftermath can become a public spectacle that haunts the company forever. All it took was one accident for the name Exxon to be forever associated with oil-slicked seabirds, and after Pan Am flight 103 crashed in Lockerbie, Scotland, the airline went bankrupt from a lack of customers. Up until a few months ago, Toyota was a symbol of high-quality, affordable cars, but today the name conjures up images of speeding death traps.
These are hardly the only companies to ever make mistakes—corporations institute recalls, issue apologies, and grapple with public-relations missteps every day. When a crisis is handled poorly, the company’s credibility can suffer indefinitely, but when it’s dealt with the right way, the organization can make a triumphant comeback and garner even more goodwill than before.
In with the Old, Out with the New Coke
Coca-Cola is an institution as American as apple pie, and it’s always been the best-selling soda in the country. In the 1980s, though, the company was losing market shares to Pepsi. Research and taste testing suggested that customers preferred sweeter soft drinks, so in 1985, the company introduced New Coke, the first revision of the Coca-Cola recipe in almost a hundred years. Although most people remember New Coke as a debacle, it was actually popular when it was first released, though an angry and vocal minority incited a huge backlash by very publicly boycotting New Coke, dumping bottles of it into the streets and trying to purchase original Coke from abroad. News media eventually jumped on the bandwagon, ridiculing Coca-Cola for deviating from what had made it famous. Within three months of New Coke’s release, the company capitulated and announced that it was returning to the original formulation, under the name Coca-Cola Classic. The powers that be realized that no matter what their market research suggested, people had a deep and abiding emotional attachment to Coke that couldn’t be ignored.
Pop! Goes the E. Coli at Jack in the Box
Few things are worse for a fast-food franchise than a bacterial outbreak. In 1993, health officials in Washington state traced an outbreak of E. coli to Jack in the Box when three young children died after eating burgers there. During the crisis, the restaurant and its parent company were less than forthcoming with the media: they denied any wrongdoing, placing the blame squarely on their meat supplier, and lambasted the state board of health for not being clearer about regulations regarding cooking temperatures and food handling. It also didn’t help their reputation that they attempted to recoup their own sales losses by suing their suppliers. For years, E. coli outbreaks became synonymous with the Jack in the Box brand, but after starting the first food-safety program in the fast-food industry, the restaurant has regained its popularity. Today, it’s considered one of the industry’s leaders in sanitary food-handling procedures. Many of today’s consumers barely even remember the tainted-beef scandal.
In the autumn of 1982, seven people in Chicago died after ingesting Tylenol caplets, which were revealed to have been laced with cyanide. The killings sparked a massive media panic, with police and the FDA warning consumers to avoid Tylenol products. The crisis was big enough that several advertising executives predicted that the Tylenol name was too badly tarnished to bounce back, but Johnson & Johnson fought back by immediately enlisting the media to warn customers not to use their products, and issuing a recall of about thirty-one million bottles of painkillers. Executives at the company attended the funerals of the victims and offered a reward for the arrest of the individual who tampered with the bottles. Even though the poisonings weren’t Tylenol’s fault, the company never acted evasively or stonewalled the investigation, instead putting the safety of its customers before its own profits and branding itself as compassionate, open, and honest. When Tylenol launched a new advertising campaign a few months later, highlighting new bottles with tamper-evident seals, customers came back, and as a result it’s still seen as a doctor-recommended safe, effective painkiller.
McDonald’s Super-Sized Scandal
As one of the most visible companies in the world, McDonald’s is accused of being the emblem of unchecked globalization, capitalism run amok, and the worst example of the Western diet. Obesity became a fashionable cause in the past decade, reaching its zenith when the documentary Super Size Me was released in 2004. The company became the target of anti-obesity campaigns when consumers saw what a diet of McDonald’s food did to filmmaker Morgan Spurlock body’s and decried the fast-food giant for obscene portions and cheap, unhealthy ingredients. Although McDonald’s response was very defensive and did little to extinguish the flames of outrage, the company did change its business practices immediately, beginning to focus on healthy lifestyle choices and personal responsibility. It did away with its Super Size portions (claiming that had been the company’s plan all along), and started introducing healthy menu items like fruit, salad options, and bottled water. McDonald’s also started making the nutritional information for its products more widely available. The company now leads the fast-food industry in advocating physical fitness and balanced choices.
Crises are inevitable. Lawsuits happen. It’s how a corporation handles them that determines whether it rebounds or fall flat. Those that evade, deny, or deflect blame usually end up ruining their reputation, while the companies that acknowledge wrongdoing and vow to do better can often save face with their customers. It remains to be seen whether we’ll be buying Toyotas in ten years, but the lessons of PR crises past show that there’s no disaster too big to overcome.
Updated March 18, 2011