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Crisis Proofing - How to Save your Company from Disaster, by Tony Jaques

Whey protein concentrate (‘WPC 80’) may not be the best known or sexiest product, but it is certainly big business. Deriving from cow’s milk, and a by-product of cheese production, it is used in baby formula, beverages, and a host of food supplements, including for bodybuilders.

Like other dairy products, WPC 80 is susceptible to contamination, the result of which can be deadly when digested. So when Fonterra, New Zealand’s largest company and the world’s largest dairy products producer discovered in July 2013 that 38 tonnes of concentrate had tested positive for botulism, a recall was quickly announced.

The trouble was, later tests by the government found no evidence of botulism and that the recall had been a false alarm. However, considerable damage had already been done to Fonterra, with several countries announcing milk product import bans and the company’s reputation for product quality in severe jeopardy.

The company’s independent inquiry (summary – pdf) into the incident concluded that, among other things, Fonterra was ‘not ready for a crisis of this magnitude’, that there had been a ‘failure to join the dots’ between botulism, infant food products, consumer sensitivities and the firm’s reputation, and that the company’s risk and crisis processes needed overhauling.

Fonterra’s top brass would have done well to have read Crisis Proofing, Tony Jaques’ book on how organisations should reduce the chances of a crisis happening and minimise the damage that may arise should a crisis occur.

While he gives many useful tips on crisis response, including how to navigate legal advice on apologies, Jaques’ background in issues management means his insights and practical tips on the leadership mindset, strategic approach and planning processes that enable companies to avoid train wrecks in the first place are particularly valuable.

In my experience, many companies place undue emphasis on identifying risks (especially, given their slippery nature, reputational risks), at the expense of ensuring their issues management processes work properly – an area Jaques excels in. For example, he lambasts the probability/impact and significance/influence issue prioritisation models as crude and over-simplified and instead sets out a more comprehensive and nuanced proprietary model based on an issue’s Impact, Salience, Visibility, Affectability, Proximity and Profile.

Jaques also takes aim at the reactive and ad hoc approach taken by many organisations to managing issues. Too often, he says, companies are overly focused on recording and tracking risks, and tweaking the identification, tracking and decision-making processes for the benefit of management and risk committees, as opposed to actively working to resolve them in a clear and strategic way. By contrast, his Do-it issue management model (chapter 8) is a model of clarity, practicality and focus.

At the heart of Crisis Proofing is a call for mindful leadership of the top-down variety that can seem contrary to the open and horizontal forms of organisational decision-making pushed by some contemporary management thinkers. Yet, as Jaques argues, effective crisis management demands hands-on, decisive and swift decision-making at the very top of the organisation, and a willingness to learn from mistakes and make changes.

As such, while many of the tips in Crisis Proofing are useful in day-to-day risk, issues and crisis management, the book is especially relevant to those leaders and senior decision-makers directly responsible for their organisation’s strategy, culture and reputation.

It is a book I recommend wholeheartedly.

Disclosure: I was asked by the author to review the chapter of Crisis Proofing on social media, and was subsequently provided with a review copy of the book by Oxford University Press. I also discuss Fonterra’s WPC 80 botulism scare in my book Managing Online Reputation

Chinese brands are more than holding their own against western firms in the court of public opinion in China, according to WPP’s latest Top 100 Most Valuable Chinese Brands study.

Local brands the mainland Chinese most trust:MostTrustedChineseBrands2014

 A few things jump out from this table:

  • A majority of the most trusted Chinese firms are privately-owned
  • The high level of trust in Baidu, despite its legacy of selling search placements, paid deletion of online comments, video copyright infringements and other misdemeanours
  • The absence of (and therefore relatively low trust in) well-known global Chinese companies, notably Lenovo.

Most noteworthy is that the study finds that Chinese companies/brands are (and indeed have been for some time) as trusted or more trusted in China than their foreign peers, something that may come as a surprise to many outside the Middle Kingdom and to plenty of foreigners living in China.ChineseversusForeignbrands_2014

Assuming the data is accurate, and putting aside concerns that the findings go against the grain of other recent studies and that trust differs significantly by category (German cars and Italian luxury still get the nod in China), how is it that so many Chinese firms are building local reputations that are just as strong if not stronger than those of their foreign peers?

Some thoughts:

  • They understand local consumers and stakeholders better than their foreign competitors
  • They provide increasingly useful, valuable and high-quality products
  • They have kept prices affordable, at least relative to some foreign firms eg. Starbucks
  • They are actively improving customer service and other functions
  • They provide many local Chinese with jobs
  • In an environment in which patriotism is being played up by the authorities, Chinese companies are seen as Chinese (though this can work both to their advantage and to their detriment)
  • Government and official media (CCTV) campaigns against foreign firms such as Apple and GSK are helping seed doubts about the quality of foreign products
  • Foreign brand failures, such as Fonterra’s botulism scare earlier this year, have given local brands an opportunity to cast themselves as caring and responsible.

As the study shows, companies of all types are generally held in fairly low esteem in China. The Chinese are notoriously price conscious and fickle – brand loyalty remains low in the country. As competition intensifies and food safety and pollution issues continue (as seems likely), trust will become an increasingly important factor in purchase decision-making in China.

Going forward, it will be interesting to see which Chinese companies manage to win the real trust of their domestic customers and other stakeholders, and how they go about it.

Equally interesting will be to see how foreign companies react. Even the German car manufacturers shouldn’t rest on their laurels for long.

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