When Good Products Go Bad – Will Your Decisions Make It A Product Withdrawal, Recall Or Crisis Management?

Reacting to potential product risks and consumer safety can take many paths, knowing which one to follow relies on good systems and great decisions.

Consider the following scenario, you pride yourself on the quality of product you produce and sell; then one day you experience a large increase in consumer complaints, your social media accounts are under siege with angry followers, and you have a product in the market that is impacting your reputation and revenue. What you do next will define your company for years to come.

As a trusted business advisor dealing in risk, I can say this is the typical story I hear when I pick up the phone from a client in crisis. I use the word crisis carefully, meaning a time of intense difficulty; when a difficult or important decision must be made (Oxford online). My role is to help make the difficult and important decisions in a timely manner and with confidence thus reducing the difficulty. What I am imparting here is my experiences in how, making decisions, can impact the success of the process of recall.

Dissecting the decision timeline highlights key turning points in the outcome. For me these are the first few minutes, the first hour, the second hour, the halfway point and the hour before the situation declared over. Yes, there are many other hours and minutes that pave a smooth or coarse path to the final act but there are times when the process can be so easily overridden by human emotion or risk behaviour. Let’s investigate these inflection points.

The first few minutes

In the life of a crisis is where someone, usually not in a management role, has identified something wrong. It could be bad, it could be ok, it may be catastrophic.  What happens next relies on the risk behaviours of that individual. Do they see it as a threat to the business or even to themselves? Did they create the problem and wish to bury it until it blows over? Are they trying to save face for themselves and the company? Or is this their time to shine? What I see often is a collection of minimal data that becomes extrapolated into the final scenario, or as I often like to borrow from Bart Simpson, the “Purple Monkey Dishwasher” effect (Simpsons season 6 episode 21). Here someone starts with a little fact and shares it with the next line of authority with a little embellishment, this carries forth until it reaches the decision maker for crisis enactment. Why this is a critical moment should be apparent as the potential to either investigate, validate and plan for action can be derailed by immediate action, “Superhero syndrome”, as someone steps in to save the day.

The first hour

Should be used to gather as many facts as possible; park any opinions; and answer any unknowns. This can be a slow step but its essential. Facts must be validated; this is to differentiate them from an opinion. Opinions are based on some form of bias, unconscious or otherwise, and often lead to the first round of disagreement or argument or confrontation. In this stage ideas should be forming around the action plan for either a product withdrawal or a product recall. Critical data such as how many, how bad, how far away from point of sale, how much cost, how long has it been happening should be answered. Use of essential tools such as risk matrices, decision trees, statistical analysis will help keep the findings objective. Again, find the Superhero in the room and lash them to a chair as they will often want to find fault with data or process and instead move to their course of direct action. You should be able to assemble enough fact in the first hour to determine if you will act, wait for more data/validation or deescalate the crisis.

The second hour

Is where things start getting real, you will have convened a crisis or recall team by now and hopefully everyone turns up. Yes, I have been at events where people were on lunch break and cam e after they finished, or decided they needed to leave to make a phone call they scheduled earlier in the day. There are people who can fail to see the importance of be present and supporting the team, often they can add pressure to a room which will lead to confrontation. I have seen stand-up yelling matches and people crying in serious moments.  In this hour the importance of the recall coordinator takes prescience, they should have command of the room and will be enacting the procedures documented in the recall plan. I recommend a Lord of The Rings (J.R. R Tolkien, 1954-55) approach here; one ring to rule them all. I was involved in a crisis where the operations manager decided they didn’t need to follow the corporate recall plan, they “had their own process which worked better”. As recall coordinator authority is important to ensure you can sufficiently direct the recall team and those supporting.

The communications team will need to be on-point here as the message to consumers is crafted stating exactly what is known and what will be done with current resource and knowledge-to-hand. Be sure to remind people that the response can change as new information comes to hand. Do not over promise in this stage as you will need to deliver on all promises before the end of the response.

The halfway point

Will indicate if the response is effective or not. Is your product returning from the market? Are consumers concerns remedied? Are regulators satisfied with your performance? Is public sentiment tracking positively? What often ruins success at this point is exhaustion and apathy. People grow tired from the relentless meeting schedules and updates associated with tracking recall status. People see a drop off in complaints or negative social responses and assume that the worst is over, so they return to business as usual. I have seen this happen where the recall coordinator is left holding the bag for the final actions and quickly become overwhelmed. You should be treating the halfway mark as a time of critical review of performance and effectiveness. I do mean critical, if you set goals or indicators for performance then measure them. If they are not on track scrutinise the plan, it may mean the plan needs rework to ensure the goals can be et. It may also mean the market has lost interest or confidence and this too needs to be addressed. As we see with so many instances on social media, the crowd follows crises moment to moment, often forgetting about your plight for another more sensational. This can have a devastating impact on your business in both pre and post social outrage. This social interaction has the greatest risk velocity, or speed at which risk manifests itself. Your business and your people should be competent to foresee and address these risks. Without this review and sustenance of process and personnel the recall can easily descend into a full-fledged crisis.

The hour before calling the recall closed

Is a bit like the night before Christmas, everyone wants to arrive, the trouble is everyone is focusing on the presence and not the future. It’s a little like giving a puppy as a gift, it’s wonderful to start but provides a lifetime of commitment. So too is a recall, as the future effect may be more significant than the initial issue. By this I mean it could lead to increased oversight and regulation, reduced scope of operation and market, continuing consumer distrust and increased cost of business.  At this point, a delay step should be injected into the process to assess the risk to business as usual (BAU). If you operate a business continuity plan then this will be a mandatory step to follow, if you operate a risk management plan this too is a condition of reviewing business changes, finally if you run a quality program it is part of process review, continuous improvement and management review. You will be assessing the impact of business continuity using your SWOT analysis and assessing your market conditions using your PESTLE analysis. You will, of course, be critically reviewing your recall action goals and indictors for completeness and satisfy yourselves that you can make the decision to stand down and close out the recall, after all you will need to demonstrate this to the regulators with confidence. Many times, I see businesses skip over these steps and charge to shoulder the grindstone again, many times missing an opportunity to learn key lessons. Here again your Superheros in the room should be lashed back in that chair and allow those with a more thoughtful approach to take over the process. Look for the people that have a lower risk appetite than yourself and allow them to inject as many “what if’s” as they can find into the discussion. Have patience with this process and ensure you have an answer or a risk assessment for each.

Once satisfied, you should be moving on the standing down the crisis or recall team(s).

What is my role in all of this? I’m glad you asked, my role is to inject the pauses into the situation to ensure good decisions are being made. I may be handing out the rope to lash down the superhero, or I may be asking questions about business continuity. I don’t provide the answers (all of the time) but I do provide the challenging questions and the support to answer them. My goal is to ensure good decisions are made in a timely manner to facilitate a successful outcome to business in crisis.

About the author

Peter Holtmann is the founder and Director of Holtmann Professional Services, a global provider of business risk management and transformation practices. Peter has more than 25 years of experience in executive roles and has been the President and CEO of a global Non-profit. Peter has written for many journals and blogs, is a keynote speaker and is a champion of prosperity through excellence of leadership.

Peter can be contacted at www.holtmann.com.au