Thursday, September 16, 2010

Why Do Some Companies Survive Crises and Others Don’t?

I sure wish I knew for sure.

It is obvious in many cases. The organizations that were prepared and had a plan and practiced with it, almost always come out on the other side on their way to recovery, even if the disruption was of their own making.

It is equally obvious when a company screws up, doesn’t know how to manage it, doesn’t take responsibility and doesn’t know what to do and say, or refuses to do the right things.

Then there is Toyota, BP, Firestone and Exxon.

Ten years ago there were many who had written Firestone off – history, gone, done, stick a fork in ‘em! It was the second time in less than 20 years that Firestone had a defective product and major tire recall. They almost disappeared after the Firestone 500 Tire recall, but Japan’s Bridgestone Tire Company bought Firestone in a “fire sale” and kept it afloat.

Then in the 90’s management ignored all the warning signs and continued to sell the Firestone ATX tire even after reports it was causing Ford Explorers to crash and kill and injure people. All of the lawsuits in that 2000 recall have not yet been settled.

Exxon’s Valdez oil spill in 1989 was the epitome of an environmental disaster up to that time.

Bob Irvine, founder of the Institute for Crisis Management, was in Alaska for several weeks assisting another company that feared fallout from Exxon’s spill. He says Exxon did a really good job of cleaning up the bay, but did a poor job of communicating what happened, what they did and what they were going to do. He stood on the shore one day with an Exxon senior executive and suggested they needed to do a better job of telling their side of the story.

The Exxon executive looked up at Bob and said “we don’t have to say anything all we have to do is a good job.” That didn’t work for them.

Yet Exxon survived and is one of the most profitable companies in the world, even though they are still vilified by people around the world.

The BP story is still being written, but there’s little doubt the company will survive and continue to be profitable, even while being the butt of criticism and possibly hundreds of lawsuits for years to come.

Toyota is another recent case.

When the year began with a massive automobile recall of nearly 10-million vehicles, Toyota lost $30-billion of its “value” in a matter of weeks, but by August, the company was recovering.

Toyota is a little easier to understand. It is a company with a ton of banked goodwill and a solid reputation. It took a hit and it has a long road to recovery, but it will make it, unless management takes its eye off the ball again.

Sunday, September 5, 2010

On Second Thought, Hospital Did Not Handle Crisis Well

A 7-month-old boy from Indiana died in a Cincinnati Hospital last month, after his body was mistakenly flushed with alcohol instead of the prescribed saline solution.

Tressel Meinardi of Richmond, IN was in Cincinnati Children's Hospital for heart surgery when the alcohol was mistakenly pumped through the little boy's body causing his organs to fail.

Hamilton County, Ohio Coroner O'Dell Owens confirmed the hospital notified his office that someone on the hospital staff had accidentally used alcohol instead of saline solution during heart repair surgery. The infant was born in February with a heart defect.

Owens says the hospital was "upfront" with the family and his office, admitting the "alcohol was the cause of death."

Apparently some days after the death, the Hospital President Michael Fisher circulated a memo to staff saying he could not disclose details, alluding to hospitals' old standby excuse that HIPAA, a federal patient privacy law, prevents them from giving even basic public information.

But the internal staff memo said, "Families have the right to know their child's medical status, treatment and outcomes. In cases where there has been an error, we accept responsibility, admit the error, apologize for it, and explain what happened."

However, the memo doesn't appear to take responsibility, nor does it confirm an error was made nor "explain what happened."

Even his statement of sympathy was somewhat backhanded: "Our thoughts and prayers are with the family of this child, with our caregivers and the entire Cincinnati Children's family. This is a difficult time for many."

When I first read about the death and the hospital's internal communication I thought they were off to a relatively good start in managing this tragedy. But after I went back and read the only public statement I could find from the hospital, I had second thoughts.

The internal memo appears to have been written by a lawyer with fears of a medical malpractice lawsuit hanging over his/her head.

The next challenge for the hospital administration comes when the Coroner reveals what went wrong, or the first lawsuit is filed. These kinds of hospital "accidents" were more common in the past, but a nationally publicized operating room "mistake" a number of years ago prompted most hospitals to change a procedure that had been subject to such accidents and ignored for ages.

Medicines and other solutions were poured out of clearly marked containers into bowls to make it handy for the nurses and doctors to access them during the press of the operation or procedure. It was easy for the bowls to get mixed up and patients to pay with their lives.

If that happened in this case, the staff and hospital malpractice rates will go through the roof. Not to mention the hospital's reputation plunging into to the toilet.