Merit

How A Corporate Crisis Leads To Market Invention


 

“When written in Chinese, the word crisis is composed of two characters; One represents danger and the other represents opportunity. – John F. Kennedy

Most have witnessed—and some have experienced—an extraordinary volume of crises over the last 12 months. Salacious headlines seemingly hit our newsfeeds on a daily basis. One crisis is just as scandalous and shocking as the next. Sexual harassment charges, natural disasters, shootings, racial biases, and data breaches are becoming all too common.

In the past year, several companies have seen their previously respected reputations, staff morale, and overall profits severely dwindle as a result of a damning crisis that hit their business. However, a crisis should be seen as a learning lesson and opportunity to change, improve, and invent.

As a company that invents new markets and opportunities for businesses, Merit sees a crisis as an opportunity for an affected company to create change it might not otherwise consider making while experiencing inertia. Almost every corporate breakdown is an opportunity for market breakthrough.

“You never let a serious crisis go to waste. And what I mean by that is it’s an opportunity to do things you thought you could not do before.” – Rahm Emanuel

Although we assert that good crisis management is 99% preparation and 1% execution, we also strongly believe that the aftermath of a crisis is an optimal time for innovation. Any company that has experienced a crisis can harness the situation as a chance to review, improve, and reinvigorate three primary business functions: 1) people, 2) product, and/or 3) process.

We will explore a few recent examples of how companies in crisis seized the opportunity to change and innovate.

STARBUCKS

This week’s unfortunate episode of alleged racial profiling at a Philadelphia-based Starbucks underscores just how critical smart change can be when handling a challenging situation. Within days of public protest and customer outrage, Starbucks made  necessary changes to its 1) people and 2) process by scheduling anti-discrimination training on May 29 to “ensure everyone inside a Starbucks store feels safe and welcome.”

Did this kind of training exist before at Starbucks? No. Did this week’s crisis force Starbucks to rethink how its people act and invent a better process? YES! A timely example of an iconic brand inventing in the wake of a crisis.

“Almost every corporate breakdown is an opportunity for market breakthrough.” – Casey Boggs, President, Communications @ Merit

KFC

An immediate response is what most people expect when they hear “crisis management.” A recent example of a remarkable response was when KFC restaurants in the UK ran out of chicken. It doesn’t sound like a global news story, or a particularly great PR opportunity, and normally it wouldn’t be. Customers would be disappointed or angry and move along to the next restaurant. They’d probably even be hesitant to choose KFC the next time they’re craving fried chicken. But KFC turned their chicken shortage into something memorable—a news story people wanted to read about—and an example of great crisis mitigation.

You’ve almost certainly seen the apology poster: an empty KFC chicken bucket with the company’s logo rearranged into “FCK” and a subtle headline beneath that read, “We’re Sorry.” The move was witty, irreverent, and amused people to such a degree that they were ready to overlook the chicken shortage.  KFC quickly made improvements to its supply chain process and product—and ultimately to how it communicates to its valued customers.

KFC’s quick, smart approach is now legendary in the PR world, but was it really market invention? Absolutely! The immediacy of KFC’s response to a crisis showcases the company’s innovative, honest approach to making things right. While the best time to implement market invention into a crisis strategy is long before a crisis ever strikes, KFC  managed some clutch maneuvering during their crisis, even boosting brand image and connecting with people who otherwise wouldn’t care about fried chicken.

BP

In 2010, BP became public enemy #1 in the United States and abroad due to Deepwater Horizon oil spill and the unnecessary lives that were taken. The hatred was even more intense for the people and businesses of the Gulf Coast, who despised the oil company because of the lives lost and the environmental and economic issues the behemoth oil spill created.  There was no shortage of well-deserved blame heaped onto BP’s shoulders.

Instead of flailing in the eye of adversity, BP pledged after the crisis to “make it right” and earmarked billions of dollars and resources to do so. The company acted relatively quickly to remove key executives (bye bye Tony Hayward), took initiatives to improve community relations in the Gulf region, and became fully committed to not only clean up its mess, but to make the region better than it was before.

Some would argue that BP didn’t act fast enough and they should have done more BEFORE, DURING, and AFTER the catastrophic failure. We agree. However, we recognize that the company did take this crisis opportunity to reinvent itself to vastly improve its people, process, and overall product to prevent such disasters again. BP is no hero and will likely forever be chastised for its 2010 failure. To move forward, the company will need to continue to make necessary changes, reinvent itself, and extol the remarkable changes it has made.

DON’T WAIT FOR A CRISIS

“When you’re going through hell…keep going!” – Winston Churchill

Going through a crisis is no fun and can be debilitating. We applaud the corporations that seize the crisis as an opportunity to learn, grow and invent to improve their people, product and processes. We do, however, advocate that companies don’t wait for a crisis to invent.  Rather, the time is now to strengthen reputations and future-proof brands by being proactive through market invention.

About Merit

Merit is the global leader in market invention. More often than not, our work carves out an entirely new market and transforms industry through research and strategy, communications, creative, and technology. For a company to succeed in the new era of marketing, it needs Merit.

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