Controlling and Crisis Management Notes

Controlling

  • Compiled by Dr. Malcolm F. Homavazir, Ph.D, MBA (Finance), State Eligibility Test (SET) for lectureship, M.Com, LLB, BMS.

Crisis Management - HBR Article Discussion

  • Harvard Business Review Article Discussion.
  • Article: "Are You Leading Through the Crisis … or Managing the Response?" by Eric J. McNulty and Leonard Marcus, March 25, 2020.
  • Source: https://hbr.org/2020/03/are-you-leading-through-the-crisis-or-managing-the-response

Key Discussion Points

  • Taking a Narrow View (Oil Spill).
  • 'Managing' the situation.
  • Response Time.
  • Forgetting Human Factors (Sandler O’Neill).
  • Pre-Reads Discussion.

What is Control?

  • Control is a management function.
  • Involves monitoring activities to ensure they are being accomplished as planned.
  • Correcting any significant deviations.
  • Managing by Walking Around (MBWA).

Acceptable Range of Variation

  • Exhibit 13-3 illustrates the acceptable range of variation.
  • Includes acceptable upper and lower limits around a standard.
  • Acceptable range of variation is the range between the acceptable upper limit and acceptable lower limit.

When Does Control Take Place?

  • Feedforward Control:
    • Control that takes place before a work activity is done.
    • Aims to anticipate problems.
  • Concurrent Control:
    • Control that takes place while a work activity is in progress.
    • Focuses on correcting problems as they happen.
  • Feedback Control:
    • Control that takes place after a work activity is done.
    • Deals with correcting problems after they occur.

Control Timing - Exhibit 13-5

  • Feedforward Control: Occurs at the input stage to anticipate problems.
  • Concurrent Control: Occurs during the processes stage to correct problems as they happen.
  • Feedback Control: Occurs at the output stage to correct problems after they occur.

Case Studies

  • Two case studies presented:
    • United Airlines and Dave Carroll.
    • P&G and Green Peace.

United Breaks Guitars - Case Study

  • United Airlines is one of the largest international airlines based in the US.
  • Close to 50,000 employees and more than 3300 flights per day.
  • Rough handling of Dave's guitar caused damages.
  • Customer complaint was not handled properly.
  • United Breaks Guitar-effect: Stocks plunged by 10%, creating a loss of 180180 million to the shareholders.

Dave Carroll's Experience

  • Dave Carroll is a Professional guitarist, member of the band Sons of Maxwell.
  • Undergoes a very bad experience with United Airlines.
  • Makes a song "United Breaks Guitar" which talks about his bad experience and frustration.
  • United Breaks Guitar-effect: Reaches 100 million people, popularity increases.

The Power of One Voice in the Age of Social Media

  • 9 month long battle with United Airlines.
  • Chicago representative said no refund after 24 hours of incident.
  • Asked to speak to supervisor: refused.
  • Denied 12001200 worth of flight vouchers.
  • Warned her of his plan to make 3 videos and told his goal to reach a million viewers in a year.
  • Actually hit 3 million in a week with a 150150 video.

Impact of "United Breaks Guitars"

  • United Breaks Guitars - YouTube's no.1 rated music videos of all time and no. 3 in any category of video.
  • The video reached to a total of 4.6 million, number of visitors to 20000 per week.
  • Song sales on iTunes increased from 1 or 2 to hundreds per day.
  • The song becomes a Top 20 iTunes download in Canada and number one in United Kingdom for July 2009.
  • United Airlines realizes its mistake and offers Dave 12001200 in cash and 12001200 in flight vouchers to correct its mistake.

United Airlines' Mistakes

  • Did not address Dave's Complaint.
  • No Immediate response for the 1st video post.
  • Responded after it went to mainstream media.
  • United made no official apology, no statement released regarding the incident.
  • Spokesperson only gave limited media interviews and announced that they use video for training purpose.
  • They only responded directly through tweets, not in any other online channels.

Lessons Learnt from the Case

  • Lesson 1: This was a preventable crisis.
  • Lesson 2: Actions of employees can come under public scrutiny and impact company’s image.
  • Lesson 3: United Airlines misjudged it’s audience.
  • Lesson 4: Major aspect of crisis resolution is the speed of response from the Company. United Airlines responded the very next day when the video of Dave was viral else the outrage and brand damage would have been much more.
  • Lesson 5: It’s important for a company to engage on the right social media platform. It was shocking and confusing that United Airlines never engaged on YouTube, instead they used Twitter. Many missed opportunities for United Airlines to mitigate the crisis.
  • Lesson 6: United Airlines to increase its credibility could have:
    • Released a YouTube statement
    • Apologize for the incident
    • Collaborated with Dave to make video showcasing corrective action.

Case Material - United Breaks Guitars

  • Case study: United breaks guitars, https://hbswk.hbs.edu/item/united-breaks-guitars, http://assignmentvip.com/Melbourne/351.html
  • Video Link: United Breaks Guitar: https://youtu.be/5YGc4zOqozo

P&G - Organization Background

  • American consumer goods company.
  • 105,000 employees.
  • 65 brands make up portfolio.
  • Organized into 10 categories: Baby care, feminine care, grooming, oral care, personal health care, hair care, skin care, personal care, fabric care and home care.
  • Examples of P&G brands: Tide, Always, Dawn, Crest and Bounty.
  • Sold in 180 countries and territories and can be found in 98% households.
  • Net sales in 2016 = 6565 Billion.
  • Competitors: Johnson & Johnson, Unilever and Kimberly-Clark Corporation.
  • Brand position: "Touching lives, improving life"

P&G Olympic Partnership

  • 2010, mid-tier sponsor.
  • 2012, IOC TOP sponsor.
  • IOC: International Olympic Committee.
  • TOP: The Olympic Partner.
  • Not in the business of athletics but, in the business of helping mom's with their trusted brands for over 175 years.
  • Utilized in making campaign relevant to mission and values.

P&G - Thank You Mom Campaign

  • "Best Job", "Pick Them Back Up" and "Kids" are the three most viewed Olympic advertisement videos of all time.
  • "Best Job", "Kids" and "Raising an Olympian" were viewed over 17 million times online.
  • 33.6 billion earned media impressions.
  • Most successful campaign in P&G history delivering 200MM+200MM+ in incremental sales in the USA
  • Brand recall for P&G's first corporate campaign was the best among long-standing Olympic partners such as Coca-Cola and McDonald's, at 40%.
  • P&G familiarity expanded by 22%, favorability by 13% and trust by 10%.

P&G and Greenpeace

  • Greenpeace Shames P&G’s “Thank You, Mom” Campaign With Orphaned Orangutans.
  • Greenpeace accuses P&G over Indonesian forest destruction.
  • Procter & Gamble brings rainforest destruction into bathrooms, says Greenpeace. Greenpeace takes on Procter & Gamble over commitment to mothers.

Greenpeace Actions Against P&G

  • Greenpeace then launched its assault when nine activists snuck into P&G's corporate headquarters, ziplined across its buildings, and unfurled banners with slogans like "Head & Shoulders: Wipes out dandruff & rainforests.“

Public Outcry and Greenpeace Campaign

  • Nearly 400,000 people have called for Procter & Gamble, to change its ways and take measures to stop the destruction of habitat that is home to the Sumatran tiger and the orangutan, amongst other species.

Response by P&G

  • Procter & Gamble were not immediately available for comment. The company's website says it is "committed to growing our business responsibly" and has introduced sustainability scorecards for suppliers.
  • P&G declared a statement over social media that it is investigating Greenpeace's claims and has committed to using only sustainable palm oil by 2015.
  • To mitigate the potentially negative impact, P&G immediately took measures announcing its commitment to preventing deforestation in its entire supply palm oil chain.

P&G's Commitment to Forest-Friendly Palm Oil

  • P&G committed to forest-friendly palm oil.
  • Go beyond to restore, grow and protect forests globally.
  • Restore: Help the Arbor Day Foundation plant two million trees via the California Wildlife Restoration project.
  • Grow: Work with experts to increase the number of forests acres that are FSC certified in the U.S. and Canada.
  • Protect: Train private forest owners on the value of certification.

Result: Major Change in Corporate Behaviour

  • P&G promised to take measures removing all deforestation from its palm oil supply chains by 2020.
  • The No deforestation policy goes beyond existing criteria from the Roundtable on Sustainable Palm Oil (RSPO)
  • P&G’s no deforestation policy promises to remove forest destruction from its palm oil supply chain by ensuring all its suppliers guarantee no conversion of peat lands, respect the rights of local communities, and protect high carbon and high conservation value areas.

Transformation in Palm Oil Industry

  • P&G’s policy is testimony to the transformation that the palm oil industry is currently undergoing: from consumers demanding deforestation free products, to traders and producers such as Wilmar and GAR adopting no deforestation policies: responsible palm oil is fast becoming the norm.
  • It is an undeniable change of the heart in the global palm oil industry, one provoked by public pressure and a desire to stem the tide of forest destruction. P&G’s no deforestation policy comes as a commitment by one of the world’s largest consumer goods companies!

Crisis Management - Forbes Article

  • Crisis Management: Do You Have The Right Plan?
  • Source: https://www.forbes.com/sites/jackgarson/2019/10/01/crisis-management-do-you-have-the-right-plan/

Post-Reads Discussion - Crisis Management

  • Plan for the Worst
  • Investigate
  • Remediate
  • Plan your Communication
  • Legal Experts Opinion
  • https://www.lbbonline.com/news/procter-gamble-launches-global-thank-you-mom-campaign
  • https://www.google.co.in/amp/s/www.smartinsights.com/online-brand-strategy/brand-positioning/campaign-of-the-week-pg-and-the-olympics-thank-you-mum/amp/