Coke's Hard Lesson in Crisis Management
Seventeen years ago, James E. Burke wrote the playbook for handling corporate catastrophe when, as CEO of Johnson & Johnson, he managed the Tylenol scare. His strategy: Be visible, be sympathetic, be responsive. Coca-Cola Co. Chairman and CEO M. Douglas Ivester is now trying to be all three, weeks after 200 people in Belgium and France, many of them children, came down with nausea and dizziness after drinking Coke. Banned in Belgium, Luxembourg, France, Spain, and the Netherlands until June 23, Coke, perhaps the most valuable brand in the world, suffered mightily (page 32).
Ivester has belatedly flown to Brussels and published a personal apology in Belgian newspapers. Coke has set up a special consumer hotline and has offered to pay all medical bills. And it has identified poor-quality carbon dioxide and a fungicide used to treat wooden pallets as the source of the smell and off-taste that might have caused illness.
CEOs of global corporations, of course, cannot be expected to jump on a plane every time something goes wrong. But some problems require immediate action. Europe has been gripped by a food-safety obsession for some time. Just a month ago, Belgium's government fell because it delayed acting over cancer-producing dioxin in chickens. Britain's government came under fire for being slow to halt the spread of mad cow disease. Food from both countries were banned. Unlike those cases, Coke has not been found to be a health hazard. Indeed, it is possible that the children who originally got nauseous were simply caught up in the food-safety scare.
All the more reason for Ivester to have moved decisively. Global companies must be aware of national sensitivities. When something goes wrong, CEOs don't have to admit guilt if there is none, but they should show they care and offer to do whatever it takes to restore confidence in their product.