Markets & Finance

Bausch & Lomb: Crisis Management 101


It's about the worst thing that can happen to a consumer-products company -- a suggestion that your product is harming your customers. It happened to Rochester (N.Y.)-based Bausch & Lomb (BOL)last week, after the Centers for Disease Control & Prevention reported an upsurge in a fungal eye infection called Fusarium keratitis that can cause blindness. The cause of the more-than-100 reported cases is not known, but a large proportion of them involved contact lens wearers who used Bausch & Lomb's ReNu with MoistureLoc contact lens solution.

After some retailers independently began pulling the product from their shelves, Bausch & Lomb embarked on a public relations offensive to limit the damage. On Apr. 13 the company said it was asking all retailers to stop selling ReNu with MoistureLoc while it and public health officials examined the company's South Carolina plant to see if there's a link to the infections.

LEARNED OPINIONS. Bausch & Lomb also took out newspaper ads with a letter to consumers from Chairman Ronald Zarrella. "If there is a problem with our product, we'll find it and fix it," the open letter said. "If there's not, when we come back you'll be able to know with absolute certainty that we've taken every possible step to ensure your safety." The company also offered refunds for bottles of ReNu with MoistureLoc that consumers had already purchased.

Will it be enough? BusinessWeek Online presented the problem to several business-school professors as a real-life case study. Here's how they would advise Bausch & Lomb to handle the problem:

"When you have a problem like this, you should deal with it immediately. I don't know of a consumer good where people are more concerned about the quality of the product than one that they have to stick in their eyes. This could turn out to be a case of the eye people -- Bausch & Lomb -- poking themselves in the eye.

"Now the company needs to find out who's responsible at the highest level and fire them. [Company executives] should make amends and avoid lawsuits by paying to help anyone who has been harmed. They need to take complete responsibility for whatever was their fault. They need to do whatever they can to make this right and make a real show of it.

"They need to make it right twice over -- and today. CEOs are either the kind to run away from problems like this or the kind to stare them down. The latter ones are successful. There is nothing better that you can do than own up to it and fix it. There's no magic in this."

-- Glenn MacDonald, professor at Olin School of Business, Washington University in St. Louis

"In this situation, you do what your mother taught you to do. You take responsibility for your actions, tell the truth, learn from your mistakes, and move on. Don't make the same mistake twice. And quit separating financial and social concerns, which go hand in hand."

-- Kellie McElhaney, adjunct assistant professor of corporate responsibility at Haas School of Business, University of California at Berkeley

"I teach crisis management to MBAs and executives, and the steps that B&L has taken follow the fundamental advice we offer most executives facing crises of this type. B&L began by halting shipments. They then pulled product from shelves. I know, too, that the company has made efforts to communicate the problem via news segments and a recent conference call with analysts.

"In crisis situations -- especially those involving recalls and where the consumer may still face some harm due to the company's product, the usual advice is to communicate quickly, often, clearly, and broadly across constituents. What I am less familiar with in this case is the length of time B&L knew about the possible connection between their product and health risks.

"My advice for the CEO is to maintain open lines of communication and provide information about the next steps. For example: What is the company doing to investigate the matter? It should commit the necessary resources -- funds and people -- to fully investigate the incidents. And be as forthcoming as possible with information. There is no better way to restore confidence of customers, doctors, and investors than to outline what the company is doing to confirm or deny the initial findings and document the actions being taken to protect the health and safety of customers."

-- Idalene F Kesner, chairperson of the MBA program at Indiana University's Kelley School of Business.

"Consumers want reassurance that the company is actively engaged in solving the problem...Right now there's an uncertainty and lack of information, which creates rumors and problems. The company needs to fill in the blanks. The CEO must come across as humane and empathetic. He can't be seen as hiding behind data or blaming others or the media. He must take responsibility and show that the company is seeking a solution to the problem and has the consumer's best interest at heart....

They knew something was coming, and they needed to get out in front of the problem. You have to be scanning the media environment constantly."

-- Irv Schenkler, clinical associate professor and director of the management communication program at the Leonard N. Stern School of Business at New York University

"Bausch & Lomb needs to be up front with its value statement and underscore its support for consumers. They need to be open and transparent and do what's right, despite the short-term market effects."

-- Clinton Sidle, director of Park Leadership Fellows Program at the S.C. Johnson Graduate School of Management at Cornell University

"This is a classic crisis communications problem right out of my textbook. They should be able to take out the playbook and just handle it...You don't wait five days to do something [recall the product] that you knew you had to do on Day One....

In the first days of a crisis, you should be managing communication. Figure out the problem, explain it, and apologize to customers. People will forgive you when you admit your mistakes. The problem happens when you dig in your heels and don't get out there and say: 'We screwed up.' Bausch & Lomb hasn't done that...People's memories are short and their forgiveness is large."

-- Paul Argenti, professor of corporate communication at the Tuck School of Business at Dartmouth College


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