Madhukar Sabnavis: Crisis management

Companies have much to learn from the recent crisis in Mumbai

A crisis comes unannounced. By definition it cannot be foreseen.

On July 26, Mumbai received an unprecedented record rainfall of 944 mm in one day. It turned out to be the eighth heaviest day of rainfall in Indian history in about 100 years. It also exposed the limitations and deficiencies in the infrastructure and management of the city. The city virtually came to a standstill""in fact, it collapsed.

The government and its agencies got caught off guard and chaos prevailed. Power and water supply got affected, so did the city's transportation network and thousands had their houses and belongings washed away in the torrential floods that followed. It was only the will of the people that saw them through this trying period.

Clearly the rains were unforeseen. However, the issue is more how prepared Mumbai and its management were to face the challenge and how well it was handled.

Was the government really at fault or is it being blamed for the vagaries of nature on which it has not much control. Interestingly other populous cities like Tokyo and Hong Kong face natural assaults like earthquakes and typhoons with less disastrous consequences. The Mumbai system seems to have failed on four counts:

There was no disaster management plan in place, and if one existed, its implementation network was not effective;

There was no communication, either before or during the key crisis period through the multiple media channels that were available i.e. radio, SMS and even on ground, through the traffic police and other bodies;

There was no demonstration of leadership""the chief minister appeared in public eye almost 18 hours after the crisis hit the city. (Interestingly, Tony Blair got on air within two hours of the London bomb blast of July 7, after leaving an important G-8 meeting midway to be with his people.) Local MLAs, MPs and municipal councillors were conspicuous by their absence;

There was little tangible action from the government to show that it cared and was trying to solve the problem and help the public. The steps taken were fairly predictable and routine.

Further, unfortunately, the government had not built prior brand equity for itself to cushion its inability to manage the crisis as it struck the city. There was little reason for the citizens to believe that the government was doing its best to tackle the situation. Whatever seemed to have been done was seen as too little, too late.

This environmental situation may seem far removed from the corporate world""however, it is instructive for companies in India that are sensitive and want to be prepared for such eventualities. In business, risks cannot be eliminated; the future cannot be predicted, but one can do enough to be prepared for possible problems.

A "crisis management plan" may not prevent a disaster from happening but could work towards reducing losses. Citizens cope with crisis, but consumers (be it buyers, employees or business associates) need not and will not. They will just move on.

Past corporate history shows a mixed bag of management of crisis. Union Carbide packed up post the infamous Bhopal plant leak, getting into litigation and adverse publicity thereafter. On the other hand, a couple of years ago, Cadbury's managed its product crisis with systematic management of the problem""from openly communicating with its stakeholders with facts of the case and then taking immediate steps from retail drives to packaging change to rebuild consumer confidence. Cadbury's had the added advantage of strong brand equity built over the years in the past, which made consumers willing to give it a second hearing. (Any other newer multinational with less corporate and brand credentials would have found it doubly hard to retrieve ground).

Two bold corporate crisis management moves have come, in the past, from US companies. Johnson and Johnson called back large stocks of Tylenol when some batches were found to be "contaminated". And Lee Iacocca actually pledged his personal reputation on the products of Chrysler in the 80s""speaking up for the brand in the media and in formal advertising.

There can be no greater confidence-building measure to manage a crisis than an opinion leader actually giving his word for the resolution of the problem. (The Indian Prime Minister's presence in Kashmir to flag the first bus ride across the LoC earlier this year is also representative of this act.)

While senior corporate executives can complain about inadequate governmental measures and reputed film personalities decide to go for public interest litigation against the government for its inaction, the real solutions lie in opinion leaders, who can make a difference, taking upon themselves the responsibility of influencing and changing the infrastructure in the city.

Micheal Porter, in his seminal work Competitiveness of Nations, propounds that the growth and development of a country (or a city) cannot be done by government alone. It needs the active participation of the corporate sector""in seamless partnership with the local government.

Unfortunately Mumbai is a city that everyone takes from and few give back to. (This includes the central government, which takes Rs 58,000 crore as tax revenue and gives Rs 100 crore). Companies need to see their contribution to the city as "corporate social responsibility" acts that will help to provide them a cushion against any future consumer crisis they may face.

Quite certainly, the people of Jamshedpur will forgive the Tatas any "uncontrollable" transgression its brand or company may do, due to the goodwill it has built with the citizens of that city! John F Kennedy's famous remark "Ask not what your country (or city) can do for you, ask what you can do for your country (or city)" should be the motto for the companies of this city.

In sum, citizens and consumers are intelligent people. They are willing to understand and forgive if adversity in the form of a crisis hits them-however, they seek honesty, credibility and speed in thoughts and actions from the managers involved. Government and companies need to recognise that and act accordingly when a crisis strikes.

Something worth thinking about!

The author is Board Partner, Discovery and Strategy, at Ogilvy and Mather, India. He can be contacted at Madhukar.sabnavis@ogilvy.com