Reputation management: How to polish your corporate apple
The spontaneous worldwide outpouring of sympathy for Apple on the death of its iconic founder Steve Jobs is certain to earn it corporate dividends for many years to come.
Already, Apple is the world’s most valuable technological company, having displaced Microsoft with the success of a string of products: iPod, iTunes, iPhone and iPad. Its corporate future seems secure over the next three years, largely on account of its immense reservoir of goodwill among its customers.
West Tower
Contrast Apple’s enduring corporate reputation with something happening in our backyard.
The continuing litigation over the oil pipeline spill that forced the evacuation of residents of the West Tower condominium building in Bangkal, Makati, recalls similar disasters that live in the annals of corporate social responsibility as classics in the handling (or mishandling) of corporate reputations.
Tower residents have filed a new suit, this time for criminal negligence, against the operators of the oil pipeline, First Philippine Industrial Corp. (FPIC), owned by the prominent Lopez family of industrialists, and oil companies Pilipinas Shell and Chevron Philippines, which use the pipeline.
FPIC operates the 117-kilometer-long pipeline that moves fuel from Batangas to the Pandacan oil depot in Manila. A breach in the pipeline was found to be the source of oil products that leaked into the basement of the 22-story tower, prompting Makati officials to evacuate its residents.
The residents went to the Supreme Court for a writ of kalikasan (environment), which the court granted last November. The court also ordered FPIC to shut down the pipeline and clean up the West Tower basement on other areas in Barangay (village) Bangkal. The residents then sued for damages prior to the latest suit for criminal negligence.
The contentious issues in the litigation will fill up this entire newspaper, so it is best to let the courts tackle them. The Exxon Valdez environmental disaster off the coast of Alaska and the Tylenol murder cases in the United States are worth recalling for the lessons they impart.
North to Alaska
Shortly after midnight on March 24, 1989, the Exxon Valdez supertanker ran aground in Alaska’s Prince William Sound. Despite efforts to stabilize the vessel, more than 250,000 barrels of oil spilled to the sea.
Exxon and the US Coast Guard began a massive cleanup effort that eventually involved more than 11,000 Alaskan residents and thousands of Exxon and contractor personnel. In 1992, the US Coast Guard declared the cleanup complete.
The 1989 Valdez accident was one of the lowest points in ExxonMobil’s 125-year history. According to Exxon’s official account of the disaster, “we took immediate responsibility for the spill and have spent over $4.3 billion as a result of the accident, including compensatory payments, cleanup payments, settlements and fines. The company voluntarily compensated more than 11,000 Alaskans and businesses within the year of the spill.
Exxon also undertook significant operational reforms and implemented a thorough operational management system to prevent future incidents. This system has been deployed globally and in the years since the accident, Exxon has had nothing similar occur.
Tylenol murders
On Sept. 29, 1982, a sick 12-year-old girl in Elk Grove Village, Illinois, unwittingly took an Extra-Strength Tylenol capsule laced with cyanide poison and died later that day. She would be one of seven people to die suddenly after taking the popular over-the-counter medication, as the so-called Tylenol murders spread fear across America, according to the History.com website.
The victims, all from the Chicago area, ranged in age from 12 to 35 and included three members of the same family. Johnson & Johnson, the maker of Tylenol, launched a massive recall of its product and offered a $100,000 reward for information leading to the arrest of the person or people responsible.
Investigators soon determined that the tainted Tylenol capsules hadn’t been tampered with at the factories where they were produced. This meant that someone had taken the bottles from store shelves, laced them with poison, and then returned them to grocery stores and pharmacies, where the victims later purchased the tampered bottles.
Johnson & Johnson reacted to the crisis swiftly and decisively, launching a massive public relations campaign urging the public not to use Tylenol. The company also ordered a national recall of 264,000 bottles of Tylenol and offered free replacement of the product in safer tablet form. At the time, it was unusual for companies to recall their products.
Back on top
Before the “Tylenol Terrorist/s” struck, Tylenol was the nation’s leading over-the-counter drug and Johnson & Johnson’s bestselling product, and some observers speculated that Tylenol would never be able to recover from the disaster. However, within months, Tylenol was back on store shelves with a new safety seal.
The recall and re-launch cost Johnson & Johnson over $100 million, but in the end, Johnson & Johnson was praised for its handling of the crisis. Within a year, Tylenol’s market share rebounded and its tarnished image was significantly repaired.
The Tylenol murders, which inspired copycat crimes involving other products, were never solved, although various individuals were investigated. However, a positive outcome of the crisis was that it led drug makers to develop tamper-evident packaging, which had been largely nonexistent before the Tylenol Terrorist struck.
West Tower incident
The West Tower case will long be litigated, and the company’s reputation will continue to deteriorate while the legal wrangling drags.
Wayne Calloway, former chief executive of Pepsi-Cola, once declared: “If I can get our reputation right, lots of good things happen… If I get it wrong, we’re in big trouble,”
The Exxon Valdez and Tylenol cases offer the Lopez company sterling examples of how best to handle a corporate social responsibility case with minimal damage to the company’s reputation. Its choices are crystal clear.
