One of business school's most touted leadership case studies is about J&J's 1982 Tylenol recall. J&J acted immediately and at a cost of over $100 million to pursue action in the best interest of the consumer. In the end, it was in the best interest of the Tylenol brand, which to this day remains a top global seller.
Dell could learn something from J&J's action. Although its battery problem has yet to completely play out, the defects and more importantly the response could further erode its customer service reputation. The take aways from J&J's crisis management actions were:
- Declare a crisis to defuse a crisis: Doesn't matter whether the company believes something is a crisis or not ... if the customer believes it, it's true
- Act immediately: Lead time between first report and action should be less than 72 hours
- Act transparently: Tell everyone what you are doing
- Take responsibility
- Make it easy for the customer
It took awhile for Dell to respond as pictures of exploding batteries circulated virally. No doubt, Dell was examining the battery to determine if there actually was a problem. But that goes against the first rule "Declare a crisis to defuse a crisis". Action was slow. Time will tell whether customers find it easy to work with the recall.
Appropriate crisis management is not only responsible, it's also a sound business decision. Recalling 4.1 million batteries will likely cost Dell and Sony more than $100 million. However, with a slow response, Dell allowed negative publicity to steamroll. This actually could be costlier in the long run.