About 25 per cent of Nestle's revenues in India comes from the sales of
the Maggi 2 Minute Noodles. The company spends an estimated Rs 150 crore
(of its Rs 450 crore annual advertising budget) on the instant noddle
brand. No wonder Nestle's response to the events leading up to the June 5
ban and recall of Maggi noodles, and a string of developments
thereafter leading to the Indian government filing a lawsuit against the
Swiss food firm's Indian unit, has baffled experts. Here five branding
experts discuss what the company could have done to avoid the crisis
from blowing up in its face
Stand up, take it on the chin: Supriyo Gupta
Nestle needs no lectures or prescriptions on managing food crises. They
have been at the centre of many a malevolent maelstrom over their food
and promotions. Their long drawn wars over baby food is the stuff of
many a case study. Every new episode seems to simply reinforce their
inherent inclination to put up the walls and hunker down. The question
is what did Nestle get horribly wrong?
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Failed containment: When the issue first erupted, there was a
healthy chance to keep it geographically locked up. Identify the factory
that was the source for the suspect samples and lock in the batch.
Contain. Isolate. Address. On the contrary, a dogged refusal to draw
boundaries sucked the whole brand in.
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The missing leader: Yes, there were no leaders coming out to bat for the jewel in the Nestle India crown.
Not even a brand manager was out there defending the brand. The global
crisis manual probably kicked in and a bunch of lawyers crossed out all
meaningful communication for fear of suits. Well, they have one now
worth Rs 640 crore and that would be an invitation to shut up even more.
On the contrary, it is a great opportunity to raise the flag of, well,
revolt.
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Opening with the King: In no strategy of war is the King the
opening gambit. The King is the reconciler, the person who makes the
moves that open a new chapter. Here they rolled him in straight into
FSSAI. His ideal job should have been to build the image of remedy and
reconciliation. Putting up the global CEO was possibly a very European
view of engaging the government and sorting out issues rather than
dealing with the opinion outside.
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No credible external endorsers: Nestle seemed to have created
and existed in a cold world. Possible years of dealing with people as
dealers, vendors, paid artists and 'stakeholders' meant there were no
warm relationships across the board. It is fairly unprecedented that a
corporate with such an extensive presence in the country didn't have
anyone standing up to bat for it.
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Failing to stand up and take it on the chin: Somewhere between
the clean chits of various food authorities and the rejections by Indian
labs, there is a batch or two that may have fallen between the cracks.
However, the biggest blunder in the episode was Nestle's failure to
stand up and take ownership of the product and the brand. All that was
needed was for the India leadership team to man the ship and communicate
leadership. To say, that we own this brand. We will investigate. We
will see. And we will fix.
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Moves that became inexplicable because they didn't get communicated: Nestle
recalled tonnes of Maggi and proceeded to incinerate them. Why? Who
asked for it? There was possibly very sound logic in destroying products
that would have expired if they had stayed on the shelf. But without
explanation, it simply ended up looking like disposing off the evidence.
Yet, it continues to be a company that is in a reactive mode. There
seems to be no real communication campaign in action. Much of the
statements and speak seem to be heavily guided by artificial legal
constraints.
Supriyo Gupta
CEO, Torque Communications
Do not deny involvement: Rita Gunther McGrath
Nestle, the global food giant, has had more than its string of troubles
lately, with some commentators arguing that the company actually veers
into a space they call 'evil' in its business practices. So the
company's latest venture into really, really, bad publicity with its
Maggi brand of noodles is unfortunately not completely out of character.
Despite an emergency effort by Nestle CEO
Paul Bulcke to
reassure consumers, including shredding his schedule for a two-day
visit to Delhi, the leadership at Nestle really didn't do a good job of
crisis management. The old nostrums - do it all, do it early and do it
yourself - were basically ignored in this case.
For starters, it's clear that Nestle folks did not initially recognise
the magnitude of the problem, magnified by the social media echo
chamber. The initial recall of Maggi by the folks in Uttar Pradesh took
place on April 30. Nothing was done until June, when the media uproar
was well advanced, and APCO Worldwide was appointed to manage its
message in India. Bringing in a crisis management communication firm
after the crisis has already exploded leaves it too late. The firm was
basically in denial that the questions represented a significant issue
for it.
My colleague, John Kimberly, professor of management at Wharton, has
some excellent ideas about what companies should do in a crisis
situation. He recommends a five-point crisis management strategy for
companies in such situations to restore credibility: "One, acknowledge
that there is an issue that needs to be examined carefully. Two, buy
time to get the facts. Three, do not deny involvement/ responsibility.
Four, do not attempt to estimate the magnitude of the problem. And five,
commit to a speedy but thorough investigation." (source: http://
knowledge .wharton
.upenn.edu/article/hot-water-lessons-from-the-maggi-noodle-recall-in-india/)
The Maggi incident also raises questions of whether operating in
countries with different regulatory and enforcement standards creates
new kinds of risks for large multinationals, as every misstep can be
amplified by social media. For citizen stakeholders who feel powerless
against what they may perceive as lax standards, social media provides a
powerful way to draw attention to their issues. Can the Maggi brand
recover? Possibly, but Nestle is going to have its work cut out for it
to regain trust.
Rita Gunther McGrath
Associate Professor, Columbia Business School
Bring in brand evangelists: Ramanujam Sridhar
Maggi has been really a case of a poorly-managed crisis. Having said
that I would also like to say upfront that it probably got a raw deal
and was the victim of a witch-hunt. But on to what should have been
done:
Who was minding the store? Every brand needs a custodian, more so
a brand that is under crisis. Nestle's response was muted, confusing
and delayed if it was even made. The brand custodian should have said:
"I am in charge and will move heaven and earth to ensure that the
consumer does not suffer and her health is not affected. I will
identify, withdraw and meet all standard that the government decides. We
will not compromise on consumer safety."
Speed was not the essence: One of the biggest problems was that
being a global company, Nestle's speed of response is constrained.
Today, in the reign of social media, we do not have this luxury. What
Nestle did was to bolt the stables after the horses had fled. On the
contrary, it should have quadrupled the speed of response.
So where was the consumer hiding? Let's not forget Maggi is loved by
people. A few generations have grown up on that snack. Where were those
evangelists and why they didn't come out and speak up- like Amitabh
Bachchan did for Cadbury - that we trust it and have had it for years?
The answer is not the mother and daughter ad but testimonials from real
life consumers. They should have used real consumers.
Ramanujam Sridhar
Founder & CEO, Brand-comm
Respond in real-time: Anil S Nair
Now that the Maggi saga has fully played out in full view of all of us,
one can preach some pearls of wisdom with the 'unfair' advantage of
hindsight. Truth be told that what has happened to Maggi and, hence
Nestle, is something that very few companies in India are prepared for. I
am not sure if this is a marketing task or corporate affairs task or a
legal and compliance task. So here is what Nestle could have done if
they could rewind time.
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Get up to speed: In this age of digital media you
can't wait even for an hour before you respond to an issue like this.
You have to start responding/acknowledging in real time. It is not about
giving out legally vetted official statement but engaging with the
audience in some form so that one can't be accused of 'hiding' from the
controversy. If Nestle was out there facing the music from day one,
things would have worked better for the company.
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Show a human face: Nestle could have appointed an official
'face' who could reassure the consumers about their commitment to
resolving the issue than merely give out delayed statements that lacked
human touch.
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Be proactive: Nestle should have recalled all the
stocks proactively just to convey their commitment to the well-being of
Indian consumers. This would have given a clear signal to the consumers
that here is a company that is willing take losses but not willing to
compromise on consumer confidence.
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Communicate: Nestle should have opened all channels of
communication - social, PR, advertising - soon enough to explain its
position. They were slow off the block in this regard. It is not about
saying the legally correct things but being seen as willing to talk -
that is important.
Having said all this, these points are wisdom born out of hindsight than
out of any best practice manual available on the subject.
Anil S Nair
CEO & managing partner, L&K Saatchi & Saatchi
Focus on internal branding: Saurabh Uboweja
A company of the size of Nestle is not new to handling or managing
crisis. But when you put a question mark on the equity of a popular food
brand and one of the world's top food companies, the best of your
crisis management plans can go haywire. Crisis related to food products
surface frequently and research shows that it can take three/four years
on an average for a large successful brand to recover from the equity
dilution and loss in sales after a crisis. The larger your brand, the
higher the risk it carries as the chances of it failing its own
standards increase because of its level of penetration and reduced
control over the supply chain before it reaches a consumer's plate.
There are, however, a few important steps one must take as a brand
custodian during such a crisis:
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First response: Timing your first response can be the most
challenging decision during a crisis because you are in shock and are
still gathering facts to formulate your communication. However, any
delay of more than a few hours can be disastrous. Your first response
must go out almost instantly, owning up to the crisis with a promise to
supply more information and enumerating your action points.
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One voice: During such crisis, everybody in your company has an
opinion from your security guard to your CEO. It is important to focus
on your internal branding first and limit the source of communication to
a single point. This ensures consistency and builds both internal and
external confidence in the brand during crisis.
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Reduce messages: Fewer messages mean fewer speculations. Stick
to the facts and share your firm official stand on the issues. Draft
well thought out releases in advance by speculating all likely actions
and reactions by the stakeholders.
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Time it: Your messages must be timed with important releases
from government authorities, the buzz in social media and reactions from
other stakeholders. You need to be ready with your engagement strategy
much before opinions start taking shape. Acting timely will give you
rare opportunities to drift public sentiments in your favour by subtly
influencing the discussions around your brand.
Saurabh Uboweja
CEO & Chief Brand Strategist, Brands of Desire
"Mind
you, those days you didn't have commercial breaks like today. One had
commercial breaks for a few minutes, and then the show ran non-stop for
the next 30 minutes or so. It was a different era altogether," Ramanujam
Sridhar, Founder and CEO, Brand-comm reminds.
