A handle on disaster

A handle on disaster

Most corporations know that prompt and aggressive public relations efforts are often needed in times of crisis – something BP and BA are finding out the hard way.

June 21, 2010 5:55 by Katherine Azmeh

In 1982, seven people in the US state of Illinois died after taking cyanide-laced Tylenol, a non-prescription pain reliever used for headaches and minor aches and pains. No one was ever charged in connection with the killings, which led to a nationwide panic, and dramatic changes in American legislation regarding tamper-resistant food and drug packaging.

The high profile case is now seen by many as a model of corporate crisis management. Prompt and aggressive action by the manufacturer of Tylenol, Johnson and Johnson, is credited with an astounding rebound in the market share of the product. The company instituted disaster control measures like a full nationwide recall, despite the low likelihood of recovering additional tainted bottles. The “Tylenol Crisis,” has been referred to as an example of “how effective public relations saved Johnson and Johnson.”

In corporate disaster control, the bigger they are, the harder they fall – and the bigger the mess to clean up. In the case of UK’s British Petroleum, BP, the “mess” is measured in tens of thousands of barrels of spilled oil along the Gulf of Mexico shoreline.

More than a month later, BP has kicked the “disaster response” into high gear. Its redesigned website reads like an ode to corporate social responsibility. Here you will find detailed instructions on how to make a financial claim against the company, along with a laundry list of “payouts” and nods to good governance, transparency, and a lighter ecological footprint. From millions for Louisiana barrier island construction, to billions as part of an agreed package of measures to meet its obligations in the spill, BP’s corporate losses are estimated at as much as $84 billion. And while the water cooler guys are keen on debating “will BP survive?”, optimistic types are calling the shares “a screaming good buy.” The question is whether BP will run out of money before it reestablishes viability.

BP is not alone in trying to mitigate disaster before they reach the point of no-return. As if the ash cloud disaster didn’t go far enough in disrupting passenger travel, British Airways skidded head first into another nasty cabin crew strike in May, following close on the heels of a March strike. As the whole business played out it the media, complete with Twitter updates, it proved that not much had been solved the first time around. As part of BA’s response to what the airline is calling “well-documented challenges,” the company is looking to “regain the faith of customers,” with discounted fares, free car hires, and a commitment “to operate all long haul flights if another strike goes ahead this summer.”

But given the beleaguered business climate in the airline industry, the question facing would-be BA passengers may boil down to choice, and it remains to be seen whether BA is doing enough in this crisis. Faced with the possibility of delayed or canceled flights, airline travelers may not be much enticed by the promise of a discounted rental car, particularly where competition is stiff.

And despite the sinister sound of $84 billion in corporate losses, it’s difficult to imagine BP doing more in the way of damage control. More importantly perhaps, while BA operates in a fiercely competitive industry, BP is a dominant player in an increasingly vital and strategic one. In the end, this may be the company’s saving grace.