Dealing with the unpredictable

May 21, 2018

 Your book begins with the suggestion that every brand is a crisis in waiting. Taking cue from this plausibility, should organizations look at developing a business model with the potential to preempt crisis situations?

The opening line in my book was an attempt at waking readers up to the reality that a crisis is not an implausible rarity in today’s age of viral or fake news. No brand is crisis-proof, so it is best to be prepared for the worst. However, there is no real model or substitute for proactively pre-empting crisis by doing the basics of risk assessment, quality control, R&D, direct consumer feedback, and regulatory due diligence that most companies should undertake in one form or another.

There are models for calculating the risk for any product, which are a part of a basic SWOT analysis as well as market research and industry analytics—which are part of the standard operating procedure for any product launch. However, mapping the vulnerability of a product or brand during its entire lifecycle to all kinds of crisis is not a reality yet. Presently, brands need to be vetted at every stage—from production to distribution and even after that to monitor online/offline chatter about the brand. Perhaps artificial intelligence and machine learning can offer some solutions to businesses for mapping the crisis threat factor at the customer response stage. ML and AI are already a major investment focus for companies and a key tool in assessing the consumer for Netflix, Facebook, and Apple.

Furthermore, companies like Lyft and Mastercard are also using AI to prevent financial fraud, verify customer identities, and test autonomous self-driven cars, etc. Harvard Business Review points out that 16% of AI use is to monitor social media comments to determine brand affinity. This may be done via Natural Language Processing (NLP) or the ability of a machine to process, sort, and categorize elements of text using language mechanics for recognizing various types of words and can help companies avert crisis on social media.

ITC diversified its product line from cigarettes (considered hazardous to health) to confectionaries, ready-to-eat foods, and stationery (products perceived in a positive light). How effective is diversification of product line a means to maintain a positive brand image?

This is a great example of trendspotting in time and then minimizing your risk exposure. ITC did not just move from tobacco to confectionaries, ready-to-eat foods, and stationery, but also hospitality, clothing and so on. It was transforming from a business to a behemoth. However, in today’s world, a diverse portfolio is not de-risked by default. Unilever still faced a problem in Kodaikanal despite having a diverse portfolio. Similarly Nestlè has a vast product portfolio but still had to deal with the Maggi Noodles recall. Packaged goods and cola brands are in slow-burn crisis mode due to the health concerns of high sugar content and carcinogenic pollutants. So how could they diversify or pivot? Maggi Noodles can become a champion of food conservation in a nation that allows so much of its foodgrain to waste as one contributor to my book told me. Cola companies are already into the next big trend, which is packaged water, but may need to think beyond. Similarly, phone companies are witnessing a cannibalistic frenzy of technological innovation that makes their own models redundant every few months. They may need to spot and diversify into the next wave of innovation, be it VR or IoT (to avoid the fate that occurred to Blackberry and Nokia when they failed to foresee the rise of the app-based OS ecosystem).

 How effective is PR in the age of the all-pervasive social media where knowing the true facts has become very difficult?

PR is still effective in tackling old-school crises like product recalls, environmental hazards, or HR issues. PR agencies too are at the crossroads, of having to evolve to stay relevant to their client’s changing digital needs especially when clients are choosing to engage directly with consumers via in-house digital media teams or niche reputation management agencies. PR works best when the client needs to communicate via traditional media but when it comes to digital media, the brand may choose to engage directly with consumers via social media (with an agency to strategize, monitor, and curate its communication if need be). Direct consumer feedback and communication are becoming the new norm.

Though a brand can calculate the drop in sales/ market share during a crisis, it is not easy to assess how it affects brand perception. Can big data analytics help in this regard?

Qualitative market research surveys are conducted by the company or the brand in crisis recovery mode to gauge if the crisis management has been adequate. Big data analytics can help if the problem is easy to quantify and measure and if this information is readily available. For instance, in the case of Facebook, if they had access to how people voted when it came to Free Basics polls or the extent of support for the Digital India campaign, then that would help them understand how to tweak their next product offering in this market. But information-heavy products like Facebook that are ripe for data harvesting are not yet the norm in most other sectors.

 The flip side to the digital age is that it has dramatically reduced the response time one gets to act on a crisis. How can companies be prepared for this?

Using ML or AI, companies need to be alert to the online conversations happening about their brand, continuously. Social media and crisis management teams (that are trained, and enabled to act autonomously during crisis with minimal wait time for headquarter approval for every message) need to respond to the crisis as it unfolds on the appropriate medium. They also need to speak the same language that the brand has spoken in the past, and if there is a break in tonality, then it needs to be thoroughly vetted. For example, Pepsi’s advertising has usually been cheeky and irreverent, and it was widely panned for trying to opportunistically appropriate the activism of Black Lives Matter in its Kendall Jenner ads. Firstly, it showed that the company was woefully out of step with millennial consumers—so the need of the hour may be to invest in consumer insights first and avoid any implication of piggybacking on the trend of the hour. Secondly, once such an ad is out, monitoring the real time conversations about their brand to spot negative trends and responding appropriately and immediately should be a priority.

It requires considerable will within the company to prioritize consumer conversations and actually listen to them. The leadership need to be sensitized to this and persuaded to spend on this. Creating a commitment to this form of crisis management, then finding the right people, training them, and creating the ideal level of oversight so that the message is vetted but not delayed are crucial factors—more than the time, money, and resources.

  You suggest that the political affiliations of a corporation matter to the new-age consumer. Will this mindset sustain over the long term, especially, in a market such as India where consumers are largely value conscious?

I would like to clarify that political or rather ideology-based affiliations are not the same world over. An Uber may face social media backlash from Trump protestors when it apparently ends its cab strike too soon but in India, a rape committed by an Uber driver may trigger mass protests instead. The moral compass of the company should align with its target market. In a country like India, which is price conscious, there are some values that are sacred—such as safety, trust, financial stability, and cultural sensitivity. So, if a company indulges in fraud or corruption, or its products are contaminated or is not mindful of cultural and religious sensitivities, then it may provoke a crisis in India. Ola, for instance, was quick to distance itself proactively and condemn its user Abhishek Mishra who started trending on social media after he proclaimed he cancelled his ride because his driver was Muslim. So, brands in India are aware that moral or political affiliations of consumers are impacting their choices.

Can political affiliations trump profitable deals?

All things being the same, a consumer may choose value or profit over political or moral affiliation with a brand but these things are increasingly entwined. So, for instance, Patanjali products are seen as doing well because 01) they are cheaper than most MNCs and 02) they also have the added advantage of appealing to those that seek Indian/ Ayurvedic products. It is hard to pin down how much of Patanjali’s success is due to price or the Swadeshi factor. Politics/ values kick in when the brand does something inimical or antithetical to your own beliefs, and you can no longer support a brand whose ideology you do not espouse. After the #metoo movement, it was impossible for Uber to allow its CEO and the bro-code atmosphere that permeated under his reign to continue because it risked losing customers to the more empathetic and progressive Lyft in the US. So, it had to appoint a new CEO and adopt a more gender-friendly stance in the workplace.

The Kingfisher Airlines controversy was, among other things, a PR disaster. However, its parent company United Breweries Group (UB Group) is still able to sell India’s most-consumed beer Kingfisher. How does the dynamics of brand perception work in this case?

Kingfisher, the liquor, pre-dates Kingfisher, the airlines, and the beer brand was much beloved and continues to be so. Vijay Mallya was asked to step down as Chairman of the UB group for the airlines debacle, creating some distance between him and the parent company. The airlines’ inability to pay its dues and its employees and the eventual closure of the airline by the DGCA seems to have impacted Mallya more than the UB group or Kingfisher (as evidenced in the way the crowds in London booed Mallya when he stepped in to catch the Champions

Trophy match). Also, Kingfisher Beer is a low involvement purchase; so, the mismanagement of the affiliate airline did not impact the liquor brand. Another factor could be that, once parts of the liquor business were sold off to Diageo and Heineken (which now owns a controlling stake in Kingfisher beer), it was dissociated from the one that was run by Mallya.

Do evolution, innovation, and ‘leading the change’ always guarantee success? Would there still be the possibility of a crisis situation if a company always engages in these?

There are no guarantees as crisis management is no precise science. Consumer behavior is mutable and their loyalty is fickle. Crisis situations can turn a brand on its head within minutes or hours today—so while evolution, innovation, and leading the change are good barometers of staying relevant in the marketplace, the company needs to also engage in due diligence as a hygiene practice. It needs to be compliant with local laws, it needs to inspect and oversee quality control obsessively, and invest in systems—be it AI-based social media monitoring or direct consumer feedback mechanisms that allow the company to get on top of any potential crisis. The evolution of crisis management in a company needs to keep pace with how consumers and society itself are evolving and that is a continuous process.

(As told to Ashutosh Gotad)

This interview is based on the book REBUILD by Ramya Ramamurthy, published by Hachette India.