Managing Major Failures in Your Business

Those days are gone when businesses were small and local. In today’s world, businesses are becoming more and more complex. And brands are becoming bigger than ever. So, what happens when you encounter a failure in your business? What would you have done as a CEO of Toyota, during the tough times in 2010? What would you do as a spokesperson of BP, when you realize that there is a major leak in your new plant? I might not have an ideal answer for what you can do during situations like those, but from my personal experiences and observations, I have few suggestions to deal with situations like those.

First thing that you want to do in these kind of situations is to be accountable for your failures. Everyone remembers the gulf oil spill by BP. In today’s business world, accepting the failure isn’t the sole decision of the CEO. By accepting the failure like this big, they might be ruining their brand image. Whatever may be the case, I recommend you to take responsibilities of your actions. Remember the famous case of Tylenol? It was company’s quick acceptance of the problem, which saved the image of Johnson and Johnson.

In any major failures, you need to be transparent with your stakeholders, no matter who they are. A good example of this is - Toyota’s gas peddle fiasco. On July 29 of 2010, Toyota recalled approximately 400,000 cars for their problems in the gas peddle. Before this incident, Toyota was perceived to be the safest automobile maker in the world. Guess what Toyota did? They utilized lot of 21st century’s media tools like Facebook, Twitter, etc. to reach to their customers and admit their mistakes as a part of their immediate response. They also had a lot of TV and radio commercials within a month to communicate with their customers about what they are doing regarding this issue. This effort from Toyota helped them to keep their “brand value” intact by communicating their efforts to their customers.

I think that businesses might be becoming complex and failures might be becoming very difficult to handle, but if we can accept our failures and act on them quickly then we can minimize the impact of those failures.

I hope my article was helpful and I am eager to hear your feedback. Thanks. Bhavin Gandhi.