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Six - Show Your True Colors

The chapter begins with an extended narrative about Toyota: how a fatal crash that occurred in 2009 because a floor mat had trapped the accelerator. The media looked into the history of acceleration incidents and found that Toyota had a far higher incidence than other manufacturers. Government stepped in and demanded access to all engineering reports and internal communications, which revealed the manufacturer was aware of the problem but attempted to minimize the cost of doing a recall, and attempted to keep the matter low-key. When all of this came out, the credibility of the brand plummeted, as did sales in the US market.

Who Comes First?

Ethical dilemmas are often posed in the scenario of a crisis situation. If there are only so many seats on a lifeboat, or so much space in a bomb shelter, whom do you take in and whom do you turn away. It is presumed that the choices people make in a difficult situation reveal their true character.

The same is said of companies who face a crisis, and people watch to see "who comes first?" as a way of gauging the company's ethical values and true character. Do the managers set up golden parachutes from themselves? Do they seek to protect profits? Or do they take care of their customers and employees?

There is a strong distaste for firms that put profits first, and the widespread perception that when companies are faced with a product recall, 93% of US adults believe that this is an opportunity for the firm to "show their true colors and demonstrate whether they care about customers." Particularly in industries where human life is at stake, people expect firms to put profits aside and do the right thing.

Unfortunately, the traditional approach of companies is first to attempt to cover up the incident so that no-one will ever realize that a mistake was made. If it cannot be hidden, to maintain a stiff upper lip and show no sign of panic so that people think that they are well in control of the situation. This sort of cold reserve that gives battlefield commanders the mien of valor comes off as being cold and unconcerned, or even ignorant or in denial, in non-emergency situations.

There is some merit to the notion that people will recall companies that have to issue defects as being incompetent, but survey results do not bear that out. The author refers vaguely to a WSJ survey, which found that more than 90% of respondents agreed that "even the best run companies can make mistakes that can lead to product recalls."

As such, only 10% of people assume that a company that made the mistake is incompetent - and it is presumed the majority seek competence not in the form of perfection, but in being effective in responding when mistakes occur.

When "Customer First" Turns Into Company First

Audi is another manufacturer that has shown callusness toward its customers. When over 400 serious incidents occurred involving Audi vehicles shifting into gear while idling. Audi's reaction was to claim the problem was due to driver error - even though some incidents involved an unattended vehicle left idling that had shifted into drive, the company denied any mechanical problem and continued to blame the victims of its products.

In this instance, Audi never did accept responsibility, but did install a shift-lock feature that would require the brake pedal to be applied for the car to shift into gear. This functionally addressed the problem, but enabled the firm to maintain the claim that the drivers were at fault.

Dodging the blame, or shifting it onto the victims, is a common tactic companies use to defend their own interests - to discourage lawsuits and avoid having to do a recall. But considering the loss of esteem the brand suffers, and the drop in revenues as the story spreads, the expense of the lawsuits and recalls seems paltry. Audi in particular experienced an 85% decrease in sales in the North American market over the following five years and remained the least popular German import (falling well behind BMW and Mercedes) until 2010.

With this in mind, it would be fair to say that Audi's hostility toward the victims of its engineering flaw may have saved the firm millions in lawsuits and repair costs that fiscal year - but cost the brand billions in lost sales over nearly three decades since.

Forgivable Faults

The concept of "poetic justice" applies to brands as well as people: the more boastful they are, the less sympathy people have for them when they suffer misfortune or disgrace, even to the point that people experience a sense of schadenfreude at seeing their downfall. In that way the persona that companies attempt to project, of being cold and aloof, makes people less likely to be forgiving when their faults are discovered.

On the other hand, people are more likely to be forgiving of warm and friendly people. The author refers obliquely to a study (Levinson 1997) in which it was found that doctors who have a friendly bedside manner, who talk longer and laugh more often with patients, are far less likely to be sued for malpractice than doctors who have shorter and less convivial encounters.

Some studies also have shown that competent people even become more liable after making some minor mistake. In an experiment (Helmreich 1970) subjects were shown videotapes of individuals interviewing for a position - the two "candidates" had equivalent credentials for the position, and adopted the same demeanor - but one of them spilled a cup of coffee during the course of the interview - and this individual was rated as being "significantly more likeable" than the candidate who did not spill their coffee. It is reckoned that this simple mistake made the candidate seem less perfect, more human, hence more approachable. The author suggests that the same occurs for brands: if they make a mistake and recover, they appear to be more approachable to the customers as compared to a company that has never made a mistake at all.

(EN: The same has been asserted elsewhere but for different reasons. People have the general sense that most brands can take care of them when everything goes according to plan but are often worried about what might happen if things go wrong. A brand that shows its ability to recover from a mistake has given them proof of its ability to do so, and they have more confidence than they would if the brand had never demonstrated its ability to recover.)

A Vicious Circle of Positive Sentiment

It's suggested that forgiving someone changes our attitude toward them: resentment is a form of stress, and "letting go" causes a sense of relief. That positive emotional experience becomes associated to the person whom we forgive.

In that way, we are not only more willing to forgive when we feel empathy toward someone, but we also feel more empathy toward them if we have forgiven them. It is exactly the opposite of the way that holding a grudge makes us dislike a person more (we don't merely dislike what they did, but we dislike them for making us feel the disliking), only in reverse.

Loyalty to Employees

There's a brief anecdote that illustrates the way in which employees sometimes work around draconian company policies to be able to provide service to customers.

In the story, a customer who was unable to get a problem with his telephone service addressed after multiple attempts encountered a serviceman who took personal responsibility. The servicemen gave the customer his personal phone number, remarking that it was against company policy, bit insisted that he wanted to take personal responsibility to see that the issue was taken care of.

There's some description of the cause of the problem (a bureaucracy in which multiple departments might be involved in resolving a problem, each concerned with doing only their bit in an uncoordinated manner, etc.) and a note that many people in the firm were happy with the bureaucracy because their work was very regimented and well-defined.

But the important thing is that this service person did things he was not authorized to do, going outside the well-defined boundaries of his job, and was likely discouraged by his employer from doing, even though they were necessary to ensuring the customer got the service he needed.

(EN: I've a bit more perspective on this, as I am familiar with the company and got some inside information on this exact problem - it was not the company's management but labor unions that had restricted the activities of employees so dramatically. Management could not require or even request employees to do anything outside their job descriptions, could not change the job descriptions without union consent, and employees who were union members were discouraged by their own union from doing anything outside their narrowly defined duties.)

The author suggests that in these instances, a customer may no feel much loyalty to a company or a brand, but has strong loyalty to a specific individual who goes out of their way to ensure that the customer is taken care of.

Don't Wait for Mistakes to Learn

For many companies, a crisis situation enables them to reconsider practices that evolved over a long period of time, and recognize things that they have been getting wrong for a long period of time by placing a spotlight on an issue management was often unaware of. Until something goes horribly wrong, they simply are not paying attention and assume all is well.

However, the modern age of social media enables companies to listen to customer conversations, and to learn about things that are not going very well long before a crisis arises. But this requires being attentive and proactive, and listening rather than speaking.