Many Lessons to be Learnt from Fonterra Report

The report released last week on the Fonterra suspected contamination of the WPC80 product makes very interesting reading.

It was what I call a creeping disaster - there was a whole series of events that slowly came together to create a signficant incident.  These are often the most difficult events to deal with as there is no clear trigger point.  The downstream impact of the event was not thought through and planned for.  In these sort of events there is a need for someone to be playing the devil's advocate and doing "what if" thought process to anticipate possible negative impacts that will come from the "left field". 

There was an under-estimation of the intense pressure of the news media.  The news media can be a friend or foe.  The best plan is to play it honestly, do not fudge the facts and do not play fast and loose with them.  Not that I am suggesting that Fonterra was doing this, but it would seem they were not ready for the intense pressure they came under. 

The importance of social media was under estimated.  The importance of social media comes through disaster reports time and time again, and as the saying goes "in a disaster, ignore social media at your peril."

One of the points we noted was that there was no clear steps to follow or an action plan.  I often read plans where there are vague statements or all emcompansing statements.  One of the things we spend a lot of time with our clients is developing action lists.  These lists are developed from knowledge of our clients busienss, lessons learnt from other disasters and events. 

The Fonterra report highlights managements commitment to crisis management is not finished once a plan has been developed and put on the shelf.  People need to be trained and there is a need to be a strong commitment from senior management to keep people trained and informed on what to do in a crisis.  Crisis management takes managers out of their normal day-to-day routine and into roles that they are not familar with. 

Often with the work that we do, when we talk to potential clients we find out that crisis management or business continuity management has been removed from the budget as a cost cutting measure.  This is wrong.  Business continuity and crisis management should be seen as part of doing business. It can also be seen as part of asset protection of the organisation for which Board Members and Senior Managers are legally responsible for.  Business continuity management is not just an IT thing either.  It impacts across the whole business and key business units need to be trained and plans tested.  Managers need to realise this.  It is quite evident from the Fonterra report how important crisis management is. 

There is plenty of evidence, that for an organsiation that handles a crisis well, they will increase their market share. For an organisation who handles a crisis badly they will suffer brand damage and lose market share.

In a recent article I read on crisis managerment there was a heading which caught my attention*.  It said:- "Perception is reality and that reality is an organisation's reputation".  This is so true.  It does not matter what the truth is, if the perception is that you did not do well, then you will suffer brand damage.  Crisis Management Plans and training have to become part of your business.

Sam Mulholland - Standby Consulting

*(Prevenitng a data breach from becoming a disaster by Ed Goldberg, Journal of Business Continuity 2013),