Budget 2021 will have to create a new order for Sri Lanka post-pandemic
Let’s face reality in the backdrop of Budget 2021 being presented. Corporate Sri Lanka faced a blow when the first COVID-19 wave swept past Sri Lanka even though many of us were not directly affected. The economy crashed in Q1 to -1.6% and most companies had a negative growth other than for the very aggressive companies that took the gaps in the market place.
In the backdrop of Q-2 data not being released speculation is that Sri Lanka has registered a -17% GDP growth with exports and industrial output declining. In Q3 we saw the economy really kicking in with many companies catching up to the loss of Q2 but now corporate Sri Lanka is up against the second wave that has taken away 68 lives and 17,500 contracting the virus.
The apparel debacle
As reported in the Sunday Times last weekend it is obvious that the ‘Minuwangoda Cluster’ gave birth to the current reality in Sri Lanka. There was finger pointing in all directions but the lesson was simple – debacles happen and it must be managed. Given that I was the eighth Chairman of Sri Lanka Export Development Board obviously I will be biased to the export industry of Sri Lanka so I cannot do a deep dive on this issue.
Also, I am mature after working six months on the COVID-19 project for Rotary that end of the day it’s all about ‘Money or Bodies’. In the above case we took the call for ‘Money’ and hence now we are sacrificing the bodies. So far, it’s 68 and I guess time will tell the reality at a fatality rate of 0.33%. This will be the real cost of the war on COVID-19.
President Trump has estimated that the cost of keeping the US economy alive will be around 400,000 deaths at a 2.2% fatality rate as at now. This is the reality and we have to face this.
Lesson for Brandix?
Brandix was the first company to get tested on the COVID-19 challenge. But, given my global exposure in brand marketing I knew it was not going be the first. This became true when we saw supermarkets, printing companies and many companies in the Katunayake zone facing the same challenge. The next will be your company. The million-dollar question is are you ready.
Lesson from the world
Every company will be faced with a PR issue at some time in your life. Let me pick up some global case in points. Tylenol to Toyota; from Perrier mineral water to the famous beef issue in Europe are some of the examples we have seen in the very recent past pre-pandemic.
Why PR issues?
The reason why these happen is that organisations are run by human beings and one can err. The challenge is that we must manage the situation at hand rather than having to get into confrontations with State authorities, laboratories and finally for Court orders like what has happened to Brandix. I was deeply hurt when the AG gave a ruling to IGP for a formal investigation as the owners of Brandix are very dear to me. They are people of exceptional qualities. It is very sad the situation was not managed. I can empathise as the problem blew out so quick and with such a magnitude that it was equivalent to the Hiroshima bombing. There was no time to think of what to do.
Let’s accept it, when some companies catch a cold and sneeze, everyone gets pneumonia, meaning that it is a trendsetter in the business. Similar to the Toyota debacle way back in 2010 with the faulty brake issue, the pandemic has tested the PR skills of many companies. Hilton, Cinnamon, Keells Super Cargills to MAS and Brandix just to name a few. The impact can be greater on media if you are the market leader and trendsetter, which is all the more reason that you must be sharper to face any eventuality in business. But it’s very clear that all companies are grappling as the symptoms are asymptotic and contract tracing and isolation is the only way to manage the situation but how do we tell the story to the world.
What Toyota did
If we take the Toyota issue, let’s do a deep dive. The company hails from Japan and is the pride of its super power nation that has mirrored the country’s post-war economic miracle. It is fair to state that Toyota together with Sony helped build brand Japan in the world stage. The beauty about Toyota is that the brand has taken its product portfolio across the world. In effect Toyota has helped Japan touch the lives of people around the world. Even though Brandix as a brand is not known it has also helped Sri Lanka take ‘Sri Lanka as a sourcing destination’ around the world. The products it manufactures is the closest thing that a woman has next to her skin.
How it impacts a brand
In the case of Toyota, when the faulty product was identified in the key market, the US sales declined on the speculation that the company would be downgraded by organisations like Brand Finance due to poor management of the PR issue. In the case of Toyota, the company was at a rating of AAA and the fear was that a simple A rating could cost the company almost $ 7 billion, which are the ramifications that a company will be up against when disaster strikes from a brand perspective. I guess we will have to see what impact Brandix can have globally with the emerging developments from the AG’s announcement. So, the impact will have to be seen from the end consumer brand/retail brand owner. But the fact of the matter is that there will be an impact and we will have to see how this unfolds.
Have a blue print
The lesson for corporate Sri Lanka is that whilst we plan and develop multimedia communication campaigns, we must have our PR plans in place in the eventuality of a crisis. It can be just a prawn cocktail in a star-class hotel that goes bad that can result in hundreds of people having to enter hospital. This actually happened to one of the top hotels in Colombo some years back but was very well-managed and did not hit the media, similar to the issue that Toyota faced with a faulty brake system.
Hence the pick up the world is that it is imperative for a company to have a well-orchestrated PR plan in the event of a disaster. If not like what we see with Brandix there will be debate, Court orders and finally having to comply, which is not healthy for the brand. In the case of Toyota, fortunately, the issue was confined to certain countries but it was a real eye-opener for the corporate world.
It goes without saying that the business world of today is very ruthless. Whilst Toyota was battling the PR challenge, rival companies like Ford and Hyundai were seen tracking customers from the showrooms of Toyota with guerrilla tactics. Ford’s share picked up almost four percentage points. I am not sure if such behaviour is seen in the world of apparel especially because MAS has also been faced with a similar challenge in Sri Lanka. The article by JAFF on the ‘social responsibility of the Sri Lankan apparel industry’ was a good move but I feel there was a lot that needs to be done at the ground end by the apparel manufacturing brands before the umbrella value building is been done.
Be open and acknowledge
Let’s accept it, as mentioned before, organisations are managed by human beings; it is human to falter even though the paradigm in countries like Japan is zero defects. The essence is that there must be a fallback plan in the event of a crisis. One of the best ways of reassuring customers in the event of a major disaster is for the CEO to get into the fray. This was the biggest drawback in the Toyota PR campaign post the news hitting that there was a product issue.
Some Japanese reporters tracked the Toyota CEO to the Davos conference that was staged and demanded an interview in which a brief apology was given that had no impact on the troubled customers. The golden rules in handling PR post a disaster: Be open. Do not hide. Do not ignore. Acknowledge, listen and provide a detailed ‘next steps’ on what a customer should do. In this context I am not sure if Brandix handled this situation with authority.
The golden rule in the event that an apology is made is that is that consumers must feel that the apology is genuine to the mistake made. The best example that the world saw in the recent past was by Ford Company. When it had to recall faulty Firestone/Bridgestone tyres, the then CEO Jacques Nasser appeared on prime time US television to reassure customers on the action that would be taken. He was personally there in the garages inspecting the implementation at the ground end. I guess it’s a lesson for corporate Sri Lanka in the future.
Get political support
Another important dimension in handling a PR debacle when it is of national promotion is that you must get political support, especially in the world of today where in many countries a political economy exists. For instance, Toyota initiated a $ 4 million campaign using lawyers, lobbyists and PR experts to get support from the US congress so that there would be a set of godfathers to support the company as it sailed the troubled waters. I would strongly urge Brandix to get involved in the national challenge of managing COVID-19. Dedicate resources of the company to the National Task Force. Become a voice to fight the deadly disease. Turn the issue to an opportunity to build a new value in the company.
Key components of a PR plan:
The priority for a company is to ensure that a customer is safe. The best response is to publicly explain the issue at hand and ask the customers’ help to identify the faulty product. This can be publicly displaying batch numbers, etc.
If a customer is a recipient of the mistake, very clear instructions must be given to the trade on what to say when a product is returned. The chances are that customers will go to their favourite store, than call a hotline. This is very true in Sri Lanka. In the case of the most recent debacle, most supermarket assistants were not aware what to say to a customer when asked why the brand of stocks was still on the shelves.
If replacing the stocks, reward the customer. Customers have been inconvenienced and they need to be comforted.
Be very clear to communicate what action will be taken on the faulty products so that competitors cannot create viral stories on your brand. This helps the brand rebuild credibility.
Acknowledge the mistake and explain to customers how you intend fixing the problem and that it will not happen again.
Get the Government and political authorities on your side. If not, the media continues to dramatise the issue and it becomes a political issue between the Government and powerful organisations.
The company must develop a new positioning in an aggressive manner. In the case of Toyota, what was proposed was the green marketing positioning where the company was asked to take the high ground by a worldwide initiative of where ‘Green Showrooms’ were to be opened across the world on an eco-friendly platform. This was Toyota’s promise. I guess Anchor needs to think through this proposition.
Whilst the above are ‘best practices’ in the pre-pandemic world, I guess Brandix can help a ‘PR Model’ for handling PR in the ‘new normal’. The company can re position itself to be an innovator to the world on this front and can become the most admired company in the new normal world.
(The author is the head of a South Asian AI based perception company – Clootrack for Sri Lanka, Maldives and Pakistan. The thoughts do not reflect the organisations he serves/Boards of Management he serves.)