Crisis Management: From ridicule to readiness – Learning From Intel’s 1990’s crisis turnaround: Crisis planning
In the mid 1990’s computer colossus Intel’s name was mud. Criticism of the chip-making giant compelled the company to buy full-page newspaper ads saying, “We at Intel wish to sincerely apologize for our handling of the recently publicized Pentium processor flaw.” Intel flunked Crisis Communications 101 and attempted to repair the tarnished reputation of its new prize Pentium and the company itself. The salvage operation would ultimately cost Intel $500 million. That’s right, a half-billion dollar PR mistake.
So that we can all profit from the experience, let’s review the incident and the sweeping changes that Intel made to prevent another such disaster.
The initial Pentium had a small flaw. As word spread from the Internet to mass media, Intel seemed not to address or fix the problem. If anything, the company appeared indignant. It dismissed the flaw as insignificant, accused competitors of whipping up discontent, and, fatally, said it would only replace Pentiums that customers could prove were faulty.
Blistering criticism from the marketplace shook the international company.
It was such a glaring example of how not to manage a crisis, that when I gave speeches about crisis communications at that time, I would hold up that very same Intel apology ad before my audiences and read it to them.
That was 1994: flash forward about 2 years.
One evening in Research Triangle Park, an Intel salesperson from Great Britain excitedly told me how his company transformed itself to be poised to rapidly defuse product snafus.
He told me to talk with Diana House, who, at the time, was part of the team that created Intel’s crisis control center. As Consumer Support Manager, she explained the new crisis philosophies of the company and what it is prepared to do to protect customers and its own reputation. Although I have not talked to Intel since the mid-90’s, this is what was put into place at the time. I trust it is still there.
Should a product problem develop, within 24 hours Intel can mobilize enough essential employees and hardware to process 100 times as many telephone calls as normal. That’s 100 times as many telephone calls. Diana says her chief concern is reassuring the customer. This capability is in place in Europe, Japan, Asia, and the United States. Why 100 times as many calls? That is how many the Pentium flap generated for Intel.
The company does not immediately call out all the troops, although it can. Diana brings in personnel in stages to match the scale of the problem. The first wave arrives immediately. After two hours, another wave comes if called, and then another and another as needed. She determines how many crisis helpers are needed based on how the customers, press, financial community, and analysts react to the initial problem.
Customer Handling Expertise
For her crisis response army, Diana chose employees with customer service experience. During a crisis they drop their regular duties and shift to the special telephones. Intel wants people who deal with customers on a day in day out basis. It learned the hard way that not just anyone can calm angry people. During the Pentium crisis, Intel made the mistake of pressing into service any warm body available regardless of background.
Small Crisis Team
The cadre that coordinates Intel’s “crisis central “ (Consumer Support) is tiny, but it can leverage vast technical resources at a moment’s notice. During a crisis, teams of pre-designated experts are matched to the specific problems at hand. This capability did not exist before the Pentium crisis. Again, no one just sits and waits for something to happen. All have regular jobs until an emergency surfaces.
Know Your Customers
During the Pentium flap, Diana said Intel mistakenly analyzed the situation from an engineering perspective, primarily because Intel is an engineering company. The company saw the chip flaw as a technical dilemma involving primarily the computer companies it served. Overlooked were the millions of computer users around the world, Intel’s real customers. She admits the company “royally aggravated” its customers when it required them to prove their chip needed replacement. She said it created a “firestorm.”
Intel now publicly reveals all product errata (flaws) as they become known. They are posted on the company’s website. Diana said the company learned the hard way that if you do not publicize a problem then the public perceives that you are deliberately withholding information. “Nobody knew that if you didn’t say anything it would be interpreted that way,” she said. “We don’t do it anymore. We just tell people.”
Intel has created its own crisis database to track customer calls so that it can analyze what is happening. While it is not a very sophisticated database according to Diana House, the company uses it to track appropriate information from around the world.
Since awareness of the original Pentium problem arose chiefly via the internet, Intel now monitors most of the major news groups and net sites to remain current on what is being said about the company and its products.
I asked how a sophisticated company could have been so misguided three years ago. Diana House said she is convinced the company did not intentionally do anything wrong or bad. “You need to appreciate that we had never dealt with consumers, or needed to deal with consumers up until this event happened,” she said. “We don’t sell to them. Normally we were getting our information through our traditional customer base (computer designers and manufacturers).”
I believe that there are at least two primary lessons that we can learn from Intel’s misstep and recovery.
First, whether you deal with them directly or not, always assume that the public is your ultimate customer.
Second, have a crisis plan in place so that you can rapidly reassure your ultimate customers that you are acting in their best interest.