Responding to the consumer
Smart corporations don’t just launch new products, they even tweak entrenched ones when need arises
Smart corporations don’t just launch new products, they even tweak entrenched ones when need arises.
When Hindustan Unilever decided to drop the word “Fair ” from the well-entrenched Fair & Lovely, it explained its decision using the terms “inclusive” and “diverse”. That it was facing sustained criticism for promoting “fairness” as a virtue was known, but whether the Black Lives Matter movement provided a strong final nudge to take such a drastic step remained unaddressed in its communication.
Either way, here was a company that responded to criticism taking a major step as did Nestle by taking off its instant noodles Maggi — when it faced both regulatory pressures and public outcry — in 2015 or Facebook, when it had to drop its Free Basics plan for India despite the same having worked in other markets because of the strong backlash it met here.
At what point should corporations take the call to respond to criticism and what does it take to react quickly? Author and corporate advisor R Gopalakrishnan, who is also a former director of Tata Sons and ex-vice-chairman of Hindustan Unilever (HUL), gives the larger perspective: “Crisis develops exponentially, but management responses develop linearly, so there is a widening gap as you go along the graph and therefore the crisis spins out. But there are certain examples where crisis and response both developed exponentially. For example, Johnson & Johnson had the Tylenol crisis that they handled well.”
A company gets signals from market research teams, public comments, shareholders, activists and when all of it goes to the leadership team, they have to come to a view, adds Gopalakrishnan. It is the leadership team’s ability to process the signal and develop it into something that can be acted upon that makes all the difference. In Gopalakrishnan’s opinion, “HUL didn’t respond to Black Lives Matter, but that they had been mulling their responses to various signals over time.”
What does that process of sensing and processing feedback involve? An Indian executive of an FMCG major weighs in. The process is broadly divided into three parts, he says: How to determine whether the backlash is material to the business, the decision-making process that follows, and finally, the steps taken to react quickly.
“Brands activate social listening tools to analyse and assess whether something is just one news cycle or a trend that can result in shaping consumer sentiment. This data is the foundation for decision makers/brand leaders to decide how to act. The action could be to respond in the public domain, take action like recall/change product or brand assets (logo, name, jingle, etc.) or not to take any action. Not taking action in this scenario is also a very strategic action if data supports it,” he says.
Once there is substantial evidence that the backlash is crucial or will have a material impact on the business, the leader decides the course of action along with the relevant members of their leadership team. The key is to avoid attacking the low-hanging fruit — say, a product recall, given that most businesses in today’s scenario are battling to meet their short-term targets (monthly, quarterly, yearly).
Smart leaders in global companies that have stood the test of time (and hence are sitting on a wealth of experience) prioritise the long-term health of the business. It is the right thing to do for consumers, shareholders, trade partners and even employees. These business leaders are comfortable taking a shortterm hit on sales and maintain the consumer ’s trust in the long term. This is even more critical today, where more and more millennial consumers have become aware about what’s happening around them and prefer brands that have shared values and beliefs.
And from there, it comes down to fast decision-making by the leadership team and the agility to execute the decision quickly. Note that leanness (number of people) is not a determinant here, but it boils down to the corporation’s culture. A sizeable multinational boardroom can be as fast and agile as a start-up if the culture is amenable. Faster decision-making and agility are cultural traits independent of the size of the organisation, the executive adds.
But a question then emerges is, why would such criticisms arise in the first place if business leaders are following the a-b-c of strategic planning? Sometimes it could be because the company failed to read how the consumer herself had changed. A 2016 article in The Guardian that dissected how the Free Basics idea failed in India, quoted an unnamed Facebook executive saying that in essence, the company made the mistake of thinking that a third-world country was a banana republic and institutions such as the public, the press could be bypassed.
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