Dressed in a light-gray suit with her hair pulled back tightly into a bun, McDonald’s Holdings Co. (Japan) Chief Executive Officer Sarah Casanova walked stiffly into a news conference on Feb. 5 and addressed a throng of reporters.
“I would like to sincerely apologize, once again, for all of the great anxiety and concern that the recent reports of food-related foreign objects have caused our customers,” Casanova said, before joining her Japanese colleagues in a deep five-second bow.
The prostration, however, did little to settle the ire of increasingly suspicious customers across the country.
The news conference had been called almost a month after McDonald’s Japan first revealed that small pieces of vinyl had been discovered in two servings of chicken nuggets at outlets in Aomori Prefecture and Tokyo. Facing reporters on Jan. 7, the fast-food giant’s Japan affiliate also revealed that a human tooth had been found in an order of french fries in Osaka last summer. It also confirmed that a piece of plastic from a broken ice-cream machine was found on Dec. 19 in a sundae served at an outlet in Fukushima Prefecture.
Casanova didn’t appear at this news conference, however, because she was overseas at the time.
The fast-food chain has been under fire since last July, when a Chinese supplier was found to have been using chicken meat that was past its expiration date.
By the time Casanova made her belated appearance at the Feb. 5 news conference, her apology looked token at best.
Toshiro Era, president of public relations consulting firm Arex Corp., says Casanova’s apology at the earnings announcement “made the company appear extremely passive.”
“It’s one of those situations where she should have displayed strong leadership,” Era says. “People have been keeping their eyes on McDonald’s crisis management since last July and (the foreign objects found in their food) is another issue directly linked to food safety.”
Companies are vulnerable to an infinite range of unforeseen crises, from accidents in the workplace and defective products to political scandals and money laundering. The way in which a company responds to a crisis is key to the ultimate impact such incidents have on business.
Corporate culture on contrition in Japan differs from that of the West, which tends to view an apology as an admission of guilt that potentially opens the guilty party up to civil lawsuits. Domestic firms place great emphasis on public apologies and it’s not unusual to see an individual utter the words “Taihen moshiwake gozaimasendeshita” (“We are deeply sorry”) before bowing deeply for about three to five seconds as dozens of cameras flash incessantly at a news conference.
It’s essential to make this public apology as quickly as possible, says Takayuki Asami, a lawyer who specializes in crisis management.
“The apology that is made when the crisis erupts is critical,” Asami says. “The company must show it is sorry for what has happened and is ready to provide whatever additional information may be necessary without hiding anything. Perhaps it is a Japanese thing, but making an apology is like a samurai dressing in white (before committing ritual suicide by disembowelment). It symbolizes coming clean and hiding nothing.”
Yet, despite myriad examples of past failures, companies still struggle in times of crises. Take Benesse Corp., for example. The correspondence education firm suffered the nation’s biggest data theft in history in June 2014 after a computer subcontractor leaked family members’ birth dates, addresses and telephone numbers to third parties.
The company launched an investigation into the leak at the end of June after customers started to complain they had received unsolicited advertising from a competitor. By June 30, the company had alerted the police. Instead of informing existing customers, however, Benesse waited until July 9 before the leak was made public at a news conference.
The company’s executives, headed by Chairman Eiko Harada, apologized and bowed before reporters as usual but the tardy response triggered resentment from the public.
At the news conference, Harada spoke as if Benesse was a victim, refusing to resign over the leak and even going so far as to say that customers would not be offered financial compensation because the data was “not sensitive information like credit card numbers” and so on. He later retracted this comment, and offered Benesse enraged customers the choice of a ¥500 gift certificate or a donation worth ¥500 that would be put toward the company’s newly established fund for children.
In fact, Harada’s “victimized” stance was so blatant that when a reporter asked him whether he thought Benesse was “the offender or the victim.” His response — “As of right now, we are the offender” — also drew criticism for implying that Benesse could also be a victim at some point in the future.
As a result, a number of disgruntled customers decided to file a class-action lawsuit against Benesse. As of mid-February, about 2,000 people have joined the suit against the company for damages.
“There are three key points in managing a crisis: responding quickly, taking a proactive approach to information disclosure and clearly informing the public about the problem at hand and the position of the company, what the company is sorry about and whether its an offender or a victim,” Era says. “Benesse took too long to take action once news had been leaked. What’s more, the public believed Benesse was trying to shirk its responsibilities because of the noted gap in perception, judging from the official statements.”
A number of other high-profile public apologies have been made in the past 12 months. In February 2014, composer Mamoru Samuragochi, who falsely claimed to be deaf, issued an apology for lying about his use of a ghostwriter to write scores that included “Hiroshima” and “Sonatina for Violin,” which figure skater Daisuke Takahashi used for his performance at the Sochi Olympics. At a news conference in March, he apologized again about the deceit and also for not being honest about his hearing ability. Later the same month, the government-backed Riken research institute delivered an apology over Haruko Obokata’s falsified papers on pluripotent stem cells.
In June, Liberal Democratic Party lawmaker Akihiro Suzuki apologized for shouting a sexist remark at a female opposition member during a plenary session of the Tokyo Metropolitan Assembly. Topping it all off, former Hyogo Prefecture lawmaker Ryutaro Nonomura became an Internet phenomenon in July after crying like a toddler as he tried to explain his profligate use of public funds.
But none of the above acts of contrition were quite as damning as the apologies issued by the Asahi Shimbun last year.
In August, the newspaper retracted all stories, going back decades, on the “comfort women” issue that quoted Seiji Yoshida, a Japanese man who claimed he kidnapped about 200 Korean women and forced them to work at wartime military brothels. The newspaper said it first published testimony from Yoshida in 1982 and referenced him in at least 16 articles through the 1990s. In its apology, however, the Asahi said his stories couldn’t be confirmed. Criticism of the paper intensified after a weekly magazine then claimed Asahi had refused to run a column by Akira Ikegami, a journalist who had criticized the paper’s handling of the erroneous comfort women reports. In September, the newspaper was on the defensive again after it issued an apology concerning an erroneous article that alleged workers fled the Fukushima No. 1 nuclear power plant during the meltdown crisis in March 2011.
While Asahi President Tadakazu Kimura faced the music in front of reporters over both issues, several of the newspaper’s own staff writers posted their “personal views” on the scandals via Twitter, including criticism that was directed at management.
In principle, media organizations grant their reporters greater freedom to carry out their duties without censorship. Understanding that such entities may work differently from other companies, Asami questioned the lack of control Asahi had over its staff during the crisis.
“Asahi had zero crisis management,” Asami says. “It might be a news organization but Asahi let its employees comment freely on the situation, something that would never be tolerated in a normal company. Reporters are not freelance writers, they are company employees. In this situation, the company should have laid down some regulations.”
Crises, by definition, will arise no matter how hard companies try to prevent them. Successfully managing a crisis requires an understanding of how to handle a crisis: Companies should make a rapid and adequate response to the crisis, and attempt to minimize the negative impact. It’s also important to maintain clear lines of communication in the event of crisis to ensure it is resolved.
Marketing firm Japanet Takata Co.’s success in dealing with a data leak in 2004 provides a great example of crisis management in Japan. A former employee stole personal data on 510,000 customers, forcing Japanet Takata President Akira Takata to halt sales immediately and keep them on ice for more than one month. Although he did not offer victims of the breach any financial compensation, his leadership during the crisis was exemplary.
By comparison, Snow Brand Milk Products Co. provided a poor example of crisis management in 2000, when it struggled to deal with the fallout after 14,000 people got sick from old milk that was contaminated with bacteria. The first food poisoning complaint was filed in Osaka on June 27 but it took Snow Brand another two days to start recalling the contaminated milk products and make the scandal public.
Snow Brand President Tetsuro Ishikawa was ridiculed after being filmed trying to run away from reporters and barking, “I haven’t slept at all!” Ishikawa announced his resignation on July 6, 2000. Snow Brand sales, however, plummeted and the company was forced to undergo major restructuring.
“The Snow Brand incident had a major impact on how companies deal with information disclosure,” Asami says. “Since 2000, companies have learned that they will be attacked by the media for trying to hide facts if they don’t disclose the information in the beginning themselves.”
When a crisis arises, companies often find themselves facing social reporters who are a different kettle of fish to the staid business types that usually attend their news conferences. For one thing, such reporters tend to ask the hard questions.
David Wagner, an expert in media training and crisis management, says he helps companies to prepare for emergencies by conducting exercises in which he takes on the role of a journalist who attacks senior management or the public relations team with hard-hitting questions.
“Once a problem is in the media, it is a crisis and the reason why it’s a crisis is because you can’t control what the media does … particularly, when it goes to social media, where anyone can become a journalist,” Wagner says during an interview via Skype. “That’s the life we now live in, and that’s the problem for most organizations.”
Wagner, president of David Wagner & Co., has worked with more than 450 companies around the world, including organizations in Japan, China and the U.S.
He lived in Japan for more than 25 years, and although he is currently based in Denver, Colorado, he flies to Japan almost once a month to help train companies.
Wagner says he offered to help the Japanese government during the aftermath of the triple meltdowns in 2011. The government, led by the Democratic Party of Japan at that time, was criticized by global news outlets for its handling of the crisis and the lack of information that was disclosed to the press. Without revealing whom he was working with, Wagner explains he offered to help behind the scenes.
“I didn’t charge any money because I wanted to help Japan — and, believe me, they needed it,” Wagner says. “I made sure that when they (government officials) engaged with the media, their messages were clear and persuasive in nature. That was a very intense crisis … and the issue of what to release in terms of information and what not to release for various reasons, as well as the believability of the spokesperson, became critical.”
Wagner notes that the need for crisis management training has been growing rapidly in Japan over the past 10 to 15 years. And with the spread of social media such as Twitter and Facebook, companies these days face a more complex situation than they have ever experienced.
“The need for crisis management is exploding partly because the awareness of Japanese organizations is increasing as to the need,” Wagner says, adding that corporations need to be aware of the multi-lingual aspect of social media. “It is a matter of getting an accurate, cross-cultural take on what messages will be delivered and how they will be interpreted.”
McDonald’s Casanova at least tried to play her cards right, despite the fact that it took her almost a month to face the public.
As a result, however, McDonald’s is now in the midst of a severe financial slump, reporting its first full-year loss in 11 years.
The fast-food chain is being attacked for foreign objects found in its products, something that experts say is almost impossible to prevent. However, confidence in McDonald’s has dropped since the expired chicken meat incident last July when, again, Casanova delayed making an apology until appearing at the company’s earnings announcement and suggesting that McDonald’s was a victim because the scandal was caused by the “willful deception of a few employees.” She did not bow on this occasion.
Six months later, she tried a different tactic of changing her hairstyle and clothing, and bowing prominently before the press corp. Arex’s Era believes it was obviously an appearance specifically targeted at a domestic audience.
“To be honest, I felt that something was not quite right,” Era says. “I got the impression that it was choreographed. Impression, appearance and attitude is important at a news conference that is held to deliver an apology but, more than that, the most important thing is for a leader to explain what went wrong, what the company is sorry about and the preventative measures it plans to take.”
Which company will be the next to have its crisis-management skills put to the test by an unforeseen emergency? The odds are high that it won’t be long before we find out.
Timeline of mismanagement
July 20, 2014: A Chinese supplier is found to have been using chicken meat that is past its expiration date.
Aug. 26, 2014: A human tooth is found in french fries at a McDonald’s outlet in Osaka.
Dec. 19, 2014: A 5-year-old child is injured by a piece of plastic found in a sundae served at an outlet in Koriyama, Fukushima Prefecture. The foreign object is believed to have come from a broken ice-cream machine.
Dec. 31, 2014: A piece of blue vinyl is found in a chicken nugget at an outlet in Tokyo.
Jan. 3, 2015: A similar piece of vinyl is found in a chicken nugget in Aomori Prefecture.
Jan. 7, 2015: Senior Vice Presidents Takehiko Aoki and Hidehito Hishinuma apologize for the incident at a news conference.
May 20, 2014: The newspaper publishes an article claiming that 90 percent of workers at the Fukushima No. 1 nuclear power plant defied an order from the plant’s late boss, Masao Yoshida, and fled to the No. 2 facility during the meltdown crisis in March 2011.
Aug. 5, 2014: The Asahi Shimbun retracts stories from the 1980s and ’90s on the “comfort women” issue that quote Seiji Yoshida, a Japanese man who claimed he kidnapped about 200 Korean women and forced them to work at military brothels.
Sept. 11, 2014: Asahi Shimbun President Tadakazu Kimura retracts the article on Yoshida’s testimony and issues an apology for both incidents in print and online.
June 26, 2014: Benesse starts to receive complaints from customers about being sent direct mailings at contacts registered only with the correspondence education firm.
July 9, 2014: Benesse admits that the names, addresses, phone numbers, birthdays and genders of 7.6 million customers had been leaked. Benesse CEO Eiko Harada says no financial compensation will be paid.
July 17, 2014: Harada agrees to pay ¥2 billion in compensation in an attempt to restore Benesse’s reputation.
Sept. 10, 2014: Benesse reveals that at least 28.95 million customers have been affected by the leak.
Late June 2000: More than 14,000 people are sickened by staph bacteria in low-fat milk produced by Snow Brand Milk Products Co.
June 29, 2000: Snow Brand starts recalling milk products.
July 4, 2000: Snow Brand President Tetsuro Ishikawa issues an apology for the outbreak, but is later ridiculed after being filmed trying to run away from reporters and saying, “I haven’t slept at all!”
July 6, 2000: Snow Brand President Tetsuro Ishikawa announces his resignation.