How not to manage a PR crisis situation in Japan June 8, 2006Posted by fukumimi in Japan, Media.
Update: The administrative vice minister for Land Infrastructure and Transport has expressed his displeasure at Schindler's handling of this issue. He revealed that the MLIT had asked for a list of installations of where the same model lift was installed. Schindler had apparently refused citing customer confidentiality. Given the potentially life threatening nature of the malfunction, that seems to be a completely wrongheaded call.
On saturday, a teenager was killed when he was crushed between the floor and the door frame of a lift, when the lift rose abruptly as he was getting off. Details here.
The lift was manufactured by Schindler Japan. Schindler is the #2 elevator manufacturer in the world (is #1 Otis?) but has just 1% market share in Japan, a market dominated by domestic heavyweights Toshiba, Hitachi, and Mitsubishi Electric.
The lift in question is said to have been installed in 1998, and there had been at least 18 reports of problems with this particular unit before this accident since December 2003.
Lift maintenance was performed directly by Schindler until March 2005, a company called Japan Electric Power Service (JEPS) handled maintenance from Apr 2005-Mar 2006, and SEC Elevator is the current maintenance contractor. SEC has announced that it was aware of the fact that the lift in question had problems in the past, but in regular scheduled maintenance since their contract began this april, no problems were found. It is interesting to see that the annual maintenance contract was not renewed with JEPS this year, it will also be interesting to find out why the maintenance contract was switched from Schindler to a third party provider last year.
In any case, Schindler is taking a beating in the media. It has released three announcements regarding the accident, but has not made an apology to the victim's family. The intial statement was a terse 6 line affair which contained a boilerplate condolence message to the family of the victims and stating that the company was cooperating with investigations and therefore no further comment was forthcoming at this time. A second statement was released the next day, as published here (in english also).
Top management has yet to conduct a press conference, and the media repeatedly show the same clip of Ken Smith, the representative director of Schindler Elevator K.K., walking stony faced surrounded by cameras and seemingly ignoring pleas from reporters to make a comment.
This kind of media handling reinforces the Japanese belief that overseas companies and foreign executives thereof are overly sensitive to legal issues at the expense of the moral obligation of victim care. Whilst it is true that Schindler was not currently responsible for maintenance of the lift, they did manufacture the lift and in the public's eyes, they share a portion of the responsibility, at least until proven categorically otherwise.
Large Japanese companies have in the past also made serious errors in post-crisis PR management (and will probably continue to do so), so overseas companies are not alone in being incompetent at handling these situations. However, Japanese companies typically do not publish statements like this:
we would like to stress that we are convinced that there is no reason to attribute the accident to either the design or the installation of the elevator
Such conviction seems inappropriate just 3 days after a fatal accident.
Ken Smith and other members of the senior management of Shindler Japan really need to meet with the victim's family, and face the cameras.
All the major media outlets are now scouring the nation for more reports of incidents involving Schindler's products. The Asahi Shimbun reports that its investigations have found at least 100 incidents where people were trapped in lifts, or cases of malfunction whilst there were passengers in the lift.
However it should be pointed out that these numbers by themselves mean very little. How many similar accidents have their been with Toshiba? Mitsubishi? Hitachi? What are the comparative incidence rates?
Flicking through the channels "news" surfing this morning, a media outlet had a "telephone interview" with a person introduced as "an employee of a competitor". The "interviewee" was anonymous, his employer anonymous, and the interviewee's voice appeared to have been changed. We soon learnt the reason why this was an anonymous interview. The interviewee said that Schindler has become extremely aggressive on public building project tenders in the last couple of years, and then said the cost pressures of low bidding led him to believe that Schindler was shipping inferior quality goods (粗悪品in Japanese, a fairly strong accusation). The fact that the lift in question was installed in 1998 (therefore making this anonymous person's accusations irrelevant) apparently didn't matter to the interviewer or interviewee. I would think this interview is slanderous, and Schindler would have a cause of action against TBS for broadcasting such a shoddy interview.
This is the level of tabloid journalism that TBS (in this case) and other media outlets regularly stoop to.
The media loves to oversimplify and carry out a witchhunt (especially when it makes their advertising sponsors happy).
Companies need to understand that and take measures to counteract such tactics. Especially if you are a new company taking on the establishment, or you are an overseas entrant taking on powerful local incumbents.