So, yesterday, I talked a bit about major manufacturing failures such as the 1982 Tylenol poisoning, the current Toyota accelerator problem, and my own experience a few years ago. The bad news is that stuff like this happens to nearly every manufacturer, eventually. There are simply too many variables that affect your ability to test everything. And some variables (like sales forecasts, Wall Street numbers and market timing) even affect your willingness to test everything. You may choose to go to market with incomplete testing or even knowing that your product is defective. If your product is doilies, it’s probably not a huge deal. If your product is 3,000 lb chunks of metal and plastic that inexplicably zoom up to 120 mph and drag their screaming passengers to their deaths, that sort of decision is criminally negligent. Note that I’m not saying Toyota did this, but there are some allegations floating around out there that they weren’t as aggressive as they could have been. It’s ironic that both the company and their product kept rocketing along at high speeds, seemingly out of control.
In the case of the issue I had to manage (one of many that came up during my tenure with the company, but by far the issue that was most applicable across a wide array of manufacturers), we had been supplied faulty parts. We’d then used these parts – which looked identical to good parts we’d always used successfully – to manufacture product that was going into our customer’s stores. In place of older, still-functional product that actually worked better (because it didn’t have these faulty parts). My experience may serve as a lesson to Toyota and other companies when they encounter serious product failures.
1. Be as up-front and forthright with your customers as possible. The more you lie or try to dodge responsibility, the worse it’s likely to be for you when the truth comes out. And the truth usually does seem to come out. In my case, at first it didn’t seem to be our product. We’d seen the customer’s employees mishandle our printers in the past, as well as issues where a little piece of paper would tear off and lodge between the LED and the sensors. But as soon as we realized the problem was ours we told the customer that it looked like we had a product issue and we assured them that we’d make it right. I gave my personal assurance to management at at least three different levels of their corporate hierarchy that we’d resolve this issue. Just as importantly, I made it clear that we understood the difficult position that our failing product was putting them in, and that it was going to get worse (much worse) as the newer units still being installed began to fail. Their pain was my pain.
One key difference was that, even as we realized the scope of the issue, we didn’t attempt to weasel out of it or pretend that it wasn’t our problem. Which isn’t to say that we threw open our arms and took responsibility for the sins of the world. We just owned our problem like grown-ups and committed to making it right. This is huge and it’s something too few companies seem to have the balls to do. It takes some balls, yes. It may mean that somebody (or several somebodies) at the company are putting their jobs – their livelihoods – on the line. But it’s the right thing to do and it’s important that companies do their best to encourage and protect people with this sort of courage unless they’re culpable of some gross negligence or severe incompetence.
2. Get your facts straight internally and present a consistent message externally. As soon as it was clear to us that this problem wasn’t the result of user error, we got busy. We began to have internal meetings between our engineering, quality control, senior management and sales teams to gather and exchange information about the problem. We brought in my repair teams to analyze what they were finding in their workshops. When all of the indicators started to point back to one part, we involved our purchasing department to make sure that supplier also felt our customer’s (and our) pain.
We carefully documented our findings. This allowed us to explain to the customer what was happening and actually allowed us to refute some (half-assed) assumptions they’d begun to make about what was going on. Again, it’s important to be clear that we didn’t just lay down and accept responsibility for global warming, the war in Darfur and the assassination of JFK. We stuck to our guns on issues that were not our fault or were not related to the actual problem we were seeing, even when the customer was insistent. The careful documentation had two other benefits as well:
a. It made it easier to show to our supplier that their part was inarguably defective.
b. It made it easier to keep our multi-disciplinary internal committee on the same page. There were a lot of gears turning in this scenario as we attempted to find a new, reliable part and also determine exactly what batches of the old parts were bad. We also had to negotiate with the supplier while we worked to soothe and satisfy the customer, all in such a way that we didn’t completely disembowel our own company.
3. Do the right thing. This actually applied as much to our supplier as it did to us. They ended up kicking in some serious money that we added to our own budget and used to send technicians out into the field to replace the bad parts with new ones as quickly as we could get them. And we coordinated the hundreds of locations, scores of techs and thousands of parts out of my office with the help of a really good temp. All according to the priority order and timetable set by our customer (and brutally enforced by them). It was a massive and expensive undertaking, but it allowed us to make a bad situation as right as possible for our customer. And that was key – we wanted them to be customers for a long time to come, and they needed to see us as a valued business partner rather than just some company that sold them a shoddy piece of crap that almost destroyed their multi-billion-dollar corporation.
4. MANAGE your customers, even if what you’re asking of them is unreasonable. This is important and it’s one of the hardest things to pull off. It’s a tightrope you walk with your customer. If you just roll over, many people will smell your weakness and, like sharks in a frenzy over blood in the water, they’ll attack. If you let yourself get in the situation where you customer feels like they’re putting their foot on your throat, you may never get back to an amicable partnership again. That’s bad for everybody – partnerships are always better than simple customer/supplier transactions. At the same time, if you’re too stand-offish with your customer – if you refuse to own up to the problem or you act like you’re doing them a favor for trying to fix it, they’ll hate you. And rightfully so. We were the little guys in this scenario – our customer was the 800-pound gorilla. But all too often it’s the other way around. It’s IBM or Microsoft or Toyota who’s at fault and they sometimes treat their customers like something they scraped off their shoe, even when the customer’s asking for something very reasonable to address a legitimate product failure.
So you need to strike the right balance with your customer. Be a partner, not a patsy. Be a friend, not somebody who’s doing them a favor. In my case, I always behaved like a professional – much like if I’d been a doctor or an attorney. I took a fact-based approach, addressed the problem unemotionally, and refused to get emotional myself when they got nasty. And a few of them got really nasty with us. Every company has small people who get off by beating up on people they see as in their power. A few of them worked for my customer.
To handle them, I identified the people at my customer’s who were rational and reasonable, and let them run interference on the ones who weren’t. I made it clear to them that I wanted to fix their problem. More importantly, I made it clear that there were things I could do and things I could not do. I wasn’t going to be walking on water or turning water into wine. I couldn’t offer miracles, only hard work and professionalism. And this was the sort of problem that really called for a miracle – it was a disaster that was going to affect my customer’s business through no fault of theirs. Asking them not to freak out about it was borderline unreasonable. Asking them to wait for days or weeks while we found and tested a solution was unreasonable. The amount of time it took us to find and fully implement the solution was unreasonable. It was a mess. I asked them to work with me anyway. They did. To the best of my knowledge, that relationship between my old company and that customer is still going strong, mutually satisfying for both organizations.
In military jargon, this product situation was FUBAR – fucked up beyond all recognition. Fixing it took time, money, professionalism, and an enormous effort. But it took honesty, coordination, resolute action and strength to resolve the problem in a way that satisfied the customer and maintained a valuable relationship. If you’re a business executive who finds himself of herself in a situation like this, courage is an asset. Be confident, be smart, do the right thing, and make it right for your customer and your company.
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