Kathy Watson

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Note: This story appeared in the March, 1997, issue of Oregon Business magazine. Reprinted here with permission.

Antidote for a Lethal Crisis

A health-conscious juice company learns that a hale and hearty reputation can be decimated in mere hours from events that may even be beyond its control. Good planning and fast action saved the company.

By Kathy Watson

The late-afternoon e-mail message glowed on Mike McClane's computer screen with all the charm of a ransom note. The company he works for, Odwalla Inc., was ordering the recall of all its apple juice fruit drinks, which had been linked to several cases of E-coli infection in Washington state.

"I was in disbelief," says the Portland-based distributor. "I didn't think it could happen to Odwalla." He typed back a one-word question: "Now?"

Beginning at 4:00 the next morning, his people spent 16 hours hitting 150 accounts in the Portland area, clearing the shelves of the colorful plastic bottles from the Half Moon Bay, Calif., company. "The only responsible thing to do was to go get it," says McClane today, nearly five months after the E-coli crisis nearly sank the 16-year-old company.

Odwalla's rapid response -- McClane and the other distributors to 4,600 outlets in seven states and British Columbia were ordered to pull the juice within hours of the Washington discovery -- is a textbook case of a company that wasted no time doing the right thing. In the process, the company's reputation survived, and so did the company.

Odwalla's action did not begin, however, with a decision to pull the juice. Nor did it end there.

Long before the crisis, the company had prepared itself by developing a set of values and a mission statement that would guide its decisions in the panicky hours after Washington state health officials called to say they had found an epidemiological link between several cases of E-coli and Odwalla's apple juice. That fact alone didn't really tell the company much. All it showed was that the patients had all consumed Odwalla apple juice, and all were infected with the same genetic strain (found through DNA fingerprinting) of E-coli. How in the world had it found its way into Odwalla's juice? To this day, the company does not know.

At around noon on October 30, Odwalla got the first call from Washington, recalls Sydney Fisher, director of communications. "Our first reaction was shock and disbelief," she says. Over the next four hours, the company's executive committee -- chairman Greg Steltenpohl, CEO Stephen Williamson, the COO, CFO and CLO (chief learning officer) -- and Fisher scrambled to determine a course of action.

Washington state held a press conference that afternoon at 4:00, and 20 minutes later, Odwalla issued the recall, on the strength of the DNA evidence alone.

"We looked at our values: honesty, integrity, respect. It was pretty easy to know what our next step would be" Within hours, every television network had a crew at Odwalla's doorstep. Steltenpohl and Williamson did as many of the interviews as possible.

By acting quickly and communicating openly, Odwalla was poised to clench positive public opinion.

"It always costs more to manage a crisis the longer your wait," says Portland crisis management consultant Ginny Burdick. "It costs more in time wasted, in money spent for advice, and in public good will."

Nike learned this lesson the hard way, just wishin' sentiments about off-shore manufacturing and child labor would go away. In the company's silence, others held forth in the court of public opinion. Of Nike, Burdick says, "This issue should be behind them. They should be established as a white hat in the countries they deal in."

Odwalla did not rest after the recall, either. "Part of a good crisis plan is planning any possible scenarios," says Fisher. The company set up a situation room where it collected information and developed an array of possibilities.

"They ranged from removing the product from the shelves, and then no more problems to a worst case scenario ..." -- Fisher is quiet -- "... death."

The worst happened. Just two days after the Washington outbreak, cases, again linked to Odwalla, turned up in Colorado. A 16-month-old child died from the bacteria on November 8.

"It was an awful day. It was devastating, especially for a company with a vision to nourish people," says Fisher. Before the girl's death, chairman Steltenpohl had quietly contacted the family, asking if he could see them. On a trip to Denver to hold a press conference on the crisis, he met with them, and later returned for her funeral.

While Fisher is quick to point out that his visits were not public relations moves (the media didn't know about them) the company's honest concern -- even horror -- showed through in the press release issued when the child died.

"I've been a writer for 25 years, and you know when you're being manipulated," says Concord, Calif., communications consultant Shel Holtz, who thought the release and all the company's communications were genuine and effective.

"You have to show that you care," advises Holtz, even if you aren't sure you're at fault. Dow Corning bungled this test in responding to the failure of its silicon breast implants. "Some attorney said, 'Don't say anything, we'll deal with it in court.' That may be good legal advice, but there is hardly a company left now. They needed to say, 'Our hearts go out to those people who are suffering.'" Odwalla took it one step further, offering to pay the medical bills of anyone hurt by its juices.

But just acting contrite is not enough.

"My premise has always been that crisis communication is a misnomer. It really ought to be crisis action," says Gregg Kantor, director of public affairs and communications for Northwest Natural Gas.

Besides the recall, Odwalla acted in several other ways. It turned quickly to its production facility in Dinuba, 30 miles south of Fresno, and home to 85% of its drinks' ingredients. It took the line apart, doing a hazard analysis at critical control points. On December 5, it announced that though tests found nothing, Odwalla would begin flash pasteurization of its apple juice products, an absolute barrier against E-coli.

It brought in outside experts too, forming in the first week a nourishment and food safety advisory council that would not only make suggestions, but verify the quality of Odwalla's actions.

"Throughout America, there is a cynicism and distrust of institutions -- both in government and the private sector," says Kantor. "To say you have the best service or an environmentally sound product rings hollow with most people. The way to address that is to have a third-person testimonial that says you're different."

Ironically, some of the third-party testimonials came not from the advisory council, but from families and individuals caught in the crisis. Holtz remembers seeing the interview of one victim who told a reporter he wouldn't sue Odwalla: the company had done everything right.

Odwalla did not depend on the media alone to communicate either its contrite behavior or its action plan. Within 72 hours, the company launched a skeleton Web site -- its first -- that included all the company's actions, and links to other sites of interest including the Centers for Disease Control.

Rather than just depend on people finding the site through a search engine, Fisher promoted the site address in news releases, garnering 30,000 hits within the first few hours. The company also expanded its 800 number from one line to eight lines, 20 hours a day, 7 days a week. It focused on constant communication, holding regular press conferences and issuing news releases sometimes hourly. Odwalla did something it had never done before: It advertised, placing full-page open letters to consumers signed by the president and chairman.

"Odwalla took their case to the public," sums up Holtz.

Now the $60 million publicly traded company is looking at a few sagging quarters, but sales are slowly rebounding, even in Washington state.

"I think the feedback we got was that our swift action and communication with the public saved us," says Fisher.

But its salvation had other origins, too. Like the solid relationship the company already had with the media, shareholders and other "stakeholders," as Fisher calls them. Including employees. McClane recalls that he was never out of the loop throughout the crisis. And when the lean months followed, he didn't lay off any delivery people.

"I sort of sent everybody out to maintain customer relations."

That's an attitude that will keep Odwalla's reputation intact, crisis or no.

1. Do the right thing. "If you have a problem that's causing you bad PR, you have to have the will within the company to fix the problem for real. If you don't have a good story, get one," says Burdick.

2. Ixnay on the spin. "I think people should stay away from the whole spin doctor mentality. This is not the time to paint a rosy picture.

Find out what happened and why. Know how you're going to fix it. "Then be frank, don't be afraid to say what happened," says Trish Neiworth, communications consultant to government and private non-profits.

3. Show you care. You may be constrained from admitting guilt, but you can always sympathize with those who are suffering. "Don't let your response be, 'we're not at fault.' Show genuine compassion for those who have been wronged or hurt," says Holtz.

4. Make friends with the media. "It helps if you have already developed a relationship with the media. When they call, call them back, and have the information they need. If you don't have that, you don't have a place to start," says Neiworth.

5. Don't be shy. "The culture of most companies lends itself to fixing problems, not communicating about it. Sometimes you need to be high profile. I point out the real risks of doing nothing. It's far more risky to say 'no comment' than to get your own story out there," says Burdick.

6. Take your case to the public. Don't just rely on the media. Try an 800-line, a Web site, or take out advertisements explaining your position. Caution: if you start a Web site, keep it up-to-date. After the crash of a Boeing-built jet off Long Island last year, the manufacturer's Web site offered no acknowledgment of the crash for weeks. "They couldn't understand why their server was getting hit so hard. Your Web site doesn't exist out there in a vacuum," says Holtz.

7. Talk inside and out. "If you're in the middle of a crisis and can't talk to your employees, it makes it a lot worse," says Neiworth.

"Committing yourself to a good internal communications policy tends to identify problems early on," says Burdick.

8. Find an outsider. "You need outside experts to make an assessment of things. It's risky, because they may not tell you what you want to hear.

Then you act on their recommendations. You don't have to act on them all at once, but you make a commitment to move yourself in the right direction," says Kantor.

9. Don't wait. It's not going to get better on its own.

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