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The Peril of Brands Making Bad Decisions

The Peril of Brands Making Bad Decisions

The right decision can be a game changer for a brand, the wrong one can make it go bust.

At last week’s National Radio Conference, Rob Pyne, founder of decision making and strategy consultancy X or Y, listed strategies for brands to get the decision-making thing right.

“Making decisions is like breathing, it’s automatic,” said Pyne. It’s important, he added, to understand the ways in which we make decisions so we can make the best ones.

Each and everyday, brands are faced with decisions. “Yet 72% of managers say their companies have problems making good ones,” explained Pyne.

“Our careers are becoming less about making products and more about making decisions – we need to learn the best ways of making them quickly, effectively and being able to align people behind them,” he said.

Pyne explained that it’s decision-making skills which underpin a company’s ability to make money, hire and fire or create great teams who can develop winning strategies.

An example Pyne referenced of bad brand decision-making was the UK Hoover free flights fiasco of 1992. For every purchase of a Hoover vacuum valued over £100 the customer would receive a free round trip flight in Europe. Sales for Hoover products in the UK sky rocketed and the brand could hardly keep up with the demand.  But then customers across the UK were complaining that Hoover was not delivering on its promises which resulted in a PR nightmare that cost Hoover executives their jobs, almost half a billion dollars in costs, customer revolt, court cases and even the kidnapping of a Hoover delivery driver.

“This is how not to make decisions. They made a lot of decisions based on assumptions that were wrong,” Pyne said of the Hoover debacle.

“Now here’s a good example of brand decision-making, although it starts out badly – it starts with murder,” said Pyne referencing the Tylenol murders of 1982. The US painkiller had been tampered with resulting in the deaths of seven people. “The parent company at the time was Johnson&Johnson, so what were they going to do in this situation?” Pyne asked.

“They recalled every single Tylenol product from the shelves in the US. That cost them hundreds of millions of dollars, but they went far beyond their corporate responsibility,” he added. All Johnson&Johnson really had to do was recall that particular type of Tylenol in Chicago.

They also set up help lines for doctors and nurses and assisted police in their investigation of the contamination.

Pyne believes what underpinned the decisions made by Johnson&Johnson was their credo their corporate responsibility. “Johnson&Johnson listed what they perceived to be their corporate responsibilities which included: responsibility to the doctors, nurses and mums and dads, then their employees, then to the community and finally to the stockholders.”

12 months after the still unsolved mystery occurred, Johnson&Johnson’s shares had risen 29%. “Their brand reputation went up. They did the opposite to Hoover and based their decisions on their brand values,” explained Pyne.

Pyne argued that using brand values and focusing on the long term is more effective in the decision-making process than making short-term tactical decisions, which is what Hoover did.

Pyne’s company, X or Y has designed and tested a 6-step decision process to help not just brands, but people, make better decisions. He calls it “Value PATHS”.

V is for Values

If your brand values aren’t being used in big decisions, then what are they for?

P is for the real Problem

Are you treating the symptoms or really getting to the cause. Brands can add value by probing for and identifying the real problem.

A is for generating Alternatives

Over 70% of business decisions are made from too few options. Ensure your team considers other alternatives before locking in a decision.

T is for Test your assumptions

Are there any critical assumptions underlying the decision? If so, how can you test them? Talk to people close to the issue, then pull away and compare data and research to help establish the decision.

H is for take an emotional Holiday

Understand the role emotion plays in the decision. Try step away from them by imagining it isn’t you making the decision it’s someone else – like the marketing manager or CMO.

S is for Scenario planning

Plan to fail: imagine the reasons why, in 12 months time from now, the decision might have made for your brand turned out to be the wrong one.

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