Editor’s note

Citation

(2006), "Editor’s note", Journal of Business Strategy, Vol. 27 No. 4. https://doi.org/10.1108/jbs.2006.28827daa.001

Editor’s note

James O’Rourke’s paper on how Merck managed communications about the Vioxx recall reads like the beginning of a novel. The ending may not be known for many years, as more than 11,000 product liability lawsuits run their course in the courts. One sure lesson for all CEOs and senior managers is never to think, “it can’t happen here.” In the 1980s and 1990s, when Merck routinely appeared on lists of best companies, no one at the company thought it could fall so suddenly and so far. But pharmaceuticals are particularly at risk for product liability issues that affect thousands.

Communication crisis experts warn that no large company should consider itself insulated from crises where it is potentially blamable. These are not catastrophes due to external factors like terrorism but crises where the company stands to lose millions or billions due to possible wrongdoing. Most large companies give lip service to the need for a crisis communication plan but many do not have one in place. It is too late to create one after the crisis happens.

Even with a plan in place, many companies faced with a product crisis think that by denying or not commenting on the problem immediately, it will go away. Not only will not go away, it will escalate and reverberate as the damage spreads. Whether the damage to stock price or reputation is more serious is hard to say; besides, the two are intertwined.

Business professors recently offered their opinions on crisis management in a BusinessWeek article (April 17, 2006) about the Bausch & Lomb (B&L) crisis. Bausch & Lomb, an eye health company headquartered in Rochester, New York, has core businesses that include contact lenses and lens care products. There were reports of over 100 infections in early 2006 linked to contact lens solution made by the company. The professors weighed in on whether B&L had done enough, quickly enough, to handle the crisis effectively. Opinions diverged, but all essentially agreed with Irv Schenkler of New York University Stern School of Business:

Consumers want reassurance that the company is actively engaged in solving the problem … The CEO must come across as humane and empathetic. He can’t be seen as hiding behind data or blaming others or the media.

Readers will find James O’Rourke’s account of the Merck crisis fascinating, especially since he was able to interview Joan Wainwright, the vice president of communications, several times. Wainwright orchestrated a plan to announce the Vioxx recall almost simultaneously to various stakeholders around the world. The communications effort will continue to unfold as each verdict comes in.

Other articles in this issue of Journal of Business Strategy are less dramatic but just as timely and valuable, we think. Mercer Consulting’s Adrian Slywotzky and co-authors from Munich, Hong Kong and Paris discuss a concept they term value migration to explain the effects of globalization in business. Eric Olson points out that innovative technology alone is insufficient for sustaining competitive strategy. It takes integrating operations with strategy, where technology is only one part of the arsenal needed to succeed.

Markku Wilenius’ paper on cultural competence in business refers mainly to the scenario in Finland, but his observations are as valid for other countries as for his own. As a futurist, his research interests center in part on the importance of developing culturally sophisticated employees and managers in order to compete on a global scale.

Pieter Klaas Jagersma, professor at Nyenrode Business University in The Netherlands, contributes an article for this issue based in part on his survey of 225 executives at 88 banks in 11 countries on issues related to marketing and strategy in financial institutions. He regularly contributes to Journal of Business Strategy and to many other journals and publications. The only problem is that many of his papers are in Dutch, his native language!

From Israel, Michael Etgar provides insights on how Israel’s robust and economically critical high tech industry faltered and then rebounded. Companies that operated informally had to learn quickly about strategy and marketing to survive. Professor Etgar’s analysis of the Israeli sector applies equally to how the US high tech industry is recovering as well.

As organizations throughout the world continue to experience radical changes of one kind or another, many of which involve reduced work forces, the question naturally arises of what happens to corporate knowledge when people leave. In one organization, Nicholas Scalzo finds that corporate memory did not dissipate with departing employees. Various mechanisms came into play that helped to retain key elements of memory.

We hope that you enjoy this issue. Please let us know what you think by sending your comments to the editor at nanci_healy5@earthlink.net