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4 Famous Engineering Brands that Bounced Back from a Crisis

  • by: Max Snegirev
  • On: 3, Aug 2020
7 min read

The coronavirus pandemic has negatively impacted, and in many cases sadly decimated, thousands of companies across industries around the globe. Even ‘essential’ Engineering and Manufacturing businesses such as those working in food production, pharmaceuticals, technological communication and cyber security have suffered major impacts to productivity and profitability, and have been forced to diversify or delay projects in order to maintain business continuity.

History has shown that, with innovation and collaboration at the heart of Engineering, the industry can and has returned from difficult situations time and again. From malfunctioning and dangerous products to no products at all, to rising production costs and near-bankruptcy, Engineering leaders have proven that the sector can bounce back from crises, big or small, and can even utilise them for the better.

Here are four examples of Engineering businesses that used a crisis to improve their products and services and get closer to their customers.

 

1. Samsung – Dangerous Product Malfunctions


Tech giant Samsung suffered from a plethora of negative headlines and consumer complaints after its Galaxy 7 smartphones began to explode. In October 2016, an unseen technical fault caused overheating batteries to catch fire, with some causing injuries and burns to phone owners. Samsung immediately ceased production of the phone model and tackled the crisis head on in the press.

The South Korean tech company launched an expansive communications campaign to provide transparent explanations of what went wrong, first introduced by sincere apologies. The campaign included:

  • Full-page newspaper adverts apologising to Note 7 customers
  • An advert series where engineers reveal the current safety and quality tests for smartphones, and planned improvements
  • Releasing the investigation report into the faults behind the phone explosions
  • Identifying and explaining new multi-layer safety measures and battery checks.

UK & Ireland Vice President Conor Pierce commented, ‘We understand that we must continue to work hard to earn back consumer trust. This was obviously a complicated matter, but independent brand and consumer insights demonstrate that we are winning back consumer’s confidence. They know what went wrong, and more importantly, they know what we are doing to make sure it doesn’t happen again.’

Samsung’s campaign to address customer concerns, apologise and take responsibility for its mistakes, and taking an honest and human approach to reassure customers enabled the Engineering company to successfully bounce back from the Note 7 crisis. Just months following the Note 7 disaster, Samsung saw its highest quarterly operating profits since 2013 (£6.2bn). In 2020, the company is growing and succeeding like never before: now the world’s largest maker of smartphones, the business recently saw a 23% rise in operating profits compared to 2019, have just launched Galaxy Note 20, and are rumoured to be releasing innovative and exciting new products in the latter half of this year to great anticipation.

2. Apple – Lack of Leadership & Innovation


Now one of the best-known and most-loved Tech and Engineering organisations in the world, the innovative Apple would no longer be in existence today had it not bounced back from a business-critical crisis. Before the millennium, the company was losing $1 billion a year and on the brink of bankruptcy after the departure of famous Founder Steve Jobs.

Declining sales and market share in the 1990s were swiftly reversed by bringing back Steve Jobs through the purchase of his company, NeXT, and installing him as interim and later permanent CEO. Jobs transformed the company by implementing a new corporate philosophy of recognizable products and simple design, which began with the launch of the original iMac in 1998.

An ethos of innovation and creativity leading simple design generated the now historic introduction of the iPod music player in 2001 and iTunes Music Store in 2003. Under its revolutionary strategy, Apple established itself as a leader in the consumer electronics and media sales industries and stayed at the front of Engineering innovation with futuristic products such as the iPhone and iPad. Winning hearts and minds as well as customer trust and respect, Apple is now the largest publicly traded corporation in the world by market capitalization, with an estimated value of $1 trillion and ever-growing global revenue.

 

3. IBM – Agile Competition


Although IBM is one of a select elite that has managed to keep its spot on the Fortune 500 list for more than half a century, the Engineering brand was incredibly close to entering administration in the early 1990s. Once strong in the IT sector, the business was experiencing falling sales upon the popularity of PCs and client servers and couldn’t compete with smaller start-up tech companies. In 1992, the company lost $5 billion – more than any other American company in history. When the initial turnaround strategy of its existing CEO to divide the company into business units (such as processors, storage, software, services, printers) failed to address the problem, market critics predicted certain failure.

The company decided to take a radical risk and hired a new CEO, Lou Gerstner, who had no background in computing. Gerstner embarked upon a revolutionary strategy to transform the company’s fortunes, including:

  • Customer Centricity – Speaking directly and listening to customers, Gerstner discovered that the biggest problem in the market was integrating all the separate and different computing technologies that were currently emerging
  • Restructuring – Losing over 100,000 jobs to reduce costs, increase efficiencies and concentrate on quality
  • Marketing Strategy – Delighting customers and problem-solving focus.

The radical rethink and strategic risks, directed by visionary leadership, paid off. In 1995, IBM’s sales reached $72 billion (a 12% increase from 1994) and profitability grew by 42%. Almost two decades later, IBM operates in 170 countries, retains its strong position on the most valuable companies in the world and is one of the globe’s largest employers.

4. Lego – Complacent Culture


In 2004, the long-established and universally loved toy brand was in severe trouble. Global sales had dropped 29%, delivering the company’s biggest loss in its then 60-year history (£217 million). Debts were almost equal to annual sales, and many products found to cost more to manufacture than the profit they generated, leaving the organisation close to bankruptcy.

CEO Jorgen Vig Knudstorp was at a loss to understand the sudden decline in fortunes: since its inception in 1932, the company had never made a loss. Knudstorp embarked on an urgent challenge to understand the problems behind the financial situation by launching a dramatic turnaround plan that involved:

  • Travelling in person to Virginia, US for BrickFest, the annual convention for adult fans of Lego to listen to loyal customers and gain first-hand feedback on products and marketing
  • Consulting previous colleagues at the Massachusetts Institute of Technology on product quality and business strategy
  • Streamlining operations and selling every part of the business not integral to the core product, including properties in the U.S., South Korea and Australia, four theme parks and videogames development division
  • Handing over creative direction to the core fans of the brand by placing customer experimentation and research at the heart of product development and improvements
  • Establishing partnerships with new designers that truly loved the products and successful franchises such as Harry Potter and Star Wars to benefit both brands
  • Fundamentally changing the internal culture of the company.

A family-owned and long-established brand that had enjoyed success without the need for introspection for 60 years, the culture change proved Lego’s biggest challenge. Employees had become complacent and had lacked focus on financial outcome in addition to product quality. Knudstorp introduced performance-related pay and made processes more efficient, such as reducing new product development time from two years to one, and outsourced multiple process aspects to further increase efficiencies.

Knudstorp led the company to a resurgence and storming success. Lego soon became the world’s largest toy company, and during the 2008/2009 global recession enjoyed a 63% increase in profits of £163 million at a time when many companies were on the brink of collapse.  Lego had expanded into Asia and America, seen phenomenal success with new product ranges and innovated with the popular The Lego Movie film franchise, the first of which made $69 million in its 2014 opening weekend with one of the largest debuts of the cinematic year. There are now 62 Lego pieces for every person on Earth, 7 Lego sets are sold every second around the world, and entered Forbes’ list of the top 100 World's Most Valuable Brands 2018.

 

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