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MISSION:INTANGIBLE, the blog of the Intangible Asset Finance Society, offers critical comments on intangible asset, corporate reputation, and finance; supplemented by quantitative reputation metrics. Intangible assets include business processes, patents, trademarks; reputations for ethics and integrity; quality, safety, sustainability, security, and resilience; and comprise 70% of the average company's value. MISSION:INTANGIBLE is a registered trademark of the Intangible Asset Finance Society.

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Pram lessons

Nir Kossovsky - Thursday, November 12, 2009
The headline risk de jour is being realized by Maclaren, a premier British parenting lifestyle company “that produces the world’s most safe, durable, and innovative and styling baby buggies…” You get the drift from their website lead-in.

On Monday, U.S. Consumer Product Safety Commission (CPSC) announced the recall of some 1 million Maclaren strollers that were released nationwide from 1999 through November of this year. This is why. Maclaren received reports that 12 children had their fingertips amputated after they placed their fingers in the hinge where the stroller folds.

The blogosphere is active. Some parents are outraged, as would be expected. But the story is getting significant mainstream news uptake and that means a greater range of stakeholders will be impacted. This morning, for example, the Financial Times had a banner ad above the fold and below the masthead leading to an op-ed piece on page nine, “How not to take care of a brand.”

Safety is one of the six key intangible assets that support the Roman Arch of corporate reputation. Safety is the state of being certain that a set of conditions will not accidentally cause adverse effects on the well-being of people or the environment. The safety issue has grown into a reputation-driven existential issue at Maclaren. There are several reasons.

      1. There was a design problem. The product design did not anticipate certain forms of use. Children walking alongside and using the strollers for support may hold on to the product at the amputating hinge.
      2. The design problem could have been addressed at any point in time post-market release with a simple engineering fix: a hinge cover.
      3. There was a surveillance problem. Safety is a core asset for a company that serves children and their parents. The company was not monitoring for indications and warnings of safety problems.
      4. There was a preparedness failure. The company had no crisis management system in place.
      5. There was a failure of execution. The company’s response to the crisis failed to conform to well established crisis management best practices:
        1. Instead of empathy, the company offered statistics
        2. Instead of contrition, the company suggested that parents were at fault for using the strollers as walkers rather than push carts
        3. Instead of reaching out to all stakeholders with the engineering fix (see #2), the company focused their attention on the US market (even though they are UK-based and sell worldwide)
      There is a take home message. Even in private companies, reputation management may be one of the best investments an executive team can make. Join the Society and learn more about increasing, protecting, and restoring intangible asset value.

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