UK: HOW NOT TO MANAGE A CRISIS. - 'Speed to market' is one of the great battlecries of our day. All over the world, chief executives are urging their divisional managers to get new products out of development and off to the customer. Unfortunately, this

Last Updated: 31 Aug 2010

'Speed to market' is one of the great battlecries of our day. All over the world, chief executives are urging their divisional managers to get new products out of development and off to the customer. Unfortunately, this pressure does not always result in competitive advantage. The rush to get on the market contributed to the fiasco of the flawed Pentium microprocessor chip, for example. And its producer, Intel - the biggest chip-maker of them all - has not been the only IT manufacturer to fall down recently. In the same month that the Pentium hit the headlines, Compaq was obliged to recall tens of thousands of notebook computers which had bugs in their memories and faulty power supply units.

Defective products are unacceptable as companies move an increasing number of critical applications on to computers. 'The practice of leaving final testing until the product has been shipped will have to stop,' insists one IT specialist. Microsoft, perhaps fortunately, has already announced that development problems will delay shipments of its Windows 95 operating software until the second half of the year.

Yet what infuriated many users about the Pentium episode was not so much the silicon bug as the behaviour of Intel. 'We live in an imperfect world,' observes Cormac O'Reilly, IT director at Costain Group, the construction engineers. 'All chips have bugs; the difference with Pentium was that there was an awful lot of denial when the problem surfaced.' Indeed, when the flaw emerged last December, Intel at first brushed it aside, claiming that it would cause an error only once in every 27,000 years. As the story gathered pace, the company further alienated customers by announcing that those with a proven need for accurate complex mathematical processing would alone be entitled to replacement chips. The crunch came when IBM announced that it was withdrawing Pentium-based machines from the market. Intel immediately issued an unconditional offer to replace any Pentium on request.

Intel should have been more open about the flaw and kept customers informed, argues O'Reilly: 'We'd have preferred to have known, and to have made our own judgment about its significance.' A penitent Andy Grove, Intel's president and chief executive, has had to admit that the episode was an object lesson in how not to manage a crisis. 'There was resentment to our approach, it appeared that we at Intel were arrogant,' he has confessed.

But Intel's high-handedness is not unusual in the computer industry. 'Most IT users are familiar with being told that they were the only ones to experience a problem, only to discover many months later that there were a whole host of people with similar difficulties,' says Rob Briggs, head of management services at East Sussex County Council. 'Some quite large vendors work hard to keep the users apart.

'The IT industry gets away with behaviour that other industries couldn't contemplate in delivering products to market that are clearly substandard and incomplete,' insists Briggs. 'Some of the things it expects users to pay for are quite disgraceful. If you bought a car under such conditions you wouldn't accept it - in fact, you would probably not be able to drive it away.' But at least businesses may now hope for a more frank and open response from IT suppliers.

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