Lessons in damage control

Maclaren is a small private company with a big public problem, one that it has not handled well.

On Monday, Maclaren announced that it was issuing repair kits for up to one million pushchairs it had sold in the US over the past decade after 12 cases in which children's fingertips were chopped off in the pushchairs' hinges. By that afternoon, its website had frozen and its phone lines were overwhelmed by parents. Meanwhile, the British company founded in 1965 by Owen Finlay Maclaren, the inventor of the "umbrella-fold" buggy, told non-Americans they would be treated differently.

Instead of a formal product recall, it was simply issuing warnings to owners not to let children stick their fingers in the folding mechanism as they opened the pushchairs. Repair kits to cover the hinges would not be automatically dispatched to every Maclaren owner, as in the US.

Outrage ensued, with messages on Twitter such as "OH MY GOD. Amputations from a stroller?!" By the time Farzad Rastegar, chief executive of Maclaren in the US and the brand's controlling shareholder, had lunch with me in New York on Tuesday, he sounded shaken.

"Did I expect this kind of coverage? No I did not," he said. It was hard to grasp why. The words "child" and "amputation" in a media release from the US safety regulator would surely terrify anyone.

After talking to him, I concluded that Maclaren does not have a bad story to tell – its safety standards are higher than cheaper rivals. But it has done a poor job of telling it.

Therein lie lessons for companies that face similar crises, of which there are a lot. Nokia has announced a recall of 14 million phone batteries, while Toyota is still coping with a recall of 3.8 million cars with floor mats that can make the vehicles accelerate uncontrollably and crash.

Lesson one: be ready. "Like the Scouts, you must be prepared and Maclaren was not," says Craig Smith, professor of ethics at Insead, the European business school.

Maclaren had plenty of warning – the 15 incidents of fingertip laceration or amputation in the US occurred over 10 years, but it became concerned when there were eight cases in the past two years. It has been working since the summer on how to remedy the problem.

But when the announcement of the recall (confusingly, "recalls" in the US need not involve products actually being taken back) leaked early, Maclaren was left floundering. Not only did its technology fail, but it was several hours before Bahman Kia, its US chairman, offered to give media interviews.

Reaction to such events tends to move swiftly, especially in the age of the internet. By Tuesday, Maclaren had vans driving around New York handing hinge covers to people with strollers and was urging European executives to talk to the media but it was already playing catch-up.

Lesson two: empathise. Maclaren is the latest of many companies to fall into the trap of being inwardly focused and failing to realise how customers will react. Finger injuries account for 3 per cent of the total to children from using pushchairs and such serious cases are very rare.

But statistics do not reassure consumers when something so horrifying is involved. "Companies tend to approach recalls with an engineering mindset but that is not how most consumers respond. They do not have a good appreciation of risk," says Prof Smith.

Maclaren knows it had an extremely low accident rate ("zero" according to Rastegar) when children are seated in fully-opened pushchairs, and its folding frames and hinges are stronger than many competitors. The consumer heard "amputation" and that was enough.

This problem of inward focus was exacerbated by the fact that Maclaren is a private company, or set of companies, controlled by Rastegar's family and is uncomfortable about public scrutiny. It has been a similar shock to other private equity companies that acquire consumer brands.

Lesson three: be polite. The injuries were caused by carers letting children grasp the hinges as they opened pushchairs. Mr Rastegar insists that he is not blaming his customers but at times it sounded a bit like that. "If you operate the product properly, your child is not at risk,” he assured me.

On paper, he is correct, but any parent knows how difficult it is to corral a small child while opening a pushchair, often in a hurry and feeling hassled. Maclaren needed to be better prepared with a simple, inoffensive way of pointing out what parents needed to do.

Lesson four: don't discriminate. Maclaren's biggest mistake was to appear to be treating American children's fingertips as more precious than those of children in the UK and other countries (ironically, since it advertises its English origins).

Safety regulators in most countries were content with Maclaren issuing a short-term warning and working on a safer design for the hinges in the long term but the US Consumer Product Safety Commission insisted on a temporary fix.

It should have been obvious, then, that the kits had to be offered globally, and not just in one country. Rastegar explained at length why he did not think so – including the fact that Americans more often get children to walk next to pushchairs – but I was not convinced.

Now Maclaren is backtracking under pressure from consumers and retailers and saying that anyone can have the hinge cover if they ask for it. The company might have avoided a lot of potential damage to its brand and its reputation by employing its common sense quicker.