A corporate emphasis on growth at the expense of safety and a slow regulatory environment are two possible reasons behind the controversy surrounding Fisher-Price’s Rock ’n Play Sleeper, which has been linked to 32 infant deaths since 2009. The infants apparently died of accidental suffocation as they rolled over in the sleeper unrestrained.
The past three weeks have seen a flurry of corrective action on the Fisher-Price product. A subsidiary of El Segundo, Calif.-based toymaker Mattel since 1993, Fisher-Price is recalling all 4.7 million Rock ‘n Play sleepers it has sold thus far. The recall came April 12, three days after a warning from the American Academy of Pediatrics (AAP) and a day after a Consumer Reports investigation into the product’s safety. On April 5, the Consumer Product Safety Commission (CPSC) and Fisher-Price jointly issued a warning that the product shouldn’t be used after infants begin to roll over, which is usually after they are 3 months old.
In its recall announcement, Fisher-Price claimed the infant deaths occurred because the sleepers were used “contrary to safety warnings and instructions.” However, the product is unsuitable for infants, according to Benjamin Hoffman, professor of pediatrics at the Oregon Health & Science University School of Medicine, medical director at the Tom Sargent Safety Center and director of the Oregon Center for Children and Youth with Special Health Needs.
“A safe sleep space for a baby is a flat, firm surface,” said Hoffman, who was part of the AAP committee that recommended the recall of the Fisher-Price sleepers, which are inclined. “We know that sleep [for infants]is really hard, but products like the Rock ’n Play may impede the ability of a baby to protect themselves.” He added that several other similar products that are being sold fail to meet safeguards and are dangerous.
Hoffman dismissed the argument that infants get better sleep when they are at an incline because that position avoids acid reflux conditions. He noted that both pediatricians and gastroenterologists have found that sleeping at an angle doesn’t decrease the risk of reflux and may make it worse.
“I can’t think of a safe way to have an infant sleep in a product like that regardless of the use or non-use of the buckle,” he said, referring to the Rock ‘n Play’s built-in harness. If a child were to be on such an inclined sleeper, an adult would need to remain present because “something untoward can happen if they leave the room for even five minutes.”
If no safe way exists for the use of the Fisher-Price sleeper, it shouldn’t have been sold in the first place, suggested Robert Hurley, professor of leading people and organizations at Fordham University’s Gabelli School of Business. “If Fisher-Price is going to retain its strong brand name, it can’t be producing products that are unsafe,” he said. “So, there is a real question as to why this design was allowed to go forward, both by Fisher-Price – which obviously should be concerned about safety and its brand reputation – and the regulator who was in charge of this.”
Both Hoffman and Hurley spoke about the Rock ‘n Play sleeper on the Knowledge@Wharton radio show on SiriusXM. (Listen to the podcast at the top of this page.)
“I can’t think of a safe way to have an infant sleep in a product like that regardless of the use or non-use of the buckle.”–Benjamin Hoffman
The regulatory action came too late, according to Hoffman. “It’s been on our radar [at the AAP]and we’ve been trying to get people to listen,” he said. “Unfortunately, it came to the point where before there was proactive action, babies died.”
Hoffman noted that the CPSC had to create a new product category to allow the Rock ’n Play sleeper to be considered, “with different criteria than other sleep spaces” such as bassinets and cribs. “It’s something that those of us in the in the child health world had a lot of issues with, and the American Academy of Pediatrics has spoken to the Consumer Product Safety Commission about it previously without success.”
The CPSC is now investigating all so-called inclined sleepers, which 26 companies sold in the United States as of August, according to a New York Times report.
In the case of the Rock ‘n Play, regulators also failed to act decisively and in good time, according to Hurley. “Their job is to create stability and safety and to act as a countervailing force versus commercial interests that would want to innovate, perhaps in reckless ways,” he said. “Regular people are not going to read the fine print. They’re busy. Parents are going to put that kid in there and not realize how critical that harness is. And so, we need a regulator to say, ‘Hey, wait a minute. This doesn’t really work in a safe manner in the real world. You need to change your design or you need to not market this product.’”
Growth vs. Safety
Hurley pointed to other aspects of the Fisher-Price case that he found disconcerting. For one, he noted that Fisher-Price’s recall message came from a general manager at the company. “Why isn’t the CEO making a statement?” he asked. “There can’t be anything more important than safety with respect to kids’ toys.”
Fisher-Price may have consciously decided to avoid having Mattel’s CEO address the issue, according to Wharton marketing professor David Reibstein. “I suspect they were trying not to make it into a bigger issue than it already was,” he said. “Nonetheless, it probably would have been better if it was handled from the highest levels of the organization, signaling this is not to be taken lightly.”
“Fisher-Price should take every opportunity to repeatedly note their No. 1 goal is children’s safety.”–David Reibstein
Meanwhile, Mattel itself has seen some turmoil at the top recently. A year ago, the company replaced CEO Margaret Georgiadis after only 14 months with Ynon Kreiz as chairman and CEO. Mattel had hired Georgiadis from Google parent firm Alphabet to modernize the company and halt Mattel’s sales slump, but “the bankruptcy and liquidation of Mattel’s top customer and toy retailer Toys ‘R’ Us has heaped more pressure on the company and highlighted the troubled retail environment,” according to a Reuters report. Georgiadis’s predecessor at Mattel, Christopher Sinclair, served as CEO from January 2015 to February 2017, and stayed on as non-executive chairman until May 2018.
Mattel’s shares have fallen from $38 to about $12 now over the past five years. Its finances have steadily worsened during that time, with revenue falling from $6.5 billion in 2013 to $4.5 billion last year. Its bottom line in that period went from a profit of nearly $900 million to a $530 million loss.
“Often, when a company’s stock price is declining, they look to bring on an aggressive group that wants to grow earnings, and they start to change the culture and be more aggressive,” said Hurley. “Sometimes – I’m not saying that’s the case here – what happens is the concern about growth trumps concerns about safety or compliance.”
Hurley listed other problems Fisher-Price has been facing. “They’ve lost the lead in toys to Lego, and they’ve slipped behind Hasbro,” he noted. “You could argue that they’re aggressively trying to grow. And that may be part of the problem here. If you look at a lot of these companies that have violated trust – Wells Fargo, Barclays and so on – [these incidents]are generally preceded by manic growth or unrestrained growth. The guardrails start to come off as you try to grow, and maybe safety is one of the guardrails.”
Such times bring a company to a point where it might reflect and reassess its priorities. “You can step back and put this in a sociological, macro business perspective and ask whether it is possible that sometimes these betrayals of trust – the pain that’s inflicted on stakeholders – is a side effect of manic growth, which is driven by the stock market and the desire to grow the stock price,” Hurley noted.
“If you look at a lot of these companies that have violated trust – Wells Fargo, Barclays and so on – [these incidents]are generally preceded by manic growth or unrestrained growth.”–Robert Hurley
“It’s a paradox – growth versus safety, growth versus stability,” said Hurley. “So many times, when we run companies, we don’t balance that paradox. We skew to one end of the continuum, and it creates problems.”
Reclaiming Lost Ground
What could Fisher-Price do to reclaim lost ground in trust and brand value?
“You could argue that if they want to repair trust, one thing they might do is consider change – bringing in a new CEO who has a record around quality and safety and so forth,” Hurley suggested.
“The Chinese symbol for crisis is two characters that roughly translate to ‘danger’ and ‘opportunity,’” Wharton marketing professor Americus Reednoted. “The latter means that Fisher-Price could use this moment to take an industry-wide leadership role to partner with others to raise awareness, and to uplift the safety standards and raise them across the board so that all toymakers, parents and children will benefit.” He added that such a posture would be a much better approach “than just saying, ‘We’ve always been safe and we will continue to be,’” as in its recall video. “There is an opportunity to go way beyond the ‘show action’ piece here and to signal very concretely that it is impossible to over-do safety efforts when lives of innocent children are at play.”
According to Reed, Fisher-Price realizes that most people don’t read the fine print, except perhaps first-time parents with an infant. “Validating concerns does not necessarily mean proclaiming from the mountain top, ‘We screwed up,’ nor does it mean passing the buck and blaming others to try to get out of lawsuits,” he said. Instead, he advised genuine regret. “You will be amazed at how just coming out and authentically expressing a sense of devastation and tragic, serious loss that occurred in the incidents in question will often create goodwill that mitigates the anger and emotion when the victim begins to try to sort out whose fault it is.”
“You will be amazed at how just coming out and authentically expressing a sense of devastation and tragic, serious loss … will often create goodwill that mitigates the anger and emotion….”–Americus Reed
Hurley recalled that Mattel “did a great job of repairing trust” after a 2007 controversy involving lead paint in toys it sourced from China. “This repair of trust [in the Rock ’n Play sleeper case]I don’t see as nearly as good.”
According to Reed, “The rules of crisis management are (1) Validate concerns, (2) show action and (3) control the narrative.” The executive in the Fisher-Price recall video has earned a failing grade “because he’s reading a script – obviously – and he spends the entire 50 seconds defending his safety record instead of acknowledging first, that the death of a child is a horrendous tragedy and that the incidents in question are of grave concern, and that is why the company is doing the recall. He is doing OK at controlling the narrative. But this violates some very simple principles of crisis management.”
“Fisher-Price should take every opportunity to repeatedly note their No. 1 goal is children’s safety,” said Reibstein. “Toys and other products for children should take every precaution to be safe; it is imperative. Companies need to recognize that not all people read instructions and only a few read the fine print. The responsibility should be on the part of the company.”
Legal Liabilities Ahead
Fisher-Price could find itself in big trouble if plaintiffs prove that the company sold the sleepers even as it was aware of the risks they posed. Chris Gowen, adjunct professor at American University’s Washington College of Law, who joined Hoffman and Hurley on the radio show, recalled Merck’s case in the early 2000s involving its painkiller Vioxx, which it recalled after heart attacks were linked to its use. During the litigation, it was revealed in email trails that Merck was aware of the risks with Vioxx, and eventually the firm settled class-action suits for nearly $5 billion.
“Whether that sort of smoking gun exists or documentation that Fisher-Price knew or should have known that this was a defective product will be a big factor in this case.”–Chris Gowen
“Whether that sort of smoking gun exists or documentation that Fisher-Price knew or should have known that this was a defective product will be a big factor in this case,” said Gowen, who is partner at the law firm of Gowen, Silva & Winograd.
It is not entirely clear what legal liabilities Fisher-Price could face in this case. The recall doesn’t impose a liability on the company because it is voluntary, and neither can it be used by plaintiffs as evidence for liability, Gowen noted. “This product has a buckle and a snap in it, and I believe that if you use that properly it’s going to prevent the baby from turning over and thus preventing death,” he said. However, a “foreseeability” factor could come into play – “whether it’s foreseeable that that parents would put the child in this rocker without snapping them in.”
Meanwhile, lawsuits are on way. The parents of a 12-week-old girl who died last September after a few minutes in a Rock ’n Play have sued Fisher-Price, Mattel and Amazon, where the sleeper was bought, in a federal court in New York, according to a New York Times report.
This article first appeared in www.knowledge.wharton.upenn.edu
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