How to Make Your Company More Resilient

Health Tip 2: Keep It Clean

From the beginning, Odwalla has relied on a network of route managers who deliver Odwalla products to retail outlets and manage relationships with trade partners across the country. This hands-on approach was more expensive than a third-party distribution system, but it more than justified its cost during the crisis. "Following the recall announcement, we had only a few days to reassure our trade partners and our consumers," Williamson says. "In less than a week, our coolers would have been unplugged, our products thrown out, and our space in the market lost."

Immediately following the E. coli detection, Williamson asked route supervisors to yank apple and carrot products from coolers and to talk one-on-one with account managers. They revisited retail sites every day to deliver updates and to post public notes on Odwalla coolers. The company also bought ads in local papers, alerting consumers to the recall, and offered to cover medical expenses for anyone affected by the contaminated juice.

"Odwalla didn't survive by accident," Williamson says. "For 15 years, we built a reservoir of goodwill in the Bay Area. When crisis struck, some of that goodwill drained away, but a lot of people still believed in Odwalla, partially because we never deceived or manipulated them. When things go bad, people want to look inside a company and to see whether its soul is good. Ours is."

Odwalla maintained its open-door policy in December 1996, when the company introduced a stringent new quality-control process, and in July 1998, when it pleaded guilty to federal criminal charges and agreed to pay a $1.5 million fine for its involvement in the E. coli outbreak. "We could have kept the grand-jury investigation under wraps until the settlement, but we believed that our customers deserved to know the truth," Williamson says.

Health Tip 3: Jump On It

For a small company with highly perishable products, time is more than money. Time is survival.

When Seattle's health officials contacted Williamson that day in October, he didn't first call his lawyer or summon the board of directors. After ordering the recall, he immediately reassigned all managers to one of three teams: managing the existing business; plotting a reemergence strategy; and managing inquiries from health authorities, media, and customers. While one team worked to reassure distributors, another team devised new formulas for Odwalla drinks containing apple or carrot juice.

"We had no crisis-management procedure in place, so I followed our vision statement and our core values of honesty, integrity, and sustainability," Williamson says. "Our number-one concern was for the safety and well-being of people who drink our juices."

Within just five weeks of the recall, Odwalla had initiated an entirely new method of juice production called flash pasteurization -- a surefire method of killing bacteria with heat. On December 5, Odwalla brought back its apple juice -- now produced under stringent guidelines approved by the FDA.

Health Tip 4: Take It Back

For Odwalla, instituting flash pasteurization was more than just a quick fix for a dangerous problem; it was admitting that the company's founding principles were wrong. Greg Steltenpohl had built the company on a promise of absolute freshness and insisted that pasteurization stripped juice of its taste and nutrients.

Odwalla originally believed that it could avoid harmful bacteria in its juicing process by passing along its high standards to fruit growers and handlers. Odwalla instructed its suppliers to harvest only tree-picked fruit that had not fallen to the ground. That plan failed when a batch of contaminated apples reached Odwalla's production facility in Dinuba, California.

In the days following the E. coli outbreak, Odwalla did not try to defend its policy against pasteurization. The company admitted its fault, scrapped its operating system, and asked leading industry experts to help it start all over again -- fast. Odwalla invested $1.5 million in new safety procedures within a year of the recall. Today, the company adheres to a Hazard Analysis and Critical Control Points program that exceeds FDA requirements, tests every batch of juice for purity, performs daily microbiological tests, and leads the charge for higher government standards across the juice industry.

"Odwalla has been scarred forever by the mistake that we made in 1996," Williamson says. "We don't try to hide that scar. We don't cover it up. We keep it in plain sight to remind us of the tragedy that we must avoid at all costs."

Williamson says that the process of trashing and reinventing its production methods forced Odwalla to take a long, hard look at its business model. And when it pulled the world into focus again, Odwalla realized that it was no longer content being a quirky little juice maker from California. In the years following the E. coli outbreak, Odwalla has built a brand that represents more than good juice. The company, which merged with Maine's Fresh Samantha last year, now produces Future Shakes, health bars, and soy milk.