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Situation:
Kryptonite was a well established and respected brand of bicycle
locks. The first to employ the U-shape design, early advertising
showed what happened to a bike in New York City that was locked
up and left. After 30 days, the bike was completely stripped
clean except for the frame, which was still secured by the
Kryptonite lock. Ever since the early 90s, it had been rumored
that there was a way to break into the seemingly theft-proof
device. Yet, the Kryptonite locks still sold millions. In
2004, the blogosphere was about to change everything for the
company. That summer, videos were circulated on the internet
and posted on blogs that showed how to pick the Kryptonite
lock using a simple dime. Aware of the videos, but with no
way of knowing how widespread the discussion was, or by whom,
the company held their breath. On September 17, 2004, prompted
by the blogs, the New York Times and the Associated Press
published stories about the problem--articles that set off
a new chain of blogging. Within two days, almost 2 million
people had seen postings about Kryptonite and the how-to guide
to break the lock. Later that week, Kryptonite announced it
would exchange any affected lock free. The company sent out
over 100,000 new locks.
Solution:
Could Kryptonite have avoided this episode? While only speculative,
knowing that this design flaw was possible, it would have
been easy for Umbria to have monitored the blogosphere for
any reports of the flaw being discussed, and possibly caught
it in time to replace the locks before it hit the mainstream
media.
Outcome:
Later that week, Kryptonite announced it would exchange any
affected lock free. The company sent out over 100,000 new
locks. "It's been--I don't necessarily want to use the
word 'devastating'--but it's been serious from a business
perspective," says marketing director Karen Rizzo. Kryptonite's
parent, Ingersoll-Rand, said it expects the fiasco to cost
$10 million, a big chunk of Kryptonite's estimated $25 million
in revenues. Ten days, $10 million.
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