Last week, Apple was forced to admit several of its best-selling products suffer from a fundamental design defect--a defect its leaders denied for years, a defect they knew existed all along, a defect that only came to light after Apple released internal documents in court as part of an ongoing lawsuit against the company for touchscreen failures known as "touch disease."

The term "touch disease" refers to the touchscreen issues that surface after the phone undergoes stress. It's caused by design defects in the iPhone and in the processing chip inside that cause some units to "bend," and once bent, cause the touchscreen interface to become unresponsive.

According to Motherboard, "The information is contained in internal Apple documents filed under seal in a class-action lawsuit that alleges Apple misled customers about touch disease."

Apple has repeatedly denied or downplayed touch disease and "Bendgate," just as it denied for years that iOS updates slowed down older iPhones.

But with Apple already facing more than 60 class action lawsuits around the world for its cover-up of iPhone performance throttling, this latest discovery could not come at a worse time. What Apple does next is anybody's guess, but pretending there isn't a problem does not seem like a wise approach.

When products fail or businesses behave badly, market perceptions and purchasing decisions can be adversely affected. Fines and legal costs amount to only a small part of the damage a scandal can bring. A big scandal also distracts management, causes a loss of public trust and social capital, often leads to a drop in the value of the company overall, and in some cases (hello, Facebook) can lead to painful regulatory scrutiny.

So what should Apple do? And more importantly, what should you do if you are caught in a scandal of your own making?

The Six-Step Process for Dealing With Scandal

There's a Harvard Business Review article from 2009 that lays out a four-step framework for dealing with a scandal. I think it's a good start, but it's missing a few important pieces.

Here's my six-step framework:

  1. Assess the incident. Was it big or small? How many people were impacted? What is the quantum of damages suffered as a result? How close is the scandal to our core value proposition (why customers choose us)?
  2. Acknowledge the problem. Do this as soon as possible. Once you have assessed the issue and planned a response, then it is best to get out in front of the story. Even if you don't yet know all the answers, quick disclosure is key. It allows you to set the narrative and shape the discussion. The longer the gap between assessment and acknowledgement, the greater the potential impact.
  3. Apologize and take responsibility. Once you know you are in the wrong, even if you are only partly to blame, you need to step up and take responsibility for the issues that your company's action (or lack of action) caused.
  4. Put a response plan in place. Make sure your plan addresses the problem, determines why it wasn't addressed earlier, and will prevent similar problems from happening again.
  5. Execute the response plan. Follow through, and provide timely dates on progress.
  6. Be transparent with steps 1-5. No more hiding. After a scandal, you should expect your business to be under the microscope. So turn into the scandal or product failure, own it, and address it. Make it an opportunity to learn.

Everyone messes up, even organizations. The key when a business fails and a scandal ensues is to understand the issue and how it impacted users. In the 21st century, customer expectation has evolved when it comes to scandal, and it's best to be transparent, conciliatory, apologetic, and honest. Mea culpa!