Emerging Tech

If you were the CEO of Toyota

As the executives at Toyota have learned, although crises can occur in any organization, how they're handled can turn a bad situation turn into a positive.

 With the world's attention on it, one of the world's best-known brands has shot itself in the foot. And then it shot the other foot.

Since the first problems of its cars experiencing unintended car acceleration surfaced, Toyota has reacted poorly. It failed to address the issue in a satisfactory and public manner. Worse, it went turtle, i.e., withdrawing and not dealing with the issues ahead of it.

Whatever the reasons for the mechanical or electronic issues that have surfaced, the smart thing to do -- for any organization -- when faced with a crisis is to manage it. That process usually starts with the creation of a communication plan and appointment of one or two individuals to represent the organization publicly. If nobody internally knows how to do that, there are communication experts who can be retained to help manage the process. There are case studies and even books written on how to manage through and ultimately "get ahead" of this kind of crisis.

Toyota took too long to start dealing with this issue in the public forum. Its dealers were left in the dark about the reasons for the problems, and to the media, it gave the impression of being dishonest or inept.  The loyalty of its customers is being tested. While many will stick with the company through this calamity, there's no doubt that Toyota's reputation (and, likewise, Lexus and Prius) has been harmed significantly.  Sales have fallen, share prices have dropped, and brand value has taken a hit.

Studies over the years have shown that this doesn't have to be the final outcome however. In fact, customer loyalty can actually improve after a very bad experience has occurred. It all depends on how well the business handles the communication and what they do to help their customers and stakeholders get through it.

It's unlikely that many organizations will have to face a crisis as public or potentially damaging as this one. However, crises can and do occur every day across all nature of fields and locations. Would you know what to do if your Web site went down for hours? Would you know what to communicate with your end users?

As a leader, it's worth spending the necessary time to consider how you handle a crisis. Create a "damage control" outline that could be used if such a situation arises and identify those in your organization who should be ready to take charge during a crisis of any nature. A few simple steps now will make a big difference in such an event.

john

Leadership Coach

About

John M. McKee is the founder and CEO of BusinessSuccessCoach.net, an international consulting and coaching practice with subscribers in 43 countries. One of the founding senior executives of DIRECTV, his hands-on experience includes leading billion d...

41 comments
alistair.k
alistair.k

I have a Lexus, I bought it used, some other sucker gets to take the big hit on the depreciation... The Toyota recall issue thus makes no issue to my choice of my next car as it will also be a used one. However: Damage limitation in these events is #1, #2 and #3 priority.

tvt221
tvt221

I'm currently in an MBA program marketing class and one of the foundational concepts of marketing is that all companies must have contigency plans in place when product problems (or even the appearance of product problems) occur. I have also conducted a lot of research on the Toyota Way and the culture of success Toyota has nurtured all these years. I think the company has been so good at managing success that they never saw the need to have procedures in place to manage failures and problems with products. The lesson for the rest of us may be to learn that meeting the challenges of our failures is as important as meeting the challenges of our successes.

NickNielsen
NickNielsen

I've seen ads in the last day or two addressing the reasons for their decisions and assuring the public that they intend to once again be the Toyota we once knew. "At Toyota, Working to regain trust" If I fit into any of them, I might consider buying one, but to paraphrase the Sony ad from Crazy People: "Volkswagen, because the Japanese are just too damn short."

pricemar
pricemar

What this shows is that the famous Toyota Production System, that's been adopted so widely as Lean Thinking, is not perfect. But what we can be sure of is that Toyota will identify the problems, both manufacturing and public relations, and improve the processes.

hlhowell
hlhowell

This is not new, nor is Toyota the only one of the Japanese companies suffering from the "save face syndrome". There are some really bad skeletons in the closet, and now that it is opened, Toyota and other Japanese companies will understand the parable of Pandora's Box. For years I have heard that Japanese or German or whatever country built better products than the US. Worse I would hear that from American Engineers, who drove their Camry's or BMW's to go to work designing products for their American employer. What is wrong with this picture? Well, now that several people have lost lives and property, the truth is coming out. They managed to keep the lid on until the American companies hit a rough spot. Worse are the folks that "stick with Toyota". What lie would it take to make them look at it differently if the scenario of cars speeding out of control or with no brakes and their families inside won't do it?

trapper
trapper

TechRepublic needs to hire someone who knows how to construct objective poll questions. As usual, this one fails to include any choices not predicated on the assumption that potential participants ever intended to buy a certain product.

tuna1000
tuna1000

Its all about the quality put forth, assurance of the quality is a deciding factor. True leaders do not cut corners, instead they drive around the corner even if it takes more time.

kitty.wooley
kitty.wooley

Do we recognize, or really want, real leadership? I ask because it is embodied in Akio Toyoda's letter in the February 9th Washington Post, at http://bit.ly/ddFMqk (the original headline was, "At Toyota, Working to Regain Trust"). If we aspire to excellence, we ought to take a long-term, systems view on this and think about the consequences of too easily dismissing long traditions of excellence. The alternatives are truly frightening.

pbock
pbock

Sucks for Toyota, but this debacle just will lower the price on a _great_ product. Their product is very superior to the competition. A few people had accelerator problems? And now they are being fixed... What about how Ford handled the exploding gas tanks on the Pinto. They decided it was cheaper to pay off the deaths instead of fix the problem.

sajeevvarghese
sajeevvarghese

This looks like a one sided questionnaire. all the 5 questions in the vote are -ve in some way. I will always get a Toyota no matter what. Unless something drastically changed Toyota is still the best. Honda may be good but they are overpriced and you are paying more for the brand name. So i will never buy a Honda. Toyota is the best. You need to have a sixth option to vote - " I will always buy a Toyota" because your current vote looks one sided and as though you have already made up a decision that Toyota is bad and doomed. If you want an honest vote, add positive ones in the selections too.

darshan.sangodkar
darshan.sangodkar

I disagree that the situation is due to inadequate communication. More than anything the timing and the economic situation when this occured hit Toyota badly for the advantage of the competitors. The mass recall of the vehicles only emphasises the committment and concern of Toyota towards service. Almost every car manufacturer had this kind of problem but no one expected it to be with Toyota cars and that is what surprised all! What it needs to do next is explain to press what happened and how the situation is resolved. Till then everyone will ride on the failure!

dogstar69
dogstar69

If I were CEO of Toyoya i'd be sleeping well at night ... would have a bit of extra work to do to pull together the logistic of the "right thing to do", tighten QA around process gaps that could lead to this. 8 years ago I experienced a serious engine failure in my Mitsubishi Pajero. Misubishi subsequently contacted me 6 months later on a recall that had been supressed for MANY MANY YEARS. That failure could very nearly have cost me and my family their lives. (Imagine your car gliding onto the next lane at 80kmh facing oncoming traffic doing similar speed [combined impact=160k] and by some miracle and/or skill not having a collision!). Mitsubishi had deliberately buried the flaw, for years, but were subsequently busted by investigators after years of crash evidence pointed to a flaw. Even then, Mitsubishi's response was underwhelming. I'd be quite happy to see them insolvent and off the market - a company culture (which comes from its leadership) is a liability and reckless. TOYOTA on the other hand ... appear to have done all that I can expect in this situation: "clean it up". I'm impressed. My next car was going to be a toyota anyway, but now its even more so.

jay.nathoo
jay.nathoo

If one looks at the product line(s) affected, it would seem that mostly USA is affected herewith. South Africa and the rest of the world, hereafter, was included in the recall. Now this is strange, especially since the ZA production plant is very different from the ones used in USA. However, if Toyota's issue was pinned down to a specific part causing the pedal to stick BEFORE they went to the press and stated a recall scenario, they would have been better positioned to control the proactive replacement of this part(s), instead of being faced with mass turmoil where people are engaging legal action and insurance claims relating to the pedal getting stuck. We saw this coming. Why did Toyota not?

AneelaR
AneelaR

Since it's never too late to apologize, I would start by hiring some experts to outline a plan on how to recover from the recent mistakes. Then I would revisit Toyota's philosophy of engaging the employees to discover what went wrong. Then empower the employees to make it better

Bebedo
Bebedo

I definitely think Toyota needs to act aggressively and honestly in fixing all current issues in order to emerge as the quality car company of choice. People who buy a Mercedes do so not because they know the car will be flawless at all times, but because the service levels when there is a problem are fantastic. People can quickly recall other product recalls within the industry (Ford's Explorer/Firestone rollover issue caused many more deaths and accidents, as well as the Pinto's well-publicized gas tank issue; Audi had an "unintended acceleration" problem in the 80s; and outside of the automotive industry, McNeil had a product tampering issue and massive recall (cyanide scare with 6 deaths reported as I remember). It was the reaction of these companies to the issue that made them a company to mock and scorn or to admire. Audi and Tylenol were aggressive in their communications, the scope of their recalls, and the fix; Ford tried to cover up the issues and fought legally to suppress information; in the case of the Pinto, there was a famous memo from a top executive comparing the risk of an unlikely explosive event with the cost of the fix ($11 per car), and opted not to implement the fix as too expensive. I think the media are simply fatigued with bad news about American car companies and exaggerated this problem, perhaps with prompting from other sources, to exacerbate the perception of this issue, and play out the drama on TV and the public arena in the face of a sluggish response from Toyota. All but one of the Toyota drivers I know would buy another Toyota once these issues are resolved; and the one holdout wants to buy a BMW.

gharlow
gharlow

I speculate Totyota next year lineup will be pretty solid. I do agree having owned a Camry for a few years that the Brakes are the biggest weakness and are obviously not sufficient for the car. Personally, and I see this in the current lineup of computers available at the $500 price-point there is a huge amount of pressure by consumers to cut corners and lower the price. We may need to get used to the idea that prices must go up even while our wages are held artificially low by offshore labor.

esarhaddon
esarhaddon

Until I see more evidence that there was a REAL problem that was widespread and covered up (Facts), I will consider this nothing more than a concerted effort to destroy the Toyota name. I fully believe this is an attach by the Unions that can not compete with non-union manufacturers. It is nothing new. It is the only tactic that the left knows. GM, Ford, Chrysler have all have so many recalls that it would make your head spin if you looked them up. Nothing new here other than negative publicity, finger pointing, and name calling. The same reason I left that party back in the 70's.

DMambo
DMambo

The cover-up is what causes the most trouble. One thing they should avoid is any appearance of trying to hide the cause, solution and prevention of this problem going forward.

rvidalc
rvidalc

I hope Toyota learn the lesson, this will cost them the respect of their loyal customers and maybe it will take years to recover.

kitty.wooley
kitty.wooley

This is astute and bears thinking about. Thanks.

Gilbertr14
Gilbertr14

And thats the problem. Its all they sold for 25 years. The marketing of a super reliable car. They are not stylish, they are bland. They are not sporty, they are slow, underengineered safe bets. They are not value for money, VW and other comparative brands offer much more for less. They are reliable. Now that is gone what do you have? Nothing.

kitty.wooley
kitty.wooley

I think you're absolutely right. And, anyway, on whose planet is "perfect" the standard? The only people who hold to that point of view obviously have never had long-term responsibility for the continuing operation of any process that involves human beings.

NickNielsen
NickNielsen

What do you want? An "I'm not participating" option? :p

MikeG3b
MikeG3b

The biggest difference is that, in 1982, Johnson & Johnson immediately recalled all Tylenol, in every store in every state, even though the tampering only affected the Chicago area. It cost J&J about $100 million (in 1982 dollars) to perform the recall, and J&J stock recovered within 2 months. Toyota, OTOH, denied there was a problem with brakes, accelerators, etc. until there was so much pressure from the US government and the press that they had to do something. Toyota's handling of these issues has been totally inept and naive.

chcallahan
chcallahan

With your comparison I agree 100% As far as media being tired with bad news for American cars i disagree. The past two years Buick has tied with Lexus on initial quality. Ford has turned a profit for the first time since 2006 WITHOUT spendulas money. Not to mention for almost 3 decades the top selling truck in North America is the F-series truck. I am of the opinion that the American press is decidedly biased otherwise most of theis information would be common knowledge

Al_nyc
Al_nyc

Camry brakes are not currently one of the issues they are dealing with. It is the Prius brakes that are a problem. The Prius braking system is much different from what you have on your Camry. A Prius has a regenerative braking system. That means that when you step on the brakes the braking system does not necessarily engage. First thing it does is try to convert the braking energy into electricity that can charge the batteries. If you call for more braking, then it engages the regular braking system. Balancing the regenerative braking system with regular braking system is tricky and that is the problem.

dfa19
dfa19

Dude they've admitted it now so, I dunno what your talking about this is a leftist conspiracy? you watch to much hannity and beck. lol -Blake

LocoLobo
LocoLobo

yet how many politicians will stand up and say "mea culpa" from the beginning? It's a gut reaction like Bart Simpson, "I didn't do it!" Even when it's obvious. :)

JaneEA
JaneEA

Covering over only allows the deception to fester. In business or personal life, what you are speaks so loud that nobody can hear what you say. Walk the talk. There is no other way to gain sustaining confidence.

kitty.wooley
kitty.wooley

Given our perfect 20/20 hindsight, I can say that I would have had a heart to heart conversation with my U.S. VP and instructed him to tell the dealers to listen hard, across product lines, and bring back customer stories involving accleration & braking issues. Having had that mass of anecdotal evidence about something that was seriously wrong, I might have pulled the andon cord sooner. However, if we compare the Johnson & Johnson Tylenol recall - which has been written up and widely studied as best practice - it seems that this problem was much harder to grasp. Both the technology (which we the consumers love and demand) and the supply chain have become much more complex. So, down the road, when more of the facts are known, we may think Toyota looks pretty good. Or, we may not. I'm willing to maintain an open mind while waiting for the management case study.

Kostaghus
Kostaghus

A responsible company manager would have resigned. Plain and simple. The scandal is far too big in the news. That's the only decent way!

simon.robb
simon.robb

To be honest, this stuff happens all the time, and more often than not it is kept under wraps unless someone gets miffed with the company. I have had a similar experience with Jeep, however it never made into the media, they simply sent a card to affected customers to say it xxx needed fixing during your next service. Toyota are the top selling car in Australia and have been for many years..this proves their build quality is to a high standard and the fault is more likely a parts supplier than Toyotas directly. They will recover quickly due to the large following and use of the high end cars such as Land cruiser and Hilux which the mining industry love. Shame it wasn't dealt with faster, but not a deal breaker by far...

QAonCall
QAonCall

Play 60 second clips during the superbowl saying the following: We are so sure of our prodcuts we will gladly take your toyota in trade for any new toyotas that have already been checked for any deficiencies reported in the recent weeks. We will provide kelly Blue book value on trade in, no questions asked, or we will repair your vehicle for free and provide you with a free courtesy car. If you owe a balance and want to trade your toyota, we will finance your new vehicle at your current rate or lower to zero %, apply any credit from KBB-amount owed and we provide you with no charge service for 1 year. Our commitment to excellence does not end today, or last month when these reports surfaced, nor do they end tomorrow. We still believe our workers in the US and around the world build the finest vehicles in the world, and we will gladly take any vehicle back, to demonstrate our loyalty to our customers and our families. Leadership is leadership. If toyota deonstrated it, they would actually benfit from this mess. This could be such and easy win for them.

MikeG3b
MikeG3b

Toyota had it made -- they'd finally topped GM, had a broad (some would say too broad) product line, devoted dealerships, and so on. IOW, they had everything going for it -- they even increased sales and market share during a serious recession (at least, initially). Toyota suffered from the same malaise of dozens of other companies (Ford's rollover problem a few years back comes to mind) -- they truly thought they could do no wrong. Very few people accepted the notion that a simple thing like a floormat would cause serious accidents in so many cars. Toyota should have responded months ago to complaints and rumors. It's too late -- the ship hit the iceberg and is sinking. The other car manufacturers are eating Toyota's lunch at this point, and it'll take years -- if ever -- before Toyota makes a comeback. I'm guessing Hyundai will take their place in the US market, at least. Being a Japanese company, there's always the seppuku option for the CEO, I guess.

Kostaghus
Kostaghus

... and the shareholders would have your hide for breakfast, lunch and dinner. I truly believe the CEO of Toyota should have performed a seppukku... Frankly, I never thought nor have I ever had reasons to believe Toyota is more of a car than any other brand. Personally, I prefer Renault. Wouldn't have a japanese if it was given for free...

Jorg Borgwardt
Jorg Borgwardt

Never let it come to this desaster. The issue was already known in 2007 when tests in the factory produced enough indications of a potential desaster. This was not listened too carefully at the C-Level inside the corporation. All the trouble including the messed-up communication that's now supposed to calm retailers, owners and buyers could have been spared. Toyota was long known for manufacturing excellence; it's now lost that position but added one for worst C-suit management. Two birds with one stone... not sure that was sintended.

iShango
iShango

Toyota fumbled but you can always recover gracefully if you front up , admit the errors and then work swiftly to remedy them. Your suggestions are probably a best case scenario but would repair the damage done to date.

Al_nyc
Al_nyc

Hyundai will not take over for Toyota. They have come a long way, but still have a long way to go. They have a limited range and their reputation is not quite there yet. I recently crossed shopped them and they were not so great. Right now Ford is benefiting from Toyota's blunder. I think they will continue to benefit for a while. They have a decent product line and so they can pick up some of the slack left by Toyota.

Al_nyc
Al_nyc

Trying to hide the problem is going to cost them big bucks now, and in the future. They are going to lose many sales in the future. Anyone who had their Toyota accelerate unintentionally on them will never buy another Toyota and will probably tell their story to hundreds, if not thousands, of other people. Just look at what happened to Audi a few years back when they had a similar issue. It took them any years to recover from that disaster even though the problem was driver error, not a defect with the car.

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