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.