Crisis Management: Toyota – the good bad and ugly: Crisis response – from archives
What are we to make of what someone called the greatest crisis recall of our time: Toyota’s?
This episode is loaded with contradictions for me. For instance, when I learned that not only was the company recalling vehicles, but halting sales and manufacturing to fix sticking accelerator pedals, I thought, “This is corporate product problem-solving on an epic scale.” This was an unprecedented philosophical and financial statement. What you do in a crisis counts more than what you say. These actions, along with this week”s apology and a roll-out of a promised fix spoke volumes.
On the other hand, other images lingered. For one: a pregnant woman with a small child bawling at a dealership. She wanted to know if she was endangering her toddler, unborn baby, and herself by continuing to drive her Toyota. She said she couldn’t get a satisfactory answer. In fact, it might be another 3 weeks before drivers know whether their vehicles need repair.
Another image: after watching the Toyota US President’s media blitz explaining the fix, I asked my wife how she responded to what she heard. She said, “I did not find him very reassuring.” I had the same reaction. While he hit his talking points and seemed honorable, I felt, “This is not reassuring me either.” Declining sales and stock price reflect doubt too. Why? Perhaps because of another lingering image…
The sticky pedal problem has been accelerating for months with huge recalls, no final resolution, and repeated reminders of a Toyota wreck that killed a family after the driver reported his car speeding out of control. I think you have to attribute perceived untrustworthiness of Toyota to the drumbeat of bad news aggravated by respected media reports that Toyota was aware of this flaw for perhaps years. To gauge the level of Toyota distrust just Google press reports after the fix announcement February 1: “Toyota president denies cover-up”; “sticky gas pedals are in some European cars”; “massive egg-in-face recall may affect South Africa sales”; a Tokyo analyst said “the company waited too long to address the problem and the trust in Japanese quality, in Toyota, has been shaken.” And so on. (Toyota echoed a 15-year-old Intel crisis with a faulty Pentium chip. The company responded poorly, inquiries overwhelmed it, and baffled computer owners joined Intel in turmoil for months.)
Toyota dug itself into a pit and can crawl out by delivering on the announced promises of a fix, quickly, and with constant communication to customers and public. And there better not be a smoking gun discovery that the company really did know a long time ago of the accelerator problem and didn’t act. Absent that, the long hard slog for Toyota’s recovery can begin and should eventually succeed but with a scarred reputation for quality.
Could this gigantic foul-up have been prevented? We don’t know yet. There’s an economic incentive to go into denial over a product defect and not act. Firestone, for instance, did not correct longstanding tire problems until a reporter compelled it. There’s an even greater incentive to correct a potentially deadly defect because the penalty for not doing so is what we now see.
If ever a case exemplified the crisis principle Fix the Problem: When did you learn about it and what did you do about it? Toyota is it.
