Toyota: Gold Standard in Crisis Mis-Management

Posted on February 3, 2010 by 6 Comments

It’s no secret to anyone at this point that Toyota has made a mess of the reputational management issues stemming from their gas pedal problem. (Fun Fact: Toyota CEO Toyota Akio Toyoda drove away from his brief media encounter last week in a big black Audi).

And Tuesday their problems seemed only to get worse.

The morning started with a full page open letter to customers in the New York Times, stating that the company is “truly sorry for the concern our recalls have caused.”

Note to management (and the attorneys who worked over your ad copy): People are not concerned about your recall. They are, however, worried about their families dying in a flaming car wreck because the gas pedal was stuck to the floor.

The day went sharply downhill from there, when Jim Lentz, CEO of Toyota Motor Sales USA makes his first public appearance opposite Matt Lauer on the Today show this morning. It’s hard to do this interview justice; you really need to watch it for yourself to see one misstep unfolding after another.

Here are some things that might have helped you:

  1. Splitting hairs between the sticky-pedal problem and the pedal-stuck-under-floor-mat problem is really not the way to answer the what-did-you-know-and-when-did-you-know-it question. Really.
  2. Do not under any circumstances repeatedly refer to the floor mat issue as the “entrapment” problem. This is not effective framing when crushed metal and fire are foremost in customers’ minds.
  3. Do not say that “the number of deaths, the number of accidents, whether it is one or two thousand doesn’t really make a difference.” (This may have started as a talking point about how much the company cares about each one of its customers, but it didn’t end that way.)
  4. Do not present a timeline that has already been contradicted not only by federal regulators, but also by the company’s own previous public statements. People will notice.
  5. When asked if it might be an electrical rather than mechanical problem (as many fear), do not simply assert without any explanation that you are absolutely “convinced” and “confident” that it isn’t. Even your body language is cocky here. And that’s just what you said about the floormats.
  6. Do not wait until three quarters of the way into your interview to deliver what should have been the very first words out of your mouth: “I drive a Toyota. My family drives Toyotas,” and that you are just as concerned about this as anyone.
  7. Do not expect a softball interview just because you’re being interviewed by Mr.  Nice Guy. Sarah Palin learned this from Katie Couric. And when moms and kids are involved, morning TV will go rougher on you than Mike Wallace ever did. Be ready for it.
  8. Do not keep answering the questions about how this impacts your reputation. Ignore the Wall Street Journal chattering about your stock price and marketshare. Right now, your only concern is the millions of families out there worried about how they’re going to get to work tomorrow.
  9. Finally, think about whether you’ve got the right talker, one who might convey at least a whiff of compassion. Neither the corporate structure nor the culture at Toyota lends itself to charismatic American-style executive leadership. But you need somebody who can be the confidently contrite face of this crisis going forward. Start asking around; she’s around there somewhere.

Here’s how the message might have gone:

  • “My own children ride in Toyota vehicles every single day. Believe me when I say I am just as concerned about safety as any other parent.”
  • “In retrospect, it is clear our testing did not find the right problem in time.” [This will not come as a surprise to anyone at this point, including your lawyers.]
  • “Toyota has always stood for quality. In this case, we had too much confidence in our systems.
  • “Even our engineers did not understand the full scope of the problem until too late.” [This is your attempt to escape endless back and forth on timelines. It may or may not work.]
  • “That is something we deeply regret. We do understand the frustration and the serious concern that people have, and we are doing everything we can to make sure that it never happens again.”
  • “We have also invited Independent Experts in to help us make absolutely certain this is a mechanical problem, not an issue with the electronics. These Experts and our own engineers have tested it and retested and retested it again. Just to make sure, we will also be checking and upgrading software on every car.”
  • “As for the families all over America wondering what to do now, we are providing vouchers you can use at your local car rental agency to get you the transportation you need until we can fix your car.”

And while you’re at it, make a deal with NBC to bring a crew out to your safety lab to show them what you’re doing — and to meet the capable, talented people doing it.

Of course, all of this might or might not have prevented a disgruntled customer from accidentally accelerating his Toyota Tundra right through the showroom windows of a Louisiana dealership yesterday after the manager explained they could not give him a refund on the truck (police reportedly “found no evidence the incident was intentional”).

It probably does not help you with the fact that no less a viral subject than Steve Wozniak himself complained that he has been able to replicate the *electronic* acceleration problem in his Prius (which was not on the recall list), and that it has been impossible to get anyone at Toyota or in Washington to respond.

The irony is all this is that back home in Japan, the company is starting to be getting it right. But it’s happening eleven time zones away, and in Japanese. From the Wall Street Journal online Tuesday afternoon:

“In the first detailed comments by a Japanese headquarters executive since the recall and sales and production halt were announced last month, Toyota Executive Vice President Shinichi Sasaki told reporters in Nagoya, Japan, that the company may not have done enough to look at how parts interact with each other, and how that could cause system failures.

It was a remarkable admission after a remarkable week for a company that has long prided itself as setting the global design and manufacturing standard for quality control.

Mr. Sasaki began the press conference bowing deeply and offering an apology to Toyota’s customers. Appearing alone before a crowded room of reporters, he repeated over and over throughout the press conference the phrase “okyakusama dai ichi” — “customer first” — a concept that Toyota has widely been accused of forgetting as it pursued rapid global expansion.”

It should not have taken a month from when the story broke for this to happen. As we have seen time and again, communications crises like this do not ever end until the company or individual at the center of the storm begins to own the responsibility.

Toyota should also understand that every plaintiff’s lawyer in America is already coming after them on this. How badly it ultimately hurts from a legal standpoint is going to be decided over a very long time based far more on whatever turns up in discovery than anything said now. And somebody from Toyota  is likely to wind up sitting in front of a congressional committee.

But the damage they are doing to their reputation by appearing to bob and weave is instantaneous, irrefutable, and very long lasting.

Setting the Bar and Failing to Clear It.

Posted on January 19, 2010 by Comments Off

I’m of that age when doctors recommend that I take a daily low-dose aspirin to prevent everything from heart disease to arthritis. I have followed this routine daily for several years now, confident that the St. Joseph’s “baby aspirin” my mother gave me as a child was a safe and effective over-the-counter medicine for me to take as an adult.

 My decades-long trust in that brand was shaken Saturday morning, when shortly after taking my daily pink aspirin tablet, I read in the newspaper that McNeil Consumer Healthcare, the manufacturer of the St. Joseph’s brand had announced a recall of several of its over-the-counter brands – including St. Joseph’s Benadryl, Rolaids and Tylenol.

 Wait! Tylenol? That has to be a mistake. You see, McNeil is a division of Johnson & Johnson – the company that set the bar for crisis communications for its swift and transparent response in 1982 to the deaths of people attributed to contaminated Tylenol capsules. Johnson & Johnson is the gold standard. It is THE company every communications professional studies for its exemplary behavior in the 1982 crisis.

 It seems that the communications team at McNeil skipped reading the case study on J&J’s response to the earlier Tylenol scare. This round, it took the company a full 20 months to issue a recall after it started receiving complaints that several of its brands were giving consumers stomach cramps and making them barf. The company did recall a small batch of Tylenol Arthritis Formula in 2009, but it failed to launch a full investigation into the alleged problems for almost five months. Last week’s broader recall came only after the FDA sent the company a warning letter.

 For more than 25 years, the Johnson & Johnson brand has benefited from the company’s prompt and open reaction to the tainted Tylenol crisis. The company’s conduct in the most recent incident threatens to erode the goodwill and trust that consumers have attached to the brand over the years.

 The standards set by J&J in 1982 –  transparency, alacrity and frequent communication –  are even more important in 2010, when social media and expanded cable and broadcast media can transmit news around the world in a nanosecond.

The company now has to play catch-up with its consumers. It needs to explain why it failed to take immediate action, assume accountability, assure us that its products are safe, and re-earn our trust. It also has to answer to federal investigators. If only the company had adhered to that sage medical maxim “an ounce of prevention is worth a pound of cure.”

As for me, I am switching to Bayer.

Toyota, Firestone, and the Window of Opportunity

Posted on October 29, 2009 by Comments Off

Torod B. Neptune

The recent headlines in the media about Toyota’s problematic floor mats and uncontrollable acceleration may have some people wondering if they are seeing déjà vu.

Federal investigations? Failing vehicle parts? Prior knowledge of safety deficiencies?

Is Toyota having a flashback to Firestone’s crisis in the 1990s?

Firestone Tires made headlines after their disastrous handling of reports that Ford SUVs were rolling over because of defective tires. Instead of taking blame for their deficient tires, Firestone chose to deflect criticism to Ford for making unsafe vehicles and even to consumers for not following proper maintenance and tire inflation procedures. Although Firestone eventually ordered a recall and apologized, the brand had already taken enormous damage from Firestone’s inability to choose a consistent crisis strategy. Firestone did not take responsibility for the problem and take reactive measures when it had the chance early in the development of the crisis. Had it acted earlier, Firestone could have escaped much of the criticism and notoriety that later ensued.

Today, Toyota has the benefit of being able to learn from Firestone and Ford’s crisis communication strategies and blunders. From the early going, Toyota has done well to control the message of the developing story by acknowledging the problem, not denying or deflecting it. Last week, Toyota announced it was working with the National Highway Traffic Safety Administration to correct the issue and that it would spend nearly $440 million in recalling 3.8 million Toyota and Lexus vehicles.

By reacting to the crisis in the early stages of the news cycle, Toyota has been able to control the media coverage of the issue on its own terms. So far, Toyota has been able to emphasize its massive recall and the work it’s doing with the government and Toyota engineers to address the problem. If Toyota can keep the media, government, its employees, and Toyota owners informed of the steps it’s taking to correct the situation, Toyota will surely emerge from this pending media storm unscathed.

The window of opportunity to react to a media crisis can be short, but taking advantage of this moment is vital to protecting an individual or organizations reputation or brand. Without a contingency plan in place, reacting to a story before it spirals out of control becomes exponentially more difficult. We might learn from the mistakes and misfortunes of others, but the fact remains that clear, early, and direct communication is essential in any crisis communications plan.

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