Tag Archives: Toyota recall

Bringing perspective to the Toyota crisis–Atlantic article

Congratulations to Atlantic magazine for attempting something that is exceedingly important for everyone concerned about reputation management. Their article “What Was Really At Fault for the Toyota Recalls” on May 1 attempts to analyze the situation and assign blame for the frenzy that was Toyota’s worst crisis and one of the most important reputation crises of the past decade.

There were three potential bad guys in the Atlantic story. Toyota, the media and the federal government. Anyone who has read my take on this story knows that I think Toyota was pretty much the innocent party here and the real bad guy is the media and the politicians who once more responded to media provocation rather than the facts. Mr. Cole, writing for Atlantic, still appears to assign a significant portion of the blame to Toyota demonstrating how their quality had slipped in their pursuit of becoming the number one automaker in the world.

In February 2007 I published a post warning about the danger that Toyota faced as it headed toward being number one. I referenced Microsoft and Wal-Mart as examples of those who are honored and admired as they are climbing to the top, but once they get there, we  and the media love to take them down. Jack Fuller talks about this in his book “What is Happening to News” as it relates to celebrity coverage and how journalists seem to enjoy taking down the powerful.

So, I find Mr. Cole’s assessment that Toyota’s quality problems were a major contributor to the crisis. Their quality was still at or near the top, they seemed extraordinarily quick to issue safety recalls (and so even more so now), and while they may have responded a little slowly in hindsight, no one could have predicted the maelstrom they suddenly found themselves in.

Generally, I think the Atlantic article is a very helpful assessment. I think he is too defensive of the media and I think he downplays the obvious motivation that the administration had in piling on Toyota given its competition with the Government Motors–Mr. LaHood’s boss had a lot at stake in this game. I think Mr. Cole doesn’t give enough attention to the role of social media, even though he identifies the YouTube video of the well publicized Saylor crash as a major contributor. And I think the main thing he missed was the tremendous incentive we have in our society to creating this kind of problem for the benefit of trial attorneys. Plaintiffs attorneys have far more influence on the kind of hyped-up media coverage we see in this situation–if you have any doubt read the book about the Ford-Firestone crisis.

Toyota paid an extraordinarily high cost for the innate desire in our culture for a big crisis. We all pay a high price for that. And every organization out there with high brand value has to look at this and ask: are we next?

Toyota's crisis–just how real is it?

Tell you the truth, I have a hard time evaluating the Toyota crisis. Certainly it is one of the biggest corporate reputation crisis of all times. One of the truly global brands, one of the most admired companies in the world, the world’s leading auto maker, the undisputed kingpin of manufacturing efficiencies or “lean manufacturing” is now wallowing in the dirt in agony with some PR pundits asking out loud if the brand (like Firestone) needs to be killed.

I really don’t get it. So I went back to see if I could find just how serious the safety issues are. What I found was some pretty bad accidents attributed to accelerator issues. Admittedly, I haven’t dug deep to see the statistics. But what I saw was a lot of very typical fear-motivated reports such as these they carry dramatic lines and dramatic photos but seem remarkably short on facts. Here’s the blotter from ABC News and in my view only helps cement Brian Ross’s reputation for dramatic story telling–perhaps at the expense of the truth.

I very much respect Jim Lukaszewski (luke-a-shevski Ithink) and Jon Harmon and here is their take on the subject. Crisisblogger readers will recognize Jon because I recently hosted a webinar with him talking about his great book on the Ford Firestone crisis called Feeding Frenzy. There is no doubt that this is a corporate reputation crisis of almost unmatched dimensions. But what I can’t really tell why. Possible reasons:

1) The safety problems with Toyotas are every bit as serious as the huge coverage and government focus warrant.

2) Safety problems are real but overblown and Toyota’s lackluster response contributed to the current crisis.

3) Safety problems are way overhyped but its too good a story to miss for the media who was tiring of Haiti, and great news for the Obama administration (Mr. LaHood being on point) because the worse Toyota does, the better GM does and that will make the president’s investment in GM look brilliant.

Number 3 would make me a conspiracy theorist and a cynic ( I lean more toward cynicism than conspiracy theories) so I’m going to with a combination of number 2 and number 3. Maybe some reader will point me to overwhelming factual evidence that the 9 million or so cars that have been recalled have safety problems far beyond any other vehicle on the road. If so, I will readily grant that perhaps Toyota deserves the treatment it is getting and maybe even deserves the corporate reputation death it is being threatened with.

From Toyota’s perspective, none of this really matters. The public believes right or wrong that their vehicles are dangerous. So dangerous that our transportation secretary doesn’t seem certain if they should even drive them to the dealership or junkyard. Perception, as they say in this business, is reality. (That was one of the biggest public misstatements I’ve even seen and why he has not been excoriated for that I don’t understand.)

Some of you might think I’m a Toyota lover–actually I drive a Honda and my wife drives a Mercedes. I don’t work for Toyota and never have. But as a commenter on reputation crises, this one has me befuddled. The outrage seems to go far beyond anything rational. The recalls, apologies, more recalls, production halts, emergency fixes–albeit just a step behind the ideal–are all right out of the crisis management playbook. But still, the doo doo seems deeper and deeper for this company.

My advice to Toyota–keep doing what you are doing. Try to keep thinking ahead. Imagine, as it hard as it may be, the worst case scenarios that may still lie ahead. Try to get ahead of any bad news. Report all the bad stuff yourself. Keep apologizing and keep up the messaging you have in place. Get back to making great cars because you got to be number one for a good reason. Don’t lose heart. This storm will take a long long time to pass–just think of all those hungry trial attorneys now advertising to all your good customers–but it will pass. And how you conduct yourself now will impact your share value and your brand value for many years to come. Hang in there.

Toyota faces government scrutiny–from its competitor!

I try to avoid politics as much as possible, but I have to admit to being very squeamish about the government taking a controlling interest in GM, now known in some circles as Government Motors. So many reasons for concern–like choosing factories to close on political grounds rather than business rationale, but now here is a big one. The government is now going to “investigate” Toyota for its safety problems. And there is talk about civil penalties and maybe all kinds of other punishments. Maybe the government should eliminate Toyota from the US marketplace–they have the right to do that. Already the concern about Toyota (overhyped or not, I’m not sure, but I lean toward the over-hyped view) has resulted in a double-digit dip in their sales. Who has to gain from this? Why the government, of course! Or, maybe I should say taxpayers. So US taxpayers have to gain from Toyota’s problems. What impact does this have on media coverage? Aren’t reporters taxpayers too? Conversely, what would the reporters interest be if the same safety issue faced Government Motors (maybe should be changed to Taxpayer’s Motors)? Would reporters and editors be as tough?

The more I think about this morass, the more disgusted I get. But, if I was on Toyota’s side of this issue, I would see government involvement in GM as a potential huge benefit in dealing with the reputation issues involved. They need to find a way to ask the question of whether or not they can expect fair treatment from Congressional hearings when the members they are looking at are not just representing the public’s interest, but GM’s interest as well. Oh, wait, representing GM’s interest is representing the public’s interest. What a stinking mess.

The biggest loser in this may not be Toyota–it may very well be the credibility of our government. As if they have any more room for loss in public trust. But will we trust them to treat Toyota fairly when they have much at stake in making it look like they made a brilliant decision in supporting GM? They now face the same problem that corporations have in defending their reputation against government attack–the profit motive. Young people in particular have the view that if there is a profit motive, it trumps everything and anyone with any money at stake cannot be trusted to do anything other than protect their investment or ability to profit. Now our government is in that position. What a stinking mess.

What should Toyota do? Advice from the Ford-Firestone experience.

We were very fortunate to spend an hour and a half on a webinar this morning with Jon Harmon, author of the book Feeding Frenzy, and the crisis communicator in the middle of the Ford-Firestone crisis (for you young folks, this occurred in 2000). Jon’s phone was ringing away with reporters calling to ask him what he thought about Toyota’s problems with the huge recall and shut down of production–no doubt the biggest reputation challenge in the auto industry since the Ford-Firestone problems ten years ago (barring the meltdown of course). Jon will be interviewed on CNBC shortly, but you can get the scoop here.

I asked Jon during the Q&A session on this webinar what he would say to the CEO if he had a seat at the table of executives as he did at Ford. He said, “I would ask them first if they are doing enough? Are they doing all they can to protect the public? What about Lexus–they are keeping that out, but should they be looking at that too?” Then he said, “they should ask the question ‘what are people most worried about?’ and ask how we are addressing their concerns. We need to be clear about how we are addressing them.”

What struck me about Jon’s comments, clearly coming from the voice of experience, is how they well they mesh with the basic message about trust that we talk about all the time. Trust, we say, depends on two things: doing the right things, then communicating about them well. Jon is very right in advising that they first be concerned about the realities of protecting the public. No amount of posturing or spinning will compensate for decisions that don’t go to the fullest extent possible in addressing real safety concerns. But, if they are doing all those things, they need to be very aggressive and very clear about the actions they are taking. Jon talked about all the Twitter chatter and social media activity around Toyota and no doubt most of it is pretty ugly. I was interviewed by CNN Money a few days ago for my thoughts on Toyota’s reputation and I haven’t seen any of my comments showing up. They probably won’t because I did not quite see this as the blow to Toyota’s reputation that the current media hype is making it.  I related their reputation problems to a bigger issue of becoming the world’s largest and dominating auto manufacturer–an achievement that puts a huge target on them and certainly for the media as well as those who hate all things big and powerful. That is a more challenging issue long term for Toyota. However, the current spate of safety issues, recalls, accusations and negative reporting don’t help in that overall battle one bit.

I’ve asked Jon to contribute a guest post on crisisblogger and hopefully he’ll have time to do that. In the meantime, go out and get a copy of Feeding Frenzy.