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Thursday, February 25, 2010

Toyota's Image Re-Building: The Start of a Long Haul

The headline from the past two days of Toyota testimony before Congress is clear. Toyota has finally shaped and disseminated a message of corporate contrition: we grew too fast, focused on revenues and profits instead of quality control and the customer, and we forgot what got us to the top in the first place.
But corporate messaging aside, predicting the outcome of the crisis for the world #1 carmaker remains dicey. Here are some thoughts on the Toyota testimony from the past two days:

1. Toyota was well advised that the Members of Congress were the stars. Toyota executives did not attempt to upstage elected officials. They knew this was political theater.

2. The apology from Mr. Toyoda to individual customers and their families appeared sincere, but did not give any additional information or ammunition to the plaintiff attorneys. Apologies are not admissions of facts. Still, for one of the most powerful Japanese executives in the world to apologize to the public in person before another country's governing body is a powerful statement given that country's traditional culture of organizational pride and personal accountability.

3. The pledges to do better also appeared to be sincere but the recent documents praising the victory in dodging U.S. sanctions for minimizing recalls were very scarily damaging.

4. It's unclear what impact the hearings will have on the audiences of existing customers and potential customers. Customer decisions will depend on whether the "fixes" work and when and if the bad news stops.

5. There did not appear to be any "Japan bashing" from the US lawmakers. Reasons: Toyota has worked hard to integrate itself into the U.S. Its American workforce and its impact on domestic suppliers is significant. Furthermore, lawmakers - despite the government ownership of GM and Chrysler - have no inordinate love of U.S. owned auto makers. Toyota played the Congressional game the way any domestic company would. Asking why the early memo and signals of problems weren't communicated to the U.S. subsidiaries was more questioning of corporate communications incredulity than any xenophobia.
For the moment Toyota may be stabilizing its seriously damaged corporate public image. But the automaker still stands on shaky ground. Fixing mechanical problems will only be part of the next challenge. Rebuilding confidence in its products, and regaining the loyalty of customers, dealers and suppliers is going to be a much longer haul. My biggest question: What impact does this continue to have on the next generation of auto buyers? The current ones wouldn't buy their parents Oldsmobiles. Will next gen buy a Camry or a Lexus just because it was in the driveway?

What do you think? Has the corporate image band-aid worked? Will it translate into renewed trust in the Toyota brand and its products?

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Thursday, February 11, 2010

Why Toyota is Not Tylenol: Victim, Villain or Vindicator?

In 1982, I was privileged to work with Johnson & Johnson during the first Tylenol crisis. I was asked to prepare CEO James Burke for the critical "60 Minutes" interview that was a key component in communicating the comeback strategy for the brand and the company. I also worked with other senior executives who fanned out to local markets throughout the US to create a local presence in key cities. Other than SARS and 9/11, I can't think of another crisis that matches the unique circumstance of Tylenol. This is because J&J and its Tylenol brand did nothing to cause this crisis. In almost all other crises, there is an aspect of what lawyers call contributory negligence to the events. No company or organization willingly causes a crisis.
However, most of the time, there is an event that precipitates the crisis.

Due to the size and scope of its current crisis, some are comparing Toyota to Tylenol. I don't believe there are many comparisons. Please read the analysis of Toyota vs. Tylenol that appeared in PRNews Online. http://bit.ly/dwZ1gv

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Monday, February 1, 2010

Assessing Mr. Toyoda's Role Through the Ongoing Recall Crisis at Toyota

As the recall at Toyota turns from a crisis to a long term saga that impacts the company's reputation, the company is finally doing many of the right things and trying to avoid missteps. The full-page advertisements in 20 national newspapers, the helplines and emails, the updates and webpage buttons are all well and good and necessary. While these efforts may be too late to pacify many disgruntled customers, dealers and stakeholders, apologies are finally coming from North America heads (namely North American CEO Jim Lentz) and other company spokespeople. CEO Akio Toyoda was even quoted as recently as this past weekend saying he was "very sorry" to a local Japanese auto trade publication.

But this is a saga, not a flash-in-the-pan crisis, which means that there will be much more to deal with. There will likely be lawsuits and other legal actions, uncountable criticisms, and now there will be a congressional investigation.

Communications professionals and advisors like us are particularly interested to monitor and discuss ways in which Mr. Toyoda should and shouldn't be utilized as the company attempts to weather this storm. The similarities and differences with the Tylenol crisis have been well established. But, how is the Toyota crisis different specifically regarding the CEO's role? How should the CEO be utilized differently than Johnson & Johnson's Jim Burke?

In July of last year, when Akio took over from his father, Shoichiro Toyoda offered some sage advice to his son. The new CEO was taking the wheel at a time of a global retrenchment of the auto industry and significant sales slump, even for this well-esteemed and trustworthy 70+ year-old company. At the same time, critics discussed how there had been a shift in focus from the customer and reliability to increasing volume, market share growth and profits. Shoichiro advised his son that he should consider these great challenges -both external and internal - as opportunities to emerge as an even stronger leader.

Just a few months later, the accelerator pedal problem is now a full blown crisis that threatens to hurt sales by over $1B, and cause immeasurable reputational damage.

So, how does a communicator assess and utilize Mr. Toyoda throughout this crisis? Is it time for
Mr. Toyoda himself to speak on the national and local stages in the U.S., or is it better left to Mr. Lentz (http://tinyurl.com/yjkutsz) and others? Is Mr. Toyoda adequately skilled, articulate, and would he be embraced by a U.S. audience? Mr. Lentz has already posted at least two video updates on the Toyota YouTube channel, (http://www.youtube.com/toyotausa). Should that have been done by Mr. Toyoda or should his communication best be limited to a Q&A with a global business publication like the Wall Street Journal? Should he tour the facilities where they are implementing the fix, and visit the factories where there has been a work stoppage to talk to the workers?

If the company is really serious about refocusing on the customer, they should enlist dealers on a grass roots level to reach out to customers and employees. There is evidence that the dealers are doing that already, but how much support are they getting from HQ? Should Toyota consider developing a new "best practices" in assessing defects, faulty parts and testing that go well beyond the current NHTSA guidelines and industry norms? If so, than those efforts should be documented and turned into a communication campaign that Mr. Toyoda can begin to articulate to all audiences. Perhaps therein lies the opportunity Mr. Toyoda's father spoke of.

What are your thoughts about Mr. Toyoda's communication role here? Should it be expanded or curtailed? Should Toyota actively seek to emerge as a leader in safety or just hunker down and get through the crisis and hope that time will heal this wound?

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