Thursday, February 11, 2010
Anatomy of a Recall, er, Recalls David Letterman's monologue hit a little close to home the other night. Dave said that things had gotten so bad at Toyota that the "navigation lady was praying." Indeed, prayer may be the next strategy at Toyota. At least it would be a strategy. Whatever happens next, Toyota could do well to follow the lead of the navigation lady. She is the best thing about my Toyota. The navigation lady is always polite, authoritative, just a bit assertive in that favorite aunt kind of way, and she is always well prepared, unlike the top brass at Toyota. When you take a wrong turn, against her advice, the navigation lady will gently remind you to "make a legal U-turn" and get back on track. Better than prayer, Toyota response to its current crisis of quality requires a legal U-turn. Listen to the navigation lady. Toyota has violated all three of what I think of as the basic rules of handling a crisis. The company's response has been consistently ineffective, slow and lacking a message. Three strikes. Until very recently, Toyota failed to take charge of the crisis, admit the obvious and directly and convincingly apologize. It seems like no one in charge at the big company asked the fundamental question that should always be asked in a crisis situation - what is the right thing to do to protect the public? Answering that question honestly and then acting in the public interest is almost always the surest way to protect the corporate reputation and maintain public trust. The image of Toyota's CEO getting ambushed at a swanky Swiss resort during the world economic summit, followed by his escape in a sleek Audi (with good brakes no doubt) only helped drive the narrative of a company lacking real leadership and unwilling to assume responsibility for serious quality shortcomings. A brand as resilient as Toyota's could have withstood an early, frank admission of lack of performance followed by a heartfelt apology and immediate corrective action. Instead, the response was halting, ineffective and forced. Most folks are forgiving, even of corporate CEO's, if they believe they are getting the honest story and that contrition is genuine. Toyota dented the fender on this basic requirement. Toyota has lacked a consistent, believable message. Communication 101 here. A consistent message from the beginning of the crisis; a message that addressed what went wrong, what needs to be done to fix it and restating the company's commitment to safety and quality would have helped shape the public - and Letterman's - response. Perhaps Toyota should have immediately invited third-party supervision of its processes and aggressive engaged the regulators as it engineered a technical response to the crisis. Instead, customers and the public got what looks a lot like the stonewall. And, Toyota has made the classic mistake in the age of the 24 hour news cycle, it has failed the test of speed. Speed kills. In the age of instant communication, speed kills bad news or a lack of speed feeds the flames of crisis. Toyota's response has been so slow and so defensive that it helped spawn a whole series of stories, like the lead piece in last Sunday's New York Times, that only fed the notion that Toyota's reputation for quality is a myth. With Toyota failing to provide a quick, credible counter narrative - no recognition of the need for speed - the crisis has kept growing. Toyota will probably pick its way through this mess, but it will take some time and the damage will last a while. I'll keep paying close attention to the navigation lady, at least for a while, but I may need some convincing to take a chance on another Toyota. The company is paying the cost of incredibly sloppy handling of big and very public troubles. In the modern world, a precise, quick and genuine response to a crisis is the only way to avoid an even bigger crisis.