What Should Toyota Do Now?

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Includes: F, TM
by: Alpha Author

A friend and colleague from Oxford (Mike Barnett, Director of the Saïd Business School Center for Corporate Reputation) sent me a brief Op-Ed he penned about the challenges Toyota (NYSE:TM) faces in preserving its reputation for quality (see Toyota Can Still Save Reputation). Mike writes:

Toyota was high on a pedestal, reputed for its superior quality, and then life-threatening defects captured media attention. How far will Toyota fall? It depends upon how quickly Toyota can capture the conversation.

To stop its descent and recover its reputation, Toyota must give people something positive to talk about. Errors are inevitable, especially in something as complex as automobiles; recalls are a regular feature. It is the hesitance and delay in initiating a recall, not the recall itself, which has made this into a bigger reputation destroyer than it might have been otherwise.

Toyota has an opportunity to show that, even though it may sometimes mess up, it will always make good. This will turn the conversation to, “Hey, even when Toyota hits a bump, it is always looking out for the customers’ welfare”, and away from “Toyota screwed up and won’t admit it, so I can’t trust them”. Do this, and the public is quick to forgive, or at least forget. Where Toyota does not want to get bogged down is in publicly battling over fault with its sticky pedal supplier. Avoid the Ford (NYSE:F)-Firestone trap, as the conversation will continue to drag on in the negative.

Interesting. And some wise advice.

Toyota is taking some well-deserved heat for its delay in issuing a recall in the face of evidence that problems existed with its accelerators. In fact, Toyota long maintained that there was nothing wrong with its accelerators. At first it cited driver error, until the evidence suggested that there could not possibly be so many horrible drivers. Then they shifted the blame to faulty floor mats. Strike two.

At this point, Toyota would be wise to issue (and reiterate) mea culpas. Toyota cannot apologize too much. It should then, as Mike Barnett suggests, handle the situation in an honest and transparent way – keeping the public apprised on an almost daily basis. And once it identifies the defect, claiming that a solution has been found is not enough. The problem (and its solution) must be described in detail, and in a way that customers can understand. They need to detail what happened, and why. They then need to describe how their fix remedies the problem in a non-technical way.

Halting production until they find a solution is certainly a good (however costly) first step; but along the way, Toyota ultimately needs to redeem itself in the eyes of the consumer. It is important for Toyota to understand that how it bounces back is not simply a function of how quickly it can find a fix, but also in how quickly it can win back the public trust.

Disclosure: No positions

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Tagged: , Auto Manufacturers - Major
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