Toyota’s challenges of the past several months are more than just a case study of what not to do if you want to avoid a crisis. How events have unfolded actually speak to the nature of corporate reputation, what is perceived, what is real, and how both get managed.
There is a distinction between image and reputation. Image is a perception. It is what is created based on how people react to information, but they may only have selected information. Reputation is defined by actions, what is done.
Toyota’s brand image has grown over the last nearly 75 years to be associated with durability, reliability, quality, efficient manufacturing, and creating value for the customer. Their reputation was built by producing cars that didn’t need constant repairs, held their value when sold and could be driven 200,000 miles or more. Clearly, not having a lot of recalls enhanced their image. Now there is question about whether Toyota knew about unintended acceleration problems and deliberately tried to keep the lid on safety problems to avoid recalls finding other explanations like customer error rather than defects to explain customer complaints. This and its implications for customer safety will be among the issues addressed in Congressional hearings this month.
In making decisions about what the right thing is to do when problems surface, we have to know what is driving us. If it is saving face and avoiding embarrassment, then we can get caught up in rationalizations and explanations that avoid needing to be embarrassed; thus, image is served. If a company has values and principles that define it and it uses those guidelines to determine its response then it reinforces its reputation. The reality is that reputation is organic; it is earned or eroded every day by decisions and choices leaders and employees make.
In a previous column I addressed the ethical issues involved in Dimitrios Biller’s suit against Toyota. Biller, a former Toyota attorney who headed the national rollover practice, is suing the automaker for how he alleges it handled product liability cases he defended for them. Biller, whose credibility has been challenged, claims Toyota hid or destroyed evidence. Toyota is vigorously defending itself against Biller’s accusations.
The old saw that it takes years to build a reputation and seconds to lose it is true; however, what is more instructive is what we learn about a company and its leaders after a crisis or major setbacks occur and the company finds the road back. It is an inevitable journey because neither companies nor leaders are able to sustain a perfect record. Just recently, for example, Johnson & Johnson, the gold standard for putting customer safety first, stumbled badly.
Last week in this column I suggested five ways Toyota could rebuild trust. Managing image is about public relations decisions. Managing reputation is about leadership decisions that get to the core of what the company stands for and the actions that support that. Reputation is continually impacted by what those leading it and inhabiting it decide and do. For Toyota navigating the road back depends on what they do from here. On Friday, Toyota announced they were re-opening a review of unintended acceleration complaints of Tacoma pickup trucks that in 2008 the company had concluded were drivability issues not safety related. That is a start.
Gael O’Brien, February 14, 2010