Update: March 19, 2014: U.S Attorney General Eric Holder announced a $1.2 billion criminal penalty is imposed on Toyota for “hiding safety defects from the public,” concluding a four-year investigation of Toyota’s handling of its unintended acceleration issue.
Trust and reputation decline in proportion to how big the gap is between cultivated corporate image and how a company actually behaves. For Toyota, the world’s largest automaker, the gap has widened with breath-taking speed since August 2009 when a Lexus ES crashed in San Diego County, California as a result of unintended acceleration killing the four passengers. Toyota may have been consumed internally with what to do about this problem, but externally, Toyota was criticized for dragging its feet and not protecting customers from unintended accelerations.
Toyota initially denied the problem was a defect. Communication was too slow in coming, incomplete, and even conflicting. Confidence that they knew how to fix the problem was undermined by three recalls affecting more than 9 million vehicles globally in the last few months, stopping production of eight models, and continuing to produce the 2010 Prius but making a production change in it without recalling the Prius’ already on the road. (2/9/10 update: Toyota initiated global recall including 2010 Prius and Lexus models in U.S. ) In the void, both the U.S. Department of Transportation and the Japanese Government claimed credit for seeming to push Toyota to action.
To make matters worse, the National Highway Traffic Safety Administration (NHTSA) had been talking with Toyota about the complaints it had been receiving on runaway Toyotas since 2004. While Toyota learned about sticking accelerator pedals in vehicles in Europe in 2008, and installed redesigned pedals in new vehicles last summer, it didn’t recall affected vehicles on the road or recall U.S. vehicles for several more months. The automaker and NHTSA are subjects of hearings this month by two different Congressional Committees.
Toyota’s long professed commitment to customer safety was eroded by allowing a crisis to develop. Here are five suggestions for what Toyota can do to begin regaining trust.
Fixing quality but not reshaping the culture is only a partial solution. Akio Toyoda, the founder’s grandson became CEO last year and announced in his first press conference on the crisis February 5, 2010 he was creating a Global Quality Special Task Force. The task force outlines a tightening of the system of delivering quality. But, Toyota also must look at its beliefs and constraints about saving face, transparency, the role of disagreements, how authority is challenged on behalf of safety, and even how the Toyota Way principles can be expanded so that the culture ensures that safety and quality are about the well being of its customers as well as lean processes.
Make values and slogans real. Toyota Motor Sales USA President Jim Lentz has said that the company’s goal is to be #1 in the hearts and minds of customers. Sounds good, but only if Toyota employees know what that means and what actions Toyoda will lead globally that leaders like Lentz will carry out in other countries for that intention to become real. If no one internally, right this minute, is thinking about how that can take root in the Toyota culture and creating an action plan, these are only empty words which will increase cynicism.
Re-establish an authentic connection with the customer. If that is what Lentz meant by his hearts and minds comment, then recognize that safety is an emotional issue as well as a design and engineering outcome. It is too soon to know how badly that dynamic was damaged when customers saw Toyota didn’t put their safety first in handling unintended acceleration. A video on the Toyota website has Lentz proudly saying that customers are back and have been very understanding and supportive. That PR positioning should not mislead any Toyota employee or dealer employee into thinking they don’t have a long road back to trust. And it is built or further eroded with each interaction. Those dealing on any level with customers have to be credible to earn credibility.
Encourage and seek out committed employees who challenge decisions by asking questions to help the organization do the right thing. This is particularly hard for a Japanese company. However, when you think about the magnitude of what Toyota will pay for the recalls, in potential market share losses and stock price decline, in potential lawsuit settlements or civil penalties over this, would Toyota rather have had a mirror held up with crucial questions asked by committed employees that might have resulted in different actions being taken or listen after the fact to leaders like Congressman Henry Waxman’s committee in the presence of international media? Dr. Gloria-Jeanne Davis was such an employee for Mitsubishi Motor Manufacturing of America hired after the sexual harassment lawsuits, but able to help the company prevent further problems. This requires reshaping the culture to hear and act on these voices.
Leaders can help establish credibility even in situations where all the answers aren’t known. But the almost invisible profile of Akio Toyoda in this global crisis did not help further trust or build credibility. Given Toyota’s success in the U.S., and how GM and Chrysler have stumbled, it is even more incumbent upon Toyota leadership here and in Japan to be mindful of how to build relationships of trust with stakeholders – which includes not just investors and customers, but local communities, local and international media, and federal and state regulators. Toyota knows this as well as anyone, but why their credibility has been eroded in this crisis comes down to behaviors and actions that didn’t increase trust. If they want to change the outcome, this is where they need to start.
Gael O’Brien, February 7, 2010