Monday, February 08, 2010

Toyota's crisis management hits the brakes

Watch out if the car in front is a Toyota, or worse still if you're in it. The problems for the company seem to be growing by the day, as a technical problem transforms into a massive recall and thence to a PR disaster. The last thing a car company wants these days is a drop in public confidence in its products, so they all work hard (or should do) at reputation management. However, in my opinion, Toyota has so far handled the media crisis with all the skill of a world-class golfer alleged to have multiple affairs (in other words with not much skill at all).

The problems with sticking accelerator pedals were first reported in 2007. However, in an echo of a similar problem reported with Audi cars 20 years ago (which caused a sales drop of 83% in the US, and took 15 years to recover from), Toyota has been slow to act. Rather than dealing with all known issues, Toyota have reacted to each problem separately, causing them even further embarrassment with the latest revelations about problems with the Prius braking system. It's been a double whammy.

What should Toyota have done better? Here's my check-list

1) Acted as quickly as possible to take responsibility for the problems
2) Show concern for all owners affected by the problem
3) Put up a high-level spokesperson - ideally the CEO - to make a statement
4) Explain how they will put things right

I suspect that many Toyota owners will think twice when heading out to buy their next car. That's Toyota's real problem. If they had crisis media experts available, then either they didn't consult them, or they ignored their advice. Dealing with a crisis is not complicated. It's been done well (and badly) by many big corporations in recent years. But as George Santayana said; "Those who fail to learn the lessons of history are doomed to repeat them."

Every business should have at least two things in place to deal with reputation issues:

1) Knowledge of its current reputation, and regular monitoring
2) A crisis management plan, with a process, a team and trained spokespeople

How does your company stack up?

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