Too Perfect To Fail

The coming weeks will not weigh Toyota’s failure against car failure, but it’s failure to handle crisis.

By Dean Crutchfield. As seen in PR Week

When anatomizing the Toyota debacle, the most interesting machinations over the coming weeks will not weigh Toyota’s failure against car failure, but it’s failure to handle crisis. Quality issues had been metastasizing long before they accelerated over recent weeks. Toyota’s pristine reputation, attention to detail and just in time operational excellence has proved a chimera.

A fascinating study of 200 languages found that during the last 10,000 years, two words have changed least: I, and who. These are the corner stones of what makes a successful brand i.e. creating “I want” from your customer and knowing “who you are” as a brand. In Toyota’s pursuit of manufacturing excellence (“Monozukuri”), these two critical brand building blocks have been defenestrated and the root cause reveals five traits:

Trait 1. Failure to Analyze Failure

Great brands decline when they’re no longer sublime: If brands are belied as perfect, their skills to handle crisis will atrophy. Failing to prepare is preparing to fail. Since 1996 Toyota has experienced five vituperative debates surrounding safety of their products. Each time Toyota has failed to think ahead and lacked a swift response. Not to alter one’s faults is desultory. Just ask John Edwards.

Now, Toyota’s botched protestations of “we care” seem blithe and distrustful, portraying itself as ruthless monomaniacs, obsessed by their “too perfect to fail” attitude and willingness to do avoid anything peremptory to stay aloft. Consequently matters are at a division of deep regret, trust in Toyota is going to take a major battering and it could have been avoided.

Trait 2: A Derisory Crisis Plan

All plans fall apart on impact, but responding to the crisis with alacrity would have offered up some palpable success for Toyota’s woes. Instead Toyota initially displayed the dexterity of gook and the personality of ash. The simplest answer to any crisis is to act because to the court of public opinion, no answer is an answer. And when you fail to even respond to the US Secretary for Transport, LaHood’s pleas, you risk harsh brand depredation.

Necessity often saves us the trouble of choosing so you don’t start fiddling if Rome is burning: It took Toyota’s CEO, Akio Toyoda, too long to move his company beyond its internal sloganeering and denial. Consequently the pusillanimous response of Toyota’s CEO has deracinated Toyota’s reputation for quality and brought forth the dangers of a reputation for dodgy cars. The gaffes are too many to enumerate. Hide nothing; tell all, just ask Tiger.

Trait 3: Intransigence

Crisis begs bold and virtuous action, not soggy corporatism: a brand can be lost on a single battering and now Toyota faces a litany of complaints, a morass of stories and the customers, dealerships (and congress) have only just begun to vent their spleen. Just punch Lehman’s CEO, Richard Fuld and he’ll make it crystal clear.

Prior to the current crisis, examples of Toyota’s intransigence have not been imperceptible e.g., making essential design changes without informing customers with existing models of those changes! This potent combination within Toyota to combat crisis without ossifying their customers and the short-term myopia that has plagued Toyota’s recalcitrant board, tainted by the belief perhaps, that nothing matters more than the next profit announcement or Monday’s share price has opened them to a volley of imprecations.

Trait 4. Expect V. Inspect

Execution is essential to mollify markets askance – you’ve got to be in it to win it. The unconscionable shoddy reaction Toyota demonstrated reveals impotence within their management approach (and structure) to crisis along with a lack of effective decentralized decision-making. Especially troublesome when you have the conservative top down management hierarchy of Japanese corporations. In a global crisis trust is essential and Toyota’s “stop the line” manufacturing philosophy should have been applied immediately to the crisis; it is too quick for lengthy company procedures, which are less important than the ability to marshalling a crisis team and taking action to calm people’s fear.

After weeks of ruminations, there was finally some wisdom from Toyota’s spokesman, Mr. James Wiseman, on February 7th, 2010, “We acknowledge that we could have communicated better as a company.” These sops being thrown our way, such as the latest advertising campaigns’ claims, may calm our ire for the time being.

Trait 5. Gestures V. Actions

A brand’s integrity is compromised through fear. Toyota’s inviolable reputation has been violated and the scandal, which the brand is besmirched, represents an embarrassing reminder of the recurring gap between the two determinates of brand equity: affinity and performance. It’s important to know that studies have empirically shown that companies who handled a catastrophe with high standards have recovered and even exceeded pre-catastrophe stock price.

Toyota’s trauma has focused car buyers’ minds in a salutary way: it costs 5X more to win a new customer than retain an existing customer. Consequently Toyota will spend the coming months fighting hard to rescue its market leadership and its reputation, whilst balancing contention with compromise on major issues affecting the company’s future performance. Ask Jeffrey Skilling and he would tell you that Enron had the best (written) values around: communication, respect, integrity and excellence.

Despite (the less than likely $2Billion cost of) the recall and the public backlash that belabors the brand, Toyota still believes it is the car in front and has raised its earnings outlook for the year. That withstanding, the desultory nature of Toyota’s initial crisis response has shown that it is less a Gibraltar like castle than a stool resting on a few legs – kick one out and a head on collision occurs.

Perhaps at the core of Toyota’s recalcitrance (and the heart of Japan’s culture) are three heroes who are the limelight of Japanese history: Nobunaga, Hideyoshi, and Leyasu. Legend has it that they were presented with a humming bird that did not sing and Nobunga said “kill it,” Hideyoshi said “make it sing” and Leyasu said, “wait.”

In deference to this legend lies the conundrum for Toyota as it assiduously attempts to purloin the crisis. Therefore, it should remember its roots, as the ancient Samurai had a saying, “difficulty is here, I give thanks.”

Author: Dean Crutchfield

Builds Brands and Fixes Them When Broken

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