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How businesses should cope with bad news – not like Toyota

Posted by Michael under Leadership

Damage to Toyota’s image is no longer growing by the day – it’s multiplying by the hour. The recall of the latest model Prius hybrid – the car that’s been an icon of Toyota’s engineering and green ambitions – is hammering the nails into a public relations coffin for the Japanese manufacturer.

The global recall has now reached more than eight million vehicles, but the cost of solving the problem technically may be minor, compared to the cost of putting right the debacle of lost public confidence.

Toyota got three things terminally wrong:

1. It failed to explain what it was doing to fix the problem
2. It didn’t apologise appropriately or fast enough

And, a particularly Japanese PR failure this one …

3. It wasn’t humble enough to its customers.

Point 1 – Not only did Toyota fail to recognise and respond to the problem with its cars, it tried to blame a supplier and even suggested that the drivers of the vehicles might be ‘in error’ – it’s a cardinal failure: the customer may not always be right, but even if they are wrong, you don’t tell them so. And you certainly don’t say the problem is in their heads or their ability to use your products, because all you’re doing is telling them that they shouldn’t buy from you in future

Point 2 – the company’s crisis management was invisible. When the company CEO finally appeared on TV, it wasn’t at a press conference – he was pinned in a corner at the Davos summit and forced to comment, briefly, on the issue, before he drove away – in a German manufactured car! There was a hastily called news conference last week, but the spokesman for Toyota wasn’t a board member and seemed unconvincing in his comments. When things go wrong, the public expects to see leadership from the top.

Point 3 – when a Japanese person makes a mistake, they bow low in apology. During the scheduled conference the Toyota spokesman did not bow and address the audience with an apology – while non-Japanese may have failed to recognise the insult, the Japanese press did, and pointed out that Toyota had ‘insulted’ its customers. When a company makes a mistake, it needs to apologise with honesty, speed and conviction.

That insult, on top of the faulty information supplied in trickles from the company itself, might have seemed like the worst that could happen.

Until today – when a senior American lawyer went on air to tell Toyota owners that if they drive their cars, now they have been ‘given notice of a problem’, they could be classed as having taken responsibility for any accident that results from vehicle faults. In other words, American people now believe that if they get into their Toyota car, their insurance has been invalidated. Already car hire companies have reported that they are running out of rental vehicles. The only cars they still have in their lots … are Toyota models.

And even that isn’t the lowest of the low for the Japanese manufacturer. One knock-on effect that the company has no control over is that the price of second-hand Toyota cars has begun to drop and there’s evidence of a rush in the UK to get Toyotas into the scrappage scheme, perhaps so their current owners can buy something they consider more trustworthy.

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