Protecting Your Reputation During a Witch Hunt
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Aiko Toyoda is sworn in to testimony at the House Oversight and Government Reform Committee. Picture Source |
You asked for it, you got it, Toyoda. Is his company’s brand permanently tarnished, or will the great Japan auto-empire save its reputation?
Last Wednesday, Toyota CEO Akio Toyoda found himself in the hot seat of the United States House Oversight and Government Reform Committee. Not a familiar or comfortable spot for the CEO of a Japanese company, especially one whose hallmark of outstanding quality, supplanted the US auto-markers’ front-running position decades ago in the US, and their reign until now has been uncontested.
In a long string of high profile icon-toppling discoveries, starting with Bernie Madoff and recently including the Tiger Woods fiasco, Mr. Toyoda becomes the latest victim of skinny-dipping in the ocean when the tide goes out. He asked for it though. In his testimony, Toyoda stated:
“I would like to point out here that Toyota’s priority has traditionally been the following: first, safety; second, quality; and third, volume. These priorities became confused, and we were not able to stop, think, and make improvements as much as we were able to before.”
Dear Grandfather—what have I done!
His decision to divert his focus from quality to growth ended up producing cars that would suddenly accelerate for no reason. Just one day prior to Toyoda’s Hibachi in front of the HOGRC, the House Energy and Commerce subcommittee heard testimony from witnesses like Eddie and Rhonda Smith from Sevierville, Tennessee.
In 2007, on an ordinary fall day in Tennessee, Ms. Smith took her Lexus out for a drive, as she normally would. She casually pulled onto interstate 40 when her Lexus suddenly took off out of control! Before very long, the car was traveling at 100 mph. Ms. Smith didn’t panic though, she did everything—I mean everything—you would expect somebody in this situation to do. The cruise control light came on, so she immediately disabled the system—nothing. She put the automatic transmission into every gear including neutral—nothing. She pressed hard with both feet on the brakes—nothing. She actually engaged the parking brake—and the car still kept going. After six long miles at over 100 mph, she finally called her husband to hear his voice one last time, whispered a prayer to God, and prepared for what she thought was the inevitable. In what cannot be described as anything but a miracle, her car started decelerating. Ms. Smith finally brought the car to a halt, and thanked God for his (or her) divine intervention.
As I stated, this was in the fall of 2007, well over two years ago, and only now after being summoned by the US, did he ever answer for what was happening with his “high-quality” cars. Mr. Toyoda did apologize to Ms. Smith from Sevierville, Tennessee and all the others who were traumatized by his out-of-control rocket cars, and he did promise the American people that something like this will never happen again.
From the standpoint of restoring Toyota’s reputation and confidence in the mind of the Americans, which according to Mr. Toyoda was his goal in coming to the US, how do you think he did? I think he came close, but no cigar—not yet. I’ve recently engaged in some very intelligent debates with my colleagues on whether or not Toyota will ever be able to restore its image. Many people think it’s not possible at this point, but I disagree. However, Toyota is missing a critical element to pull this off. Let’s review Toyoda’s statements to date:
- He has apologized to the people who were victimized by his uncontrollable rocket cars—good.
- He has admitted that he purposely revised Toyota’s strategy to favor growth over quality—very good.
- He’s made a promise to the American people that this will never happen again—sounds hollow, but okay.
- He has admitted that there was a glitch in his product development and / or manufacturing process that caused anomalies in the electronic control of his accelerators—wait, no he didn’t!
In fact, Toyoda denies his electronics had anything to do with it. His only remediation to date, is to replace floor mats and accelerator pedals, which he admits may not prevent future accidents.
What?!
Wait a second. Doesn’t something seem off to you? What’s missing here is our confidence that they’ve identified the cause of the problem, which is a necessary component for fixing the problem, which is a necessary component for us to feel safe about driving his cars.
Some of my colleagues would have you believe that there’s nothing Toyota can do to restore its image. In my view, that’s temporally myopic. Inside, we want to believe that Toyota manufactures high-quality cars. It’s what we’ve come to know for a number of decades now, so it’s hard to surrender that impression. We need to have closure though, and we won’t have that until three things happen:
- Toyota comes up with a good explanation of why the cars were suddenly accelerating
- Toyota comes up with a good explanation of how they fixed the problem
- We see objective evidence for a couple of years that the quality is back where it “should” be
- If these things happen, I think Toyota’s brand will be fine.
You’ve heard me talk before about your moral and ethical compass as a company, and how the wrong alignment can severely compromise your compliance efforts; however, although this was Toyoda’s first mistake, that’s not my point today. My point is, as hard as we try, with all the right intentions, compliance violations do happen. And, your biggest exposure doesn’t have anything to do with penalties and fines, it’s your image. If your brand suffers as a result of a compliance violation, your company will be ruined.
To protect your company’s brand in a situation like this (provided your ethical compass was pointing in the right direction), apologize to those affected, but also get to the root cause as quickly as you can, and demonstrate that you now have things under control. This is vital for closure in the perception of your customers, and an important ingredient in being able to forgive the mistake and move on. People will forgive, but you must handle it properly, or it could cost you your company.
John Weathington is President and CEO of 