Toyota prepares to recall the Prius
Since Toyota announced what has become its biggest ever safety and public relations disaster several weeks ago, the company has undertaken a herculean effort to restore the public’s confidence. It’s spokespeople have filled the airwaves, twitterverse and facebook with messages of reassurance, ads featuring an apology from the company have run nationwide, the website is continuously updated with information about the recall, consumer complaints are answered on a newly established hotline and U.S. President Jim Lentz has issued an apology via letter and on the Today Show. Why then, does Toyota’s reputation still hang in the balance?
Answering Three Questions: Effective crisis management requires a quick, no nonsense, full-responsibility response to three basic questions:
1) What did you know?
2) When did you know?
3) What are you going to do about it?
Part of Toyota’s mounting problems stem from their perceived failure to answer these questions quickly, openly and genuinely. After reports of sticking gas pedals surfaced in Europe in 2006, the company altered the pedals abroad, but made no effort to inform US consumers about the problem. After the magnitude of the issue was realized in the United States, Toyota issued two separate recalls and has dragged their feet in giving a straightforward response the mounting Prius issues. Rather than addressing the problem, its history and a proposed solution in one fell swoop, Toyota’s recall woes have continued to trickle out in a slow drip, ensuring the problem remains firmly in the public eye.
There is a Japanese proverb that says “If it stinks, put a lid on it.” Toyota’s initial decision to delay and deny seems to be taking this advice a little too close to heart.
Brand Matters: Another issue Toyota faces is that the recall eats at the heart of the company’s core values: safety, reliability and quality. Toyota built their reputation by always putting the customer first, and has taken an obsessive approach to building the safest, most reliable cars on the market. The recall not only calls into question Toyota’s core safety values, its response rattles consumer trust in the company. A company’s values are the essence of who they are, so any crisis that questions these values is particularly difficult to overcome.
The question is, can Toyota salvage its reputation and repair consumer confidence? I would argue that the answer is yes, but a lot more legwork will need to be done. The American public has shown again and again our willingness to extend second chances to those that issue a public apology and take swift action. Companies like Mattel, which issued a massive toy recall in 2007 amid safety concerns, and Tylenol, whose swift and unilateral decision to pull Tylenol from the shelves has become the gold standard for crisis response, have emerged on the other side of similar situations with their reputations intact.
To do the same, Toyota must make a complete explanation of their response to the pedal issues and answer tough questions from outside experts. Toyota management has to be transparent and forthright in their response and proposed solutions. Then, and only then, can they begin the long process of rebuilding public confidence.
