Caution: Dangerous Curves Ahead for Toyota

It was announced this past week that Toyota has once again unseated General Motors as the leading automobile manufacturer in the world. This, following a tumultuous couple of crisis-filled years for the Japanese car maker, beset with reports of sudden acceleration, cars with faulty brakes, steering defects, cars that stalled while driving, resulting in recalls of several million cars including some from their Lexus and Prius brands, in addition to good old reliable Toyotas.  

How reliable? The New York Times once described Toyota as “engineering cars so utterly reliable that they seemed boring.”

But when they fell they fell hard. Once the dominant year-after-year leader in the J.D. Powers annual customer survey of car quality, two years ago Toyota plummeted to lowly 21st position, which prompted a J.D. Powers vice president to understate with a straight face, “Clearly, Toyota has endured a difficult year.”

That difficult year also included a special Congressional investigative committee, which forced the head of the company, Akido Toyoda, to come from Japan to testify in Washington. Among the many things Congress, government regulators, and the public, wanted to know was why leaked company documents indicated that the carmaker knew of many of these defects for years and had kept quiet about them. In one instance, at least one serious safety defect was well known in Japan for years, but the company never bothered to notify U.S. owners of the same model cars.

In addition to crisis management and quality assurance problems, the company suffered from crisis communications problems, too – all of their own making. Either saying the wrong thing at the wrong time, or saying nothing at all when communications was exactly what was needed. It was a crisis communications disaster of the highest magnitude, and one that many companies have experienced in their own time and their own way.

In addition to overtaking GM in worldwide sales once again, the company also reclaimed its preeminent position atop the coveted J.D. Powers list of customer satisfaction. So, things are looking up for Toyota at last.

 But, they are positioned to fall again – and harder than before – if they’re not careful.

Too many times we have seen companies survive a crisis, but not learn from it. This could prove near fatal if Toyota falls victim to the success of its own turnaround. 

The best thing Toyota can do is to critically and objectively study its failures in crisis management and crisis communications by learning from its mistakes. Often, companies that emerge scarred but otherwise intact think they’ve dodged a bullet and assume a “business as usual” mindset. But such companies would be better served by looking at their current situation as a potential crisis. And the time to act is now.

From my analysis of the Toyota crisis for my upcoming book, Crisis Communications: The Definitive Guide to Managing the Message, I note that almost every one of Toyota’s crises was avoidable, but ignored, and everyone one of the crisis communications blunders also easily avoidable. This happens frequently with otherwise successful companies, who think they’re immune from the capricious winds of a crisis. Toyota’s hubris was part of its downfall.

Now that they have reclaimed two of the lofty perches they once dominated, they would be wise to correct the management and communications missteps and overconfidence that befell them previously.

 The public is generally forgiving and likes to give otherwise good companies a second chance.

 As long as they don’t blow it again.