Column: On the Road

Toyota is something of an instant Greek tragedy as of late. Having displaced General Motors as the world’s biggest automaker, the gods of conveyance quickly punished the Japanese automaker for hubris and success, leaving the company wandering dazed and confused in the loneliest place on earth … at number one.

But the story is more than technical problems resulting in Toyota’s largest U.S. recall ever.

It also is about Toyota’s culture and how their approach to communications during this crisis exacerbated an already difficult situation.

The facts, as they appear now, anyway, seem to indicate that Toyota had a clear understanding of the defects for many months and had ample time to respond to the acceleration issue, with serious investigations underway as early as last August following a crash killing four people. The problem originally was blamed on the design of the floor mat and the matter seemed to be closed, at least in Toyota’s eyes.

This initial milestone was the first in a series of missteps driven by the company’s culture. Although Toyota is famous for its “andon cord” – a cord next to the assembly line that lets anyone stop production if they see a problem – the Japanese corporate culture is very top down. When a supervisor, or someone with significant authority, renders a decision, it rarely is challenged from people below.

That management approach may have precluded engineers and other managers from offering other points of view: points that became increasingly relevant as other theories about the acceleration began to manifest.

Gas pedals in contemporary vehicles typically do not have the kind of mechanical links to the throttle compared with older models. Instead they rely on sensors and software to not only provide direction to the engine’s throttle control, but also tactile feedback to the driver’s foot.

When a second theory began to surface around a malfunction of the pedal sensor itself in early January, Toyota was caught flatfooted and there was no communication whatever to the public.

Instead, the media picked up the story first: an incredible blunder. Had Toyota come out in front of the story, the media would have picked up the facts both from Toyota and other sources, but instead they ran with what they had – speculation and theory from “experts” in the field.

This information vacuum was driven from the top down too. Toyota President Akio Toyoda, grandson of the company’s founder Kiichiro Toyoda, made only a passing comment to a Swiss journalist before calling a hasty but belated press conference a week later to apologize for the problems. In a stark illustration of Toyota’s problem, Japanese journalists chastised Toyoda for calling the press conference with little advance warning, and then saying nothing of any substance except his expression of regret. That kind of aggressive journalism is very rare in Japan where the media and large corporations share a relationship more described as cooperation than investigation.

Here culture again played a role. Japanese companies in particular are very deliberate in their message – there is no such thing as improvisation. Announcements and directives are carefully vetted weeks before delivery. Nothing is left to chance. The president of Toyota did not come out with a clear message for the media and for customers about a solution to the problem because they simply were not ready (unlike American media responses thrown together so quickly that they often forego proper grammar.)

Jim Lentz, president and CEO of Toyota Motor Sales, did make an attempt at reeling back in the story by appearing on the Today Show with host Matt Lauer, one of several TV and radio stops made that day in an effort to quell the rising frenzy. No luck. For a guy covering sextuplets and travel destinations, Mr. Lauer deftly put the thumbscrews to Mr. Lentz, whose answers rang more as coached than genuine.

And it kept coming. The last lesson of a crisis with this magnitude is that there always are aftershocks.

The first of these aftershocks came from U.S. Transportation Secretary Ray LaHood. In an interview, LaHood suggested that Toyota owners should consider not driving their cars. In the context of the interview, the comment was offhanded; clearly not a prescription or a remedy being endorsed by the federal government. LaHood later retracted his comment, offering further clarification. But the damage was done and out of the interview, the media focused on the sound bite that made the biggest headline.

Next came the revelation that the antilock braking system on the Prius was under a recall too, adding another log on the fire and threatening one of Toyota’s most valuable and successful models from a brand perspective.

Had Toyota’s voice been out in front of the discussion, these corollary issues would have been muted, but because the media was driving the bus, each problem amplified the original acceleration problem. Even with no direct link between the Prius brakes and the larger throttle problem, the media made the connection declaring a wider, more systemic breakdown at Toyota.

And that is unlikely. Toyota has led the approach to – and results in – quality for decades. It would be irresponsible to marginalize these quality issues in the light of the fatalities that resulted. But there have been much larger recalls. Ford’s 1996 recall for a faulty ignition switch still ranks at the top of the list, and the Firestone tire debacle also ranks as one of the most publicized recall episodes in automotive history. But in these cases, Ford was out in front of each issue. Bill Ford himself was on the television attempting to reassure customers during the tire recall that the company was taking every measure to resolve the problem quickly and safely.

And GM. Having walked over hot coals last summer through their bankruptcy to emerge not only intact from a brand perspective but actually gaining ground in the public eye is the result of herculean efforts from their communications machine. The value of the results probably can be quantified with some clever math. And I would bet they are in the billions.

Toyota does now have a “mea culpa” marketing program running in an attempt to repair the damage. But the story still is resonating on the front page of newspapers and the lead in news broadcasts. The longer the story stays current, the harder it will be for dealers to get cars off of their lots. As a result, Toyota now is trying to run with big cash incentives to get buyers back. Just ask General Motors how that strategy plays out in the long run.

Is it fair to penalize Toyota for not having experience with recalls? Probably not. But Toyota is the largest car company in the world today (for the moment) and even if the excuse is having gotten it right for the last 50 years, a company of this size and scope has to have all of its disciplines executing at the highest level to stay that way.

It’s time for Toyota to learn once again from a pivotal moment in their brand’s history, and create a culture that allows the company to open up clear and frank dialogue with its customers and from people at the execution level, not executive. It will be an absolute must if they plan to hold on to that number one spot … that is, if they want it anymore.

About the author: Rob Cleveland is CEO of ICON Creative Technologies Group and a co-owner of Grange Kitchen and Bar in Ann Arbor.