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Top Consulting Organization Identifies What the Toyota Episode Teaches Us

Friday, April 2, 2010

The Society for the Advancement of Consulting® (SAC®) had asked its global membership to comment on the difficulties of Toyota and what they mean for business leaders in general. "It's impact is far beyond Toyota or even the auto business," comments SAC CEO Alan Weiss, PhD.

Three lessons from Toyota top the list for author and business growth consultant John Carroll, president of Unlimited Performance, Inc. in Mount Pleasant, South Carolina. “Protect customer trust, immediately respond and reassure customers the moment that trust is broken and work relentlessly to restore trust among loyal customers, even as some are falling away,” Carroll says.

“Ideally, you never want that trust bond to be broken,” says Carroll. “You accomplish this, as Toyota had through most of its storied history, with proper quality, prevention and customer care systems. You do everything possible to maintain and strengthen those bonds to increase your quantity and quality of brand-insistent customers. The moment it appears that you’ve done something to lose the customer’s trust, respond and reassure customers that you’re aware of the issue and you’re dedicating significant resources to resolving it. Whatever you do, don’t hide or give the appearance that you’re hiding. Use all available tools and channels to communicate, open the lines to get feedback, receive and answer questions and provide frequent, timely updates on progress toward issue resolution. You’ll do this best by having a crisis response plan ready in advance to implement at a moment’s notice.

“Finally, launch the campaign with the message focusing entirely on helping your best customers to stick with you or return quickly,” says Carroll. “If you’re sufficiently high profile to warrant heavy media coverage as Toyota does, expect that the sensationalism of the story will have an impact that you can turn around in some people and not in others. Apologize. Be personal and personable in your delivery. Tell and show people what you’re doing to address the current issue, what you’re doing to make up for customer inconvenience, and what you’re putting in place to prevent the issue from reappearing.”

Contingent liability

Karen Eber Davis, from Sarasota, Florida, specializes in helping nonprofit organizations obtain resources, like money, time and ideas. She offers a these thoughts:

“Toyota failed to follow its strategic vision concerning quality. Nonprofits do not have to follow Toyota’s missteps. Nonprofits with a solid mission, vision and a clear understanding of their strategies—have the tools they need to respond to crisis that come with serving the community. These tools provide the framework to answer questions like: How can we continue to best serve our customers in light of this incident? How do we avoid such events in the future? How can this make us a stronger organization? How can we communicate our plans?

"Clear thinking about mission, vision and strategies is not only for blue-sky days. It is a must for days when our organizations are rocked by storms. Mission, vision and strategies help nonprofits to understand the actions necessary to weather the storms that are part of life.”

Gary W. Patterson, the FiscalDoctor® and enterprise risk management expert and speaker in Boston, MA provided these three warning observations.

  1. Calling these type issues a contingent liability to keep the expense off of your income statement catches up with business at the worst time.
  2. It also highlights the fact that reserve accounts and provisions are more like reasonable estimates, not precise scientific computations, when companies do not face reality. 
  3. Ask yourself what accounting reserve issue can your company be accused of crossing the line on between advocacy and misleading

 From Roberta Matuson, president of Human Resource Solutions in Northhampton, MA:

  1. When you make a mistake, own it the minute you realize something is not right. Toyota allegedly knew about these problems several years ago and even made some fixes for their cars being sold in Japan. If they had done this here in the US, people might have been more sympathetic. Fortunately, most of us are not dealing in life or death situations. More than likely, you will be forgiven if you come forward immediately and you are honest with those around you.
  2. Take responsibility for your mistake. Own it with an "I" statement. By that I mean, begin your apology with "I" rather than using words like "corporate" or "the bank." In the end, you are ultimately responsible for your actions. Few people are going to forgive an inanimate object like a corporation, but they will certainly consider forgiving someone who appears to be human.
  3. Vow to make things right and then do so. Toyota keeps vowing to make things right, as they continue to reveal more information that indicates they are not sure if the problem has really been corrected. If you are unable to make things right, then tell people so and explain to them why you are unable to do this right now. The last thing people want to hear is more of the same. If you are able to immediately begin to fix things, keep people informed as to exactly what you are doing along the way, in order to regain their trust.

More transparency

Dr. Maynard Brusman is a consulting psychologist and executive coach. He is the president of Working Resources, a talent management and leadership coaching firm in San Francisco, California. He offers a few insights:

"I own a Toyota Camry and have had problems with the gas pedal sticking and the floor mat getting caught under the pedal. I believe Toyota got carried away with their errant strategic focus pursuing growth and productivity gains sacrificing their commitment to quality.

“Leadership at Toyota needs to create more transparency and reestablish trust in the safety of their products. It’s no longer prudent to judge American or foreign companies’ performance solely on the extent to which they create wealth for investors.Company leaders need to create organizations that are economically, ethically and socially sustainable. Companies that foster a culture of transparency and trust clearly have a competitive advantage for sustainable success.

“There are I believe three leadership lessons from Toyota applicable to any enterprise:

  1. Don't fall in love with your story: Toyota developed a story about itself as being the number one car company in the world with the best quality in the world.
  2. Don't outgrow your talent:Top talent is a coveted resource. You can't grow faster than available talent.
  3. Don't hide information:  When your organization is facing a crisis, you have to proactively get ahead of the situation by openly sharing information.

“My guess is the company will slowly recover from its current crisis maybe not wealthier, but wiser. Often it is the success that established them in the first place that can lead to trouble down the road. Whatever got them here might not get them there.”

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