Toyota Recall and Crisis Leadership

By Tony Deblauwe

Watching the hearings involving the sudden acceleration issue with several models of Toyota vehicles is scary to say the least. Testimony included stories from victims of the problem – in one case, an entire family was killed. With such catastrophic consequences and huge liabilities and tarnishing of a once great brand know for quality, it provides a platform to look at how companies, and leaders, address crisis.

When faced with crisis, leaders need to make prudent decisions quickly. That involves canvassing their direct teams, and in many cases several levels below to get answers. It’s not apparent if CEO Toyoda did this given the criticism they received for their slow reaction time to consumer complaints.

Once a leader is engaged in addressing a critical issue, what should they do to make sure they respond adequately? Here are a few ways leaders can cope with rapidly changing circumstances:

1. Focus on a few key elements and build a plan. Often emotional tensions are so high that seepage of minor issues pop up as the most important issues. A leader has to determine critical touch points that - addressed properly - cascade down to fix other issues. It’s not the lowest hanging fruit argument, but a strategic view of the top 3-5 issues that need immediate attention.

For a business this is usually shareholder and customer communication of what’s happening, operational analysis of essential work processes, and key legal considerations/regulatory interests. Toyota executives were late to the game in some of these areas. This could have reduced the level of exposure and amount of crisis to handle (e.g. notifying people of other models that had the problem, etc).

2. Communicate constantly. Crisis management requires immediate updates as new information is available. To facilitate this exchange, networks need to be created that can share pertinent details to different parts of the organization and to external interests. Sometimes creating internal wikis or discussion boards helps with this process and ensures that appropriate business units are talking to each other. In the hearings, CEO Toyoda said he was not aware of key meetings addressing the complaints.

3. Roll through setbacks. Often the first ideas aren’t the best – they are solutions meant to get certain actions in place. They require modification on-the-fly as the situation unfolds. These initial actions may prove to be duds or they don’t capture the full scope of the problem resulting in negative backlash. Toyota thought the problem was solved with adjusting floor mats, then sticky brake pads, and now the problem appears to be in the software. While consumers were not please with these initial measures, Toyota has continued to diagnose the problem and issue offer different solutions. 

Leaders often make the mistake that after pouring so much effort into initial solutions, they have to stick to them no matter what. Toyota did this with the floor mat issue for a long time - blaming driver error if this solution was not the fix.

A confident leader will accept imperfection in initial approaches and make sure the team is ready to change quickly and respond with new approaches. The leader has to stay calm and focused when this happens to avoid worsening the crisis.

4. Recognize what is working. The bright spot at the end of the tunnel can be elusive in the early going of crisis management. Everyone is bogged down with moving forward so it becomes difficult to notice how solutions are taking root and reducing issues. Leaders who have created the right communication channels will be able to flag good results and use those results to bolster ongoing efforts. This helps morale and shows progress against the crisis mitigation plan. Toyoya made the right move to halt new car production in January which saved more potential accelerator problems from going to market.

5. Maintain a good pace. Leaders need to be mindful of the pressures coming from all directions to solve problems quickly and “perfectly.” If a strong plan is in place, backed up by the right communication channels, and a focused team, resolution activities will eventually balance out. This has nothing to do with perception or reputation damage control – that can take much longer as Toyota is sure to experience.

Pacing decisions around good solutions and re-working as needed provides a sense of control. Reacting to everything all the time is chaotic and doesn’t endear a leader as professional and deserving of the higher position. Executives must maintain decorum to their team and key stakeholders at all times. They must be ready to calm nerves for weeks or months depending on the issue and never waver from a methodological and reasoned response to crisis situations. Only time will tell if Toyota is pacing their crisis management properly and what that will mean in order for them to regain global consumer confidence.

 

Additional Resources:

Center for Creative Leadership
http://www.ccl.org/leadership/landing/crisis.aspx

 

Leadership Challenge

http://www.leadershipchallenge.com/WileyCDA/Section/id-131339.html#tipFeb10

 

Crisis Leadership Blog

http://crisisleadership.blogspot.com

 

Leadership Now Blog

http://www.leadershipnow.com/leadingblog/2008/03/five_tips_from_atsutoshi_nishi.html

 

Crisis Communication Checklist

http://www.topstory.ca/crisis.html

 

Rudy Giuliani on Change and Crisis Leadership Lessons

http://www.schulersolutions.com/change_leadership_lessons_of_r.html