Wednesday, October 7, 2009

What Will We Learn From Toyota's Mounting Crises?

If your company has a fire, you rebuild. If your company has a product recall, you manage it. If you face a patent infringement claim you prove its not true. If you have a disgruntled former employee you may have a whistle-blower and if you have all of these things or even most of these things all at once, you have a business crisis.

That would be Toyota!

The worldwide economic crash has not been kind to Toyota either. But, within a single year, The U.S. National Highway Traffic Safety Administration has launched an investigation surrounding growing evidence that "severe frame corrosion" on 2000 and 2001 Tundra pickups is causing brake system failures and the spare tires to break away from the underside of the vehicle.

Within weeks of that disclosure Toyota began recalling 3.8-million Toyota and Lexus automobile because of problems with factory installed floor mats that may get caught in the accelerator pedal.

That recall resulted after a California state trooper and three members of his family were killed in a related accident in a Toyota built Lexus.

Within a couple more weeks, U.S. trade officials said they will investigate allegations by a Florida based company, Paice, that claims Toyota violated their patents when it developed their latest generation of hybrids cars, including the Prius and the Lexus HS250h.

Two of those issues shake the public's faith in the car company's QUALITY -- one of Toyota's biggest selling points for years.

But wait, there's more!

Dimitrios Biller, former national managing counsel of the company's National Rollover Campaign for four years, is now a whistle-blower publicly accusing the company of covering up potentially damaging information that, he says, has been withheld from victims of defective Toyota vehicles.

Do you remember Ralph Nader? He made his reputation and badly damaged General Motors' image with his campaign against what he called a death trap Chevrolet Corvair.

Toyota can recover but it must be aggressive both at cleaning up its quality issues on the drawing boards and assembly lines, AND in taking responsibility for past problems and communicating to employees, partners, regulators and customers what it is doing to restore their trust and confidence in the Toyota brand.

The company President got off to an appropriate start last week, when he offered his condolences to the California trooper's family and publicly acknowledged the company was in a "near rock-bottom crisis."

Many companies of every size will be watching, along with customers, competitors and investors, to see if Toyota's leadership can pull the company back from the brink.

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