Tuesday, February 23, 2010

Poor Polish Lawyer From Detroit Takes Toyota to Task

Toyota North America President James Lentz made the most heart-felt and earnest apology, yet, from any Toyota executive as he appeared before a U.S. Congressional Committee in Washington, DC Tuesday.

He was grilled after Rhonda Smith, of Sevierville, Tenn., said "Shame on you, Toyota," at the same congressional hearing. Her Lexus had accelerated out of control for several miles before she got it stopped. She and her husband told the panel Toyota sent them a form letter and discounted her harrowing experience.

When Lentz began his remarks, he said, "I'm embarrassed for what happened." Lentz added, "I want her and her husband to feel safe about driving our products."

Michigan Representative John Dingell launched into a list of questions prepared by his staff, and kept demanding "yes or no" answers to many questions that could not be answered yes or no.

At one point he told Lentz, "I'm just a poor Polish lawyer from Detroit" and asked for simple yes or no answers.

If I had been Lentz, I would have been tempted to respond, "I know your Polish and a lawyer, but I doubt your poor!" If I had been counseling Lentz, I would have died on the spot, if he had said what I would have been tempted to say.

Some of the questioning was good and tough. Some was mean-spirited. Some of the questioning was political posturing.

What Lentz did well, was to keep calm, not over-react to the baiting questions, and allowed his humanness to show at times. He came close to tearing up, at one point, when he talked about losing a relative in an automobile crash, and how he knew the pain of such a tragic event.

Friday, February 19, 2010

Tiger Takes The Stage

It seems like an eternity since Tiger Woods' Cadillac SUV struck a tree and fire hydrant in Florida Thanksgiving weekend.

Today, he faced a camera, three carefully selected reporters (who did not get to ask any questions), his mother, and about 40 friends and employees, in a PGA Tour clubhouse in Pont Vedra Beach, FL. That's not to mention the millions of television viewers from around world, including his father-in-law watching in Sweden.

There are critics, not the least is Golfer Ernie Els, who pointed out Woods made his public mea culpa on the Friday of the Accenture Match Play Championship. Els told Golf Week Magazine "It's selfish." And, he accused Woods of stealing the spotlight from the Tournament, sponsored by the first company to pull its sponsorship after the sex-scandal broke.

My sense is Tiger Woods meant what he said today. He could have been pressured by handlers and friends to say the same thing two months ago, when he was not ready, or perhaps not even convinced he had done anything wrong. The words, without heartfelt meaning, could have done more harm, than no public statement at all.

Many reporters and even some of Woods' competitors complained that he didn't answer questions, nor give any sordid details. I wasn't ask, but I would have counseled him to do what he did ... make a statement, take responsibility for what he did, say he is sorry -- only if he means it -- explain what he is doing to fix his problem . . .then move on.

One of our competitors has written a book, and promotes it every chance he gets, about how apologies are over-rated. After 20-years of working with clients of all kinds, including some very public figures, there is ample evidence that "taking responsibility" for mistakes, screw-ups, bad behavior, defective products or poor service is still the first step toward recovery of a brand or reputation.

Unfortunately, words alone won't fix anything. It requires the second step -- doing the right thing(s) coupled with the apology or "taking responsibility".

Now golf fans and his family, employees and friends will be watching to see if he follows through with his public commitment to make things right.

Friday, February 12, 2010

Let's Put the Toyota Recall in Perspective

Toyota is recalling an estimated 5.6-million vehicles in the U.S. and critics and the media have been all over the Japanese car maker.

But, in the grand scheme of things, the current Toyota recall only ranks Number Four on the all time recall hit-parade in the United States, according to the National Highway Traffic Safety Administration.

Numbers five and six on the recall "top ten" were both Ford, with similar defects, in 2005 and again in 2009. Both involved cruise-control systems that could overheat and fill the car with smoke or even catch fire. If both related recalls were combined it would put Ford at the top of the heap with at least 9-million defective vehicles. But the NHTSA continues to list them as separate recalls.

Toyota comes in at Number Four with about 5.6-million defective vehicles in 2009-2010.

Number Three is General Motors' 1978 to 1981 Buicks, Chevys, Oldsmobiles and Pontiacs with a front suspension mounting bolt that was subject to breaking. In all, 5.8-million GM cars were called back for replacement of the defective bolts.

Number Two involved almost all 1971 Chevrolet models, 6.7 million total, with engine mounts that could break and cause wrecks.

And, Number One on the recall hit parade -- Ford. In 1996 the government ordered the recall of most Ford cars and trucks built between 1988 and 1993 because of an ignition switch that could overheat and smoke or start a fire.

Toyota is in elite company with its "big" recall, but still not the class champion.

Ford and GM car dealers and their sales force should not lose sight of their own history when they try to take advantage of Toyota's current problems.

Tuesday, February 9, 2010

Toyota Fires Another Round Into Its Feet

Just when I think Toyota is going to show its class and quality, there's another "after-shock".

You know that all business crises are like earthquakes -- there's the initial damage and then there are often numerous after-shocks. Some do more damage, some just keep you unnerved and distracted from recovering from the initial quake.

And in Toyota's case, I'm not talking about the Prius brake problem and third major recall that was just announced this week. I'm talking about the Toyota Dealers of Florida, Georgia, Alabama, South Carolina and North Carolina who just cancelled all their advertising with local ABC affiliated television stations in those states.

ABC claims the advertising agency representing those dealerships in those five states cancelled their contracts in protest of what the agency described as "excessive stories on the Toyota issues." One local ABC station manager said the cancellation was "punishment for the reporting" of his station and the other ABC stations.

173 Toyota dealerships, calling themselves Southeast Toyota, say they will move their advertising dollars to other non-ABC stations.

To the general public, Toyota is Toyota, although the dealerships are individually owned businesses.

There is an old saying: "Don't get into a p____ match with the folks who buy their ink by the barrel or own the big stick at the edge of town." The media will always have the last word. If there was a benefit to advertising on those ABC stations to begin with, are those dealerships not hurting themselves by pulling their ads? If those ads were not useful to the dealers, why were they wasting their money there?

Corporate Toyota cannot be pleased with the 173 dealers who have drawn more negative attention to the company and its troubles. And what do you bet, those local TV stations won't go after Toyota and their dealers even more aggressively.

Monday, February 1, 2010

Is Toyota Another Firestone?

If you read my first post about Toyota or saw me quoted in an Associated Press story Sunday, you would naturally assume I was a "fan" of Toyota's and approving of what they had done so far in managing the "crisis communication" issues facing them.

That was before watching Jim Lentz, President and Chief Operating Officer of Toyota Motor Sales North America talking to Matt Lauer on NBC's Today Show Monday morning.

He did a good job of responding to the questions and did not appear defensive. However, there appears to be a smoking gun in his television interview. He implied Toyota didn't know about the sticking throttle pedal until October.

But, in the same morning's New York Times, Reporter Bill Vlasic wrote, "The company said on November 2 that 'there is no evidence to support' any other conclusion. . ."
He was referring to Toyota's earlier recall and statements that the problem was a result of loose floor mats. There was no reference about any other problem with Toyota gas pedals.

On top of that, some of the victims and plaintiff's attorneys claim Toyota is not being honest when they say the problem is a mechanical part that wears and sticks in the throttle assembly. They claim it is an electronic malfunction.

I'm sure you're not surprised, nor shocked but the lawsuits are already flying. As of this writing, Bloomberg News says there are at least seven individual lawsuits and three class-action suits. The first class action suit was filed in November of 2009.

But, wait there's more! Toyota is dealing with lawsuits involving roll-over crashes with collapsing roofs, and a whistle-blower case brought by a former Toyota attorney who claims the company with-held or hid evidence from plaintiffs attorneys in the "roof" cases.

So, will we end up comparing Toyota to the Ford Explorer/Firestone ATX tire debacle or to the Tylenol case? I was thinking the massive recall and manufacturing halt was in a league with the Johnson & Johnson handling of the contaminated Tylenol.

But if the allegations are true that someone in Toyota knew much earlier about the accelerator problem and didn't do anything or tell anyone about it, we'll be comparing tires and accelerators for a long time and the lawsuits will drag on for another ten years or more.

There is evidence that quality control engineers knew as early as 1993 that there was a problem with the Firestone ATX tires installed on new Ford Explorers. But it wasn't until early 2000 that the public found out.

The most reliable estimates say 271 people died and 800 were injured when ATX tires failed and caused Ford Explorers to crash. Thirty class action lawsuits resulted and 19.5-million tires were recalled.

Ford and Firestone survived, in spite of the fact it was the second time Firestone was the center of a massive tire failure. The Firestone 500, the company's first radial tire, was prone to come apart at high speed. In 1978 the government ordered the recall of 7-million tires and hit Firestone with a $500,000 fine -- the largest business penalty up to that time. At least 34 deaths were attributed to the Firestone 500 tires.

So, there is precedent for big companies to survive these kinds of issues.

However, that does not excuse any company from "doing the right thing" as soon as it becomes aware of the problem.

I don't care how expensive the "fix" may be, the ultimate loss of customer respect and confidence, the outrageous legal fees and victim settlements will always cost more.