Crisis leadership: Toyota brand lessons
Brands play an important role in modern society. A role which cannot be denied in scope and scale. Think of the incidents starting January 2010 around the world's largest carmaker Toyota and its handling of the recall of 8 million Prius hybrid cars. It is a perfect case in crisis management of brands and a compelling one of how not to handle it.
Toyota had become a case of perfect management, The Toyota Way, involving lean manufacturing, continuous improvement, innovation and quality beyond imagination. Several global corporations aspired to learn from the Japanese company, and mirror some of their best practices in management. Anything in Japanese management was much in demand. So what went wrong with the Toyota brand the last weeks?
Leadership in time of crisis
Innovation is a fundamental building block of iconic brands. Toyota is a great example of how an Asian company rose quickly and taught the rest of the world about best practices. Leading brands create their corporate strategies with an inherent strategic element encompassing innovation. Such innovation is not limited to bringing new products to markets, but is expanded to innovation in communication with customers and other stakeholders.
But as management professor Peter Drucker said, the only two functions of any organization are innovation and marketing. Irrespective how innovative a company is, how committed the employees are, and competent the top management is, unless the company connects with the customer, success will be elusive. The top management should constantly evaluate their strategic decision in the context of customer feedback and how the customers can help the company in co-creating value.
Many brands before Toyota have been through similar crisis cases. The mineral water brand Perrier had to recall 160 million bottles in 1990 after traces of benzene. Firestone tires had to recall 6.5 million defective tires in 2000. The mother of all cases was the painkiller brand Tylenol which had to be recalled by Johnson & Johnson after traces of cyanide. Johnson & Johnson recalled 30 million packages. But the company acted fast, regained market share fast and remains the leader today.
There are 4 important steps for management in time of crisis and how to handle the issues to help protect their brands regaining their reputation and image:
Face the stakeholders: Modern global brands and companies do not operate in isolation. Stakeholders are deeply involved with brands and bond with them during all times.
Management must step up and reach out immediately. At this early stage, few people in the company would have the big overview and may lack insights. But communicating early builds trust and open lines of dialogue – which may in most cases be very useful later.
Act fast: The sooner the management can establish a dialogue with stakeholders, the better the outcome. The company has to showcase that it moves fast, is agile and is on top of the subject matter. It will prove that the brand is still in control and has not lost confidence in itself. This early move will also allow the brand to better control the messages and help galvanizing the company support networks.
Strategic roadmap: The best global brands have ready-to-go strategic roadmaps which outlines exactly what to do and who should do it in case of crisis incidents. A strategic roadmap outlines how management and the company seek to repair the damage, re-establish operations and lead the brand's way back to normal. As management gets more details about the incident, the brand roadmap will be adjusted.
Nurture the organizational culture: During times of crisis, many corporations tend to forget their most important and trusted stakeholder: the organization and its employees. It is the talent pool who is the back-bone of operations. They do not easily give up on things they trust, respect and identify strongly with. Management can benefit tremendously by involving the organization early and empower them to solve the crisis. Most management teams forget about this important resource.
Conclusion
Many Asian business leaders are yet to realize that building and sustaining iconic brands is a boardroom discipline. It involves skills and experiences in public communication and stakeholder issues management - it must engage with the public and take center-stage at any time. This is a critical point for Toyota, CEO Akio Toyoda and the leadership team.
Toyota is strongly linked to Japan Inc. so much is at stake for Japan and its reputation moving forward. The Toyota brand must step up actively on the global scene, and take control of the crisis. It is easier said than done successfully.
But Toyota represents one of the strongest brands in the world, and its brand equity will help the company steer through the rough waters. It is up to the boardroom and CEO Akio Toyoda to take leadership.
Toyota had become a case of perfect management, The Toyota Way, involving lean manufacturing, continuous improvement, innovation and quality beyond imagination. Several global corporations aspired to learn from the Japanese company, and mirror some of their best practices in management. Anything in Japanese management was much in demand. So what went wrong with the Toyota brand the last weeks?
Leadership in time of crisis
Innovation is a fundamental building block of iconic brands. Toyota is a great example of how an Asian company rose quickly and taught the rest of the world about best practices. Leading brands create their corporate strategies with an inherent strategic element encompassing innovation. Such innovation is not limited to bringing new products to markets, but is expanded to innovation in communication with customers and other stakeholders.
But as management professor Peter Drucker said, the only two functions of any organization are innovation and marketing. Irrespective how innovative a company is, how committed the employees are, and competent the top management is, unless the company connects with the customer, success will be elusive. The top management should constantly evaluate their strategic decision in the context of customer feedback and how the customers can help the company in co-creating value.
Many brands before Toyota have been through similar crisis cases. The mineral water brand Perrier had to recall 160 million bottles in 1990 after traces of benzene. Firestone tires had to recall 6.5 million defective tires in 2000. The mother of all cases was the painkiller brand Tylenol which had to be recalled by Johnson & Johnson after traces of cyanide. Johnson & Johnson recalled 30 million packages. But the company acted fast, regained market share fast and remains the leader today.
There are 4 important steps for management in time of crisis and how to handle the issues to help protect their brands regaining their reputation and image:
Face the stakeholders: Modern global brands and companies do not operate in isolation. Stakeholders are deeply involved with brands and bond with them during all times.
Management must step up and reach out immediately. At this early stage, few people in the company would have the big overview and may lack insights. But communicating early builds trust and open lines of dialogue – which may in most cases be very useful later.
Act fast: The sooner the management can establish a dialogue with stakeholders, the better the outcome. The company has to showcase that it moves fast, is agile and is on top of the subject matter. It will prove that the brand is still in control and has not lost confidence in itself. This early move will also allow the brand to better control the messages and help galvanizing the company support networks.
Strategic roadmap: The best global brands have ready-to-go strategic roadmaps which outlines exactly what to do and who should do it in case of crisis incidents. A strategic roadmap outlines how management and the company seek to repair the damage, re-establish operations and lead the brand's way back to normal. As management gets more details about the incident, the brand roadmap will be adjusted.
Nurture the organizational culture: During times of crisis, many corporations tend to forget their most important and trusted stakeholder: the organization and its employees. It is the talent pool who is the back-bone of operations. They do not easily give up on things they trust, respect and identify strongly with. Management can benefit tremendously by involving the organization early and empower them to solve the crisis. Most management teams forget about this important resource.
Conclusion
Many Asian business leaders are yet to realize that building and sustaining iconic brands is a boardroom discipline. It involves skills and experiences in public communication and stakeholder issues management - it must engage with the public and take center-stage at any time. This is a critical point for Toyota, CEO Akio Toyoda and the leadership team.
Toyota is strongly linked to Japan Inc. so much is at stake for Japan and its reputation moving forward. The Toyota brand must step up actively on the global scene, and take control of the crisis. It is easier said than done successfully.
But Toyota represents one of the strongest brands in the world, and its brand equity will help the company steer through the rough waters. It is up to the boardroom and CEO Akio Toyoda to take leadership.
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