The Toyota Way: A tragedy in three acts

Toyota is in the midst of the most widely discussed automaker recall in recent memory, and this seemingly Greek tragedy is still unfolding. The Toyota recalls of the past six months, two related to acceleration (floormat entrapment and sticky pedals) and one to braking on the 2010 Prius, have been the most publicly known and popularly debated automaker recalls since perhaps 2000, when Firestone tires were linked to more than 100 deaths.

The dialog between Toyota and the public has continuously shifted as more and more information comes to light and newer technologies are necessary to keep the conversation going.  I look back on the past six months and see it as an evolving play of sorts, and this trio of recalls is a climactic moment that could very well define the next decade of Toyota worldwide.

Prologue: Rise of a new king
Toyota set up U.S. operations in California in 1957, as Toyota Motor Sales, U.S.A., and steadily grew market share and profits, even garnering a few business books about their production system, the Toyota Way, as they surpassed the longstanding king, General Motors.  Toyota, the new champion of America, built its empire on quality and reliability.

Act one: Signs of trouble
Shortly after Toyota recalled nearly four million vehicles in September 2009, the largest recall in its history, due to potential floormat interference with the accelerator pedal, the Los Angeles Times began a series of stories that looked at safety concerns at the company.  The first of these, which was published in October 2009, covered reports of sudden acceleration in Toyota vehicles.  A flurry of blog posts, tweets and re-tweets, Facebook messages and emails quickly spread the news.

In a subsequent article, in December 2009, the L.A. Times reported that an investigation by the paper “shows the world’s largest automaker has delayed recalls and attempted to blame human error in cases where owners claimed vehicle defects.”

The same day that L.A. Times article appeared, Toyota published a statement on its U.S. media site. Titled Setting the Record Straight, it read in part, “Today the Los Angeles Times published an article that wrongly and unfairly attacks Toyota’s integrity and reputation.”

Toyota acted as any new king would, as if its authority couldn’t and shouldn’t be questioned.  The company’s simple, direct rebuke of the article posted on their site suggests a stark and limited dialog about the possible quality issue.

Act two: Public outcry
However, the hyper-connected nature of consumers created a storm of conversation around these recalls that continues to build even now, several months later.

While recalls are not uncommon among automakers, why has this instance been raised to such tragic frenzy among the public and the press?  It is debated within the industry as well as among concerned owners.  It could be a patriotic sentiment: excitement to see a chink in the import brand’s armor. It could be a heartfelt outcry for the lives lost due to avoidable mechanical error.  It could be an escape valve for pent-up frustration stemming from the recession. It is likely all of these and more.

Some argue poor communication is more to blame than poor mechanics.  Most automakers still rely on standard mail to inform owners of a recall.  That is both horribly slow and often ineffective due to residential moves as recalls can span several model years and millions of vehicles.  DriverSide.com got some acclaim for automating recall announcements via email, allowing for timely knowledge of critical information (something every car owner should expect, but don’t often get). [Disclosure: I am an employee of DriverSide.com.]

Toyota has been very reactive across the web. Toyota’s Twitter stream is littered with @mentions, updates on the recall, upcoming announcements and interviews. In the past month two company execs have participated in Q&A sessions: Jim Lentz, COO of Toyota Motor Sales, U.S.A., Inc., went on Digg Dialogg to answer several of the top questions asked by participants (#1- What do you drive?); a few days later Doug Coleman, Prius Product Manager, answered questions on the Prius fan page.  And, of course, Toyota’s new ad campaign promises to repair vehicles and to learn from its mistakes.

It seems every Toyota message is coming across as apologetic and promising a better tomorrow.  What I find really refreshing is the company’s use of different communication channels to reach the right audiences, quickly shedding the solitary press release response at the onset of this ordeal.

Act three: In the trenches
Despite these apologies, Toyota has suffered a nearly unimaginable PR blow and significant sales declines. February sales were 9 percent lower than for the same period in 2009 while GM saw 12 percent gains and Ford an amazing 43 percent climb from sales volume a year ago, according to Automotive News.

Toyota has hit back by launching amazing incentives, including special lease offers and zero-percent financing for up to 60 months.  Also thrown in will be two years of maintenance for owners.  And I am sure more offers will hit your TV screens if the sales don’t rebound quickly.

The bottom line is definitely the bottom line for Toyota.  The automaker needs to move metal and this major setback has the potential to dethrone the brand in the U.S. market. The aggressive offers being rolled out are an interesting first step, but I predict Toyota will surprise us over the coming months with new approaches to the market.

Epilogue: Rebuilding the kingdom
I think the widespread coverage and often-negative slant has and will continue to cauterize Toyota and help the automaker focus on the most important aspect of its business: the overwhelmingly supportive fan base of loyal Toyota owners.

With almost 80,000 fans on Facebook providing amazing sound bites and easily hundreds of thousands out on the road every day, Toyota has let the loud voices of the few outweigh the quiet voices of the many.  Yes, lives were lost and for that Toyota needs to be held accountable. However, that needs to be counterbalanced by the millions of vehicles Toyota has put on the road safely.

Some owners leading the way have already made their own fan page: LoyalToyota to help spread the word online via Facebook and offline with bumper stickers. Toyota should take note: use online outlets to rally and inform the vocal minority, then deploy offline tactics through them to remind and convert the masses.

But how this all turns out isn’t written yet.  Chances are the final scene won’t play out this year at all.  But one thing is certain, Toyota showed a critical weakness and is now adapting quickly to respond.  As Darwin wrote, evolution doesn’t favor the strongest, but rather the most adaptable.

The comments in this article are the opinion of author and are not necessarily reflective of his employer, DriverSide.com.

Related links:

• Floor Mat Recall; Toyota Motor Sales, U.S.A., Inc.
• Pedal Recall; Toyota Motor Sales, U.S.A., Inc.
• 2010 Prius Recall; Toyota Motor Sales, U.S.A., Inc.
• Firestone Tire Recall; Firestone-tire-recall.com, which is registered to attorney Konstantine Kyros
• Toyota Motor Sales, U.S.A., Inc.; Wikipedia
• Toyota production system, search results; Amazon.com
• Toyota Beats GM for First Time; Associated Press via CBS News, 01.21.09
• Toyota Consumer Safety Advisory: Potential Floor Mat Interference with Accelerator Pedal; Toyota USA Newsroom, 09.29.09
• Toyota: Road to Recall; series of Los Angeles Times times on Toyota recall
• Toyota’s runaway-car worries may not stop at floor mats; Los Angeles Times, 10.18.09
• Toyota found to keep tight lid on potential safety problems; Los Angeles Times, 12.23.09
• Setting the Record Straight; Toyota USA Newsroom, 12.23.09
• How to split up the U.S.; PeteSearch, 02.06.10
• Safety Recalls; Office of Defects Investigation
• Toyota’s Pledge to Customers; What’s Your Opinion?; Automotive Digital Marketing, 02.19.10
• Toyota Recall: How Car Owners Avoid Being Victims; The Huffington Post, 02.03.10
• Toyota profile on Twitter
• Digg Dialogg: Jim Lentz; Digg, 02.08.10
• Prius fan page on Facebook
• Dealer Perspective on Toyota Recall; YouTube
• U.S. sales rise 13% after an uphill climb; Automotive News, 03.02.2010
• Toyota chief forecasts March sales recovery; Automotive News, 03.08.10
• Toyota USA fan page on Facebook
• LoyalToyota fan page on Facebook
  

Image credits:
GM Toyota image appears via Orbitcast; social media bandwagon image by Matt Hamm appears via Save the Tiger Fund;  Associated Press image of Toyota Motor Corp. President Akio Toyoda appears via Arab News.