Toyota is not the first manufacturer to recall their products due to safety concerns. In fact, they aren’t even the first automaker to be asked to a congressional hearing. Unfortunately, the public’s perceptions on the recalls are one of the most difficult things to control and Toyota’s response in the past six months has been far from ideal.

So far, Toyota’s response has been appallingly slow. It took the gruesome deaths of four people for the company to finally issue a recall. Initially it centered on misplaced floor mats over only a few models. As the number of models affected increased, the public concern rose. However, when owners continued to report and prove to dealers that the throttles were sticking open without any floormats in the vehicle, Toyota altered their recall to focus on sticking accelerator pedals.

As The Economist pointed out, customer’s confidence in Toyota also fell as the automaker was unable to give a definitive cause for unintended acceleration. Additionally, upper management did not make any public appearances during the crisis. The missteps can be partially explained by the corporate culture in Japan. In general, Japanese companies are extremely respectful towards their leaders and very defensive concerning other businesses. These traits combined with the propensity to promote internally create a culture wherein the company is perceived to be perfect.

Fixing the situation will take time, especially to prevent such problems from occurring in the future. The recall needs to be handled in a fast, efficient and courteous way. They need to make sure that upset and concerned customers are taken care of to help rebuild Toyota’s reputation for quality, reliability and safety. In the long term, the corporate culture will need to change. More executives need to be brought in from the outside to prevent complacency. Additionally, bad news travels upwards slowly due to the rigid structure of seniority. Management needs to take a proactive role in any safety or quality issues that may arise. One of the largest and most apparent issues with Toyota is the lack of diversity of the board. All 29 members are former Toyota employees and all are Japanese. In order to make informed decisions on an international scale, the makeup of the board needs to be changed.

Recalls that are managed well can actually benefit the company which is issuing the recall. The most prominent example of this situation is Johnson & Johnson and their Tylenol recall in 1982 when the pills were found to be laced with cyanide. The Economist makes the point that due to the swift action taken by the manufacturer as well as introducing tamper-proof packaging quickly after the recall, Johnson & Johnson was seen as a victim.

Toyota built itself up to a sales juggernaut and international business poster child by preaching safety, reliability and quality over the offerings from Detroit. Bolstered by the problems that the American manufactures have had by attempting extreme cost cutting, Toyota grew. The tables seem to have turned and Ford looks to be the competitor that will gain the most from Toyota’s fall from greatness. Only time will tell if Toyota can implement the recall and change their business to avoid another spate of devastating problems.

Source: The Economists

Images By: Andrew Walensa

[UPDATE]:

Toyota Internal Documents Brag of Saving $100M by Negotiating “Limited” Recall

Grand Jury Subpoenas Toyota Documents

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