Posted on February 9, 2010 by Dennis Snow
The Toyota recall has been dominating the business news lately. Every day it seems a new piece of information regarding the "sticky gas-pedal" issue comes out - some of it indicating that Toyota is handling the situation quickly and effectively, and other information indicating that Toyota has known about the problem for a long time and took action only after being forced to. I'm sure that new information will continue to come out, and it remains to be seen how all of this will affect Toyota's reputation and future.
While no one knows at this point how the Toyota story will play out, I do know this: an organization's brand is fragile. Brand is all about what customers think about a company and say about a company. For years customers have connected Toyota with quality, and that image brought them to the top of the automotive industry. Now customers are wondering if they've been wrong all along. Has it all been smoke and mirrors? I don't think so, but a seed of doubt has certainly been planted. And if it turns out that Toyota knew about the problem and took no action until forced to, regaining trust will take years (if it can be regained at all).
Two years ago I posted an article, "What to do When Your Company Screws Up." Based on what's happening with Toyota, I think it's worth running the article again, with a few minor tweaks. While you may not often run into the same challenge Toyota has - at least I hope not - every organization, department, and employee screws up at some point. How you handle the screw up will determine the level of trust you lose, retain, or gain. The article below highlights five steps for managing through potentially debilitating screw ups.
What to do When Your Company Screws Up
The public is never at a loss for examples of high-profile company screw ups. Some companies handle mistakes very well. The Tylenol tampering scare in the early 1980s was handled immediately by Johnson and Johnson and to this day the company is recognized for its excellent response. Others companies have created huge problems due to poor handling. Firestone Tires and Ford, for example, handled their defective tire situation by pointing fingers at each other and both companies got fried by the press.
So, what do you do when you make a big or even a small mistake? No matter the size of the problem, there are steps you can follow. The complexity of each step will depend on just how big the mistake it is; but the steps are the same.
1. Admit to the mistake quickly - Trying to cover up a mistake will come back to bite you. Someone is going to find out and it's best to assume they will find out sooner rather than later. When we come forward ourselves to admit a mistake, customers are more forgiving. It appears that Toyota may be particularly vulnerable on this point.
2. Accept responsibility - In the case of the Firestone/Ford tire debacle, neither Firestone nor Ford accepted responsibility for the problem, and they paid a stiff price for it. Accepting responsibility may seem dangerous in the short run (lawsuits, etc.) but the organization comes out stronger because of the willingness to own up to the problem. In fact, costly lawsuits can be even more likely when the company takes a belligerent stance.
3. Apologize - We all appreciate a sincere apology. Saying you're sorry that the situation occurred can take the sting out the mistake. I think that Toyota has effectively apologized for the problem, although some disagree. The argument, however, that the company's president, Akio Toyoda, didn't bow low or long enough when apologizing is just looking for something to complain about in my opinion. But, some people do feel that way, and if some feel the apology is insincere it will affect their perception of the company.
4. Say what you're going to do to fix the problem - If the wrong meal was delivered, say how you're going to make it up to the customer. If the phone bill is wrong, say how you'll handle it. Clearly communicate that you are taking ownership of the issue. If the tires are defective, tell us how you're going take care of the situation and don't waste time pointing fingers. I think Toyota has clearly communicated what they are doing and how customers can go about getting the gas-pedal problem fixed.
5. Explain what you'll do so the problem doesn't happen again - This step may not be necessary for some errors - you don't really need to explain to the customer how you'll make sure to deliver the right meal in the future. Bigger issues, like defective tires or sticky gas-pedals, seriously erode customer trust. In that case, customers want to know that you are putting in processes to ensure the situation doesn't happen again.
If more companies and employees would follow these steps, customers and companies would be better off. Everyone screws up and most of us can accept that as long as the organization handles the screw up well. Most of us are willing to give a second chance; maybe even a third. But if the situation is handled poorly, it may be one strike and you're out.
We'll see what happens with Toyota. I'd love to hear what you think about how they're handling the situation.