How to Repair a Broken Brand

Last Updated Apr 7, 2010 12:44 PM EDT

If there is anything we've learned from the recent fiasco by Toyota, it's this.

When you screw up, come clean right away and announce the fix. Why don't companies ever, ever learn this? Most often, it seems, their first instinct is to deny the problem, then stonewall, followed by an internal investigation, and finally to announce that no way will our CEO testify to Congress.

What we've learned is that the cover-up is always worse than the crime, and that customers appreciate a company that quickly owns up to its mistakes and attempts to make good. Every day that goes by between screw up and acknowledgment is a chip in that company's credibility and trust with customers.

When you make mistakes, "tell the truth about them," said Harvard Business School emeritus professor Stephen A. Greyser, at a recent Harvard conference. "Find the facts. Address the problems, even if it's expensive to do so, and work to regain that eroded trust, even if it involves changing corporate behavior."

One of the most famous cases taught at Harvard Business School is Johnson & Johnson: The Tylenol Tragedy. The case lauds the actions of then J&J CEO James Burke who, after learning of seven deaths from tampered Tylenol, ordered more than 30 million bottles pulled from store shelves across the country. The experts said the Tylenol brand was dead. But within a year, Tylenol had regained about 80 percent of its lost market share.

Another HBS professor emeritus, Michael Jensen, calls this urge to keep faith with customers integrity, and he argues it has nothing to do with right or wrong. But it does have a lot to do with success or failure.

In a recent paper, Integrity: Without It, Nothing Works, Jensen argues there are plenty of rewards for companies that keep the faith with customers and clean up their messes. It is a necessary component for maximum performance, for one, Jensen says. And woe be to companies that act without integrity.

But here's the kicker, observed admirably in this FT.com column by Michael Skapinker. In order to act with integrity, to keep our word, companies first need to know what it is they are promising.

"They do not always seem to know," he concludes.

  • Sean Silverthorne

    Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

    Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.