Lesson Learned: Toyota's Proactive Response to Lexus Trouble

What a difference a few months makes. When Toyota customers were reporting problems with unwanted acceleration, the initial attitude from Toyota seemed to be deny, downplay, and only reluctantly recall.

On Tuesday morning, Toyota executives woke to another looming disaster. Consumer Reports had just put out a rare "don't buy" recommendation (the last one came in 2001) on a luxury SUV made by its Lexus brand. CR claimed the GX 460 entered a dangerous slide in certain turning circumstances.

Instead of repeating the DDRR strategy, Toyota/Lexus did the following, all right out of the Best Practices for Responding to a Crisis book.

Acknowledge the problem. Actually, it didn't quite acknowledge a problem, but told its customers about the Consumer Reports testing and promised to look into the issue.
Take action. By the afternoon news cycle, Lexus said it was working with the CR data and attempting to recreate the problem, which it hoped to report on by the end of the week.
Do the right thing -- even if it hurts the bottom line. Toyota told dealers to stop selling the GX 460 until the issue has been cleared up.

Cynics will point out that Toyota really had no choice but to be proactive, given its hanging-in-the-balance reputation. And that may be true. However, the last thing Toyota needed right now was another headline about a defective car, and the first reaction at corporate might well have been (again) to muffle rather than to manage. Instead, Toyota leadership was upfront and decisive in its initial response, an attitude that should serve it well with customers and regulators.

Related reading:

What executives should take away from Toyota's experience.
Harvard Business School historian Richard S. Tedlow gives advice on how to avoid the denial that clouds the vision of people and companies.

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.

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