Lessoned Learned from Toyota's Crisis

Last Updated Mar 4, 2010 3:16 PM EST

New York University Stern School of Business professor Karen Brenner called Toyota's handling of its safety crisis "disappointing" during our recent conversation, citing everything from the slowness of the company's overall response to its being "all over the page" during last week's Congressional hearing in regards to what they knew, when they knew it and how they responded.

Brenner talked about how Toyota's failures reinforce a few rules of crisis management:

  • 1. The CEO must lead: "Even when your demeanor -- be it cultural or historic -- is not to have frequent communication with the press on an ordinary basis, when you're in the midst of a crisis, the CEO must step up very quickly and very forthrightly," says Brenner. "A CEO needs to recognize that's the obligation, and they don't need extensive invitations before they step up and deal with the issue."
  • 2. Communicate early and often: In a crisis situation, Brenner states that companies must communicate often to say what they know, what they don't know, what they're still investigating, what they've learned and how they've learned it. "Build credibility so that people have confidence that somebody is in charge and somebody's getting into the depth of the issue. This restores trust right up front. With Toyota, this was unfortunately missing in the early stages," she says.
  • 3. Be ahead of the curve: "Be out in front and anticipate the issues that are going to unfold over time. It shouldn't have been hard for Toyota to anticipate that their drivers were going to need some cover for getting their vehicles prepared," says Brenner, noting that this action is key for maintaining brand loyalty.
  • 4. Understand the situation's severity: "In a crisis it's really important to be upfront, to demonstrate that you understand the severity of the problem," Brenner says. "Toyota has been slow to come to the table at seemingly every juncture, whether it's connecting the dots in terms of compiling the number of these incidents globally with sufficient speed and vigilance to see that they have a problem to confirming the source of the problem. "
While Brenner believes the company has issued "good, heartfelt apologies," she says that's only the first step of many that Toyota needs to take to restore trust in its brand. "It's the other elements that are really important. How one acts and the sense of urgency with which one acts are really more compelling than the frequency of their apologies," she says.
  • Stacy Blackman

    Stacy Sukov Blackman is president of Stacy Blackman Consulting, where she consults on MBA admissions. She earned her MBA from the Kellogg Graduate School of Management at Northwestern University and her Bachelor of Science from the Wharton School at the University of Pennsylvania. Stacy serves on the Board of Directors of AIGAC, the Association of International Graduate Admissions Consultants, and has published a guide to MBA Admissions, The MBA Application Roadmap.