We Should Learn From the Toyota Example of How Not To Run a Business

I'm having a hard time dealing with the Toyota crises. It was bad enough that a product I believed in was defective, but it's even worse that the company apparently knew about the defects for years and didn't react. But wait, it gets worse. The Associated Press reports(http://www.chem.info/News/Feeds/2010/04/manufacturing.net-news-ap-in-toyota-lawsuits-evasion-becomes-tactic/):

"Toyota has routinely engaged in questionable, evasive and deceptive legal tactics when sued, frequently claiming it does not have information it is required to turn over and sometimes even ignoring court orders to produce key documents, an Associated Press investigation shows.

"In a review of lawsuits filed around the country involving a wide range of complaints -- not just the sudden acceleration problems that have led to millions of Toyotas being recalled -- the automaker has hidden the existence of tests that would be harmful to its legal position and claimed key material was difficult to get at its headquarters in Japan. It has withheld potentially damaging documents and refused to release data stored electronically in its vehicles."

Here is a smoldering crisis -- or crises, plural -- that could have and should have been dealt with before ruining a company's reputation. The founder of the Institute for Crisis Management, Bob Irvine, used to talk to CEOs about reputation. He said they glazed over and only came to life when he talked about balance sheets. From the Toyota fiasco we should learn that reputation does matter and directly affects the bottom line. CEOs out there: take note. Communicators, do what you have to do to deliver the message that messing up, and particularly covering up, will be expensive in the long run. For years you will be able to bring up the Toyota example to improve your own organization.

There also may be some cultural differences at work here, but you can't let them happen if you are owned by a foreign corporation. Japanese executives do business differently than U.S. executives. We need to be sure that European and Asian managers understand how things -- like civil suits -- work in the States.

Larry Smith, president of the Institute for Crisis Management, has some good perspectives on the whole Toyota crisis. Check him out at http://www.crisisconsultants.blogspot.com/.