The Change Dude’s Blog

A Lesson in Loyalty – The Toyota Recall

Toyota’s focus on product quality has been the benchmark for nearly every manufacturing business over the past 20 years.  From it’s incredibly loyal customer base to the fans of TPS (Toyota Production System) that has been studied and replicated throughout the world Toyota has been the standard that many companies measure themselves against.

How did a giant that spawned Lean thinking and grew to outperform every major automobile company on the globe lose the trust of so many, so quickly?

Trust is fragile.  Establishing the extraordinary level of trust in Toyota products has taken generations.  In the virtual blink of an eye that trust has been shattered and is costing millions in lost revenue and repair related costs.  Toyota is working feverishly to shore up the trust factor by doing everything in its power to resolve the quality issues.  But will it be enough.

I am amazed with today’s development that The State of New York is getting “special accommodations” .  Toyota has agreed to pick up and return vehicles slated for repair, provide alternative transportation such as rental cars or taxi reimbursement while owners are "unable or unwilling" to use their vehicles, and arrange for the transport of owners to their dealerships or workplaces.

Mr. Toyoda said today in Congress that “We pursued growth over the speed at which we were able to develop our people and our organization.”  Full Stop!

Nearly every business can stand up and be counted in the group that can claim they have pushed growth beyond internal competency.  Getting it right for customers is expensive and difficult.  More importantly in 2010 getting it right is essential for survival.

Public apologies, monetary compensation, “special accommodations” fall into the bucket of risk management.  Our lesson here is simple to understand but challenging to follow, that a violation of customer trust isn’t worth the quarterly revenue bump or the cost savings of not getting it right.

Perceptions of corporate reputation have undergone a significant change over the last several years, Edelman’s 2010 Trust Barometer tells us that building a reputation is as much about about honesty and trust as it is about product. 

As Ben Franklin said “an ounce of prevention is worth a pound of cure.”

February 25, 2010 - Posted by thechangedude | Uncategorized