Thoughts on the Toyota Recall

There is a notion called optimism. It is a believe that everything happens through the grace of God. This notion is about adopting a positive belief to help you tackle with a problem when it arises as this helps you grow stronger. You reexamine what you need to, take immediate action to turn things for the better, and ultimately take yourself to new heights as a result of the problem solving.

I strongly hope that Toyota will handle its latest problem in such a way. Every morning I read the Financial Times (FT), a British business newspaper that comes in a unique shade of pink. I am a keen reader of the FT because it is not as pro-U.S. as American newspapers and maintains a global perspective.

Yet for four days the leading article on the front page of the FT has been the Toyota issue. The headline states “Toyota” when it refers to the company and “Toyoda” to indicate its president; either way, it’s always the top news. Every time I scan with my eyes over the pink paper, I feel I want to put it aside. It almost feels as if one of Japan’s top brands is plunging headlong day-by-day, and it’s agonizing. How did this happen?

I drive a hybrid Alphard. My father and my older brother both drive a Prius. I have asked my father, who’s quite vocal about cars, and never heard a word of doubt about the quality of a Toyota. He said to me: “There was probably some sort of software bug, but it’s a minor problem.” As for me, I have absolutely no doubt whatsoever.

Globis has been honored with an opportunity to conduct employee training at Toyota. From my experience in working with its employees, I distinctly felt the strong corporate culture and “Toyota-ism” among the employees, which ceaselessly disciplines them. Working with them I felt their high spirits that form an unshakeable integrity, regardless of what is written about them. I asked the driver of a Prius taxi I happened to be riding on, and he said to me: “That U.S. accident was probably due to the driving skills.” So what went wrong?

There are so many opinions on this subject, such as that this is a revenge for the Futenma issue, or jealousy against Toyota bettering GM, or that the U.S. tends to bash other countries whenever it faces its internal economic crisis. But these utterances will not solve anything. I feel the need to go with this notion of optimism, be grateful for this issue and learn from it.

The basic trouble was that Toyota handled it badly. I see many communication problems, such as late initial action, lack of appropriate explanation and consideration with regards to both logic and emotions. Unfortunately it has turned into a representative case of bad communication.

The basic trick to handling a case such as this is to disclose all of the necessary information appropriately and quickly, and communicate with a sufficient degree of consideration on the emotional aspects. What I thought was the biggest problem in what I read in the FT was President Toyoda’s attitude at the Davos Conference. This FT article wrote, “President Toyoda avoided contact with the media at the Davos Conference and left Davos as if to make an escape home.” This may not have been the truth; he may have had to return home early for some specific reason, and he may not have had any appointments with the media to begin with. But I think Davos, the place where many media leaders gather, would have been the perfect place to give an explanation. Shouldn’t the President have made his case in Davos?

At Harvard Business School, students learn the importance of how a leader needs to communicate under a risk by going through the case study on Johnson & Johnson. Globis University will also establish a new course called “Philosophy and Social Values of a Company,” on the themes of corporate ethics and social responsibility, and provide an opportunity for students to learn about the mindset of a corporate leader. The course will teach that the most important thing to keep in mind is to communicate with speed.

You maintain the attitude of “I’ll explain anything at any time,” and clarify logically with the PowerPoint slides and flipcharts, distinguishing what you do and do not know. You then take more than enough time to answer questions and show that you have no intention of hiding anything. In Western culture, a press conference that thoroughly explains the matter at hand is more important than one for giving an apology.
Globis requires all members of its management team to undergo media training. When I took the training myself, a professional consultant was invited from Hong Kong and was paid 1.5 million yen/day to conduct a seminar. We saw video examples of good and bad conferences, and were thoroughly taught what we can and cannot do. We then held about three rounds of mock interviews in English. The trainer would play back the videos of these interviews and ask us what we did well and what we did poorly. Every executive and manager, including myself, who could possibly be interviewed, was required to take this seminar as a team. It costs a lot, but it is hardly expensive when compared to the possibility of losing your brand value.

I hope that Toyota will work on the optimism notion, learn a lot from this problem and head in a positive direction. With the strengths it possesses, Toyota can take a greater leap forward and I hope it will!

February 24, 2010
Yoshito Hori Twitter@YoshitoHori