Executive Briefings

Toyota May Be Object lesson in How Not to Handle Product Recalls

Product recalls are common enough among firms making consumer goods. Most are handled quickly and quietly. The companies involved suffer little harm to their reputation and, in some instances, may actually win praise from customers who feel their concerns have been acted upon promptly. But some hit the headlines and stay there for weeks, ultimately doing lasting damage to the business concerned. That is the ditch that Toyota is now in. How did it get there? How can it get out? And can it learn from other firms who have been through something similar?

The answer to the first question is that Toyota was lamentably slow to respond to the large number of incidents of "unintended acceleration" involving its cars. A culture that mixes defensiveness towards the outside world with exaggerated deference towards senior management is poorly equipped to identify and then deal with this kind of situation.

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Product recalls are common enough among firms making consumer goods. Most are handled quickly and quietly. The companies involved suffer little harm to their reputation and, in some instances, may actually win praise from customers who feel their concerns have been acted upon promptly. But some hit the headlines and stay there for weeks, ultimately doing lasting damage to the business concerned. That is the ditch that Toyota is now in. How did it get there? How can it get out? And can it learn from other firms who have been through something similar?

The answer to the first question is that Toyota was lamentably slow to respond to the large number of incidents of "unintended acceleration" involving its cars. A culture that mixes defensiveness towards the outside world with exaggerated deference towards senior management is poorly equipped to identify and then deal with this kind of situation.

Read Full Article