Learning from One Crisis Management Case Study

Quick reference

• 00:05 In this lesson, we're going to look at how one company dealt with a crisis and
• 00:09 what we can learn from their way of managing it.
• 00:15 I'm referring to Toyota's vehicle recall following a series of
• 00:19 accident reports in the United States.
• 00:21 In which people claimed that their car accelerated unintentionally,
• 00:26 and this is between 2009 and 2010.
• 00:28 Toyota then issued different vehicle recalls amounting to
• 00:32 over 9 million faulty vehicles around the world.
• 00:36 So, how did Toyota deal with the crisis?
• 00:38 I've actually classified their response in three parts,
• 00:42 which we're going to call the good, the bad, and the ugly.
• 00:45 Toyota contacted customers whose vehicles were at risk and
• 00:50 they informed them that the faulty part is being recalled.
• 00:54 And they can go to a local Toyota dealer to have it repaired at Toyota's expense.
• 01:00 And they put up a 24 hour helpline for
• 01:03 people who wanted to check if their vehicle needed to be recalled.
• 01:07 So all of these were very good initiatives because they showed that Toyota had taken
• 01:12 responsibility for the mistake.
• 01:14 And they've put into place a repair strategy.
• 01:17 But now let's look at the timeline of the events.
• 01:19 And this is what I would call the bad,
• 01:21 because Toyota delayed in issuing an adequate apology.
• 01:25 And maybe this was due to Japanese culture,
• 01:28 because anything short of perfect is perceived as something to be ashamed of.
• 01:34 Yet, once the manufacturing problems were identified,
• 01:37 an official apology should have been released.
• 01:41 The apology and repair strategy came at a press conference which took place on
• 01:45 the fifth of February 2010.
• 01:47 And this was when Toyota's President and CEO said he was deeply sorry.
• 01:53 Since the first vehicle recall happened,
• 01:55 that was on the 2nd of November 2009, which was three months earlier.
• 02:00 Toyota really waited too long for an apology and
• 02:04 to inform people what it was going to do.
• 02:07 If we look at Toyota's actual response, this is what I would call the ugly.
• 02:12 Perhaps it's the ugliest because Toyota had
• 02:14 a complete lack of visibility from the CEO.
• 02:17 He didn't release any statements about what happened and
• 02:21 what was going to happen and what he intended to do about it.
• 02:24 He was caught by the media at a conference in Switzerland in February.
• 02:29 But then he failed to answer questions satisfactorily.
• 02:33 So it wasn't really until the 9th of February 2010 that
• 02:36 he announced publicly what the plan was to repair Toyota's image.
• 02:42 This really damaged the long standing reputation and
• 02:45 the excellent image that Toyota used to have.
• 02:48 It reduced sales as well, and it caused an economic loss to the company.
• 02:52 So the CEO failed to take responsibility and
• 02:56 he lost credibility with the press and with the public.
• 03:00 Is there anything that we can learn from it?
• 03:03 Tell it early, tell it all and tell it yourself.
• 03:06 The rules are the same whether you're a president,
• 03:08 a corporate CEO or even a baseball player.
• 03:11 And this quote really sums up the recipe for
• 03:14 the perfect press release at the time of a crisis.
• 03:17 Respond promptly, say what you know,
• 03:19 and release an official statement from somebody high up in the company.

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