The Price of Quality

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IBM’s Tom Watson once noted that the real challenge to any market leader came not from competitors, but rather from the leader itself (See also market leaders). As of today, Toyota has recalled 8.5 million cars and is suspending production on several models. Each week production is suspended is estimated to cost $400 million.

Much has been written about how the company has handled the crisis. There is certainly plenty to criticize there. It took them forever to admit there was a problem. In fact, it took government intervention. That’s never a good thing in communications. And, although they’ve finally begun to communicate, I’m not very impressed with their response so far. What do you think about their apology spot?

As bad as their crisis communications have been, I think that’s a secondary issue here. It’s interesting this comes a year after they unseated GM as the world’s largest car manufacturer. The real issue is the fact Toyota hocked its position as the world’s best auto manufacturer to become the world’s largest. Why would you do that? Yet another company taking its eye off the ball and forgetting what got it there.

Even if they can repair the damage, it will cost billions. Research is showing they are taking quite a hit in the trust area among customers. That can be the toughest damage to repair for any brand. Trust is very difficult to build and even more difficult to rebuild.

Hospitals can take a lot from Toyota’s failings. Obviously, one thing is to address a crisis quickly, decisively and openly. Most important, (with my apologies to Winston Churchill) never, never, never, never give up consumer trust.

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