Toyota: “The first duty of love is to listen”

Here are some further thoughts on the continually emerging story of Toyota and its potentially lethal acceleration problems.

As I noted in an earlier blog, a company’s customer service department should be its “canary in the coal mine”, giving early warnings of problems so management can act. This type of communication is always a two-way street. Companies must give their customer service people a big megaphone and an important platform to spread the word. It also has an obligation to listen.

Adding credence to those observations, here are a couple of examples that help illustrate the point.

The first comes from a very recent article in the Wall Street Journal. That story questioned why Toyota waited nearly 6 months to introduce a fix for its acceleration problems in the U.S. after it had announced a similar fix for its cars in Europe. The Journal’s report is based on comments made during the course of a February 5th news conference with Toyota's quality chief, Shinichi Sasaki, and CEO, Akio Toyoda.

During the course of that news conference, the Journal notes:

“Answering the question of why Toyota didn't move sooner the fix for the pedals in the U.S., Mr. Sasaki also referred to "coordination" between engineers and people collecting consumer feedback on products as a possible factor that stretched out the time needed for a response. He didn't elaborate further.”

The Los Angeles Times noted that one of industry’s internationally recognized software engineers, Steve Wozniak, co-founder of Apple, apparently didn’t have either a megaphone or a platform of sufficient size to grab attention. The Times reports that “Woz”, owner of a 2010 Prius, experienced acceleration problems – up to 97 m.p.h. -- when he attempted to use his cruise control to increase the car’s speed.

The Times article goes on to report:

“Wozniak, 59, wanted to alert Toyota Motor Corp. and the National Highway Traffic Safety Administration to the possible safety issue, but he grew frustrated when no one would listen.”

Love is a term that’s regularly been associated with the Toyota brand. Owners “love” their cars, and the company that makes them. The company professes to treat its customers “lovingly”.

However, as theologian and philosopher Paul Tillich once noted,

“The first duty of love is to listen.”

Trust in social media; in the eye of the beholder?

The 2010 Edelman Trust Barometer (which I wrote about as part of an earlier posting) was recently released. If you find social media distasteful, there’s news here for you. If you’re a social media fan – there’s something here for you, too.

First, the good news for social media wonks – in the digital realm, trust in “social networking sites (such as MySpace and Facebook) increased by four points from the 2009 results. Trust in digital content sources (such as Wikipedia) increased by a single point, and trust in search engines (such as Google) remained unchanged.

If your cup is half empty, you’d note that:

• Trust in all of these “digital” media is not exactly high (ranging from the lowest – 17% -- for blogs to the highest -- 35% -- for search engines; and,


• Trust in social media sites actually dropped from 2008 – where it stood at 20% -- to 15% in 2009; so, over the 2008 – 2010 period, trust in social media sites has actually dropped by 1%.

There is no question, as Richard Edelman points out, that trust in the “old line” media has continued to drop over the decade. However, trust in radio news (38%), television news (36%) and newspaper articles (34%) still equal or better the social media.

Similarly, “conversations with your friends and peers” as a source of trusted information also plays to mixed reviews (down from 40% to 37% from 2009 to 2010). However, those “conversations” still rank higher than articles in newspapers, television news coverage, and all social media.

As is sometimes the case with surveys and statistics, the results sometimes surprise.

If “conversations with friends and peers” (while dropping in trust by 3 points) still stands at a relatively high 37%, why are those same conversations significantly less trustworthy when they happen on Facebook or MySpace (19%), where, after all, we are usually reading our friends’ and peers’ postings?

How do we explain the seeming incongruity that while trust in "conversations with our friends and peers" has dropped to 37%, trust in “conversations with company employees” has increased to 41%? Don’t these employees work for the same companies in whom our overall trust level has declined over time?

In the end, as Richard Edelman notes, “social media” probably matters a lot (and its influence is growing), but organizations and individuals should not rely on these sources exclusively. As Edelman notes, “. . . don’t rely on them to tell your story solo; it isn’t ‘a’ or ‘b’, it’s ‘a’ and ‘b’ and ‘c’ and ‘d’.”

You can listen to Richard Edelman on the subject of trusted sources by clicking here.

And view the Executive Summary of the report by clicking here.

Toyota and Google: When You Lose Your Teflon Coating

Teflon is a brand name for a “non-stick” coating used on cookware – among many other products. However, in the early 1980’s, the term began to be used to describe public figures to whom criticism does not seem to stick. First applied to Ronald Reagan, it has also been used to describe a range of public figures including “Teflon Tony” (Blair)”, former British Prime Minister.

These public figures share some common attributes. They have spent long periods of time building up impeccable public reputation – at least for certain critical attributes. They are charismatic leaders. Their supporters are fiercely loyal, often overlooking serious flaws.

The term “Teflon” can also be aptly applied to companies and brands. We have two examples now immediately before us: “Teflon” Toyota and “Teflon” Google.

Toyota has spent decades around the world – and, closer to home, in North America – building a sterling reputation for the overall quality and economy of its vehicles. The search engine Google, a relative newcomer by comparison, has earned its dominant position on the strength of its core product (algorithms that are acutely and almost instantaneously sensitive to changes in its users) and its growth is almost a fairy tale success story.

Both companies have recently stumbled.

Google’s misstep involves the launch of the company’s first venture into its own cell phone, the Nexus One. Google sells the phone itself; wireless service is provided by T-Mobile. The Nexus One has been the subject of an early wave of consumer complaints about connectivity, early termination fees, touch screen problems and poor customer support from Google itself.

For Toyota, the issue involves massive product recalls for two related and allegedly serious safety defects involving sticking accelerator pedals.

For Google, the brand damage is probably both minimal and fairly easily correctable. This is likely so simply because the problem doesn’t relate to customer problems with the company’s core product, its search engine and related services.

For Toyota, the allegations go to the very heart and soul of the company’s products; accordingly, the brand damage is serious; it may take a long time to overcome this setback.

How do brands get into this kind of pickle?

I think this has to do with a form of hubris, a term normally applied to people, not large, faceless corporations. However, it is critical to remember that, even the largest corporations are simply groups of individuals focused toward a common task. As such, they have all the same human character strengths and weaknesses. In addition, the organization’s sense of shared experience can amplify both the best and worst of those human characteristics.

Highly successful corporations, like highly successful politicians, rise to the top by being the absolute best at what they do – and by skillfully managing their “brand”, passionately focusing on quality and developing a sterling reputation for leadership and performance.

Over time, particularly as the public repeatedly overlooks minor (and not so minor) performance issues, the organization may come to rest on its laurels. That may be true when that corporate culture is continually being reinforced by public and expert acclaim.

Customer service departments should be a corporation's “canary in the coal mine” – staying in the closest daily touch with customers and sending a “shout out” up the corporate ladder when a problems first begin to surface.

In the case of Toyota, it may be that the canary’s reports were so incongruent, so inconsistent with the company’s sense of itself and its reputation (and the problems not easily identified or replicated), that the internal, institutional response was to believe too much in the brand’s reputation and ignore that annoying canary. The reported acceleration issues – involving many Toyota models – go back several years and have been variously attributed to floor mats, the pedal itself and even the software that is now integral to all vehicles from all manufacturers.

In the case of Google, the answer is somewhat simpler. There weren’t any (or, in fairness, not enough of the right kind) canaries in the coal mine. There were undoubtedly problems with the new phone (as with any new product launch), and the problems were shared between the device itself and the carrier. Whatever the initial issues were that triggered the customer’s search for help, they soon became secondary to the truly vexing problem – either being bounced back and forth between T-Mobile and Google, or by not being able to obtain the help they expected from Google.

In 2004, the management consulting firm, McKinsey and Company, reported on a study of over 20,000 complaints filed with the nations’ Better Business Bureaus against all major wireless carriers. One fact stood out. According to an article in the August 2004 issue of McKinsey Quarterly by Adam Braff and Serena Leogue, one of the greatest sources of customer dissatisfaction did not flow from any root cause of actual dissatisfaction with phone service, such as poor coverage or limited handset choices, but from the carrier's response (or lack of response) to problems. Braff and Leogue concluded their article by observing that “. . . given the tremendous benefits of heading off intense customer dissatisfaction, companies should recognize the high cost of patching up these problems down the road and instead attempt to prevent them.”

No one should lose sight of this fact. These two companies have earned their “Teflon” by performance and success over time. Both must be given a chance to recover.

For Google, the road forward appears considerably easier. A February 2 article in PC World reports that “After struggling to support Nexus One customers using an online-only approach, Google appears to be developing a phone customer service operation.” While a spokeswoman for Google would not confirm this, the company is advertising for a phone support manager for Android (the Google proprietary software system) and Nexus One.

For Toyota, the full financial and brand impact of this issue is still to be calculated. Most industry insiders believe it will take years to recover from the global impact.

Three lessons from these issues seem inescapable (and they are particularly applicable to “best of class” companies):

• Never rest on your laurels; the next brand challenge may be a phone call (or a “tweet”) away;
• Your customer service department should not be an apologist; it is your most “real time” connection with your customers – your canary in the coal mine. Build it, fund it, staff and train it as if your brand depended on it. Because it does.
• When the canary sings, for heaven’s sake – listen.

It's about trust, stupid

During his state of the union address, President Barack Obama may not have mentioned the terms “war” or “security” often enough to please former New York mayor Rudy Giuliani, but he got it right about trust.

In his remarks, President Obama spoke of “a deficit of trust”, noted that “citizens have lost faith in our biggest institutions” and pointed out that “restoring public trust demands more” than trimming some spending.

When the President was referring to “institutions”, he was referring not only to our government, but also to American business. In the same speech, speaking about revitalizing the economy, he specifically mentioned cross-border commerce. Here’s what he had to say:

“ . . . we need to export more of our goods. Because the more products we make and sell to other countries, the more jobs we support right here in America. So tonight, we set a new goal: We will double our exports over the next five years, an increase that will support two million jobs in America. To help meet this goal, we're launching a National Export Initiative that will help farmers and small businesses increase their exports, and reform export controls consistent with national security.”

What does this goal have to do with a loss of trust? Everything.

Every commercial transaction requires a level of trust between buyer and seller, and trust is much easier to establish and maintain when the two halves of the equation live and work in the same neighborhood. The larger the neighborhood (city, state/province, country, region) , the harder it is for buyer and seller to get to know one another, to trust enough to place that critical first order and to maintain trust over time.

The global public relations firm, Edelman, conducts and publishes an annual Trust Barometer. The 2010 report is now available; for American businesses, the results are mixed.

On the positive side, the global Barometer finds that overall trust in business has risen slightly over the results reflected in the 2009 report. More specifically, when asked, “How much do you trust business to do what’s right?”, the Edelman survey responses show that trust in U.S. business has risen fairly dramatically, increasing 18 points (from 36% to 54%). And there’s more positive news. When asked “How much do you trust global companies headquartered in the U.S. to do what’s right?”, the overall results increased 10 points over 2009 (from 51% to 61%).

However, a closer looks at the results is cause for far less optimism. First, as noted, trust in U.S. businesses now stands at 54%; however, trust in business in many of the other key global economies exceeds that of the U.S. (China, India and Brazil stand at over 60%; Italy and Japan are at 59% and 57%, respectively). Second, Edelman notes that the rise in trust is tenuous. When asked, “When the recession is over, do you expect business and financial companies to return to ‘business as usual’?”, more than 50% of “informed publics” in nine out of the top 10 countries (ranked by GDP) answered “yes” (70% of respondents overall). Some other key Edelman findings that should be of interest (and real concern) to business are these:

• Throughout most of the western world, “non-governmental organizations” (not business or government) remain the most trusted institutions;
  

• From the 2007 through the 2010 reports, overall trust in the technology industry remains high, while trust in the financial sector has crumbled (down 39 points over the three years – from 68% to 29% in the U.S.)

To return to an earlier point, trust is a cornerstone of any commercial transaction, but trust is essential for companies, industries or national economies trying to expand their markets beyond national borders.

So, paradoxically, the Obama administration and American businesses – from the largest to the smallest – ought to share a common interest when it comes to the President’s expressed desire to create new American jobs by increasing exports into the global market. Certainly, there are things the administration can do to facilitate this goal (the President specifically mentioned a few in his remarks). Ultimately, however, this goal can only be met if those markets into which we hope to sell American made goods and services trust the practices and leadership of the individual companies and industries.

In the 2006 report, when Edelman asked “What shapes your trust in a company?”, the top three global responses were: 1) Quality products and services (53%); 2) Attentiveness to customer needs (47%); and, 3) Strong financial performance (42%). In the 2010 report, in response to a slightly different variation of the same underlying question (“How important are these factors to corporate reputation?”), the top three (out of ten) global responses were: 1) Transparent and honest practices (83%); 2) Company I can trust (83%); and 3) High quality products or services (79%). A company’s “strong financial performance” moved to the bottom of the 2010 list (although it’s percentage actually increased from 42% to 45%).

Speaking to this issue of trust in business, Richard Edelman – the company’s CEO – says:

“. . . Trust has emerged as a new line of business – one to be developed and delivered. Companies that embrace the new reality, where the interests of all stakeholders must be considered equally, will see their credibility rise accordingly. Now is the time for companies and CEOs to deliver performance, communicate frequently and honestly, and consider the role of business in society. Now is the time for business to prove its commitment to profit and purpose.”

There’s an important message for American business and American government in his words.