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Making the most of a brand in crisis

30 June 2010

The turmoil at Toyota earlier this year has the potential to create new opportunities for the company, according to consultants David Drew* and Michael Saletta**. In this week’s newsletter leader, they discuss how companies can hone their leadership qualities and rise phoenix-like from a major setback, basing their thesis on the recent crisis suffered by the world’s largest car manufacturer.

The engineering, quality and subsequent public relations challenges experienced by Toyota in the early part of 2010 are similar to those experienced by many organisations with high-profile brands and associated high levels of customer expectation. When something goes publicly wrong, the high expectations we hold for the marquee brand in question represent a branding form of potential energy. This potential energy very quickly becomes kinetic energy when coupled with the catalysts of media scrutiny, consumer disappointment and absence of the simple explanation and fix consumers demand in this day and age.

Once something has gone badly wrong, of course, there is no turning back the clock. In the more recent case of BP (whose own troubles have eclipsed those of Toyota earlier in the year), CEO Tony Hayward has candidly and repeatedly declared, “We will be judged on our response.”

Hayward’s statement grimly and accurately recognises that there is little to be materially gained at this stage from finger-pointing or publicly agonising over the factors which led to catastrophe (be it deaths, injuries and fear caused by unintended vehicle acceleration, or a tragic oil platform accident and subsequent environmental disaster), but rather that all energy should be directed towards fixing the concerns and effects at hand. This naturally requires the analysis, identification and elimination of cause – but there will be time later for the discussion and allocation of corporate and human responsibility.

However, the causes and effects of engineering problems quickly breed a second-tier issue, namely the increasingly quick (thanks to ever-shortening news cycles and the blanket nature of media coverage) and lasting damage to brand and reputation. It is in this context that an ability to quickly identify cause – or at the very least describe clearly what you are doing to identify and eliminate cause – takes on an importance all its own.

One word that has consistently appeared during the very public discussion of Toyota’s perceived organisational failures during the last few months has been ‘leadership’. Commentators have happily bandied this word around as though it were the single silver bullet which would fix, and would have prevented, anything going wrong in the first place. Consumers even got a chance to see leadership in action, through the spectacle of Akio Toyoda - Toyota’s president - going before the US Congress to represent his company.

Leadership, then, is clearly something considered to be a critical element in a company’s successful and profitable conversion of resources to goods which consumers will value and trust (there is a reason they are called ‘goods’ and not ‘bads’). The problem with leadership as a ‘thing’ is that it is pretty abstract. It’s one of those highly personal words that mean something different to everyone, like ‘happiness’ or ‘success’.  Don’t just take our word for it, go out today and ask ten people what leadership means to them and you will probably get ten different answers. “Leadership – well, we know we’ve got to have more of it, but we can’t actually tell you what it is” – it’s a sine qua non which also has a certain je ne sais quoi.

So what does leadership mean in the context of the challenges faced by companies like Toyota? What leadership buttons should be pushed, what levers should be pulled in the wake of a crisis like the one Toyota is navigating? As any senior executive knows, the bigger an organisation is, the harder it is to change. The dirty little secret in the senior management community is that executives don’t have quite the level of freedom to make sweeping changes that the world seems to think they do; they know it is impossible for the skipper to rebuild the boat while he or she is actually sailing it, even if the weather conditions are calm, let alone if they are sailing through a storm. For the most part, the options are limited to trimming sail, redistributing weight, evaluating the chosen route, making course corrections, and managing the crew in the most effective way possible.

The level of public, press and government attention focused on a besieged company like Toyota, however, has one key saving grace: it affords the company not just an opportunity, not just permission, but actually provides a mandate for the company to make significant changes to the way it is configured and how it behaves.

Every great company will have the opportunity to encounter a major crisis; a chance to prove what it is made of, a defining moment that determines whether or not it is truly great. To paraphrase Tony Hayward again, companies will rightly be judged by their response to catastrophe. Human experience tells us that things will go terribly wrong every once in a while no matter how carefully we try to prevent it; Toyota is no exception, and its time is now. So what should investment in leadership mean for a company like Toyota?

After the big moment of truth, there is a need – and probably a latent desire on the part of the organisation – to emotionally get back to the core purpose of the business, reaffirming the values and unified sense of purpose of the business that got it where it was in the first place.

Companies can easily ‘remind themselves’ what their customers want and expect (previous brand audits are probably still right there sitting on the shelf), and what customers said they loved about the company two, three or five years ago is probably still valid. Why not dust them off and take a look, and use them at the heart of a company-wide initiative to reinvigorate the organisation with a passion for doing what the most important constituents of the business – the customers – need it to do?

A company facing a crisis has a conscious choice to make, namely that of a fight for, or a flight from, what makes it the company it is. Once this choice has been made, the company has an opportunity to communicate a new breakthrough strategy and vision, perhaps that of being the best and highest quality, as opposed to being the biggest.

Leadership is not a function of what it says on your business card, the size of your salary or where your name sits on an organisation chart. A junior executive or team member who will one day be CEO probably does not sit back and think, “Well, I can’t do anything about that, it’s a leadership/management issue”; he or she more likely thinks, “What can I do about this,” and more importantly, “How can I help others to do something about it?”

At a cultural level, leadership is a specific set of behaviours that individuals can learn, practice and role model for others, and is a responsibility everyone in an organisation has to everyone else. Recognising this and reinforcing these ideas with a system of clearly understood positive and negative consequences for desired and undesired behaviours can help create a company-wide leadership culture where regular feedback and accountability are the norm, and create a whole new level of organisational self-awareness. Only by doing this can a company create (at individual, team and organisation levels) this self-awareness as to its strengths and opportunities for growth, so that everyone can show up at a different level and with new behaviours.

Internally, a crisis concerning quality calls for a dramatic rethink of the way issues are handled, problems analysed, decisions made and risks managed; in short, how troubleshooting is undertaken at every level of a company. Without a single clear language and framework for handling troubleshooting across an entire organisation, confusion will naturally abound in any effort to co-ordinate any kind of troubleshooting.

The organisation which embeds critical thinking skills into all internal performance behaviours at all levels of the organisation will have a significant advantage over competitors that have not done this. If every engineer, technician, manager, everyone in the business approaches issues with the same consistent methodology for gathering, analysing and sharing data on issues, the likelihood of early issue resolution is exponentially increased, and the cycle time to resolve those issues is dramatically decreased. Multiply this across a company of the size and complexity of Toyota, and the positive effect can be staggering. The costs to resolve issues as well as the number of issues eliminated in the early stages can both be slashed.

Once individuals and teams have been equipped with a consistent approach to troubleshooting, there are ways to engineer their performance systems to encourage quality-driving behaviours with positive and negative consequences for desired and undesired behaviours. Consider a hypothetical example of two engineers addressing two similar quality problems they have identified. Engineer ‘A’, who consistently gathers data and develops a very detailed and precise description of a technical problem, ultimately serves the interests of the customer (and by extension, the company) better than Engineer ‘B’ who tries a number of different fixes to see if one will stick.

Engineer A has systematically served the objective of identifying, and therefore permanently eliminating, the true cause. Meanwhile, Engineer B has introduced more changes, dramatically eliminating the chance that true cause can ever be identified. Although Engineer B may have looked busier and seemed to be trying to fix the problem right away, which of the two should really be rewarded for his/her behaviour, and which one should get some timely constructive feedback on his/her approach?

Of course, in this scenario both engineers were at least acting to tackle a problem, regardless of the approach they took. At least they were taking an approach. Too often, however, performers in companies (be they individuals, leaders or whole teams) will quickly classify an issue as ‘someone else’s problem’. Engineering the overall performance system to embed quality driving behaviours and encourage accountability/responsibility, rather than avoidance, is critical.

These internal changes also have external utility. By making the troubleshooting process apparent to shareholders, partners, vendors, regulators and customers, companies can re-energise their external relationships and mitigate the public relations aspects of quality issues by inviting external audit and scrutiny.

Behaviour changes can be anchored at all levels of an organisation by designing the appropriate consequences for desired behaviours. At a grass roots level, it is essential to look for little wins every day, and herald small successes with much fanfare, coupling a sense of accountability with the likelihood of recognition and reward.

The happy accidents, or ‘happidents’ – instances of individuals or teams taking appropriate action to improve operations both within and outside their immediate sphere of influence – need to be recognised and applauded. Only by recognising and reinforcing the budding green shoots of change can new behaviours be truly anchored and become the new standard operating procedure.

Simultaneously, attention needs to be paid to eliminating (and preventing the re-growth of) the weeds of ‘how we used to do it’. Entrenched habits/norms will quickly reappear and overwhelm the desired new behaviours. Performers at all levels need to be trained to pay attention to the green shoots of change and make sure that the weeds don’t overrun them.

Lastly, if there is one priority internal community of people a company needs to pay truly close attention to, it is actually middle managers and supervisors. They are the critical link between strategy redevelopment and strategy execution; the difference between behavioural change and behavioural stagnation. If they can be helped through performance system engineering to view themselves as leaders and, indeed, owners in the broadest and most meaningful sense, they as a group are the people who translate strategic organisational requirements into daily organisational behaviour.

*David Drew is a senior partner at consultant Kepner-Tregoe
**Michael Saletta is principal of corporate training and consulting organisation, Saletta Leadership

Les Hunt
Editor


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