Tylenol. Jack in the Box. Enron. WaMu. Not only has each of these brands weathered crises of varying complexity and severity, but each company negotiated its respective crisis with a degree of insight that resulted either in surprising recovery or utter failure. Today, few consumers dwell on Tylenol’s cyanide tampering incident of the early 1980s. Fewer yet, in contrast, would have trusted their investments with Washington Mutual as its role in the financial crisis unfolded in 2008. In a business landscape where crises steadily smolder, Toyota was yet another very recognizable company to land in the brand firestorm.
Brand crises can transform a company in inalterable ways, since a brand name serves as more than just a product identifier. For most companies, brands are repositories of years of strategic effort and company integrity. A successful brand conveys far more than a simple message about product effectiveness. It carries a deeper promise to provide a consistent, safe user experience from one usage to the next. Effective brands transcend the label and become symbols of the trust and reliance that consumers put into the company.
In our intensely consumption-driven lives, in which a vast number of products touch our worlds daily, brand crises almost seem inevitable. Scores of corporations work for years to develop and market a diverse range of offerings to satisfy our every need and gain our trust. In the face of crisis, decades of investment in cultivating a brand name can vanish in an instant. Response to crises must be immediate and right-minded. In a Harvard Business Review post, author Ben Heineman encourages leaders to adopt a clear crisis management mantra: “It is our problem the moment we hear about it. We will be judged from that instant forward for everything we do—and don’t do.”
In 2009, Toyota plunged into the brand quagmire after a vehicle accelerator malfunction caused a tragic, fatal accident and led to the largest-ever recall of vehicles to date in the United States. The company, once synonymous with safety and quality, was pilloried by the press, the American government, and a slew of industry experts. Sales plummeted and consumer attitudes toward Toyota changed almost instantly. According to GfK MRI's Starch Advertising Research, positive brand disposition fell 24 points to 59% in a matter of months. Negative consumer sentiment rose 24 points to 41%.
Toyota began the tough challenge of rebuilding its reputation. The company reported dramatic changes to improve its responsiveness to customer concerns, and its public outreach included a multi-channel media campaign designed to engender a feeling of partnership with its consumers. Even its new motto, “Moving Forward!,” communicated Toyota’s desire to start afresh and look toward a better future.
Taken at face value, the automobile manufacturer's attempts to rebuild confidence were helpful. However, the marketing efforts may have shrouded mismanaged and delayed disclosures of possible connections between product defects and deadly accidents, further compounding the company's troubles. Years of legal wrangling coupled with regulatory investigations and enforcement resulted in steep fines and added censure. In 2014, Toyota reached a deferred prosecution agreement with the DOJ, which required the manufacturer to pay $1.2 billion. The company also accepted the oversight of an independent safety monitor for not only failing to disclose but misleading to regulators about defective accelerators. In parallel, Toyota settled class actions, and pending individual suits continued to play out in the legal arena along with the court of public opinion.
Not all is lost for Toyota. Its 2014 sales surpassed both Volkswagen and General Motors Co. with more than 10.1 million vehicles sold worldwide. With an eye toward progress, the manufacturer has designed a plan for a new "architecture" that focuses on on product development and manufacturing initiatives to establish fail-proof standards and discover quality problems, all of which drive sustainable growth.
What sets companies that survive a brand crisis apart is not just how they react to the time of crisis but how they manage its aftermath. As with so many other companies that have survived crises, Toyota’s longterm treatment of the problem became the ultimate indicator of whether the company truly would be able to start moving forward.