Toyota’s crisis response is a two part story

(Image credit: Junko Kimura/Getty Images)
Like most riveting stories, the current recall crisis that has beset Toyota can be divided into multiple parts.

In Part One, which is still unfolding, the company is responding aggressively to a crisis. In Part Two, which will unfold in the coming months, Toyota will have to respond to the inevitable question from policy makers: “What did you know and when did you know it?”

Let’s look at Part One.

In the last few months, Toyota has recalled a staggering 8 million vehicles and halted production on 11 different models due to a plague of sudden accelerations in its cars. The crisis has rocked an auto company that for a half century had been synonymous with safety and reliability.

After a slow start, Toyota is responding the way any company should that is serious about rebuilding its reputation. Here are five key components to Toyota’s crisis communications strategy.

Be honest about your situation. Toyota recognized it was in a hole and stopped digging. It halted production on nearly a dozen different models, pledging to fix cars currently on the road before pushing new ones off the manufacturing line. The move is bold and not without serious financial repercussions, but it sends an unmistakable message that the company will bear any burden to keep its customers safe.

Say “I’m Sorry.” Toyota President Akio Toyoda (pictured) apologized to customers and took personal responsibility for the recall, as did the chief of Toyota’s U.S. operations. Sound easy? Ask ACORN and Tiger Woods what happens when you respond to a public crisis with defiance or indifference.

Fix the problem. Toyota quickly found a structural fix to the sticky accelerator pedals plaguing its vehicles. This may seem obvious, but too many companies believe that crisis response begins and ends with a good public message. They ignore the underlying problem that led to the crisis, whether it’s a sticky brake pedal or, as we recently saw in the financial industry, a huge appetite for bad debt. Toyota found a solution and dispatched thousands of employees to work 24/7 to repair vehicles currently on the road.

Start talking. Toyota’s public outreach has been relentless. Here’s a quick count of media channels they’ve used to touch consumers, opinion leaders, and policy makers nationwide: press conferences with executives; live television and radio interviews; huge TV ad buys; full page ads in newspapers; op-eds by Toyota executives in The Washington Post and elsewhere; video streaming on Youtube; a regularly updated website; a toll-free hotline; paid search ads on Google, and; regular recall updates for the company’s 100,000 fans on Twitter and Facebook. In sum, they’ve used every means of communication short of the carrier pigeon.

Enlist your friends. Toyota wisely called on a few friends to speak on the company’s behalf. NASCAR star Michael Waltrip posted a message on Youtube stating his belief that “Toyota won’t settle until they get it right, and I know they will make it right.” The company is publicizing testimonials from satisfied Toyota customers, and is working closely with members of Congress who represent states with tens of thousands of Toyota employees.

Okay, so Toyota gets crisis communication. That is rare, given that a lot of successful companies believe you don’t make money by showing contrition.

That brings us to Part Two.

The recall exposed Toyota’s larger problem: their inability to resolve a brewing crisis that reportedly first surfaced in 2002 when complaints of sticky accelerators spiked. In 2005, Toyota recalled more vehicles than it sold. Two years later, Consumer Reports stopped automatically endorsing Toyota vehicles due to what it considered declining quality. Even worse, recent news reports suggest that Toyota failed or refused to disclose vehicle problems to federal regulators over a period of years.

In the coming weeks, Part One of this story will come to a close. Shortly thereafter, Part Two will begin with congressional hearings, investigative journalism, and consumer lawsuits likely to take center stage.

Toyota’s crisis communications strategy will have to adapt to this new phase. They would be wise to be as aggressive and creative as they’ve been in recent weeks because, like many compelling stories, the second act may prove to be the most dramatic.

This article was first published in today's Daily Record.

Tuesday's quick reads: Martin Luther King, Judiciary 2.0, and the relevence of "old media"

1.) How to respond to criticism - Lessons from Martin Luther King (Tim Ferriss) -- The author of the best-selling The Four Hour Workweek examines how Dr. King's "Letter from a Birmingham Jail" is a classic case study in the art of dismantling your critics' arguments.

2.) Just two in five Americans read a newspaper every day (Harris Interactive) -- According to Harris Interactive, newspapers around the country are struggling. Last year saw several newspapers change their business model to an online focus or shut down completely. This year will most likely see the same struggle and, perhaps, new business models emerge for these media entities. One thing is clear, the era of Americans reading a daily newspaper each and every day is coming to an end.

3.) Most original news reporting comes from traditional sources, study finds (Los Angeles Times) -- As the number of sources for news proliferates on digital platforms, most original reporting still comes from newspapers, television and radio. A study by the Project for Excellence in Journalism that surveyed news gathering in Baltimore as an example of nationwide trends found that 95% of stories with fresh information came from "old media," and the vast majority of that from newspapers.

4.) Judiciary 2.0: Youtube, Proposition 8, and the Supreme Court (Huffington Post) -- Does YouTube belong in the Supreme Court? More to the point: If the White House's own YouTube channel contains some 480 videos, if Congress members consider their presence on the mainstream video sharing site as a given, then what's taking the judicial branch so long?

Monday's quick reads: Stanford endowment, United Airlines,

1.) A PR problem for Stanford endowment (San Francisco Chronicle) -- According to Forbes magazine, Stanford's $17.5 billion fund is the biggest investor in a "tough talking" Texas firm, NC Ventures, which specializes in buying bad bank loans at pennies on the dollar, "then going after the borrowers." That means, increasingly, those defaulting on their home loans. Which, in turn, can create a PR problem for a certain type of investor.

2.) Smashed guitar, Youtube song - United is listening now (Los Angeles Times) -- An unhappy passenger's catchy Youtube video has caused PR headaches for United Airlines.

3.) Why strategic planning and corporate communications should work in harmony (Council on Public Relations) -- Chief executive officers, senior strategists and communications professionals share many similar views when it comes to corporate strategy, but they must collaborate more effectively to achieve optimal results, according to a new study.

4.) Reactor LLC to test social media's effectiveness (Kansas City Business Journal) -- A Kansas City design and branding agency is trying to answer the elusive marketing question: What is the return on investment for social media?

Monday's quick reads: Home Depot, Youtube, human resources & social media

1.) Image as part of corporate strategy (PRSA) -- National media regularly ranks the most admired corporations in America, listing the core values that helped them gain fame. Is this effort just the business equivalent of selecting the most popular students in the high school yearbook? Or should companies and organizations concern themselves with image and reputation?

2.) Home Depot uses Youtube as a PR tool (Atlanta Journal Constitution) -- Home Depot's encounter with an environmental group shows that social media can work for corporations as well as activists.

3.) The good news about bad news: openness works (PR Daily) -- Employees want open communication from their bosses, particularly in bad times. Surprise, surprise. Well, don’t just slough that off: Being kept in the loop translates into increased commitment and good will among the staff.

4.) Human resources & crisis communications - (HR Executive) Although HR leaders may have been using -- or at least begun thinking of using -- social media for recruiting, project management and knowledge transfer, they may not yet have considered the benefits of using such tools in the case of emergencies. The sooner, the better, experts say.

Swine flu highlights perils and promise of social media

This column was originally published in The Daily Record on Friday, May 8, 2009


(The CDC's Youtube Channel)

The H1N1 virus – also known as “swine flu” – isn’t going away just yet, but there a few early lessons we can glean from this case about how to communicate effectively in a public crisis.

For me, the H1N1 outbreak illuminates both the perils and promise of social media and how it can shape public perception.

First, the perils. As the H1N1 flu picked up momentum in late April, popular social media sites lit up with commentary from the public. Many users of the social media site Twitter warned the broader public to avoid eating pork products so as not become “infected” with the flu.

There is one problem with this advice: it’s wrong. The H1N1 flu is not transmitted via food, but the presence of such inaccurate information in the public dialogue posed a threat to the bottom line of pork producers across the world.

Yet U.S. pork producers had just 300 followers on Twitter – a miniscule audience considering the global scrutiny and volume of chatter about their product. As a result, a critical opportunity to contain damaging speculation was missed.

Twitter is no echo chamber. The micro-blogging site has 5 million members globally, each of whom is capable of delivering information to wide audiences. With some Twitter members boasting networks of one million followers, misinformation about pork products can spread like, well, a virus.

Sure enough, prices of hog futures contracts dropped sharply as the flu’s reach spread. I won’t attribute the price drop solely to the misinformation on sites like Twitter, but it is hard to ignore the impact on the pork industry’s product as false information spread to wider audiences.

The lesson is that organizations cannot ignore social media communities in a crisis. Any citizen with a Twitter account or a video camera can spread any content about your industry or product that he or she desires, whether it’s pork or Pepsi. And whether your organization considers that citizen credible is irrelevant; what matters is whether that citizen’s network of followers considers them to be credible. To put it in public health terms, organizations fighting through a crisis must quarantine bad information and kill it. Then, replace it with the facts.

So, what is the upside of social media in a crisis? The Centers for Disease Control has demonstrated during H1N1 outbreak that organizations under the gun can use social media to their advantage. The CDC added roughly 10,000 new followers on Twitter every day during the crisis, bringing its total followers to more than 105,000 at the time of this writing. It has distributed hundreds of messages online about the flu, its origins, and what precautions the public should take. Cable news outlets such as CNN monitored the CDC’s online efforts and repeated the agency’s message to their massive viewing audience. The CDC also posted informational videos on Youtube, some of which garnered more than 140,000 views per week.

Beyond social media, the CDC’s strategy shows three hallmarks of a good crisis communications strategy.

Over-communication. One would have to be living under a rock to have not seen or heard from the CDC over the past two weeks. The agency utilized virtually every communications tool at its disposal – both old and new - to inform the public. The CDC hasn’t fallen prey to the dangerous assumption that your audience “gets it” in a crisis after you’ve issued a couple press releases and updated your website. To the contrary, they spare no opportunity to reassure the public, often on a minute-to-minute basis.

Message discipline. Acting CDC Director Richard Besser has positioned himself as a calm and articulate spokesman for the government. More importantly, he has repeated his message of prudence and informed decision-making relentlessly.

Crisis planning. The CDC has prepared for years to communicate effectively in the event of an outbreak. Granted, it’s the CDC’s job to do so, but too few companies today can say they have developed a plan to communicate with their stakeholders in the event of a crisis.

The closing chapters of the H1N1 crisis have yet to be written, but one lesson for Maryland organizations is clear: public conversations are migrating to online communities that hold great promise and great peril. The real question is whether your organization will follow.

Tuesday's quick reads

1. Repairing an agency's credibility (Wall Street Journal) -- An insurance veteran shows how to rebuild an organization's reputation through transparency and improved communications.

2. Veterans group takes to Twitter for campaign (PRWeek) -- A veterans advocacy group is harnessing social media to raise awareness about service members suffering from physical and psychological wounds.

3. AccuQuote CEO sees virtue in blog, Youtube communications (Blog Council) -- AccuQuote founder and CEO Byron Udell is using YouTube and AccuQuote’s blog to answer insurance and annuity questions submitted by readers.

4. Sides in "card check" debate intensify PR efforts (PRWeek) -- Business and labor organizations on both sides of the Employee Free Choice Act have turned their communications battle into an online and grassroots effort.

Generating goodwill on the cheap

Our monthly column in today's Daily Record explores how companies can use social media to generate goodwill in times of tight budgets and low public trust.

We hear so much about the latest "trends" in social media and so little about how it can actually be used by a company to generate buzz. Hopefully this column helps with the latter dilemma. You can read it in its entirety below, or check it out at The Daily Record's website.

Generating goodwill for your company on the cheap

HENRY FAWELL
Special to The Daily Record
March 13, 2009

Let’s face it. It’s hard to justify an ambitious advertising campaign in this economy. Your company watches every penny like a hawk.

The news outlets with which you previously advertised are losing staff and audience share, declaring bankruptcy or shuttering their doors. Plus, it’s hard to convince Baltimore’s understaffed newsrooms to cover your company when their own resources are dwindling.

Budgets are tight yet our pursuit of the public’s goodwill is endless. To make matters worse, seven in 10 Americans think U.S. businesses are on the wrong track, meaning we need all the goodwill we can find. So how can your company generate buzz and goodwill without breaking the bank?

It can be done. Technology and public conversations are converging in a way that allows you to achieve this goal. The convergence is known as social media.

It enables companies and the public to engage in two-way dialogues at little to no cost, and it’s happening every day here in Baltimore and around the world. The question is whether your company will join the discussion.

I have one rule for companies intimidated by social media: have no fear. Any organization with creativity and a plan can use it to reach the public. If you don’t know where to begin, this column outlines four starting points on the Web with real examples of companies generating buzz on the cheap.

Blogs: More than 112 million of these Web-based publications are on the Internet, with the most popular ones garnering more than a million visits monthly.

You can make blogs work for you in two ways. First, introduce yourself to blog authors who write about your hometown, industry, company or product. The makers of Audi did just that by offering a test drive of their latest model to Guy Kawasaki, a venture capitalist whose blog attracts 2.5 million page views annually. Audi got a great review on the blog, hit a key demographic and connected with a huge audience for little or no cost.

The second way is to author your own blog. Baltimore’s LifeBridge Health used its blog to spotlight its domestic violence services after the well-publicized arrest of a celebrity on assault charges. Marriott International’s Bill Marriott used his blog to tout the good deeds of a Baltimore employee and to announce his own voluntary pay cut. If the CEO of Marriott can find time to blog, why can’t you?

Facebook: With 175 million users, Facebook is not just for teenagers. It allows companies to build an online community of customers and stakeholders where it can post everything from company messages to photos.

H&R Block created its own Facebook page to offer free tax advice to more than 1,600 members. Unlike a static advertisement, the Facebook page allows H&R Block to deliver the exact service that each customer needs — a great way to generate goodwill.

Twitter: This free Web site enables companies to chat or “tweet” real-time via cell phone or computer with the public. Each “tweet” is less than 140 characters. With more than 6 million users,

Twitter has attracted several companies seeking to connect in real time with the public.
Comcast uses Twitter to sniff out customers with cable outages to get them the help they need quickly. Home Depot uses it to remind customers what supplies they need to protect their homes during hurricane season. As a result, both companies are considered by many to be on the vanguard of corporate communications.

YouTube: Anyone with a video camera and Web access can use YouTube, whether a Fortune 100 company or your next-door neighbor. With 79 million subscribed viewers, it is the dominant place for companies to upload and share video clips with the world.

Maryland’s comptroller, Peter Franchot, used YouTube to promote the state’s electronic tax filing system. His irreverent video garnered nearly 23,000 viewers in its first month at a fraction of the cost of traditional advertising.

Embracing social media means changing how you connect with the public. But with public trust of U.S. businesses so low, change can be a virtue.

So take the first step. Explore these sites to see how they can connect you with the public. You may be surprised at how much goodwill you generate and how much money you save along the way.

Henry Fawell is a communications consultant for Womble Carlyle Sandridge & Rice PLLC in Baltimore and was press secretary for Gov. Robert L. Ehrlich Jr. His column appears monthly and his e-mail address is henry.fawell@wcsr.com.

Obama, Youtube, and You

It is no secret that Barack Obama utilized youtube and other new media tools unlike any other candidate in the 2008 election cycle. Whether behind the scenes or campaigning door to door, the Obama campaign wrote the rulebook for bypassing television to communicate directly through online video.

With the campaign over, the Obama transition team shows no signs of abandoning that strategy. If the following video is any indication, the Obama White House will be the first to establish a "channel" - or page - on youtube:



With this strategy, the president-elect is preserving an inexpensive mechanism for communicating with voters, minus the filtering effects of mainstream journalism.

So, what does this mean for your company? Politicians aren't the only ones who can benefit from embracing a youtube strategy. Southwest Airlines , Dell, Standard Solar and the One Campaign are just a few of the companies and non-profits that have created channels on youtube to reach a desired audience in an innovative way. Two key factors for determining whether your organization should make the leap to youtube are (1) whether your desired audience gets its information online more so than traditional news outlets, and (2) what message you seek to convey to your audience and whether you can do so through youtube. Have questions? Send us an email.