Crisis Management from Obama to Toyota

Welcome back!
Life is busy as always. I'm just back from Calgary and on my way Monday to Fort Worth, Texas. The word crisis is over-used, no question about it. But it is a word that seems to apply when one thinks of President Obama, and the unprecedented recall by Toyota. Are there any linkages? Perhaps not, but in this posting I will explore what, in my view, are some contributing factors and lessons to be learned. As I hope many of my faithful subscribers know, that I do not indulge in partisan comments. Instead I try to stay neutral to the individual's political party and focus instead on their actions and words.

So here goes.

The Obama Crisis - Danger and Opportunity

Hard on the heels of the Democrats' defeat in the 'sure-bet' Massachusetts Senate special election, and its implication for the passage of his signature Health Care Reform bill now in House-Senate Conference. His unfavorables now exceed his favorables. The lustre and aura of 'change' has been diminished and with the mid-term election year in play, the window for Congressional support has narrowed markedly. So what went wrong?

First, he expended his significant political capital on the wrong issue. Health care reform has a long history of politicization and division. Bill Clinton learned that it can be disastrous for a Presidency for many reasons; the invasion of mega-millions from the health insurance lobby and others; the complexity of any Bill creates a cornucopia of opportunity to shred it piece by piece; the deep-seated American distaste for government-run anything was easily triggered in this debate. Few would doubt that he intended to deliver on his health care promises of his campaign. However, one suspects that the timing of this issue had more to do with the state of Sen. Ted Kennedy's health than it was through the mastery of political timing. Nevertheless he accepted his blame for not explaining it well enough.  It was convoluted, confusing, and almost impossible to explain in 2 minutes, let alone 30 seconds. Even Mr. Obama said, "the process left most Americans wondering, what's in it for me?" Right on.

Secondly, he seemed to mis-read the public's visceral anger and anxiety over the crashing of the economy. Even those who have their jobs are fearful that they, their children or grandchildren might lose theirs. Yet only now is he focusing on the four letters that they really care about: J-O-B-S.

Thirdly, he seemed to lose sight of his signature 'brand' which helped him get elected. The Obama appeal was - and will always be - change that we can believe in. Change in the status quo. Change from 'politics as usual.' His Administration supported the Bush Administration's bank bail-outs and unprecedented stimulus spending. It was no doubt significant in staving off an even worse economic meltdown, but it hurt his brand of 'change'. And what he ended up supporting - bank bail-outs - is what the public absolutely hated, and reinforced by news that the banks and investment companies were resuming their huge year-end bonuses.

Fourthly, the President has to realize that his prodigious communications talents get over-shadowed by the power of perception. Reagan's perception of being a fiscal conservative over-shadowed the fact that under his Administration, deficits and the size of government increased exponentially. Kennedy's perception of maturity and strength emerged only after the Cuban Missile Crisis. Jimmy Carter never over-came the perception that he was weak and devoid of an optimism that is in the American DNA. [In contrast, note how Obama always strikes a hopeful chord - even as he lays out the problems.]

The Chinese word for crisis includes two characters - one meaning danger and the other opportunity. The President needs to focus, do what he says, and say what he does. Focus on a few issues and succeed in them. Will he be able to do it? Only if he sees the opportunity that it presents - to redefine himself and his core values. As he said in his speech, "To Democrats I would remind you...people expect us to solve problems, not run for the hills. To Republicans leadership ...Just saying no to everything may be good short-term politics, but it's  not leadership. We were sent here to serve our citizens - not our ambitions. Let's show the American people that we can work together." That's good, but he is going to have to demonstrate it - not just through words, but through actions. Hence his meeting last Friday with House Republicans in a question-and-answer session, and his promise of monthly sessions. He has to turn that talk into bi-partisan agreement.

Those values and character traits that made him so attractive to independents have become blurred and he needs to bring clarity to them - before his opponents permanently cast them in the minds of the American public.

An interesting little thing occurred in the speech as the President criticized the Supreme Court decision allowing corporate campaign contributions. Notice Justice Alito's shaking of the head and mouthing (twice) 'not true'. Highly unusual to say the least.

Toyota's PR Disaster - Not a Pretty Sight
The record recall by Toyota, coupled with pulling its new cars off the lots, have created a breath-taking plunge of trust in the Toyota brand. It is stunning to contemplate how damaging this has been to the once highly valued Toyota brand. How did the Toyota leadership accomplish this? I would submit the following reasons:
1. They no doubt let the lawyers' lead their response. The fears of litigation often trump courageous action on behalf of consumers. In spite of serious accidents and deaths, they claimed that it might be due to floor mats; not sticky accelerators that led to these fatalities. Hhmmmmmm.
2. They didn't move quickly enough. They waited and waited - hoping to avoid the day of reckoning. Well when that day happens, the longer one waits the worse the 'reckoning' will be.
3. Where was the Toyota president? I didn't see him anywhere, did you? I guess it wasn't important enough to reassure their customers and dealers. Where was the apology? Sorry I must have missed the memo.
4. Finally, their solution is unclear. Given its sheer magnitude, it is going to take a long time to solve it. What should their customers do in the meantime?

A fine mess indeed! Hope your week goes better than Toyota's!
Until next time......


  1. Toyota could have and should have done much better. This is a great company that we and many other Fortune 500 companies have studied for years to discern the ingredients in their secret sauce. Detroit(my home town)should not be out writing their obituary too soon; they will be back stronger than ever. In my opinion, two of Toyota's most important cultural ingredients actually held them back in this case and may explain the lack of speed, heartfelt apology, and quick resolution. Toyota is a company that plans - really plans - every step of every process, every new vehicle, every new marketing campaign, you name it. Most U.S. manufacturers have 18-24 month performance plans that you could call specific; Toyota has 20 year plans they intend to execute. Their key systems methodolgy is called PDCA (Plan, Do, Check, Act)and they teach it and live it everyday. They spend more time on planning than anything else. When it's time to act quickly without all the vital metrics, data sets, predictions, etc., it runs counter to the company culture. The other key cultural imperitive at Toyota is the individual and personal responsibility every employee takes for the work they produce. When something of this magnitude occurs, the CEO of Toyota not only feels responsibly, he feels "deeply ashamed" by what has happened, especially since it effects customers directly. Unfortunately, that CEO is Japanese. Shame is a private thing. He has owned up to his responsibility inside the Toyota "family" but going public is just anti-Japanese and anti-Toyota. Despite their remarkable success in the U.S. market they are still a Japanese company at heart, and behave accordingly. This is an enormous setback for them and we're a few billion dollars and 18-24 months away from a resolution for millions of vehicle owners, but watch out GM, Ford, and Chrysler; they'll be back.

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