What Price Do You Put On A Reputation?

If you're in the market for a car or currently drive a Toyota, you'd have to be blind or deaf not to be aware of the problems the car-maker has been grappling with these past few months.

When a few isolated accidents involving Toyota vehicles caused by accelerator pedals 'sticking' to the floorboard increased to a statistically significant number, Toyota swung in action, issuing a series of vehicle recalls from November last year.

In the latest installment of this unfolding saga, Toyota announced on Wednesday this week that it would immediately stop building and selling the Camry, Corolla and Avalon sedans, Matrix wagon, RAV4 crossover, Tundra opickup, and Highlander and Sequoia SUVs. Beyond the USA and Canada, the recall will be extended to China and Europe (though it is currently unclear which models will be affected).

The accidents, and the deaths and injuries they have caused, are truly tragic. The root cause, whether it's a broken accelerator pedal or floor mat interference (as documented in this YouTube video clip: http://youtube.com/watch?v=VTOxYFt1yT8VTOxYFt1yT8), needs to be fixed, and quickly. Toyota is doing all in its power to address the swiftly situation and stem the body blows to its vaunted reputation for product quality. (See http://pressroom.toyota.com/pr/tms/toyota/toyota-consumer-safety-advisory-102572.aspx for details.)

According to some detractors, the Toyota brand is now in tatters, and the business will never recover from this, the largest product recall in its history. The vehicles being recalled account for 57% of the company's US sales; and it is estimated that Toyota will haemorrhage some US$400 million a week due to suspended production and sales. I note with a trace of distaste, however, some telling observations:

1. All the eight affected models in this recall exercise are assembled at five plants in the USA and Canada, with what I must assume to be a predominantly local workforce.

2. In its bid to become the world's #1 car-maker, Toyota moved away from some of the business practices that had served it well for the longest time. One example is its decision to buy parts from companies around the world, rather than from a small group of Japanese suppliers that had been long-time partners. The accelerator pedals in the vehicles affected by the recall come from a supplier's Canadian plant.

3. US Transportation Department officials have taken pains to point out that they had advised Toyota to act quickly. "The reason Toyota decided to do the recall and stop manufacturing is that we asked them to," said Raymond LaHood, the Transportation Secretary. "We were the ones that met with Toyota, our department, our safety folks, and told them, you've got to do the recall." (Ouch.)

4. Journalists say Toyota is almost certain to face lawsuits soon not just from people who claim injuries from the defects, but also -- get this -- class-action suits on behalf of consumers who will claim the crisis has damaged the value of their cars. (Only in America.)

Is it just me, or do some of these news tidbits merely reinforce the quality of Japanese engineering vis-a-viz the rest of the world? Toyota is a savvy organization. Not by accident (pun unintended) is it ranked amongst the world's most admired companies and the world's most respected brands. Granted, the company has skated close to the edge by risking its core brand attribute -- quality -- in its fixation on growth. Toyota now has to reconsider the wisdom of some of the operational decisions taken in its quest for global leadership in the automobile industry. But it would have executed these recalls, LaHood or no hood.

This crisis will likely cost them untold billions of dollars; but a principle isn't a principle until it costs you something.

Chin up, Toyota. You're doing the right thing.

[Disclosure: I have never owned a Toyota, nor shares in the company. But that doesn't stop me from respecting the brand.]

Brands Should Go Back to School

Earlier this week, I sat at the back of my daughter's school hall while her principal extolled the performance of the 2009 cohort of the Singapore Chinese Girls' School's secondary 4 students in the GCE 'O' level examinations.

It was a remarkable performance by the girls (the best 'O' level results in the school's storied history) ... and a memorable experience for the proud parents in attendance.

But what struck me -- apart from the collective standout achievement of this batch of confident young ladies -- was the palpable support and team spirit demonstrated by the entire school. They cheered when slides flashed the names of the girls who'd scored six A1s or more. They screamed even louder when 20 students who had faced significant challenges through the school year were named and commended. And they brought the house down when the top two girls who scored nine A1s were named. Teachers were beaming as they were mobbed and hugged by appreciative students for their year-long gifts of insight and inspiration. The whole school celebrated as one.

It got me thinking: What is it about girls that makes them work and play together better than boys? Why didn't I feel that same sense of camaraderie, that esprit de corps, when I collected my 'O' level results? (Well, besides the fact that my results were decidedly mediocre.) And -- more to the point of this blog post -- how can companies nurture this same kind of culture?

Now, why is that important? Because organizations don't act; individuals do. What organizations do, is create cultures. Culture is the organizational equivalent of a person's character. Ingrain a character, and you'll establish a pattern of action. The behaviour that is modelled becomes the behaviour that is followed.

If we accept that the primary vehicle for delivering brand identity -- especially for a service brand -- is a company's employee workforce, then the company's culture provides the framework and the propulsion for its brand image to be kept consistent and visible in the jungle out there.

Imagine the benefits: No more 'off-the-reservation' forays into dodgy sponsorships. No misinterpretation of core brand values by employees at various customer touchpoints. No more 'silo thinking'; no more secret budgets siphoning funds away from global brand initiatives. Just a single, integrated go-to-market strategy executed by teams across the region or around the world with the Power of One.

Brands go further when brand champions work together.

Creating a Lighthouse Identity

I lived and worked in Canada for a time in the early 1990s. For over six years, Vancouver was my home; and for a third of that time, I used to commute to work, an hour each way, along a coastal road to my office downtown. A lighthouse dotted a rocky outcrop along my route; and I remember wondering what it would be like to trade places with the lighthouse master for a week. After a month or so, I stopped gazing at the lighthouse as I drove past: I knew it was there, and I knew that it signalled I was only 10 minutes from home.

As we put to bed a tumultuous 2009 and gird ourselves for the year ahead, we should give a thought ourselves to polishing and projecting a Lighthouse Identity -- for the brands under our charge as well as our own personal brands. We should strive to be -- and care for -- brands with a clear sense of who they are, and what they stand for. Brands with a true north, that aren't swayed by market forces, that compel others to navigate by them because they are anchored in constancy and consistency.

Adam Morgan lays out the credo of building a lighthouse identity in his seminal book Eating The Big Fish. It's very good; read it.

2010 will usher in a sea of change. To survive and thrive, we need a firm foundation, a bedrock of values for ourselves and our brands that will stand the test of time.

Happy new year, and may your light shine as you strive to 'keep it visible'.

Why Companies Keep It Under Wraps

A week ago, Fast Company carried a post from Peter Clarke's blog (http://www.fastcompany.com/tag/peter-clarke) about steeling ourselves on Christmas morning for the inevitable flare-ups of wrap rage: the heightened levels of frustration, anger and injury potential resulting from one's inability to open a package.

Wrap rage is triggered by retailers' need for products that self-merchandise without the fear of theft. Apparently US retailers suffer losses from pilferage of more than US$10 billion annually.

I'll leave you to read the post for yourself (it's informative and insightful, and well worth the time even though it's past Christmas); and limit my comments to the statistic that leapt off the page for me:
According to the 2009 Global Retail Theft Barometer, the majority of retail theft is carried out by store employees. 44% of all retail losses are the result of employee theft. 35% is attributed to shoplifting; 15% attributed to administrative error; and 4% to vendor fraud.

Not many service organizations are keen to track or report these numbers. Do you ever wonder why?

If companies don't take the time and make the effort to cascade their core brand values throughout the organization, if the company's leaders don't align individual goals to company objectives, if employees are not given a clear line of sight from their actions to the resultant impact on the company's top and bottom lines, how in the world can you expect employees to live and breathe the brand, to correctly interpret core brand values, to be loyal to the organization? Yet often line managers merely pay lip service to the intertwining of brand and business strategy. They think branding is fluffy, and don't have the time for anything that doesn't goose their numbers.

If your company isn't cranking up its brand internalization and employee engagement programs, don't be surprised if your inventory and brand equity walk out the door.