We've all heard the adage, "The bigger they are, the harder they fall." Nowhere is this truer than in corporate business today.
The first decade of the 21st century has opened like a Greek tragedy with financial empires and kingdoms tumbling. The number of banks, saving banks and thrifts that have failed, as tallied daily by The Wall Street Journal has hit 180 from the beginning of 2008 until February 3, 2010.
Confidence in brand America has hit an all time low as Wall Street continues to wobble, shaking from after-effects of a global financial crisis that finds its root in something as American as apple pie and Chevrolet - greed. Money chasing money. Ego chasing ego. The concept of bigger is better, of corporate size being determinant of success, has taken some severe blows to the gut.
No more is this true than with Toyota. Today the news of the company's unprecedented recall of faulty gas pedals was followed up by a new problem. Brakes. Yes, apparently many Toyota Priuses have faulty anti-lock brakes too.
What happened to the "reliable" Toyota we knew and loved? How has Toyota fallen from grace to disgrace so quickly? In life as in business, there is always a flaw before the fall. In April 2007 the USA Today headline read, "Toyota outsells GM for the first time." Much media mugging by Toyota's top brass accompanied this accomplishment. By December 2009, after the death of an off-duty California Highway Patrol officer and three family members, the headline was quite different. "Toyota's reputation needs some TLC." A masterwork of understatement. The USA Today story went on to report that while "Toyota prematurely tried to blame the entire acceleration problem on floors mats," . Consumer Reports says an analysis of National Highway Traffic Safety Administration data found Toyota had 40% more 'unintended acceleration' incidents than any other automaker in 2008."
Toyota had achieved brand nirvana. Something too few brands do. It successfully positioned itself around a single idea: "Reliability." This meaning extended beyond the products to the company itself. People didn't just trust Toyota's cars . the trusted Toyota! Now, that trust hangs in the balance.
We think what happened to Toyota is what happened to McDonald's. In the 1990s McDonald's, in the company's own words, " . took its eyes off the fries." Toyota took its foot off the pedal when it chased Wall Street dreams and growth at all costs. Now it has a super-sized headache. "When man chases two rabbits, he catches neither." (Confucius).
Fixing pedals will pale in comparison to fixing its brand. Trying to convince the public that Toyota can be trusted again will not be easy, if at all doable. Time will tell. It's a dog-eat-dog world. Once you lose customers, you don't get them back easily. GM and Ford are already winning back market share. A brand is a terrible thing to waste, a worse thing to fix. Making and fixing cars is a lot easier.
Lorraine Kessler is Innis Maggiore's Principal Client Services & Positioning Strategist.