Robert Hargrove

Dear Mr. Toyoda, It’s a leadership issue.

Toyota CEO Akio Toyoda, grandson of the founder, became CEO of the company last June. He spoke of his a vision of becoming the world’s biggest automaker, surpassing Ford and GM, barely mentioning anything about quality. When signs of Toyota’s current crisis began to emerge in his first 100 days, his first reaction was to avoid the spotlight of the media and go into hiding. He sent American CEO Jim Lentz to make apologies. Meanwhile, he let serious product quality issues spiral out of control by understating safety risks and product problems. This left the media, politicians, and consumers to dictate the conversation, while Toyota fumbled the responses. (Subsequently, Mr. Toyoda has agreed to meet with Congress.)

COACHING: Mr. Toyoda, I believe you need to realize that this is a leadership crisis, not a crisis of faulty accelerators. During Chrysler’s 1980’s crisis, CEO Lee Iacocca stepped up to the podium, restoring consumer trust and prosperity. When General Motors emerged from bankruptcy last summer, Chairman Ed Whitacre became the solid, trust inspiring, determined face of the company’s comeback. Mr. Toyoda, you need to show up in the same way—making a human connection with your customers.

How can Akio Toyoda get Toyota back on track? Harvard Professor Bill George has written a book on the seven leadership lessons for leading in a crisis that might be helpful.

1. Take responsibility…starting with yourself. Mr. Toyoda, I believe you should take personal responsibility by saying that you pushed too hard for growth and neglected quality. You should acknowledge that the real problem is not sticking accelerators, stuck floor mats, and panicky drivers, but that the Toyota quality system failed due to the wrong kind of leadership. Your job is to establish “true north” for your company again. Your Teachable Point of View: Toyota must live and die by quality.

2. Forget Atlas Shrugged…get the world off your shoulders. You cannot expect to solve problems of this magnitude yourself. Instead, you need a crisis team reporting directly to you, working 24/7 to get problems fixed—permanently.

3. Get to fundamental causes and solutions. When Toyota’s problems first came up, the company blamed a symptom—exonerating the accelerators and pointing the finger at loose floor mats. Instead, management should have required its best engineers to get to the root cause of this problem and every other quality problem being reported. This is basic engineering and quality discipline.

4. Get ready for a marathon. Mr. Toyoda, the seeds of the crisis your company is now facing were sown over the past ten years by placing growth ahead of customer concerns and quality. Mr. Toyoda, addressing those problems may take another decade to resolve. Toyota must be prepared to accept shrinking sales and slim profits for awhile and invest heavily in corrective action until public confidence is restored.

5. Never waste a good crisis. For all the agony that you and Toyota are experiencing, this crisis provides a powerful opportunity to make fundamental changes required to restore Toyota quality. Employees are ready for new direction and they are willing to make radical changes to renew the company. With your leadership Mr. Toyoda, Toyota automobiles can be restored to the world’s highest quality.

6. You're on center stage. In a crisis, people insist on hearing from the leader. You Mr. Toyoda can’t send out your American CEO or public relations specialists to explain what happened. You must come out of hiding, take personal responsibility, and subject yourself to intense public scrutiny. Then you should make a personal commitment to every Toyota customer to repair the damage, including buying back defective cars.

7. Go on offense; focus on winning now. GM and Ford are rapidly regaining market share, while the confidence of Toyota’s loyal customers is badly shaken. Toyota cannot wait until all its quality problems are resolved. It must play defense and offense at the same time. To win, Toyota needs to offer sublime styling, superior quality, better value for consumers, greater safety, and improved fuel economy. This is a tall order. People are saying that this crisis is a real test Akio Toyoda’s leadership. Are you and Toyota up to these challenges? Just remember, in every breakdown are buried the seeds of a breakthrough.