By Doug Pinkham
Public Affairs Council President
March 3, 2010
There are so many lessons to be learned from the recent Toyota recall calamity that it's hard to know where to start.
Where I won't start is with a review of the 10 major tenets of crisis management. That's because the news media, which often dismiss communications professionals as spin doctors, have run their usual stories featuring PR experts offering keen insights on recovering from a communications challenge.
"Experts are divided on whether (Toyota's) media strategy will be effective," wrote USA Today. Faced with an unprecedented recall, "the public relations machine at Toyota Motor Corp. - one of the most savvy brand-creators in Asia - is floundering," reported Reuters. These and other articles talk about the need for a company and its CEO to be open and empathetic, take full responsibility and explain how they will address the problem.
Good advice. And it's advice that executives working in related fields, including government relations, should heed. Crisis management is no longer just a way to preserve one's image in the marketplace. As companies have become larger and more influential, a scandal - whether real or perceived - can create major political fallout.
Managing a 21st century crisis is much different than managing one in 1982. That's when Johnson & Johnson's response to the Tylenol poisonings made it the textbook model for crisis communications. Thanks to the Internet and 24-hour cable news, events now unfold more quickly, giving companies less time to react. Customers, investors, employees, community leaders and government officials go online when they first hear about a crisis; they don't wait to hear what the company has to say. They quickly sense growing outrage from news coverage, activist sites and social media.
Because of the Internet's ability to magnify an event, constituents often put pressure on policy-makers and regulators. That's why an operational or communications issue can become a political one overnight.
This brings us back to Toyota, whose recall has led to a full-blown political investigation. Last week, Toyota CEO Akio Toyoda's appearance before Congress included a public apology, a plan to address the company's problems and confident statements about the automaker's future. But, given the scale of Toyota's troubles and the number of people affected, the political aftershocks will be felt long after the cars have been repaired.
"This is not the end," said Rep. Edolphus Towns, D-N.Y., chairman of the House Oversight and Government Reform Committee, in a Chicago Tribune story. Towns plans to investigate whether the company withheld vehicle-design and testing evidence in previous lawsuits.
Clearly, a pattern is emerging. A corporate crisis, whether it starts on Wall Street or in Japan, begins as a business story, becomes a top news story and eventually - once activists, legislators and regulators have weighed in - turns into a major political story. Sometimes, as we've seen in the financial crisis or in the aftermath of Enron's collapse, the political story can lead to tough new regulations.
In the Toyota case, as with other crises or scandals, a company's political involvement strategy has become part of the media narrative. "Toyota heads to Capitol Hill with team of lobbyists, history of political giving" read a Page One headline in the Feb. 22 Washington Post. The article is a roadmap for how these types of issues are now covered.
The story starts by listing major lobbying firms the company hired and notes that they "join a force of 32 lobbyists already working Capitol Hill on behalf of Toyota and the Toyota dealerships' political action committee, Gulf States Toyota." It then spells out how many in Congress who sit on committees investigating Toyota have received campaign donations from the company's PAC or employees.
Next is a list of Toyota donations to charities and other groups with close ties to members of Congress. It also turns out that Toyota has launched a grassroots campaign, and many of the firm's 170,000 employees and franchise owners have called or visited congressional offices. In addition, the newspaper reports that Toyota has given money to the Democratic and Republican governors' associations.
Some might read the above and conclude Toyota has a well-integrated public affairs program. It is engaged with government at all levels, and as spokesman Ed Lewis told the Post, "It's realistic to assume that to help us educate all those important audiences, we would need expert counsel and extra arms and legs."
Yet, at a time of great public skepticism, a deconstructed corporate public affairs program can look mighty suspicious. Each financial tie to the company and each political tactic seems worthy of scrutiny.
When dealing with government, context matters. Political activities, when conducted openly and ethically, are not only legal - they're part of a company's community involvement strategy. But you can't expect the media to present them that way.
This is why every company should spend more time talking internally and externally about why and how it gets involved in politics. As the Post story reveals, most of this information is publicly available. A company can be open on a routine basis, or it can wait until a crisis so that it becomes the subject of an investigative news story.
Disclosing your political activities on a corporate website, alongside your rationale for political involvement, can help dispel skepticism. Doing so on your own terms - before shareholders demand it or Congress requires it - also seems like a good idea. (I provided some examples in my Sept. 23 post. Another site worth checking out is eBay's Main Street.)
A second way to better manage the political fallout from a crisis is to improve coordination between communications, government relations and other functions. A centralized approach to message development and issues management ensures that the company's core values and commitment to resolving problems are clearly stated. While some companies don't have organizational structures that make coordination easy, many do an excellent job of prioritizing issues and actions across the corporation, regardless of who reports to whom.
One thing is for certain. You don't want to learn how to manage a crisis when you're in the middle of a crisis. That's the challenge Toyota now faces. And while it has taken many positive steps to address quality concerns and rebuild its brand in recent weeks, it has a long way to go to overcome consumer outrage - and survive the political scrutiny that follows.
Comments? Email me at http://pac.org/contact/blog.
