Toyota

Can Sony Win Again?

There's a great video report by Reuters on how Sony lost its cool.  The question is: Can it get it back again?

The short answer is: Yes.

This is the dilemma of every company that focuses on "quality" and then commoditizes it into nothing.  That's what happened at Sony.  They lost their focus on creating exquisite, innovative products with an exquisite user experience and went for speed-to-market instead.

This was a multi-faceted mistake.

  • First, for those who trusted the Sony brand, the company has as good as lost that trust - and it's WAY harder to regain trust than it is to establish it.
  • Second, for those who didn't know the brand - most importantly, the young consumer - all they know is that Sony doesn't cut it in experience or innovation.
  • Third, even while they were cutting their quality to near nothing, they kept their prices high.

What that left them with was a company that doesn't produce anything consumers can be excited about buying at too high a price to want to pay for it anyway.

Real good strategy, Sir Howard.

The good news is, the company is going back into the hands of the Japanese.  Their new CEO, Kazuo Hirai, is a "detail" guy, according to Reuters - and that puts the Japanese right back into their comfort zone and where they perform best.

I worked with Sony before Sir Howard Stringer took over as CEO.  Even then, they were looking with awe and envy at what the Silicon Valley was able to achieve - and rightly so.

But, what they forgot in the process is that they do things with their way of doing business that, demonstrably, take markets worldwide.  But only when they work to their strength.

Can anyone say Toyota?

So, good luck Sony.  I'm rooting for you to find your cool again.

Reputation - Strategy, Management and Measurement


Leslie L. Kossoff on Corporate Reputation - Global Webcast from Leslie Kossoff on Vimeo.

This is the global webcast for the white paper I wrote on reputation for the Chartered Institute of Management Accountants.

This was a fun one for me as I got to write a case-study based paper that featured companies like Goldman Sachs, Toyota, Apple, Johnson and Johnson and more.

Both the paper and the presentation take on every aspect of reputation - from how to create it to how to lose it to...most importantly...treat it as a managed entity.  Which it is.

The webcast lasts about twenty minutes, so get comfortable.

For a copy of the paper, you can visit the Reputation site at CIMA or write me at:

leslieDOTkossoffATthekossoffgroupDOTcom

BP and Corporate Responsibility: Avoiding Present and Future Tragedy.

What's going on in the Gulf right now is a tragedy.  There are few other ways to describe it.

It's a tragedy because of the human lives that were lost and the lifelong grief that the families and friends of those who died will endure.

It's a tragedy because of the devastating impact it is having - and will continue to have for years - on the environment into which the oil is spilling.  The death it brings and suffering it is and will continue to have on the animal, bird and plant life - due not only to the spill but to the actions being taken to address it - is incalculable in any currency.

It's a tragedy because of the livelihoods of those who live in all the areas impacted.  Generations of fishermen for food and sport, the associated industries - from hotels in the vicinity to manufacturers of parts for fishing boats that may never be needed again, the many and varied members of the supply chains that have supported the movement of the fresh food caught to the worldwide audiences who enjoyed them.  All and more will suffer for years to come.

And it is most of all a tragedy because it was avoidable.

We do not know the full facts, yet, of what led up to the blowout preventer's failure.  While that is and will be important, what's far more important is what the now consistent drip, drip, drip of information that is coming to light means for corporations and the governments who regulate them.

Each time Tony Hayward, BP's Chief Executive, makes another statement, the trust and belief in everything from business success to corporate R&D is eroded that bit further in the public's mind.  Globally.

Worse, deservedly.

As statements such as his financial breakdown to BP shareholders reporting the very small percentage of the cost of the Gulf Spill to date on the company's profits are made public to a much wider audience, the lack of care that is perceived for the human race and the planet becomes palpable in the public's mind.

BP, like Enron and others, become the name-brand entities that neither can nor should be trusted.  They become the public watchword for how corporations aren't simply uncaring.  They are destructive and dangerous.

From an organizational perspective, this has incredibly and increasingly large implications.

Those internal memoranda and reports as well as the witness testimony being provided in the early-stage hearings simply dig a deeper and deeper hole into which BP, Halliburton, TransOcean and Cameron are falling in the public's mind.  And as they should also in each and every corporation's mind.

Because those data show a continued focus on cost and time.  Not on safety and care.  The arguments and pressures that are reported - within and across the organizations involved - make a compelling case for profit.  Not safety.  The deals cut and pressures put to bear - even on regulatory agencies, which, on many more human levels, deserve distrust and contempt - show that speed was the thing.  The fastest speed to profits.

Back to the corporations, they made promises to regulators which those same companies involved now seem to be saying - and demonstrating - couldn't be kept.  Even whether the disaster-recovery plans that were put forward in case of an emergency were adequate or workable weren't known to be workable.

In effect, prior to drilling, 200 feet was the same as 5,000 feet.  Now that a disaster is in play, there's a really, really big difference between 200 feet and 5,000 feet.

Somehow that wasn't the case just a few months earlier.

But we have what we have - and it becomes a lesson to executives, if you're paying attention.

Pay attention - because on everything from a smaller to a same scale, this can happen to you.

First and foremost:  Never put profits before safety.

That means that, no matter what your organization does, you make sure that policies and procedures in place are designed to ensure the safety of your employees and of the end-users.  Then you make sure that those policies are enforced.  Always and consistently.

Think about it.  From Toyota having to recover its reputation as the highest quality automobile manufacturer to Chinese manufacturers of toys and toothpaste to BP and its now much-publicized "safety" record of deaths in their operations, more time, money and reputation (the three most valuable corporate currencies) is spent on the fix after the fact than would ever have to be spent if the problems had been addressed from the first - when they were identified.

As well, the fix isn't a fix in the eyes of the public.  Toyota will always have a question mark over its name now.  Chinese manufacturers are actively distrusted.  And BP is becoming known as a death-trap for employees and the planet.

That's not going to go away.  In fact, every time any industry in the same sector does something wrong, these examples - and more - will be brought up again and again.

Second:  Suspend disbelief and plan accordingly.

Ninety-seven percent (yes, that's 97%) of what happens in an organization is predictable.  It may not be what you want but you can predict it.

That means that there is only 3% that you can't imagine ever happening.

What that also means is that, because there have been oil spills and drilling disasters in the past, the Deepwater Horizon disaster was part of the 97%.  It was predictable.

Even the failure of the blowout preventer was predictable.  After all, they, too, had failed in the past.

As an executive - and with your executive and management team at all levels - you have to look at what is to determine what can be.  You may not like it, but it's predictable.  And that means that, sooner or later, it's going to happen.

The only 3% component of this disaster is, possibly, its extent.  Possibly not.  After all, BP knew what the oil reservoir was that it was drilling into.  Their scientists also knew the pressures and temperatures at which the drilling would be taking place.

All of that was known prior to any of the consequences that are now in play.  That means that the disaster recovery plans were knowingly inadequate too.  And that's a corporate decision.

Third:  Take the hit.

If your organization does something wrong - from a mistakenly filled order to creating a human and environmental disaster - own up to it.  Not just in pretty words - but, consistently, in your actions as well.

BP seemingly continues to try to game the system for its own and its shareholders' purposes.  From using a dispersant known to be illegal for use in the company's home country to requesting a specific judge to oversee all the future cases brought against the company to trying to settle the early and current cases out of court as quickly as possible, all it looks like is that - even while Hayward continues to say that it's BP's responsibility and it is taking all the actions it can to stop the leak - behind the scenes, all he's trying to do is do further damage to and cheat the people most impacted by his company's actions.

If, on the other hand, you take the hit and own up, customers know that when something goes wrong, you're on their side to fix it.  That has a value far beyond any immediate or mid-term gains - because rather than being remembered for what you did wrong, your organization will have the invaluable reputation for one that is committed to making things right.

Which brings me to the fourth lesson - and it is a personal one.

Think about your legacy.

Within and outside your organization - public or private sector - you're going to be remembered for what you do.  It doesn't matter whether it's wholly internal or splashed all over the online and other media.

Did you keep your word?  Were you fair?  Did you bring an integrity to everything within the organization?  Do the people whose lives you touched - within and without - think well of the organization you led because of your leadership?

Corporate responsibility sounds like a typical "blah-blah-blah."  It's not.  It's all about you, who you are and what you stand for.

CEOs, of course, have a responsibility to their shareholders.  But as a corporate leader, executives and managers at every level have a greater responsibility.  That's to the much broader defined population your organization and its products and services touches.

So, when you think corporate responsibility, think your responsibility and legacy.  Think about what your kids would think of you - knowing everything there is to know.  Then think about how you want them to think about you:  honest, trustworthy, thoughtful of others and others' needs.

There's no reason that can't be your corporate legacy.  It can.  But to get there, you have to actively and conscientiously lead your organization there - every step of the way.

Toyota's Lessons for Executives

Of all the descriptors no one ever expected to put in the same sentence as the words "Toyota" and "quality," it's "bad."  But that's what's happened.

Toyota has decimated its own brand.

It's not that Toyota was always the best car going.  In the early days of the Corolla, back in the 1970s, the problems were legion.  But the cars were small and fuel efficient at a time when those were the two key market requirements and differentiators.

Over time, the company got good at quality.  Then they got excellent.  Then they were the world leader.

Now, they're having to find their way again.

And it's all their fault.  They changed their raison d'etre from creating and producing the highest quality cars in the world to being the biggest carmaker in the world.

That meant a completely new strategy.  With new suppliers.  And as good as unmanaged growth.  Because the only thing that was "good" was size.  That was their measure of success - and, as is always the case, they achieved their measures.  Because you manage what you measure.  And you reward it.

Then, if you're not careful about what it is that you were measuring in the first place, you enter directly into the world of unintended consequences.

Toyota is now living in that world.

And it gets worse.  Most recently, we're seeing those who are allegedly newly experiencing the accelerator pedal problems are talking about suing the company.  That, of course, is over and above the actions that Federal and State governments are taking simultaneously.

On the good news side of the equation, though, is Ford Motors.  Both financially stable and focused on quality, Ford, under the stewardship of Alan Mulally - a former Boeing man - already had begun changing its quality levels and product image.  Then, Toyota happened and it's the biggest boon to Ford - and others - that they could have dreamed.

Okay.  So that's what we know.  Now the question is:  What does this have to do with you and your organization?

There are two different aspects - at the least - to how this can be used as a learning opportunity for you and your enterprise.  Not just to make sure you don't make the same mistakes, but to use as a launching pad for greater growth and further success - done the right way.

First, it's all about how you define your goals.

As mentioned above, Toyota changed the way it was measuring success.  It had a new goal - to become the biggest carmaker in the world - and, in that process, it lost its focus.

Instead of paying attention to its customers, the only thing in its sights was General Motors.

In making that decision, they lost the plot.  They forgot who buys the cars and only looked at who else was selling the cars.  Seriously big mistake.

Sadly, and typically, they achieved their goal.  But, at what cost?

So, as you look at what you want to achieve - now and going forward - dream big but strategize in steps.  Make sure you keep your customers - now and future - in mind all along the way.  Develop your products and services to be best of breed and always attracting new customers to the fold.  Create value, build on it and expand it to every new opportunity you identify and execute.

Fix what's wrong and don't accept excuses - your own or others'.  If things aren't going right, you've got wrong measures in place - because there's a reason your people are doing what they're doing.  It's because they think it's what you want.

Disabuse them of that notion - fast - and get them back on the right track.  Then, through the right measures, you'll keep them there - and get your organization exactly where you want to go at the same time.

Second, it's all about controlling the message.

Toyota knew months in advance that they had a problem.  It started with the Lexus, Toyota's luxury line built on the same platforms as Toyota.  The floor mats in some models were pushing against the accelerator pedals leading to uncontrolled acceleration.  (Sound familiar?)  They created a fix but they kept the whole thing quiet.  That was last year.

By the time the story broke on the Toyota front, the company could only play catch-up.  It was too big to hide and too juicy for the news agencies and social media sites to ignore.

There are any number of hypotheses about why Toyota's executives didn't come clean from the first.  Ultimately, the reasons behind that 'why' don't matter.

It's the other 'why' that does: Why you want to make sure you're controlling the information about your organization.

You own the responsibility for your brand.  It is your most visible face out to the larger world.  It is your reputation - and that makes it an extremely valuable asset among your corporate currencies.

In a couple of weeks, I'll be featured in an article in the journal Excellence in Leadership published by the Chartered Institute of Management Accountants.  The article is about the differences in the ways that Western and Eastern management styles differ and whether one is 'better' than the other.  (The short answer is no - but it's worth reading the article to find out how to make them work successfully together.)

After we were done and the article had gone to press, the author, Ian Duncan, wrote and asked me about an article he had subsequently read about the impact of social media on Toyota's problems.  The premise was that, because of social media, Toyota never had a chance.

I disagree - and I think it's cowardly to blame social media.  Just as it is cowardly for those who don't like the message to use the 24-hour news cycle as their excuse.

It's your responsibility to protect your company - on all fronts.  You're the executive.  You own the message.

Granted, you can't control all the channels on which messages will be sent - but you have to be on top of what is being said by you and your organization as well as how you react when it's being said about you.

Your reputation - your brand - is an investment and an asset.  You forget that at your peril.

Toyota has learned that lesson the hard way.  They kept quiet when they should have come out - ahead of the wave - and demonstrated that theirs is a brand that can be trusted.  That they've got the problem on their radar and are working it - assiduously - to ensure the safety and well-being of their customers.  That, even before anyone has asked, they are doing a preventive, proactive recall to make sure that everyone's car is in better shape than ever - and that you and your family are safe in their hands.

At no cost to the consumer.  Maybe with a loaner thrown in.

You don't have to make the same mistakes as Toyota.  In fact, you can use their mistakes to adjust your strategy and tactics to ensure that you win as a result of their losses.

In the meantime, my recommendation is that Toyota executives read that seminal book about their own success, The Machine That Changed the World.  Hopefully, they'll remember how to get back to where they were before they decimated themselves.