It’s been fascinating to watch the media coverage and Web chatter around Toyota’s massive global recalls due to faulty accelerator pedals. Check out some of the media coverage here and here. Toyota has received kudos from some for being proactive about the recall, while others accuse it of knowing about the problem but keeping it buried. To me the bigger story is the damage to Toyota’s once pristine  reputation as a corporate paragon.  Even accounting for media packaging, there’s no shortage of Toyota customers – and fans – willing  to share their deep disappointment and even anger at the developments, almost as if they’ve been personally betrayed.

The lesson here – if we needed another example – is that even the strongest brands are fragile, and vulnerable to a rapid and even permanent decline in equity with consumers. That’s particularly true if the scandal is related to the organization’s key assets. Indeed, some pundits suggest Toyota’s fall from grace is so acute because its lofty reputation was based on the quality and reliability of its products, efficiency of its factories and progressive management culture. All three of these assets have been brought into question…if not obliterated. Is it possible that Toyota’s apparent obsession with passing General Motors as the world’s largest automaker made it take its eyes off the ball? If so, it wouldn’t be the first time hubris caused the downfall of an organization.

Another conclusion I draw from this episode is that old chestnut of PR and crisis planning – building a “goodwill” bank – may not be the insurance policy it’s cracked up to be. I assume Toyota has spent plenty of time and resources trying to burnish its reputation. Solid corporate citizen…check. Manufacturing legend…check. Dependable employer…check. None of that seemed to matter much when the scandal hit the airwaves. That magic pixie dust of brand reputation – trust – is hard to earn but easy to lose. It will be interesting to watch the outcome of this scandal – not just in the short-term (the recall will reportedly cost billions in lost revenue) but over the next few months and years. The one thing in Toyota’s favor is that consumers seem willing to forgive and forget.

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