When organizations choose to shift their corporate mission and redefine organizational goals, it is vital that they carefully evaluate the potential risks and fallout from redefined core value propositions and tactics. A case in point is Toyota—a company that has built its reputation on the quality of its product, but in recent years focused its sights on profits.
With the introduction of the Prius to the U.S. market in 2000, it appeared that a strategic risk had paid off, Toyota had created a hybrid engine for the mass market that was a clear success and was even marked in the press by a drove of Hollywood celebrity drivers including Leonardo DiCaprio, Cameron Diaz, Larry David, Billy Joel, David Duchovny, and more.
However, in recent years Toyota has been plagued by a series of escalated vehicle malfunctions. While the entire scope of the financial loss is currently unclear, since 2009 the company has initiated over 14 million recalls worldwide and more than $48.8 million in fines in the U.S. alone. The world’s number one automaker has also temporarily suspended U.S. sales of eight of its top models and halted production in five U.S. plants, an unprecedented step that clearly demonstrates the effort being made to maintain Toyota’s once solid reputation for customer satisfaction.
Overwhelming growth and the pressure to match increasing demand with production to has stifled Toyota’s promise of reliability. It is yet unclear what affect these recalls will have on Toyota’s global standing in years to come, but potential customers will certainly approach the automaker’s brand more tentatively than in decades past.
The lesson here is that all corporations must be prepared to mitigate risk, especially when taking such a precarious step as redefining their core vision and business strategy. Toyota now faces the huge challenge of recreating its customer brand loyalty while at the same time maintaining the momentum that their swollen infrastructure investments require.