Internal Communication Is Key to Repairing Toyota Reputation

Brands Off Track Should 'Market Inward' -- Just Ask Starbucks

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NEW YORK ( -- There's a lot Akio Toyoda can learn from a cup of coffee.

Much has been made about "the Toyota Way" -- the company's almost cultish fixation on quality -- and as it looks to climb out of the mess, Mr. Toyota could learn from how Starbucks's Howard Schultz righted that brand.

Scott Bedbury, former CMO at Starbucks, now CEO of Brandstream
Scott Bedbury, former CMO at Starbucks, now CEO of Brandstream
In 1995, Scott Bedbury, then the chief marketing officer at Starbucks, got a visit in his office from CEO Howard Schultz, who wanted to discuss an issue that was starting to worry him -- the company's rapid growth. That year the chain had just opened its fifth store in New York City and was about to go from opening one store a week around the country to one store a day while rapidly expanding its product offerings.

"Howard said he was deeply concerned that we were beginning to compromise the values that got us where we were and that he would rather commit to a slower growth curve and take the wrath of Wall Street than compromise what he had worked so hard to build," said Mr. Bedbury, now CEO of Brandstream, a brand-development company. In the end, pulling back and refocusing the company's mission internally is what saved Starbucks, Mr. Bedbury said. Without it, "I am convinced it would have peaked 10 years ago and gone the way of Boston Market and others that chased short-term financial rewards at the expense of brand equity."

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It's a lesson on the importance of "marketing inward," or staying true to a company's internal mission and keeping the frontlines focused on it -- something Akio Toyoda, president-CEO of Toyota, and Jim Lentz, Toyota Motor Sales USA president-chief operating officer, have conceded they forgot in their quest to make Toyota the world's biggest automaker.

"With the rapid expansion of production, perhaps we weren't able to develop appropriate engineering skills and human resources," Mr. Toyoda said. "The basic rule of the Toyota Production System is to build only as many cars as can match demand, and we ourselves broke that rule."

Many industry professionals believe that breakdown caused many in the company to lose sight of its mission of producing safe and quality cars. Peter DeLorenzo, author of "United States of Toyota," said Toyota's obsession with becoming the world's No. 1 automaker clashed so strongly with its normal operating procedure that it "completely went off the rails."

"Part of the 'Toyota Way' was always based on making sure that Toyota's human resources were trained, ready and up to speed with the 'way' things were supposed to be done, before a new facility opened," Mr. DeLorenzo said. "But in recent years, they were doing everything at once -- building, the plant, hiring the people, training them and shortcutting their own processes -- and it's been a train wreck. When you start shortcutting time-honored processes in a company that's so big on tradition like Toyota, things fall through the cracks and something like becoming No. 1 was more important, per se, than the time-honored calling cards of safety and quality."

Mr. DeLorenzo said internal communication is crucial in any rapidly expanding organization, but especially so for Toyota, which is insular to begin with. He believes the lines of communication only extended throughout the organization on a need-to-know basis.

"You just can't do it that way," Mr. DeLorenzo said. "Toyota was opening plants and accelerating new-product programs at a breakneck pace, and ultimately they lost their way completely."

Conversations in hallways
Mr. Bedbury, who also served as Nike's head of advertising, said effective internal-communications programs have to be a mix of the formal, like the quarterly open forums held at Starbucks, and informal programs. The motto at Nike was "the brand was sacred," he said, adding, that hitting monthly targets wasn't the most important thing. "Meeting rooms and formal meetings were the necessary banes of our existence at Nike," he said. "The real insightful conversations about what was happening at the company happened in the hallways, jogging trails or in the sports pub on campus. We called it 'the hallways of influence.'"

Mr. Bedbury said the fix won't be easy because of the culture within Japanese companies. "Toyota thinks this is going to be fixed by reworking their HR program," he said. "But a lot of this is about culture and how Japanese companies work. There's a big divide between leadership and the average worker in a Japanese corporation."

Bob Matha, senior council at OgilvyImpact, the internal-communications and -change group at WPP's Ogilvy, said a breakdown in internal communications is a common thing in a fast-growing company. "What happens is that leadership's direction, as they see it, becomes inconsistent with the business process," Mr. Matha said. "Leadership speaks in very broad terms, and as it goes deeper in the organization, people are driven less by what top leaders say and more by their business-planning processes. Maybe they did run out of trained engineers, but more likely they were pushed by business priorities to take shortcuts and actions that were inconsistent with how the organization has always acted in the past when they were successful and built very safe cars."

Mr. Bedbury said the Toyota crisis has revealed issues on so many levels that it's going to be more than just a case study in crisis communications. "We'll look back and this will rewrite the textbooks on crisis communications, business ethics and HR processes," he said.

So how does a company keep its mission top of mind for all employees without getting overly preachy?

Chanting the company's mission statement each morning or requiring everyone to make it their screensaver will only make employees feel like part of a cult. Careen Winters, exec VP at Interpublic Group of Cos.' MWW Group, said her clients integrate the content of their mission statement into daily conversation -- when it's demonstrated as part of day-to-day operations, it sends a signal to employees that it's important.

A mission statement and business objectives need to be tied together for a company to succeed, said Brian Burgess, VP-director of employee engagement at Publicis Groupe's MS&L. "If you demonstrate the alignment of company actions to business strategy and mission, it can keep people and companies on course." And align your performance metric with components of a mission statement.

The speed of growth can mask a focus on mission. "But that makes it even more critical to treat internal communications as a discipline across the enterprise and not something that is only owned by the internal communications group or the HR group," said Jerilan Greene, exec VP-change and employee engagement at Edelman.

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