The Tavor
Braving Trust and Credibility
Can You Trust Social Media?
I'll Take The Stairs
Now That's Flexible
Toyota is a technology company with some of the most high-tech and “green” cars on the planet. But right now Totoya’s leaders seem to lack integrity, and they haven’t proactively handled the current crisis. As a result, everything they have built is in danger.
Too often, IT leaders think that their technical competency is sufficient. However, these days it takes far more to succeed. Of course, profitability is a key measure of achievement and sustainability. But if basic integrity, accountability, and open and skillful communication are absent, then no amount of innovation in the world can save you.
Looking back, no one would have thought that Toyota would go down in a flaming debacle of credibility lost. For years, Toyota ate the lunch of the largest American car manufacturers—and two of the three were driven to bankruptcy just last year. Moreover, they had a great reputation built on quality – and that rocketed Toyota to be the #1 car company in the world.
A reputation for quality gave Toyota a significant edge among potential buyers. Purchasing a Toyota meant investing in a car that would last years and years without defect or trouble—it was an investment in reliability and it was well worth the extra expense. Other car companies were discounting and incenting sales with low or zero interest rates, cash back, and extended warranties, and so on. But Toyota held firm and at times their cars even sold for above sticker price. In short, their brand elicited a price premium. Toyota had credibility and that credibility translated into an incredibly successful company.
Now Toyota has suffered a serious setback by failing to disclose and fix brake problems so serious that they have allegedly resulted in loss of life. Just today, the Boston Globe reports that Toyota has been sued in Boston by an individual who alleges that “unintended acceleration (of his Toyota vehicle) caused a single-car crash that killed his wife and left him seriously injured.” The Globe goes on to report that “dozens of people reportedly have been killed in accidents involving unwanted acceleration.”
While nothing is perfect, not even Toyota engineering, in my opinion the key to recovering from mistakes is to be honest, admit them, be accountable, and take immediate action to rectify. These are critical leadership must do’s! Had Toyota taken responsibility in those ways, I believe their reputation would have been enhanced rather than grossly tarnished as it is now, because ultimately people respect integrity above all else, and they will forgive mistakes when they are honest mistakes and quickly rectified.
Unfortunately, this has not occurred with Toyota, and the brake problems appear to be mistakes that were known and then not rectified—essentially, Toyota’s transgression may have been one of commission rather than simply omission. For example, this past week, the CEO of Toyota, Akio Toyoda, testified before Congress that “we didn’t listen as carefully as we should—or respond as quickly as we must—to our customer’s concerns.” However, in reality, company executives not only didn’t respond, but also actually apparently stalled a response and celebrated their success in limiting recalls in recent years. As Congressman Edolphus Towns, chairman of the House Committee on Oversight and Government Reform, stated: “Toyota's own internal documents indicate that a premium was placed on delaying or closing NHTSA investigations, delaying new safety rules and blocking the discovery of safety defects.” (Bloomberg News via the Austin American Statesman)
In other words, Toyota strayed from its promise to customers to put safety center stage. Rather, profit took over and became the benchmark of success.
Even the company’s own managers acknowledge the deep wound that this scandal has inflicted on the company, and have doubts about its leadership. According to the Wall Street Journal, a midlevel manager stated, “Mr. Toyoda cannot spell out how he plans to alleviate consumer worries….it is a recall after another, and every time Mr. Toyoda utters the phrase ‘customer first,’ it has the opposite effect. His words sound just hollow.’” Said another, “The only way we find out anything about the crisis is through the media….Does Mr. Toyoda have the ability to lead? That’s on every employee’s mind.”
Indeed, the Journal echoes these sentiments, noting that under Toyoda’s leadership, there was a focus on “getting the company back to profitability, after the company last year suffered it first loss in 70 years.” In other words, in an attempt to “reinstate frugality,” it appears that CEO Toyoda went too far and skimped on quality—becoming, as the saying goes, “penny wise and dollar foolish.” We will see if this debacle costs Toyota market share and hurts the bottom line over the intermediate to longer-term.
In recent times, we have seen a shift away from quality and credibility in favor of a fast, cheap buck in many sectors of the economy. For example, I have heard that some homebuyers actually prefer hundred-year-old homes to new construction due to their perception that the quality was better back then and that builders take shortcuts now. But somehow Toyota always stood out as a bulwark against this trend. It is therefore deeply disappointing to see that even they succumbed. While the company has a long road ahead to reestablish their credibility and rebuild their brand, I, for one, sincerely hope that they rediscover their roots and “do the right thing.”
Why Reputation Is The Foundation For Innovation
In the computer world, free is often the architecture and economic model of choice or is it?
We have various operating systems like Linux, Chrome, Android and more now costing nothing. Information is free on the Internet. Online news at no cost to the reader is causing shock waves in the print news world. There are thousands of free downloads available online for applications, games, music, and more.
What type of business model is free—where is the revenue generation and profit margin?
Yes, we know you can use giveaways to cross sell other things which is what Google does so well making a boat load of money (billions) from its free search engine by selling ads. Others are trying to copy this model but less successfully.
Also, sometimes, companies give product away (or undercharge) in order to undermine their competitive challengers, steal market share, and perhaps even put their rivals out of business.
For example, some have accused Google of providing Google Apps suite for free as a competitive challenge to Microsoft dominant and highly profitable Office Suite in order to shake one of Microsoft’s key product lines and get them off-balance to deflect the other market fighting going on in Search between Google and Microsoft’s new Bing “decision engine.”
So companies have reasons for providing something for free and usually it is not pure altruism, per se.
But from the consumers perspective, free is not always really free and is not worth the trouble.
Fast Company has an interesting article (October 2009) called “The High Cost of Free.”
“The strategy of giving everything away often creates as many hassles as it solves.”
Linux is a free operating system, yet “netbooks running Windows outsell their Linux counterparts by a margin of nine to one.”
“Why? Because free costs too much weighted down with hassles that you’ll happily pay a little to do without.”
For example, when you need technical support, what are the chances you’ll get the answers and help you need on a no-cost product?
That why “customers willingly pay for nominally free products, because they understand that only when money changes hands does the seller become reliably responsive to the buyer.”
And honestly, think about how often--even when you do pay--that trying to get good customer service is more an anomaly than the rule. So what can you really reasonably expect for nothing?
“Some companies have been at the vanguard of making a paying business of “free.” IBM, HP and other tech giants generate significant revenue selling consulting services and support for Linux and other free software to business.”
Also, when you decide to go with free products, you may not be getting everything you bargained for either in the base product or in terms of all the “bells and whistles” compared with what a paid-for-product offers. It’s reminiscent of the popular adages that “you get what you pay for” and “there’s no such thing as a free lunch.”
Sure, occasionally there is a great deal out there—like when we find a treasure at a garage or estate sale or even something that someone else discarded perhaps because they don’t recognize it’s true value—and we need to be on the lookout for those rare finds. But I think we’d all be hard pressed to say that this is the rule rather than the exception. If it were the rule, it would probably throw a huge wrench in the notion of market equilibrium.
And just like everyone savors a bargain, people are of course seriously enticed by the notion of anything that is free. But do you think a healthy dose of skepticism is appropriate at something that is free? Again, another old saying comes to mine, “if it’s too good to be true, it probably is.”
Remember, whoever is providing the “free” product or service, still needs to pay their mortgage and feed their family too, so you may want to ask yourself, how you or someone else is paying the price of “free,” and see if it is really worth it before proceeding.
From the organization’s perspective, we need to look beyond the immediate price tag (free or otherwise discounted) and determine the medium- to long-term costs that include operations and maintenance, upgrades, service support, interoperability with other products and platforms, and even long-term market competition for the products we buy.
So let’s keep our eyes open for a great deal or paradigm shift, but let’s also make sure we are protecting the vital concerns of our users for functionality, reliability, interoperability, and support.
Is Free Worth the Price?
