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Victor L. Heller and John R. Darling
Victor L. Heller is Director of Executive Education and Associate Professor of Marketing at the Center for Professional Excellence, The University of Texas at San Antonio, San Antonio, Texas, USA. John R. Darling is Distinguished Visiting Professor of Management at The University of Texas at San Antonio, San Antonio, Texas, USA.
‘‘We are now at the start of what may become the most dramatic change in international order in several centuries . . . What we are facing isn’t the single shift of corporate leaders . . . as much as an avalanche of ceaseless change . . . creating unprecedented disruption and dislocation’’ (Ramo, 2009). In essence, corporations may be entering a period of unprecedented crises, from the airline industry to the mining industries. When a corporate crisis approaches, it is much easier to seize and act upon it early, but it must be realistically recognized. Once a corporate crisis has passed through the threshold of the initial pre- (preliminary) crisis, it is much more difﬁcult to act effectively and thus the opportunity to more easily deal with it passes. Worldwide crises, from a global environmental crisis to a loss of national identity, are impacting corporations. Additionally, the world is truly becoming a corporate, interrelated marketplace, with walls, both physical and psychological, falling, barriers collapsing, boundaries blurring, and technology ﬂattening the overall landscape, and at the forefront is the consumer-centric age (Friedman, 2008). Friedman, 2006 refers to this phenomenon as a triple convergence of the elimination of all walls, ceilings and ﬂoors to create a new ﬂat world platform. Pink (2005) describes this as a seismic – though as yet undetected – shift now under way . . . moving from an economy and a society built on the logical, linear, computer-like capabilities of the Information Age to an economy and a society built on the inventive, empathic big-picture capabilities of the Conceptual Age. The corporate leader’s implications in managing a crisis in this new age are, indeed, complex and surreal in comparison to previously existing conditions. In today’s triple-convergence world, virtually every corporation in every nation can expect a crisis to be on the horizon. The constant potential of crises has also taught the corporate world that a crisis can occur with little to no warning, anytime and anywhere. It can happen to any corporation, large or small, at every state of development, in every industry, and operating locally, nationally or internationally. It is, in other words, the safest of assumptions that a crisis looms on the horizon of every corporation. This has been referred to as a ‘‘Black Swan.’’ situation. This condition is an improbable and unnerving event with three basic characteristics: it is unpredictable; it causes massive impact; and after the fact, an explanation is concocted or invented that makes it appear less random and more predictable than it was (Taleb, 2007). However, ‘‘Black Swans’’ are not necessarily bad news – merely reality. If corporate leaders will accept this, then they will be in the right frame of mind to accept the contention that forms a basic premise of this article: with proper advanced contingency planning and preparation, and appropriate recognition and response, there can often be a positive opportunity side to a crisis.
JOURNAL OF BUSINESS STRATEGY
VOL. 32 NO. 5 2011, pp. 4-13, Q Emerald Group Publishing Limited, ISSN 0275-6668
‘‘ Once a corporate crisis has passed through the threshold of the initial pre. corporate leaders must ﬁrst understand that crisis management and mismanagement are not the same. it is much more difﬁcult to act effectively and thus the opportunity to more easily deal with it passes. acute crisis. corporate crisis management is not a quick-ﬁx solution to the crisis activities. events. Thus. orderly response to crisis situations. 5 2011 JOURNAL OF BUSINESS STRATEGY PAGE 5 j j . Perhaps it may be that what corporate leaders do not know is much more important than what they do know. Understanding and using these quantum skills helps corporate leaders address issues more intentionally and creatively. systematic corporate crisis management creates an early detection or warning system. to stop working in their areas to address the crisis. Additionally. 32 NO. acting responsibly.Fink (1986) has identiﬁed four distinct phases of a corporate crisis paradigm – focusing on the pre-crisis. thinking paradoxically. It is typically a combination of operating units brought together to manage a particular situation with every leader communicating (Goleman. In essence. identifying. or issue. knowing intuitively. Conceptual framework Nature of crisis management In analyzing the nature of crises and corporate crisis management. and trusting life’s processes can be of enormous value for effective corporate crisis management. corporations engage in crisis-type situational reactions. This response paradigm permits the corporation to continue its day-to-day operations while a particular crisis is being resolved. Furthermore. crisis management does not require all employees.(preliminary) crisis. due to inappropriate or inadequate planning. or lack thereof. Corporate crisis management entails forecasting. The case analysis focuses on corporate leadership of the infamous Toyota 2009-2010 defective acceleration recall. These phases provide the analytical foundation for the present case analysis. event. Utilizing the Fink paradigm. and establishing procedures to prevent or cope with the crisis. Without ordered priorities. Often. particularly when consumer safety threatens the reputation of the corporation. Crisis management is systems based. effective corporate crisis management provides corporate leaders with a systematic. 2002). As a result. The contemporary-based quantum skills of seeing intentionally. and to give them a deeper sense of meaning and fulﬁllment. feeling vitally alive and involved. studying and acting upon crisis issues. the objective of this article is to explore the efforts necessary for successful corporate crisis management. Deﬁnition of a crisis The term ‘‘corporate crisis management’’ is commonly used because it can apply to a wide variety of circumstances that might disrupt the normal course of activities in an organization. chronic crisis and crisis resolution stages. shown in an effort to deal effectively with the evolving crisis. It is not solely represented by a separate operational unit within an organization. reaction time is often very narrow. This is considered mismanagement! Corporate crisis management comprises a systematic approach for dealing with real crises (activities. or the absence of any kind of scenario planning. corporate leaders are often unable to continue functioning in the face of true crisis situations. However. corporate leaders seldom know which situations call for immediate attention and which do not: what can be considered a pre-crisis activity. or issues) so that the corporation continues to function as normally as possible. ’’ VOL. or even a large number of them. events or issues challenging the corporation.
chronic crisis stage.000 automobiles for ﬂoor mats that ran the risk of sliding forward and trapping the gas pedal. or. crisis resolution stage. an unstable time or state of affairs in which a decisive change is impending – thereby involving corporate leaders with either a distinct possibility of a highly undesirable outcome or a distinct possibility of a highly desirable and extremely positive outcome. but also to recognize it in a timely fashion and with a will to address the issues represented. Not all crises have all four of the PAGE 6 JOURNAL OF BUSINESS STRATEGY VOL. A corporate crisis can also be described as ‘‘a situation that has reached a critical phase’’.(preliminary) crisis stage. of course. What are the early warning signs? What analyses serve to give early warning of change and possibility of a future corporate crisis? In all corporations. pre. Crises can be of a short duration or a long duration. A corporate crisis has been deﬁned as a ‘‘turning point for better or worse’’. how many people need emergency care. including the nature of the event. how many and how quickly individuals inside and/or outside of a particular corporation need to be helped or informed. can be appropriately managed. ‘‘opportunity management’’. the process may move beyond the corporation to determine the interaction of external and internal environments and factors in the various operational arenas involved. A crisis is. how much interaction with the media is necessary. the label is not the important thing. acute crisis stage. with minor or major impacts on a particular ﬁrm. What matters is the overall process used to systematically and continuously audit the environment and operations in all corporate areas. 3. although in some cases these phases can be so closely related that they fuse together in close proximity. the importance of the issue to the stakeholders involved. Corporate crisis planning is the art of removing much of the risk in uncertainty. or ‘‘crucial time’’. thereby allowing more control over the destiny of an organization by the meaningful management exerted by its corporate leadership. how much the corporation needs to assert control and demonstrate that it is capable of responding. A crisis may not be necessarily bad but merely characterized by a certain degree of risk and uncertainty (Fink. in the case of more optimistic corporate leaders. however interpreted. who needs interpretation of the events and how accessible those individuals are. and 4.‘‘ Toyota’s pre-crisis stage began in the fall of 2007 when the ﬁrm recalled 55. However. ’’ Some corporations prefer to replace the word ‘‘crisis’’ with the word ‘‘issue’’. for corporate leaders to recognize and begin to take control of the crisis situation. and how quickly the corporation needs to respond. what the media choose to emphasize. therefore. the impact on other corporations and industries. 2. How a corporate crisis is deﬁned depends on a number of variables. 5 2011 j j . 1986). A crisis in a corporation can therefore consist of as many as four different and distinct phases. and plans for how a crisis. The corporate leadership has to recognize the pre-crisis in order to intervene proactively. Instead of calling it ‘‘crisis management’’. The operative word with regard to the anatomy of a crisis is. Anatomy of a crisis The real challenge for corporate leaders is not just to recognize a crisis. a ‘‘decisive moment’’. 32 NO. it might be referred to as ‘‘issues management’’. These phases are: 1.
particularly when crises occur across cultural boundaries – as in the case of Toyota. design and production of its vehicles to meet local government standards and local market needs and wants. interactive. Toyota was able to build long-term relationships with local suppliers. In 1945. logical and irrational. development. The distinction is crucial when it comes to successful crisis management. there is a profound difference between management and leadership. These contemporary corporate leaders help to create enhanced capacity in their people. corporate leaders must develop and nurture new skills at all levels of the organization that are congruent with the perspective of corporations as human-based systems that are fundamentally encased in highly changeable. Thailand. 5 2011 JOURNAL OF BUSINESS STRATEGY PAGE 7 j j . 32 NO. Effective corporate leadership in dealing with crises requires individuals who do not depend on hierarchy and subordination. By the end of the 1960s. orderly and chaotic – and a world in which the process of observation somehow affects that which is observed. course. and the USA. By localizing production. machine-like operations. to have responsibility for. action or opinion. The basic principles of quantum mechanics and relationships provide meaningful insights into a world that is objective and subjective. To manage means to bring about. but each of the four is very common to any major crisis (see Figure 1). linear and nonlinear. Toyota entered into automobile manufacturing. rather than stable. systemic working conditions. to inﬂuence. Malaysia.crisis stages noted above. By the mid-1950s. Toyota was developing a worldwide presence with manufacturing facilities in Brazil. South Africa. To be successful in today’s ‘‘Black Swan’’ or crisis-intensive world. Brief history of Toyota The Toyota Motor Company was established in 1933 as a Japanese domestic truck manufacturer. and to guide in direction. and to conduct – to lead means to perceive. to accomplish. In this regard. Toyota had initiated its international marketing efforts based on a philosophy of localizing research. vendors and labor. Role of corporate leadership It is through the development and implementation of meaningful strategic corporate leadership that effective crisis management becomes a reality for the organization. Figure 1 Phases of a typical crisis cycle Preliminary Crisis Crisis Resolution Acute Crisis Chronic Crisis VOL. but corporate executives should recognize that both are important.
By October 2009. 2004). 5. Personally overview issues to thoroughly understand the situations. and then implement decisions rapidly.2 million vehicles. Toyota continues to be positioned as a world leader in the manufacturing of automobiles. thoroughly tested technology that serves people and processes. Level out the manufacturing workload. Base your management decisions on a long-term philosophy. ’’ In 2001. 10. Create continuous process ﬂows to bring problems to the surface. The crisis situation Toyota’s pre-crisis stage began in the fall of 2007 when the ﬁrm recalled 55. thoroughly considering all the options. Toyota adopted a Code of Conduct. live the philosophy. 2. Use only reliable. Make decisions slowly by consensus. Toyota claimed the second PAGE 8 JOURNAL OF BUSINESS STRATEGY VOL. even at the expense of short-term ﬁnancial goals. 8. and teach it to others. Toyota ofﬁcials announced a second recall of an additional 2.3 million vehicles because of continued problems with the gas pedal. Develop corporate leaders who thoroughly understand the work. 12. 7. 6. In January 2010.000 automobiles for ﬂoor mats that ran the risk of sliding forward and trapping the gas pedal. Toyota announced that month that it was recalling the ﬂoor mats on 4. Recognize standards as the foundation for continuous improvement and employee empowerment. 14. Today. 5 2011 j j . Use visual control so problems are not hidden. The Toyota Way statement incorporated 14 principles: 1. 11. measured both in unit sales and in net sales.’’ designed as a guideline for all employees (Liker. Build a culture of stopping to ﬁx problems to get quality right the ﬁrst time. fell down an embankment and caught ﬁre. Use ‘‘pull’’ marketing distribution and promotion systems to avoid overproduction. 4. but also to recognize it in a timely fashion and with a will to address the issues represented. known as the ‘‘Toyota Way 2001. This ﬂoor mat and gas pedal issue became a public concern when in August 2009 a 2009 Lexus suddenly accelerated out of control. Respect the extended network of partners and suppliers by challenging them and helping them improve. 32 NO. Have exceptional people and teams who follow the company’s philosophy.‘‘ The real challenge for corporate leaders is not just to recognize a crisis. and company ofﬁcials instructed dealers to remove the gas pedal and shorten it so it would not interfere with the ﬂoor mats. hit another car. Become a learning organization through relentless reﬂection and continuous improvement. 3. the National Highway Trafﬁc Safety Administration had initiated nine separate investigations into claims of acceleration by Toyota automobiles during the previous decade. 13. 9.
with extensive media awareness. 2010). This second recall accounted for over 50 percent of Toyota’s US annual sales. 34 deaths were alleged due to the pedal entrapment/ﬂoor mat problems over a ten-year period (Schepp. no action is taken as a result of a pre-crisis – a lack of response that may be caused by ‘‘analysis paralysis’’ or obsessive decision making within the corporate ﬁrm. The ideal crisis paradigm would appear similar to Figure 2 that reﬂects movement directly to crisis resolution. corporate leaders failed to be transparent in the face of Figure 2 Appearance of a preferred crisis cycle Preliminary Crisis Crisis Resolution Acute Crisis Chronic Crisis VOL. Acute crisis stage Knowing how to recognize and manage the pre-crisis stage before it erupts into the far more serious acute crisis stage is often what spells the difference between a corporation that beneﬁts during a crisis. but no action is taken and an acute crisis occurs. In the case of Toyota. At this stage. and corporate leadership that suffers needlessly. and an additional 2. a pre-crisis awareness may be oblique and much harder to recognize. how and when the crisis erupts further. Toyota ofﬁcials announced that 2 million vehicles in Europe were recalled for the same problem (Brennan. but also announced that 1. ﬁnancial. The reason why pre-crises are so important to recognize and or acknowledge early is that they are much easier to manage at this stage. As of January 2010. the pre-crisis stage should have become obvious to corporate leaders and appropriate corrective steps should have been taken as early as the fall of 2007.2 million vehicles for the pedal entrapment/ﬂoor mat problem.recall was unrelated to the ﬂoor mat recall. 32 NO. Regarding Toyota. and public relations disaster. it would have been much more logical to take care of the problem before it became acute. the key decision is to control as much of the crisis as possible. and before it erupted and caused additional complications. Once Toyota’s warnings ended and the corporation passed from the pre-crisis to the acute crisis stage.3 million vehicles for the accelerator pedal problem. In many respects. Toyota corporate leaders failed to understand the pre-crisis to be a predecessor to an acute crisis. Occasionally. If the acute crisis cannot be controlled. corporate leaders should determine if they can exert some degree of inﬂuence over where. In the Toyota case. which may be extremely short or even immediate. 2010). The latter was true for Toyota.7 million Toyota vehicles were affected by both recalls. the acute crisis stage is the point of no return with regard to corporate crisis management. That same month. and sometimes this stage is evident. 5 2011 JOURNAL OF BUSINESS STRATEGY PAGE 9 j j . corporate leadership could not recover the ground lost in the process. the pre-crisis stage is the warning stage. Crisis stages and Toyota mistakes Pre.(Preliminary) crisis stage As noted earlier. the crisis became an international consumer safety. Toyota ofﬁcials had recalled approximately 4. For Toyota. In some situations. By January 2010.
using only reliable. the chronic crisis stage will often continue to be of long duration and require signiﬁcant resources. the danger may be limited to a speciﬁc area of the corporation or to a particular population within the corporation. and being a learning organization through relentless reﬂection and continuous improvement. As previously noted. the chronic crisis stage will exist for some time into the future based on the inter-connectedness of the automobile parts and assembly processes used in several different Toyota models. Toyota corporate leadership prided itself on the principles of basing management decisions on a long-term philosophy. reviewing issues to thoroughly understand the situations. but because of its intensity corporate leaders may perceive it as the longest and most difﬁcult phase. as reﬂected in Toyota’s efforts to reestablish its lost customer trust in both the corporation and in its vehicles. further US congressional reviews. whose core principles incorporated a pre-crisis detection process. this period may also become a time for congratulations and for plaudits and testimonials of how the crisis was successfully handled. The acute crisis stage is often the shortest of the four phases in the crisis paradigm. In Toyota’s case. and why the crisis event occurred – and taking appropriate actions. Failing to gauge the potential speed and intensity while the crisis was still in the pre-crisis stage. Leaders need to think creatively and ensure that all of the appropriate stakeholders know what is happening and feel involved in the corporation’s response to the crisis. which is certainly a signiﬁcant possibility. The speed is dependent primarily on the type of crisis. Corporate leaders often ﬁnd difﬁculties in managing a crisis during the acute phase because of the avalanche-like speed and intensity that often accompany and characterize this stage. In a given crisis. and of healing for Toyota. or what went wrong. if any. Chronic crisis stage During the chronic crisis stage. creating continuous process ﬂows to bring problems to the surface. becoming the largest automobile manufacturer in the world. This stage will also encompass a period of recovery. What went wrong at Toyota was not a problem of processes involving employees and middle management. thoroughly tested technology. and a long period of interviews and explanations. corporate leadership changes.media scrutiny. even at the expense of short-term ﬁnancial goals. In many respects. 5 2011 j j . the focus initially was on the decisions of the North American corporate leadership. It may also be a time of ﬁnancial upheaval. the Toyota corporate leadership lost the opportunity to prepare for managing and controlling the crisis through the acute state. For Toyota. and/or assembly processes located in different assembly plants. while the intensity is usually determined by the severity and/or value of the possible outcomes. government audits. building a culture of stopping to ﬁx problems to get quality right the ﬁrst time. Skillful corporate leaders often use the chronic crisis state wisely as an opportunity for further corporate crisis management scenario planning – analyzing what went right. Toyota corporate leaders may have lost their sense of operational PAGE 10 JOURNAL OF BUSINESS STRATEGY VOL. could not have involved the appropriate corporate leaders at this stage of the crisis. and/or other operational issues. corporate leaders and other appropriate individuals needed to assess how much immediate danger existed and determine which stakeholders. 32 NO. continuous improvement and employee empowerment. were most vulnerable to the crisis and its repercussions. timely and effective way to a mechanical problem that evolved into a product safety and public relations disaster. the crisis should come under control as quickly as possible. but rather a problem of senior leadership in North American and Japan failing to acknowledge the issues and respond in a transparent. and the consequent magnitude of the many negative events that occur during the acute crisis stage. is when such lingering issues settle in. It is difﬁcult to understand how Toyota. the Toyota’s corporate leadership team failed to effectively deal with the acute crisis stage and dissipate the enormous negative results that this stage brought into focus. but because of the lack of attention during the pre-crisis stage. continuing media coverage. of self-analysis or self-doubt. Once Toyota entered the acute crisis stage. In achieving greatness. With good crisis management skills. If there is to be a continuing government investigation.
Because crises are not tiered on a convenient plateau system. and. as was true at Toyota. However. corporate leaders took the ﬁrst public steps to address the crisis by testifying before the US Congress. 32 NO. risking the trust of its dealers and customers worldwide. a healthy paranoia was lost. 5 2011 JOURNAL OF BUSINESS STRATEGY PAGE 11 j j . the light of resolution at the end of the tunnel may very well be the pre-crisis light of an oncoming crisis. but what is eminently more sensible. Crisis resolution stage This is the fourth and ﬁnal stage that should be the corporate crisis manager’s goal during the preceding three phases. crisis cycles often make it difﬁcult to see where and when a corporate crisis ends and another begins. the leader’s objective as an effective crisis manager must be to seize control swiftly and calculate the most expedient route to achieving a resolution of the crisis. Today. in March 2010. or at what stage the corporation is in when encountering multiple crises simultaneously (see Figure 3). and correct the critical safety problems it was facing was the wrong approach. The list may well be inﬁnite. However. all of the crises their corporations potentially may face in the future. These corporate leaders failed to face the public for several weeks and appeared less than forthcoming about critical safety issues. admit to. Toyota leaders have acknowledged full responsibility for realigning the corporation to address the crisis. When the pre-crisis stage is spotted. is for corporate leaders to identify crisis planning processes necessary for assessing and VOL. a major question remains: ‘‘Has this crisis permanently marred a brand that had until recently been synonymous with quality and reliability?’’ Crisis planning and relationships It would be a useless investment of time and energy for corporate leaders to inventory all of the ‘‘Black Swans. Toyota has joined the ranks of a number of other corporations facing unpredictable corporate crises in the ﬁrst decade of the twenty-ﬁrst century – corporations whose leaders engaged in self-righteous denial of the potential risks and took half hearted measures to resolve the challenges facing their organizations. When Toyota leaders became ﬁxated on their own success and the success of their company. if at all possible. as might already have been discovered in any given corporation. The Toyota corporate leadership merely wished the risk to go away.‘‘ Corporate leaders often ﬁnd difﬁculties in managing a crisis during the acute phase because of the avalanche-like speed and intensity that often accompany and characterize this stage. and much more manageable. second.’’ that is. nearly three years after the beginning of the Pre-crisis stage. The Toyota leadership has indicated that failure to fully recognize. The corporate leader’s goal is to focus the turning point into an opportunity. if the pre-crisis opportunity slips by unchecked. However. safety. the actions and decisions during the acute and chronic crisis stages should be guided by the primary goal of: ‘‘What can be done by corporate leaders to speed up a response to resolve this crisis as quickly as possible?’’ In reality. quality. While corporate humility has perhaps been an essential element of Toyota’s learning and improvement processes. volume – priorities aligned with the company’s historical fourteen principles of management. This is especially true in situations where the ripple-effect complications of one crisis set off one or more other crises. third. ’’ balance and fell victim to the arrogance of their success and power. arrogance may have became the assassin of Toyota’s recognized success. speciﬁcally referring to the causes of the recall – and that Toyota corporate leaders were assuring the buying public that Toyota had realigned its priorities on: ﬁrst.
’’ Crisis management in an organization can often be a positive ‘new trail’ for a corporation if responsible leaders will reﬂect true leadership skills. but it is virtually impossible in times of crisis as the corporate constituencies may often move to protect their own special interests. technological. and a true sense that decisions are made openly – and that a realistic climate of fairness exists. social. competitive and other developments over a period of time. 5 2011 j j . Comprehensive planning must become an integral part of a corporation’s mode of operation in good times and bad. The uncertainties of the future call for a more inclusive process in decision-making. At the heart of this exercise would be appropriate information systems. and would identify trends and forecasts for possible impact on the corporation and its operations. which is a product of the collection of relevant data on economic. It also requires involvement by all affected stakeholders in the interactive and decision-making processes. An essential element of this system would be the capabilities to describe the corporation’s current situation and to make solid projections about its future. 32 NO. based on concern about the future success of corporations. would connect the corporation with the larger world. Summary and conclusions Ralph Waldo Emerson counseled. government. go instead where there is no path and leave a trail. Such is the challenge that now faces Toyota for the future. planning procedures.Figure 3 How crisis cycles may appear Preliminary Crisis Acute Crisis Chronic Crisis Crisis Resolution Crisis Resolution Preliminary Crisis Acute Crisis Chronic Crisis Acute Crisis Chronic Crisis Crisis Resolution Preliminary Crisis Chronic Crisis Crisis Resolution Preliminary Crisis Acute Crisis dealing with future crises. A continuous corporate-oriented environmental scan. and decision-making techniques. At the center of any meaningful system for problem-recognition and aligned decision-making lies a soundly based information system. The irony of the crisis planning process is that planning has often been seen as less important in times of calm. ‘‘Do not go where the path may lead. and a continued afﬁrmation of the importance of their positions in the domestic and international marketplaces. seize the opportunities available to make a difference in the corporation and the lives of the PAGE 12 JOURNAL OF BUSINESS STRATEGY VOL.
A Whole New Mind. (2006). Toyota is working on processes to engage the voices of stakeholders around the world to inform corporate leaders in a timely manner of potential problems.stakeholders they are called upon to serve.emeraldinsight. and concurrently a Distinguished Visiting Professor International Business. Crisis resolution. Corporate Crisis. Goleman. J. Random House.com/reprints VOL. Schepp. Toyota vows to win back customers’’. J. Leadership.’’ Whether or not Toyota corporate leaders have successfully forged a new trail by addressing the crisis will not be known for some time. NY.com (accessed 13 March 2010).aol. (2010). McGraw-Hill. Heller is the Director Executive Education and an Associate Professor of Marketing at the University of Texas at San Antonio. as well as. The Age of the Unthinkable. corporate leaders can be a very great many. (2005). Helsinki. in the long run these decisions may help to restore Toyota’s reputation and ensure a healthier ﬁnancial future. Ramo. New York. R. (2004). D.com (accessed 15 March 2010). Keywords: Automotive industry. He is the corresponding author and can be contacted at: victor. available at: http://autos. New York. American Corporate Leaders Association. (2002). Aalto University. Finally. But hopefully. NY. Sales regions have been given more local authority. Fink. S. But what was obvious was that crisis management did not seem to be in the Toyota’s leadership thinking. The University of Texas at San Antonio. A slow initial pre-crisis response. New York. ‘‘Toyota announces January 2010 recall for 2. 16 February. Hot. Taleb. New York. Straus and Giroux. School of Business. 32 NO. 21 January. The Black Swan. Finland. To purchase reprints of this article please e-mail: reprints@emeraldinsight. None of these corporate decisions will recover the over $2-billion the recall cost Toyota in direct costs for repairs and upgrades to existing models.edu John R. MA. Farrar. (1986).dailyﬁnance. Was Toyota’s response atypical or would it be typical for any corporate leadership team? Unfortunately. NY. Darling is a Distinguished Visiting Professor of Management. Riverhead Books. ‘‘As death tolls mount. Strategy References Brennan. The World Is Flat. T. T. (2007). NY. Corporate Leaders: Planning for the Inevitable. of successful managerial corporate leadership. (2008). New York. NY. NY. D. 5 2011 JOURNAL OF BUSINESS STRATEGY PAGE 13 j j .com Or visit our web site for further details: www. N. Today. New York. Harvard University Press. Pink. NY. Farrar. such corporate responses as those of Toyota may be too familiar. The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer. Straus and Giroux. Friedman. Primal Corporate Leadership: Learning to Lead with Emotional Intelligence. litigation costs. and too little compassion and concern for consumers adversely affected by the product during the crisis resolution may too often be typical. Little Brown and Company. minimizing the acute crisis through foot-dragging on the product recall. Friedman. Crisis management. poor communication with the public about the problem in the chronic crisis stage. Boston.heller@utsa. Liker. D. and throughout this exciting journey remember that ‘‘in the arena of crisis management. About the authors Victor L. (2009). (2010). New York.3 million vehicles to ﬁx sticky accelerator pedal’’. Flat and Crowded. available at: www. corporate leadership has created an Automotive Center of Quality Excellence and created a new corporate position for product safety.