GM moved quickly to diffuse a potentially devastating crisis by continuing to learn from Toyota--in this case, avoiding Toyota's mistakes at the beginning of its own product crisis last year.
Media pounced (as they inevitably do) on GM soon after the National Highway Traffic Safety Administration launched an investigation into the Chevy Volt, an advanced plug-in hybrid electric car. A Volt had caught fire three weeks after it had been crash tested, touching off a crisis with far-ranging consequences: to GM (while not expected to make a positive contribution to GM earnings for many years, the Volt is the most visible symbol of the potential of the new GM, reborn after the bankruptcy of the old one), for the Obama Administration (which rightly has taken credit for saving thousands of American jobs with its rescue of GM), and for the nascent electric car industry (which are almost universally powered by lithium ion batteries similar to the ones used in the volt).
Remember that reports of flaming laptop computers originating from over-heating lithium ion batteries forced Dell in 2006 to initiate the largest recall in the history of personal computers.
The most important action for GM was to commit to do the right thing, not just set out to prove that the Volt was a safe vehicle, I told Keith Naughton of Bloomberg news as the crisis unfolded:
"They’ve got to demonstrate that they’re putting their customers’ safety first,” said Jon Harmon, a former spokesman for Ford Motor Co. and author of “Feeding Frenzy,” a book about the Ford-Firestone crisis of the early 2000s. “The focus needs to be on getting to the bottom of this, not trying to prove that they’re right.”
To GM's credit, the company reacted in mostly the right ways--cooperating immediately with NHTSA investigators to understand the cause of the fires while working to reassure the public. The fires had occurred after the crash-tested Volts had been parked without fully discharging the batteries, GM said--and the company would not only get the word out to its dealers and other auto service centers on the necessity of discharging the batteries after a collision, but they would develop an onboard system to slowly and safely discharge the batteries after a crash. And they offered loaners of good-old fashioned petrol-burning GM cars to Volt owners who didn't want to keep their cars while the company was sorting out the problem and the fix.
GM's only misstep was when GM CEO Dan Akerson said the company would buy back Volts from concerned customers, comments the company's PR people quickly clarified (the loaner program had been launched to quell customer concerns and the company has every intent to quickly understand and remedy the problem which would take away the need for any buy-back program).
Toyota in contrast had stone-walled investigators and the media when reports began to surface of complaints of unintended acceleration in a number of Toyota and Lexus models. After much criticism put a significant dent in its sterling reputation for quality and customer satisfaction, Toyota reversed course and began handling the crisis with laudable care and attention. Ultimately, the company was vindicated in its insistence that no computer or electronic malfunction was occurring. But that did not excuse its initial behavior in brushing off reports of its cars speeding up on their own, and undoubtedly that first impression left lasting scars on Toyota's reputation.
GM's adroit handling of the Volt crisis has rightly earned high marks and the contrast with Toyota's bumbling crisis response duly noted (for example, in the Los Angles Times).
Comments