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Crisis of the Week: Evaluating Takata’s Airbag Response – Nov. 3, 2014

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Crisis of the Week: Evaluating Takata’s Airbag Response – Nov. 3, 2014

Author: Ben Dipietro, The Wall Street Journal, Risk & Compliance Journal

This week we asked crisis experts to focus on comments made by Takata Corp., the Japan-based company that manufactured the air bags being recalled by all the major automakers.

The company is facing a federal investigation, loss of customers and eventual lawsuits from this incident. It issued 
a public statement, and we asked several reputation experts to share their thoughts on how effective it was in communicating to each of the company’s constituencies, and what clues it may hold for how the company responds in future.

Halsey Knapp, partner at law firm Krevolin Horst, with expertise in crisis management: In electing to have its chairman speak, Takata chose well. The company’s highest official was in charge of responding to this crisis. This is particularly noteworthy as Japanese companies are notorious for the extreme measures to which they will go to shield top management from negative publicity. Takata was taking this crisis seriously. But the correct spokesperson without the proper message is nothing more than a strikeout. In addition to the usual crisis management concerns, Takata had to answer why it delayed its response so long.

“Takata’s press release is woefully lacking. Despite more than six years of warnings, the company still had not identified the cause of the failures. The best Takata could muster was a commitment’to promptly identifying the underlying cause of the problems. Whoever was responsible for the snail’s pace of the internal investigation is unidentified, and presumably hasn’t been held to account for its shortcomings while drivers remained exposed to the risk of harm and even death. In Takata’s world, the crisis is ‘the recent recalls of vehicles,’ not the problems with its products or the persons harmed by the malfunctioning airbags. The absence of an admission of wrongdoing and of an apology to those harmed by its products is a glaring deficiency.

“It is difficult to believe that the NTSB is and the general public will gain confidence in Takata and its management for its handling of this situation from this statement. This incomplete story is unlikely to improve for Takata as more details come out in the future.”

Davia Temin, principal at reputation management firm Temin and Co.: “Well, Takata almost got it right. Knowing that a corporate apology takes on special meaning, and is especially difficult for most Japanese companies, Takata came closer than most to getting their corporate statement right. But it was still a miss. Why? Because before you emphasize your commitment to safety—their statement is titled ‘Takata’s Commitment to Safety’— you must admit that you completely got it wrong. And apologize. After all, that is the reason why you’re under fire in the first place. And Takata did not do that. Apologies need to come first, then protestations of intent, and finally promises to redress the problems and then do much better — even learn to set the standard. But the order matters.

“You know when an apology is not really an apology, or when it is an apology for the wrong thing? Like when your spouse apologizes for your being upset(‘I’m so sorry you’re upset,’)as opposed to apologizing for doing the thing that got you upset in the first place?(‘I’m so sorry that I inadvertently blew up the garage…’) Well that is what Takata did at the beginning of their statement —they offered a false apology. And it is unfulfilling; it misses the mark. Their actual statement in the third paragraph:’We deeply regret that the recent recalls of vehicles equipped with our airbags have likely raised significant concerns and troubles to our product users, our customers and other stakeholders. We sincerely apologize for causing any such concerns and troubles.’

“That is not the issue. The issue is having produced what look like defective airbags that have killed and maimed drivers,and not fixed the airbags sooner. Clearly their lawyers might not like their taking responsibility so clearly…but the suits will come regardless, and the best thing for the company to do is’own up.’They do this in the last paragraph, but that is where they should have started.

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