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MNB user Jim Donald passed along a piece from Bloomberg Business Week by Richard Tedlow, a professor at Harvard Business School, in which he talks about Toyota’s problems but makes points that every business thought leader needs to consider. Some excerpts:

• “In 2005, Toyota recalled more vehicles in the U.S. than it sold. Worldwide, nearly 1.5 million Toyota vehicles were recalled the following year. Why was there not a spate of articles about Toyota no longer being the company people thought it was? Outsiders writing about Toyota fell victim to what John Kenneth Galbraith many years ago called the conventional wisdom. We all saw Toyota through the prism of its supposed manufacturing superiority, a prism that distorted reality. When the accelerator recalls were followed by Prius recalls over faulty brakes, the jig should have been up. But to this day I know people who do not plan to take recalled Toyotas back to the dealer. They are still in denial.”

• “Toyota's top people were in denial, just as the public was. By denial, I mean that they stopped being honest with one another. And they stopped being honest with themselves. If Toyota's products were as fatally flawed as they were, that would be too awful to be true. Therefore, the awful truth was brushed away. I've seen this happen in so many companies that I was compelled to write a book about it.

“There's a highly valuable lesson for all businesspeople in the tragedy at Toyota: If denial can destroy the reputation of a company that was once so admired, it can destroy the reputation of your company, too.”

Tedlow also raises questions that he says companies need to ask themselves in order to avoid Toyota's fate. Among them:

• “What happens to the bearer of bad news? Does your company shoot the messenger rather than heed the message? There are indications that this may have been the case at Toyota.”

• “Do the real issues of the day only come up in the hallways after meetings are finished?”

• “Would you rather be conventionally wrong or unconventionally right? Toyota's top people chose the former.”
KC's View:
This is an excellent piece, thought provoking in all the right ways. you can read the whole thing by clicking here.

The headlines are filled with examples of companies that have made decisions for all the wrong reasons. Decisions that may have made them money in the short-term, but are now costing these same companies their reputations and perhaps even their futures.

It certainly resonates here. The whole issue of denial is the subject of the first chapter in our book, “THE BIG PICTURE: Essential Business lessons from the Movies.” I won’t give away the whole thing, but essentially the chapter deals with denial, three guys and a shark. (You didn’t think I’d miss an opportunity to plug the book, did you?)

“THE BIG PICTURE: Essential Business Lessons From The Movies,” by Michael Sansolo and Kevin Coupe, is available by clicking here .