Governance, Risk Management, and Compliance: It Can't Happen to Us—Avoiding Corporate Disaster While Driving Success

Major Mistakes at Platinum-Branded Companies

We know that Toyota and Johnson & Johnson went afoul of regulators, as well as the consumer marketplace, in high-profile compliance failures. Let's take a closer look at what happened.

Toyota

Toyota Motor Corporation was long known for the high quality of its automobiles and resulting loyal customer base, which became the envy of car manufacturers around the world—but recently Toyota stumbled badly. You know the story. This once-proud company with the superb brand is now viewed by many as producing defective cars. Compounding the problem, it also is seen as failing to inform car owners of life-threatening flaws in accelerators and brakes.

Regulators and industry observers say the company reacted much too slowly to dangerous safety issues, making changes in parts for new vehicles without advising existing customers of flaws in cars they were currently driving. Media coverage of the crisis suggests a clear and troubling pattern. Years ago, Toyota had an excellent approach to dealing with problems; somewhere along the way, that attitude changed for the worse. For example, when troubles first appeared in early Lexus models back in 1989, the company arranged to go to owners' homes to pick up the cars and make the fix. And since? Well, reported problems include:

• In 1996, Toyota found problems with the steering mechanism in its 4Runner model, but for some reason began to put a design change only into new models. Not until 2005 did the company ...