Patricia McGuire
University president

Patricia McGuire

President of Trinity Washington University.

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To tell the truth

Q: U.S.-made cars are now held in higher regard by American consumers than Asian-made vehicles -- a significant turnaround in public opinion. Is this the result of negative publicity about Toyota or have Ford and other U.S. carmakers made the changes needed to change the perception about their vehicles? How hard is it to transform a person or product's reputation once it's set in people's minds?

Public opinion polls say many things, but tell us one overwhelming truth about Americans: We're fickle. We love something one day, hate it the next. Just ask Barack Obama.

News that American opinion now prefers the Ford ride over Toyota is ironic. "Ford Pinto" was once synonymous with exploding gas tanks and corporate disaster. "Ford Explorer" became synonymous with rollovers, though the problem belonged to the tire manufacturer Firestone.

Ford recovered from those disasters, just like the drug company Johnson & Johnson recovered after someone tainted Tylenol bottles with cyanide in 1982. J&J's immediate and effective public communication strategy remains one of the classic tales of effective corporate responsiveness to a product disaster.

Opinion polls do not necessarily predict consumer behavior. Toyota is still among the top selling manufacturers in the United States in spite of its spate of product disasters. Toyota has a lot of public relations work to do to overcome not only the perception of problems with its vehicles, but also the arrogance of its initial response to the problems. But in the long run, like Ford, Toyota will retain its dominance so long as it moves quickly to regain public confidence.

Some corporate disasters are so complete that no remedy is possible. Enron's financial fraud was so complete that the company's value collapsed completely. Arthur Andersen, once the leading accounting firm in the world, could not operate once its reputation was ruined by its association with Enron.

Other episodes of very bad publicity often provide incentives to restructure businesses in ways that make them much stronger.

In the Washington region, the case of American University provides many lessons in disaster management and recovery. When complaints arose that former President Ben Ladner received excessive compensation and was using university resources for personal benefit, the early responses of the president and board were defensive and hostile, adding to the perception that the governance of the university was in trouble.

After Ladner resigned and President Cornelius Kerwin took office, along with a newly structured board of directors, American University worked hard to rebuild the institution's reputation for good governance and academic excellence. The university is now a case study in how an academic institution can regain the confidence of its investors (alumni and benefactors) and consumers (students and families).

My long experience as a university president (aka a corporate CEO) as well as a member of many boards has taught me one very clear lesson about reputational setbacks and recovery: an institution that confronts the disaster, tells the truth continuously, and communicates effectively and openly is far more likely to regain public confidence than one that appears deceptive, arrogant and closed.

As for me and my ride, I'm sticking with my Honda CRV. 165,000 miles and going strong.

By Patricia McGuire  |  April 26, 2010; 12:00 AM ET  | Category:  Comeback attempts Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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