THE BLOG
03/24/2014 04:25 pm ET Updated May 24, 2014

Toyota, GM and the Big 'Values' Blowout

No, I'm not talking about bargains, or inventory blowouts, which take place every other month in automotive retail stores around the country. I'm talking about a corporate morals gap that is more evident these days in the wake of Toyota's $1.2 billion fine from the U.S. Government and GM's recall of 1.62 million vehicles, ten years too late.

First Toyota. In 2009, a California Highway Patrol officer and his family were killed when their Lexus ES suddenly accelerated to speeds approaching 120 miles per hour. Ultimately, these types of accidents -- and numerous deaths -- sparked a 14 million vehicle recall. But only after, according to Attorney General Eric Holder, "Toyota made misleading public statements to consumers and gave inaccurate facts to members of Congress."

In others words, Toyota knew about the problem, stonewalled their own customers and the U.S. Government, and caused more deaths to stack up before the problem -- floor mats trapping the gas pedal -- was addressed. "Toyota put sales over safety and profit over principle," said Assistant FBI Director George Venizelos.

Then, there's GM, which was bailed out at the good will of U.S. taxpayers in 2009 as part of a bankruptcy that allowed the company to void dealer agreements, shut down dealerships, and press the reset button. Documents at the National Highway Traffic Safety Administration show that company engineers knew as early as 2001 that an ignition switch problem was immobilizing break and steering systems, causing 31 accidents and 13 deaths. Additional evidence indicate that GM sold cars with faulty ignition systems for more than ten years.

New GM CEO Mary Barra, recently announcing additional recalls and the appointment of a "safety czar," said that, "Something went wrong with our process in this instance, and terrible things happened. We will be better because of this tragic situation if we seize the opportunity. And I believe we will do just that."

So what went wrong with the "process" at both Toyota and GM? In a nutshell, VALUES.

Senior employees across several departments -- engineering, safety, PR, investor relations, and maybe more -- knew that there were problems, but they were afraid to trump profit for principle, even after people died. Why? Obviously, the corporate culture did not support a show of morality.

Although Toyota and GM may be among the most extreme cases since 1970s Ford Pintos exploded from gas tank collisions, this compromise of values occurs every day in corporate America. Employee rewards are based on performance, not on conscience.

My wife and I have been victims of this values gap in the automotive industry. In the mid 1980s, our Audi 5000 suddenly accelerated on the highway, approaching speeds of 90 miles per hour. Through frantic trial and error, I placed the gear into neutral, and the acceleration abated. When I reported the event to Audi, I was told that I was the only one who had this problem. A few years later, and after I had unwittingly sold the car believing their story, Audi revealed their widespread sudden acceleration problems.

In the mid 1990s, our Ford Taurus station wagon rusted out, just over three years after we purchased it brand new. I complained, first to the dealer's factory rep and then to Ford's headquarters management and were told by both that I was the only customer who had complained. I believed them and sucked it up until I saw that other wagons of the same vintage had the exact same problems. My issue was not resolved until I brashly parked my rusted out car under the hotel marquis, bearing the banner, "Welcome Ford Shareholders," where Ford was holding its annual meeting. We gladly accepted Ford's generous offer of a coupon toward a new car the next day.

I'm not mentioning these examples as sour grapes. I believe firmly that Ford and Audi have excellent products today and I would buy cars from either company. But, back then, they were ethically-challenged in much the same way that Toyota and GM recently demonstrated. Looking back, I just hope that the poor victim I sold my Audi to didn't get injured or killed.

What can we learn and where can we go from here?

Many senior corporate executives do not believe that they have values problems in their companies. They assume that, because they personally have good values, so do their direct reports and other employees on down the line. I know this to be true because a major CEO once told me so -- to the point of discouraging my nonprofit organization (since renamed Values-in-Action Foundation) from doing corporate training around values alignment and culture improvement. He said to me, "School children need to be taught values; all successful companies, by definition, already have them. Otherwise, they wouldn't be successful."

Tell that to the victims of both Toyota's and GM's malfeasance. Many paid a hefty price with their lives. By contrast, Toyota paid a modest price in relation to its $60 billion stockpile of cash. According to one analyst, "Toyota can now bring the curtain down on the whole affair and focus on its real business. Its momentum is back in the U.S."

But as long as that "real business" is business as usual, their values gap will affect them in other ways, and the business world will have learned nothing from these recent flaws.

Toyota's president Akio Toyoda recently said that, "We have returned to basics and are putting customers first." These "basics" must include values, not just sales momentum.

Values training ought to be viewed not as "nice to do" soft stuff but as a "need to do" risk-management opportunity. Because, without values as the company's essential raw material -- as important as gears, electronics, logistics and sales -- the values-action gap will be the weakest link that trips up successful companies over and over again. Ms. Barra, that is "the opportunity" you and GM need to seize.

Muszynski is Founder of Purple America, a national initiative of Project Love/Values-in-Action Foundation to re-focus the American conversation to a civil, productive and respectful dialog around our shared values. To see America's shared values and get involved, go to www.purpleamerica.us