The recent Toyota crisis reminds me of an MBA course session by Pierre Casse about the emotional cycles of life: happiness and depression. I can still hear his words when he introduced his model: “life is good; you feel great, confident, everything is going your way to the point that you become a little complacent and…You make a big mistake and you slowly realise the consequences, you sink into deep depression…” I wonder to what extent this fits with the Toyota leaders’ current emotional state. I don’t doubt they will manage to come out stronger from this crisis although this is based on nothing else than intuition. Here are a couple of interesting insights I came across:
- Joel Kurtzman from the HBR reminds us of his consulting experience with Toyota 30 years ago and tells us that their problems start at the top. The company he experienced back then was one in which the leaders, among whom Eiji Toyoda at the forefront, had tremendous respect for their workers. He listened to them, trusted and empowered them. For example he gave the workers on the assembly line authority to stop the line if someone detected anything that might affect product quality. In fact everybody considered quality more important than profits. This common purpose is precisely what Joel Kurtzman believes has been missing recently, starting from the top: a failure of leadership and a loss of respect of the workers.
- Robert E. Cole, also from the HBR tells us that the crisis didn’t come out of nowhere, significant warning signs had been detected. For example, the number of vehicles recalled had increased sharply from 2003 to 2005. Apparently Aijo Toyoda, the current CEO, has been attributing the crisis to the recent rapid growth of the company, leading it to invert its priorities: volume and sales became nr1 while quality and safety fell to nr2.
However challenging a context is, I don’t believe it can be seen as the root cause of your problems but more a highlighter of its consequences. I trust Joel Kurtzman’s judgement that Toyota has partly lost what lead it to success. The challenge for them is that they will never be able to get back to what they were 30 years ago. They must change to reinvent a new Toyota way that builds on their traditional strengths and fits with the demands of a growing world leader. And eventually go from depression to happiness again until…
Toyota did not react seriously and early enough to many “red signals” their customers were sending to them. But one should not forget that Lexus and Toyota cars continue to be amongst the most reliable in the world, better than many European cars. Source = JD Power 2009. The Toyota model has been adopted and copied by the whole car industry, and continues to be a very good reference. Their major challenge is to restore their image following their misjudgements, but not to improve the quality of their cars, because they know exactly what to do to make very good cars. In most articles I read, there were a lot of confusions between these two points.
Every strategic procurement manager knows (I have been one for many years in the chip card industry), that one should never ever rely on a single source to supply a critical part or component in a given system, especially when big quantities are involved. If Toyota had done this, they could have switched to an alternate source when first alerts appeared, rather than continue to produce cars with potentially unreliable parts.
Hello Jean-Jacques and thanks for bringing your valuable expertise on this subject! It will be interesting to see how things develop for Toyota