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Michael Maccoby
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Michael Maccoby

Michael Maccoby is an anthropologist and psychoanalyst globally recognized as an expert on leadership. He is the author of The Leaders We Need, And What Makes Us Follow.

Forgetting greatness

In response to the On Leadership question: Toyota, the company renowned for its quality and continuous improvement, now finds itself having to recall millions of cars for defects. In your experience, what are the common mistakes leaders make that cause their organizations to lose their key competitive advantage?

The fatal mistake I have seen leaders make in the companies I've studied or worked with is that they have lost the clear purpose that made them great.

After the break-up of the Bell System in 1984, AT&T leadership discarded the purpose of service to try to compete with IBM on computers. It was the beginning of a steep decline. Furthermore, managers and technicians proud of their role in providing universal telephone service were less enthusiastic when the purpose was just making money.

I was invited to teach leadership to Ford executives a few years after the company had moved into the black with the Taurus. But Ford failed to recognize that the basis of its success was the collaboration of designers and engineers, using inputs from customers and workers to build a popular car. Instead, flush with profit, executives huddled to strategize how they could increase revenue by fifteen percent a year and raise the stock price.

Peter Drucker, the wise philosopher of business, liked to say that the purpose of business is not profit, just as the purpose of life is not breathing, but without either there can be no other purpose. The only legitimate purpose of business, he believed, is to gain and retain customers. To do that, leaders need to focus on what is valuable enough to people that they are willing to part with their money.

Toyota exchanged this focus on delighting customers to cutting costs each year while increasing market share and becoming number one. One result seems to have been to substitute a part in the acceleration system of some cars for a cheaper part engineers decided would work just as well but which in fact caused the accelerator to stick.

There is no indication that there was anything wrong with Toyota's renowned production system. But even a great organization will be undermined when it loses the purpose, the raison d'etre, that made it great.

By Michael Maccoby

 |  February 11, 2010; 10:20 AM ET
Category:  Corporate leadership Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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"This issue is way over blown."

2,200 accidents that we know of.
19 deaths that we know of.
Fixing new models but not recalling the old.
8 million vehicles and counting.

Posted by: themoderate | February 12, 2010 9:16 AM
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I don't know what Toyota used to be, but speaking as one of their many ripped off customers, the company now leaves much to be desired. Apparently, the NHTSA has been helping Toyota keep things quiet about a multitude of defects.

Such a shame that it took the deaths of four people in a runaway Lexus to prompt the government to force Toyota to take meaningful action. No wonder thousands of Toyota's customers have resorted to signing an online petition complaining of oil sludged engines.

I decided to start a blog about Toyota:
http://www.uc2.blogspot.com

Posted by: ParrisBoyd | February 12, 2010 1:07 AM
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If you had bought TM stock on Feb 4 and sold it today, you'd be up 9%.

If you buy a Toyota Vehicle today you'll be getting a better deal and a superior product.

Toyota has not fallen.
This issue is way over blown.

Posted by: porchfan | February 12, 2010 12:11 AM
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Toyota's problem? Two words: hubris and complacency. Success breeds both, which leads to over-expansion and a cavalier attitude towards the customer. When the reality hits upper management, the tendency is to hide the problems associated with the fallout of these two states of mind until a watershed of reality makes those problems unavoidable.

Audi experienced a similar problem decades ago with supposed deficiencies with the accelerator pedal, and it took the company years to regain consumer confidence. Audi did not have the massive brand loyalty that Toyota has enjoyed, so it is possible that Toyota may have a longer uphill battle to regain that loyalty.

Would I buy a Toyota? Absolutely not.

Posted by: MillPond2 | February 11, 2010 10:46 PM
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"I thin you're getting ahead of yourself. Remember the GM Corvair (unsafe at any speed)."

You know, Nader was wrong about the Corvair. NHTSA published a report (NHTSA PB 211-015) exonerating the car, and implicitly repudiating Nader's take on it.

My personal experience agrees with that report. My father had two Corvairs and loved them, and my older sister also had one. It was an innovative design as good as a most cars on the road at the time, and way better than the VW Beetles it competed against. I learned to drive in one and never had handling problems. Here is a link with a summary:

http://www.corvaircorsa.com/handling01.html

"or the flaming Ford Maverick? Toyota will recover."

Good point. Ford did kill people. But it was the Pinto. Ford lost a huge judgment as a result. They deserved to loose that judgment, and they got clobbered in the market place as a consequence.

In my opinion, Toyota's handling of the fatal flaws in their cars now is every bit as bad Ford's in the 1970's. There is no question that people died in both cases.

Posted by: themoderate | February 11, 2010 10:11 PM
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There was an article in the WSJ I believe that covered Honda's confusion as to how Toyota suddenly became so big so fast. They ran neck and neck with Honda and suddenly just rocketed ahead. The article cites a memo from Toyota where they ask their suppliers to reduce costs - thereby reducing quality just a little here and a little there. It all adds up and eventually it caught up with Toyota. You shave enough corners and your squares become circles. But you're still trying to convince the consumer you're selling squares. Toyota is going to have to slow down and get back to better testing, better components, etc. No car is perfect, but they just got their noses wiped for them. Honda lots are picked over like the grocery stores right now. Trust me - I just bought one.

Posted by: mwcob | February 11, 2010 9:44 PM
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"hiccup"?

Starting in 1999:

Over two thousand reported accidents.
Nineteen fatalities.
Millions of cars involved.

That's a ten year cover-up. And only one of their major problems.

The most recalls of any manufacturer this year, and more to come. The may not have even solved the run-away acceleration problem yet.

More to come on the steering problems with the Corolla.

Seriously, read the NYT article I cited.

Hiccup? More like a monumental screw-up.

Posted by: themoderate | February 11, 2010 9:42 PM
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American consumers have slavishly worshiped Japanese car manufacturers ever since Detroit's wretched products of the 1970s caused permanent damage to the Big Three's reputations. This will all blow over in a few weeks, and Americans will go right on buying Toyotas just like Consumer Reports tells them to do.

Posted by: swmuva | February 11, 2010 9:28 PM
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The only way I know to never make a mistake is to never do anything - and that may itself be a mistake. "Fall of Toyota" is a mistake. Did Tylenol fall? I don't think so.

This "thinker" may lose support. But Toyota is just fine.

Posted by: GaryEMasters | February 11, 2010 7:47 PM
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Toyota is still a fine car maker. However, they must maintain their focus on high quality and workmanship. Profits will come, but the product must be of high value and high quality for consumers to spend a little more for top engineering and manufacturing. I have owned a multiple Toyota cars for the past 18 years. Our old 1992 Camry is still running. My 1995 Landcruiser had 155,000 miles and drove like new, but was totaled in an accident. The temptation for increased profit at the expense of quality has to be resisted. Mr. Toyoda needs to listen to his customers, not his MBA-toting hot-shot bean counters.

Posted by: bruce19 | February 11, 2010 6:17 PM
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I don't pretend to know what exactly is the underlying reason for the problem(s) with Toyota's autos but even with this, and I'll name it this given their 50 years of very good quality in America, hiccup, they still beat the hell out of GM and Ford over the last 1/2 century.
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Toyota didn't hit the shores of the US in bulk until the early 1970s. Though in Toyotas ad they would like those who do not know have you to believe that they were here as a household name since the late 50s. Just another Toyota deception. Most didn't have a clue as to what a Toyota was until 1970 gas crises when they started pouring into the US.

Posted by: BeaverCleavage | February 11, 2010 6:08 PM
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I thin you're getting ahead of yourself. Remember the GM Corvair (unsafe at any speed) or the flaming Ford Maverick? Toyota will recover.
------------------------

Are you forgetting that this has turned into a worldwide 8 mill. car recall. Not just a model here and a model there like Ford and GM. This recall is mostly everything they make. Some going back 5 years. That inexcusable, especially if it was a known issue.

Posted by: BeaverCleavage | February 11, 2010 5:57 PM
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I thin you're getting ahead of yourself. Remember the GM Corvair (unsafe at any speed) or the flaming Ford Maverick? Toyota will recover.

Posted by: richard36 | February 11, 2010 5:50 PM
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When your major competitor controls the entity that is in charge of highway safety in the U.S., you're up a creek.

Posted by: EliPeyton | February 11, 2010 5:08 PM
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Something strange happens when the corporate entity takes on a life all its own. Corporate executives become more like priests of Ancient Egypt rather than managers of a business.

It's not as crackpot as it sounds. Metaphorically speaking, the corporate entity's sole purpose is greater and greater profits. It's up to the priests to appease the corporate god. That god is not a person or group of people, it is the corporation itself.

Sounds like an interesting term paper -- but who has time for that at my age.

Posted by: AlBme | February 11, 2010 5:05 PM
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There was an interesting article in the NYT about the ten year cover-up of the sudden acceleration problem among many others ("Toyota’s Pattern Is Slow Response on Safety Issues" NYT Feb 6, 2010). They fixed critical problems in new models and failed to recall the models already on the road even though they knew what the problems were and how to fix them. Negligence, pure and simple.

Ford and quality has steadily improved during the last decade while Toyota slipped badly. Right now, Fords and GMs are better cars, and better deals, than Toyotas.

Posted by: themoderate | February 11, 2010 4:52 PM
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Toyota for years now has been denying that there are major quality control problems with their vehicles. If you Google "major engine problems Toyota 3.0l" you'll find hundreds of frustrated Toyota owners out there. The fact that these quality control problems have become so pervasive that the company is finally having to admit there's a problem is not surprising.

Posted by: boris95 | February 11, 2010 4:38 PM
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As a colleague of Dr. Maccoby's for over 35 years I want to correct the misleading and uninformed comment of RLCJR. Dr. Maccoby has spoken, consulted, and done research in 33 countries in North America, Central America, Europe, Asia, and Africa; and written 11 books that have been translated into many languages. His consulting experience has been with companies, public agencies, international organizations, and NGOs around the world. His work on leadership and strategic change is taught in business schools around the globe. He directed a program at the Kennedy School for 20 years. He lectures and conducts leadership workshops regularly at the French Institute for Political Science (Sciences Po) and Oxford University. His comments on Toyota pointed out that they had temporarily lost their grip on their visionary purpose, but that the Toyota Way of an integrated design & production system remains exemplary.

Posted by: RichardMargolies | February 11, 2010 3:49 PM
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And as usual, GM and Chrysler (and to a lesser extent) Ford, are poo poo.

Posted by: BoonyTunes | February 11, 2010 3:42 PM
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I don't pretend to know what exactly is the underlying reason for the problem(s) with Toyota's autos but even with this, and I'll name it this given their 50 years of very good quality in America, hiccup, they still beat the hell out of GM and Ford over the last 1/2 century.

Posted by: anti-danyboy | February 11, 2010 3:35 PM
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Management commits ritual suicide; its the only thing to do.

Posted by: nuke41 | February 11, 2010 3:28 PM
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"Globally recognized"? He's spoken in three other countries. He is joining others in predicting the failure of a company that, like the makers of Tylenol, took quick action when their product was in trouble. Toyota will survive this. Mr. mccaoby's reputation, trivial as it is, will not outlast Toyota's.

Posted by: rlcjr | February 11, 2010 2:26 PM
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