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John Baldoni
Leadership author

John Baldoni

John Baldoni is a leadership consultant, coach, and regular contributor to the Harvard Business Review online. His most recent book is Lead Your Boss: The Subtle Art of Managing Up.

Toyota's pride accelerates trouble

Mary Ellen Keller, the noted automotive analyst and author, once told Forbes, "Toyota announces it is shooting for 15% of the global market and 50% cost cuts, and everyone goes 'Ooof!' It's like getting hit in the solar plexus."

Not any longer. Today Toyota's competitors are saying "Whew!" For once, Toyota may have overreached and in the process hurt itself significantly.

The unintended acceleration of multiple Toyota models has led to a recall of nearly 5 million of its vehicles. As drastic as the recall is, things are only getting worse for Toyota. Once the paragon of manufacturing prowess, Toyota has created what appears to be a trail of deception that may be responsible for passenger fatalities as well as a massive erosion of trust. Ray LaHood, the Secretary of Transportation, suggested that owners of affected vehicles not drive them till the problem was fixed. Now we learn there are braking problems with the 2010 Prius, Toyota's flagship hybrid. Toyota's market valuation has tumbled by more than 20 percent.

Truth is, all of this could have been avoided if Toyota had followed the principles that it pioneered in the Toyota Production System, which are grounded in the principles of lean manufacturing. Essential to lean manufacturing is an emphasis on minimizing waste, optimizing efficiency, and fostering continuous improvement and learning.

As Toyota has stretched itself to meet global demands and become the world's number one car manufacturer, it did not adhere as closely to these principles as it has in the past. For the past few years at least, there have been stories about slipping quality at Toyota. As noted 'lean manufacturing' expert, James Womack put it, "There was always a question about how fast [Toyota] could go. I'm sure they regret that they stomped on the gas so hard." Womack's comment rings with irony in light of Toyota's problems with unintended acceleration.

Worse perhaps has been Toyota's approach to the problem. In short, Toyota has acted more like a spoiled superstar who believed his own press clippings than a responsible manufacturer that has taught the world to make better products. The lean approach to manufacturing begins with clear thinking and ends with assumed responsibility.

Companies do make mistakes and recover from them. But the first step after acknowledgment is owning the problem. Toyota is clearly not doing the latter. Early in this crisis, it seemed more concerned with self-preservation than concern for customers. Given how long it has taken the company to even acknowledge the problem is troubling and undermines Toyota's hard won reputation for quality and reliability.

Suppliers I know who have worked with Toyota have always admired the company's work ethic as well as its adherence to quality. But many will acknowledge the company's growing sense of arrogance or "hubris born of success" as Jim Collins, in his book How the Mighty Fall, calls it. Such was not always the case.

In Toyota's home city of Nagoya stands the Toyota Commemorative Museum of Technology and Industry. One half the museum is devoted to the origins of the company as a manufacturer of looms. Prominently displayed in the center of the museum is a giant circular loom. That loom, however, is not a hallmark to quality; it is a testament to innovation but one that may be flawed. As authors of the 2002 book Technological Innovation and Economic Performance point out, Toyota never generated profits from this model despite its innovative principles. Flat looms were much more successful.

In short, if you stick to your knitting, that is, try not to get too grandiose, success will follow. Toyota's pursuit of greater market share at the expense of quality is this generation of management's circular loom. "Pride goes before destruction," says the Book of Proverbs, "and a haughty spirit before a fall."

By John Baldoni

 |  February 4, 2010; 4:35 PM ET
Category:  Corporate leadership Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
Previous: Flip-flopping -- or not? | Next: High-risk status quo


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This doesn't look like an accelerator pedal or floor mat problem to me. It looks a lot more like an instance of "spaghetti code" in the ECU that is the computer that actually operates the engine start and stop, the throttle, transmission, cruise control, ABS brakes, traction control, and stability control.
If it turns out that there's a glitch in the ECU that causes the computer to occasionally and dangerously misfunction, it is a huge deal. First, there's the issue of all the injury and damage caused to the public. Second, there's the expense of recalling and fixing almost every car they've built since 2002. Third, there's the cost of litigation against them. If it turns out that they've known about this and kept quiet while searching for the solution, they have done the company a huge injury.
Some people equate this to the Ford Pinto lawsuit. The Pinto was one model. If this is the ECU, it's the entire product line.

Posted by: seo1 | February 4, 2010 9:53 PM
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I would wait for the stock to continue to fall and then buy and make a profit.

It seems like not a big deal to me. I think the Transportation Secretary was particularly clueless the other day.

And for the record, I would never buy a Toyota, but only because I think they're ugly, and tend to unimaginative. The Prius in particular, is geared towards people who want to prove how green they are. That's pretty silly. But whatever. It's a free country, and you buy what turns you on.

Note that I distinguish the product from the company. I think Toyota is well run, and I have no problem with how they've handled this bit of nothing. That why I would invest.

Posted by: Ombudsman1 | February 4, 2010 8:53 PM
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I agree with the author, based on personal experience.

I have a 2003 Prius - the last model year of the original design - which has been exceptionally reliable for 7 years and 93K miles. (And, of course, has brought both economic and environmental benefits.) I've not had even a hint of a problem with acceleration or braking. The only issues I have encountered have been very minor. I also have a 1993 Corolla, a workhorse that's still going strong. My Toyotas have been leaps and bounds more reliable than any other cars I've ever driven.

I'm no engineer, but I believe that the more recent issues must be attributable to one or both of two factors: increased reliance on computer technology (that's where the SNAFUs seem to predominate), and a diminution in quality control for some reason - either spreading themselves too thin through overproduction, or cutting corners to save time and/or money. It's a real shame that this has come to pass, and I hope Toyota reverts to its former excellence soon.

Posted by: nan_lynn | February 4, 2010 8:31 PM
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people are dying 4 people died the day after christmas car went right over a bridge into the water in dallas SHE TOOK THE CAR IN THREE TIMES AND THEY SAID THERE WAS NO PROBLEM Toyota will never be the same after all the lawsuits

Posted by: candance2118 | February 4, 2010 8:13 PM
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Millions of satisfied Toyota owners have enjoyed billions of miles of almost fault-free driving in beautiful standard-setting cars, now spoiled partly by the hovering critics coming down to shoot the wounded company. Writers smart enough to write columns should know not to pile on, but I guess they have to write something. Paul R Cooper

Posted by: paulco | February 4, 2010 7:41 PM
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What goes around comes around. Those of a certain age will remember the Japanese corporate arrogance of the 'eighties when they were really feeling their oats, wasn't that the start of "JapanInc."?

Posted by: CharlesGriffith1 | February 4, 2010 5:58 PM
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Isn't it the way of the business world? Always looking for cheaper parts, labor, shortcuts? Always seeking to please the shareholders?

It would be a whole lot better for the consumer if businesses simply could revert to making the best product with pride and selling it at a fair price. But, again, that died off a long time ago.

Is it "hubris", or should you be calling it for what it really is. "Greed", pure and simple.

Posted by: dlkimura | February 4, 2010 5:35 PM
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Sounds a lot like the self-destructive arrogance the US auto industry developed after the peak of its success in the 1950s.

Posted by: twm1 | February 4, 2010 5:16 PM
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This is clearly being blown way out of proportion. More people are killed by careless driver every day than by any car manufacturer flaws in the past 10 years.

I Drive a 2007 Tundra, I called my dealer yesterday, my truck was serviced this morning in less than 2hrs.

They have stopped production, shipped the fix, are paying their dealers to stay open late, and go to customers homes if necessary.

In addition, they are not the only manufacturers that have had this problem.

I find this article very biased and misleading. And yes, I will continue to buy Toyota.

Posted by: xxx1 | February 4, 2010 5:11 PM
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