The Toyota Saga

Friday, February 26, 2010

Much has been written about Toyota's quality problems and massive product recalls.

Why is this such big news? Surely product recalls are quite common? True enough. But Toyota has built its reputation on quality and reliability -- that's what its brand stands for. The fact is that this sounds to customers like a broken promise and that's the drama.

What are the lessons learned? The story is still playing out, but some stark lessons are emerging:

- It sounds as if Toyota tried for some time to hide the problems from its customers. This has created an atmosphere of suspicion. Have they come clean now? What else may they be hiding? Brands are based on trust, and Toyota has allowed that trust to be tarnished. The lesson here: the integrity of a truth depends on when you tell it. If at first you resist the truth and then have it exracted from you, its value is severely diminished.

- It also appears that -- at least for a while -- Toyata hid the truth from itself, perhaps the greater sin. To be in a position to tell the truth to the outside world, you first have to tell it to yourself. This is perhaps a result of a culture of intense respect for authority and the reluctance to offend by telling truth to power. Toyota inculcates a culture of learning in its plants, but seems not to have applied that same behavior throughout the organization. We're back to a critical lesson: organizational culture is a big deal. Too often we see companies stumble, not because of a poor financial decison, but because of organizational behavior.

- Many of the news articles have simply blamed the much admired Toyota Production System (TPS) for the quality lapses. I suggest this is a misdiagnosis. It is too early to know the complete story, but as of now, I have not heard any supporting evidence for this claim. It seems to me that the problem was an engineering, not manufacturing problem. Every indication is that the assembly plants did exactly what was expected of them: manufacure to the specifications which were defined for them. So let's pause and think before we learn the wrong lesson.