What can we learn from Toyota’s fall from grace? This company,that for the past two decades has been the benchmark for quality, has suddenly had severe damage done to its worldwide reputation and probably to its market share. Toyota seemed to be doing everything right in terms of high performance. Employees were taught “The Toyota Way”, a set of efficiency and quality principles that has been the envy of competitors and now is being adapted to a variety of different industries. To say that they grew too fast and too big, as many commentators have said, does not help us learn from Toyota’s experience.

I don’t think Toyota’s problem is floor mats or gas pedals or electronic braking systems. In fact, the number of incidences of parts failure does not appear to be significantly greater than one would expect given the number of vehicles they have on the road. Toyota’s problem seems to go much deeper than that. The problem seems to be culture and leadership of the organization. Matthew DeBord makes this point in an op-ed piece about Toyota for the New York Times. He writes:

…its management and manufacturing culture was ideally prepared to get to No. 1, but stunningly ill suited to actually be No. 1…Comfortably preoccupied with rooting out internal weakness, the Toyota Way is lost when it comes to contending with outside threats. For such an intense system to function properly, employees have to blindly adhere to it; overconfidence is the natural outcome of this arrangement. Yes, any worker is empowered to stop the assembly line because he spots a flaw. But if a flaw does get through, the company as a whole is loath to admit that the system broke down.

The point is that the climb often requires a distinct, unyielding philosophy, while setting up shop on the pinnacle requires something else entirely, like the ability to absorb some punishment. Companies that aim for cultish loyalty are vulnerable in this way. Apple doesn’t respond well to customers criticizing its products. Toyota, likewise, doesn’t have much experience being attacked. It just wasn’t ready to handle doubt, dismay or the obliteration of trust.

Stefan Stern, in accusing DeBord of being unfair to Toyota, writes in his blog:

Senior managers may have been arrogant, or perhaps just not brave enough to admit how standards were slipping. But I expect that, down on the production line, Toyota employees could see exactly what was going on. That is the Toyota way.

To me, Stern makes DeBord’s point. If some people in the organization know of a problem but management doesn’t do anything about it, there must be systemic barriers to communication and problem solving. Organizational effectiveness is more than a consistently high quality product. It is also management listening to its employees, customers, and vendors, recognizing problems, which in any complex system are inevitable, and acting quickly and decisively with the customer in mind. Customers don’t care about the industry-famous “Toyota Production System”; they care about a quality buying experience and a company they can trust.

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