Learning from Toyota’s stumble

Monday, 15 February 2010 20:37

Long the standard-bearer for quality and efficiency, Toyota now has an ostrich-sized egg on its face: In January, a problem with sticking accelerator pedals led to global product recalls and a suspension of vehicle production and sales. And things have only gotten worse. On February 3, company officials ordered an investigation into complaints over brake problems in Toyota’s 2010 Prius models.

The Japanese automaker’s woes are a reminder that developing capacity for improvement and innovation takes time. In order to expand variety, volume and complexity while maintaining an edge in quality and reliability, you have to consistently develop and reinforce the problem-solving skills of people throughout your organization.

Such dedication used to be a Toyota hallmark. While researching a 2004 Harvard Business Review article on the automaker, I met with front-line teams charged with solving problems related to quality, productivity and safety. These teams were often given many months to find solutions. In a few cases, they were given more than a year to master the skills of problem-identification and resolution.

When I asked longtime senior managers about exemplary leadership, they would regale me with stories of company leaders who had invested time in developing their employees’ capabilities for pushing quality, efficiency, safety and responsiveness.

Sadly, the thrill of catching up to Ford and General Motors, coupled with a boom in demand, led Toyota’s leaders to prioritize sales growth over quality and employee development. This meant that new products had to be introduced more quickly, new plants had to be opened more rapidly and supply networks had to be expanded more aggressively. We’re now seeing the consequences of those decisions.

It will take years of hard work for Toyota to climb out of the ditch it dug for itself. But there are reasons to be optimistic. One is the company’s current leadership. Toyota’s new president, Akio Toyoda, cut his teeth in the factories of China and California, and from day one he’s made clear his view that Toyota has to make quality its top priority once more.

Toyota now faces the challenge of regaining consumers’ confidence—of making its brand once again synonymous with quality and reliability. That won’t happen overnight, which may be a good thing: Hopefully, this crisis will keep Toyota’s attention fixed on rebuilding its capabilities to sustain continuous improvement and innovation.



Steven Spear is a senior lecturer at the Massachusetts Institute of Technology and a senior fellow at the Institute of Healthcare Improvement. He is the author of Chasing the Rabbit: How Market Leaders Outdistance the Competition.
In Photo: Akio Toyoda, president of Toyota Motor Corp., speaks during a news conference in Tokyo, Japan, on February 9, 2010. Toyota Motor Corp. will recall 437,000 hybrid vehicles globally to fix faulty braking systems on four models, including the Prius, adding to almost 8 million vehicles the company is repairing for separate defects. (Tomohiro Ohsumi /Bloomberg)

South Korean visitors to Cebu seen rebounding in 2010

Written by Willy Rodolfo III / Reporter

Friday, 19 February 2010 19:39

OPERATORS of the biggest Korean-owned hotel in Cebu are confident arrivals from the region’s biggest tourism market, South Korea, will rebound in 2010 with the A(H1N1) flu scare out and the global economy poised for an upswing. Richie Kang, general manager of the eight-hectare, 557-room Imperial Palace Waterpark Resort and Spa on Mactan Island, admitted they were affected by the big dip in arrivals of Koreans in 2009. But he said there are indications the Koreans are coming back. “Starting December, arrivals started to pick up and we expect the numbers to increase dramatically,” Kang said. “It also helps that we now have more flights from Cebu to Korea. If you book a flight, it is already very difficult to find an available seat.” Department of Tourism (DOT) figures indicated that from January to November 2009, Korean arrivals to Central Visayas dipped 15.36 percent. There was also a significant decrease in the number of arriving tourists from Japan, the United States, Taiwan and Germany. Korea, which perennially makes up more than a quarter of arrivals every year in the region, only posted 117,603 arrivals in the first 11 months of 2009, compared with 209,832 arrivals over the same period in 2008. Players said the situation was aggravated by a dip in the arrival numbers during what was supposed to be a peak Korean arrival season between September and November in 2009—the traditional break for schools in Korea. Kang said more than half of Imperial Palace’s clients are Koreans due to their parent company’s strong presence in their home country. The rest of the occupancy is made up of Europeans and domestic tourists. He said Cebu remains a top destination for Koreans as it is perceived to be a “safe country.” “When Koreans hear about the Philippines, they don’t think of Manila. Manila has nothing to offer; it is just the same developed city like the cities we have in Korea,” Kang said. He said their own company’s marketing efforts in Korea sell Cebu as a destination that is safe, with a great beach and out of the typhoon belt.  Consolidated tourism arrivals in Central Visayas broke the 2-million mark in the first 11 months of 2009, posting a 3.52-percent growth without still counting the Christmas arrival rush. Consolidated arrival numbers from January to November 2009 hit 2.018 million, compared with 1.949 million over the same period in 2008, data from the DOT indicated. But foreign tourist arrivals expectedly slowed down. There were 717,325 foreign-tourist arrivals from January to November 2009, 0.49 percent lower compared with the same period in 2008. Japan, which is second to Korea in terms of market size with some 20-percent share of the arrivals in the region, recorded close to 136,000 arrivals, lower than the 140,708 in 2008. The US, which is 10 percent of the region’s market, had more than 68,500, but it was lower than the 74,560 recorded in the previous year. The domestic markets, however, posted a steady growth at 5.88 percent. Over 1.3 million domestic travelers came to Central Visayas compared with just 1.228 million in 2008. Cebu remains the main destination for tourists in Central Visayas, taking 73.64 percent of the pie. Bohol is next with 14.36 percent followed by Negros Oriential with 11.04 percent. Siquijor is fourth, taking 0.96 percent of the arrival numbers. Despite the dip in its major foreign markets, Central Visayas made huge headways in emerging markets like China and Hong Kong. Mainlaind Chinese arrivals—now the fourth-biggest market for the region— doubled in 11 months, hitting more than 56,000, while Hong Kong is near breaking the 30,000 mark. Australia, the United Kingdom and Canada also posted modest single-digit growth, underlining Central Visayas’ allure to long-haul, long-staying tourists from Europe and North America.