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)