Oh dear – it’s all gone square in Toyota… The company is currently recalling millions of cars due to concerns about a sticking accelerator pedal. A bit of digging behind the scenes of this story, and I’m reaching the conclusion that Toyota have foolishly changed their management focus from quality to growth and are now paying the price… a predicted $2 billion, not withstanding the cost to the Toyota brand!!!
In 2002, the president of Toyota (Fujio Cho) declared Toyota’s intention to be the world’s No. 1 carmaker by 2010 with a 15% share of the global car market.
In striving for this vision, they lost everything that they stood for as a business, and became the same as everyone else in the industry.
Unfortunately, Toyota forgot what it was good at (being the best through its work culture) and focused on growth (just like everyone else) – then suddenly, just like any other car manufacturer, they found themselves looking for ways to cut costs – including a move to common components in multiple vehicle models and outsourcing to and sharing global manufacturing and production.
Toyota always bought all its parts from long term partners - a small group of Japanese suppliers. However, like almost all car manufacturers, Toyota more recently has outsourced much of its manufacturing and production. The recalled accelerator pedals were produced a factory in the Czech Republic - pedals made by Toyota’s original manufacturer in Japan have not had any problems at all.
What is particularly worrying is that the issues caused by the change in direction were raised in 2008 by former Toyota president, Katsuaki Watanabe (now vice chairman), in his speech to Japan’s National Press Club, when he is quoted as stating that Toyota was becoming infected with “big company disease” – arrogance and complacency due to its own success. According to the Associated Press, Mr. Watanabe commented, “The fact that Toyota is growing globally suddenly shouldn’t be used as an excuse [for problems].”
It’s obvious to anyone with eyes that this is all about the basics in management thinking in Toyota. Quite simply, Toyota became the best because of how the company worked – their work culture, operating model and management focus. They had no problems until that focus changed to ambitious growth.
The jungle drums say Toyota once again is being led by someone committed to the traditional Toyota Production System model concepts and who will focus on taking the company back to the fundamentals – that can only be good news for Toyota… even if it does cost them $2 billion to work out that focusing on quality takes you where you want to be, rather then chasing the dollars….
