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What Should Toyota Do Now?

When I last wrote for Bloomberg BusinessWeek about Toyota, there had been two recalls that covered nearly 5 million vehicles, but it seemed to me that the actual defects were small.Don't get me wrong: People had died and others were claiming to be injured, which is as serious as it gets.In my mind, however, those specific problems—and even the subsequent discovery of brake problems in the hybrid Prius—were far from an indictment of Toyota's engineering and manufacturing processes.Journalists were wildly speculating about why Toyota quality had gone downhill, blaming too-rapid growth, cost-cutting, and weaknesses in the philosophy of the Toyota Way. "This is nuts, " I thought.

The week unfolded with new revelations, including complaints by government safety agencies that Toyota (TM) is secretive and criticism that the company had dragged its heels after safety problems were indicated. On reflection (the Japanese call this hansei), I realized that I never studied how Toyota reacts to safety concerns. I had just been guessing, based on experience that I have had with the high integrity of Toyota executives. The question I have since shaped is not what I know or do not know, but how Toyota should respond to what's become a crisis in customer trust.

Any crisis starts with containment, and that is what Toyota is working on now. Once the crisis is contained, though, Toyota should go back to its tried-and-true management principles, which I spelled out in my 2004 book, The Toyota Way, to investigate the root causes and come up with solutions.

What do we now know about the problem? Over 8 million vehicles have been recalled for three problems—an aftermarket floor mat that, if not clipped down properly, can interfere with the gas pedal; a pedal from one supplier that can get "sticky " because a composite material interacts with moisture over time as it wears; and a software glitch on the 2010 Prius that can cause less-than-a-second's hesitation in braking when the antilock braking system is applied.

letting problems accumulate slowly

For each of these problems a specific cause has to be determined—when it occurred, where, and how. There is no evidence that floor mats were assembled incorrectly because they are put on by dealers. There is no evidence that the sticky pedals were assembled wrongly; that issue rather concerns the specific composite material selected for one part. And in the Prius case, the issue lies in the software code, not in how the module was assembled at the plant. So revamping production does not appear to be in order. It seems remarkable that all the recalls occurred within a six-month period. But in fact the cause was at least six months old in each case—five or more years in the case of the pedal design.

Thus, the real principle violated here is to uncover problems immediately and then solve them, one by one. The issues should not have been allowed to accumulate, so in my view the response to the problems (or lack of response) is more serious than the problems themselves. We have all read that this slow response has been characteristic of Toyota for many years. This is a serious allegation. Some say the unintended-acceleration problem is electronic and has yet to be fully solved—which, if true, is a broader problem for all automakers who use so-called drive-by-wire systems.

The point is that I do not know which of these problems is real, or where and why they occurred. (I would venture that journalists do not, either.) Toyota needs to use its own Toyota Business Practices, or TBP, to identify and solve its real problems.

Regions : Asia

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