The senior management team in Toyota City, Japan has designed the systems, strategies and organizational structures that have culminated in the recall of the GX460. As described in today’s Wall Street Journal, a power struggle is diverting top management’s attention from solving a multitude of internal problems:
Toyota’s CEO Ako Toyoda has demonstrated an abysmal lack of leadership. See recent blog post
- Despite recalling cars in Europe in order to replace defective accelerator pedals, Toyota continued to ship cars to US customers containing these same defective accelerator pedals. Also, Toyota has consistently stonewalled the NHTSA to avoid having to issue recalls, despite documented safety issues. This behavior—on the part of Toyota’s management—is unethical.
- There has been a lack of communication between management in Toyota City (Japan), Europe and the US top management team. Although US senior management pointed out quality problems several years ago, these calls for action appeared to be unheeded by senior management in Japan. The current organizational structure is dysfunctional. It needs to be thrown out, and replaced.
- The Toyota Production System (TPS) used to represent the quality gold standard that other manufacturers benchmarked against. Taiichi Ohno, a Toyota executive, founded this system. He described its essence as “removing the non-value-added wastes.” Toyota has recently recalled over 8 million automobiles, an incredibly humongous “non-value-added waste.” All of the company’s stakeholders have incurred the costs associated with these recalls: customers, stockholders, and employees. Clearly, the TPS–as Ohno envisioned it–is broken.
- In the book The Toyota Way, Jeffrey Liker—who spent 20 years studying Toyota—describes the essence of the Toyota culture as being a focus on “respect for people” as well as a focus on “quality over profits.” Over the past decade senior management has emphasized growth, market share and profits. Clearly, the chickens are coming home to roost. To right the ship, senior management must renew its commitment to quality and safety over profits and growth.
The one hopeful sign about stopping sales of the GX460 is that top management is finally pulling the andon cord, stopping the sale of an ostensibly defective product.
Pulling the andon cord was a practice originated by Toyota when the worker on the assembly line could stop production at the first sign of a quality problem. Rather than stonewalling the authorities–as Toyota’s top management has done with the NHTSA—senior management is finally starting to eat its own dog food.
What is your opinion? Do you think that Toyota is experiencing just a bump in the road, or do the company’s current troubles stem from some fundamental issues?