Thinking Managers

Robert Heller of looks back at the troubles of Toyota to see if there are lessons to be learned.

Lessons from the troubles of Toyota

The disaster at Toyota - or rather chain of disasters - came as a severe shock not only to car owners, but to anyone who believes good management can endure.

Toyota could boast the best story of all the stars of the Japanese post-War rise to market dominance in key industries. A family owned and professionally managed firm, Toyota developed a management culture that steadily turned an obscure business into a world leader. Before their troubles, Toyota had accomplished what was surely its ultimate mission - replacing General Motors as the leader in what remains the most important manufacturing industry in the world.

Toyota became the most celebrated example of all the Japanese triumphs, including, of course, the worldwide drive to set new standards in production engineering, leaving Detroit in the shade. The whole basis of the engineers’ breakthrough was ‘quality’. Americans had already been shown a new philosophy of raising quality standards by systematic approaches. W. Edwards Deming, the pioneer, took the credit for exporting these new ideas to Japan. Detroit showed no interest, although they were just as valid for domestic use and would have won the same rewards painlessly. This demonstrated a wilful ignorance that has been repeated time after time in numerous industries.

Owing large thanks to an engineer named Taiichi Ohno, whose pupils demonstrated their methods without any fear of successful imitation from the West, the Toyota Production System became the world standard.

The US wrote off the Japanese revolutions as products of a different culture that were not suited to Western ways. That was of course complete nonsense. Quite simply, the cultural advantage lay in defining what had to be done and devising superior systems for doing it. That included rigorous methods for making sure that the task was indeed designed and accomplished in a superior manner.

At Toyota, the recent recalls of cars and vans to check on faulty brakes and accelerators are a testament to the staggering failure of this basic philosophy. Surely there was a breakdown in the mental conditioning at the Toyota factories, which resulted in design and production flaws that were as systemic as the traditional hit-or-miss performance of the rivals in the West. It’s hardly a time for self-congratulation, though, since the Western companies are beset by troubles enough of their own, such as GM’s sorry bankruptcy.

Toyota’s fall should not be seen as just a Japanese failing, but rather a blow to good management, and a sign that management in general is not delivering.

Was the management aware of the problems and if so, why did it fail to identify the root causes? If the causes were identified correctly, was there a delay in the reaction while the company ignored the damage to its market status? If Toyota was capable of timely repair, why didn’t the company carry it out?

Remember those simple problem-solving rules:

• Identify what has to be done.

• Devise systematically better ways of doing it.

• Employ rigorous methods to check that the task is indeed superior in design and execution.

The Toyota affair puts some basic points of management under the spotlight. First, any company, no matter how large and renowned, is not immune to grave error. Second, damaged pride and anxious fear make it harder to put right the error in good time. Third, management decisions must never be made solely on the basis of profit forecasts.

About the author
Robert Heller is one of the world’s best selling authors on business management.

  Robert Heller