Toyota finds itself humbled, embarrassed and damaged

We have the Japanese to thank for infusing craftsmanship, quality, customer-centricity and value into the global automobile industry. It was a sharp wake-up call for most automobile manufacturers, who played catch-up for years, as the Japanese invested in technology and innovation.

But Ouchi’s Theory Z values - lifetime (stable) employment, high productivity, investment in the future, and high employee morale - has pretty much played out in Japan. The demands of today’s modern, globalised world have supplanted the quaint values that made this great leap possible. Toyota is the latest Japan casualty, but there are others - Sony, JAL, Snow Brand…

Toyota lost the plot, and perhaps became obsessed with quantity over quality, as they surged ahead to become the world’s number one car company in 2009, surpassing ailing giant General Motors. But this enthusiasm to be number one comes with a price. You don’t get to be ‘ichiban’ by focusing on market share, but it appears that Toyota got caught up in the race, and has now damaged its sterling brand in the process.

In Toyota lore, the company’s commitment to quality, and its respect for the individual craftsman, was present in its ‘andon cord’ system, which allowed for assembly line workers to shut down the entire assembly line when a problem - any problem - was detected.

It appears that Toyota’s andon cord was disconnected. Not only did the company fail to locate the problem at the design stage, testing stage or production stage, but the company ignored the situation as it began to surface in the market. Now, there is a massive, global recall of vehicles, approaching 10 million in number. The recall is late - coming only after highly publicised fatalities, and foreign government intervention.

Toyota now finds itself humbled, embarrassed, and damaged. Its competitors are feasting on their foibles.

There are lessons here for all of us. Bigger is not necessarily better. Better is always better, and bigness does not equate greatness. Consumers value craftsmanship, quality and care. They increasingly value a company’s integrity, too. The Toyota brand owners need to return to their brand values and principles, and live by them again, re-building their brand culture from the bottom up. It will take time, patience and discipline. It will be painful, but it is possible.

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This article was originally published in the 25 February 2010 issue of Media.