Oh lord, it’s hard to be humble when you’re perfect in every way…”
That song, by country singer Mac Davis, always cracked me up as a kid. Lack of humility is also a problem that has plagued Toyota in recent years.
Toyota once had a phenomenal reputation as an automaker. Its corporate culture was envied and held up as an example to be studied and copied. Sitting on my bookshelf are Toyota Kata by Mike Rother and Toyota Culture by Jeffrey Liker and Michael Hoseus and they’re far from the only works praising and dissecting the “Toyota Way.”
But the automaker has taken a beating recently over safety issues, as some of its vehicles accelerated rapidly after gas pedals became stuck. In August 2009, Mark Saylor — an off-duty police officer — and his family were killed when their rented Lexus ES-350 accelerated out of control in California. The company had to recall millions of vehicles and pay nearly US$50 million in fines for delaying recalls.
The shine had come off the Toyota Way. So the humbled automaker took a step back, commissioning an independent review in an attempt to get to the root of the safety problems. The seven-member panel was chaired by former United States transportation secretary Rodney Slater and included one Canadian — Roger Martin, dean of the University of Toronto’s Rotman School of Management.
Full marks to Toyota for putting together such a panel. Not many corporations would have the stomach to engage in such a public navel-gazing exercise. Though the panel was paid for by Toyota — and panellists were compensated for their time — they didn’t shy away from criticism.
Akio Toyoda, president of Toyota Motor Corporation, testified at a federal government hearing in the U.S. in February 2010 on the company’s safety woes. He placed part of the blame on Toyota’s aggressive growth in the last decade.
“But the root causes of Toyota’s recent challenges go beyond the issue of growth,” said the panel in its report, A Road Forward. “They are more complex and more subtle and, in many cases, are not unique to Toyota.”
The panel divided its inquiry into five areas. The first three are the most interesting, from an HR perspective:
• the balance between global and local management control
• responses to problems raised by internal and external sources
• management responsibilities for quality and safety.
Global versus local: The panel noted global organizations experience “inevitable tension” between global and local forces. Too many decisions at Toyota — involving everything from recalls, communications, marketing and vehicle design and development — have been centrally managed and tightly controlled by head office in Japan. It needs to shift the balance somewhat to greater local authority and control, said the panel. For example, Toyota does not have one executive in charge of its North American operations. Instead, individual heads of each division report directly to Japan.
Internal versus external: Toyota is famous for continuous improvement and a fundamental principle that is “genchi genbutsu” — which means “go and see” the source of the problem to determine the cause. For example, workers on the line can pull an “andon cord” to immediately halt production when a problem is spotted. But when the complaint comes from an external source, such as customers or regulatory bodies, the company is skeptical and defensive and often takes “too long to pull a metaphorical andon cord and quickly solve the problem.”
Management responsibility for safety: Toyota has had a tough time distinguishing between quality and safety, said the panel. It figured if it produced a quality car, it would also, by definition, be a safe car. But a process that produces quality vehicles will not necessarily produce safe ones, said the panel. Until recently, Toyota did not have an executive in charge of safety. Now that it does, the company should be available to avoid the “when everyone is responsible, no one is accountable” trap, said the panel.
For years, employers, academics and consultants have studied the Toyota Way. This latest report, exposing some of Toyota’s flaws, gives organizations even more fodder and ideas for improvement.
Being ahead of the competition “can sometimes be the most dangerous place for any corporation to be,” noted the panel. That’s because it can easily turn into arrogance and foster complacency.
Akio Toyoda said company executives were suffering from “hubris born of success.” That’s just a fancy way of singing Mac Davis’ old tune.
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