Toyota's Challenging Steps

Believe it or not, Toyota is at a great place in its history. They are at a momentous turning point that is presenting them with the opportunity to a.)  Create a new and modern face for their business, b.) Challenge the rest of Japan, Inc. to do the same and c.) Make themselves into a truly global company, not just a Japanese company that happens to do business successfully internationally.

Toyota is truly at the cross roads.  A place where you are usually in a devil of a fix and must make the choice or choices of a lifetime. Toyota has the opportunity to not only address the critical issues plaguing their company but to make changes that will better their business, overall Japanese business and the way Japan is viewed around the world. 

A lot of responsibility to fall on Akio Toyoda’s shoulders but he has the DNA of the founder in his blood so who better than him? We can look at it this way; he came to power just in time for he is the only one who can handle this crisis. 

New conditions call for new solutions

A crisis of this size cannot and should not be dealt with only the usual tools that have been used in the past. It is time for a whole new rule book. Toyota can write it for themselves and it can be a model for other large Japanese companies as well. 

Mr. Toyoda in his interview on CNN Money on February 23 listed several steps Toyota plans to implement going forward to address the meltdown that they are going through.

New conditions call for new solutions.  Here are some of the steps mentioned in the article and why I think they will work:

1.)  “Toyota is to devise a system to convey customer complaints from around the world to the company's management in a timely manner.”

It is a known fact that most companies and Japanese ones in particular have a chasm between top level executives and the people on the ground, whether it be their workers or customers.
This step is good for the following reason—cut out the middle man as much as possible. Information travels in a meandering and unclear path. What A says is lost in translation and communication styles by time it gets to D.

Toyota will be able to address issues better if complete and accurate information reaches the person who can do something about it without going through the many hands that will either downplay the information or massage it in ways that make it useless. 

Japanese managers often, for even just culture reasons alone, tend to “adjust” information before they relay it upward: to save face, to not insult, to keep consensus, to not state too clearly or harshly (because that is not culturally acceptable).

Delivering unclear information and reporting critical issues in a murky way to save face is like building a house on swamp land, it will either fall or the alligators will come calling. Information needs to be delivered straight no matter how awful it is.

 2.) "Toyota will also implement a system in which each region will be able to make recall decisions as necessary."

This is a big one.  In a Japanese company — everything comes from HQ in Japan. A lot is usually ignored on the local level wherever that is because every manager cares more about HQ than doing what is right and what works for where they are operating even if it is detrimental to business.

HQ operates on what is overall good for all units and solutions coming out of Japan are not always fitted to what is happening in the units overseas. This is like trying to have one dress size fit all body types. Not possible?

Addressing issues and making recall decisions at least on a region level will give more decision making power to the people who have direct connection or just more connection with the customers and issues—after all, they can read the situation best. It will also make responses timelier which was one of the complaints leveled at Toyota – slow response to this issue.

3.) "The company will form a "quality advisory group" that Mr. Toyoda said will be "composed of respected outside experts from North America and around the world to ensure that we do not make a misguided decision." 

New thinkers, new ideas—all are needed and will be good.  A board of directors made up of Japanese only, or “ insiders” will only have a myopic view of everything. Going forward Mr. Toyoda is to surround himself with people of varied types of intelligence and expertise, viewpoints and backgrounds. This will give a broader spectrum of ideas (hopefully new ideas) and a wider pool of knowledge to select from and allow for better decision making.

4.) Mr. Toyoda said the automaker " will "invest heavily" in quality in the U.S. and will establish an Automotive Center of Quality Excellence and will introduce the new position of Product Safety Executive."

I am not sure what this means exactly because they should have always been a heavy investment in quality in the U.S.  I want to know more about that this will entail.

All of these initiatives are steps in the right direction.  It remains to be seen of course whether they will a.) Be done, b.) Be done right and timely, c.) Be monitored for effectiveness and adjusted if needed and d.) Translate into actual measureable results.

Frankly, Toyota has no choice but to put forth these measures and more. They have put themselves in a position where the law is dictating what they have to do. The opportunity for them is to not only do what they must to address the issues and survive, but to institute plans and programs that will have them thrive once again in a whole new way.

It remains to be seen.

Comments

[Net Success]

I hope toyota pulls through, I think toyota has a great line of vehicles and does awesome work. They are one of my favourite large companies.

[James Baker]

Toyota will bounce back. Their reputation for quality and reliability did not just happen by accident but it does show how quickly a company can descend into a mire of bad publicity. I remember Mercedes got into a similar heap of difficulty a few years back -they survived but maybe became a bit less cocksure. No bad thing.