Toyota's in trouble. Here's how to fix it.

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Toyota's sticky pedal fiasco has dropped the car maker into hot water. Slapped with a $16.4 million fine, it signals not the end of the Toyota Way, but a back-to-basics for the company. Here's what went wrong, and how to fix the company from the inside out using their own mantra.


Once you’ve been made late-night fodder on David Letterman, the subject of countless editorial cartoons and the target of a class-action lawsuit, the brand that Toyota has built based on trust, quality and reliability takes a pretty serious hit – one that will leave Toyota reeling for the foreseeable future.

Toyota’s slow response to safety concerns has left customers feeling betrayed. Akio Toyoda, Toyota’s current president, has admitted in an American Congressional Oversight and Government Reform Committee that he was unaware of acceleration problems, despite thousands of complaints from customers to the company and to regulators in years past.

It’s a sharp contract to Toyota’s actions 30 years ago while they were building up their American operations. Back then, Toyota went to lengths to provide good quality and service, going as far as picking up cars with quality issues directly from customer’s homes.

Some commentators have sounded the death knell for Toyota and the Toyota Way, but such stories are simply sensationalist reporting. Toyota may have made mistakes and strayed from the path of the Toyota Way, but their methodology and ethos of quality still stands.

What went wrong?


The company did not heed its own corporate mantra and failed to follow horenso, a part of kaizen and a virtual religion within Toyota. It facilitates effective communication in an organization, so that all related parties have full information on a given situation.

Their second failure comes from a more sensitive factor: they are too Japanese in an international world. In a land where face and hierarchy comes second to none, pressing problems and issues are not reported for fear it would make the boss “lose face”.

Also, the Japanese value conformity and penalizes societal deviance seriously, which is summed up neatly in the saying “the tallest nail is struck first”. Any attempt to tackle quality problems individually would be met with resistance and social isolation from the rest of the group until the offending individual returned to the accepted norms. It also helps to explain the cute, but uninspiring and un-sexy designs that Toyota is known for.

Ironically, these facets of Japanese culture have been allowed to invade and push aside the concepts of horenso, leading to the problems of today. It is an issue in their subsidiaries globally and even in the US, as Toyota, like other Japanese companies, still practice Japanese prioritized promotion. In other words, Japanese are often sent from Japan to hold managerial positions, even if there are more capable locals.

What’s being done now?

In a twist of fate, Toyota is now scrambling to reactively respond to the whole situation when they are more accustomed to being proactive by using kaizen, or continuous improvement.

Akio Toyoda and his company have taken the right steps in apologising and cooperating with the relevant authorities to solve these problems. The next step needs to be taken internally.

What's next?

Toyota is notorious for being a closed company. They need to acknowledge that, as a world leader, they will need to adapt to the rest of the world instead of insisting that others completely adopt Japanese ways. The first move they can make is to bring in outsiders to sit on their board.

In choosing these board members, they will need to move from their comfort zone and bring in non-Japanese from outside Toyota. Many Japanese companies, Toyota included, are notorious for being culturally insular when it comes to appointing managerial and decision-making positions. Some people have even charged it with racist promotion practices.

Whatever it may be described as, their current practices leads to group-think and lack of acceptance for change. Fresh and different views are essential in ensuring that problems can spotted and challenged, instead of being ignored and brushed aside collectively.

Although Western management does not always demonstrate the best of business practices, there are many successful concepts and elements which Toyota can bring in and absorb into their business. Implementing a system of accountability is something they will need to learn from the West, as the recent Lexus brake lockup fiasco shows.

A more innovative hybrid car design.
In general, Japanese companies are slow to respond to changing situations, because of the importance of consensus in their culture, and Toyota is no objection. Consensus is a double edged sword because it takes so much time to achieve, so Toyota will need to re-examine the need for consensus versus the need to respond to business conditions, and balance the two accordingly.

Most importantly, Toyota needs to remind itself of what made them great in the first place: the Toyota Way. They need to reaffirm across the board that the highest quality is their goal and guiding light. Akio Toyoda will also need to reaffirm a commonly said, but temporarily forgotten Japanese belief that the Customer is God.

They will need to reinstate horenso, or effective 360-degree communication, and emphasize that it is not simply nice to have, but is essential for the firm’s recovery and continued growth and prosperity. They will also need to remember that in today’s world, solely engaging in bottom to top communication is not efficient nor acceptable, as it would lead to sub-par decisions, actions and results. Full communication to all stakeholders and employees is now the key to any successful leading organization.

Toyota Will Return

Toyota has been given a bloody nose. They are down, but are certainly not out. With the reemphasis on the basic beliefs of quality first using the tools in the Toyota Way, they will return from this crisis with even greater strength and a sharper focus than before.

Photo Credits

Toyota Logo Grill: Photo by kenjonbro, licensed under Creative Commons by-nc-2.0
Change Sign: Photo by David Reece,  licensed under Creative Commons by-sa-2.0
Toyota Yaris: Photo by Jonathan W, licensed under Creative Commons by-nc-2.0
Toyota Hybrid Concept Car: Photo by Alan D, licensed under Creative Commons by-2.0

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Karn G. Bulsuk: Full Speed Ahead: Toyota's in trouble. Here's how to fix it.
Toyota's in trouble. Here's how to fix it.
Toyota's sticky pedal fiasco has dropped the car maker into hot water. Slapped with a $16.4 million fine, it signals not the end of the Toyota Way, but a back-to-basics for the company. Here's what went wrong, and how to fix the company from the inside out using their own mantra.
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Karn G. Bulsuk: Full Speed Ahead
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