Can Toyota get fanatical about quality again?

Lean manufacturing is not to blame for Toyota’s recent quality and public relations woes, says Anand Sharma

In its pursuit of growth, Toyota management lost its fanatical focus on what is most important to its customers: safety, quality and reliability. A management system that is lean and true to Toyota’s roots offers a way back to the top.

Let’s be very clear. The Toyota Production System (TPS) is not to blame for Toyota’s recent quality problems and spate of product recalls. What we call “lean manufacturing,” the process improvement tools and methodologies championed by Toyota have been applied and proven to work again and again by companies in every sector around the world. If anything, Toyota wasn’t lean enough.

Toyota’s quality failures reflect a management failure just as its past success reflected superior management. The company rose from the wreckage of postwar Japan by being fanatical about what its customers cared about. Customers have always cared about quality. So, lead by Kiichiro Toyoda, Eiji Toyoda, and Taiichi Ohno, Toyota was fanatical about quality. As it turned out, buyers around the world wanted better quality cars, and Toyota’s vehicles became even more reliable with each new model introduction. As it grew and expanded overseas, Toyota managed to remain fanatical about quality and reliability. That was the heart of the brand.

In a 2005 magazine article Toyota President Fujio Cho, who was mentored by Ohno, said the company must keep growing and expanding into more markets, and he acknowledged an internal target to capture 15% of the global automotive market by 2010. That push for growth was meant to reignite a fire in Toyota managers who had become fat and happy with success. On one level, it worked. Toyota took over the crown of world’s largest automaker from General Motors in 2008. Their biggest challenge, Cho said at the time, was maintaining the growth pace without diluting their “corporate DNA.”

Before too long it became evident to customers and observers that Toyota wasn’t successfully replicating its production methodology and culture as fast as it was expanding. In 2006, following a now-eclipsed string of recalls, Cho’s successor Katsuaki Watanabe apologized and pledged a renewed focus on customers and a realignment of engineering resources. The company succeeded to a point, climbing back up the consumer-quality survey rankings, until today.

Describing his efforts to speed-up the company’s famously slow decision-making process back in 2005, Cho noted that he wanted a management structure that was as instantly responsive as Toyota’s assembly lines. “If there’s a problem,” he said, “I want to hear about it in an hour.” By not disguising and highlighting mistakes and waste, a truly lean management system reveals problems and enables corrective action better than any other methodology. Cho failed to embed such a lean management structure. In the face of early signals and mounting evidence, Toyota managers appear to have ignored, dismissed and failed to find the root cause of the accelerator problems. That management failure has already cost the company billions of dollars in consumer trust, brand value and lost sales.

A way forward
I was in a car accident in 1994. It had nothing to do with the automobile. I was a bit bruised and battered but otherwise unhurt. When the airbag on the Toyota Lexus I was driving exploded and expanded, I received some small burns on my hands and stomach. When I told the dealer representatives they said I shouldn’t have been burned and quickly took back the wrecked car to find the root cause and devise a fix so future customers wouldn’t be so injured. And they replaced the three-year-old car, for free. There weren’t any discussions about residual value or anything like that. They simply replaced the car. I don’t know how many times I’ve repeated that story. That’s what an automotive company does that puts customer safety and quality first. It’s the type of behavior that built the Lexus brand and drove it to the top of the luxury-car market in just a few years.

Getting back to the company’s roots, admitting the problems and becoming utterly committed to customer safety and quality again, will take more than a pledge from Toyota’s President Akio Toyoda. Customers could not care less that the company they buy a car from is the largest in the world. If you look back, everything that Taiichi Ohno tried to do was focused on quality and customer satisfaction. One-piece flow and kanban systems were not designed for inventory reduction or productivity improvement. Those were the byproducts of a single-minded focus on improving quality.

The TPS and lean are not to blame for Toyota’s woes. In fact, they offer a way back to the top, not necessarily in terms of global market share, but by providing what customer’s value most.

Anand Sharma, Chairman and CEO, TBM Consulting Group