Where Did Toyota Go Wrong?
Posted by admin on Sunday Jun 12, 2011 Under Toyota NewsAs I have been learning all of the wonderful tools and innovation that Toyota brought to manufacturing I am astounded to say the least. And up until now their quality was unsurpassed. What happened? I was reading an article from the Harvard Business Review by Sean Silverthorne on this very subject. Apparently, a significant contributor to this accelerator problem was Toyota leadership abandoned their quality driven system for increased market share. This wonderful thing called capitalism comes with an underlying price – manufacturer responsibility to the consumer’s safety. Toyota let themselves be lured by increasing market share instead of their customer first ideals. I wonder if the leadership seriously considering the long term consequences of this direction.
“The flush of catching up to Ford and General Motors, coupled with a boom in demand, led Toyota’s leaders to put sales growth above quality. Senior leaders became focused on becoming first in sales with a 15% share of global sales. This meant that new products had to be introduced more quickly, new plants had to be opened more rapidly, and supply networks had to be expanded more aggressively. We’re now seeing the consequences of those decisions.” – Learning from Toyota’s Stumble by Steven Spear
Another automaker that lost its credibility was Audi. “Volkswagen AG’s Audi luxury brand spent 15 years rebuilding U.S. sales after sudden-acceleration incidents in the 1980s almost wiped out demand, a possible sign of the difficult times Toyota Motor Corp. faces. Audi’s U.S. deliveries plunged 83 percent by 1991 from their peak in 1985 following recalls of the German automaker’s 5000 sedan. A class-action lawsuit in 1987 by Audi owners seeking compensation is still being fought.” Audi 1980s Scare May Mean Lost Generation for Toyota by Andreas Cremer and Tom Lavell.
Toyota was the industry example of how to run a manufacturing business at optimum performance. When they upheld Lean principles of the customer first in on all levels of their processes it was reflected in the quality of their product. Not just in production, but design and marketing. This Lean philosophy was translated into profit, brand loyalty and an impeccable reputation. They were truly a lean enterprise. I fear that they have now become just another automaker. Toyota is reexamining what made them great. However, it will still take years to recover from the brand damage now done.
Toyota is a clear example of what not to do when you have a successful business model. All companies can be what Toyota was and hopefully will become again. Before this recall Toyota had 15% of the global market. Amazing. On a local level, think of what is would be like to increase your market share just by doing things Lean. If you were able to set up best practices, reduce or eliminate mistakes, full utilization of staff, etc. how would that help you become an industry leader? The question to ask yourself is am I the Toyota of yesterday or the Toyota of today? This applies for service business too. Which one are you?
Cynthia Marsh-Croll