Sunday, June 19, 2011

Toyota Under Fire

I ran the Shelter Bay 10K yesterday. Hot day. 5:30 start. Slow time (54:58) put me right at 50% of the men that ran. At least I ran a reverse split (last half faster than the first).

And my daughter Beth likes my garden report. Peas are just awesome now. Basil and currants are coming on. Lettuce continues to be plentiful.

And this is me next to the parsnips which I am allowing to go to seed. Think I will have enough seed?

I read a great book:

Toyota Under Fire: How Toyota Faced the Challenges of the Recall and
the Recession to Come Out Stronger
by Jeffrey K. Liker and Timothy N.

I have driven Toyota's for my last 3 cars. I am on my second Prius now and love it. Toyota makes great cars.

One of my interns, Marcus Arcabascio
wrote the following review on it:

In the light of the Toyota recall crisis that negatively impacted the
company’s public reputation and trust, Jeffrey K. Liker, author of
esteemed lean production manual The Toyota Way decided he should again
focus on Toyota’s cultural efforts, but this time with a bit of a

Co-authors Jeffrey K. Liker, and Timothy N. Ogden’s Toyota Under Fire
reveal how Toyota used its recall problems and recessionary period as
means of opportunity. Instead of firing employees like many other
large firms were doing at the time, Toyota embraced its mantra of
kaizen (Toyota’s firm philosophy of change/improvement for the better)
and held company-wide training seminars (most impressively in
factories it had stopped production in).

Methods of improvement during the recession were not limited to Toyota
staff and production facilities, but extend to suppliers as well.
Toyota’s lean production model means that 70% of Toyota vehicles are
produced by outside suppliers with 30% in-house, so assisting
suppliers increase their efficiencies ultimately increases Toyota’s
own efficiency.

On August 28, 2009, in San Diego, California a family driving their
Lexus was killed when their loaner vehicle accelerated out of control
at more than 100 mph. What exacerbated the story was that the driver,
Mark Saylor was a veteran California Highway Patrol officer. The
question became: If a highway patrol officer cannot stop an out of
control car, who in the general public can?

After months NHTSA investigations, a media whirlwind, congressional
appearances of Toyota executives and massive public misinformation it
was determined that cars do not magically accelerate on their own
(even if their acceleration is computer controlled). Accidents were
caused by drivers putting 3rd party or non-factory installed floor mats
into their vehicles that the accelerator could get caught under.

Japanese and American executives each had their own sentiments with
regards to dealing with the public backlash, which lengthened response
time. Public perception versus the truth played a critical role in
the tarnishing of Toyota’s reputation.

In due time, Toyota began to regain its public confidence and road to
recovery through the implementation of 3 phases:

Phase 1—React
-Fixing customer problems/addressing issues
Phase 2—Contain
-Don’t let things get worse while enacting kaizen
-Don’t point fingers; instead, respond to customer concerns
-Set stage for continuous improvement (strive for True North)
Phase 3—Turning Crisis into Opportunity
-Diagnosing root causes (Asking why 5 times until locating root of problem)
-Fixing internal communication problems
-Eliminating weak points in listening to customers
-Making sure customers come first in the engineering process

Toyota’s experience can be broken down into 3 lessons:

Lesson 1: Your crisis response started yesterday
-Through establishing a culture that values transparency, and always
striving for improvement, or kaizen, you are readying yourself for
crisis in advance

Lesson 2: A culture of responsibility will always beat a culture of
-Public transparency and acceptance of responsibility reinforces the
value of quality employees whose personal growth is worth investing in

Lesson 3: Globalizing culture means a consistent balancing act
-Different cultures do not always deal with situations in the same
way; by increasing regional autonomy, companies can decrease their
response time, and be more sensitive to the specific needs of their

Despite problems with the recession and recall issues, in 2010 Toyota
was the number one auto manufacturer in the world, number one in USA
for the third year in a row as well as the global leader in used car

While Toyota’s reputation was certainly tarnished by public
misinformation with regards to its recalls, Toyota Under Fire presents
an interesting analysis of how company culture can be used to address


At 2:18 AM, Blogger Andrew Robins said...

A principled approach at a desperate time for Toyota, a brave move for any business. I much admire their senior management, only time will tell as to outcome, but I wish them every success. Andy Robins CEO Snibor UK


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