Lean times at Toyota

So what has gone wrong at Toyota?  For the past couple of decades Toyota has been held up as the paragon of quality control and their Lean process has been copied and applied to many, many industries and not just in manufacturing.   Toyota has become the number one car manufacturer and their profits returned in the final quarter of 2009 despite tough global trading conditions.
Now, while we are relatively big fans of Lean methodology (provided it is applied appropriately and kept in context),  we do recognize that it is not a silver bullet for all business ills.  Having said that it’s clear that great gains can be achieved by focusing on quality and removing waste, re-work and non value add activity. But if the inventors of this philosophy have got it horribly wrong with their current recalls and now the concerns regarding Prius brakes, what does this mean for the rest of industry?
Four months ago the President and CEO of Toyota, Mr. Aki Toyoda, stated that Toyota was “on the verge of capitulation to irrelevance or death” – prophetic words as it turns out with over 8 million vehicles currently subject to recall notices.  I suspect that this is not what Mr. Toyoda quite in mind when he was making his point about becoming complacent.  It will be interesting to see how this damaging blow to their reputation as a quality car manufacturer impacts their fortunes going forward.
Quality control is a bit like communication – everybody recognizes and acknowledges its importance but in practical terms it is often overlooked or under resourced in the pursuit of short term profit and margin targets.
We have seen, in this global downturn, that many companies have been found wanting – anyone can look good during times of growth and expansion but the real test for leaders, managers and the core business processes is when the going gets tough and frankly many have failed the test.  The good news is that the more progressive companies are looking to invest time in developing their people and amending their core processes to fare better when the chips are down.
For Toyota perhaps the issue is complacency – the fact that they had become number one, the best.  It’s a good lesson for all of us to stay humble and keep focused on the basics regardless of our success, avoiding the dangers of complacency and believing our own press.  Toyota is too big to fail because of this current crisis but that hard won reputation will take some restoring.