Dustin, great question. All of the lean community looks to Toyota as setting the bar in the use of such techniques as kanban, poke yoke, etc. I'm sure many people on the outside of this situation were shocked to hear of Toyota's problems. It seems the best use of lean tools and techniques are not immuned to the organizational issues you described. I would interested to hear your opinion on how it went from being so good to so bad for Toyota. Did they really become that complacent? Did they always have this silo-based structure? Thanks, Bill
Thank you for responding, Bill. I hope we can begin to generate some discussion around this topic, because it is fascinating.
IIn my opinion, Toyota did become complacent, and there are elements of "arrogance, indolence and ignorance" to this story, as Robert Bea suggests, but I don't believe anyone inside the company would have believed that of themselves prior to the massive recall.
Toyota has a long history of success with only a fews bumps in the road. Like any company that has enjoyed a long string of successes, its employees develop an unwavering faith in the brand. It is a sign of a healthy company until it edges into the realm of "we can do no wrong." That's when people become complacent and even arrogant. Here's a simple sports analogy -- think about how many times you have seen a top ranked team with a decided lead over its opponent begin to slack off, lose their lead, and ultimately lose the game. It happens all the time.
With regard to your question about whether Toyota always had a silo-based structure, I don't believe so. Based on what I've read, it sounds like silos began to spring up as the company pushed for rapid growth, and as someone in a LinkedIn discussion said, silos force communication up-and-down and side-to-side, but only within the confines of the silo -- making it difficult to share information inside a company with diverse geographic locations, let alone with between the company and its suppliers.
Great discussion. I personally feel that the only reason this recall is getting so much attention is because of the scale both in terms of the number of cars and the number of models recalled. I'm going to touch on a different perspective here. I googled the incident and apparently this hasn't been the first such recall for Toyota. Check out the stats.
- 2010 - over 9 million cars (Source: http://www.csmonitor.com/USA/2010/0129/Toyota-recall-update-dealers-face-full-lots-anxious-customers)
- 2005 - close to 1 million pickup trucks (Source: http://www.usatoday.com/money/autos/2005-09-07-toyota_x.htm)
- 2002 - close to 400,000 cars (Source; http://breakingnews.iol.ie/news/?c=ireland&jp=qlaugbmhid)
- 1999 - 2.3 million cars (Source: http://pqasb.pqarchiver.com/latimes/access/43053602.html?dids=43053602:43053602&FMT=ABS&FMTS=ABS:FT&type=current&date=Jul+10,+1999&author=JOHN+O'DELL&pub=Los+Angeles+Times&desc=Toyota+Faces+a+Massive+Recall+in+Emissions-Control+Dispute;+Autos:+U.S.+and+California+officials+allege+that+diagnostic+computers+are+faulty.+Company+denies+it+and+vows+to+fight.&pqatl=google)
I guess what I'm trying to say is that this is not the first incident of the kind. Also, other companies have had their share of recalls over the times. I agree with Dustin in saying that faith in the brand should not go into the realm of "we can do no wrong". This is precisely where Toyota faltered. Also two other things went wrong that complicated the situation even more.
- The timing: This couldn't have come at a worse time for Toyota. Consumers were just beginning to spend after a year-long official 'recession' and this massive recall dented their confidence.
- PR: I think Toyota is to blame for this. They handled the issue very poorly in the media. It was a long time after the recalls were announced before we saw any ads on television. The President of Toyota, Akio Toyoda didn't make any public announcement for weeks after the media covered the issue.
I personally don't think their manufacturing floors have silos. I certainly believe their management does. Their handling of this situation has reflected the same.
While it is disappointing to see any industry giant stumble, I believe you have hit on the key factor: organizational silos.
Any organization that is not managed as a unified system -- which is most, not a few, business enterprises -- will never achieve its full potential. Toyota has done better than most due to several innovative factors. But the history of repeated and major recalls is evidence that strategies and tactical operational decisions are not being made from the standpoint of an integral system.
I deal this the subject of "system thinking" in several articles posted at GeeWhiz To R.O.I. Check the key-word list for "system thinking."