Dr. Jeffrey Liker has just published a new book about how Toyota handled the challenges of its recent issues with recalls, economic downturns, etc. It is a fascinating book that should be on every lean champion's desk!
I have been communicating with Dr. Liker via email about the book and he sends this short message about the book:
The Toyota Recall Crisis and what it means to the Lean Community
Process improvement specialists have been making major impacts on companies throughout the world independently of what happens at Toyota. Yet, it has been comforting to have Toyota to hold up as an icon, even spiritual leader, that is living proof that operational excellence leads to exceptional business results.
Lean, six sigma, and any other process improvement methods are based on principles of scientific thinking. Get the data, analyze it, make informed decisions to get to the root cause of the problem, then move on to the next problem in a continuous cycle of learning. In Toyota Under Fire (McGraw Hill, 2011) Tim Ogden and I work to bring out the facts about the last two years of Toyota’s history, putting it in the perspective of the Toyota Way. Some of the clearest facts come from the U.S. government which originally attacked Toyota viciously then released reports on February 8, 2011 after a 10 month investigation by NASA and decades of investigation by the agency responsible for highway safety (NHTSA).
Here is a broad summary:
1. There is no evidence, and there has never been any evidence, of electronic problems in Toyota vehicles (or any other brand) that cause sudden unintended acceleration (SUA).
2. When they studied cases of crashes where drivers claimed SUA in almost all cases they found it was driver error or “pedal misapplication” as they put it.
3. There were a small number of cases of pedal entrapment by unsecured, rubber, all weather floor mats that are stacked on top of other floor mats so reach a dangerous height and can slide into the pedal sometimes entrapping it. (That also has been reported for other automakers like for the 2010 Ford Fusion).
4. There were some sticky pedals that are slow to return, but they do not seem to affect braking distance, and up to this point there are no known accidents.
5. The case is closed as far as NHTSA is concerned and essentially NASA simply proved what NHTSA already knew one year earlier (but was not willing to say).
It now sounds a lot like the Audi false accusations of SUA in the 1980s. But Audi was a small, specialized brand and all but driven out of the U.S. market for a decade and Toyota is still number one in retail sales in the U.S. market once again the leading company in America in every quality award possible (J.D. Power, Consumer Reports, Polk, Kiplinger’s, Motorist Choice).
The beginning in Toyota’s turnaround in sales actually was March, 2010 (market share dropped to 12.8 percent in February and rebounded to 17.6 percent in March), one month after stopping sales for a week for the sticky pedals, hundreds of negative articles written about Toyota, and the congress of the United States berating Toyota for lacking honesty, integrity, and a safety culture. Even in the midst of that bleak month of February, a survey by Rice University of vehicle owners found that Toyota owners overwhelmingly trusted the company, thought they were handling the recalls properly, and would buy another and their loyalty scores were the highest of any auto maker.
Organizations that wish to view Toyota as a role model and find that useful can take solace in both the strength of the brand through the crisis, demonstrating the value of the investment in customers and quality, and in Toyota’s productive and effective long-term response. In Toyota Under Fire we note that Toyota was heroic in its handling of the recession, and not so heroic in the early stages of the recall crisis—taking too long to respond to allegations, too long to make decisions on recalls, and communicating poorly between Europe, headquarters in Japan, and staff in the United States. This is a problem Toyota is going to great pains to solve over the coming decade by turning upside down key processes and organization globally.
The good news for those who value Toyota as a model of operational excellence is that their strong culture, the Toyota Way, is what got them to the point where customers trusted them, regardless of a negative media firestorm, and what allowed them in the short term to respond to customer needs such as getting the problem diagnosed and vehicles fixed in record time. More important, the Toyota Way is guiding their long-term response based on deeply reflecting (hansei), taking responsibility, developing appropriate counter-measures with real punch, and relentlessly implementing the countermeasures. We believe we will see an even stronger and better Toyota that we can be proud of for decades to come.
Jeffrey K. Liker
Professor of Industrial and Operations Engineering, University of Michigan
Author with Timothy N. Ogden of Toyota Under Fire (2011)
And more information about the book from Amazon.com (where you can buy the book now):
About the Book from Amazon.com
For decades, Toyota has been setting standards that are the envy—and goal–of organizations worldwide. Its legendary management principles and business philosophy, first documented by Jeffrey K. Liker in his influential book The Toyota Way, changed the business world’s approach to operational excellence.
Granted unprecedented access to Toyota’s facilities worldwide, Liker, along with Timothy N. Ogden, investigated the inside story of how Toyota faced the challenges of the recession and the recall crisis of 2009–2010. In both cases, the company was caught off guard—and found that a root cause of the challenges it faced was its failure to live up to its own principles. But the fundamentals were still there, and the company has ultimately come out of the most challenging years of its postwar existence even stronger than before.
Toyota Under Fire chronicles all the events of the recession and the recall crisis in detail, providing valuable lessons any business leader can use to survive and thrive in a crisis, no matter how large:
- Crisis response must start by building a strong culture long before the crisis hits.
- Culture matters far more than decisions made by top executives.
- Investing in people, even in the depths of a recession, is the surest path to long-term profitability.
Apply the lessons of Toyota Under Fire to your company, and you’ll meet any future management challenge calmly, responsibly, and effectively— the Toyota Way.
About the AuthorJeffrey K. Liker is the author of the bestselling The Toyota Way and 10 other related books. He is a professor of industrial and operational engineering at the University of Michigan and consults and speaks through his own consulting firm and The Toyota Way Academy.
Timothy N. Ogden is cofounder of Sona Partners and a writer and editor who has developed nearly 20 business books for major publishers. His work has appeared in Harvard Business Review, Stanford Social Innovation Review, Strategy+Leadership, and Miller- McCune, among others.