This from our Managing Director in Asia, Craig Briggs;
Brand Toyota Stumbles
We have the Japanese to thank for infusing craftsmanship, quality, customer-centricity and value into the global automobile industry. It was a sharp wake-up call for most automobile manufacturers, who played catch-up for years, as the Japanese invested in technology and innovation. And, the global consumer won big-time with better cars at a better price.
But Ouchi’s Theory Z values – lifetime (stable) employment, high productivity, investment in the future, and high employee morale – has pretty much played out in Japan. The demands of today’s modern, globalized world – shareholder value, consistent growth and returns, growing employee expectations – have supplanted the unique values that made this great leap possible. Toyota is the latest Japan casualty, but there are others – SONY, JAL, Snow Brand…
Toyota lost the plot, and perhaps became obsessed with quantity over quality, as they surged ahead to become the world’s number 1 car company in 2009, surpassing ailing giant General Motors. But this enthusiasm to be #1 comes with a price. You don’t get to be “ichiban” by focusing on market share, but it appears that Toyota got caught up in a race, and has now damaged its sterling brand in the process. They were seduced by their own good fortune.
In Toyota lore, the company’s commitment to quality, and its respect for the individual craftsman, was present in its “andon cord” system, which allowed for assembly line workers to shut down the entire assembly line when a problem – any problem – was detected.
It appears that Toyota’s andon cord was disconnected. Not only did the company fail to locate the problem at the design stage, testing stage or production stage, but the company ignored the situation as it began to surface in the market. For years, reports of unintentional acceleration were dismissed as driver error. Then, later, floor mats were cited as the cause. Bad news was discounted. Now, there is a massive, global recall of vehicles, approaching 10 million in number. The recall is massively late – coming only after highly publicized (and tragic) fatalities, and foreign government intervention.
From the envy of the automobile world, with multiple consumer favorite brands, Toyota now finds itself humbled, embarrassed, and damaged. Toyota’s brand keepers have failed dramatically. Their competitors are feasting on their foibles.
There are lessons here for all of us. Bigger is not necessarily better. Better is always better, and bigness does not equate greatness. Consumers value craftsmanship, quality and care. They increasingly value a company’s integrity, too. The Toyota brand owners need to return to their brand values and principles, and live by them again, re-building their brand culture from the bottom up. It will take time, patience and discipline. It will be painful, but it is possible.