Toyota: recalls and responses

One of the case studies in my forthcoming book on organization culture (due out in July 2010) is on Toyota. I wrote it last December before the news broke of the recalls. Back then, in what now seems a 'hurrah for self' prescient moment I wondered whether the company would survive or die – mainly because the research I'd been doing on strong cultures suggested that too strong a culture had, in effect, built-in blinkers. The assumptions and norms around the ways of doing things – even when they were, as in Toyota's case, aimed at reducing errors and maintaining quality seemed to stop people from seeing patterns and trends that didn't fit on their 'radar screen'.

Gary Klein, in his book Sources of Power: How People Make Decisions, remarks on a phenomenon in relation to decisions that result in an undesirable outcome. He talks about three categories of decision making that resulted in error:

• Lack of experience: 'For example, a fireground commander failed to call in a second alarm because the fire did not seem large. He did not realize that the balloon construction of the building made it vulnerable to damage to the supporting framework'.

• Lack of information: For example, a flight crew failed to obtain full weather reports prior to takeoff and failed to identify alternate landing sites. … When the fight ran into difficulties the weather profile was inadequate for selecting an alternate landing site, etc.

• The de minimus error: Decision makers notice the signs of a problem but explain it away. They find a reason not to take seriously each piece of evidence that warns them of an anomaly.

All three categories appear to exist in the current Toyota recall case (today I read that Toyota quickly suspended sales of its 2010 Lexus GX 460 sport utility vehicle on Tuesday after Consumer Reports magazine warned buyers that the model had a dangerous handling problem that could lead to a rollover and possibly "serious injury or death.)

Toyota lacks experience in dealing with what Jeffrey Liker (Professor of Industrial and Operations Engineering at the University of Michigan and author of the best selling The Toyota Way) describes as the highly-charged public and media "inferences about Toyota's quality problems [that] are emotional and have little to do with actual facts."

Akio Toyoda, President of Toyota, in his February 24 appearance before US Congress the company said We pursued growth over the speed at which we were able to develop our people and our organisation and we should be sincerely mindful of that. But under questioning he insisted no faults had been discovered with the electronics of any of its vehicles i.e. there is, so far, a lack of information on what the safety issues are attributable to. Toyoda promised full co-operation with investigators who are seeking the information that will explain this, which is in line with their philosophy. As Liker points out – Toyota's "next step is to do hansei which means dig deeply to find the root cause of the problems, put in place countermeasures, check what happens, then make further adjustments as you learn".

The company made the de minimus error – I am not here talking about in relation to the safety issues – but in relation to the reputational damage that was coming their way. For example, Akio Toyoda "had initially said that he would stay in Japan and not face Congress but changed his mind last week after a formal request from the committee chairman." Because they did not have all the facts they appeared slow to respond to increasing media and government attention. As another commentator said, This contributed to this growing from a problem to a crisis.

Like others I do not know whether the accusations being leveled at Toyota are founded in any facts or if their safety record is better or worse than other car manufacturers'. (From what I have read, it appears better). But whether or not the company manages to repair the reputational damage done seems to boil down to whether they can rapidly learn to apply the principles similar to (or the same as) the Toyota Way in circumstances as nuanced and unpredictable as media attention, emotional responses, and different cultural and mental models of the accountabilities and responsibilities of leaders.