May 26th, 2010
Paul White
President, White & Partners Ltd.
The massive recall by Toyota of 8.4 million vehicles (8 million for unintended acceleration (which as of this date has not been adequately diagnosed) and 400,000 for brake problems is, according to the company, attributed to over expansion and insufficient attention to quality. Toyota’s organization was unable to cope with the building of upwards of 17 new production facilities since 2,000 on top of the need to supply and manage the current total of 75 production plants world-wide. The outcome is that Toyota became the largest auto maker in the world and was simultaneously hobbled with the largest recall in its history. Will the recall affect Toyota’s traditional innovative culture?
We don’t think the mechanical problem itself is other than a very serious blemish on Toyota’s reputation but the manner in which Toyota has handled the issue is much more serious and needs to be addressed by Toyota. It is a management issue. It is Toyota’s first major glitch in its 20-year roll to become #1 in the automotive world. Over expansion is a part of the problem but not the root cause.
It’s fashionable to criticize Toyota. The evidence of design, manufacturing, quality, and operational flaws is awesome and disturbing to management, regulators and, most significantly, for Toyota, to the consumer. Serious for sure, but is it the beginning of a downslide for Toyota; a company which has built a stellar reputation over its 53-year history? Not likely!
Our conclusion is that Toyota remains in a strong position and will continue to being highly innovative in the auto industry while suffering some short term but significant adjustments to its innovative practices.
For the full White Paper, visit http://www.corporateinnovationonline.com.
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