Business/Finance

Toyota is the Tiger Woods of the car business (but one observer thinks there's hope)

In case you missed it, Toyota seems to have developed a little public relations problem. And, like most PR issues, this one ultimately has very little to do with PR. Instead, the company, which was once famed for quality, seems to have fallen into one of the most common traps in the book – it grew too fast. At least, that’s what its president, Akio Toyoda, thinks.

Scheduled to testify before a congressional committee overnight, Toyoda linked his company’s problems to its expansion in the past few years.

“We pursued growth over the speed at which we were able to develop our people and our organisation, and we should sincerely be mindful of that,” he said in a transcript of his testimony. “I regret that this has resulted in the safety issues described in the recalls we face today, and I am deeply sorry for any accidents that Toyota drivers have experienced.”

When you grow too fast you outrun your expertise. I watched in horror as one of my hometown’s flagship enterprises, Krispy Kreme, went from world-class case study to world-class debacle seemingly overnight for this very reason (well, this plus some competence and ethical issues at the top), and if you’ve ever seen a great local business (restaurant, brewery, you name it) go national, you’ve probably experienced a small-scale version of what Toyota is going through. (Although when Krispy Kreme rolls a bad doughnut off the conveyor belt, nobody dies. Not right away, at least.)

When an organization loses control the way Toyota apparently has, bet the farm that it’s going to be awhile before the revelations finally stop trickling out. And let’s be clear: when the CEO acknowledges that the company has prioritized growth over safety, you have the corporate equivalent of a roofie, Red Bull and Viagra cocktail-addled Tiger Woods hurtling through a lounge crowded with cocktail waitresses. For instance, did the company know about the problems and cover them up? Did they make a cost/benefit decision to ignore customer safety? Who knew what and when did they know it? Congressional minds want to know.

One of the best takes on the Toyota predicament I’ve seen comes from my old friend and colleague John Cavanaugh at his new biz blog, The Tap Tap Tap. John is one of the smartest business guys I’ve ever worked with, and he knows a thing or six about the car business, having grown up as the son of a very successful retailer. He observes that Toyota has finally become an American car company, although I don’t think he means that in a good way.

Cavanaugh thinks Toyota can bounce back, and he offers a brief roadmap for how that might happen (both from an operations and communications perspective). However, their recovery is anything but certain. As he notes in the comment thread:

…yesterday it was leaked that Toyota has been internally critical of the “Democratic administration” since they fear it will be tougher on regulation. If it’s revealed that Toyota sat on incriminating data, they’re in a heap of trouble. And if they sat on it after doing a cost/benefit analysis…well, let’s just say they’d better be ramping up production for China.

If for no other reason than the fact that it would be a tragedy to see all of Toyota’s hard-working people out of jobs, my fingers are crossed. But right now, they’re looking a little too Crouching Tiger to suit me, you know?

6 replies »

  1. I don’t think there’s much hope for Toyota. Mr. Toyoda can talk about whatever he wants, but the old Toyota way is probably further gone than even this spate of recalls indicates. They’ll soldier on based mostly on their reputation for a while, but they’ve lost the mojo…and more importantly, the Koreans are nipping at their heels.

    One of their problems has been called “beige”, as in they simply don’t build anything interesting. That leaves them vulnerable to problems like this. You don’t buy a Toyota because you love cars, you buy one because you want a reliable appliance. To some degree Toyota has always been that way (though the Celica, Supra and MR2 had some excitement). But in the old days you gave up some comfort for warlord grade, Toyota construction. It may have been a utilitarian purchase, but you could point at the 1990 Corolla and say, “that will survive the apocalypse.”

    Now it’s fat, plasticky and festooned with all the doodads that make for unreliability. I’d also be willing to wager that the days of a line worker being able to shut down production because they see a problem or a better way to do something are over. I’m not sure it’s a matter of too big too fast so much as putting the bottom line before building the kind of product that makes a nice bottom line.

    Frankly, i’d sooner stab myself in the leg with a knitting needle repeatedly than buy an American made Toyota, but the American way seems to have crept across the Pacific too. The best Toyota can hope for from me is a trip south to pick up a new, pre-1994 truck. Otherwise it’ll be a Ford…who’s finally realized that bringing European grade vehicles here makes people who care about cars happy.

  2. But the government is also going to hammer Toyota, as they have ownership stakes in GM and Chrysler….Toyota’s the competition in a non level playing field.. Perhaps the salvation for Toyota is in allowing the UAW in…..their problems would go away in this government environment.

    • Can you clarify a bit? Are you arguing that the government will only land on Toyota because it’s invested in other companies, and not because the company apparently acted with appalling disregard for customer safety? Or are you arguing that the government shouldn’t land on Toyota at all?