Toyota's Lessons for Executives

Of all the descriptors no one ever expected to put in the same sentence as the words "Toyota" and "quality," it's "bad."  But that's what's happened.

Toyota has decimated its own brand.

It's not that Toyota was always the best car going.  In the early days of the Corolla, back in the 1970s, the problems were legion.  But the cars were small and fuel efficient at a time when those were the two key market requirements and differentiators.

Over time, the company got good at quality.  Then they got excellent.  Then they were the world leader.

Now, they're having to find their way again.

And it's all their fault.  They changed their raison d'etre from creating and producing the highest quality cars in the world to being the biggest carmaker in the world.

That meant a completely new strategy.  With new suppliers.  And as good as unmanaged growth.  Because the only thing that was "good" was size.  That was their measure of success - and, as is always the case, they achieved their measures.  Because you manage what you measure.  And you reward it.

Then, if you're not careful about what it is that you were measuring in the first place, you enter directly into the world of unintended consequences.

Toyota is now living in that world.

And it gets worse.  Most recently, we're seeing those who are allegedly newly experiencing the accelerator pedal problems are talking about suing the company.  That, of course, is over and above the actions that Federal and State governments are taking simultaneously.

On the good news side of the equation, though, is Ford Motors.  Both financially stable and focused on quality, Ford, under the stewardship of Alan Mulally - a former Boeing man - already had begun changing its quality levels and product image.  Then, Toyota happened and it's the biggest boon to Ford - and others - that they could have dreamed.

Okay.  So that's what we know.  Now the question is:  What does this have to do with you and your organization?

There are two different aspects - at the least - to how this can be used as a learning opportunity for you and your enterprise.  Not just to make sure you don't make the same mistakes, but to use as a launching pad for greater growth and further success - done the right way.

First, it's all about how you define your goals.

As mentioned above, Toyota changed the way it was measuring success.  It had a new goal - to become the biggest carmaker in the world - and, in that process, it lost its focus.

Instead of paying attention to its customers, the only thing in its sights was General Motors.

In making that decision, they lost the plot.  They forgot who buys the cars and only looked at who else was selling the cars.  Seriously big mistake.

Sadly, and typically, they achieved their goal.  But, at what cost?

So, as you look at what you want to achieve - now and going forward - dream big but strategize in steps.  Make sure you keep your customers - now and future - in mind all along the way.  Develop your products and services to be best of breed and always attracting new customers to the fold.  Create value, build on it and expand it to every new opportunity you identify and execute.

Fix what's wrong and don't accept excuses - your own or others'.  If things aren't going right, you've got wrong measures in place - because there's a reason your people are doing what they're doing.  It's because they think it's what you want.

Disabuse them of that notion - fast - and get them back on the right track.  Then, through the right measures, you'll keep them there - and get your organization exactly where you want to go at the same time.

Second, it's all about controlling the message.

Toyota knew months in advance that they had a problem.  It started with the Lexus, Toyota's luxury line built on the same platforms as Toyota.  The floor mats in some models were pushing against the accelerator pedals leading to uncontrolled acceleration.  (Sound familiar?)  They created a fix but they kept the whole thing quiet.  That was last year.

By the time the story broke on the Toyota front, the company could only play catch-up.  It was too big to hide and too juicy for the news agencies and social media sites to ignore.

There are any number of hypotheses about why Toyota's executives didn't come clean from the first.  Ultimately, the reasons behind that 'why' don't matter.

It's the other 'why' that does: Why you want to make sure you're controlling the information about your organization.

You own the responsibility for your brand.  It is your most visible face out to the larger world.  It is your reputation - and that makes it an extremely valuable asset among your corporate currencies.

In a couple of weeks, I'll be featured in an article in the journal Excellence in Leadership published by the Chartered Institute of Management Accountants.  The article is about the differences in the ways that Western and Eastern management styles differ and whether one is 'better' than the other.  (The short answer is no - but it's worth reading the article to find out how to make them work successfully together.)

After we were done and the article had gone to press, the author, Ian Duncan, wrote and asked me about an article he had subsequently read about the impact of social media on Toyota's problems.  The premise was that, because of social media, Toyota never had a chance.

I disagree - and I think it's cowardly to blame social media.  Just as it is cowardly for those who don't like the message to use the 24-hour news cycle as their excuse.

It's your responsibility to protect your company - on all fronts.  You're the executive.  You own the message.

Granted, you can't control all the channels on which messages will be sent - but you have to be on top of what is being said by you and your organization as well as how you react when it's being said about you.

Your reputation - your brand - is an investment and an asset.  You forget that at your peril.

Toyota has learned that lesson the hard way.  They kept quiet when they should have come out - ahead of the wave - and demonstrated that theirs is a brand that can be trusted.  That they've got the problem on their radar and are working it - assiduously - to ensure the safety and well-being of their customers.  That, even before anyone has asked, they are doing a preventive, proactive recall to make sure that everyone's car is in better shape than ever - and that you and your family are safe in their hands.

At no cost to the consumer.  Maybe with a loaner thrown in.

You don't have to make the same mistakes as Toyota.  In fact, you can use their mistakes to adjust your strategy and tactics to ensure that you win as a result of their losses.

In the meantime, my recommendation is that Toyota executives read that seminal book about their own success, The Machine That Changed the World.  Hopefully, they'll remember how to get back to where they were before they decimated themselves.