How the Mighty Have Fallen

The news of Toyota’s multi-million-vehicle recall involving many of its most popular vehicles sent shock waves throughout the automotive world and possibly opened up a new pathway to increased sales for the company’s rivals. How could the world’s largest automaker, which built its reputation on quality and reliability, stumble so badly on a part as prosaic as an accelerator pedal?

“When Toyota gets around to doing one of its famous ‘root cause’ analyses of the Great Accelerator Recall, it should start by looking in the mirror,” writes Alex Taylor III, senior editor of Fortune magazine. “As the company grew to become the world's largest automaker, it failed to adjust its corporate structure to accommodate its altered scale. And it in its zeal to deliver profits as well as revenue, it may have overlooked fundamental principles that used to underpin its business.

“Toyota, in other words, forgot what the ‘Toyota Way’ was all about.”

Taylor postulates that Toyota was so intent on cost-cutting that it may have specified components that simply weren’t up to snuff. Whatever the cause, the company now says it has a solution to its problems. But the scale of the recall is massive, and Toyota’s decision to suspend sales of existing cars and production of new ones is costing the company and its dealers plenty.

One key tenet of the Toyota Way is to be a learning organization. If the company can put that concept into practice and draw the right conclusions from this debacle, maybe the whole episode will be worth the millions spent in repair costs and lost sales.

Watch for more about this episode—and lessons that any company draw from it—in the March issue of Products Finishing.