There is a saying “you get what you focus on.” Jim Lentz, the president of Toyota Motor Sales U.S.A., said yesterday in the House Energy and Commerce Committee hearings that “We lost sight of our customers.”
Toyota documents from July 2009 released this week by a Congressional committee include an internal memo citing company success in saving more than $235 million by negotiating a limited recall, delaying implementation of a federal safety rule, and delaying or mitigating other safety regulations, among other things. The focus to limit or avoid recalls was achieved. The problem now is the consequences of the focus.
That Pyrrhic victory, appallingly in its strategic short-sidedness, will probably cost Toyota many times that $235 million savings when all the additional recalls, potential suits, fees to manage the ensuing crisis, and sales and shares losses are calculated. The distraction to their business the last several weeks has been seismic. With congressional investigations, a Securities and Exchange Commission subpoena, rumors of investigations by Japanese regulators and ongoing requests for documents, Toyota is under an international microscope of accountability.
It has been quite a week for public apologies. Pundits can debate whether Tiger Woods’ press conference with hand picked media unable to ask questions was better than the one today by Akio Toyoda, the president and CEO of Toyota, before the House Committee on Oversight and Government Reform. Toyoda made clear that his name is on every car, that when the cars are damaged, “it is as if I am as well” and he gave his personal commitment that Toyota will work “vigorously and unceasingly to restore the trust of customers.” However, for both Woods and Toyoda the apology comes very late in the game, and the road back has incalculable miles to travel.
The reality is that companies lose their way just like people do, not surprising considering it is people who run companies. Toyoda testified that the company’s priorities of safety, quality and volume became confused. As they grew rapidly in the last few years, volume apparently was the driver. Toyoda announced the company is changing how it manages quality control, reinstating the concept of “customer safety first,” plans to improve its internal and external communication around safety, and will create a new position of Chief Quality Officer for North America.
My problem is that all of this is about process or about developing people to execute the process. The culture and values are about doing the right thing according to the process. But, it isn’t about people. Where is the space created for the moral compass to override process when lives have been lost and customers complain about a problem like unintended acceleration that Toyota engineers can’t replicate? President Toyoda would be well served to admit into his inner circle someone who can speak to ethical considerations and pose tough questions that help illuminate Toyota’s choices in arriving at what they say they stand for. Earning back trust and reputation is so much more than good process.
Gael O’Brien, February 24, 2010