The Week in Ethics: Toyota’s Focus on Process not People

Akio Toyoda testifies before Congress

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

The Week in Ethics

Advertisements
Explore posts in the same categories: Congress, Ethical Leadership, Integrity, Leadership, Reputation, Tone at the Top, Trust

Tags: , , , , , , , , , , , ,

You can comment below, or link to this permanent URL from your own site.

8 Comments on “The Week in Ethics: Toyota’s Focus on Process not People”

  1. Jane Roeder Says:

    Another great article, Gael. I hope you’ll consider submitting your resume to Toyota for a Chief Ethics Officer position!

  2. CJ Says:

    The statement “Earning back trust and reputation is so much more than good process” really struck me. I will have to ponder that some more.


  3. Truly interesting story as for me. It’d be just great to read something more concerning that theme. Thanx for sharing that material.


  4. What do you think about adding some more images? I don’t want to offend anyone, content is really nice. But according to the scientists visitors acquire information much more efficient if there are certain helpful illustrations.

    Stacy Nixon

  5. Shiny eyes Says:

    Truly it is certainly interesting for me to read the article. Thank you for it. I like such topics and everything connected to this matter. I definitely want to read more on that blog soon.


  6. […] is an understandable business strategy to try to limit the scope of recalls as Toyota did, but what happens to Toyota or any company if there aren’t others at the […]


  7. […] trust was lost. Consider the hearings on huge oil profits and high oil prices, health insurers, Akio Toyoda testifying on unintended acceleration, (Toyota), Richard Fuld on the collapse of Lehman, Lloyd […]


  8. […] previous articles on Toyota in this column see Five Ways to Rebuild Trust, Reputation and Image, Focus on Process not People, and Ethics of […]


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: