U.S. Sen. Jay Rockefeller, D-WV, said this week that he had once worked hard to have Toyota locate an engine plant in his state because he knew it was a company built on the philosophy of quality first. “If they designed and built the safest and most reliable cars possible, then sales and profits would follow,” the senator said. “Now it is clear that somewhere along the way public safety took a back seat and corporate profits drove the company’s decisions.” Rockefeller made this comment in opening remarks as chairman of the Commerce, Science and Transportation Committee, which marked the third separate congressional hearing Toyota has faced to date.
In previous columns, I’ve talked about ways Toyota could begin rebuilding trust, dealing with challenges in reputation and image, and restoring what was lost in a process-only focus. Sen. Rockefeller’s comments, and Toyota’s own admission of losing sight of its mission, propel the Japanese auto giant into a growing category of corporate losers – those who shift focus to go after more growth and more profits, at the cost of what gave them a great reputation in the first place. Toyota, once the world’s most profitable automaker, suffered its first losses in its past two fiscal years; the turning away from a quality to a profit focus only created far more problems.
The idea that “Greed isn’t as good as we thought” is one of 10 ideas that will reshape the business world in the next decade, according to a recent Financial Times article. The author points to Bill Allen, legendary leader at Boeing, who inspired the organization to eat, breathe and sleep aeronautics and led them to market dominance and profits. Successor Phil Conduit’s focus on using measurements like unit cost, return on investment and shareholder return didn’t pay off: Boeing had scandals and lost its market leadership. Other companies mentioned — Citigroup, ICI, Enron and Lehman Bros – offer additional examples to future leaders of the quicksand of a profit-at-any-cost approach.
Toyota had a failure of ethical leadership. Delivering to the values of high quality standards and safety is ethics in action.
Ethics is at the heart of creating customer loyalty, creating an engaged workforce, and providing the reality behind the differentiating qualities that marketers use to describe a brand. Failing to build the highest quality product is, in fact, unethical. For Toyota and every other company, ethics and success in business are inextricably entwined. This lesson is proving very painful and costly to have to re-learn.
Gael O’Brien, March 4, 2010