At this point, we can all agree that apologies aren’t enough.
Over the past month, every Toyota employee from CEO Akio Toyoda down to your local dealership’s janitor has apologized for the company’s quality meltdown.
Realizing that wasn't quite enough, Toyota took the bold step of going after recent unintended acceleration incidents, hoping to either find the root problem or debunking the claims as false.
After federal investigation and Toyota's own available black box data, two of the most notable incidents over the last two weeks seem to fall into the latter category: both the San Diego and New York runaway Prius incidents appear to be more than originally reported. The driver of the Prius in San Diego who ran out of control until police stopped him had a colorful past and his car was found to be capable of stopping under its own power. This week, federal investigators found the New York Prius driver avoided the brake pedal altogether when she went into a stone wall, even though she claimed she had her foot on it the entire time. If Toyota is directly to blame for either of these incidents, more evidence will need to surface.
But that doesn't mean Toyota is back on the sunny side. Let’s assume that Toyota replaces all those defective floor mats and sticky accelerator pedals, then rewrites its software for its balky antilock brakes. What can Toyota do to prevent a recurrence?
Luckily, we’ve got a few answers. Amid all the arm-waving on Capitol Hill, some interesting details have emerged about Toyota’s dysfunctional corporate culture.
Two industry experts, David Champion of Consumer Reports and Robert Cole, a professor emeritus at the University of California-Berkeley’s Haas School of Business, helped me to assemble a list of five things Toyota can do to restore quality.
1) Stop trying to be the world’s largest automaker. If you focus all your energy on higher sales, the customer no longer comes first.
In 1998, Toyota’s then-president Hiroshi Okuda instructed his subordinates to attain a 15% share of global car sales by 2010. Okuda’s unstated goal was to make Toyota the world’s biggest car company.
Toyota pulled it off. Sales soared from 4.7 million units in 1999 to 7.8 million units a decade later, and Toyota now outsells General Motors and Volkswagen.
But the company has paid a price. Breakneck growth over-stretched the company’s engineering staff, says Cole, an expert on automotive manufacturing and an authority on Toyota’s corporate culture.
Why not simply hire more engineers? Cole says it takes a decade or so for an engineer to learn all the intricacies of Toyota’s product development and culture of teamwork. Some things can’t be rushed.
There were other problems. As Toyota grew, it lined up new suppliers around the world to provide components -- vendors who were less familiar to Toyota than the suppliers back home, which often were managed by former Toyota executives.
In a Feb. 23 article in the Harvard Business Review, Cole describes what happened next: “Relatively inexperienced Toyota managers, with greater frequency, were put in charge of supplier relations.”
Hmmm. Remember that it was an Indiana supplier, CTS Corp., that produced the sticky accelerator pedal (to Toyota's designs) that sometimes fails to return to the “idle” position.
By contrast, Toyota has experienced no problems with accelerator pedals produced by Denso Corp., a longtime member of Toyota’s keiretsu family of suppliers.
Breakneck growth creates too many temptations for an automaker to cut corners. Toyota should stop trying to be the world’s biggest car company.
2) Let independent experts study allegations that electronic malfunctions may be causing sudden acceleration.
Toyota insists that its own tests have turned up no electronic malfunctions that would cause sudden acceleration.
The company also has refuted Prof. David Gilbert of Southern Illinois University-Carbondale, who demonstrated to ABC News how electrical problems supposedly could cause a Toyota Avalon to accelerate out of control.
And yet we have all those sudden-acceleration fatalities since 2001... Are Toyota’s runaway cars afflicted by electronic gremlins, or by motorists who slammed the wrong pedal? We don’t know.
The usual American solution is to leave it up to the courts. Attorneys representing accident victims will call in their experts, while Toyota counters with its own engineers. And then 12 jurors with no technical expertise will do their best to sort out this nightmare.
There’s a better way. During his congressional testimony, Toyota chief engineer Takeshi Uchiyamada suggested that the company might invite the National Academies of Science to study sudden acceleration.
Good idea. The NAS doesn’t have a dog in this fight. Let them conduct an independent study.
3) Put an American executive in charge of U.S. recalls and quality.
In testimony during the congressional hearings, Jim Lentz, the president of Toyota Motor Sales U.S.A., admitted he had no authority to issue a recall. All such decisions are made in Japan.
A three-year-old memo from his predecessor, Jim Press, was even more revealing.
In 2006, Press warned his Japanese superiors that Toyota was running into trouble with U.S. safety regulators. His pleas apparently went unheard -- which is shocking.
At the time, Press was arguably the most powerful non-Japanese executive who ever worked at Toyota. His colleagues called him “the emperor” because he always got his way.
And yet his calls for help fell on deaf ears. That’s a pretty good sign that Toyota’s chain of command has calcified. “You’d get quicker action if you didn’t go through the Japan bureaucracy,” Cole says. “It would speed up the process.”
Amen. Put an American in charge of U.S. recalls.
4) Launch fewer models in your lineup. Model proliferation makes it tougher to manage quality.
As Toyota gained market share, it has fallen prey to model proliferation -- a disease that nearly killed General Motors.
In 2010, Toyota, Lexus and Scion market 28 different models, up from 23 in 2000. And if you count the hybrid variants that Toyota has introduced for a number of models, the model proliferation is even greater.
David Champion, who is senior director of Consumer Reports’ automotive test center in Connecticut, argues that Toyota’s decision to fill every product niche stretched its engineers too thin.
Champion questions whether Toyota needs a Camry, a Highlander and a Venza in its lineup. Is it really necessary to market an FJ Cruiser and a 4Runner? Does America need a Toyota Sequoia and a Toyota Land Cruiser? “Why produce both when they compete in the same market?” Champion asks.
Good question. In 2007, Consumer Reports decided it would no longer give all Toyota models a blanket endorsement. Toyota now ranks third in the magazine’s 2010 quality survey, behind Honda and Subaru.
Toyota’s models as a group are still rated “above average” in reliability. But Consumers Reports has not restored its across-the-board endorsement of Toyota products.
At a time when many consumers are questioning the company’s commitment to quality, it would be a priceless advantage if Toyota can regain the top spot in Consumer Reports’ reliability survey.
Dump the unnecessary models. Focus your engineering talent on quality -- not quantity.
5) Design your vehicles to be panic-proof.
Last month, Toyota announced plans to install a brake override system in its vehicles.
A brake override cuts the throttle back to “idle” if the accelerator and brake are applied simultaneously. In theory, this would eliminate incidents of sudden acceleration caused by electronic defects.
Earlier this week, Mazda also announced plans to install brake overrides in all vehicles, and Transportation Secretary Ray LaHood has said he may require it.
Clearly this is an idea whose time has come. More broadly, automakers should design vehicles to be as panic-proof as possible.
Right now, the recall furor has claimed Toyota’s complete attention. In months to come, it will be interesting to see whether Toyota reverts to its bigger-is-better default mode, or whether it changes the way it does business. Keep your eye on Mister Toyoda.