Lesson Learned

Use Toyota’s recent troubles as an educational opportunity

by Henry J. Lindborg

Last fall, when I remarked to university educators that a particular decision-making tool was widely used at Toyota, their response was respectful interest. When I did the same in February, a similar group laughed derisively at the comment, as though I were being ironic.

For that audience, Toyota’s reputation for quality had become a joke, a tragic reversal for a company accustomed to admiration and emulation.

Last year, Toyota was the world’s eighth most valuable brand—down from sixth a year earlier—and worth $31 billion.1 The company was named among the 100 most ethical firms, and books—most famously, The Toyota Way2—spread the gospel of its quality systems from manufacturing to other industries, including healthcare.

Not so fast

The decline in market share, recent recalls and Toyota’s CEO’s public admission of a downward spiral led the Economist3 to cite another book that may help diagnose Toyota: How the Mighty Fall.4 As additional massive recalls were announced, negative press has turned melodramatic.

At the same time, the company has tried to recover, employing crisis management aligned with its espoused values: apologizing, telling the truth, avoiding finger pointing and taking direct action by stopping production to focus on making things right for customers.

Whatever the lasting damage to Toyota’s brand, competitive position or ability to recover, the company’s troubles have a special significance to quality professionals. Toyota’s situation is different from other manufacturers that had safety problems and conducted recalls—Mattel or Bridgestone/Firestone, for example. No other organization, whatever its success in winning brand recognition or quality awards, has captured quality professionals’ imaginations like Toyota.

In some respects, the company represents the culmination of the United States’ decades-long adaptation of Japanese tools and techniques for improvement: Toyota offers a compendium of "how to." Its approaches have been successfully applied in a broad range of organizations. Now as the role model’s reputation is damaged, there is significant risk to the credibility of those who have held it up for admiration.

Room for growth

In the Toyota story, there are warnings and opportunities for quality professionals. While many practitioners have applied the company’s lessons intelligently—with systems perspectives and full awareness of the perils of knowledge transfer—others have not. They have reverted to selling tools and techniques by invoking the Toyota brand.

It’s not a bad concept for marketing, but over time, it can be perceived as a fad: a set of practices that overpromise. Clients may have wondered, "Why didn’t we become Toyota?" Now, of course, they may be grateful they didn’t.

We should be warned that Toyota’s brand is not quality’s brand. When a brand suffers major blows—including media frenzy, government investigations and allegations of long-standing inattention to risks—successful marketing can become an albatross. The lesson applies to consultants and other quality professionals who need to make a case for improvement initiatives: Quality is a profession with a body of knowledge (BoK). It is not dependent on any single model, brand or training.

While our most persuasive arguments are often embodied in stories, narratives are perilous. Check out textbooks or trade journals from a decade ago for glowing case studies of quality transformation. How many fulfilled their promise? How many imperiled the credibility of the principles and practices they were intended to illustrate?

Peter Drucker wrote, "Failures, unlike successes, cannot be rejected and rarely go unnoticed. But they are seldom seen as symptoms of opportunity."5 He understood failures as opportunities for positive, disciplined innovation. Innovators create value by applying what is already known in new ways.

Let that be a lesson

How might quality professionals use Toyota to spark innovation? First, focus on the full range of quality’s BoK. Do we have perspectives that allow us not only to capitalize on Toyota’s success, but also to explain to a cynical public the dynamics of its failures? Do we have an enterprise perspective? Can we tell the rest of the story?

To what degree have we limited ourselves to functionary, and now defensive, roles by focusing on tools and techniques? Is our reaction, "But the tools work?" Can we offer a big-picture response based on quality’s role in global economics and organizational life cycles? What is our level of understanding of strategic risk, especially in the supply chain? Do we grasp the implications of risk within a stakeholder approach to quality, involving ethics and social responsibility (SR)? Do we bring to the table an integrated view of the profound knowledge W. Edwards Deming advocated? How we answer these questions may be an indication of our willingness to innovate and to reinvigorate the profession.

Individually and collectively, we have the opportunity to define the quality profession by articulating how its BoK not only applies to improving efficiency, but also has the power to explain enterprise risk and strategies for improvement. This may require revisiting our BoK to ensure it integrates what we have learned about risk, stakeholder management and auditing for corporate SR. We may need to ask whether our education, training and certifications incorporate that knowledge.

We should use Toyota as our test. Can we analyze and explain its failures—and, we hope, its recovery—as convincingly as we did its success?

Note and references

  1. For more information on brand valuation, visit Interbrand at www.interbrand.com. For a list of the world’s most ethical companies of 2009, visit Ethisphere at www.ethisphere.com/wme2009.
  2. Jeffrey Liker, The Toyota Way, McGraw-Hill, 2003.
  3. The Economist, "Toyota Slips Up," Dec. 10, 2009.
  4. Jim Collins, How The Mighty Fall, Harper Collins, 2009.
  5. Peter Drucker, Innovation and Entrepreneurship, Harper Collins, 1986, p. 46.

Henry J. Lindborg is executive director and CEO of the National Institute for Quality Improvement, which provides consulting in strategic planning, organizational development and assessment. He holds a doctorate from the University of Wisconsin-Madison and teaches in a leadership and quality graduate program. Lindborg is past chair of ASQ’s Education Division and of the Education and Training Board. He also chairs the IEEE-USA’s Career Workforce Policy Committee.

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