Toyota's CEO discusses quality problems

In the July/August 2007 Harvard Business Review, Toyota CEO Katsuaki Watanabe engages in a wide-ranging discussion of the company’s plans for the future.

It’s a fascinating article, and a couple of passages caught my eye in particular. In them, Mr. Watanabe frankly confronts problems that Toyota has faced on the quality of its automobiles:

In 1995 there were 26 Toyota factories; in 2007 there will be 63…. I realize that our system may be overstretched.

We must make that issue visible. Hidden problems are the ones that become serious threats eventually. If problems are revealed for everyone to see, I will feel reassured. Because once problems have been visualized, even if our people didn’t notice them earlier, they will rack their brains to find solutions to them.

Revealing the hidden problem, not tolerating the “quiet fix,” has been discussed in a prior post. But Mr. Watanabe goes on. He immerses himself in the company’s mistakes, and gets actively involved in diagnosing and fixing them. Says Mr. Watanabe:

Soon after I became president, as you know, we confronted several quality-related problems. We created teams specializing in different areas and instructed them to analyze the root causes of problems in each area. We found that in several cases the problems had occurred because of design flaws or because of short lead times that didn’t allow out engineers to build a sufficient number of physical prototypes. If we had thought about product designs more clearly or had the time to conduct more experiments, we could have avoided those problems.

Don't "Quiet Fix" your mistakes

Deborah Ancona and Henrik Bresman, in their book "X-teams: How to Build Teams That Lead, Innovate and Succeed" neatly describe a phenomenon that I've witnessed at every company I worked for. I dare say I was guilty of it a bunch of times.

It's called "quiet fixing." Here's how it's described in the book:

At Toyota, for example, when a new car comes off the assembly line with a defective door handle, the person responsible for that part does not fix the problem quietly without the assembly team leader noticing. Instead, the team comes together to identify the root cause of the problem to ensure that it does not happen again. This process often gets noisy, and it requires psychological safety. Without it, quiet fixers would rule the day--leaving the source of the problem and its consequences to crop up again and again. (Ancona and Bresman, "x-teams," p. 93)

When at EDS we were studying the Learning Organization, I used to joke that we weren't a Learning Organization, we were a Forgetting Organization, like the guy in "Memento" who has lost his short-term memory.

What I was saying, in essence, was that we had a culture of "quiet fixers."

Toyota acceleration incident report cites company's "skepticism and defensiveness" to customers and regulators

The Toyota "North American Quality Advisory Panel," put together in the wake of the sudden-acceleration incidents in 2009-2010, has released its report, and it's fascinating reading of how a large company's strengths can turn into weaknesses under stress. [A copy of the full report is available at this link.]

The panel cites several factors that contributed to the crisis, including Toyota's centralized reporting structure, which led to miscommunication and delayed responses, and an unwise policy of categorizing safety as a subcomponent of quality. But most striking to me was a lesson that can apply to many companies I'm familiar with: they didn't take seriously complaints and feedback from customers and regulators - until it was too late to stave off a full-fledged crisis. To use John Kotter's term, they did not "let the outside in" at Toyota, which led them to minimize and push back against unintended acceleration complaints. Here are several excerpts from the report:

Truly listening to customers requires carefully considering, processing, and internalizing their feedback, even when it may be inconsistent with the company’s instincts....

The Panel has observed that Toyota did not adequately apply the key principles of the [Toyota Production System] and the Toyota Way to its management and decision-making practices. The Toyota Way is founded on the core pillars of continuous improvement and respect for people. A fundamental principle of continuous improvement is genchi genbutsu, which means that one must “go and see” the source of the problem in order to determine its root cause. The Panel feels that Toyota applied this and other aspects of the TPS and the Toyota Way too narrowly in two respects.

First, while it is clear that Toyota applies the [Toyota Production System] process and the Toyota Way to problems or flaws found internally, Toyota does not appear to treat feedback from external sources, including customers, independent rating agencies, and regulators, the same way. For example, it doesn’t appear that Toyota applied genchi genbutsu as quickly and thoroughly as it could have in investigating and seeking out the root causes of customer complaints regarding issues such as [Unintended Acceleration].

Second, Toyota did not apply the principles of TPS and the Toyota Way adequately to identify and avoid repeating management decision-making errors with the same thoroughness and dedication with which it applies them in its manufacturing process. Although Toyota is in the car manufacturing business, it—like most modern corporations—is also a decision factory. Toyota’s reputation in North America increasingly will be based as much on the quality of its decision making as on the quality of its vehicles.

It seems to me that Toyota has a tremendous opportunity to learn from this situation, to become more open to feedback and critique, and to, as the panel recommends, bring the power of the Toyota Way and the TPS to improve its management and information-sharing processes. Will they take that opportunity?