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Liker Looks @ Toyota

No, not the numbers again—well, not entirely. But a book you need to read about Toyota.

Given the timing of this newsletter, its coincidence with the release of monthly sales figures, and the apparent popularity of last month’s look at what those numbers really mean when you peel away the headlines, I thought about doing that again.  But I won’t.  Still, I do find it a little amusing that Toyota’s lousy sales notwithstanding (“Toyota Motor Sales (TMS), U.S.A., Inc., today reported August sales of 129,483 units, a decrease of 16.1 percent from the same period last year on a daily selling rate (DSR) basis. On a raw volume basis, unadjusted for 26 selling days in August 2011 compared to 25 selling days in August 2010, TMS sales were down 12.7 percent from the year-ago month”), Camry, which is going to be replaced with a new model, came in with sales of 30,185 units, which is more than the Fusion (17,925) or Malibu (17,840), so, again, caution is in order.  The other hard players in this category, the Hyundai Sonata and the Honda Accord, sold 20,682 and 18,439, respectively.

And while this might be a spurious comparison, it is worth noting that the Camry outsold total Buick (16,021) and Cadillac (13,208) divisions combined.  And while Ford is chuffed with the performance of its Lincoln brand (“Lincoln posted a 25 percent sales increase in August—following July’s 40 percent sales increase” ), it may be worth knowing that Prius, just now back from earthquake-induced inventory reductions, outsold Lincoln brand, 9,491 to 8,006—and Prius sales were down 22.7% compared to August 2010. 

Again, the point here is not to laud Toyota but to make people in this town aware that the game’s still afoot, not won by any stretch.

No, rather than looking at the sales numbers, I want to strongly recommend a book that everyone in this industry should read:  Toyota Under Fire: How Toyota Faced the Challenge of the Recall and the Recession to Come Out Stronger by Jeffrey K. Liker and Timothy N. Ogden (McGraw Hill).  Liker, professor of industrial and operation engineering at the University of Michigan, is arguably the most knowledgeable person in the West about Toyota; Ogden is a writer and editor.

While the book is ostensibly about the sticking pedals and uncontrolled acceleration of 2009-2010, that is really not why the book is important.  Yes, it is a fascinating, detailed case study of what happened.  Yes, the authors got unprecedented access to Toyota executives, including Akio Toyoda.  And yes, the authors are even-handed in their assessment of what happened; they are by no means in thrall to Toyota.

(They also provide the best explanation of why things seemed bollixed from the point of view of those of us on the outside.  Writing of the Toyota engineers in Japan, they write, “The primary concern was determining if the sticky pedals affected the ability of drivers to stop their vehicles.  This question is the hidden factor around which much of the subsequent controversy revolved: If the sticky pedals kept drivers from stopping or materially increased the amount of time required to bring a car to a halt, then the sticky pedals were clearly a safety defect and required immediate corrective action.  If, on the other hand, braking performance was unaffected by the sticky pedals, then, the engineers felt, the pedals were not a safety defect but a customer-satisfaction and component-reliability issue.”   And while you may not recall this, the NASA analysis that was performed to look at the alleged acceleration issue found that the pedals weren’t culpable.  And as the authors point out, the NASA study exonerated Toyota of electronic defects.) 

The reason why the book is important—and useful—is because the authors provide in-depth information about the ways and means that Toyota people do what they do.

Take, for example, the near-hysterical headlines that followed when a Toyota executive would say, during the crisis, that it was important that the company “get back to basics.”  This was interpreted as “Toyota has lost its way” or “Toyota has concentrated too much on growth at the expense of all else and this is a huge mistake.”

But the authors note, “Throughout Toyota’s history, you’ll see statements from executives that the firm needs to ‘get back to basics.’  Fujio Cho”—chairman of Toyota—“would even say in speeches that the company has to ‘reinvent itself.’  These statements are usually interpreted as admissions of major corporate decline.  Having a kaizen mind, though, means that it is always appropriate to go back to basics, to renew the focus on quality, and to critically evaluate today’s conditions, no matter how good you are compared to the past.”

Somehow, this seems to have been missed.

The authors write about genchi genbutsu, about the importance of going and seeing, being on the ground, getting the information first-hand, making decisions based on facts, not opinions or speculations.  Taiichi Ohno—the father of the Toyota Production System—is known to have stood by machines for hours, trying to get to the root cause of things, which can’t be achieved via spreadsheets.

One might argue that this is a slow methodology.  But someone else might point out that one of the things that Western auto companies learned from Toyota, Honda and other companies is that it is better to spend more time up front than to deal with change orders after things are in motion.  Go slow to go fast, in effect.

While some people wondered why “heads didn’t roll” among the Toyota executive ranks as a result of the alleged acceleration etc. issues, the authors point out, “Toyota Business Practices dictates using the ‘Five Whys’ to get to the root of a problem, not the ‘Five Whos’ to find and fire the guilty party.”  Solutions matter more than scapegoats.

And let’s not overlook the fact that the same sort of coincidence of factors that led to the chaos that Toyota had to work through is something that can happen to any organization.  Whether Toyota has become “stronger,” as the subtitle indicates, or not remains to be seen.  Tested and tempered, yes.  Still, that it seems to be methodically moving forward after a situation that would have undoubtedly crippled other companies—and let’s not forget that the 2009-2010 problems occurred hard on the heels of the massive automotive downturn of 2008, which resulted in the serial closing of a tremendous number of plants by the company’s competitors—indicates that they’re doing something right.

For many years, The Machine That Changed the World was the book of choice in this industry.  Toyota Under Fire ought to become the one that people now study with even more vigor.

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