Out of Control
With a worldwide recall of some 8 million cars and 51 deaths that U.S. regulators say have been caused by mechanical failures in its cars, Toyota Motor Corporation faces a corporate crisis of epic proportions. What happened at the car company that had finally achieved the title of world’s largest car maker? (It overtook General Motors in 2008.) What factors contributed to the mess it now found itself in? At the core of Toyota’s manufacturing prowess is the Toyota Production System (TPS), which has long been touted and revered as a model of corporate efficiency and quality. Four management principles (the 4P model) were at the core of TPS and guided employees: problem solving, people and partners, process, and philosophy. The idea behind these principles was that “Good Thinking Means Good Product.” Taiichi Ohno, a long-time Toyota executive, is widely credited as the innovative genius behind TPS. During the 1950s, Ohno, along with a small core of other Toyota executives, developed several principles of car-making efficiency that became what is now known as lean manufacturing and just-in-time inventory management. “Ohno’s ideas not only changed the auto industry, they changed late-twentieth-century manufacturing.” At the very core of these concepts were attention to detail and a “noble frugality.” However, over the years, it appears that Toyota’s executives slowly lost the “purity” of that approach as the once-strong commitment to quality embedded in Toyota’s corporate culture became lost in its aggressive moves to grow market share and achieve productivity gains. From about 1995 to 2009, Toyota embarked on the “most aggressive overseas expansions in automotive history” and at the same time had a laser-like unparalleled focus on cutting costs. Four major cost-cutting and expansion initiatives severely strained organizational processes and employees. One