Fascinating…I’d say it has lost its way…read on…
In spring of 2008, with the distant rumbling of financial crisis still far off, Toyota TM could be forgiven for complacency. It had just taken the title of world’s largest automaker from longtime rival General Motors MTLQQ. To most observers, this was no surprise. It had been clear for a decade that Toyota wanted to be No. 1, and that it could beat GM in just about every market, except full-size pickup trucks in the United States.
What a difference a year makes. Toyota is now reeling after historic financial losses, a change of leadership at the top, several lawsuits, and a string of recalls. These culminated last week in the humiliating announcement that the firm whose stated goal is perfection would need to service 3.8 million vehicles due to a poorly designed and potentially deadly flaw in a floor mat. This is a company that operated according to the almost mythically-revered Toyota Way, a set of management principles intended to inspire continuous improvement. But the Toyota Way is at the root of Toyota’s current woes: Perfectionism is great when you’re on the way up and your main rival is extremely imperfect. But once you’re there, staying flawless can become an ordeal, as CEO Akio Toyoda as much as admitted last week.
Toyota became No. 1 because it made cars that didn’t have to be distinctive. Instead, they fulfilled customer needs better than the competition. This was the result of Toyota Way, along with the much-envied Toyota Production System. Toyota became a contender for the top spot in the early 2000s, when it began to threaten then-No. 2 Ford F. During the ’00s, this wasn’t lost on GM. Inside the company’s headquarters at the Renaissance Center in Detroit, there were times when it seemed as if the colossus of American manufacturing had Toyota on the brain. Toyota could do small cars; it could do family sedans; it could do SUVs. And with the arrival of the Prius in 2001, it proved it could do the future. The Japanese carmaker wasn’t just capable of building better cars than GM—it was also prepared to mercilessly out-innovate No. 1.