Toyota: No trade-off between growth and quality

• Source: People's Daily Online
• [13:59 March 02 2010]
• Comments

The world-renowned auto brand Toyota is tarnished by the massive recalls of a host of its cars in North America and elsewhere and an even more overwhelming negative media publication. The grilling of its chief executive, Akio Toyoda, at the Capitol Hill who repeatedly apologized, and his choking-up with wetting eyes before American dealers and employees, sent chills on to tens of millions of TV viewers, not just Japanese.

However, it is the inertia of an Oriental corporate culture and the slack or failure of Toyota's response to earlier consumer complaints that caused the seemingly relentless prodding from the US legislators and the press. American consumers are angry because they want to know answers to a problem that may have caused more than 30 deaths since 2001, or what is really behind the sudden and unintended engine acceleration.

Obviously, Toyota's response is embarrassingly slow, leading to critics attacking it for hiding truth and covering up the genuine defects, and incorrectly blaming road accidents on floor mats and on sticky pedals. The Lack of forthright and decidedness in admitting mistakes and promptly looking for any technological lapses, runs counter to Western culture of doing business, posing as an affront to Westerners who embrace directness and quick tackling of a crisis.

The tempered or piecemeal way of acknowledging a defect may earn time and also profits for a company, temporarily, but a snowballing of the fault and its eventual implosion will cause the business a catastrophic loss, and very often, lead a company to end up in ruin. Now, Toyota has been forced to recall more than 8 million vehicles worldwide, and it looks increasingly likely that those families whose relatives were lost in accidents are to file numerous civil suits and ask for billions of economic compensation.

Now, the damage to Toyota reputation has done, it will probably take the company a couple of years, if not longer, and huge investments to win back spooked customers. Sales are almost certain to decline in North America this year. The real challenge for the brand is if the company says the current debacle of uncontrolled accelerator is fixed, and then a new problem props up in the course.

Asian culture weighs face saving above others. "All the Toyota vehicles bear my name," Mr. Toyoda said in English in his opening statement on the Capitol. "For me, when the cars are damaged, it is as though I am as well." He means it. But, he could have avoided the barrage from the politicians and media if his management took to heart the consumer complaints much earlier and got to eliminate the risk in the first place.

Deviation from its prior pursuit of top quality cars made the world's top auto manufacture stumble badly. It took a grave risk and fell by putting growth ahead of safety and profits before consumers. A pell-mell rush in the past 10 years to become the global top automaker caused it to pursue "growth over the speed" at which the company was able to develop its capability, Mr. Toyoda admitted. Since 2000, the company has nearly doubled its production capacity, and has more than tripled the number of its assembly lines around the globe. Such rapid growth, combined with increasing complexity of cars and their computers in general, led Toyota into dangerous lapses in safety controls.

Putting quality first is the lifeline for any business to take root and prosper. In China, various quality problems have been reported encompassing milk powder, dumplings, toothbrush and toys. Today, the Toyota accelerator defect is giving Chinese enterprises another lesson that once the customers lose trust in the quality of your products, it is very difficult to restore it.

I have every reason to believe that Toyota will weather the current storm, by aggressively investigating into the real cause of the flawed accelerator, publicizing and fixing it, and re-emerge a stronger company. It will prove to be a viable lesson as the Americans have brought Toyota to account on safety.

Please bear in mind: No trade-off between growth and quality, all the time.