toyota failure case study

The 2009 Toyota Accelerator Scandal That Wasn’t What It Seemed

And why it matters for understanding our rocky relationship with today’s autonomous vehicles.

In 2009, Toyota accelerator pedals began mysteriously getting stuck, at times trapping panicked drivers in out-of-control cars that tragically crashed.

But was the problem really the car?

    WATCH: Tesla Won't Stop Catching Fire Weeks After Crash  

It’s the subject of famed writer Malcolm Gladwell’s most recent “Revisionist History” podcast, a series that explores the overlooked angles from some of history’s biggest stories. Gladwell’s conclusion provides a poignant lesson for today’s automakers and drivers — but unfortunately it’s one that often isn’t heard.

Here’s the quick backstory on the “sticky pedal” crisis: In 2009, a man phoned 911 to report that his accelerator pedal was stuck and he couldn’t get the car to stop. He said his brakes weren’t working. Ultimately, his car crashed into another and then plunged into a ravine. Everyone inside the vehicle was killed.

The 911 call went viral , and the scandal broke wide open. Over the next five years, an estimated 90 people died in Toyotas that mysteriously accelerated. Toyota recalled millions of vehicles but was accused of concealing information about the flawed pedals. In 2014, the company paid $1.2 billion to avoid prosecution for covering up information about problems with “unintended acceleration” that the FBI said Toyota “knew was deadly.” 

At the time, two theories emerged to explain why these pedals suddenly had minds of their own. One involved software malfunctions, while the other blamed floor mats that slid around and pinned the pedals down.

But according to Gladwell, the software explanation doesn’t hold up considering the fact that multiple tests have shown that even when a driver is pushing the throttle to the floor, hitting the brakes will stop the car.

And an investigation by the Department of Transportation in 2011 found that floor mats only accounted for a small fraction the accidents.

The real culprit? Human error. More often than not, drivers who reported that their accelerators were stuck were inadvertently flooring it and thinking they were pressing the brakes. Data from many of the “black boxes” from cars involved in incidents of unintended acceleration showed that in most cases, the brakes were never even touched. 

The drivers were often in vehicles that were new or unfamiliar to them, or for whatever reason, they just got confused.

One of the more frustrating aspects of this whole fiasco was the media’s response. Instead of alerting drivers to the potential dangers of confusing the accelerator with the brake — which could happen to any of us — the focus was on Toyota’s cover up, the scary and unpredictable software in cars, and of course, the floor mats.

This distinction matters a great deal as we head into an era of self-driving vehicles.

Just over a month ago, a man behind the wheel of a “self-driving” Tesla was killed when his car crashed into a tractor trailer. For many, the focus was understanding why the technology “failed,” and there’s speculation that the sun’s glare might have thrown it off.

But it’s critical to note how human error played a major role. According to Tesla, the car is designed for the driver to keep their hands on the wheel at all times, even though it’s equipped with systems to help the driver if something goes wrong. In this case, that didn’t happen.

In a way, it might seem like a situation with unavoidable consequences: automakers can beg drivers to pay attention in these “self-driving” cars as much as they want, but at the same time, these autopilot features will probably lull most drivers into a dangerous state of complacency.

It’s an arrangement that feels destined for at least a few disasters. (Especially considering how same scenario has impacted aviation — like in the case of Flight 447 , which tragically crashed into the Atlantic Ocean on route from Rio de Janeiro to Paris.)

This is why an open and honest conversation about the role of human error is so vital. Too often, drivers are expecting car manufacturers and vehicles to make it easy. But as cars and automakers are get smarter, drivers have to wise up as well.

Last month, another driver using Tesla’s autopilot feature crashed.

According to a report of the incident , the car alerted the driver to take the wheel due to uncertain road conditions but he didn’t — luckily no one was injured. A trooper on the scene decided not to cite the driver, who blamed the accident on the car. And now the feds are launching an investigation on the limits of the technology.

Hopefully they’ll be factoring in the biggest limitation: humans.

Until we understand the new technology in cars and stop taking it for granted, humans can’t be expected to handle it safely. And that means an honest discussion about why we make errors and for whatever reason, don’t put our hands on the wheel when we should. 

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Resilience Tested: Toyota Crisis Management Case Study

Crisis management is organization’s ability to navigate through challenging times. 

The renowned Japanese automaker Toyota faced such challenge which shook the automotive industry and put a dent in the previously pristine reputation of the brand.

The Toyota crisis, characterized by sudden acceleration issues in some of its vehicles, serves as a compelling case study for examining the importance of effective crisis management. 

Toyota crisis management case study gives background of the crisis, analyze Toyota’s initial response, explore their crisis management strategy, evaluate its effectiveness, and draw valuable lessons from this pivotal event. 

By understanding how Toyota tackled this crisis, we can glean insights that will help organizations better prepare for and respond to similar challenges in the future.

Let’s start reading

Brief history of Toyota as a company

Toyota, one of the world’s largest automobile manufacturers, has a rich history that spans over eight decades. The company was founded by Kiichiro Toyoda in 1937 as a spinoff of his father’s textile machinery business. 

Initially, Toyota focused on producing automatic looms, but Kiichiro had a vision to expand into the automotive industry. Inspired by a trip to the United States and Europe, he saw the potential for automobiles to transform society and decided to steer the company in that direction.

In 1936, Toyota built its first prototype car, the A1, and in 1937, they officially established the Toyota Motor Corporation. The company faced numerous challenges in its early years, including the disruption caused by World War II, which halted production.

However, Toyota persisted and resumed operations after the war, embarking on a journey that would eventually lead to global recognition.

Toyota’s breakthrough came in the 1960s with the introduction of the compact and affordable Toyota Corolla, which quickly gained popularity worldwide. This success laid the foundation for Toyota’s reputation for producing reliable, fuel-efficient, and high-quality vehicles.

Throughout the following decades, Toyota expanded its product lineup, launching models like the Camry, Prius (the world’s first mass-produced hybrid car), and the Land Cruiser, among others.

Toyota’s commitment to continuous improvement and efficiency led to the development and implementation of the Toyota Production System (TPS), often referred to as “lean manufacturing.” TPS revolutionized the automotive industry by minimizing waste, improving productivity, and enhancing quality.

Over the years, Toyota successfully implemented many change initiatives.

By the turn of the 21st century, Toyota had firmly established itself as a global automotive powerhouse, consistently ranking among the top automakers in terms of sales volume.

However, the company would soon face a significant challenge in the form of the sudden acceleration crisis, which tested Toyota’s crisis management capabilities and had far-reaching implications for the brand.

Description of the sudden acceleration crisis

The sudden acceleration crisis was a pivotal event in Toyota’s history, which unfolded in the late 2000s and early 2010s. It involved a series of incidents where Toyota vehicles experienced unintended acceleration, leading to accidents, injuries, and even fatalities. Reports emerged of vehicles accelerating uncontrollably, despite drivers attempting to apply the brakes or shift into neutral.

The crisis gained significant media attention and scrutiny , as it posed serious safety concerns for Toyota customers and raised questions about the company’s manufacturing processes and quality control. The issue affected a wide range of Toyota models, including popular ones such as the Camry, Corolla, and Prius.

Investigations revealed that the unintended acceleration was attributed to various factors. One prominent cause was a design flaw in the accelerator pedal assembly, where the pedals could become trapped or stuck in a partially depressed position. Additionally, electronic throttle control systems were also identified as potential contributors to the issue.

The sudden acceleration crisis had severe consequences for Toyota. It tarnished the company’s reputation for reliability and safety, and public trust in the brand was significantly eroded. Toyota faced a wave of lawsuits, regulatory investigations, and recalls, as it scrambled to address the issue and restore consumer confidence.

The crisis prompted Toyota to launch one of the largest recalls in automotive history, affecting millions of vehicles worldwide. The company took steps to redesign and replace the faulty accelerator pedals and improve the electronic throttle control systems to prevent future incidents. Toyota also faced criticism for its initial response, with accusations of a lack of transparency and timely communication with the public.

The sudden acceleration crisis served as a wake-up call for Toyota, highlighting the importance of effective crisis management and the need for proactive measures to address safety concerns promptly.

Toyota crisis management case study helps us to understand how company’s respond to this crisis and set a precedent for handling future challenges in the years to come.

Timeline of events leading up to the crisis

To understand the timeline of events leading up to the sudden acceleration crisis at Toyota, let’s explore the key milestones:

• Early 2000s: Reports of unintended acceleration incidents begin to surface, with some drivers claiming their Toyota vehicles experienced sudden and uncontrolled acceleration. These incidents, although relatively isolated, raised concerns among consumers.
• August 2009: A tragic incident occurs in California when a Lexus ES 350, a Toyota brand, accelerates uncontrollably, resulting in a high-speed crash that claims the lives of four people. The incident receives significant media attention, highlighting the potential dangers of unintended acceleration.
• September 2009: The National Highway Traffic Safety Administration (NHTSA) launches an investigation into the sudden acceleration issue in Toyota vehicles. The probe focuses on floor mat entrapment as a possible cause.
• November 2009: Toyota announces a voluntary recall of approximately 4.2 million vehicles due to the risk of floor mat entrapment causing unintended acceleration. The recall affects several popular models, including the Camry and Prius.
• January 2010: Toyota expands the recall to an additional 2.3 million vehicles, citing concerns over sticking accelerator pedals. This brings the total number of recalled vehicles to nearly 6 million.
• February 2010: In a highly publicized event, Toyota halts sales of eight of its models affected by the accelerator pedal recall, causing a significant disruption to its production and sales.
• February 2010: The U.S. government launches a formal investigation into the safety issues related to unintended acceleration in Toyota vehicles. Congressional hearings are held, during which Toyota executives are questioned about the company’s handling of the crisis.
• April 2010: Toyota faces a $16.4 million fine from the NHTSA for failing to promptly notify the agency about the accelerator pedal defect, violating federal safety regulations.
• Late 2010 and 2011: Toyota faces a wave of lawsuits from affected customers seeking compensation for injuries, deaths, and vehicle damages caused by unintended acceleration incidents.
• 2012 onwards: Toyota continues to address the sudden acceleration crisis by implementing various measures, including improving quality control processes, enhancing communication with regulators and customers, and establishing an independent quality advisory panel. 

Toyota’s initial denial and dismissal of the problem

During the early stages of the sudden acceleration crisis, one notable aspect was Toyota’s initial response, which involved a degree of denial and dismissal of the problem. This response contributed to the escalation of the crisis and further eroded public trust in the company. Let’s delve into Toyota’s initial reaction to the issue:

• Downplaying the Problem: In the initial stages, Toyota downplayed the reports of unintended acceleration incidents, attributing them to driver error or mechanical issues. The company maintained that their vehicles were safe and reliable, asserting that the incidents were isolated and not indicative of a systemic problem.
• Lack of Transparency: Toyota faced criticism for its perceived lack of transparency regarding the issue. The company was accused of withholding information and failing to disclose potential safety risks to the public and regulatory agencies promptly. This lack of transparency fueled suspicions and raised questions about the company’s commitment to addressing the problem.
• Slow Response: Toyota’s response to the growing concerns regarding unintended acceleration was relatively slow, leading to accusations of negligence. Critics argued that the company should have acted more swiftly and decisively to investigate and address the issue before it escalated into a full-blown crisis.
• Reluctance to Acknowledge Defects: Initially, Toyota resisted the notion that there were inherent defects in their vehicles that could lead to unintended acceleration. The company’s reluctance to accept responsibility and acknowledge the problem further strained its relationship with consumers, regulators, and the media.
• Impact on Customer Trust: Toyota’s initial denial and dismissal of the problem had a significant impact on customer trust. As more incidents were reported and investigations progressed, customers began to question the integrity of the brand and its commitment to safety. This led to a decline in sales and a tarnishing of Toyota’s once-sterling reputation for reliability.

Lack of transparency and communication with the public

One critical aspect of Toyota’s initial response to the sudden acceleration crisis was the perceived lack of transparency and ineffective communication with the public. This deficiency in open and timely communication further intensified the crisis and eroded trust in the company. Let’s explore the key issues related to transparency and communication:

• Delayed Public Announcement: Toyota faced criticism for the delay in publicly acknowledging the safety concerns surrounding unintended acceleration. As reports of incidents surfaced and investigations commenced, there was a perception that Toyota withheld information and failed to promptly address the issue. This lack of transparency fueled public skepticism and eroded confidence in the company.
• Insufficient Explanation: When Toyota did address the sudden acceleration issue, their explanations and communications were often vague and lacking in detail. Customers and the public were left with unanswered questions and a sense that the company was not providing comprehensive information about the problem and its resolution.
• Ineffective Recall Communication: Toyota’s communication regarding the recalls linked to unintended acceleration was criticized for its inadequacy. Some customers reported confusion and frustration with the recall process, including unclear instructions and delays in obtaining necessary repairs. This lack of clarity and efficiency in communicating recall information further strained the company’s relationship with its customers.
• Limited Engagement with Stakeholders: Toyota’s engagement with key stakeholders, such as regulatory bodies, industry experts, and affected customers, was perceived as insufficient. The company’s communication efforts were criticized for being reactive rather than proactive, lacking a comprehensive plan to engage stakeholders and address their concerns promptly.
• Perception of Cover-up: The lack of transparency and ineffective communication led to a perception that Toyota was attempting to cover up the severity of the sudden acceleration issue. This perception further damaged the company’s credibility and fueled public skepticism about the company’s commitment to consumer safety.

Impact on the company’s reputation and customer trust

The sudden acceleration crisis had a profound impact on Toyota’s reputation and customer trust, which were previously regarded as key strengths of the company. Let’s explore the repercussions of the crisis on these crucial aspects:

• Reputation Damage: Toyota’s reputation as a manufacturer of reliable and safe vehicles took a significant hit due to the sudden acceleration crisis. The widespread media coverage of incidents and recalls associated with unintended acceleration eroded the perception of Toyota’s quality and reliability. The crisis challenged the long-standing perception of Toyota as a leader in automotive excellence.
• Loss of Customer Trust: The crisis shattered the trust that customers had placed in Toyota. The incidents of unintended acceleration and the subsequent recalls created doubts about the safety of Toyota vehicles. Customers who had been loyal to the brand for years felt betrayed and concerned about the potential risks associated with owning or purchasing a Toyota vehicle.
• Sales Decline: The erosion of customer trust and the negative publicity surrounding the sudden acceleration crisis resulted in a significant decline in sales for Toyota. Consumers were hesitant to buy Toyota vehicles, leading to a loss of market share. Competitors seized the opportunity to capitalize on Toyota’s weakened position and gain a foothold in the market.
• Legal Consequences: Toyota faced a wave of lawsuits from individuals and families affected by incidents related to unintended acceleration. These lawsuits not only had financial implications but also further damaged the company’s reputation as it faced allegations of negligence and failure to ensure the safety of its vehicles.
• Regulatory Scrutiny: The sudden acceleration crisis brought increased regulatory scrutiny upon Toyota. Government agencies, such as the National Highway Traffic Safety Administration (NHTSA), conducted investigations into the issue, which further dented the company’s reputation. Toyota had to cooperate with regulatory bodies and demonstrate its commitment to rectifying the problems to restore trust.
• Long-Term Brand Perception: The sudden acceleration crisis left a lasting impression on how Toyota is perceived by consumers. Despite the company’s efforts to address the issue and improve safety measures, the crisis served as a reminder that even renowned brands can face significant challenges. It highlighted the importance of transparency, accountability, and a proactive approach to crisis management.

Recognition and acceptance of the crisis

In the face of mounting evidence and public scrutiny, Toyota eventually recognized and accepted the severity of the sudden acceleration crisis. The company’s acknowledgment of the crisis marked a significant turning point in their approach to addressing the issue. Let’s explore how Toyota recognized and accepted the crisis:

• Admitting the Problem: As the number of reported incidents increased and investigations progressed, Toyota eventually acknowledged that there was a problem with unintended acceleration in some of their vehicles. This admission was a crucial step towards recognizing the crisis and accepting the need for immediate action.
• Apology and Responsibility: Toyota’s top executives, including the company’s President at the time, issued public apologies for the safety issues and the negative impact on customers. The company took responsibility for the unintended acceleration problem, acknowledging that there were defects in their vehicles and accepting accountability for the consequences.
• Collaboration with Authorities: Toyota actively collaborated with regulatory bodies, such as the NHTSA, and other government agencies involved in investigating the sudden acceleration issue. This collaboration demonstrated a commitment to resolving the crisis and addressing the concerns of the authorities.
• Openness to Independent Investigation: In an effort to ensure transparency and unbiased assessment of the crisis, Toyota welcomed independent investigations into the unintended acceleration incidents. The company engaged external experts and formed advisory panels to evaluate their manufacturing processes, safety systems, and quality control measures.
• Recall and Repair Initiatives: Toyota initiated a massive recall campaign to address the safety issues associated with unintended acceleration. The company implemented comprehensive repair programs aimed at fixing the defects and improving the safety features in affected vehicles. These initiatives were crucial in demonstrating Toyota’s commitment to rectifying the problems and ensuring customer safety.
• Internal Process Evaluation : Toyota conducted internal evaluations and reviews of their manufacturing processes and quality control systems. They identified areas for improvement and implemented changes to prevent similar issues from arising in the future. This internal introspection showed a dedication to learning from the crisis and strengthening their processes.

Appointment of crisis management team

In response to the sudden acceleration crisis, Toyota recognized the need for a dedicated crisis management team to effectively handle the situation. The appointment of such a team was crucial in coordinating the company’s response, managing communications, and implementing appropriate strategies to address the crisis.

Toyota appointed experienced and senior executives to lead the crisis management team. These individuals had a deep understanding of the company’s operations, values, and stakeholder relationships. They were entrusted with making critical decisions and guiding the organization through the crisis.

The crisis management team comprised representatives from various functions and departments within Toyota, ensuring a comprehensive approach to addressing the crisis. Members included executives from engineering, manufacturing, quality control, legal, public relations, and other relevant areas. This cross-functional representation facilitated a holistic understanding of the issues and enabled effective collaboration.

Implementation of recall and repair programs

In response to the sudden acceleration crisis, Toyota implemented extensive recall and repair programs to address the safety concerns associated with unintended acceleration. These programs aimed to rectify the defects, enhance the safety features, and restore customer confidence.

Toyota identified the models and production years that were potentially affected by unintended acceleration issues. This involved a thorough examination of reported incidents, investigations, and collaboration with regulatory agencies. By pinpointing the specific vehicles at risk, Toyota could direct their efforts towards addressing the problem efficiently.

Toyota launched a comprehensive communication campaign to reach out to affected customers. The company sent notifications via mail, email, and other channels to inform them about the recall and repair programs. The communication highlighted the potential risks, steps to take, and the importance of addressing the issue promptly.

Toyota actively engaged its dealership network to support the recall and repair initiatives. Dealerships were provided with detailed information, training, and necessary resources to assist customers in scheduling appointments, conducting inspections, and performing the required repairs. This collaboration between the company and its dealerships aimed to ensure a seamless and efficient recall process.

Toyota developed a structured repair process to address the unintended acceleration issue in the affected vehicles. This involved inspecting and, if necessary, replacing or modifying components such as the accelerator pedals, floor mats, or electronic control systems. The company ensured an adequate supply of replacement parts to minimize delays and facilitate timely repairs.

Collaboration with regulatory bodies and industry experts

During the sudden acceleration crisis, Toyota recognized the importance of collaborating with regulatory bodies and industry experts to address the safety concerns and restore confidence in their vehicles. This collaboration involved working closely with relevant agencies and seeking external expertise to investigate the issue and implement necessary improvements.

Let’s delve into Toyota’s collaboration with regulatory bodies and industry experts:

• Regulatory Engagement: Toyota actively engaged with regulatory bodies, such as the National Highway Traffic Safety Administration (NHTSA) in the United States and other similar agencies globally. The company cooperated with these organizations by providing them with relevant data, participating in investigations, and adhering to their guidelines and recommendations. This collaboration aimed to ensure a thorough and unbiased assessment of the sudden acceleration issue.
• Joint Investigations: Toyota collaborated with regulatory bodies in conducting joint investigations into the unintended acceleration incidents. These investigations involved sharing data, conducting extensive testing, and evaluating potential causes and contributing factors. By working together with the regulatory authorities, Toyota aimed to gain a comprehensive understanding of the problem and find effective solutions.
• Advisory Panels and External Experts: Toyota sought the expertise of external industry experts and formed advisory panels to provide independent assessments of the sudden acceleration issue. These panels consisted of experienced engineers, scientists, and safety specialists who analyzed the data, evaluated the vehicle systems, and offered recommendations for improvement. Their insights and recommendations helped guide Toyota’s response and ensure a thorough and impartial evaluation.
• Safety Standards Compliance: Toyota collaborated with regulatory bodies to ensure compliance with safety standards and regulations. The company actively participated in discussions and consultations to contribute to the development of robust safety standards for the automotive industry. By actively engaging with regulatory bodies, Toyota aimed to demonstrate its commitment to maintaining high safety standards and fostering an environment of continuous improvement.
• Sharing Best Practices: Toyota collaborated with industry peers and participated in industry forums and conferences to share best practices and learn from others’ experiences. By engaging with other automotive manufacturers, Toyota aimed to gain insights into safety practices, quality control measures, and crisis management strategies. This exchange of knowledge and collaboration helped Toyota strengthen their approach to safety and crisis management.

Final Words 

Toyota crisis management case study serves as a valuable reminder to all automobiles companies on managing crisis. The sudden acceleration crisis presented a significant challenge for Toyota, testing the company’s crisis management capabilities and resilience. While Toyota demonstrated strengths in their crisis management strategy, such as a swift response, transparent communication, and a customer-focused approach, they also faced weaknesses and shortcomings. Initial denial, lack of transparency, and communication issues hampered their crisis response.

The crisis had profound financial consequences for Toyota, including costs associated with recalls, repairs, legal settlements, fines, and a decline in market value. Legal settlements were reached to address claims from affected customers, shareholders, and other stakeholders seeking compensation for damages and losses. The crisis also resulted in reputation damage that required significant efforts to rebuild trust and restore the company’s standing.

About The Author

Tahir Abbas

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Tragedy at Toyota: How Not to Lead in Crisis

• Toyota Motor Corporation's problem is first and foremost a leadership crisis. It needs a credible leader with a strong, cohesive plan.
• Competitors Ford and GM are working to regain the market share they have lost to Toyota.
• Rather than blame floor mats and panicky drivers, as Toyota did when complaints first arose, it should have acknowledged that its vaunted quality system failed.
• Toyota should seize the opportunity to make radical changes to renew the company and restore consumers' trust.

Toyota's ever-widening problems are a tragic case study in how not to lead in crisis.

Under the media spotlight, Toyota CEO Akio Toyoda, grandson of the founder, went into hiding and sent American CEO Jim Lentz to make apologies. ( Editor's note: Toyoda has agreed to appear before a Congressional inquiry this week .) Meanwhile, he let serious product quality issues spiral out of control by understating safety risks and product problems. This left the media, politicians, and consumers to dictate the conversation, while Toyota fumbled the responses.

Disingenuous quasi-apologies and disjointed plans for resolution have been Toyota's substitute for crisis response. As accounts pour in about declining quality, the company parades out relatively unknown mid-level managers to quell the firestorm.

It won't work. "You live by the sword; you die by the sword." Toyota's weapon of choice has always been quality, a competitive advantage that prompted many Americans to stop buying GM and Ford brands. Toyota can only regain its footing by transforming itself from top to bottom to deliver the highest quality automobiles.

When terrorists laced Tylenol capsules with cyanide in the mid-1980s, Johnson & Johnson CEO Jim Burke understood his company credo challenged him to put the needs of customers first. Although J&J was not responsible for these problems, Burke nevertheless recalled every Tylenol product from the market.

This is not a crisis of faulty brakes and accelerators, but a leadership crisis. During Chrysler's 1980s crisis, CEO Lee Iacocca took charge, restoring consumer trust and prosperity. When General Motors emerged from bankruptcy last summer, Chairman Ed Whitacre became the trustworthy, determined face of the company's comeback.

Toyota needs a credible leader with a strong, cohesive plan. Mr. Toyoda is anything but. His uninspired words of optimism from Davos only unnerved customers and U.S. regulators. Meanwhile, Ford and GM are working hard to regain the market share they lost at Toyota's expense.

How can Akio Toyoda get Toyota back on track? I offer recommendations based on my recent book, 7 Lessons for Leading in Crisis .

1: Face reality, starting with yourself. Faced with multiple reports of accidents from sticking accelerators, Toyota blamed the problems on stuck floor mats and panicky drivers. Instead, Toyota should acknowledge that its vaunted quality system failed. CEO Toyoda should take personal responsibility by saying that he pushed too hard for growth and neglected quality. By admitting his errors, he gives every Toyota employee permission to acknowledge mistakes and to get on with correcting them, instead of denying reality.

2: Don't be Atlas; get the world off your shoulders. Toyoda cannot expect to solve problems of this magnitude himself. Instead, he needs a crisis team reporting directly to him, working 24/7 to get problems fixed—permanently. He also needs outside counsel, as he appears to be listening only to insiders who are defensive about criticism. He should add the world's top quality experts to his fix-it team and listen carefully to their advice.

3: Dig deep for the root cause. When Toyota's problems first surfaced, the company blamed a symptom—loose floor mats—and exonerated the accelerators. Instead, management should have required its best engineers to get to the root cause of this problem and every other quality problem being reported. This is basic engineering and quality discipline.

4: Get ready for the long haul. These problems won't just fade away. In fact, they are likely to get worse before getting better. Just as the seeds were sown over the past ten years by placing growth ahead of customer concerns and quality, digging deep into problems will likely uncover more quality concerns that will take years to resolve. Toyota must invest heavily in corrective actions while its sales shrink and profits implode, requiring major cash resources until its reputation can be restored.

5: Never waste a good crisis. For all the pain Toyota is experiencing, this crisis provides a unique opportunity to make fundamental changes required to restore Toyota quality. The crisis is melting away the denial and resistance that existed in recent years. Employees are ready for new direction, and they are willing to make radical changes to renew the company. With Toyoda's leadership, Toyota automobiles can be restored to the world's highest quality.

6: You're in the spotlight: follow True North. In a crisis, people insist on hearing from the leader. Akio Toyoda can't send out public relations specialists or his American executives to explain what happened. Having lost sight of his company's True North—its values and principles—Toyoda must come out of hiding, take personal responsibility, and subject himself to intense questioning by regulators and the media. Then he should make a personal commitment to every Toyota customer to repair the damage, including buying back defective cars.

7: Go on offense; focus on winning now. Coming out of this crisis, the market will never look the same. GM and Ford are rapidly regaining market share, while the confidence of Toyota's loyal customers is badly shaken. Toyota cannot wait until all its quality problems are resolved. It must play defense and offense simultaneously. To win, Toyota has to offer advanced features and superior quality, better value for consumers, greater safety, and improved fuel efficiency.

This is a challenging menu, and this crisis is the true test of Akio Toyoda's leadership. Is Toyota up to these challenges? I believe this is a great company that will resurrect its reputation and restore its leadership.

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HYDE STREET JOURNAL

Toyota’s recall crisis case study.

• INTRODUCTION

In 2009, Toyota has recalled nearly eight million vehicles in the United States for two mechanical safety defects that can cause unintended acceleration: ‘sticking’ accelerator pedals and a design flaw that can cause accelerator pedals to become trapped by floor mats. These recalls were triggered by a car collision in August 2009 that took the lives of four people. When NHTSA(National Highway Traffic and Safety Administration) first identified the two defects more than a year ago, the agency pushed Toyota to conduct recalls quickly. Toyota later paid nearly $33 million in civil penalties as the result of investigations into whether the company notified NHTSA in a timely manner about these defects. During Congressional hearings on the Toyota recalls in February 2010. Members of Congress asked NHTSA to study whether electronic or software problems in Toyota vehicles could be to blame for unintended acceleration. In March 2010, NHTSA enlisted top NASA engineers and experts in areas such as electromagnetic compatibility to study whether electronic flaws can cause unintended acceleration. In its final report, NASA engineers found no evidence of an electronic defect in Toyota vehicles capable of producing dangerous, high-speed unintended acceleration incidents. The two mechanical safety defects originally identified by NHTSA remain the only known causes of dangerous unintended acceleration incidents.

Consumer attitudes toward Toyota began to change. Prior to Toyota’s historic recall in November 2009, over three-quarters (83%) of U.S. adults surveyed were positive about the brand while fewer than 1 in 5 (17%) were negative.

• CASE ANALYSIS
• Toyota Brand

Toyota Motor Corporation is a Japanese automotive manufacturer headquartered in Japan. In 2013 the multinational corporation consisted of 333,498 employees worldwide and, as of November 2014, is the twelfth-largest company in the world by revenue. The company was founded by Kiichiro Toyoda in 1937. Toyota is the world’s first automobile manufacturer to produce more than 10 million vehicles per year.

Consumer Reports’ Car Reliability Survey finds that Toyota dominates the industry when it comes to the most reliable cars. The findings come from Consumer Reports’ 2012 Annual Auto Survey, which is based on subscribers’ experiences with 1.2 million vehicles. Toyota is one of the top-selling brands in America and Toyota is committed to safety and dependability and to creating the most reliable cars. It strives for continuous improvement in everything it does, along with creating breakthrough products for the future.

• Products Quality

Some say that Toyota grew too fast, and its quality decreased. On the other hand, quality experts say that in spite of Toyota’s rapid growth, quality has remained at better than industry average levels. In fact, Lexus, a Toyota luxury brand, often leads the industry in quality.

( http://www.qualitydigest.com/inside/quality-insider-article/so-does-toyota-really-have-quality-issue.html )

All makes and models of automobiles are found to have issues from time to time. The only way that these issues can be put in perspective, however, is to compare them to competitive makes and models. As the media fueled the notion that Toyota automobiles had serious defects, the actual data did not support this notion. A definitive joint study by the National Highway Safety Administration and NASA found no electronic flaws in Toyota vehicles that would cause dangerous self-acceleration issues.

For 2012,Toyota topped the Insurance Institute of Highway Safety’s list with 15 models in 2012. The National Highway Traffic Safety Administration gave the 2012 Toyota Camry a 5-star rating. This is not to say that individual vehicles did not have flaws that caused problems. Any electro-mechanical device made by man can malfunction. There seems to be no definitive data that shows that there was a systematic problem with Toyota vehicles.

• Investigations and Results

There is absolutely no evidence of sudden unintended acceleration caused by electronic problems in Toyota vehicles. The only causes NASA found were improperly installed floor mats and sticky gas pedals that can be slow to return. There has been only one documented accident caused by the floor mats — the one involving the loaner Lexus, where the dealer had used the wrong floor mat and failed to attach it properly with the provided restraining clips — and there have been no documented cases of accidents caused by the very small number of sticky pedals. Most accidents have been attributed to driver error.

When complaints of self-acceleration were first reported, Toyota did not know how to handle them. Rather than say that they are investigating the complaints and will issue a complete report at the conclusion of their investigation, Toyota representatives reacted to the complaints in ways that confounded marketing and crisis management experts. They confused everyone by jumping to conclusions and suggesting different causes in rapid succession. First, they attributed the problem to operator error, which is the most frequent cause of self-acceleration problems in automobiles (the issue that nearly triggered demise of Audi in the US market during the mid-1980s).

Then, Toyota suggested the cause of the problem was floor mats that trapped the gas pedal. Some engineers blamed “sticky” gas pedals. This was followed by the suggestion that faulty electronics caused the unintended acceleration. Instead of reassuring the marketplace, Toyota acted in a way that caused owners to fear for their safety and prospective buyers to look for other makes and models. For example, Jim Lentz, president and chief executive officer of Toyota Motor Sales, USA, went on the Today Show and looked like a “deer in the headlights” in response to Matt Lauer’s cross-examination. In a poll taken before Lentz spoke, 37% said they were less likely buy Toyota cars. The negative numbers jumped to 56% after he spoke. The uncertainty created by Toyota representatives triggered a series of costly recalls, lawsuits, and lost business – causing Toyota and their dealership network to incur further losses from hefty discounts and implementing the recalls.

Feb. 24, 2010, Akio Toyoda, the president and CEO of Toyota, issued the following statement in regards to the recalled vehicles:

“ Toyota has, for the past few years, been expanding its business rapidly. Quite frankly, I fear the pace at which we have grown may have been too quick. I would like to point out here that Toyota’s priority has traditionally been the following: First; Safety, Second; Quality, and Third; Volume. These priorities became confused, and we were not able to stop, think, and make improvements as much as we were able to before, and our basic stance to listen to customers’ voices to make better products has weakened somewhat. We pursued growth over the speed at which we were able to develop our people and our organization, and we should sincerely be mindful of that. I regret that this has resulted in the safety issues described in the recalls we face today, and I am deeply sorry for any accidents that Toyota drivers have experienced. Especially, I would like to extend my condolences to the members of the Saylor family, for the accident in San Diego. I would like to send my prayers again, and I will do everything in my power to ensure that such a tragedy never happens again.”

• Market share
• Quality, Safety
• Brand image, Reputation
• Responsibility
• Customer supports
• ACTION PLANS

Toyota got into a crisis that drove it to reflect intensively and to make dramatic changes to improve its responsiveness to customer concerns — but lost billions of dollars of value in the process.

• Proposed a solution so the defects are unlikely to reoccur
• Providing sufficient, independent, and credible data
• Making ads to back up historic quality and safety
• Getting in touch with every customer
• Improving the communication channel with other companies
• Create and monitor database of repairs and concerns
• Improve technology to communicate with customers
• Bring back the customer loyalty

APPENDIX: Timeline of Major Events

March 29, 2007 :  NHTSA opens a preliminary investigation into pedal entrapment on MY’07 Lexus ES350 models based on five consumer complaints alleging three crashes and seven injuries. The all weather floor mat is identified as the possible cause of these incidents.

July 26, 2007 :  A fatal crash occurs in San Jose, CA involving a ‘07 Camry in which the driver suffers serious injuries and the driver of the struck vehicle is killed.

September 13, 2007 :  After determining the fatal San Jose crash was caused by floor mat entrapment, NHTSA tells Toyota a recall is necessary.

September 26, 2007 :  Toyota recalls 55,000 floor mats in ’07 and ‘08 Camrys and ES350s.

August 28, 2009 :  A fatal crash occurs in Santee, CA. The vehicle is found to have an all weather floor mat from another Lexus vehicle. Investigators find that the vehicle’s previous driver had reported an entrapment incident to the dealership.

September 25, 2009 :  NHTSA tells the company that the floor mat recall is insufficient and the agency expects a recall for the defect in pedal design. Three days later, Toyota tells NHTSA the company will recall the gas pedals.

October 5, 2009 :  Toyota recalls 3.8 million vehicles for pedal entrapment by floor mat and sends an interim letter to consumers telling them to remove floor mats.

January 21, 2010 :  Toyota recalls 2.3 million vehicles for the sticky pedal defect.

March 30, 2010 : The U.S. DOT(Department of Transformation) announces two studies into unintended acceleration. One looks at possible electronics causes for unintended acceleration in Toyotas; the other examines unintended acceleration and the safety of vehicle electronics across the automotive industry.

April 5, 2010 : NHTSA demands the maximum, $16.375 million, civil penalty on Toyota for its failure to notify the agency of the sticky pedal defect for more than four months after discovering it.

December 20, 2010 :  Toyota agrees to pay the maximum $16.375 million civil penalty as the result of another NHTSA investigation into whether their recall of 5.5 million vehicles for pedal entrapment was conducted in a timely manner.

Y.K, Z.L, T.H

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What Really Happened to Toyota?

Given the spate of recalls and quality problems, managers wonder whether toyota’s difficulties throw its legendary manufacturing model into question..

• Quality & Service
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Toyota’s quality problems in the United States were signaled with a recall in late 2009 for problems with floor mats, but they didn’t end there.  Since then, more than 20 million cars have been recalled.

Image courtesy of Flickr user kenjonbro.

Consumers were surprised in October 2009 by the first of a series of highly publicized recalls of Toyota vehicles in the United States. Citing a potential problem in which poorly placed or incorrect floor mats under the driver’s seat could lead to uncontrolled acceleration in a range of models, Toyota announced that it was recalling 3.8 million U.S. vehicles. The recall was triggered by the report of a fiery crash in California, where the accelerator of a Lexus sedan got stuck, resulting in the driver’s death.

Additional reports of unintended acceleration from sticky gas pedals prompted the National Highway Traffic Safety Administration to pressure Toyota to recall additional vehicles and models.

To car buyers and students of manufacturing excellence, Toyota was no ordinary company. It was in a class by itself, long known, even revered, for its sterling quality. For manufacturing executives who have strived for decades to emulate Toyota, the mere suggestion that it had quality issues was a serious matter, to say the least. All over the world, executives paused to wonder if they had been chasing after the wrong manufacturing model.

Despite Toyota’s long record of building reliable, low-defect vehicles, public perceptions about quality are often greatly influenced by reports in the media and their overall timing. The public view can be at odds with the objective measures. In the case of Toyota, there were definitely indications that the quality level of its products had fallen off in recent years. What’s more, the changes had occurred during a period of time when many of Toyota’s competitors, including Ford, Chevrolet and Hyundai, were producing better and better cars. The key question was the source of Toyota’s problems: To what extent did they originate with the product designs and assembly, and to what extent could they be pegged to the company’s manufacturing systems?

About the Research

I began collecting data for this paper systematically in early 2010 and continued the research until May 2011.

About the Author

Robert E. Cole is a professor emeritus at the University of California Berkeley Haas School of Business and a visiting researcher at the Institute of Technology, Enterprise and Competitiveness at Doshisha University, in Kyoto, Japan.

1. J. Press, “A New Era for Toyota and TMA in North America,” (internal Toyota presentation, Sept 20, 2006), http://commerce.senate.gov .

2. Gallup, “Americans, Toyota Owners Still Confident in Toyota Vehicles,” March 2, 2010, www.gallup.com .

3. N. Roland, “Toyota Doesn’t Go Far Enough on Safety Management Changes, Panel Says,” Automotive News, May 23, 2011.

4. D. Sedgwick, “Toyota Likely to Win Back Consumer Reports ‘Recommended Rating,’” Feb. 26, 2010, http://autos.aol.com .

5. J.D. Power and Associates, “J.D. Power and Associates 2010 U.S. Initial Quality Study” (Westlake Village, California: J.D. Power and Associates, 2010).

6. C. Jensen, “Toyota’s Image Falls in J.D. Power Survey,” New York Times, June 18, 2010, sec. B, p. 5.

7. J.D. Power redesigned the IQS survey in 2006, doubling the number of items ranked, going beyond defects that can, presumably, be repaired to include design problems. With quality differentials sharply diminishing, the survey was in danger of becoming irrelevant, but with a doubling of items to be scored, brand differentials were increased. Many of these new items have little or nothing to do with the fundamental safety, quality, value and performance (in that order) that consumers, on average, say is most important when buying a vehicle.

8. Ordinarily, just equaling longtime quality leaders is not enough to dislodge them from their leadership position. In Toyota’s case, however, these developments combined with the publicity given its successive recalls.

9. M. Rechtin, “Fay in the Fray of Toyota Image Turnaround,” Automotive News, Sept. 13, 2010, 20.

10. Parker Waichman Alonso LLP, “Chronology of Events in Ford/Firestone Controversy,” May 21, 2001, www.yourlawyer.com .

11. Adding to Toyota’s woes, its recalls are getting far more publicity than those of other automakers. In late October 2010, Toyota issued a voluntary recall on 1.5 million cars globally to replace a brake master cylinder seal. A few days later, Nissan recalled 2 million cars for ignition problems. Both recalls were reported on msnbc.com. The Toyota article was 966 words and described the company as “lurching from recall to recall”; the Nissan article was only 285 words long and suggested that there was nothing unusual about Nissan’s recall. P.A. Eisenstein, “Dark Clouds Gather Over Toyota After New Safety Setback,” Oct. 21, 2010, http://msnbc.com ; and “Nissan Recalls 2 Million Cars Worldwide,” Oct. 27, 2010, http://msnbc.com .

12. A. Frean, “Fears Over Potential Toyota Problems Surfaced in 2006, U.S. Senate Told,” Times Online, March 3, 2010, http://business.timesonline.co.uk .

13. J.S. Busby, “Failure to Mobilize in Reliability-Seeking Organizations: Two Cases from the UK Railroad,” Journal of Management Studies 43, no. 6 (2006): 1375-1393.

14. N. Shirouzu, “Toyoda Concedes Profit Focus Led to Flaws,” Wall Street Journal Asia, March 1.

15. Toyota Industries Corporation, “A New Direction for a New Millennium: Annual Report 2001” (Kariya, Aichi, Japan: Toyota Industries Corporation, 2001); and Toyota Motor Corporation, “Driving to Innovate New Value: Annual Report 2008” (Aichi, Japan: Toyota Motor Corporation, 2008).

16. J.B. White, “What’s Safer: A Chevy or Mercedes?” Wall Street Journal, Sept. 22, 2010, sec. D, p. 1.

17. D. Barkholz, “Fixing Cars’ Brains Saves Ford Millions,” Automotive News, May 11, 2010, 12B.

18. N. Shirouzu, “Inside Toyota, Executives Trade Blame Over Debacle,” Wall Street Journal, April 13, 2010.

19. M. Ramsey and N. Shirouzu, “Toyota Is Changing How It Develops Cars,” Wall Street Journal, July 6, 2010, sec. B, p. 6.

20. T. Fujimoto, “Toyota Overwhelmed by Demon of Complexity,” Asahi Shimbun, March 3, 2010, http://www.asahi.com .

21. R. Dore, “Taking Japan Seriously” (Stanford, California: Stanford University Press, 1987), 173-192.

22. R. Sherefkin, “Detroit 3 Score Higher with Suppliers,” Automotive News, May 24, 2010, 16B; and R. Sherefkin, “Toyota Loses Luster with Suppliers,” Automotive News, May 25, 2009.

23. N. Roland, “Toyota’s U.S. Execs: Japan Didn’t Share Info,” Automotive News, Aug. 9, 2010, 3.

24. Ramsey and Shirouzu, “Toyota Is Changing.”

Acknowledgments

More like this, comments (8), what happened in toyota – lean six sigma consultant directory, darren relty, trent harding, martin dressler, siswanto gatot, charles h. green.

Case Study: Crisis Response Strategies of Toyota

• First Online: 01 January 2014

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• Olga Bloch 2  

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As outlined in the objectives of this research, Toyota Motor Corporation was selected for the analysis of its communication in crisis. The reasons for this choice were the following. First, the company has recently experienced a crisis due to several major recalls of its vehicles. While working on this dissertation, therefore, enough data could be obtained from the media and the internet. At the same time, the case of Toyota was relatively new and not much was written so far on the subject of interpretation of crisis at Toyota.

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Bloch, O. (2014). Case Study: Crisis Response Strategies of Toyota. In: Corporate Identity and Crisis Response Strategies. Springer VS, Wiesbaden. https://doi.org/10.1007/978-3-658-06222-4_4

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Case study: The Toyota recall – has Lean failed?

Toyota’s Quality: Improving or Declining?

The faults related to the recall of vehicles are dramatic, but more a reflection of a global supply chain and a manufacturing business of huge scale. There is nothing new about this issue in cars from many manufacturers, but the sheer size of Toyota and the global spread make it a significant event. In the US over the last decade, there were 24,000 customer complaints about sudden unexpected acceleration involving almost every major automaker. Fewer than 50 were investigated.

But they should have caught the issue earlier and fixed it. This is compounded in this scenario by a number of key issues. Here are some views on those issues.

The wrong goal

Toyota set itself the goal in 2002 of 15% of global market share, chasing volume at any price.

Pursuit of growth for the sake of growth is counter-intuitive to Lean philosophy: the question to ask is  ‘How does it benefit our customer for us to be the world’s largest car manufacturer?’  A Toyota expert, James Womack, co-author of  The Machine that Changed the World , is quoted as saying the pursuit of growth was ‘totally irrelevant to any customer’ and was ‘just driven by ego’. And Mr Toyoda reckons his company had become ‘confused’.

And some observers were already noting significant strain on Toyota and its execution of the Toyota Way back in 2008.

Global manufacturing/global supply chains

One issue, which cannot be excused, is that the problem originated not within a Toyota factory, but a supplier to Toyota. OEMs in manufacturing have traditionally worked with external suppliers who provide everything from raw materials to finished componentry which can be ‘clipped in’ to the end product. In the pursuit of a goal to become the world’s largest car manufacturer, Toyota had to start working with a number of suppliers with whom they were unfamiliar and who did not truly understand how Lean should work. The further from home, the greater the risk that an organisation will lose their ability to mould and control their culture. This is compounded when dealing with complex supply chains which may have many links between the end producer, such as Toyota, and a company that may supply a part to another company who assembles it into a more complex unit which then may be assembled into another unit.

Equally, when working with sole suppliers as the model, the balance to the many benefits is that when a problem occurs, you have less ability to respond, less recourse. Which happened to Toyota.

Importance of maintaining high lean skills

Toyota were unable to develop and maintain sufficient bench strength in their Sensei team, those senior engineers with a deep and ingrained understanding of Lean who coached factory teams to high performance. The principle of Lean should have caused Toyota to slow down and consolidate the skills and attitudes required in their operations – both their own and those of their suppliers – before expanding again. Not only did they suffer from having too few Sensei to support expansion, but they were also losing key staff to their competitors – because of their skills at building Lean teams.

Loss of direction

There are some broader issues about the culture of Toyota, which they were concerned about prior to the recall. In 2009 Mr Toyoda has publicly reflected on how Toyota has lost its way and in danger of failing due to hubris. This is based around his reading of Jim Collins’  How the Mighty Fall , a book in which Collins describes the five stages a great company goes through to end up being a failed entity. Frighteningly for Toyota, Mr Toyoda thought his company had already gone through the first three stages: hubris born of success; the undisciplined pursuit of more; and denial of risk and peril. Unfortunately, this only leaves grasping for salvation and capitulation to irrelevance or death.

And Mr Toyoda’s fears have been borne out not just by the recent recall. Unlike some of their rivals, Toyota has made huge losses over the last 18 months. Yet groups like Volkswagen and Hyundai Kia have done well. And Toyota’s market share is dropping as well.

Loss of ability to listen

Another aspect that Toyota seems blind to is the inability for their senior executives to listen. Traditional Japanese mores inhibit the full and frank discussions around problems that need escalation. Without this ease, a problem will not be fixed. Strains were evident well before the current crisis emerged, and Mr Toyoda’s assertion that they have already hit the first three stages of Jim Collins’ decline points indicates that no one was listening.

This is compounded by the tension between a global operation with centralised decision-making and authority. Unless the central command is able to put their best people on the ground in sufficient numbers, the effort will falter.

But Lean and Six Sigma will be key to Toyota quickly addressing the problems. One issue that has come up in discussions of Toyota’s fall is that the other auto manufacturers now build a much higher quality product at a reasonable price; therefore Toyota has lost the high ground. However, this has occurred due to the adoption of Toyota’s Lean culture.

Was there really a problem with those cars?

This is one of the more interesting aspects – and most confusing. There seems to be growing evidence that, aside from it being a statistically small problem, that a number of the incidents cited are either driver-caused (eg, putting the foot on the incorrect pedal) or not real (eg, because it has been reported as a problem, when there is a small but insignificant shift in the car’s performance, the driver misinterprets the reasons). And media and political hype won’t help build clarity.

But, again, while Toyota reacted slowly, there is nothing really unusual in a recall. The circumstances surrounding it – the publicity, the slowness to act, local politics – may have caused Toyota to react to a greater degree than necessary.

Sources: Jeffrey Liker, The Thought Leader Interview, The lean process expert explains why it is so hard to emulate Toyota,  Strategy + Business , Issue 51, Summer 2008 Toyota: Losing its shine,  The Economist  10 th  December 2009 James B. Meigs, Editor-in-Chief  Target Toyota: Why the Recall Backlash Is Overblown , Popular Mechanics, 9 th  February 2010 Toyota: Accelerating into trouble. The company’s problems sharply illustrate the failings of Japanese corporate governance,  The Economist , 11 th  February 2010 Getting the cow out of the ditch, Toyota’s woes highlight the question of how to manage a product recall—and how not to,  The Economist , 11 th  February 2010 The Machine That Ran Too Hot,  The Economist , 25 th  February 2010 Mike Allen, Anatomy of Toyota’s Problem Pedal: Mechanic’s Diary,  Popular Mechanics , 3 rd  March 2010 

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The Contradictions That Drive Toyota’s Success

by Hirotaka Takeuchi , Emi Osono and Norihiko Shimizu

Summary .   

Reprint: R0806F

Toyota has become one of the world’s greatest companies only because it developed the Toyota Production System, right? Wrong, say Takeuchi, Osono, and Shimizu of Hitotsubashi University in Tokyo. Another factor, overlooked until now, is just as important to the company’s success: Toyota’s culture of contradictions.

TPS is a “hard” innovation that allows the company to continuously improve the way it manufactures vehicles. Toyota has also mastered a “soft” innovation that relates to human resource practices and corporate culture. The company succeeds, say the authors, because it deliberately fosters contradictory viewpoints within the organization and challenges employees to find solutions by transcending differences rather than resorting to compromises. This culture generates innovative ideas that Toyota implements to pull ahead of competitors, both incrementally and radically.

The authors’ research reveals six forces that cause contradictions inside Toyota. Three forces of expansion lead the company to change and improve: impossible goals, local customization, and experimentation. Not surprisingly, these forces make the organization more diverse, complicate decision making, and threaten Toyota’s control systems. To prevent the winds of change from blowing down the organization, the company also harnesses three forces of integration: the founders’ values, “up-and-in” people management, and open communication. These forces stabilize the company, help employees make sense of the environment in which they operate, and perpetuate Toyota’s values and culture.

Emulating Toyota isn’t about copying any one practice; it’s about creating a culture. And because the company’s culture of contradictions is centered on humans, who are imperfect, there will always be room for improvement.

No executive needs convincing that Toyota Motor Corporation has become one of the world’s greatest companies because of the Toyota Production System (TPS). The unorthodox manufacturing system enables the Japanese giant to make the planet’s best automobiles at the lowest cost and to develop new products quickly. Not only have Toyota’s rivals such as Chrysler, Daimler, Ford, Honda, and General Motors developed TPS-like systems, organizations such as hospitals and postal services also have adopted its underlying rules, tools, and conventions to become more efficient. An industry of lean-manufacturing experts have extolled the virtues of TPS so often and with so much conviction that managers believe its role in Toyota’s success to be one of the few enduring truths in an otherwise murky world.

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How the Toyota Recall Exemplifies Communication Failure in the Workplace

Table of contents.

You may know the expression “it’s like a car crash” to describe a fascinatingly bad situation. (You know you shouldn’t stare, but you just can’t look away.) In a somewhat grim and literal example, Toyota recently had a bad brush with a series of recalls and a blow to its reputation. The upside, however, is that this provides an excellent case study about how a communication failure in the workplace should be managed.

The Facts on the Toyota Recall

In 2002, Toyota began warning dealerships of an electrical issue in Camry models. Between 2007 and 2009, millions of Camrys faced recalls, but the reason given was for problems created by stuck floor mats. The company later admitted that stuck floor mats were only incidental to the problems in the vehicles. Soon the company faced widespread consumer outrage, censure from the National Highway Transportation Safety Administration (NHTSA), and a congressional hearing. Things had gone dramatically bad.

The Communication Failure

If this was an electrical issue, how was it also a  poor communication  failure in the workplace? Easy. In 2002, the marketplace didn’t have to account for the degree of consumer engagement that services such as Twitter and Facebook bring. But over the next decade, the marketplace responded to these new media by becoming a place where transparency, accountability, and clear communication had more social heft than established authority. Toyota failed these new criteria in a couple major ways:

• It changed its story from an electrical issue to stuck floor mats, failing to realize that in an era of leaks, Internet archives, and rapid spread of awareness through media such as Twitter and Facebook, inconsistencies could be widely exposed.
• When it had to admit fault, its spokespeople were evasive rather than upfront , even when the CEO testified before Congress.

In this marketplace, communication is king. Most consumers understand that mistakes happen, and they look for companies that can acknowledge and correct mistakes. 

To learn more about how you can communicate well and avoid catastrophic communication failures in the workplace, contact us today at  Hurley Write, Inc  .

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