Toyota Motor Company is accused of delaying its response to countless service complaints about "sticky" accelerators. Millions of cars, including the wildly popular Prius, have been recalled in an effort to avoid more accidents, injuries and potential fatalities. To date thirty four deaths in the U.S. have been attributed to the sudden surge in acceleration.
U.S. journals wrote scathing reports claiming Toyota sacrificed quality for profits. Tough questions about motives for the negligence were fired at the CEO by a U.S. congressional panel. One represenative asked, "Where's the remorse?"
The remorse was apparent as Akio Toyoda, grandson of the founder, repeatedly apologized to the families of victims, "I extend my sincerest condolences to them from the bottom of my heart. I'm deeply sorry "" His sincerity was palpable. Either because he was looking at hundreds of millions (perhaps billions) of dollars in losses, or because he was losing "face" as the leader of the company his ancestor built.
Apologies will never be enough for the families that lost loved ones. Yet the acknowledgment of responsibility offers some relief to those who held the company in trust. One lawmaker spoke of the almost mythological reverence he held for the Japanese car maker. He remembered those "like myself have grown up in an atmosphere that we had a great deal of faith in something that was stamped Made in Japan."
Toyota was a brand held in reverence. The brand was built on reliability and integrity. The Toyota Way was the official name for the top of the line production quality and efficiency that Detroit envied, but could not repeat.
Toyota will undoubtedly right its sinking ship and get to the top of the industry heap again. The automaker has enjoyed a reputation for excellence stretching back for decades. Their downfall was to veer from the integrity model and focus instead on maximizing profits. A lesson for all businesses that your best profit model is to serve your customers first. To remedy the problem, the car company should use its own tried and true model for creating value for its loyal customers.
Professor Jeffrey Liker, an expert on the Toyota business model, summed it up this way, "Failure to follow all the principles of the Toyota Way led to this crisis. Now the Toyota Way is the only way out of it."
Shame is a great burden in Japanese culture where honor has almost religious qualities. In America, where honorable business is often a quaint memory from our parents and grandparents, the U.S. financial industry could learn a thing or two from Toyota.
One Congressman revealed a document written to the chief of Toyota Motor North America, Yoshimi Inaba, celebrating the official agreement for a limited recall. The sentiment ignored public safety issues and focused on the bottom line. Inaba confessed, "It is inconsistent with the guiding principles of Toyota." They have principles? How refreshing.
"Saving face" is a deeply ingrained principle in Japanese culture and business affairs. Unlike American business, Japanese corporate culture sees business as personal. Clark Roundy, VP of Marketing at Luxul Wireless, writes "When doing business in Japan, never underestimate the importance of personal relationships or the role that honor, loyalty, and saving face will play in your success." American Roundy claims that to do business successfully in Japan, there must be a respectful relationship of mutual concern behind monetary goals. In other words, trust and honor are your bread and butter in Japan.
Clearly, things go wrong in business. Products malfunction and quality can be compromised in the rush to get products out to the market. How a company responds to a problem is the key to recovery.
The American Way
The remarkable aspect to Toyota's tragic debacle is the glaring comparison to top corporate behavior in the U.S. this past year. We have seen former national treasures, including some of our largest financial institutions, not only shame and embarrass us around the world, but deliberately attack us where we live.
Through marketing predatory loans, hiding bad debt inside complex securities, hedging debt against worthless paper "swaps," and unloading products on an unsuspecting public through Government Sponsored Enterprises, the actions of professionals and institutions were not due to neglect or oversight. Their actions were the result of a calculated strategy to market lethal quality loans to financially vulnerable citizens and sham securities to ignorant investors. The "shame" is on all of those who participated in this economic American tragedy, yet somehow those individuals feel little or no responsibility for their actions.