The Business Complexity Accelerator at Toyota

There was an interesting article in the Knowledge@Wharton newsletter today. Wharton management professor John Paul MacDuffie interviewed Toyota expert, author and Tokyo University Professor Takahiro Fujimoto. The piece is called Under the Hood of Toyota’s Recall: ‘A Tremendous Expansion of Complexity’ and raises the by now familiar questions of complexity of modern automobile systems design, attitudes at Toyota towards its recent quality problems, and what this means for both Toyota and its competitors. To sum up the article with an automotive metaphor, Toyota needs to take its foot off of the business complexity accelerator.

Fujimoto said, “I was surprised to see that Toyota was the first to be caught in this trap of what we may call complexity problems.” What has puzzled Toyota watchers is how Toyota, proven to be so great at solving problems for so many years, seems to have stumbled in a big way during this recent acceleration-related recall. Why?

Toyota failed to see this problem in the right way, at least in the beginning.

Failing to grasp a problem clearly, quantitatively and without prejudice is the first step in problem solving. Was this a case that the problem solving approach was flawed, or was it that the problem solving process is still sound but that Toyota did not follow their own process?

The danger is that people tend to connect the two problems. “This happened and that happened, so there must be causal relations between the two.” But this is not the case. There appears to be no connections between the design problems and the Toyota production system or Toyota Way.

He clearly says that the recent quality issue at Toyota is not connected to their way of working within the production operations, i.e. the Toyota Production System or even more broadly their philosophy, the Toyota Way. He suggests that that the complexity of new systems within the design simply got out of hand, and when they did, Toyota was unable to respond properly. While the processes within TPS are sound, the mindsets and behaviors of people may have shifted in an unhealthy way towards overconfidence, even arrogance. Fujimoto said:

Sometimes I’m critical of Toyota. But they get angry. They always say, “We want to find problems. So please, give us any clues on the problems you see.” But if I actually say, “This is a problem for you,” they say, “This is none of your business. We have to find the problem. Not you.” This attitude was growing for some time, I think, in some parts of headquarters. That was very dangerous.

This is like giving someone the key to a treasure box and watching them ignore the heaping pile of treasure and slam the lid shut because they saw something scary inside. You might be saying, “We would never do that! We would grab the treasure! But the lesson here is that if even Toyota can slip in this way, no organization is safe. Why would an organization renowned for its practice of exposing problems behave this way? What is the cause of this huge blind spot, this bleached skull that shades the glitter of gold?

I think this can happen to any company which is confident of its quality. This has happened to other companies in the past, too. When you’re very confident of your quality, this is a source of arrogance.

Ah pride, that which comes before the fall. Not seeing the problems, seeing them but blaming the customer rather than looking for the source, and not correctly grasping the problem once it is finally acknowledged, these seem like rookie mistakes and not the traits of the world benchmark for lean manufacturing. What is the remedy? According to Fujimoto, Toyota must go “Back to the basics.”

6 Comments

  1. John Santomer

    April 1, 2010 - 3:24 am

    Dear Jon, Well said! May I add that in going back to basics ; also re-study the fundamentals of basics and find where improvements are still possible.Because we did not reach at this stage for no reason at all if there is no more room for improvement starting from the basics…

  2. Cristian

    April 2, 2010 - 12:20 am

    Hi,
    The high complexity of a process can give you a lot of problems and to keep it all „under engineering control” can be very tricky, but if we are looking at the Toyota’s situation we can clearly see (if we want) that there cannot be a connection between the recent acceleration-related recall and the Toyota way(kaizen way).
    In my humble opinion this is nothing more then the wrong step long-time awaited by the competitors… i guess nobody is perfect.
    By the way, I have a little curiosity maybe you can help me. Why Mr ToyoDa’s plant is called ToyoTa is a feature of Japanese language? I know another japanese exemple from automotive industry: Mr. TakaDa’s plant is also called TakaTa, I see a patern but I cant understand it.
    Tanks

  3. Ton Bil

    April 2, 2010 - 6:09 am

    Dear Jon and John, Good points. The basics, then, should be Values that inspired the Toyota Way. One of the important ones here, imho, is Humility. It may have been so, that the Toyotans have become Proud of their Humility, which is so typically human that I will ask myself now: why did I write “imho” there?

  4. John Santomer

    April 3, 2010 - 8:50 am

    Dear John, perhaps as a reminder of what imho meant – I M Human Only?(imho)! Hhhhhh! Good reminder… and everyone does make mistakes, ONLY those who do checks before making decisions and have kept an open mind on all plausible alternatives may have seen the outcomes and have prepared catch point checks that may have erradicated all/if not most of the negative impacts. Yet again, in kaizen – never miss the lessons learned. One can never really understand what those are unless you make these mistakes yourself and stand up from where you have fallen…

  5. sharma

    April 4, 2010 - 7:07 am

    Dear Jon,
    This “Toyota acceleration debate” is getting very boring and tiring. I would request you to put the facts straight…
    Can you give us a comparision table of number of recalls by FORD, CHRYSLER, GM, TOYOTA, NISSAN, HONDA in the last 5 years?
    Why is Toyota singled out in this bashing? Is there something to do with the timing and economic slowdown and the government help being dished out to Toyota’s competetiors?

  6. Jon Miller

    April 4, 2010 - 8:56 pm

    Hi Sharma
    Toyota is being singled out because they are widely acknowledged as the best automotive company in terms of quality and efficiency and therefore are held to a higher standard. Dozens of books have been written on “The Toyota Way” while very few on Honda, Nissan, GM, Ford, Hyundai or Daimler “Ways”.
    I’ll have to decline preparing a comparison table but this article takes Toyota’s side and partially addresses your question
    http://www.washingtonpost.com/wp-dyn/content/article/2010/03/15/AR2010031501693.html?wprss=rss_opinions
    Best wishes,