With Toyota's woes going from bad to worse, with the price of recalled Toyota models falling, with Toyota being hit with another class action law suit from customers claiming the Lexus hybrid vehicles had defective braking systems, and the company coming under pressure to appear before Congress, it is time to look at the company's culture. How much did that contribute to this crisis.
Time magazine suggests the culture had everything to do with it. The company simply got too big.
"Rapid expansion puts enormous pressure on any company's ability to transmit know-how and technology, especially over long distances and across national cultures. When Toyota opened its Georgetown, Ky., plant in 1988, hundreds of work-team specialists and other experts were transplanted from Japan for several years to make sure the new plant fully absorbed the Toyota way. That kind of hand-holding may still be possible, but it isn't as easy … When weak signals started coming out in 2002, Toyota's top management wasn't listening. By then, the heroic stage of Japan Inc. was over; parts of its business culture had become sclerotic. Compared with the nimbleness seen in Silicon Valley, Japan's manufacturers and their systems began to be seen as inflexible, too removed from a changing global economy to adapt. Analysts describe a Toyota management team that had fallen in love with itself and become too insular to properly handle something like the current crisis. 'The reaction to [the situation] is a very Japanese thing,' says Kenneth Grossberg, a marketing professor at Waseda University's business school in Tokyo. Jeffrey Kingston, director of Asian studies at Temple University Japan, says Toyota's managers don't understand how sensitive the American public is to auto-safety issues. "Their focus on the customer has been nonexistent," he says. "Toyota is famous for having an arrogant culture. They're so used to dealing with successes that when they have a problem, they're not sure how to respond."
And as is common with many companies, those lower down didn't want to deliver the bad news to top management. Time Magazine suggests it's a failure of Japanese companies but it's true of all big companies. Delivering bad news is a career limiting move.
Barron's also makes the point that Toyota had a culture of secrecy. It was run out of Japan, did not include US executives and was slow to react to safety issues.
Will Toyota get over this? Maybe, but it will take a lot of soul searching.
no comment untill now