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Archive for the ‘Quality’ Category
Toyota – Risk Management Gone Bad
Akio Toyoda - AP Photo
The whole world now knows about Toyota’s problems surrounding “sudden unintended acceleration” in its cars. Not only is there an issue about the loss of life and other serious injuries, there’s also the tremendous damage to Toyota’s legendary reputation for quality. In areas ranging from Toyota trying to sweep the problem under the carpet until it was too big to contain, the appearance of Toyota CEO Akio Toyoda on Capitol Hill, to basic questions about whether the recall fix that Toyota is installing at this point is even an effective solution, Toyota has undeniably been in a 100% damage control mode.
Of course hindsight is 20/20, but in retrospect, it seems rather obvious, at least to me, that Toyota did a poor job in risk management in weighing the risks associated with saving money vs. recalling cars in a much earlier time frame. There have been news and accusations about this being an issue long before Toyota came clean and took the action associated with its current recall(s). There was even an internal Toyota presentation uncovered, dated 7/6/09, that touted as a “Win,” “Favorable recall outcomes.” To say that this is not good news for Toyota could arguably be called the understatement of the year.
A couple of weeks back, I read a technical article about Toyota’s gas pedal assembly, the alleged root cause of the problem, and the solution that the postage stamp size piece of metal installed during the recall provided. I was going to write an article about the engineering solution, but then as I was looking at reader comments, many claimed this the problem was electronic or that the solution didn’t address or fix the root cause of the problem.
Regardless, I think it’s safe to say that the final chapter on Toyota’s “sudden unintended acceleration” problem hasn’t yet been written, and further, it’s not clear that the current recall really fixes the problem(s). By trying to save money, Toyota not only will incur much higher costs than it ever could have imagined, the biggest blow has been to its stellar brand and impeccable reputation for quality. Whether the damage is irreparable remains to be seen, but it’s certainly much more severe than Toyota’s management ever could have foreseen. There are many case studies that will no doubt surface at Toyota’s expense as how to NOT manage risks or manage a brand.
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