Toyota recovers from a rock-n-roll hangover

Toyota, struggling along with other automakers, is restructuring to rebound from a counterproductive growth strategy:

Only two years ago, Toyota was riding the crest of a deliberate growth strategy in which it doubled in size and became the world’s biggest car company. Although most carmakers have suffered, Toyota’s rapid decline shocked many at the automaker and the experts who follow it.

Yoshimi Inaba, named by Mr. Toyoda as Toyota’s new head of North American operations, faces heavy pressure to turn things around here. “Without North America, we are not likely to come back to global proficiency,” Mr. Inaba told reporters in Detroit last month.

Toyota has an advantage over its Detroit rivals in its streamlined processes for engineering and building its cars, said James P. Womack, an author and expert on company efficiency. But he said the company, famous for caution and self-reflection, strayed when growth, not quality, became its main concern.

There’s something to be said for being big, but Toyota’s play could not have come at a worse time.  Aside from recent quality concerns and more aggressive designs that may have alienated its conservative base, the company’s course correction comes at a time when far fewer people will be buying new cars.  Oddly, the reliability of older Toyotas mean that drivers can hang on to them longer, eroding the natural market for new products.

Some years ago, I used to run 2-3 times a week with the drummer of a very well-known hair-metal band.  We knew each other as neighbors and never talked about work.  One day he asked what I did, and I told him.  I then politely asked what he did, and we began to talk about the new album he was working on.  I asked whether the band was exploring new directions in its music, and he gave me an answer more coherent than what I usually hear from executives:

“We occasionally experiment a little bit, but we have a sizable core market for our product, and we always put them first.  They have a certain expectation of us, and we have to make sure to take care of them in everything we do.”

That’s a far cry from Spinal Tap.  For all the talk of corporate strategy and raving customers, the band got it more than most businesses.  They’re still around, albeit with a smaller market and fewer new customers.  Even in a tough market, they survived as many of their peers (Guns N’ Roses, for one) couldn’t seem to find their place.  Modesty and focus worked well for them.

It’s odd to think that Toyota–a company built on modesty and focus–fell victim to the hubris of selling out stadiums.  It’s time for them to get back into the studio.


3 responses to “Toyota recovers from a rock-n-roll hangover

  1. who knew hair band philosophy could contribute to organizational theory.

  2. Graham Stewart

    You’ve got to win a prize, Mr Logan, for linking Toyota and Spinal Tap in a post. It also raises in my mind questions about long-term relationships between producers and customers. Are there some organisations whose product leads to long-term loyalty, while others do not? Or is it simply a matter of how they behave i.e. they only develop what their customers want, rather than what they want.

    • Thanks for that, Ben! Interesting questions, Graham. I think I would buy just about anything Apple makes so long as it adheres to its own values and behaviors; conversely, there’s very little Sony could make that I would feel good about purchasing from them. Small sample size and all of that, but I suspect the approach to making products and services means more in the fullness of time–especially as it informs the choices that define those products.

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