Toyota has a hard won reputation for being the best car company in the world and from 2008 they also become the biggest. This was achieved without making any significant acquisitions, all done from relentless, organic growth.
And then the mood music started to change. During the last 12 months there has been the odd warning from a couple of senior Toyota executives about being the biggest not automatically meaning you stay the best; about needing to avoid complacency, retain some humility. These siren voices now seem too little, too late.
Toyota’s long term success has now presented them with their biggest challenge. The cornerstone of their reputation was built on quality, which led to reliability, which led to repeat sales; a virtuous circle of business excellence. And with their hybrid technology they added a sexy ingredient to the mix; innovation.
This is now at risk. The recalls won’t destroy the company but they will force it to confront how it runs its business model. GM was the biggest car company for many decades, but with a much simpler supply chain, much less deployed technology (in production and in the vehicles) and a much longer product cycle. Toyota’s complexity may have got ahead of its capabilities, allowing systemic failure to develop.
And there are also early indications that it believed its own reputation. Customers complaining about the accelerator pedal or the braking system can’t be correct because the quality systems prevent these kinds of things from happening. Ergo, we’re right and they’re wrong. A classic symptom of an arrogant mind-set.
And their success also means they don’t just have millions of Toyota customers they have thousands of Toyota families – because when something works brilliantly, why not buy another one? And nobody won referrals like Toyota because satisfaction is contagious. But so is being let down, people will want to share just as much their sense of being duped. Toyota is like all the other companies, not special, but average.
How they respond it critical; not only do they need to over communicate they need to develop a new narrative, one that shows why these issues occurred and why similar problems can’t reoccur. They need to show tactical humility and a strategically different way of thinking about their business model. The stakes couldn’t be higher.