Why Toyota Is Not Lean Thinking's 'Rosetta Stone'
- Raphael L. Vitalo, Ph.D. and Christopher J. Bujak
In the absence of foundational knowledge,1 Lean
thinking can only be explained and extended to address new situations by turning
to the Toyota Motor Corporation’s
practices. In this sense, Toyota functions as their “Rosetta Stone.” It
is used to decipher what is and is not “Lean thinking.”
There are problems, however, in using a case example, such as the Toyota
Motor Corporation, as your guidance for conducting commerce. First, every individual
demonstrates variation in his or her behavior across situations and over time.
When one studies a large, international organization, the problem of variation
is greatly magnified by the numbers of people, work settings, and geographical
locations in which the company operates. Second, people are sensitive to how
they are perceived. We all have an image of ourselves, but few of us have an “objective
image”—i.e., one based solely on empirical facts verified from
multiple perspectives. Commercial organizations are especially sensitive about
their image, as public perceptions can affect their commercial success. Hence,
self-report is subject to bias. That bias may be quite unintentional, yet real.
Third, if you have worked at the executive level within large corporations,
you are aware that there are levels of decision-making and action that are
kept confidential. The record of these discussions is not publicly available.
Hence, not all the facts about a company are available for review. Fourth,
there are almost always gaps between written policy and action. Within the
Human Resource function, for example, compensation rules may be relaxed for
specific individuals, usually executive-level employees. These decisions are
made on a case-by-case basis and their record, if one exists, is also not publicly
available. As another example, take the comparative compensation between male
and female employees. When studied empirically, compensation paid to males
is discovered to be higher than the compensation paid to females performing
the same work, at the same level of proficiency. The senior author has done
such employee compensation studies and documented the male-female discrepancy.
In every such study, the existing, written compensation policy was ‘sex
neutral.’ Never did they direct unequal pay.
To derive usable information
about the actual behavior of an institution, therefore, one must employ a sophisticated
sampling strategy that draws facts from multiple
perspectives, controls for confounding variables, and uses objective records.
The sampling must include observations from all the different levels of the
organization, across its various departments and locations, and across time.
The researcher must have access to the non-public aspects of the organizational
decisions and actions taken by the subject institution. Even at its best, the
image of conduct derived is only probable, not certain. Once assembled, the
information must be categorized and systematically assessed to discover what
if any trends in conduct may be properly asserted as being typical of an organization.
even when you have implemented such a well designed naturalistic study, you
are only left with verified conduct and its apparent results—not
with knowledge that explains why the conduct and results correspond. One could
use such findings to generate hypotheses about the causes that might explain
of the correspondence between observed behavior and results, With these hypotheses,
one could undertake controlled experiments to validate them. To our knowledge,
the Lean community has not done this. At best, therefore, one can only imitate
what has been documented. With regard to Lean thinking, however, knowledge
is expected to drive behavior, not imitation.
A Real World Example of the
Limits of Observation
In the monograph, The Incompleteness of the Lean Enterprise
Vitalo and Bujak (2019) identify a number of market strategies that Capitalist
businesses use and ask whether a Lean enterprise can use them. Here, we address
three such business strategies: externalizing costs, withholding negative information
from the public, and deception. If you use Toyota’s behavior as your
reference for deciding the question of use and picked a point in history when
otherwise hidden information became revealed, you would find that Toyota has
indeed used these methods to advance its profits. Specifically, it withheld
information and released inaccurate information about company actions and product
defects from customers and government regulators in order to protect its profits.
If Toyota had revealed that information, it would have provoked a vehicle recall
and exposed the company to liability claims. Thus, Toyota externalized the
cost of poor quality to its customers who were left to pay for repairs of the
defect and any other damages it might have caused. Profits before customers
is not consistent with lean thinking as generally understood.
Based on public records, we can say that Toyota practiced these
strategies during the period of 1995 through 2010. The first example concerns
handling of a steering mechanism problem with their Hilux Surfs and 4Runner
vehicles in the 1990s. The second example concerns how it addressed unintended
acceleration problem of some of its vehicles and two related problems with
gas pedals installed in various models in the 2000s.
Steering Mechanism Problem—Hilux Surfs and 4Runners
The Hilux Surfs and 4Runner’s steering mechanism problem became public
in Japan in 2004. Its exposure was the result of a police investigation into
the crash of an out-of-control Hilux Surf. The crash caused serious injury
to five people. The police investigation into this accident triggered a scandal
that provoked Toyota to acknowledge the problem and recall 330,000 affected
Hilux Surfs and 4Runners in Japan.
While this public revelation occurred in 2004, facts make clear that Toyota
was aware of the problem with the Hilux Surfs and 4Runners from the beginning
of 1996. They also reveal that the problem extended backwards to earlier models.
In 1996, “Toyota engineers discovered that a crucial steering mechanism
could fracture on the Hilux Surf, which was sold as the 4Runner in the United
States” (Kanter, Maynard, and Tabuchi 2010). While it corrected the flaw
in 1996 models, Toyota took no action to alert the owners of the 1995 and earlier
models of the danger. After Toyota received a rebuke from the Japanese government
in 2004, it executed the recall in Japan but not in the U.S. for its 4Runner
model (Kanter, Maynard, and Tabuchi 2010). Thus, it left its American customers
at risk of harm and bearing the cost of repair for the defect and any damage
or harm its failure caused.
Further, other Toyota truck models sold in the U.S. (e.g., Toyota 4x4 and
T100 pickups) used the very same linkage, a steering relay rod that was found
in Japan. Rather than recall these vehicles, Toyota told the U.S. National
Highway Traffic Safety Administration (NHTSA) in October 2004 that it would
not conduct a recall in the U.S. because it had not received information here
indicating a problem with the part. This was a lie. As later reported in the
Los Angeles Times, “Documents entered into four lawsuits filed in Los
Angeles ... revealed that Toyota had received numerous consumer complaints
dating from 2000” about linkage problems with its Toyota 4x4 and T100
pickups (Bensinger and Vartabedian 2009).
Unintended Vehicle Acceleration and Gas Pedal Problems
As to unintended sudden acceleration and gas pedal problems, the first instance
was uncovered in 2003. Internal Toyota documents, discovered during a court
case filed against Toyota, revealed that earlier in that year a company technician
described a case of sudden, unintended acceleration in a Toyota model. According
to a court document filed in U.S. District Court in California in 2010, the
technician, in 2003, “requested immediate action due to the ‘extreme
dangerous problem’ and [said] ‘we are also much afraid of [the]
frequency on [sic] this problem in the near future’” (Whoriskey
Later in 2003, routine testing revealed that the Sienna minivan had a problem
with a part that could come loose causing the gas pedal to stick, potentially
causing unintended acceleration. It affected both current and previous year
models. Toyota redesigned the part and installed it in 2004 models, but chose
once again not to tell owners who bought Sienna's before 2004. In 2009, when
investigations revealed what Toyota had done, it explained its action on the
basis that “a safety recall was not justified” and the corrected
part was simply “an added safety measure” (Bensinger and Vartabedian,
Yet another problem with gas pedals was uncovered in 2008 in Europe. Toyota
responded by making a design change in the summer of 2009 in the manufacturing
of cars in Europe going forward, but did not make the change to the same models
produced elsewhere. Also, it did not recall the already sold cars in Europe
because the company considered the problem a “consumer satisfaction” issue.
Then, almost a year later, after the problem was publicly exposed in the U.S.,
a recall was issued.
As to the U.S. recall, Toyota claimed that it did not issue it earlier because
it just discovered the gas pedal problem in the U.S. This statement was made
despite records that showed it modified the same pedal to address the same
problem in Europe the year earlier (Kanter, Maynard, and Tabuchi 2010).
Across these actions to address unintended acceleration and gas pedal problems,
Toyota externalized the cost of defects in its cars by off-loading it to customers
in terms of risk, injury, and personally funded repairs. It controlled the
information flow about the problem in various countries until it was ‘outed.’ And,
on several occasions, it appeared to deceive government regulators and the
public. Why? Clearly, recalls are costly and potentially impact sales thereby
deflating profit. This suggests that maintaining or increasing its profits
outweighed concern for customers.
Pure speculation? Then consider the July 2009 presentation by Toyota staff
to Yoshimi Inaba, then Executive Vice President, Member of the Board and Chief
Officer of the North America Operations Group. The presentation was entitled, “Wins
for Toyota -- Safety Group.” In the presentation, U.S. Toyota executive’s “boasted
of saving hundreds of millions of dollars by getting the federal highway safety
regulators to limit the scope of recalls” for floor mats in some Toyota
and Lexus vehicles (Maynard 2010; CNBC 2010). The floor mats could cause unintended
acceleration (Valdes-Dapena 2010). In Mr. Inaba’s 2010 testimony to the
U.S. House Oversight and Government Reform Committee, he implicitly admitted
that he was briefed on the Safety Group’s “successes” when
he stated that he could not remember the meeting where he was briefed on the
memo “with any depth” (Bensinger and Vartabedian 2010).
Other “wins for Toyota” lauded in the same presentation were a
$124 million savings reaped by winning a phase-in to new safety regulations
for side air bags and an $11 million savings reaped by delaying a rule for
tougher door locks (Thomas 2010). Also credited as wins were: “Avoided
investigation on ‘Tacoma rust’ and helping win delays in various
new federal safety regulations” (Valdes-Dapena 2010).
In response to the facts of this presentation, a Toyota spokesperson said, “Our
first priority is the safety of our customers and to conclude otherwise on
the basis of one internal presentation is wrong. Our values have always been
to put the customer first and ensure the highest levels of safety and quality" (Thomas
2010). The conflict between the facts of this internal presentation and the
spokesperson’s assertions were not explained. No one asked how, given
this unassailable ethic, such a presentation could be made to an executive
officer and member of the board of Toyota (Yoshimi Inaba) without the least
for reprimand for being unaligned with Toyota’s “first priority.”
Aberration or Clearer Image of the Toyota Motor Corporation?
To answer the question of whether the handling of the Hilux Surfs and 4Runners
steering mechanism problems and the separate issue of unintended acceleration
were aberrations, consider the findings of a deeper analysis of the Toyota
Motor Corporation’s conduct during the period 1995– 2010 (see Exhibit
A1, beginning on the page 6). This period offers an unusual window into Toyota’s
actual executive practices. It was made possible because of a significant increase
in investigative news coverage of the company. Also, the discovery processes
a number of
lawsuits against Toyota became public and facts previously unrevealed were
available for scrutiny. As a result, many revelations emerged about executive
actions that hitherto had not been reported.
Both before and after this period, news coverage reverted to reporting traditional
business performance information. Thus, we have no way to assess whether conduct
similar to that reported in Exhibit A1 existed before 1995 or after 2010. Nonetheless,
15 years is a long period of performance. The factual occurrences revealed
are many and the pattern of conduct in relation to customers, employees, and
the community at large appears highly consistent yet thoroughly inconsistent
with Toyota’s publicly asserted ethic.
Given its length of occurrence and the consistency of performance that significantly
deviates from the declared values and practices of the company, it seems
highly unlikely that this pattern of conduct emerged de novo in 1995. Indeed,
the major Toyota actors in this historical record had long and significant
careers in the Toyota Motor Corporation prior to 1995.
Toyota's Executive Actions and Related Events
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deliberately withheld' evidence in safety lawsuits, House panel says. The Los
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1 Foundational knowledge refers
to the set of concepts, principles, and relations used to explain the “why” underlying
observed facts or precribed actions, or the set of assumptions from which the
judgments and directives
of a deductive knowledge systems are deduced.
Published June 12, 2019 - © 2019 Vital Enterprises - Austin,
Texas. Revised 10/17/2021
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