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NINETY EIGHT REGENCY

When Toyota lost its culture, it lost its way

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When Toyota lost its culture, it lost its way

Peter Brown

Automotive News -- March 1, 2010 - 12:01 am ET

Toyota wanted to be General Motors. And now Volkswagen wants to be Toyota.

Be careful what you wish for.

The grilling of Toyota Motor Corp. President Akio Toyoda by our congressional committees was embarrassing for almost everybody -- Toyoda; his North American chief, Yoshi Inaba; and a good many of the members of Congress. Those members' attitudes toward Toyota's cynical history of dealing with unintended acceleration tended to reflect whether a Toyota plant was in or near their district.

But enough about Congress.

Poor Akio Toyoda had to grovel over the collapse of his family's culture in the company. Whatever you think of the Japanese takeover of much of the American car market, Toyota was an admirable company -- until somewhere in the last decade when it got big-company disease.

Toyota used to have a learning culture, in which nearly every worker tried to do things a tad better every day. The underlying ethic was to build bulletproof vehicles that offered value to buyers.

That culture worked, as the company grew large and prosperous.

And then the ethic changed. Toyota listed on the New York Stock Exchange in 1999. The NYSE rewards only growth. And President Hiroshi Okuda made clear that -- despite public declarations of "aw, shucks, we're just a simple country automaker trying to satisfy customers" -- the company was dedicated to overtaking GM as the world's largest automaker. The goal became not the highest-quality cars but 15 percent of the world's auto market.

And now we know that it ends with a Toyoda family member scraping and bowing before Congress, apologizing and not quite defending the indefensible, such as the infamous report on Toyota's "win" in talking federal regulators down from an expensive recall.

A few years ago, I was talking with a group of current and retired auto executives in Torrance, Calif., home to Toyota's and Honda's American sales operations. I rhapsodized about the Toyota culture. The only flaw I saw was that the company was so entirely, parochially Japanese. It sold internationally, but was run from home. If all the power is in Japan, bad things could happen in other countries.

Afterward, a couple of Toyota retirees quietly alerted me to the dent in the armor: overconfidence. Hubris was the virus that could take the company down, they said. They seemed concerned.

Akio Toyoda is setting up new committees and new structures. He says he'll install people with real power in America, people who can enforce quality and sensitively handle recalls. The difficult testimony last week by U.S. sales boss Jim Lentz showed, embarrassingly, how little power resides in America. Lentz had to keep telling members of Congress that, well, no, I had no authority over that issue.

So sure, Akio Toyoda absolutely needs to make the company less Japan-centric and to put some corporate power on the American continent.

But it's not the structure that will determine how fast Toyota rebounds from this woeful period. It's the culture.

The GM culture, dating from when the powerful company was almost too dominant in America, never adapted to the new realities of global competitors. And in the past year, GM filed as a certified failure in U.S. Bankruptcy Court. GM now has a clean balance sheet, competitive costs and fewer weak brands.

But the jury is still out on the culture. Can GM become a learning culture, sensitive to the needs of its customers and responsive to the competitive pressures of a fabulously international industry? Can it listen and hear? Or will an old, haughty culture drive the new GM down at the same rate that the old GM dropped? We'll see.

Meanwhile, VW CEO Martin Winterkorn has been exhorting his far-flung troops to overtake Toyota as the world's biggest. I think "biggest" is the wrong goal. If you become the world's best, you'll work your way up the sales chart.

After his chastening experience in Washington, Akio Toyoda can pull organizational levers. But if he can't drive the spirit of his father and grandfather down through the company, there will be more unintended consequences than just acceleration.

Read more: http://www.autonews.com/article/20100301/OEM01/303019935/-1#ixzz0gw3huaIW

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