Toyota: Can a Corporation Repent?
Will Toyota repent? Last week Toyota announced yet another recall, this time of the Lexus GX 460 and the Land Cruiser Prado, luxury SUVs that had received a "don't buy" warning from Consumer Reports because of their rollover hazard. The 34,000 vehicles recalled worldwide last week bring the total to over nine million vehicles Toyota has recalled since November.
For decades Toyota was known for "the Toyota Way," an approach to business that focused on respect for people (both customers and employees) and continuous improvement. Experienced mentors taught new employees Toyota's practices, resulting in world-renowned quality of Toyota's products.
Yet the phenomenal growth of the past decade that resulted from Toyota's reputation for quality turned out to have a downside: Toyota left behind the Toyota Way in its race for growth. With not enough mentors available for new employees, with a reduced capacity to respond to complaints from customers, and with a rush to produce more cars resulting in less focus on quality, Toyota manufactured millions of flawed vehicles.
Akio Toyoda, president of the company founded by his grandfather, stated in February when he testified before the US Congress:
Quite frankly, I fear the pace at which we have grown may have been too quick. I would like to point out here that Toyota's priority has traditionally been the following: First; Safety, Second; Quality, and Third; Volume. These priorities became confused, and we were not able to stop, think, and make improvements as much as we were able to before, and our basic stance to listen to customers' voices to make better products has weakened somewhat. We pursued growth over the speed at which we were able to develop our people and our organization, and we should sincerely be mindful of that. I regret that this has resulted in the safety issues described in the recalls we face today, and I am deeply sorry for any accidents that Toyota drivers have experienced.
Yet many experienced his apology as too little, too late. Would he show wholehearted repentance and make amends the way Johnson and Johnson did with the Tylenol recall in 1982? The jury is still out.
As many have pointed out, the purpose of business is to serve the common good, to contribute to society. Of course businesses need to make a profit in order to survive and thrive. But profit is no more the purpose of business than breathing is the purpose of human life. Just as breathing is necessary for life so that humans can live out their purpose, profit is necessary for business so that a business can live out its purpose and make a contribution to society.
The current crisis faced by Toyota reminds us what frail human constructs businesses are, subject to the same temptations of greed and pride that individual humans face. Like individuals, businesses need to repent and restore relationships when they overreach themselves and go astray. Businesses tear the fabric of society when they lose their moral compass and forget their purpose.
Toyota will likely return to its core values eventually, and, as a consequence, to its former greatness. What remains to be seen is how long it will take, whether it can happen under the leadership of Akio Toyoda, and how much damage will have been done along the way to the company and to the societies in which Toyota manufactures and markets its vehicles.
The sooner Toyota fully repents, makes amends to its customers, fixes its manufacturing problems, and returns to the Toyota Way, the sooner it can return to its role as a leader in the auto industry. All eyes will be on Toyota as it determines whether and how to repent and return to being a company that contributes positively to the societies in which it operates.
Margaret Benefiel, Ph.D., author of Soul at Work and The Soul of a Leader, works with leaders in health care, business, churches, government, and nonprofits to help them stay true to their souls. Visit her Web site.