And now it's Toyota?

How many of you had "Quality scandals involving major manufacturers" on your industry Bingo cards for Q1 of 2024? Anyone have it twice? It looks like we have another winner. (After Boeing, I mean.)

Toyota Industries Corp. President Koichi Ito, front, bows in apology
at a press conference in Tokyo on Jan. 29, 2024. (Kyodo)

What happened?

A week ago Monday, on January 29, President Koichi Ito of Toyota Industries Corporation admitted in a press conference that "power output data had been manipulated for 10 of its models sold globally." [See also this article here.]

"Toyota Industries Corp. fabricated the data on diesel engines it makes and supplies for the automaker, Toyota said, adding that it will suspend shipment of the affected vehicles, including the Land Cruiser 300 and the Hilux.... The 10 models also include the HiAce, the Fortuner and the Innova. The cars were sold in Japan, Europe and the Middle East, among other markets. The output data rigging dates back to 2017, Toyota Industries said."

Nor is this the only recent scandal involving Toyota:

• Last year, Daihatsu (a Toyota subsidiary) stopped all shipments after admitting that safety tests for most of its models had been rigged for thirty years.
• Back in 2022, Hino Motors (another Toyota subsidiary) admitted to falsifying emissions and fuel performance data for nearly 20 years.
• For that matter, Toyota is still following up on the largest automotive recall in history, first announced in 2015, because some models were built with Takata airbags that risk exploding. (See YouTube video below.)

Is there any good news?

Toyota Chairman Akio Toyoda bows in shame during a news
conference addressing the recent scandals. Nagoya, central
Japan, Tuesday, Jan. 30, 2024. (Kyodo News via AP)

A little. The public announcements were made by the highest of top management: Koichi Ito, President of Toyota Industries Corporation, and (one day later) Akio Toyoda, Chairman of Toyota Motors Corporation. They appeared in person, admitted what had happened, and were duly ashamed. Honestly, that counts for something.

But it's not the whole game. We in the Quality business often use Toyota as our model of how to do things right. Sakichi Toyoda, founder of the Toyota family of businesses, invented 5-Why analysis. Taiichi Ohno, an industrial engineer working for Toyota, invented the Toyota Production System and Lean manufacturing. In many ways, this is where we turn for inspiration.

But these falsifications had been going on for decades. And however good the Toyota Quality System may be, it wasn't good enough to find these deliberate falsifications or correct them. In all these cases, the news was first leaked by a third-party, or by a whistleblower. 

So while I admire Toyota top management for showing up to take the blame, I would have admired them a lot more if their systems had found the fraud internally, if their line management had taken action to correct it, and if then the top management had gone to the public on their own initiative to announce the risk in case there were affected vehicles in the field. They didn't do that, and they should be ashamed of themselves for failing to.

What caused it?

Good question. I haven't seen the output of the 5-Why analysis for any of these failures, and I doubt I ever will. But the first nominee for Root Cause appears to be ... Culture.

• In the most recent case, a third-party panel investigating the issue "blamed the company's corporate culture, saying it lacked the will" to enforce compliance.
• The report on the Hino falsifications said that the fraud was caused by "an environment and structure in which management was not attentive to the front line and gave priority to schedules and numerical targets rather than appropriate processes." In other words, Culture.
• I haven't seen an article summarizing the cause of the Daihatsu fraud, but wait and see if it's not the same.

There are two reasons for a company in Toyota's position to blame Culture. First, at some level the accusation is almost certainly true. Second, there is almost nothing that a company can—or can be expected to—do about it. The corrective actions (if any) can be carried out behind the scenes with no expectation and no attempt to explain them to the public. Because really, what are you supposed to do about culture?

Can you ever change a company's culture?

Absolutely. But it's not easy. Here's one way.

1. Fire all the top management.*
2. Fire half the middle management.
3. Bring in a new management totally committed to the new culture.
4. Require all employees to go through mandatory training on the new culture, repeated every year, including specific explanation of exactly how it applies to the real-life situations they will confront in their daily jobs.
5. Whenever anybody does something inconsistent with the new culture, make an example of him. This means, first, that you fire him; and second, that you use his story to build another training class that all employees are required to take. So from then on, once a year, employees learn "Don't be like John Jones. Here's the bad thing he did."

You see what I mean. It's not easy. It is, in fact, very nearly the hardest job you can ever have in management.

It works. But wow, does it cost you.

And honestly, it is too much to expect that any company will ever voluntarily do this to themselves. It can only be imposed by an outside authority. Usually that outside authority is another company who acquires the first one and imposes their culture as part of the bargain. Maybe there are other ways it could happen, but I can't think of many right now. Certainly I can't think of any that apply in this case.

So I guess it's up to whatever corrective and preventive actions Toyota assigns internally.

__________

* It is only fair to add that in many respects the Toyota culture is already very good, or they would never have become the poster-child for the Quality business. And the last thing anyone wants is for them to lose the good parts of the company's culture. So addressing the cultural problem in this case probably requires less brutality and more subtlety than I describe here. I don't know how to do it.