What Should Toyota Do Now?

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Here's how that process should play out:

Step 1: Clarify the problem vs. the ideal state

The first question always asked in TBP is: What is the problem compared with the ideal state? The ideal state is to strive constantly to completely satisfy customers and provide them safe and quality transportation—zero defects. The problem statement needs to be clear, concise, and actionable. It should not make assumptions about where the problem has occurred or its underlying cause.

The following would be poor problem statements: "Toyota has lost its way in quality" (too vague and general). "Toyota expanded too fast, which led to overworked engineers—and thus quality problems" (makes an assumption about the root cause that has not been proven and cannot be acted upon). "Toyota has evolved a culture of being secretive and hard for government safety organizations to deal with" (draws specific conclusions that if true, should come out of the analysis).

A better problem definition, based on what is actually known and not assumed, might be: "Toyota's reputation for quality and safety has been called into question because of large recalls and there is evidence that Toyota customers have been injured and even died because of defects in their cars."

Step 2: Grasp the actual situation and see the gaps

If customers are complaining about quality and safety, millions of customers have to bring cars in for recalls, and there is even one injury, the ideal is not being satisfied. At this point we need data to understand the scope and extent of the problem. As I mentioned, the number of cars recalled is not so much the issue; the problems are the issue. A single problem is still a single problem, whether it leads to one car or a million cars recalled. The real problem being investigated is unintended acceleration and that should be the major technical focus. Do we have evidence that there is an electronics problem?

In addition to the technical problems, there are reports that Toyota is secretive and uncooperative with local safety organizations. This needs to be thoroughly investigated, as does the ancillary problem of Toyota's public response during the crisis itself. It is critical at this point to be brutally honest. Toyota President Akio Toyoda has committed to bringing in outside quality control experts. This is one of the places they can be most valuable—using unbiased outside eyes to understand the problems.

Step 3: Break down the problem and set targets

The overall problem of quality and safety and responses to customers and governments is too massive to act upon. It needs to be broken down into a smaller set of more tractable problems. At this point sub-teams might be set up to focus on more targeted areas such as development processes, customer-complaint management, engineering changes, public relations, and government relationships. It may or may not be the right time to set specific quantitative targets, but more detailed investigation would be needed.

Step 4: Analyze underlying causes

Toyota is famous for its five-why analysis. Why are there recalls? Because it has been determined that there are serious problems in some vehicles that might be present in other vehicles. Why were there serious problems? Because errors were made in the design stage internally or when working with suppliers? And so on, until the root cause is identified. There would be separate analyses to investigate why it takes so long to respond to customer complaints and why the government believes Toyota is unresponsive to safety concerns.

Steps 5 to 8 would be where Toyota actually comes up with potential solutions (called countermeasures), puts them into practice, monitors the processes and results, and then standardizes and spreads practices that have proven effective.

As you can imagine, this will not happen overnight—and it shouldn't, despite the pressures of the news cycle and Washington politics. Toyota has proven time and again that good planning should be 80% of the effort. Then implementation will go smoothly. It is always a mistake to jump into solutions without thoroughly analyzing the problem and taking time to develop a good plan.

The real test for Toyota will be the longer-term, full problem-solving process. Akio Toyoda seems intent on doing hansei and solving problems the right way, turning over every stone, finding weaknesses, and improving virtually every function of the company. Failure to follow all the principles of the Toyota Way led to this crisis. Now the Toyota Way is the only way out of it.

Liker is Professor of Industrial and Operations Engineering at the University of Michigan and author of the best-selling The Toyota Way

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