Harvard Business Review

Toyota's Recall Crisis: What Have We Learned?


Posted on Harvard Business Review: February 11, 2011 8:15 AM

In August, 2009, the improper installation of an all-weather floor mat from an SUV into a loaner Lexus sedan by a dealer led to the vehicle's accelerator getting stuck, causing a tragic, fatal accident and launching the most challenging crisis in Toyota's history. This iconic company, synonymous with safety and quality, was vilified by the American press, the government, and expert witnesses to plaintiff lawyers. Details usually unworthy of public attention, such as internal memos disagreeing over public relations strategy, became smoking guns that convinced the press and the public that Toyota vehicles had electronic problems causing runaway vehicles — and that the company was hiding this from the public.

The National Highway Transportation Authority (NHTSA), the government arm responsible for enforcing auto safety, came under attack for being too soft on Toyota. So they did what any good American organization does when they are attacked: They got tough and became enforcers. Ray LaHood, Secretary of Transportation, was the toughest, accusing Toyota of being "safety deaf" and vowing to get to the bottom of all Toyota defects that could endanger American citizens. He got help by paying NASA taxpayer dollars to conduct a study that dragged on for 10 months to study Toyota electronics.

What did we learn on February 8, 2011 when the report came out? That there is absolutely no evidence of sudden unintended acceleration caused by electronic problems in Toyota vehicles. The only causes NASA found were improperly installed floor mats and sticky gas pedals that can be slow to return. There has been only one documented accident caused by the floor mats — the one involving the loaner Lexus, where the dealer had used the wrong floor mat and failed to attach it properly with the provided restraining clips — and there have been no documented cases of accidents caused by the very small number of sticky pedals. Most accidents have been attributed to driver error.

We also learned that the NHTSA knew all along that the only problems were floor mats and sticky pedals, but they had to go ahead with the NASA study to convince members of Congress who believed electronics were the cause of sudden acceleration despite a total lack of evidence to support that belief. Toyota's name was dragged through the mud for over a year, $1.5 million in taxpayer money was spent, and some of the brightest minds in American engineering were occupied for 10 months — just so that NHTSA could prove they were right all along.


So who won in this debacle? Journalists who wrote speculative and poorly researched sensational articles got a lot of internet hits. NHTSA got a lot of attention, a larger budget, and a reputation for toughness. It remains to be seen whether the lawyers suing Toyota will get anything. American drivers got a paranoid auto industry that will recall vehicles at the drop of a hat. There will be some positive safety policies relating to how runaway cars are shut off in an emergency, and we all may get "black boxes" that record our recent driving actions. And Toyota got a crisis that drove it to reflect intensively and to make dramatic changes to improve its responsiveness to customer concerns, so likely will emerge stronger — but lost billions of dollars of value in the process.

It's hard to believe that our roads are any safer at the end of this extended saga. For that to happen, we would have to rethink the way we deal with safety in the U.S. A first step might be the government and the media learning something from Toyota's systematic approach to problem solving. It starts with some patience in getting all the facts, then prioritizing problems, then looking at them objectively to determine root causes, and finally developing solutions based on the real problems. The NHTSA took a positive step by objectively looking at the NASA data, concluding there was no evidence of electronics problems in Toyota vehicles, and shifting its focus to the important problems of distracted driving and pedal misapplication.

Copyright © 2012 Harvard Business School Publishing. All rights reserved. Harvard Business Publishing is an affiliate of Harvard Business School.

Jeffrey liker
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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