Toyota's Management Challenge

The automaker needs a revamped control system to manage the reliability of its products, as Peter Drucker would surely recommend

By Rick Wartzman

To the dismay of its growing chorus of critics, Toyota Motor (TM) continued to insist this week that its electronic throttle control isn't to blame for any unintended acceleration in its cars. But what the company has readily conceded—and what Peter Drucker would have surely seen as the key to its hoped-for resurgence—is that it needs to get a much better handle on another type of control system: that by which the entire enterprise manages the reliability of its products.

"We are fundamentally overhauling Toyota's quality assurance process…from vehicle planning and design to manufacturing, sales, and service," Shinichi Sasaki, an executive vice-president, told a Senate committee.

Given the pleasure that some lawmakers and news outlets seem to be taking in Toyota's fall, it would be easy to dismiss Sasaki's comments as empty rhetoric or to overlook them altogether. At the same time, Toyota hasn't done itself any favors with some of its behavior. The company's now-infamous "safety wins" presentation—in which it boasted of having saved $100 million by averting a full-blown recall of 50,000 sedans—has only helped fuel the tar-and-feather-them attitude that many have adopted.

Yet the steps that Sasaki outlined—and that have been echoed by others, including Toyota President Akio Toyoda—are anything but hollow or trivial. For they get right to the heart of a question that Drucker thought every company needs to rigorously address: What set of "controls" will provide the utmost "control"?

"The synonyms for controls are measurement and information," Drucker wrote in his 1973 book Management: Tasks, Responsibilities, Practices. "The synonym for control is direction. …Controls deal with facts, that is, with events of the past. Control deals with expectations, that is, with the future. Controls are analytical, concerned with what was and is. Control is normative and concerned with what ought to be."

Manager Control

Drucker explained that to give a manager proper control, controls must satisfy a number of criteria, including several that Toyota seems to be zeroing in on. For example, the company has pledged to increase its collection of consumer complaints and to then respond to them more quickly than in the past by deploying "SWAT teams" of technicians. It has also vowed to give its executives in the U.S. and other regions across the globe a greater voice in safety-related decisions. Until now, such authority has resided largely in Japan.

Drucker, having stressed the need for controls "to be timely," would undoubtedly have favored these moves. But what may be most crucial here is the way that Toyota is positioning itself to meet another one of his specifications: "Controls," Drucker wrote, "must be operational. They must be focused on action."

In a day-to-day context, Drucker added, "this means that controls—whether reports, studies, or figures—must always reach the person who is capable of taking controlling action. Whether they should reach anyone else, and especially someone higher up, is debatable. But their prime addressee is the manager or professional who can take action by virtue of his position in the flow of work. …This further means that the measurement must be in a form that is suitable for the recipient and tailored to his needs."

More Than Just Data-Tracking

There is more, as well. "Controls," Drucker wrote, "have to be appropriate to the character and nature of the phenomena measured."

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