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PUBLISHED ARTICLE: Toyota Must Deal with Denial
March 9, 2010 [by Larry Chao]
Toyota’s current troubles seem to illustrate that it is easy for managers to fall into the trap of denial and not accept the very problems that allow them to learn from their mistakes, writes Larry Chao.
No doubt for years to come, the current crisis facing Toyota will make for an instructive business case study. The reluctance of Toyota’s management to identify and deal with its problems suggests a top-down culture of denial, where mistakes are not recognized and no one is encouraged to rock the boat.
Problems with so-called sudden acceleration of Toyota cars began cropping up ten years ago. Yet it wasn’t until late last year after a high profile car accident that Toyota finally decided to take this problem seriously.
At first Toyota dismissed the problem as poorly designed floor mats that trapped the accelerator pedal. This was a curious explanation, and did not seem to convince consumers or congressional investigators. Then, after studying the problem further and weighing the mounting evidence pointing to a more serious technical defect, Toyota conceded that the problem was a mechanical flaw in the accelerator mechanism.
Under pressure from U.S. federal regulators, Toyota launched a massive recall of affected vehicles this past January. But why did it take Toyota so long to recognize this problem while thousands of people were complaining?
It was no big secret. Over the years, hundreds of accidents and several fatalities involving Toyota cars were reported linked to “sudden acceleration.”
One of the possibilities is a top-down corporate culture where senior managers do not like to admit mistakes. Junior managers learn to avoid bringing them bad news for fear they might be blamed. Everyone ends up burying their heads in the sand, hoping the problem will go away.
This type of culture might survive if managers always made the right decisions, and there was no need to adjust strategies to adapt to changing markets. But in today’s volatile world, where market shifts demand altering course and correcting mistakes, managers must be able to self-reflect and admit when they are wrong.
Moreover, this problem is not only about Toyota, but also about other large organizations, especially Asian companies, where decisions made by senior managers often go unchallenged.
While Toyota has finally begun to address its car problems, the bigger challenge is how to create a corporate culture where there is less denial, greater openness and accountability at all levels. Perhaps it starts by breaking down seniority and hierarchical management.
For example, this might include structuring productive debating between levels of management, promoting capable junior managers with the right attitude, applying penalties and incentives to encourage diversity and inclusiveness, reducing entitlements that reinforce different employee classes.
This is not an easy task, but one companies like Toyota must tackle if they are to preserve their reputation as world class competitors.
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