What is next for Toyota?

Maybe one of the most discussed business cases the last six months has been the situation at Toyota. I have therefore tried to analyze what exactly are the problems at once one of the most respected companies in the world, and it looks like there are more underlying problems at the organizations than simple floor maths and accelerators. 

First of all, it is interesting to see how Toyota has changed their strategic focus over the years; the company was near bankruptcy in the 1940s, but through an obsessive focus on quality in the manufacturing process (with the development of the famous “Toyota Way”), they managed to earn themselves a vital position in the automotive industry.

From the 1980s however, there seems to be a change in focus in their strategic direction; with market share as the indicator of success, they expanded their production systems into western countries – and this might be the root of the problem. And when the downturn in financial markets came around year 2000, they were forced to cost-cutting activities within manufacturing and human resources. Have Toyota finally paid a price in terms of quality for their increased quantity?

What is interesting is that Toyota tried to copy their success in Japan to other countries – completely ignoring cultural differences that are well documented. Already in the 1990s there were some signal of dissatisfaction from Toyota’s employees in the United States; a Tayloristic approach combined with arrogance from the top-management in terms of ignoring and accepting cultural and language barriers seem to split the organization.

It is interesting to see how a well-respected organization seem to completely have ignored basic management assumptions. Although sales are increasing at the moment, it will be interesting to see how they will prevent such a crisis to happen again; will they continue ignoring less quantifiable social benefits of an organization, or will they follow in the footsteps of Chrysler who, through a higher level of empowerment and less level of standardization, managed to reduce it’s time-to-market ratio at the same time as they managed to increase product quality significantly?