Even Gold Standards are getting Tarnished

Today's Wall Street Journal features a front-page article about everyone's favorite Lean automotive company, the "prime mover" of Lean Production, Toyota. Yes, the home of Taiichi Ohno and Shigeo Shingo, often thought of as an invincible industrial force, is human after all, and is having troubles that it's admirers probably thought were the realm of their lesser competitors.

They are not selling cars. A lot of cars. They have to lay people off. They have a sad earnings report and sadder projections. They are having a top level management shakeup. They are touting the language of ordinary companies facing a long uphill battle, admitting to grave strategic mistakes by stressing a need to go "back to basics". They are still probably better off than all the American car makers put together, but their recent admissions of failure is frightening evidence of just how bad our global ecomony really is.

For years, companies have jealously viewed Big T as a superlative blend of strategy, customer focus and a beyond excellent production capability that created a juggernaut profitability factory in Japan. But as happens over and over again in business history, companies get too big for their britches and like an expanding cosmic universe, quickly lose sight of their center, their origins that created their success. In the article, Toyota executives blame their misguided focus on ambitious global profitability and straying from their core ideals of frugality and customer value.

For example, they tried to raise prices on the Corolla in America, and saw their sales slide. They tried offering fancy features in some models (solar powered cooling vents for parked cars in the summer), which goes against their philosophy of solid functionality at reasonable prices.

One particularly intriguing example is Toyota's development of a new car painting technology. American Lean Guru, Jim Womack, once told of how in the automotive industry, the paint room was the symbol of a slow, cumbersome production process that was the most difficult for applying Lean Thinking. Toyota's new "shabu shabu" paint system was specifically identified by Toyota execs as a symbol of their waywardness from the Toyota Production System values, as they sunk a lot of investment into the technology that did not provide a significant improvement.

The message: Toyota has become bloated and their vision blurred by their own success.

While still a role-model company, whose excellence still exists, and which probably kept them from suffering worse, we both take heart in empathizing with their vulnerability, but also fear the underlying meaning behind the loud thud of a giant. Like children faced with 'roid-filled cheating sports stars, we are also running out of our economic heros.