Toyota's CEO on the hot seat

aiko_toyoda100224.gi.top.jpgBy Alex Taylor III, senior editor


NEW YORK (Fortune) -- In making his debut before a congressional committee, Toyota CEO Akio Toyoda could be forgiven for feeling the anxiety of any novice facing an audience for the first time. However his stagecraft is graded, failing marks should go to those who wrote his script and directed his performance.

The Toyoda scion was not served well by appearing on the same stage as his lieutenant Yoshi Inaba. The seasoned Inaba speaks impeccable English and appeared so at ease before the Washington audience that he might have been in his own boardroom. Toyoda, on the other hand, has been in his job for less than a year and, in place of Inaba's innate gracefulness, displays a dogged determination.

More substantively, Toyoda was not well served by those who prepared his opening statement. The proposed measures to improve the way Toyota (TM) deals with quality issues were nothing more than 11th-hour Band-Aids as Toyoda surely understands.

To begin with, appointing a "product safety executive" and creating an "Automotive Center of Quality Excellence" is the equivalent of putting inspectors at the end of the assembly line to make sure that a car is built right. Fixing mistakes after the car is assembled does nothing to ensure that the same mistakes are not made over again.

True quality comes from examining all the processes that go into developing and assembling a car beginning with the design of the vehicle and the selection of the parts suppliers.

A culture that prizes speed and efficiency over reliability and safety is never going to produce high quality cars. The goodness has to be built in at every step.

Another of the suggestions put forward by Toyoda must have amused Toyota watchers around the world. Toyoda promised to devise a system "in which customers' voices around the world" are heard in a timely manner.

Toyota already listens to customers more intently than any other auto company. It is famous for sending its engineers out to live beside customers for weeks at a time to find out what they like and dislike.

A couple of other suggestions would have been rejected by Toyoda had he been still studying business administration at Babson College in Boston. The proposed "quality advisory group" sounds like the equivalent of appointing a blue-ribbon presidential commission to study a problem. It enables the appointee to delay any serious action -- perhaps indefinitely.

And the notion of enlisting members of Toyota's management team to drive cars and point out problems is all but laughable. Akio Toyoda is in fact a skilled driver, but neither he nor most of his managers is a development engineer trained to unearth potential defects beneath the sheet metal.

Congressional questions, which gave the committee the appearance of being on a fishing expedition, didn't give Toyoda many opportunities to shine. The investigators seemed to assume that the CEO is steeped in the details of product engineering, design, and purchasing. It would have made more sense to question him on issues on which he can have a direct impact: the seeming delay and indecision with which Toyota has dealt with the sudden acceleration issue and its inability to make a coherent public disposition of the issue.

Nor did the formulation of "gotcha" questions, intended to elicit a headline quote, move the committee any closer to answering the question about how the sudden acceleration issue arose.

As Akio Toyoda will surely learn, the longer he stays in the job, the root cause of Toyota's quality problems is a company that has strayed from the innovative principles that made it successful. It has become large, bureaucratic, arrogant, and insular -- more concerned with growth and profits than selflessly serving its customers.

Its evolution is not surprising -- many companies go through it as they grow and age. General Motors suffered an extreme case and went through bankruptcy as a result. The good companies, though, discover where they have strayed and correct their course.

Akio Toyoda has talked about getting his family's company back to basics. Nothing could be smarter or more timely. If Toyoda lacked a mission for his term as CEO, now he has it. To top of page