5 Lessons of How To React To Crisis -- The Toyota Way to Lean Leadership

March 10, 2016

Looking at Toyota's response to crisis can teach people in other industries how effective leadership can create more resilient organizations.

The Toyota Way to Lean Leadership sets the stage by defining the importance of leadership in all its aspects to the success or failure of Lean efforts.

The declarative statement it makes is that the form of leadership necessary to Lean is unlike that which is often observed in many western companies or in many eastern corporations for that matter.

Lean leadership was vital at a pivotal economic time in the world and to Toyota itself as it felt the effects of the economic climate prior to the recession in 2008.

Toyota was at this time navigating its own PR appearance in the midst of recalls, rumored defects, as well as public apologies from senior management. Many of these shortcomings were dissected in order to learn not so much that the company had failed, but to examine how they failed to adhere and sustain their own concept of Leadership.

One’s ability to help others see a vision and get behind it is one of the differentiating factors.

Lean depends on the quality of its leaders to continually improve. It also fosters a growth mindset in its people and staff which is imperative to organizational success.

The Great Recession:

The dramatic rise in oil prices had a devastating effect on the sales of vehicles that consumers felt as inefficient gas utilizers. However, Toyota and its TPS system was built to adjust to such changes in customer demand and the company had experienced similar seismic shifts in the past.

The effectiveness of the system in the past propelled its notoriety throughout the world. This sudden drop in demand made evident the waste of inventory and overproduction that preceded the recession.

The company responded by halting production for three months and refocusing the teams’ energy to kaizen (continuous improvement) in the interim. This ability to pivot in this manner is evidence of Toyota’s principle of self-reliance.

This attribute that Toyota has to not be swayed by the times and indulge in opulence for the sake of it and nothing else is inspirational.

All the executives and the team members have a long-term vision and game plan for the company and its legacy. They are realistic in their forecasts knowing that without fail less profitable times are ahead and thus plan accordingly.

The Crisis:

A California car accident involving a Lexus that was speculated to have experienced electromagnetic interference resulting in its uninhibited acceleration to 110 miles per hour and ultimate crash led to widespread investigation.

The investigation was fueled with gossip and rumors of foul play and cover-ups alleged to be part of what Toyota was doing at its company. The investigation ultimately revealed human error at the dealership where the car was purchases, rather than a manufacturing error by Toyota.

However, other unrelated errors surfaced and resulted in a massive recall of vehicles from the market. It is interesting that although a lot of the fire was started on speculation, and in spite of all the negative feedback, Toyota used every opportunity to continuously improve how they functioned as a company.

The root cause of the accident was found to be the all-weather floor mat that was highly prone to pedal entrapment. Other issues to be dealt with were the “sticky pedal” dilemma and how Toyota was endangering the general public. Through concerted effort, Toyota satisfaction remained high amongst those that drove and had been users of the brand in the past.

Lessons learned in How to react to a Crisis:

  • You start by think and reacting with facts
  • Next you focus on customer care
  • Accept blame for where you had weaknesses
  • Don’t fight losing battles
  • Use it as an opportunity to catalyze and improve the company

Were there leadership failures?

One failure brought to light was the decisions being made by managers that were not at the worksite.

The president of Toyota articulated it as that the company grew faster than it developed and built its workforce (people development).

The countermeasure enacted for this response were the Swift Market Analysis Response Teams. The implementation of such countermeasures is evidence once again of the company’s commitment to problem solving and kaizen.

So what can we learn from these experiences?

A reminder of how crucial leadership is to Lean Leadership and crisis response. Leaders are an integral part of an organization.

It is important that they are cultivated to lead people in the best possible ways and develop the skills needed to keep the company vision and mission on target.

Second is that true north can never be attained, and a Lean leader can never rest on her laurels. This to me reflects the notion of never being complacent and understanding that the journey is a lifelong experience at attaining excellence. This involves a daily re-commitment to this vision and goal.

The Toyota Way is a testament to this approach and has been a pillar in the success Toyota has experienced over the years. It has also allowed the company to navigate very treacherous times that many companies have never recovered from, and thus provides lessons that can be applied in times of crisis.

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