SUMMER 2011 • Volume 52 • Number 4
What Really Happened to Toyota?
Robert E. Cole (University of California Berkeley Haas School of Business) pp. 29-35
Consumers were surprised in October 2009 by the first of a series of highly publicized recalls of Toyota
vehicles in the United States. Citing a potential problem in which poorly placed or incorrect floor mats
under the driver’s seat could lead to uncontrolled acceleration in a range of models, Toyota announced
that it was recalling 3. 8 million U.S. vehicles.
For manufacturing executives who have strived for decades to emulate Toyota, the mere suggestion
that it had quality issues was a serious matter. All over the world, executives paused to wonder if they
had been chasing after the wrong manufacturing model. Despite Toyota’s long record of building reliable, low-defect vehicles, public perceptions about quality are often greatly influenced by reports in the
media and their overall timing, the author argues. The key question was the source of Toyota’s problems: To what extent did they originate with the product designs and assembly, and to what extent could
they be pegged to the company’s supply and manufacturing systems?
The author discusses two root causes for Toyota’s quality problems. The first is an outgrowth of
management’s ambitions for rapid growth. Management’s goal was to increase Toyota’s global market
share from 7.3% in 1995 to 10% over the next decade, then to 15% by 2010. The second is the result of
the increasing complexity of the company’s products. A typical auto sold in the United States or Europe
has more than 60 electronic control units and more than 10 million lines of computer code — a fourfold increase over what was common a decade ago.
However, the author notes that any thorough analysis would also need to acknowledge the role of the
company’s centralized management structure. The result: Top management in Japan was less sensitive to
the expectations of regulators, culture and politics in overseas markets, and consequently they were
slower to respond to local problems.
Reprint 52417. To order reprints of this article, see page 10.
Innovating in Uncertain Markets: 10 Lessons for Green Technologies
George S. Day (Wharton School) and Paul J.H. Schoemaker (Wharton and Decision Strategies
International) pp. 37-45
Talking about “green technology” gets people excited. It’s thrilling to think that a new wave of inventions and discoveries will revolutionize the way we live, halt the degradation of our planet and conserve
resources for future generations. And it’s more than just talk: Investors are committing real dollars. As
the level of activity increases, however, discussions about green technology raise as many questions as
they answer. Addressing the key questions is complicated by the fundamental uncertainties that are at
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