During my e-mail exchanges with Jeff Liker we agreed on the critical role leadership and culture play in boosting or blocking major organizational change and improvement efforts (“Lasting Organizational Change Balances Doing and Being”) Jeff is Professor of Industrial and Operations Engineering at the University of Michigan and the author of numerous books on how Toyota’s leadership practices and culture underpin its incredibly rapid rise to the world’s largest automobile manufacturer.

Toyota Under FireThis spring Jeff released a timely new book, Toyota Under Fire: Lessons for Turning Crisis into Opportunity, providing invaluable leadership lessons on how Toyota handled a major crisis that would have fatally crippled many companies. Jeff summarizes the crisis in a Harvard Business Review blog post:

“In August, 2009, the improper installation of an all-weather floor mat from an SUV into a loaner Lexus sedan by a dealer led to the vehicle’s accelerator getting stuck, causing a tragic, fatal accident and launching the most challenging crisis in Toyota’s history. This iconic company, synonymous with safety and quality, was vilified by the American press.”

A ten month NASA study just released in February showed that the “sudden unintended acceleration” problem was not caused by any quality problems with Toyota’s cars. But the damage to Toyota’s brand and stellar reputation has been done. It will take lots of time, effort, and leadership skills to rebuild that.

In the newsletter article, Responding in the Toyota Way to a Crisis, Jeff and co-author Timothy Ogden summarize four main lessons to be learned from how this crisis was handled (I’ve condensed here):

Lesson 1: Your Crisis Response Started Yesterday
Turning crisis into opportunity is all about culture. It’s not about PR strategies, or charismatic leadership, or vision, or any specific action by any individual. It’s about the actions that have been programmed into the individuals and teams that make up a company before the crisis starts.

Lesson 2: A Culture of Responsibility Will Always Beat a Culture of Finger-Pointing
By not pointing fingers Toyota was able to turn the energy from the crisis from anger or despair to positive improvement energy. The starting point was to take care of customers…then energy turned to looking in each function and finding opportunities for improvement to respond more quickly to every customer concern, whether rooted in technical defects or customer perception.

Lesson 3: Even the Best Culture Develops Weaknesses
Toyota’s investment in a shared culture of continuous improvement is remarkable and practically unique…the company still encountered difficulties that were directly attributable to weaknesses in the culture…the greatest threat to a culture of continuous improvement is success.

Lesson 4: Globalizing Culture Means a Constant Balancing Act
Developing a shared corporate culture across varied national cultures is perhaps the biggest challenge facing modern multinational corporations…the balance between centralized and decentralized, global and local, is even harder than most people think (and most people think it’s very hard)…it was out of balance toward too much centralization and took bold actions to provide more power and influence to local leaders.

Further Reading: