Here’s what we think about Toyota’s latest crisis:
- They handled the PR crisis management badly, not being open enough fast enough and not giving a full meaning to their act. Because they care about their clients and manage through results—instead of through excuses—they are recalling with no hesitation millions of vehicles in the US for a dysfunction that presents no proven safety danger.
- Cars are so complex that every manufacturer WILL have sooner or later its own black swan (cf. Taleb’s book “Fooled by Randomness”): believing that it only happens to others is a fallacy of non-probabilistic thinking.
- Toyota had the best quality industrial processes and culture in cars. This accident will only bring them to tear apart a lot of great stuff and redesign it to make it even greater. Competitors will stay even further behind because they aren’t doing anything comparable for the moment: they are too busy laughing and trying to steal Toyota’s clients (thinking that a customer who came to you thanks to a bribe will not leave on the first occasion sure is a strange strategy).
- Like Apple which for a long time wasn’t so much a computer firm but more of a religion, Toyota, to its many owners, is a religion too: owners are irrationally attached to the brand.
The latest first page craze of “Toyota-bashing” is the envy of the first-in-class who slipped for the first time.
To sum up, it’s a good time to buy Toyota’s stock.
We still have a major criticism about Toyota but it has nothing to do with the current crisis. They should apply their “respect for people” all over the company stop dividing it into two parts:
- “Motors”: a single-status organization built on the total respect and autonomy of the front-line people (team-members)
- “Sales”: a hierarchical organization built on a traditional approach both to sales people and customers
We think that if Toyota built its sales branch on the same principles and values than its industrial branch it would be even more formidable.
Read also a fine WSJ article on the subject by Holman W. Jenkins here.