Tag: Toyota

Revisiting Toyota, Ethics and Compliance

Toyota Logo

After many people slapped Toyota with the unethical label over its unintended acceleration problem, it appears that Toyota may be vindicated.

The Wall Street Journal is reporting some early results form the U.S. Department of Transportation’s analysis of data recorders. They found that throttles were wide open and brakes not engaged on Toyotas involved in accidents blamed on sudden acceleration.

Back in March, I pointed out that we saw the same situation with Audi back in the late 1980s. People claimed that the car suddenly accelerated when they applied the brakes. It turns out they were stepping on the gas pedal, not the brake pedal.

It’s hard to pin blame on your customers for failing to use the product correctly. Audi was never able to deal with the same issue. Steve Jobs failed to find much support in telling people they are holding the new iPhone 4 incorrectly.

Toyota has experienced quality issues since they began their quest to become the biggest car company, instead of staying with being the best car company. By looking at the sticky accelerators and stuck floor mats Toyota was cognizant that their cars had flaws. Those flaws seem to have distracted them from realizing that the fault may not have been not their own.

I continue to think that the Toyota saga is one of a failure of crisis management, and not one of ethics or compliance.  Toyota has also benefited from BP’s bigger crisis. BP’s failure seems to be one both of quality, ethics, compliance, ineffectual leadership, and crisis management.

I’m also still troubled by the conflict of interest the US government has with Toyota.  General Motors is one of Toyota’s  biggest competitors. The US government own almost 61% of General Motors after having invested about $50 billion to keep the company alive. It would be good for General Motors if Toyota was found at fault and lost market share as a result. Therefore, it would be good for the US government for Toyota to be found at fault.

I don’t mean to imply that the Department of Transportation is being biased in its investigation. There is just an inherent conflict in the marketplace when the government starts owning private enterprises.

Sources:

Incentives, Productivity and NUMMI

I recently listened to a great show from This American Life. They covered the story of New United Motor Manufacturing Inc. (NUMMI). General Motors and Toyota opened NUMMI in 1984 as a joint venture so Toyota could start building cars in the US. Toyota showed GM the secrets of its production system and how Toyota made cars of much higher quality and much lower cost than GM.

There are some great lessons in the story for compliance professionals. In part because the story can be seen through the lens of incentives and corporate culture. Two topics that are important to compliance.

For GM plant managers, their pay was based on productivity. They needed to get lots of cars out the door at the end of the assembly line. It didn’t matter whether the car could drive off the line or had to be towed. Workers told the story of cars coming off the line with a Monte Carlo having the front end of a Regal. They would just let them run down the line and out into the yard. Then they were fixed out there (with overtime). The emphasis was on quantity. At GM, the production line could never stop.

The Toyota system empowered the line workers to stop the line if there was a problem they couldn’t fix. The emphasis was to fix the problem at its source and not defer it for later. The emphasis was on quality. (Some of the recent problems at Toyota can be blamed on changing their focus to quantity. They wanted to be the biggest car company in the world.)

In spreading the Toyota system, there was resistance from both the company and the union. The union was opposed because the system was more efficient and would reduce the workers at a plant by 25%. The NUMMI plant was the re-opening of a shut down GM plant. The union was out of work and was more open to change. It was either change the way you work or don’t work at all.

GM had trouble empowering its worker and changing the corporate culture that comes along with the Toyota production line. They thought workers would just stop the line to play cards and get coffee.

Its worth an hour of your time to listen to the story.

Sources:

Toyota, Ethics and Compliance

Toyota Logo

With Toyota’s problems all over the news, I started to think about whether compliance and ethics professionals could learn anything from these problems.

To begin, I don’t think there is a systemic problem with their vehicles or with the company. I think the sudden acceleration problem is bunk.

Yes, I own a Toyota, but my Tundra has not been implicated.

Numbers

It is unfortunate that people have died in Toyotas. About 56 people have died in accidents involving Toyotas that allegedly accelerated out of control. That anyone has died or been hurt is difficult to face.

But lets put that number in perspective.  Over 34,000 people died in car crashes in 2008 and over 2 million people were injured.

Over 10,000 of those deadly crashes in 2008 involved alcohol impaired driving. That means you were at least 100 times more likely to be killed by a drunk driver than sudden acceleration.

From an ethics perspective, you obviously don’t want to sell a product that is defective or even a little more likely to injure your customers. Of course, that assumes there is a defect in the product and it’s not just a big pile of media hype.

Look back at Audi

We have seen this situation before. Twenty years ago it was Audi. The reports on Audi suffering from sudden acceleration nearly destroyed the automaker in the late 80s.

They never did find a problem with the Audi cars. Audi was never able to counter the outcry against their cars.

Is there really a problem with the cars?

Surely, the throttle of a car could get stuck open and cause the car to accelerate. Cars are increasingly run through electronics that control the fuel levels and throttle of the car. Floor mats can get stuck on the gas pedals. Cruise controls can malfunction. For any number of reasons, a car could accelerate without the driver’s input. (With Audi, the assumption is that the driver stepped on the gas pedal instead of  the brake pedal.)

But what about the brakes?

Car and Driver ran some tests for unintended acceleration. Even with the throttle held wide open, if you stepped on the brakes your car would stop in roughly the same distance.  In a normal situation, they stopped a Toyota Camry from 70 mph to 0 in 174 feet. With the throttle held open it took 190 feet to stop from 70 mph.

The brakes were not as successful for the hugely powerful Roush Stage 3 Mustang with 540 horsepower. It required an extra 80 feet to stop with all extra horsepower was fighting the brakes.

Even if the engine in most cars suddenly accelerates, the brakes should stop in it roughly the same distance.

However, if you pump the brakes, you may lose the vacuum boost needed for the power assist and have a hard time stopping the car. Prior to anti-lock braking systems, we were taught to pump the brakes in slippery conditions.

Another possibility is that the car could have suffered a brake failure at the same time the throttle failed.

Driver error

One way to deal with sudden acceleration is to disconnect the engine. With a manual transmission you step on the clutch and with an automatic you shift into neutral. (I’m not sure that I would have thought to do that if my throttle got stuck.  I would now.)

With Audi, they main theory was that people were stepping on the gas when they thought they were stepping on the brake.

As for the runaway Prius a few days ago, he could have pumped the brakes and lost the power assist needed to stop the car, or had a simultaneous failure of the brakes and the throttle. (Or he could have faked it.)

Systemic failure

What Toyota needs is a way to avoid systemic failure. It’s really bad to have the throttle and the brakes fail at the same time.

What Toyota needs is a throttle kill switch. When you step on the brakes, the electronic throttle control will cut the throttle and cut the power. In the Car and Driver test, they tried an Infiniti G37 that had the throttle kill and its braking distance barely changed. Many cars have this throttle kill mechanism, but not all.

Having a safeguard for a systemic failure is good thing from a compliance and risk management perspective. By having a throttle kill, it’s easier to point to operator error. (“If you had stepped on the brakes, the engine throttle would have released.”)

What about the conflict of interest?

One problem with a government investigation of Toyota is the inherent conflict of interest the United States government and the taxpayers have in the automobile industry. We own a competitor to Toyota. It would be good for the U.S. ownership in General Motors for Toyota vehicles to be less popular.

I was very disappointed to see Mr. Toyoda flogged in front of a Congressional panel. To some extent, he was being yelled at by the board of directors of GM.

Lessons

In the end, I believe the Toyota story is one of a failure of crisis management and not one of ethics or compliance. It seems like Toyota was not able to quickly gather the facts and act on the facts. They keep announcing recalls, without explaining the problem or the fix.

Every company action made in error is magnified under the white hot lights of the media looking for stories. We the taxpayers and our government has a big conflict of interest in attacking the company without a good set of facts.

The failure of crisis management is going to cost them. There will be shareholder class action lawsuits, driver lawsuits, owner class action lawsuits, the cost of recalls and the long term damage to the company’s image.

Sources: