Toyota’s settlement with the U.S. Government over misleading investigators about the sudden acceleration problem illustrates that nobody is immune from information flow problems. According to published reports, Toyota people misled investigators by denying the problem existed, but internal company records showed Toyota knew of the problem.

It is unfortunate when people are harmed by products, and more so when harm is kept hidden, sometimes for a very long time – as General Motors seems to have done for more than a decade with it’s ignition switch problem.

As an outsider, I can only speculate that in both cases a culture has developed over time where it became career-limiting to inform management of problems. This is a common occurrence. A shoot the messenger policy is obviously inconsistent with the “Respect for People” principle, for employees, customers, regulators, etc. It creeps into an organization that grows rapidly and takes in managers who do not understand the rationale for and benefits of having a “problems are OK, no-blame” environment.

It seems that Toyota people were trying to protect the brand, which over the last 35 years has been put on a pedestal by nearly everyone – especially those who carefully study Toyota. Success, as we all know, breeds failure. Another way of saying that is that if you try hard enough to protect the brand, then you will surely end up hurting the brand.

We see this play out, one way or another, in nearly every management failure we study in the failure analysis course that I teach at my university (TM590). Try too hard to cut costs (by traditional methods), and you end up increasing costs (Johnson & Johnson). Try too hard to reduce lead time (by traditional methods, e.g. proclamation), and you end up increasing time to market (Boeing 787). Try too hard to reduce grow sales (by traditional methods), and you end up selling people stuff they don’t need (as Cisco did).

Unfortunately, we find a recurring pattern among most business leaders: They are penny-wise, and pound foolish. We see this all the time in Lean transformation efforts, too. Not wanting lead the Lean transformation, and not wanting to wait for employees to learn and develop, they hire expensive consultants to rapidly drive change. The typical result is leaders who don’t know how to lead a Lean organization and a workforce that is not willing to learn and develop their Lean thinking and Lean practitioner skills.

Too often, leaders are success-oriented and ignore risks or the reality that something could easily fail. You hear catch phrases such as “failure is not an option.” It most certainly is. Everyone in a position of responsibility for the lives and livelihoods of other people should be eager to learn from the failure of others, whether Toyota, Johnson & Johnson, Boeing, Cisco, or the botched Lean transformation at Her Majesty’s Revenue and Customs. They should be eager.

The failure analysis course that I teach at my university (TM590) is very popular, with most graduate students saying they learned more in that course than in any other. It is both eye-opening and life-changing. They consistently rate it 4.5 (out of 5). But, the Lean failure analysis course that I teach outside of the university has had few takers. That’s a pity. Shouldn’t success-oriented leaders want to avoid failure and learn from the mistakes of others? Remember: Penny-wise, pound foolish.

4 Responses to “Sales Over Safety, Profit Over Principle”

  1. Mark Graban says:

    Great stuff as always, Bob.

    As a former GM employee, I’m embarrassed by (but not really surprised by) their quality problems that are more a result of culture than their people (good people, bad culture). Cultures are hard to change.

    As a former J&J employee, I’m embarrassed AND surprised by the irresponsible, ridiculously bad way in which some of their factories were managed. Holes in the ceilings of U.S. factories and contaminated medications… for children? I guess it goes to show that it was easier the J&J culture (and their famed credo) to go to hell pretty quickly.

    Neither Toyota nor J&J lived up to their own ideals or to what the public expected.

    GM probably surprised very few people.

    It’s sad. Generally, GM products look great and are well built these days. But, this makes me think again about buying one… until a similar scandal pops up with another automaker?

    • Bob Emiliani says:

      It it illustrates how difficult it can be to preserve and improve the culture when one created self-made goals (and future problems) such as double-digit CAGRS in sales, EPS growth, etc. It’s a lot of work to live up to one’s ideals. Constant PDCA.

  2. Mark Graban says:

    Oh, and I forgot to mention (sidetracked by a rant) the book “Obliquity.” Have you read it?

    Makes the case that when companies, for example, focus on profit as the #1 goal, they underperform companies that focus first on quality, mission, purpose, etc.

    Read this article instead of the whole book:

    http://www.johnkay.com/2004/01/17/obliquity

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