Three Quick Leadership Lessons from Toyota

Posted 02.26.2010

Toyoda With the ongoing spate of stories about Toyota’s safety recall and this week’s congressional testimony by Mr. Toyoda himself, it’s easy to forget that it was just a few years ago that the company was enjoying a twenty plus year run as a quality leader in the automotive industry. During that time, they expanded their operations in the United States and now, on a direct and indirect basis, employ about 170,000 Americans. In my family, we own two Toyotas and are very happy with them. My guess is the company will recover from its current crisis.

Still, there are some pretty big leadership mistakes that have been made at Toyota lately. I don’t think their mistakes are unique to Toyota. As Jim Collins outlines in his latest book, How The Mighty Fall, even the most successful organization’s fortunes can turn quickly. Often it is the success that established them in the first place that can lead to trouble down the road. With that idea in mind, here are three things I’ve noticed about the Toyota situation that I think are lessons for leaders in any field:

Don’t get too wedded to your own story:
Deservedly, Toyota developed a story about itself as being the number one car company in the world with the best quality in the world. That story was the map that guided them. When the terrain (consumer safety problems) didn’t match their map, it was hard for them to move quickly to correct the problems. The disconnect between what the map said and the reality of the terrain was too great. It’s important to step outside your own story on a regular basis and poke your own holes in it.

Don’t outgrow your talent: Toyota has grown over the years by redeploying their best and most senior engineering talent in new production facilities around the world. The idea was that the experienced people would mentor and train the people at the new facilities. That worked really well until Toyota dramatically increased its production capacity over the past five years or so and there weren’t enough mentors to go around. Even in a tough global economy, there is still usually enough financial capital to invest in growth. The scarce resource is human capital. You can’t grow faster than your talent will allow you to grow.

Don’t sit on information: There’s been a lot of criticism of Toyota for sitting on information about their cars that should have been shared. Some of this dynamic played out on Capitol Hill this week when one of their US execs did not have the information that he needed to answer a number of questions that were asked by members of Congress. As they say about the internet, information wants to be free. Especially when your organization is facing a crisis, you have to get ahead of the situation by sharing pertinent information with key stakeholders like your customers, employees and executives.

What’s your take on the Toyota situation? What other leadership lessons can be taken away from what’s happened so far?