February 10, 2010

Lessons from Toyota

Toyota has problems. Eight Million problems. It’s interesting that this has attracted so much attention from mainstream quality media such as the Today programme. My own interest in Toyota – of which some of you are well aware – is driven by their principles and product development techniques, which are fascinating, and provide some of the foundations for currently ‘buzzy’ things like agile software development.

For those who not excited by Toyota, product development or agile software techniques, here’s a cookie for reading this far! Meanwhile, for those who like products, principles, and how the mighty fall, more after this graphical interlude…

Toyota Land Cruiser

So this post offers thumbnails on two topics: (1) why look at Toyota if you’re running an ad agency, digital agency or web app company. (2) what went wrong.

Why Toyota?

I became aware of Toyota principles when we started developing the Viral Ad Network. One of Toyota’s key principles is to control inventory – whatever that inventory might be, you don’t want too much of it piling up around you, the aim is to have just enough while never running out.

‘Inventory’ is a key feature of the Ad Network – in this case ‘inventory’ means space on publisher websites where ads can be displayed. Managing inventory is right at the heart of the network. Too much and space goes unsold (bad for publishers and us), too little and we can’t meet the promises we’ve made to clients. More on how we do this another time.

Way beyond inventory

A little light reading gave me a much more in depth understanding of what Toyota and similar Japanese companies have been doing, where their techniques came from (common sense, rigourously applied), and how they’ve surfaced in lean techniques and agile software development methods. Given that we’re advocates of agile techniques like Scrum and Kanban, it’s seems that we’d have run across the Toyota methods eventually somehow.

…but for agencies and web app startups?

Toyota – and similar lean companies have a bunch of stuff you can use:

  • Principles to run a business by – that put people first
  • Build in quality, don’t rely on fixing it later (film knows this – bad shots *cannot* be “fixed in post”)
  • Get stuff done

There’s way more, but this story about Amazon’s Jeff Bezos sums it up: “stop cleaning and spend your time eliminating the source of dirt”.

So how do the mighty fall?

Toyota’s aim was to be the biggest carmaker in the world. They achieved that a couple of years ago. They got there with a fearsome reputation for quality, customer service, and a certain kind of innovation (excellent engineering, but rarely exciting).

Problems at Toyota have been kicking around for some time. Last year, Toyota’s president went public on his concerns for the company.

Four connected pitfalls (I’m guessing!)

I think Toyota got smacked down by these four nasties. They’re all connected:

  • Infallible fallacy
  • Engineering is difficult
  • Success can kill
  • Dissipation

When you believe that you have the best quality, it’s hard to accept you don’t. You know that you have a system for quality, so there can’t be a problem, right? “We’re infallible” <- Fallacy.

Meanwhile, engineering is difficult. Toyota initially traced many of the accelerator problems to slipping floor mats. With this pegged as ‘the problem’, it takes time to identify that there’s actually a secondary problem with the accelerator pedal. So engineering is difficult. Anyone think a similar thing might apply with clients and customers for agencies and web apps?

Success can kill. Nothing or more less than hubris – a fine dramatic staple. Toyota achieved their goal. Hubris makes you think you’re invincible, infallible, it makes you over-expand, and bank on a certain future, but the future is not certain, and you’re not in control of it. Lean attitudes are born in the cash-strapped start up, or the nation desperately trying to win a war. Hubris is the antithesis of this, it makes you fat, arrogant and lazy, and expectant of easy success. It’s a short step from there to…”you’re dead”.

People love a goal. They like a win, an achievement. Toyota hit their goal – become the biggest – and despite being renowned planners (do you have a one hundred year plan? I don’t – they do) – they don’t seem to have lined up much else in the way of goals. They’ve expanded globally and stretched their capability dangerously. Meanwhile the car market has moved on around them. Most carmakers ‘do quality’ now. Toyotas are not appealing beyond their loyal audience. Suddenly everyone wants their lunch, they are in ten places at once, and they have no clear win in mind. Dissipation.

I don’t need to draw a diagram: there are lessons above for any of us.

Say “sorry”

Toyota: say sorry. You probably will. You should. Not just because it’s in ‘your’ character, but because it’s the right thing to do.

Too many brands aren’t brave enough to say sorry. They should get braver.

Toyota Land Cruiser