Fall of the Mighty

Ford Motors’ Pinto lives on in automobile infamy not just because it was prone to fiery explosions upon rear-end collisions, but because a 1968 internal memorandum directed the company to live with the design defect as it would cost $121 million to modify the fuel tank, but only an estimated $49 million to compensate future victims.

The evolution of cars from the earliest horseless carriages to a modern vehicle with over 20,000 physical parts is one of wonder and respect. However, the industry has had its inevitable share of bad apples, with designs that have been arrogant, unstable or fragile. The latest to join the Hall of Shame is Toyota Motors who have been forced to recall 9 million vehicles worldwide in less than a year because of flaws with their accelerator pedal and braking system.

Although the gradual decline of General Motors in the last decade paved the path for Toyota to rise to the coveted position of the world’s largest auto-maker, its reign at the summit is likely to be short-lived. With the company having to suspend the sale of eight of its models, the impact is already being felt in the plummeting resale value of Toyota and Lexus models, while rival car companies are attempting to mask their schadenfreude by offering incentives to lure Toyota owners into their showrooms. More importantly, the damage to its brand (built on the twin ideals of quality and reliability) is likely to take longer to recover. A problematic car-part is forgivable in itself, but a company’s denial and obfuscation from a position of hubris is more difficult to forget.

The current unravelling of Toyota’s alleged cover-up is in sharp contrast to the contrition it displayed when defects surfaced with its Lexus 400 launch in 1989. Granted that there are instances when a problem lies with the operator of the vehicle (as in the manufactured scandal with the Audi 5000 in the 1980s), a company’s first line of defence should never be to blame the driver. Toyota’s incompetence in handling the recalls is a case study for what not to do in the face of crisis. It also invalidates Toyota’s kaizen (“continuous improvement”) philosophy, which empowers any worker to halt the assembly line if a flaw is detected, in a culture where loyalty, conformity and discipline are considered synonymous.

While Toyota will have its hands full in the coming months repairing vehicles and restoring its reputation, it will hopefully be a wake-up call for complacent companies who sacrifice innovation and imagination upon hitting a winning formula, and remind them not to take customers for granted.


Five stages of decline:
1. Hubris born of success,
2. Undisciplined pursuit of more,
3. Denial of risk and peril,
4. Grasping for salvation,
5. Capitulation to irrelevance or death.

Jim Collins, How the Mighty Fall

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