Monday, June 29, 2009
Last Thursday the new president of Toyota admitted that the company lost its way over the last decade as it tried to overtake GM to become the world’s largest automaker.
Akio Toyoda (grandson of the company’s founder) said, “I do not think we were wrong to expand our business to meet the needs of customers around the world but we may have stretched more than we should have.”
Indeed. Toyota’s legendary quality has slipped as sales have slumped with the decline in the global automotive market. Toyota lost its focus on the legendary operating philosophy that had won the hearts, minds and wallets of a generation of consumers and led it to the precipice of becoming No. 1 in the world.
Says Toyoda about what the Wall Street Journal calls his “back to basics” strategy, “Rather than asking, ‘How many cars will we sell?’ or ‘How much money will we make by selling these cars?’ we need to ask ourselves, ‘What kind of cars will make people happy?’ as well as, ‘What pricing will attract them in each region?’ Then we must make those cars.”
That’s a good start. When growth stalls, the place to begin is with the needs of the customer. Only by better understanding those needs–and orienting its strategy around that understanding–can a company increase its relevance and desirability, critical building blocks in regenerating growth.
Toyota’s problems are, of course, intertwined with the larger issues affecting the auto industry. But the company is wise not to blame all of its woes on external events. By putting its own house in order, Toyota is increasing the odds that when the larger economy turns around, its own fortunes will lead the way.