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[Music]
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we're here today with Professor takahiro
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Fujimoto from the University of Tokyo
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he's perhaps uh the world's leading
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Authority on the Toyota production
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system and on Automotive product
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development more generally he's also a
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colleague of mine with the international
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motor vehicle program which is an
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international Consortium of researchers
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that work to do insightful research on
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the industry so taka welcome to Wharton
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thank you very much so for my first
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question uh given all of the news about
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Toyota and the kind of recall crisis uh
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you've studied Toyota and its production
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system for a long time can you tell us
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what surprised you about the crisis and
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perhaps if there was anything that
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didn't surprise you mhm right well uh
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probably i surp a surprised to see the
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fact that well Toyota was the first guy
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who got this trap uh of what we may call
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the complexity problems uh because this
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can happen to anybody uh because now the
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the society and the the market are
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stricter and stricter against the the
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the cars and vehicles in the world so uh
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this uh could happen to anybody but I
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was a bit surprised that this happened
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to Toyota first because there were
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Warning by toyot Executives that well we
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are in a very difficult situation uh
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dealing with complexity so they sort of
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knew that that could happen to anybody
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but uh that was
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Toyota surprising right which had always
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been one of the best at managing
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complexity right mhm yeah right right so
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they were probably a bit overconfident
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that they can handle this kind of
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complexities more than other companies
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and quite ironically uh they probably
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took in too many too much uh
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complexities I think that was over the
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the capacity so I I know that one of
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Toyota's primary explanations for this
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is how rapidly they've grown in the last
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decade as you think about everything
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you've learned does that seem to you
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like a a good uh root cause of the
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problem as Toyota would would want to
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look for the root cause or are there
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other factors as well well it's it's
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really uh true that the Toyota is
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growing very rapidly but other companies
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like Hyundai and and some others were
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grow even faster than Toyota so the the
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the growth itself was not uh the only uh
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cause this multiply by other factors
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what probably the the real cause of the
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the problems and that was probably the
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uh like number of uh production lines
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facilities uh number of models uh sold
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in the global market uh and the uh
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complexity growing complexity of each
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each individual vehicles uh uh influen
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by the social pressures and market
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demand all these things multipli
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together I think uh created uh really
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explosive expansion of the workload for
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handling quality uh problems and again
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the the Toyota although they had a
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capability to uh to handle this kind of
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things uh they even Toyota couldn't
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really handle this expansion of uh the
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complexity
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mhh I know there's a saying at Toyota
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that a problem is a treasure want to
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find problems because each problem
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provides an opportunity for improvement
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and uh under that philosophy hiding a
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problem would be the worst thing when
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you look at how Toyota has handled this
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uh crisis do you see them living up to
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that philosophy of revealing problems
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and focusing on them to uh resolve them
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yeah to my knowledge they were not
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trying to hide the problems but uh uh
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well uh again the pro when the problem
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happened actually uh since this is a
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very complex problem they were not sure
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probably to what extent this is a
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responsibility for the company and to
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what extent uh other uh sort of parties
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responsible for that so uh their prop
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attitude was wait a minute you know this
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is complicated and so so uh uh they were
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sure probably that they were not the
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only uh uh party responsible for for
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this problem but it was also well uh
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quite uh uh well uh obvious that uh the
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uh TOA was at least you know partly uh
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responsible for many problem that was
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popping up after another so uh uh they
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probably what they have should they
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should have done uh was to come as quick
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as possible like like the president
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comes to America as quick as possible
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and and then they apologize uh for
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whatever is
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responsible uh uh from Toyota's point of
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view uh so so like partial
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and but thorough apology quick apology
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what what they had to do but uh they
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probably uh hesitated uh to come because
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they were not sure to what extent they
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were responsible for uh for those uh uh
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problems and and then people saw that as
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you know uh the Toyota is escaping from
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the this is probably what this is was
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not what they meant probably but uh they
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the way they handled uh the initial uh
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problem uh occurring uh uh was very bad
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I
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think yeah I think uh a problem that
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appears in the factory even if it's
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complicated is somehow more you have
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more uh kind of control uh and more
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access to the full information uh when a
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problem comes to your attention because
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a customer says something to a dealer uh
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it seems the Toyota had trouble kind of
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taking that information and recognizing
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it as a problem that definitely needed
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their focus and attention right I think
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this can happen to any companies which
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are confident of uh the the quality I
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this happened to other companies in the
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past too but uh when you are very
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confident of the quality uh this is a
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source of arrogance you know back in
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1990s I saw some of my friends just
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complaining about how Toyota treat those
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people when there was comp there was a
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problem know they go to the dealers and
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they dealer reports to the the the the
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Toyota companies uh about these this
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problems but uh uh they tended to get
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some uh reaction from the those the
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company that you know the product must
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be good we are confident of the quality
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of the product so you know logically it
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must be your driving problems you know
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and that made uh many people very angry
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and I noticed this kind of things were
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coming after first SP but more
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frequently uh since 1990s so I was
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always warning that the arrogance is
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number one enemies to to the philosophy
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but uh you know uh they didn't uh well
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uh take this seriously until this big
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problem happened it was really uh out
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sad and clearly uh what's happened has
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damaged the Toyota brand and and
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reputation uh do you have some uh kind
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of advice or recommendations for
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president Akio Toyota to uh for what
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would be the best way to help restore
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that reputation right well uh quite
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ironically this is really the the uh
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long-term race of like overstyle race of
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handling growing complexities uh that we
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cannot avoid you know uh they and TOA
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was well one of the Front Runners the
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taking care of the very complex products
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like hybrid or luxury cars at very high
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volume and growing volume so so they
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were taking all kinds of complexities
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and they were Front Runners in taking
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care of complexity and then they
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probably took in too much complexity and
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they stumbled know but this is a race
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that you not allowed to to to to retire
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you know because they are customers so
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so they have to stand up and and and go
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again uh and uh so so there is no excuse
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and there's no no room for them to
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retire they uh will have to just just uh
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keep on building capabilities know uh
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that is the only solution in the long
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run uh now in the short run uh they have
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to uh persuade people that you know
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although they made a big mistake this
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time uh uh they will go back to the root
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cause and do to ways of solving problems
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finding problems and and and then come
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back and to to make sure that everybody
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convinced that well uh this will not
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happen again and sounds almost like back
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to kind of Back to Basics so not not a
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change away from the Toyota way or the
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to production system but kind of Back to
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Basics to build those capabilities to
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handle the new demands right I think the
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Toyota system or Toyota way as a
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philosophy or as a system is still I
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think the one uh good ways uh to handle
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the customers needs uh quickly and
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accurately uh but that was a deviation
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of Toyota itself particularly the
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headquarter I'm not talking about
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production people because I I'm
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constantly looking at the production
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sites uh almost every week uh but
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there's no signs of decreasing
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capabilities on on their side and also
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uh we have to well uh uh understand that
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uh uh so far all of these problems that
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is now uh picked up uh at to the problem
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are design quality problems rather than
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manufacturing quality problems no I
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think that's an important distinction so
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of course it's true that the production
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site has problems I I go there and I see
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many many problems there but but those
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problems on the one hand and quality
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problems that we see now are not
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directly connected so you know in this
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kind of situation people tend to uh pick
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up all kinds of bad news about Toyota
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and of course this a big company so uh
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you you can't find 1020 bad newses very
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easily and then people the danger is
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that people try to connect these things
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I this happened and this happened so
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there must be quer relations between the
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two but this is not the case I guess uh
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uh in terms of Toyota production system
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uh or Toyota way uh as a Toyota way as a
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philosophy uh probably uh at least uh
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some part I would probably see say um uh
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middle managers particularly of
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headquarters uh started to deviate a bit
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from Toyota way of thinking by being
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arrogant being overconfident and also
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don't uh they started not to listen to
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uh the problems that customer raised you
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know they are problem finding problem
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solving companies and this this culture
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is is still there in the factories and
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in Development Centers but in part some
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part of the the the headquarters uh they
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started to say hey this is our problem
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no I am I am responsible for finding my
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problems and solving my problems it's
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not you to find my problems so sometimes
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I I I I'm critical of Toyota for some
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some some areas but they they get angry
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you know they always say that we want to
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find our problems so please you know uh
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well uh give us any clues on on the the
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problems but I really say that this is a
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problem for you uh they say hey this is
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none of a business you know I this is me
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and that I know I have to find the
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problem not you and that kind of inward
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looking this was growing I think some
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part of headquarters and that was very
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dangerous this is a good time I think to
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re uh to correct this uh kind of at
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itude and go back to the basics of
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Toyota
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system uh you mentioned complexity
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earlier and you talked about the kind of
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needs or demands of society and also of
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the market and I know we've talked
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before about how uh a car is a expensive
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and heavy and fast moving object in the
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public space uh and that is part of why
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all these demands face an automaker
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could you say a little bit more about
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that elaborate on the complexity issue
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right right and well I I I I don't say
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that car is a special things uh car is
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very different from PCs For example or
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Internet products and other uh digital
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products in a sense that it's heavy and
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it's dangerous you know it's fast moving
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as you said uh so uh this is well
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Society is is very strict in dealing
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with this this this products because
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this product was was like a born uh with
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the original s know because of the cars
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people are killed and the the air
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pollution happen and uh and it's noisy
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and uh you know the oil is consumed
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heavily by by this vehicle uh so there
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are many bad things about the car but
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there are many good things about the car
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that's why we see uh 700 th million cars
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and on Earth know but uh we have to
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solve all kind of problems so so so so
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uh they can't stop Innovation they have
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don't have luxury of stopping
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Innovations and uh because this kind of
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uh uh uh social pressures social
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constraints regulations and also
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customer
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requirements are are getting higher and
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higher the H is getting higher and
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higher what was okay 10 years ago is not
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okay now for example this Toyota problem
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also reveals that some of the the things
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that uh uh is a part of Toyota problems
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was probably not treated as big problem
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20 years ago so customers and societies
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are FAS and FAS about about the the the
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the how they treat the cars and that
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just creates tremendous demands on the
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designers right there's more and more
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right it's a nightmare for the the the
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designers you have to take all these
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constraints so they have to solve
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gigantic simultaneous equations of
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structure and functions and uh PR
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problem was a typical example of that
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they tried to improve uh fuel efficiency
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and uh uh safety and quietness at the
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same time by a nice combination of uh uh
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uh regenerating brakes very powerful one
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and uh anti-lock brake system uh the
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latest systems and uh uh the uh uh usual
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hydraulic braking system but the the the
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waiting changed a little bit and
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solution changed a little bit but Toyota
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sort of uh failed to solve the this
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problem in the right way at least in the
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beginning and uh so if all these things
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are happening to Toyota uh would you say
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we can expect other auto companies to
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show some problems also with these these
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issues because these challenges must
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face all automakers right right right
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there are some spec Toyota specific
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things like arrogance other you know
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history specific things but uh this
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complexity issues is is well nobody can
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escape from that so everybody is in the
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same race and to it I was ironically one
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of the Front Runners when this tumbled
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big failure happened there but we in the
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same race so uh Smart Companies uh at
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least I I see as far as I see started to
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uh see rather than laughing at Toyota
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they say oh this is our problem and they
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the some of CEOs started to to to say
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check all kinds of quality problems
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potential problems of our companies
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because that that could happen to our
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company and that's very healthy reaction
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right and I guess otherwise if Toyota is
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very good at uh recovering from this uh
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that would be the the optimistic View
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then perhaps they gain some advantage in
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dealing with these issues ahead of other
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companies if the other companies don't
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proceed so could you just say who you
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think might benefit of Toyota's
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competitors out of this situation well
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again the uh the companies which are
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quality driven you know in this kind of
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situation of course front runner stumbl
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so uh people tend to say hey this is a
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great chance uh to uh to to gain the
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market share in easy way you know that's
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very dangerous I think that company may
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become that that next their victim uh so
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rather than this they have to say hey
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this is the time when quality is very
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important particular safety is number
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one uh and health is going up so uh we
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have to be very careful not to dis
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satisfy the customers and then you know
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uh if they uh focus on the the quality
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and safety and all these issues and make
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more numbers of customers happy then as
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a result the company will grow and they
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will gain market shares if the company
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stick to this kind of philosophies I
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mean the companies sticking to this kind
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kind of philosophy will I think be uh uh
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wi as and do do you see uh uh I know
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it's uh maybe would be a sweeping
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assessment at this point but do you see
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the US automakers uh being in a position
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to do that well this is a kind of
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opportunity for them right right so
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again uh if they see this as a just
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short-term marketing you know
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opportunities that's very dangerous but
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if they see this as a great opportunity
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to look at their own quality again and
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and improve the design quality and
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Manufacturing quality at the same time
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and to make more customers happy I mean
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this there is a this is a great chance I
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think for them okay thank you very much
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really appreciate you being here thank
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you
