00:00:03
[Music] we're here today with Professor takahiro Fujimoto from the University of Tokyo
00:00:21
he's perhaps uh the world's leading Authority on the Toyota production system and on Automotive product
00:00:26
development more generally he's also a colleague of mine with the international
00:00:30
motor vehicle program which is an international Consortium of researchers that work to do insightful research on
00:00:37
the industry so taka welcome to Wharton thank you very much so for my first question uh given all of the news about
00:00:44
Toyota and the kind of recall crisis uh you've studied Toyota and its production
00:00:49
system for a long time can you tell us what surprised you about the crisis and perhaps if there was anything that
00:00:55
didn't surprise you mhm right well uh probably i surp a surprised to see the
00:01:01
fact that well Toyota was the first guy who got this trap uh of what we may call
00:01:08
the complexity problems uh because this can happen to anybody uh because now the
00:01:14
the society and the the market are stricter and stricter against the the the cars and vehicles in the world so uh
00:01:22
this uh could happen to anybody but I was a bit surprised that this happened to Toyota first because there were
00:01:29
Warning by toyot Executives that well we are in a very difficult situation uh dealing with complexity so they sort of
00:01:38
knew that that could happen to anybody but uh that was Toyota surprising right which had always
00:01:44
been one of the best at managing complexity right mhm yeah right right so they were probably a bit overconfident
00:01:50
that they can handle this kind of complexities more than other companies and quite ironically uh they probably
00:01:57
took in too many too much uh complexities I think that was over the the capacity so I I know that one of
00:02:06
Toyota's primary explanations for this is how rapidly they've grown in the last
00:02:10
decade as you think about everything you've learned does that seem to you like a a good uh root cause of the
00:02:17
problem as Toyota would would want to look for the root cause or are there other factors as well well it's it's
00:02:22
really uh true that the Toyota is growing very rapidly but other companies like Hyundai and and some others were
00:02:29
grow even faster than Toyota so the the the growth itself was not uh the only uh
00:02:36
cause this multiply by other factors what probably the the real cause of the the problems and that was probably the
00:02:43
uh like number of uh production lines facilities uh number of models uh sold in the global market uh and the uh
00:02:54
complexity growing complexity of each each individual vehicles uh uh influen by the social pressures and market
00:03:01
demand all these things multipli together I think uh created uh really explosive expansion of the workload for
00:03:10
handling quality uh problems and again the the Toyota although they had a capability to uh to handle this kind of
00:03:17
things uh they even Toyota couldn't really handle this expansion of uh the complexity
00:03:25
mhh I know there's a saying at Toyota that a problem is a treasure want to find problems because each problem
00:03:32
provides an opportunity for improvement and uh under that philosophy hiding a problem would be the worst thing when
00:03:39
you look at how Toyota has handled this uh crisis do you see them living up to that philosophy of revealing problems
00:03:46
and focusing on them to uh resolve them yeah to my knowledge they were not trying to hide the problems but uh uh
00:03:54
well uh again the pro when the problem happened actually uh since this is a very complex problem they were not sure
00:04:02
probably to what extent this is a responsibility for the company and to what extent uh other uh sort of parties
00:04:10
responsible for that so uh their prop attitude was wait a minute you know this is complicated and so so uh uh they were
00:04:18
sure probably that they were not the only uh uh party responsible for for this problem but it was also well uh
00:04:26
quite uh uh well uh obvious that uh the uh TOA was at least you know partly uh responsible for many problem that was
00:04:37
popping up after another so uh uh they probably what they have should they should have done uh was to come as quick
00:04:46
as possible like like the president comes to America as quick as possible and and then they apologize uh for
00:04:52
whatever is responsible uh uh from Toyota's point of view uh so so like partial
00:05:00
and but thorough apology quick apology what what they had to do but uh they probably uh hesitated uh to come because
00:05:09
they were not sure to what extent they were responsible for uh for those uh uh problems and and then people saw that as
00:05:17
you know uh the Toyota is escaping from the this is probably what this is was not what they meant probably but uh they
00:05:28
the way they handled uh the initial uh problem uh occurring uh uh was very bad I
00:05:35
think yeah I think uh a problem that appears in the factory even if it's complicated is somehow more you have
00:05:42
more uh kind of control uh and more access to the full information uh when a problem comes to your attention because
00:05:50
a customer says something to a dealer uh it seems the Toyota had trouble kind of
00:05:58
taking that information and recognizing it as a problem that definitely needed their focus and attention right I think
00:06:05
this can happen to any companies which are confident of uh the the quality I this happened to other companies in the
00:06:10
past too but uh when you are very confident of the quality uh this is a source of arrogance you know back in
00:06:17
1990s I saw some of my friends just complaining about how Toyota treat those people when there was comp there was a
00:06:24
problem know they go to the dealers and they dealer reports to the the the the Toyota companies uh about these this
00:06:32
problems but uh uh they tended to get some uh reaction from the those the company that you know the product must
00:06:41
be good we are confident of the quality of the product so you know logically it must be your driving problems you know
00:06:48
and that made uh many people very angry and I noticed this kind of things were coming after first SP but more
00:06:58
frequently uh since 1990s so I was always warning that the arrogance is number one enemies to to the philosophy
00:07:07
but uh you know uh they didn't uh well uh take this seriously until this big
00:07:13
problem happened it was really uh out sad and clearly uh what's happened has
00:07:18
damaged the Toyota brand and and reputation uh do you have some uh kind of advice or recommendations for
00:07:25
president Akio Toyota to uh for what would be the best way to help restore that reputation right well uh quite
00:07:33
ironically this is really the the uh long-term race of like overstyle race of handling growing complexities uh that we
00:07:42
cannot avoid you know uh they and TOA was well one of the Front Runners the taking care of the very complex products
00:07:50
like hybrid or luxury cars at very high volume and growing volume so so they were taking all kinds of complexities
00:07:57
and they were Front Runners in taking care of complexity and then they probably took in too much complexity and
00:08:04
they stumbled know but this is a race that you not allowed to to to to retire you know because they are customers so
00:08:11
so they have to stand up and and and go again uh and uh so so there is no excuse
00:08:18
and there's no no room for them to retire they uh will have to just just uh keep on building capabilities know uh
00:08:26
that is the only solution in the long run uh now in the short run uh they have to uh persuade people that you know
00:08:34
although they made a big mistake this time uh uh they will go back to the root cause and do to ways of solving problems
00:08:42
finding problems and and and then come back and to to make sure that everybody convinced that well uh this will not
00:08:51
happen again and sounds almost like back to kind of Back to Basics so not not a change away from the Toyota way or the
00:08:59
to production system but kind of Back to Basics to build those capabilities to handle the new demands right I think the
00:09:04
Toyota system or Toyota way as a philosophy or as a system is still I think the one uh good ways uh to handle
00:09:13
the customers needs uh quickly and accurately uh but that was a deviation of Toyota itself particularly the
00:09:20
headquarter I'm not talking about production people because I I'm constantly looking at the production
00:09:26
sites uh almost every week uh but there's no signs of decreasing capabilities on on their side and also
00:09:34
uh we have to well uh uh understand that uh uh so far all of these problems that
00:09:42
is now uh picked up uh at to the problem are design quality problems rather than
00:09:49
manufacturing quality problems no I think that's an important distinction so
00:09:52
of course it's true that the production site has problems I I go there and I see
00:09:57
many many problems there but but those problems on the one hand and quality problems that we see now are not
00:10:04
directly connected so you know in this kind of situation people tend to uh pick up all kinds of bad news about Toyota
00:10:12
and of course this a big company so uh you you can't find 1020 bad newses very
00:10:17
easily and then people the danger is that people try to connect these things I this happened and this happened so
00:10:23
there must be quer relations between the two but this is not the case I guess uh
00:10:28
uh in terms of Toyota production system uh or Toyota way uh as a Toyota way as a
00:10:34
philosophy uh probably uh at least uh some part I would probably see say um uh middle managers particularly of
00:10:44
headquarters uh started to deviate a bit from Toyota way of thinking by being arrogant being overconfident and also
00:10:53
don't uh they started not to listen to uh the problems that customer raised you
00:10:59
know they are problem finding problem solving companies and this this culture is is still there in the factories and
00:11:07
in Development Centers but in part some part of the the the headquarters uh they
00:11:12
started to say hey this is our problem no I am I am responsible for finding my problems and solving my problems it's
00:11:19
not you to find my problems so sometimes I I I I'm critical of Toyota for some
00:11:25
some some areas but they they get angry you know they always say that we want to
00:11:30
find our problems so please you know uh well uh give us any clues on on the the problems but I really say that this is a
00:11:40
problem for you uh they say hey this is none of a business you know I this is me
00:11:45
and that I know I have to find the problem not you and that kind of inward looking this was growing I think some
00:11:51
part of headquarters and that was very dangerous this is a good time I think to re uh to correct this uh kind of at
00:11:59
itude and go back to the basics of Toyota system uh you mentioned complexity earlier and you talked about the kind of
00:12:06
needs or demands of society and also of the market and I know we've talked before about how uh a car is a expensive
00:12:15
and heavy and fast moving object in the public space uh and that is part of why all these demands face an automaker
00:12:23
could you say a little bit more about that elaborate on the complexity issue right right and well I I I I don't say
00:12:29
that car is a special things uh car is very different from PCs For example or Internet products and other uh digital
00:12:38
products in a sense that it's heavy and it's dangerous you know it's fast moving
00:12:43
as you said uh so uh this is well Society is is very strict in dealing with this this this products because
00:12:51
this product was was like a born uh with the original s know because of the cars
00:12:56
people are killed and the the air pollution happen and uh and it's noisy and uh you know the oil is consumed
00:13:04
heavily by by this vehicle uh so there are many bad things about the car but there are many good things about the car
00:13:11
that's why we see uh 700 th million cars and on Earth know but uh we have to
00:13:17
solve all kind of problems so so so so uh they can't stop Innovation they have
00:13:22
don't have luxury of stopping Innovations and uh because this kind of uh uh uh social pressures social
00:13:29
constraints regulations and also customer requirements are are getting higher and
00:13:35
higher the H is getting higher and higher what was okay 10 years ago is not okay now for example this Toyota problem
00:13:42
also reveals that some of the the things that uh uh is a part of Toyota problems
00:13:47
was probably not treated as big problem 20 years ago so customers and societies are FAS and FAS about about the the the
00:13:57
the how they treat the cars and that just creates tremendous demands on the designers right there's more and more
00:14:04
right it's a nightmare for the the the designers you have to take all these constraints so they have to solve
00:14:09
gigantic simultaneous equations of structure and functions and uh PR problem was a typical example of that
00:14:17
they tried to improve uh fuel efficiency and uh uh safety and quietness at the same time by a nice combination of uh uh
00:14:28
uh regenerating brakes very powerful one and uh anti-lock brake system uh the latest systems and uh uh the uh uh usual
00:14:40
hydraulic braking system but the the the waiting changed a little bit and solution changed a little bit but Toyota
00:14:48
sort of uh failed to solve the this problem in the right way at least in the beginning and uh so if all these things
00:14:58
are happening to Toyota uh would you say we can expect other auto companies to show some problems also with these these
00:15:06
issues because these challenges must face all automakers right right right there are some spec Toyota specific
00:15:11
things like arrogance other you know history specific things but uh this complexity issues is is well nobody can
00:15:19
escape from that so everybody is in the same race and to it I was ironically one
00:15:24
of the Front Runners when this tumbled big failure happened there but we in the same race so uh Smart Companies uh at
00:15:32
least I I see as far as I see started to uh see rather than laughing at Toyota they say oh this is our problem and they
00:15:40
the some of CEOs started to to to say check all kinds of quality problems potential problems of our companies
00:15:47
because that that could happen to our company and that's very healthy reaction
00:15:52
right and I guess otherwise if Toyota is very good at uh recovering from this uh
00:15:56
that would be the the optimistic View then perhaps they gain some advantage in dealing with these issues ahead of other
00:16:02
companies if the other companies don't proceed so could you just say who you
00:16:05
think might benefit of Toyota's competitors out of this situation well again the uh the companies which are
00:16:14
quality driven you know in this kind of situation of course front runner stumbl so uh people tend to say hey this is a
00:16:20
great chance uh to uh to to gain the market share in easy way you know that's
00:16:26
very dangerous I think that company may become that that next their victim uh so
00:16:30
rather than this they have to say hey this is the time when quality is very important particular safety is number
00:16:36
one uh and health is going up so uh we have to be very careful not to dis satisfy the customers and then you know
00:16:45
uh if they uh focus on the the quality and safety and all these issues and make more numbers of customers happy then as
00:16:56
a result the company will grow and they will gain market shares if the company stick to this kind of philosophies I
00:17:03
mean the companies sticking to this kind kind of philosophy will I think be uh uh
00:17:07
wi as and do do you see uh uh I know it's uh maybe would be a sweeping assessment at this point but do you see
00:17:14
the US automakers uh being in a position to do that well this is a kind of opportunity for them right right so
00:17:22
again uh if they see this as a just short-term marketing you know opportunities that's very dangerous but
00:17:29
if they see this as a great opportunity to look at their own quality again and and improve the design quality and
00:17:36
Manufacturing quality at the same time and to make more customers happy I mean this there is a this is a great chance I
00:17:43
think for them okay thank you very much really appreciate you being here thank you