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Wednesday, April 2, 2014

GM & Toyota: Of course they generate scandals!

I'm part of a discussion list on Japan [hosted by the National Bureau of Asian Research in Seattle] where comparisons of GM and Toyota naturally arise. At the time of the Toyota unintended acceleration incidents there was lots of discussion of how this reflected Japanese culture. Now we find the same in Japan for how GM reflects American culture. Balderdash and bullshit.

Back in 2010 NPR's Morning Edition carried an interview with several Japan experts on the topic. Let me (re)quote pieces from 3 different people:

Corporate Gulf Between Japan, West

Kenneth Grossberg, professor of marketing at Waseda University in Tokyo, blames a gulf in corporate culture between the West and Japan. "It is proper behavior not to air linen in public. It is not considered a cover-up in terms of Japanese culture, it's considered proper etiquette. You don't talk about it," Grossberg says. ... Like many other Japanese companies, it's stuck to the Japanese way.

. . . . . .

"Many Japanese managers are convinced that the economics of homogeneity, of being ethnocentric, outweigh the advantages of being a globally integrated enterprise," explains Stefan Lippert, a former management consultant with McKinsey and Company who teaches at Temple University's Tokyo campus. ... Lippert says Toyota's appointment ... of Toyoda ... shows its commitment to tradition and to the Japanese way of doing things. Now, Toyota's troubles underline the stark choice faced by Japanese businesses.

. . . . . .

Jeff Kingston, Temple University's director of Asian Studies, believes the lessons are clear. "This has to be a turning point for corporate Japan, a wake-up call. ... They need to become less insular. They need to become more international. They have to regain some of that competitive edge that they had in the 1980s that made them into world-beating companies," Kingston says.

One NBR member who lives in Japan and reads the Japanese-language press, Earl H Kinmonth, then observed that

"It [NPR], like many reports at the time, explained Toyota's response to the stuck accelerator issue in terms of either a unique and insular Toyota culture, a unique and insular Japanese culture, or both." EHK went on to ask: "I have been reading of accounts of the unfolding issue(s) with GM. Not being a specialist in Japanese or American corporate culture and with no knowledge at all of corporate culture in "the West," I am finding it very difficult to understand what is all that different about the GM case compared to Toyota other than it involves different parts of cars."

In this case EHK hits the nail on the head. Here is my argument:

We can interchange "Toyota" and "GM" in listing factors behind their recalls.

In the Toyota case, it was in part an organizational structure where the right hand did not know what the left hand was doing, no common boss for brands in North America [Toyota of America, Southwest Toyota, Southeast Toyota – a tripartite geographic split dating to Toyota's initial entry into the US, when they lacked the resources & vision to market to the entire US], model proliferation [I counted 90 inside Japan, some effectively identical vehicles but with different names in different channels], later add-ons poorly coordinated [Daihatsu, Lexus], rigid personnel policies [rotations!] and hierarchy, MBAs at the top who emphasized cost cutting. The denouement was the sacking of Toyota's executive suite in 2009, with Akio Toyoda ascending to the top in June 2009. Reorganization on various levels coming bit by bit over the last 4 years.

In the GM case, it was in part an organizational structure where the right hand did not know what the left hand was doing, no common boss for brands in North America [each marque long had their own marketing, design & engineering staffs], model proliferation [effectively identical vehicles but with different names in different channels, later add-ons poorly coordinated [such as Saab and Saturn], rigid personnel policies and hierarchy, MBAs at the top who emphasized cost cutting. The denouement was the sacking of GM's executive suite in 2009, with a new board ascending to the top in July 2009. Reorganization on various levels coming bit by bit over the last 4 years.

We can interchange "Toyota" and "GM" in listing factors behind their recalls. To put it another way, I see no analytic benefits from resorting to "japanese" or "american" culture as an explanation. Indeed, in almost all cases [outside of discussions between anthropologists] the introduction of "culture" is a denial that the situation is capable of analysis using the tools of organizational theory, economics, or any other discipline: they're unique, end of story.

Certainly GM and Toyota each have their own "culture" (as do all large organizations). My sense, however, is that the culture of Toyota differs tremendously from that at Honda or at Nissan. Ditto Ford vs Chrysler vs GM – for the latter I've heard tales of consultants who worked for one finding themselves at a loss when their next project was with another of the Detroit Three. From my end, I hear very different descriptions of OEMs when I visit suppliers – which drives suppliers batty who are not versed in the auto industry and assume if they learn how to work with one, they know how to work with all.

I can't define "japanese" or "american" and I've not heard anyone else do so. And it's not for lack of a knowledge base. I'm fluent in Japanese and English, have lived in Tokyo for 7 years and rather longer in the US, have had kids in local elementary and middle schools in Japan and the US, have taught in high school and college in Japan and been around high schools and colleges in the US, have worked in Japanese and US organizations. All this is backed by reading in anthropology and sociology and organizational behavior and business history, and not just economics. Thus I can't think of a metric for judging whether Toyota differs from GM more than it does from Honda – my hunch is that if somehow we could devise an anthropological metric, we'd conclude that Honda differs more from either GM or Toyota than GM and Toyota from each other.

Before resorting to "culture" we must first try other, analytic explanations. Toyota and GM are both very large, multidivisional firms long dominant in their home markets, and with my analytic models, that's sufficient. Do their cultures also vary? So what – that's irrelevant!!

PS: I own a month-old Chevy Cruze with a 1.5L engine, for which I may well receive a recall notice. BTW it's a manual transmission Eco model, chosen because it has an interior that both my wife and I can endure – we found Toyota's interiors cheap and ugly, Ford's too busy – it has seats that are comfortable, and it's a fine drive on the winding ridgeline and holler bottom roads around my home in rural western Virginia. But I expect any vehicle I might purchase to get at least one recall notice. My reading of the data is that post-2009 GM vehicles come off better on that criterion that post-2009 Toyotas.