The Toyota Way and the Crisis: a New Industrial Divide

The recent wave of recalls has shed new light on Toyota’s evolution and on its potential effects on the global automotive industry. The worsening of Toyota’s financial and market performance may be transitory, and has been exacerbated by the global crisis of 2009. However, it may also be the symptom of deeper and longer lasting problems, rooted in a reduced capacity of Toyota’s capabilities and management systems to cope with the changing competitive landscape of the automotive industry. We analyze the recent history of Toyota, showing how current performance problems are rooted in strategic decisions, structural issues and managerial dynamics dating back to the early 2000s’, specifically connecting the actual problems with the growth strategy pursued in North America. In the second part, our study takes a closer look at the European operations of Toyota, analyzing how the crisis has impacted the Toyota European assembly plants and how this crisis is challenging the Toyota management philosophy, social system, and people management policies. The study argues that Toyota’s crisis was seeded almost a decade ago and is grounded on the one hand on the changes going on in the auto industry competitive landscape (“catch up” of competitors, globalization and challenges from emerging markets and producers, the sustainability challenge) and, on the other hand, on a sort of “latent betrayal” of the company’s original core values, and on a dilution of its corporate culture and leadership resulting from internationalization and excessive growth.