Defective accelerator pedals discovered in Toyotas? In Toyotas?
Flashback: 1984, Houston.
We had ordered integrated circuits from our Japanese supplier. A standard clause in the contact indicated that “no more than 1 in 10,000” could be defective. (The manufacturing process was error-prone and we wanted the best quality.) We ordered 100,000 chips. Upon arrival, we detected a small plastic bag of 10 chips in the larger shipment. An attached note basically said:
We don’t know why you want the defective chips, but here they are.
UnFlash
Japanese quality was a given. A certainty. And now? Defective accelerators on Toyotas?
Executive management focus in the past decade has shifted to ‘shareholder value’ and meeting, eh, beating analyst expectations. This is the way to get a (gargantuan) bonus. In the past, there was an annual planning and review cycle, but that gave way to semi-annual, then quarterly, monthly, weekly…
“Hi, Dan! What have you done for me today?”
… reviews. Efficiency is the mantra chanted by analysts and management. Sometimes things are sensible:
“We are spending $100B a year. There must be areas where we can reduce.”
Sometimes management is ridiculous:
“Our expenses are $100B/year. I hate spending. I want to drive expenditures to zero.”
To get the efficiency, companies move work to the lowest cost location – off-shoring, right-shoring, near-shoring and point-missing. The belief appears to be almost universal: The same or better quality is available (some-shore) at a (much) lower cost.
Hence the promise:
Japanese quality was a given. A certainty. And now? Defective accelerators on Toyotas?
Executive management focus in the past decade has shifted to ‘shareholder value’ and meeting, eh, beating analyst expectations. This is the way to get a (gargantuan) bonus. In the past, there was an annual planning and review cycle, but that gave way to semi-annual, then quarterly, monthly, weekly…
“Hi, Dan! What have you done for me today?”
… reviews. Efficiency is the mantra chanted by analysts and management. Sometimes things are sensible:
“We are spending $100B a year. There must be areas where we can reduce.”
Sometimes management is ridiculous:
“Our expenses are $100B/year. I hate spending. I want to drive expenditures to zero.”
To get the efficiency, companies move work to the lowest cost location – off-shoring, right-shoring, near-shoring and point-missing. The belief appears to be almost universal: The same or better quality is available (some-shore) at a (much) lower cost.
Hence the promise:
“Every one of the engineers at your call center in Beserkistan will have a Ph.D. and an IQ higher than 175.”
The truth:
“And they’ll all be 17 years old.”
The relentless drive for ‘efficiency’ has unpleasant implications for quality. Cutting fat (and muscle) before moving to an enumeration of DNA molecules inevitably degrades quality.
Example: Paying a commuter airline pilot $25,000/year – meaning that they have to commute from home (Seattle) to work (Newark) because they can’t afford to live away from their parents, may not attract very best staff. And, even if the pilot is another Sully, and he flies simply because he loves the job, the overnight commute will impact his ability to perform in an emergency.
Toyota? Just the tip of the iceberg.
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