The business and consumer world seems to have been truly shocked by the quality problems faced by Toyota over the years and their problematic gas pedal. Over the last few decades, Toyota has become one of the leading car manufacturers in the world with a reputation that is synonymous with quality. Not only has Toyota innovated in terms of manufacturing practices, they have done so in management with concepts such as Total Quality Management (TQM), quality circles, and Kaizen (a word meaning continual incremental improvement). During this time they have become the envy of numerous organizations and touted as an example of best practice in many areas.
Unfortunately, what has happened to them has happened to many successful organizations: success breeds complacency. IBM being another prime example back in the late 80’s and 90’s. Firms that are truly leaders in their field start to believe they can do no wrong and stop listening to the people that really matter. Additionally, the factors that have led to past success (such as TQM, employee involvement, and consensus decision making for Toyota) become core rigidities instead of competencies as the market place changes and new competencies must be developed to maintain success. Large firms are naturally elephants when it comes to being nimble and this is why smaller, niche firms can often steal ground on these incumbents through faster decision making and innovation.
In the world of fitness we can see similar changes, many of these accelerated by COVID but in fact apparent long before that. An article in the Wall Street Journal during the troubled times of Toyota by a former US engineer who worked in Japan with Toyota describes a very salient fact that firm leaders should take to heart. The author of the WSJ piece, Darius Mehri, says:
Although one of the main tasks of engineers at the company was to come up with ways to improve existing product designs, I learned early on that kaizen had a fairly narrow application. It was mainly used to tweak designs to improve product performance. These techniques ensured increased market share for the company because buyers could immediately see the results of the improvements in new models. But some of the most complex engineering design processes—and the ones that tend to fail—are under the hood and out of sight of most owners…In most cases however, kaizen was driven by a fanatical emphasis on increasing market share. This policy had a dramatic impact on the work environment and the way kaizen was applied.
Likewise, the Toyota Production System involved a punishing amount of work for its employees and parts suppliers. Projects required meeting strict design and quality goals with unyielding deadlines. It was not unusual for engineers to put in 16-hour days for several months. I remember one engineer who frequently dozed off at his computer while working on an engine analysis. Working in teams where engineers would help each other with their design work helped but it was never enough. Under conditions of unrelenting overwork, it is simply too hard for engineers to produce products without design flaws and too easy for managers to hide those flaws.
Whilst I have no doubt that many manufacturers and operators in the fitness industry deliver great quality and are probably comparable in many cases, do they focus on the wrong things? As the author of the WSJ article points out, Toyota was obsessed with market share and revenues and this made the focus very narrow. Firms seem obsessed with technical quality but not customer servicing excellence. They are also obsessed with numbers that have little relevance to the future successful running of a firm and judge new innovations or concepts by the same financial thresholds they use for traditional investment.
What is needed is a change of mind set. The demands on organizations are changing. Customer demands are increasing, competition is rife and coming from non traditional sources (think Big Tech). Organizations need to realize that the factors which have created success in the past are limiting the firm’s chances for success in the future. An obsession with numbers is blinding them to the issues that create long lasting success, the main ones being a performance driven culture that is change capable and highly agile.
Strategy & Competitiveness 