Toyota: lost in translation

How has one of the most respected car companies in the world apparently managed to drop the ball in such a big way?
One thing's for sure: Toyota hasn't suddenly stopped making very reliable cars.
What's left it looking like an athlete stuck in quicksand is a mix of its own management methods and differences between Japanese and Western culture.
Right now, it seems like it's taken too long to act on what feels like a big risk. But has it?
Now, risk is a factor big companies examine regularly because there's a lot at stake. There's even a formula which allows them to calculate it: probability times consequences.
In other words, how many times are things likely to go wrong and what will happen if they do?
For example, you can calculate the risk of flying by multiplying the number of accidents by the injuries or fatalities. Divide it by the total number of flights and you have a statistical risk factor.
What that number won't flag up is factors seemingly unconnected to an activity. Go back to that flying example: statistically, the most dangerous part of air travel is not take off or landing but driving to and from the airport.
Which brings us back to cars. Like most car firms Toyota often tweaks its car designs when feedback from service departments suggests something isn't operating as well as it could.
In the case of those accelerators, it saw feedback last year which said some drivers were finding their pedals weren't going up and down smoothly. Checks highlighted moisture and wear in a small component so it did a redesign.
What that feedback didn't flag up, Toyota says, was a risk that the accelerator might actually stick in position.
We don't know what process Toyota followed with this problem. But it will have been a set process - the company is famous for a strict, step-by-step approach to the job known as the Toyota Production System.
It has served the firm well for decades, but there's evidence it isn't perfect for situations where you have to think on your feet.
In Formula One motor racing, Toyota spent billions but won nothing, the sport's insiders blaming what was, by their standards, a laborious management system which didn't give engineers and designers free rein.
Has the same inflexibility cropped up with the recall of hundreds of thousands of cars around the globe? Toyota will be well aware of the exact scale of the risk posed by the accelerator problem. In pure statistical terms the risk posed by driving a Toyota is, infact, tiny.
But risk is not just about statistical fact. It's also about fear - perceived risk rather than reality - and reputation.
People have heard about an accident in California involving a Toyota-made Lexus where people died. It may be one accident in millions of journeys (one not caused by the same accelerator fault), but they'll naturally notice the one fatal accident they've just heard about not the journeys where nothing happens.
So the perceived risk is of a clear and present danger.
And reputation? In Japanese culture, admission of guilt doesn't come easy, there are degrees of saying sorry, and it is entirely honourable to pick a particular sorry for a particular situation.
To Westerners that risks being seen as grudging, calculating and insensitive.
The reality? There have been accidents and worried drivers because of a faulty component which Toyota has already phased out. It has recalled the cars affected that are still out there. It has publicly taken responsibility and - eventually - said sorry.
In Japan, it will recover ground quickly. In the UK, its long-established reputation for reliability will eventually overcome the effect of a recall. In the US, armies of personal injury lawyers and vested interests in the country's own auto industry will make sure it pays a price for years.
Toyota may ultimately have done all it could. But its own way of doing the right thing seems to have got lost in translation.

Recession: another statistical health warning

Today's news that the economy grew again in the last three months of 2009 will actually come as a bit of a disappointment.
The UK hasn't so much climbed out of recession as crawled, managing a 0.1% rise in output between the start of October and the end of December.
That's not only weaker than expected (the forecast had been for 0.4%) but also likely to be influenced by temporary factors like Christmas spending, the car scrappage scheme, lower VAT.
All these measures will disappear, and the worry is that with them gone the next set of figures could see growth halt again.
However...I'd attached a very big health warning to today's figures because they are NOT the full picture.
The analysis released today by the Office of National Statistics is based on only 40% of the data used to produce a figure - so it's only a first impression.
History tells us that the ONS often has to revise its figures (it will do so in February) and that in the recent past those revisions have been up.
So there'as a chance things are better than we think.
However, take on board the verdict today of George Cowcher, the chief executive of Derbyshire and Nottinghamshire Chamber of Commerce: "While the region is on the brink of leaving recession, it is not there yet."

Bye-bye recession, hello hard slog

We'll be told tomorrow - at long last - that the UK economy has finally come out of one of the longest recessions on record.
As I've blogged before, business probably stopped contracting sometime towards the end of September, with the picture being muddied by a series of revisions to the last set of growth figures.
This saw some people mistakenly assume that we were being given a new set of numbers signalling that recession was still lingering.
To repeat, the last set of official figures refer to how the economy was performing in June, July and September last year - not the most recent three months, October, November and December.
Anyway, take as read that UK plc is growing again.
In truth, the big question is not whether we're out of recession but whether we can sustain recovery.
If we can, there's every chance that those businesses which have grimly hung on to staff because they don't want to lose experience will start motoring again.
If we can't, there's every chance that we may see yet more redundancies and business closures as an economy that's on the bottom just bounces along the deck.
On the optimistic side, there are some signs that the cheap pound might give us some growth in exports. An international trade expert I spoke to last week reckons many Notts firms still haven't realised the kind of price advantage they've currently got in some overseas markets.
On the pessimistic side, it can't be long now before the double whammy of higher taxes and lower public spending starts to kick in as the government gradually withdraws the financial life support.
Around here, there is an additional risk posed by the high numbers of people working in the public sector in a city which is the main regional administrative centre. Their numbers look likely to fall.
Business went into this recession financially healthier than it did in the 1980s and 1990s. Neither did they see any point dumping talent they might have to rehire later - especially if it was willing to live with wage cuts or reduced hours.
This is why unemployment doesn't seem to have been the catastrophe some predicted.
When you put indebted consumers together with lower public spending and the likelihood of higher taxes it's very difficult to see the economy growing at anything like the rates it did in the past.
Recession may be over. But 2010 looks like a hard slog.

It's chilly in Minsk today

My spies in Belarus tell me that Nottingham's delegation to Minsk has been frozen out.

That's only because of the weather, though - it's minus 15 and they are all walking around in Russian hats, large coats (see the picture, taken in Minsk around 10 this morning).
The Nottingham delegation arrived in the city yesterday and has been sitting through back-to-back meetings with city officials and developers about the £500m scheme to build a new quarter just outside the capital and call it 'Residential Complex Nottingham'.
It was, apparently, particularly chilly in the forest just outside Minsk where Univest hopes to build an upmarket, English-style suburb which will be home to 20,000 people.
There, they were shown plans of the development and have since been involved in conversations with Minsk authorities and Univest about how the scheme will work, where the money will come from and what role Nottingham architects, civil engineers and finance experts might play.
We'll know more after tomorrow.

Tales from Eastern Europe

If the only chance of decent growth for UK businesses lies in using the weak pound to sell cheap overseas, has Nottingham got a head start in the export race?
After all, the City Council has been drumming up support for trade missions to Minsk in Belarus and Timisoara in Romania.
The line is that both cities want to do major regeneration projects and that we've got the expertise to help them do it.
On top of that, the developers in Minsk actually want to call their project - a whole new quarter of their capital city - 'Nottingham'.
Guaranteed business for our own architects, engineers and construction companies, then?
Well, not quite.
Let's look at that Minsk project first. When you flick through the pictures in the brochure for 'Residential Complex Nottingham' you could be forgiven for thinking that they're trying to do a London Bridge, transplanting our Watson Fothergill architecture brick-by-brick the other side of Poland.
That's their way of saying they want a suburb that would be home to 20,000 people to have the look, feel and sophistication of a long-established English city.
And they are, apparently, willing to throw £500m at it.
I say apparently because the one question Nottingham businesses are asking is who's going to fund it?
They're asking for two reasons. One is that in this neck of the woods large-scale construction projects are guaranteed to make banks faint - this is where they lost [us] a packet in the credit crunch.
The second is that no one here really understands the way business operates in Belarus.
All we know at this stage is that the company behind the project, Univest, is a big conglomerate which has made a fortune out of energy. It also has some links with the country's President, the formidable Alexander Lukashenko.
President Lukashenko, who is happy to admit his authoritarian tendencies, is the kind of many who tells the economy which way to jump. So far it has done, avoiding recession because he told the factories to keep on running.
Who knows whether he will tell Minsk to build Nottingham.
Timisoara should be more straightforward. The seat of the revolution which overthrew the vile despot Nicolae Ceausescu, it is Romania's historic second city and chock full of old buildings looking for a new life.
Romania has become part of the European Union, opening the door to pots of cash aimed at helping the 'accession states' to overhaul infrastructures left creaking by decades of Communist neglect.
Timisoara's Mayor has yet to convince the EU to hand over any money. The idea is that Nottingham, which has long experience of extracting regeneration cash from Brussels, will show him how.
And if Nottingham shows him how, why not let the companies which did the work here do it over there?
Which makes sense - but we've got to get past EU contract regulations first.
These dictate that any contract above a certain value must be widely advertised and awarded via a proper tendering process. So Nottingham will be competing with Uncle Tomas Coblenz and all.
This doesn't mean these trade missions are a wild goose chase. Nottingham has already done what these cities are trying to do, there is genuine regeneration expertise among city firms, and when business opportunities are so thin on the ground here it would be daft to ignore them.
Nothing venture, nothing gained. And this is quite a venture.

Haiti: an economy from another world

We may be wondering how the UK economy is going to recover from recession, but at least we're not wondering how we're going to recover from an earthquake.
Hard though it is to believe, there was a time when Haiti was a thriving economy which dominated the Dominican Republic, its neighbour on the Caribbean island of Hispaniola.
How it descended to a level of poverty that has left it unable to cope with the aftermath of an earthquake is a salutary tale about the fragile relationship between population, economy and especially environment.
Haiti's 18th and 19th century wealth came from plantations farmed by huge numbers of African slaves shipped in by the country's French masters.
When the French left, their legacy was an over-populated country whose mainly creole-speaking people had few cultural ties to the world immediately around them and a a slave heritage that encouraged an understandable antipathy towards outsiders.
Unstable governments and long-running dictatorship (the consequence of having been a European colony) allowed the country's abundant forests to be stripped bare for fuel and lumber, leaving productive topsoils to be eroded by wind and water, while failing to invest in home-grown industries of note.
Just how extensive the deforestation of Haiti has been becomes obvious when you zoom in on Google Earth.
The result is that Haiti has been reduced to a barren landscape of subsistence farming, of weak government, of creaking infrastructure, and of no resources of any interest to the rich outside world.
You'll have seen from some front pages that the outside world's only real experience of Haiti is glimpsed from cruise liners. The capital, Port-au-Prince, did have a screen credit in the last James Bond movie, Quantum of Solace, but the scenes were actually filmed in the safer surroundings of Panama. Those with longer memories may also recall the cultural caricature that appeared in an Alan Whicker TV documentary about Dr Francois 'Papa Doc' Duvalier, Haiti's murderous 'President for Life'.
Infamously corrupt, both Papa Doc and his son Jean-Claude accelerated a social and economic disaster that had already been gathering pace for decades. Yet on the other side of the island industry and export has grown in the Dominican Republic, a state which has also protected its forest reserves.
The disastrous deforestation of Haiti isn't the only cause of its desperate predicament.
Neither is it the only example in history of the abuse and mismanagement of a natural resource contributing to a society's downfall.
Or, potentially, the last.

• Planting trees won't help Haiti deal with the immediate human tragedy. If you want to help, follow this link to the Disasters Emergency Committee.

Business: an honourable omission?

A few years back, honours were being handed out like confetti to national business superstars.
The people leading high-flying Stock Exchange companies were feted like celebrities, and it wasn't unusual to see PLC chairmen and chief executives being turned into Lords, Ladies and Knights of the Realm when the boom economy gongs were being sprayed around.
Not anymore. What is most noticeable about today's New Year Honours List is the limited number of high-profile awards to people working in the private sector.
Here in Nottinghamshire, 15 people were honoured. Only one works in business (and he's actually based in South Yorkshire), with the rest either voluntary workers or people on the public payroll.
No one should begrudge them their awards. They are all dedicated people who make a real difference to services many of us take for granted.
But why the low profile for business?
Here's a theory.
Big business has fallen out of favour with Government, which is wedded to a political narrative which says that banks, fatcats and anyone who pays a big bonus is to blame for the state we're in. At best, that's a sweeping generalisation. At worst, it displays a shocking ignorance of the contribution made to the economy by the vast army of small to medium-sized businesses.
But could it be a reason why there are so few business people in the New Year Honours List?
If it is, it’s a poor justification.
Some would argue that it is business we're depending on to help us survive one of the most severe recessions in living memory and get the economy growing again.
Shouldn't some of the people who are helping us to achieve that be recognised? There are several deserving examples of people whose commitment and professionalism has made a real difference to the Nottinghamshire economy and the people who depend on it.
May be they will be recognised in future.
To be fair, there is another class of people also likely to enjoy a low-profile in honours lists – politicians.
Wonder why that is...