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27 February 2010

Toyota and Tiger Woods

Tag(s): Business, Marketing

As those of you who follow these blogs regularly know, interspersed with a weekly blog like this I publish a chapter each month of my book “The 20 P’s of Marketing”. As I assume you also know I am writing this book on the hoof as it were and while I have been thinking about it for several years I only write the chapter in the month before I publish it.

I can now see one of the negative consequences of this is that in the time it is taking me to write this book, almost 2 years, things I have already written and published can become out of date.

For example in my first chapter on Product published on 4th July I wrote


“Such practices would not be tolerated in industries with sophisticated product development processes pioneered by Toyota in the car industry. However, these processes are now generic and not really a source of competitive advantage as all major companies follow them. Companies that ignored them have largely gone to the wall.  Toyota however has had the foresight and discipline to customize tools and technology to fit within a broader framework, one that includes people and processes.

Notwithstanding its current financial difficulties because of a worldwide collapse in demand for new vehicles, Toyota can lay claim to be the world’s outstanding large company (I don’t think it’s practical to try and identify the world’s outstanding small company). Its philosophy is to constantly seek improvement, even if of a small nature. This process of Kaizen is not unique to Toyota or indeed to Japanese industry any more, but it was perfected by Toyota who set the standard.

Toyota, until 2008-9, had enjoyed uninterrupted sales and profit growth for many years. But each year, rather than indulging in excessive celebration, its top management ask what went wrong and could be improved. The workforce is fully involved in making a contribution to this effort.”

Now Toyota has had to conduct several recalls involving millions of cars in most of its major markets and much of what I wrote might now be challenged. Its new CEO, the grandson of the founder, has been forced to go to the USA and apologise. So what has gone wrong? Well first perhaps my analysis is faulty in that hubris also set in with Toyota. With the benefit of hindsight the warning signs were there when the company set out to be the number one and dislodge General Motors from its perch. That is a meaningless objective. We should aim to be the best as measured by customer satisfaction. We should aim to be the most profitable. We should never aim to be the biggest per se. Perhaps too many compromises will be made in the pursuit of volume.

I also think that too much complexity has entered into the world of cars just as it did in consumer electronics where I worked for many years. Engineers seem obsessed with more and more gimmicky gismos being added to the specification, most of which now require semiconductors to manage them and we know how unreliable the engineering in information technology can be.

On the other side of the coin the media love to pull down a giant and US politicians love to indulge in protectionism. Recalls in the auto industry are common and are managed by national bodies. The decision to recall is not made by the car manufacturer independently but by the national organisation once the manufacturer reports the fault. This has not been well explained by the media.

Another giant brought down to mere mortal status is Tiger Woods. Woods was certainly number one in the world of golf and possibly in all sport. And I wrote on him in Chapter 5 on Packaging published on 6th November

“The complete packaging of name, logo as worn by all conquering sports stars and slogan is well exampled by Nike who has followed up its relationship with Michael Jordan with long-term deals with similarly iconic stars such as Tiger Woods and Roger Federer. “

Just a few weeks later Tiger Woods was involved in a bizarre incident with his wife outside his home and within a few more days it emerged that he had had numerous affairs with other women.

Phil Knight, the chairman and co-founder of Nike, has said scandals like those that have engulfed Tiger Woods in recent weeks are “part of the game” when it comes to commercial endorsements Nike signs with athletes. However other major sponsors have cancelled their endorsement contracts.

The issue is not so much that Tiger has cheated on his wife but rather that he has cheated on his image as an upright pure role model. John Terry has cheated on his wife but not on his image of being a bit of a lad who plays football quite well and as far as I am aware has not lost any of his contracts. He has lost the England captaincy but I think that is more to do with squad harmony.

And the issue for me is that I will have to do some re-editing before I publish the hard copy as I hope to do some time next year.

Copyright David C Pearson 2010 All rights reserved




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