Doing the Right Thing for the Customer

February 11, 2009 - Tags:

I asked Jim Press how he learned the Toyota Way. He explained that the reason he joined the company was partly to move on from an environment at Ford where there was constant tension between doing business the way it should be done and the way it actually was done. When he went to a social event, he avoided telling people he worked for Ford. He explained:

People told me all the problems with their Ford cars and I had seen the end result when working in a service department of a Ford dealership. One job I had was driving a Thunderbird before it was shipped, and I could tell how badly the customers were going to complain. Intuitively I knew that was not right.

In contrast, Toyota is aligned around satisfying the customer. It felt like I finally had found a home. The learning process was from the people I worked with from Japan. The executive coordinators from Japan really were here not only to guide the company’s development but the development of the people. The environment allowed you to do business the way you knew it should be done. Toyota was a company that did not say it, they did it. We saw it firsthand.

Press described an early example of Toyota’s commitment to doing the right thing for the customer during the “Nixon shock” of 1971. President Nixon had imposed an import surcharge and also the yen was starting to float.

We had in dealerships at any one given time three different prices for the same car—three dealer costs, three different MSRPs. You went into three dealerships and there were three 1971 Coronas, the same color, same specs, with three different prices. The dealers had paid three different dealer costs. It was a mess. We were a very young company then. Finally, Nixon’s import surcharge was reversed, but the government did not pay us back. We still went back and paid every customer and dealer for all that extra tax they had paid on cars they purchased from us. We lost money. But we did it to satisfy the customer and to gain their long-term interest in us …. We were the only company that did it. We got approval from Japan and it was not a time when we were real rich, either. We struggled to make payroll.

Jim Press then fast-forwards to Lexus in 1996-1997:

We wanted to have a distinctive Lexus-like ride and wanted to break new ground in ride quality. To get that, our tire compounds were fairly soft. And so even though the customers experienced a good ride and the tires were well within our specs, they did not last as long initially as many customers wished. I think 5-7 percent of the customers actually complained about tire life. To us that is a big deal, as we are used to dealing in complaint levels of far less than 1 percent. So we sent the owners of every Lexus where these tires were specified a coupon they could redeem for $500 and apologized if they had any inconvenience with their tires and felt that they wore out early. Many of these were customers who had already sold their cars. The way you treat the customer when you do not owe them anything, like how you treat somebody who cannot fight back—that is the ultimate test of character.