At Toyota hearing, echoes of Wall Street's mistake: profits over safety
The Toyota recall and now its apology are reminders of the risk in pursuing market dominance and profit maximization. Wall Street is still learning the lesson of growth at any speed without regard to the safety of shaky mortgages.
A public apology by Akio Toyoda at a congressional hearing Wednesday included this explanation for Toyota’s surging gas pedals and faulty brakes: The company put growth ahead of safety and profits before consumers.
It is a regret – and a lesson – for more than just Toyota.
Wall Street still needs to learn from the 2008 financial meltdown that was caused by its own reckless pursuit of growth at any speed without regard to the safety of its prime assets – stable US housing prices and reliable mortgage payments.
Both Toyota and Wall Street fell from grace because they took great risks in relentlessly seeking the holy grail of market dominance and profit maximization. Blinded by their single-minded focus, they ignored critical details in risks, and too often shooed away internal complaints and warnings of potential dangers.
In Toyota’s case, a pell-mell rush over the past decade to become the world’s automaker caused it to pursue “growth over the speed at which we were able to develop our people and organization,” Mr. Toyoda admitted.
Since 2000, Toyota has nearly doubled its production capacity. And the Japanese company has more than tripled the number of its production sites around the globe. Such rapid growth, combined with the increased complexity of cars and their computers in general, led Toyota into dangerous lapses in its safety controls.